RESUME

PUBLIC SECTOR ACCOUNTING

Group 2: Asaquita Sophie Premarci (18312068)
Rania Abdul Aziz Baraba (18312225)

Public Sector Budgeting

A. Budgeting Concept in Public Sector
Budget is about the estimation of what the company wanted to achieve in certain period that is
estimated in financial unit. However, budgeting is the process or method to arrange budget. In
public sector, budgeting is political process that have to be announced and criticized. However,
in private sector, the process of budgeting is not open for public and there is no external
interference. This is the main different between public sector budgeting and private sector
budgeting.

The aspects that need to be included in public sector accounting are:

1) Planning aspect.
2) Controlling aspect.
3) Accountability aspect.
Sector public budgeting need to be supervised and controlled from the beginning, executing,
and reporting.

. The Definition of Public Sector Accounting

Public budgeting contains the planned activities that will be presented in the acquisition unit of
spending and gaining in the financial unit. Budgeting contains the estimation of what the
organization is going to do in the upcoming period. Therefore, we can concluded that public
budgeting is a set of financial planning that stated about:
1. How much cost of the activities planned (expenditure)
2. How to get funds to financially support the planned activities.

C. The important of Sector Public Accounting

Not all aspects of the society are included in the public sector budgeting. There are several
aspect either in the scale of national or local that is not budgeted. Public sector budgeting is set
in order to help the daily need of the society such as electricity, clean water, health quality,
education, and so on.
In the democratic country, the government represents the interest of the society. The resource
owned by the government is owned by the society and the budgeting shows the government
plans to spend money. Therefore, it can be concluded that budgeting is the blue print of the
country’s future path.

D. Budgeting and Fiscal Policy of The Government.

The main tool of fiscal policy is budgeting. Budgeting is the economic tool that is
important to guide social development and economic development that will improve the living
quality of the people in a country. Public sector budgeting must fulfill:
1. Reflects priority changes of public’s needs and wants
2. Decide the receipt and spending of the government units either local and central
government.
The cash flow related with government activities will effecting the price, employment, income
distribution and tax expenses of public services that need to be paid. Public sector budgeting is
important because of several reason which are:

 Budgeting is the tool for the government to steer the socio-economic development and
improve the life quality of the public.
 Budgeting is needed because of the unlimited need and want of the public that keeps
diverse with the very limited resource. Budgeting is needed because of scarcity of
resources, choice and trade-offs.
 Budgeting is needed to convince that the government taking responsible of their people.
In this case, public budget is the execution instrument of public accountability.

E. Sector Public Budgeting Function

Public sector budgeting has several main function such as:

 Budgeting as planning tool

Budgeting is the planning tool management to achieve the organization objective.
However, budgeting in public sector is arranged to plan the actions that need to be
taken by the government, how much money will it incurred, and how significant the
result can be. Budgeting as planning tool can be used to formulating the goals that is in
line with vision and mission, planning programs and activities to achieve the goal,
resource allocation on several program and to set work indicator and strategy.
 Budgeting as control tool
As control tool, budget gives detail plan of the spending receipt of the government that
can be accounted for the public. Without budget, government cannot control resource
wasting such as overspending and misappropriation in allocating the resource to
 divisions that had been prioritized. As management control for public sector, budget is
used to convince the public that the government has sufficient resource to fulfill their
responsibility. Budget also can be used to give information and convince the legislative
house that the government work efficiently without corruption and overspending.
 Budget as fiscal tool
Budget as fiscal tool is used to stabilized the economic and to boost the economic
growth within a country. Budget can give the public a glimpse of the government fiscal
path. Furthermore, economic estimation and prediction can be made.
 Budget as political tool
Budget can be used to make decision of the prioritized financial need of an
organization. However, in public sector, budget is a political document in the form of
commitment of the house representatives and it is not only about technical problems.
 Budget for coordination and communication tool.
Every working units involved needs to set up budget (budgeting). The public budget is
the coordination and communication tool that can detect any inconsistency of working
unit within an organization.
 Budget as performance measurement tool
Budget is the output of budget holder (executive house) commitment to the authorizer
(legislative house) that will be evaluated based on the achievement and the efficiency.
 Budget as motivation tool
Budget can be used as a tool to motivate managers and their set of staffs to work
economically, effectively, and efficiently. In order to motivate the staffs, budget
supposed to be challenging but attainable or demanding but achievable. Therefore, the
staffs are willing and motivated to work like what the organization expected.
 Budget as the tool for public sphere
Public budget cannot be abandoned by the house of representatives, bureaucracy, and
the public itself. All level of society need to take role to speak about heir aspiration,
opinions, and critics to make a better environment.