BUDGETING

Public Budgeting

Public Budgeting

Comparison of Qualitative, time series, and causal analysis approach

Qualitative approach, also termed as the judgmental approach, is a subjective method of revenue forecasting. The forecasters review the statistics, and project the future revenue on the basis of their own experience and opinion. In this method, the opinion of the suppliers, competitors, customers or other stake holders forms the basis for the profit estimation. This type of approach is applicable in cases where the variables have the potential of impacting the buying behaviors are complex to difficult to identify (Cleveland, 1915). Moreover, when sufficient data or statistics are unavailable, then the projection is made by taking opinions of the stakeholders. In times in advancing technology and when the planning horizon is too far into the future, this approach is very useful and effective to project the revenues. However, the major drawback of Qualitative approach is the possibility of biasness in the judgment of the analyst.

Time series approach is a non causal approach of forecasting the future revenues. This method is also termed as trend analysis, as the future profits are projected on the basis of past revenues. The forecasters analyze the historical data over different time periods, the follow the past trend, adjust the inflationary and other factors, and then project the future revenues. This method is less reliable then other methods of revenue forecasting. Moving average method is one of the examples of time series approach.

Causal analysis approach is referred the process of forecasting the revenue on the basis of underlying or independent variables that have the potential of affecting the future sales. In this method, the analyst or researcher identifies the components that may have a causal influence and then develop a cause and effect relationship between the variables the future revenue (Smith, 2004). For example, the sales of computer related equipment and software is highly influenced by the increasing trend of technology and use of internet and academic and professional institutions.

Major Subjects of Issue Assessments

Some of the major subjects and issues with regards to budget assessment include fiscal transparency, accountability and economic governance. The performance of the economy is associated with the allocation of resources and design of federal and local budget. In this context, it is imperative to incorporate and consider several factors during the process of budget assessment. First is the fiscal transparency and accountability. The government is responsible to operate in the best interest of the general public. Apart from this, concept of fairness in financial reporting is only possible when the concerned authorities are accountable to justify their decision making and performance (Norton, 2006). Moreover, the fiscal transparency will attract foreign investment into the state. In a nutshell, the overall process depends upon the economic governance at the federal and state level.

From a budget examiners perspective, there are several factors that must be considered to achieve responsiveness to duly elective political leaders. These include the professional competence, experience, past record, knowledge of economic governance, integrity and fiscal ...