Budgetary
Accounting, and
Budgetary
Reporting
Chapter 4
Learning Objectives
Budgets
In businessesmanagement plans
In governmentsmanagement plans
AND laws
Control the activities authorized to
carry out plans
Prepare statement that permit
comparison of actual results with
budget and evaluation of variances
Minimum Budget
Information
Assumptions about GF
Budget
Estimated Revenues
Appropriations
Budgetary Fund Balance
427,00
0 423,00
0
4,000
Taxe
s
Estimated
Revenues
(Cr.)
Dr.
(Cr.)
Revenu
es
Balan
D
ce
Date of transaction
Records initial budget and changes in it
Records actual revenues
Reports positive balance when amount must still be
collected;
negative balance when collections exceed budgeted amount
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Expenditures Ledger
Format
General
Dr. (Cr.)
Government
Unencumbe
Dr. (Cr.)
(Cr.)
Dr.
red
Encumbra
Appropriati
Dat
Expenditur
Balance
nces
ons
e
es
A
B
C
D
E
Use of Each Column
A. Date of transaction
B. Records estimated amount for issuance of (debit) or receipt
of (credit) order
C. Records actual expenditure
D. Records initial budget and changes to it
E. Reports positive balance when budget is over-expended;
negative balance when spending authority remains
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10
11
Making Adjustments to
the Budget
12
Estimated Revenues
Appropriations
Appropriations
Budgetary Fund Balance
4,000
3,000
6,000
1,000
13
Recording
Encumbrances
14
#3 Recording
Encumbrances
Encumbrances
Encumbrances
Outstanding
(Page 129)
30,000
30,000
15
#4 Receipt of Order
(Pages
129130)
29,900
29,900
16
17
426,00
0
5,000 431,00
0
18
19
Reporting Encumbrances
in Fund Balance
20
Budgetary Bases
Interim Budgetary
Reporting
22
Budgetary Reporting in
CAFR:
Options for Placement in
Report
Basic financial statement (BFS)
23
Budgetary Reporting in
CAFR:
Columns Used in Presentation
Original budget
Final budget
Actual on a budgetary basis (if not
GAAP, reconciliation must be included
in notes (if BFS) or with schedule (if
RSI)
Most governments include optional
Variance column
24
Next FYReestablish
Encumbrances (Page 145)
Encumbrances
Encumbrances
Outstanding
20,000
20,000
25
26
Budget Types
Capital or Current
Tentative or Enacted
General or Special
Fixed or Flexible
Executive or Legislative
27
Comparison of Different
Budget Types
Capital
Typically used for
acquisitions
requiring several
years
Typically contains
portion for current
year and for future
years
Current
Also known as
operating budget
Contains proposed
expenditures for
current operations,
debt service, and
estimates of
expendable resources
to be available during
the year
28
Comparison of Different
Budget Types
Tentative
Plans that are
subject to change
Also includes
requests from
departments to
Chief Executive
Enacted
Appropriation enacted
by legislative branch
that provides legal
basis for control over
the executive branch
29
Comparison of Different
Budget Types
General
Typically used for
general
governmental
activities financed
through General
Fund, Special
Revenue Funds,
and Debt Service
Funds
Special
Budget enacted for
any other type of
activity
30
Comparison of Different
Budget Types
Fixed
Flexible
Appropriations are
Typically fixed per unit
for specific dollar
amounts of
of goods or services
expenditures/
but vary in total based
expenses
on demand for goods
or services
Appropriated
amount may not be More appropriate for
exceeded
Proprietary Funds but
rarely used
Limit flexibility of
Chief Executive
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31
Comparison of Different
Budget Types
Executive
Prepared by
executive branch
but approved by
the legislature
Legislative
Prepared and
approved by
legislative branch
32
Budgetary Preparation
Process
33
Alternative Budgeting
Approaches
Object-of-expenditure
Performance
Program and planning
programming-budgeting
Zero-based budgeting
34
Object-of-Expenditure
Approach
Essential Elements
Subordinate agencies submit detailed
budget requests
Chief executive compiles and modifies
agency requests and submits overall
request
Legislature makes line-item
appropriations
Accounting system must capture data in
sufficient detail to permit budgetary
control and
accountability at legislative 2013 Pearson Education, Inc. All rights reserved.
35
Legislative Consideration
and Action
36