Financial Analysis



City of Kelsey

Introduction

The city of Kelsey is experiencing increment in the rate of crime because of growth in the population. However, the Mayor has called the meeting with the budgeting staff in order to find the solution and reform the budgeting structure for the year 2005-2006, which should also be politically feasible. In addition, the Mayor has shown the concern that chances of increase in tax money are not assured and the budget has to be altered accordingly to combat against the crime rate and ensure citizens satisfaction. This report is based on the view point of the budget officer.

Discussion

Affect Of Budgeting On Fiscal Cycle

The City of Kelsey has specified July 1 to June 30 as its fiscal cycle. Budgeting is a technique and a rule driven process to appropriately allocate, regulate and raise the public money and their spending. However, the changes in the budget for the year 2005-2006 will affect the operations in the fiscal year. The changes in the financial factors affect the fiscal cycle over and above the output. Overall budget is increased by 6.4%. Bonds are issued for financing the capital projects; hence, increasing the debt in the fiscal year 2005-2006.

Changes in the Budgeting Cycle

Preparation

Budget preparation is the first and the crucial step in the budgeting cycle. It will allow the department to reassess the goals and objectives (www.imf.org, 2010). Historical data and the analysis of at least five years data are reviewed before the implementation of the budget. However, the fiscal year starts from July and the budget is approved in May by the Mayor and the Council, its preparation starts six months before in which city reserves, taxes and expenditure and financial capacity are considered. The changing budget involve individual requirement of the department which will align to the goals and the objectives.

Execution

After the budget is discussed with the Mayor and the authorities, the budget execution phase started. The department has to be alert and has to pay attention on its implementation because of the fact that budget may show diversification and may change in the implementation phase. In order to ensure the appropriate execution as it was approved, the budget department has to be extra efficient in this phase. However, in this phase the civil society organization engage in monitoring activities and assure the quality of spending in achieving the desired goal.

Evaluation

Evaluation and auditing ensures the effective allocation of the public resources. The budgeting department will ensure that there is no corruption in the process in a way that the inputs will be assessed against the expected outcomes (Lane, 2011). Feedback will be taken and valued from the civil society in the form of audit, surveys, etc. to ensure that the objective of the budget is achieved.

Budgeting Approach Based On the Changes and the Reasons

The budgeting approach which will be used based on the changes is Incremental budgeting approach. This approach is used in the preparation of the budget in which the previous period or ...