A budget is a financial report of statement and proposals which are periodically placed before the legislatures for its approval and sanction.
A budget is a balanced estimate of expenditures and receipts for a given period of time. In the hands of the administrator the budget is a record of past performance, a method of current control, and a projection of future plans. It is a report of the entire financial operations of the government of the past and gives us a glimpse into future government fiscal policy. Budgeting aims to gather legislative support for government proposals.
It is an attempt to allocate financial resources through political processes. It reflects on organisation’s goals and aspirations and its policies and proposals to realise them. “The real significance of the budget lies,” states Willoughby, “in providing for the orderly administration of the financial affairs of a government.” The entire budgetary process can be summed up in the following way:
An estimate is first made of the expenditure that will be required, for the proper conduct of governmental affairs during a fixed period, usually one year, together with proposals for raising the money to meet these expenditures.
On the basis of this estimate, revenue and appropriation acts are passed giving legal authority for the action determined upon. Following this, the operating services open revenue and appropriation accounts corresponding to the items of the revenue and appropriation acts, and proceed to expand the money so voted.
The data recorded in these accounts are examined by the auditing and accounting department to ensure their accuracy, to see that they correspond to the real facts and represent a full compliance with all provisions of law. The information furnished by these accounts is then summarised and given publicity in the form of reports.
Finally, on the basis of these data new estimates for the next year are made and the circuit is begun again. In this chain of operations the budget is the instrument through which several operations are correlated, compared and examined at one and the same time.