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PROGRAM BASED BUDGETS Presentation by: CPA Elkana Kimeli

PROGRAM BASED BUDGETS Presentation by: CPA Elkana Kimeli Public Finance Management Workshop –Eastern Branch Friday, August 23 rd 2019. Uphold public interest. Legal framework Public sector budgets Rationale for Program based budgets Key elements in Program based budgets.

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PROGRAM BASED BUDGETS Presentation by: CPA Elkana Kimeli

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  1. PROGRAM BASED BUDGETS Presentation by: CPA ElkanaKimeli Public Finance Management Workshop –Eastern Branch Friday, August 23rd 2019 Uphold public interest

  2. Legal framework • Public sector budgets • Rationale for Program based budgets • Key elements in Program based budgets Presentation Outline

  3. PFM Act • County Government Act • IPSAS • Constitution of Kenya (2010) Legal Framework

  4. Main types of budgets in the public sector are as follows: • Zero based budgets • Program budgets • Line item budgets • Outcomes (performance) based budgets Types of Budgets

  5. Agenda 2063 • Sustainable development goals • Vision 2030 • Big 4 agenda Budgeting Framework

  6. Zero based budgeting

  7. It lists the entire organization’s expenditure items based on either a department or a cost center • Each expenditure is given its own separate line in the budget • It allows for easy tracking of expenditures and is simple to understand • It however doesn’t provide for justification of the public expenditures Line Budgets

  8. It aims at improving the efficiency and transparency in the expenditure of public funds through establishing a link between funding of public sector entities and the results they deliver • Systematic performance information/indicators to establish the link • The impact can be felt through improved efficiency and effectiveness in service delivery Performance Based Budgets

  9. It lists all the institution’s programs/functional areas and then determine the amount of resources to be allocated to each function based on the outputs and services expected • It links allocations for inputs to the expected outputs together with accompanying narrations • It organizes the budget into objectives rather than inputs Program based budgets

  10. Focuses on the outputs and service delivery & no inputs • Has significant narrations linking inputs & outputs and explanations on any changes in priorities • Organized around a set of programs with clear & specific objectives and not units of administration • Is broken down into sub programs with clear information on activities and objectives • Program performance is measures with clear indicators and targets credible base and time frames Program based budgets Cont’d

  11. Aids to determine the priority for projects • Facilitates planning management of services in future • Aids in monitoring resources so as to determine how the resources have been used in attaining set goals • It points areas where cost reduction is to be implemented in order to make savings. • Helps in identifying areas where higher levels of funds are required. • It enhances accountability in the organization. PBB Advantages

  12. Preparation requires a lot of information and is time in determining exact resources requirements. • Changes in the budgets results to changes in resource requirements making it difficult to achieve a balanced budget. • Budgeting of dual expenses is a possibility. • Inaccuracies in the budget, leads to higher costs. • At times it is difficult to evaluate the performance of the project due to multiple layers of administrators PBB Disadvantages

  13. Traditional vs Zero base budgets

  14. Adapted from www.internationalbudget.org Line vs program budget

  15. Narrations about the entity – to help understand the budget numbers and the related assumptions. It also includes the following: • Mandate of the entity and information about the programs and related objectives to be met • Information about the citizens’ priorities and a statement as to whether their inputs were taken into account Key Elements in PBB

  16. Expenditure estimates (per program and as per vote/economic classification) and trends • Fiscal policies for the year • Targets and trends • Major spending priorities • Strategic objectives, Programs and subprograms, objectives and performance indicators • Appropriations in aid Key Elements in PBB Contd’

  17. In groups of Four, using Kitui County Government 2018/2019 program budget identify the following: • Major spending priorities for the county • Key program outputs and performance indicators • Expenditure trend over the medium term • Strategic objectives of environment, water, energy & natural resources • For a program of your choice identify the key outputs and performance indicators Exercise

  18. Interactive Session • Comments, questions, feedback……..

  19. CPA ElkanaKimeli Lecturer, School of Business and Economics Maasai Mara University elkanakimeli@gmail.com 0725411409 END

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