February 4, 2013Doug Hadden
Doug Hadden, VP Products
The second released document, embedded below, describes good practices in budget formulation. Governments are budget driven and use commitment accounting. Profit is the key concept in private sector accounting. Budget is the key concept in government.
That’s why budget formulation is so critical in government.
Budget is linked with policy and government objectives. It’s the formal and legal expression of government policy. That’s why many countries call a budget “the vote” or the “organic budget law”.
I’ve seen governments fall in Canada by losing the budget debate.
There are many budget formulation applications designed for the private sector. These software programs focus on fulfillment planning: logistics, manufacturing, assembly. Sure, financial planning is part of that. But the result of the planning is rarely multiple aggregate controls across different periods into the financial system. And, rarely handles supplemental budgets, virements, transfers, continuing resolutions and adjustments to tolerances.
And, let’s face it: budgets in the private sector are guidelines.
In government, the budget is the law.
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