BUDGET PREPARATION IN PUBLIC GOVERNMENT

Budget Preparation in Public Government

Budget Preparation in Public Government

Q1. What changes should be made to the town's financial management process? 

Effective financial planning enables the management to run operational matters smoothly. This could be done easily through an effective financial management policy that addresses all components of financing and funds management.

Opportunities financial management system has considerable weakness that has created serious issues for the community to manage the financial needs of town properly. First of all, biggest flaw in the budget is poor allocation of resources and lack of accurate financial recording in budgetary phases that provided inappropriate results. As a result, when actual expenses need to be realized it created a burden on financial managers to cover up expenses from limited revenues (Kemp, 2007). An appropriate budget making committee should be established by the town community for the formation of the budget. This committee would equate all projected figures against a standard reporting method to minimize chances of error. Variation in budget worsens the financial system by elapsing deficit level. Same situation occurred because expenses for the month of September were missed while calculating budget for the year. This increased the difference between actual and projected figures.

Committee members should ensure that they have surplus amount in their budget to avoid critical deficit condition. Committee has to settle the loan amount in upcoming years, which would require paying the interest and principal amount from specific level of income. Excessive surplus level will enable the committee for not passing on burden of deficit to residents of town (Brigham, 2010). Currently, their budget level is exactly equal to the expenses, which shows that budget is not able to sustain if any financial disaster hit the town economy, such as in the form of additional burden that due to flood. These funds can be increased from a number of sources from revenue accounts or budget surplus can be increased by decreasing the wastage cost and avoiding unnecessary ...