Estimates & Budget

Control

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Budget
Budget is a statement of an organizations programs
in terms of money
Used in Planning and Control, a budget lists the
detailed cost of each program
Programs are set in achieving the vision of the
Organization

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Budget
Available money
A set amount of money for the
organization
A method of control
A financial plan for a specific
time
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Things to Consider
Who is the funding authority?
What is the source of funds?
What are the short term & long term
objectives of the organization?
What is the time period involved?

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Things to Considered
Where are we now?
Where do we want to go?
How we get there?

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Budgeting methods

Zero Based Budgets

All objectives & operations are given a
ranking
Each unit or goal is ranked and then
available funds are given in order
All units justify all funding
periodically

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Budgeting methods
Formula Budgeting
A specific cost is applied to calculate
funding
Would apply an average cost to
comparable expenses

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Budgeting methods
Incremental Method
Prior budget is basis for funding allocation
New funds are requested based on needs and
objectives
Most frequently used to impact operating
budgets

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Budgeting methods
Accrual Budgeting
Available
assets
and
its
employment is considered for the
preparation of the next periods
financial plan or the budget

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Vision and Mission

Vision of the SLAF
Ensuring National Security through
effective employment of Air Power
Mission of the SLAF
To train, equip and deploy a professional Air
Force exploiting our core competencies to
under take air operations in support of
National Security.

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Functions

Tactical air support and transport to land & naval forces

Provide rescue facilities and transport at the request of the

government

Provide engineering and logistic services to maintain aircraft,

road transport, electronic equipment and other plant & machinery

Provide troops for internal security operations

Undertake non-military air operations and carryout research &

development projects connected with national development

Organize, train and equip personnel in the Air Force for carrying
out its functions
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Objectives

To carryout prompt and sustained operations in the air for the

purpose of Defense including tactical air support and air
transport for land and naval forces, air patrol and rescue
missions

2. To carryout ground operations for the internal security of the

country

3. To participate in non-military activities of the government

specially those that are connected with the economic
development of the country.

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Where Budget Comes

To Play

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Financial
Management
It implies the management of the finance
function of an organization. It is that part
of management which is mainly
concerned with raising of funds, using of
funds as economically as possible,
planning for future requirements and
controlling current activities through
financial accounting, cost accounting,
budgeting and other means.

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Financial Management
Financial planning
Financing
Control

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Public Financial
Management & Accounting

The Minister of Finance is charged with the raising

of revenue and the collection of other government
monies as well as with the oversight of all the
financial operations of the government. He
therefore lays down the broad framework within
which departmental financial transactions of all
kinds may be undertaken

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Treasury
The main function of the treasury is to
maintain control and supervision over
government finance by a system of Financial
Administration with regard to accounting,
security & responsibility

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Treasury

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Treasury Supervision &

Control
By issuing regulations, directives and
instructions that are generally
applicable
By instructing or advising Chief
Accounting Officers and Accounting
Officers of any special measures
necessary in particular circumstances

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Public Financial Management &

Accounting Structure

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Consolidated Fund
The Consolidated Fund comprises all monies
belonging to the Republic which are not separately
allocated to other specific funds
The fund also comprises monies (including money
in bank accounts) of the various departments and
funds of the republic with the Crown Agents and
other Approved Overseas Agents of the Republic
and also includes investments

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......Contd

Consolidated Fund

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Estimates
Financial Estimates depict the quantity
of monies required by the relevant
department to meet its commitments to
achieve its objectives during the
forthcoming financial year

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Responsibilities of the
Accounting Officer Preparing
Draft
Estimates
(FR
50)

All services which can be reasonably foreseen and within the

capacity of his department are included in the estimates
The estimates are prepared as completely and accurately as
possible
Due regard has been given to economy and efficiency in the
preparation of estimates
No delays arise in complying with the procedure arising out of
preliminaries to the estimates
Whenever necessary requisite authority has been obtained
before provision is made in the estimates
Estimates are sent up in the proper form and in proper time.

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Preparation of Draft Estimates

(FR 55)
Prepared on the prescribed format and extracts of the current
years estimates suitably amended. (Current years estimates is
normally the base)
The provision for the ensuing year should be inserted in a
column adjacent to that current year
Chief Accounting Officer finalizes the estimates when the
Accounting Officer forwards the estimates with the number of
apportionments within the single vote
Actual expenditure of the the past years to be obtained from the
published accounts and appropriation legers to be reconciled
with it
No provisions to be made for expenditure which is not likely to
be incurred in the year of estimate
Every endeavor should be made to avoid under estimate
*
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Channel of Forwarding Draft

Estimates
Accounting Officer
Chief Accounting Officer
Treasury
Budget Programme Conference
Cabinet of Ministers
Minister of Finance
Appropriation Bill
Parliament (Budget Reading)
Budget Debate
Appropriation Act
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Appropriation Bill
It provides for the services of the financial year, to
authorize the raising of loan in or outside Sri Lanka,
for the purpose of such service, to make financial
provision in respect of certain activities of the
government during that financial year, to enable the
payment, by way of advances out of the consolidated
fund or any other fund or moneys of , or at the
disposal of, the government, of moneys required
during that financial year of expenditure on such
activities, to provide for the refund of such moneys to
the consolidated fund, and to make provision for
matters connected with, or incidental to, the aforesaid
matters
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Appropriation Act
The Appropriation Bill incorporating
the consequential amendments, is
passed by Parliament and becomes law
when the certificate of the Speaker is
endorsed thereon in terms of article
80(1) of the Constitution

It is, thereafter, referred to as the

Appropriation Act

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Warrants

Appropriation Act doesnt on itself provide complete authority

for expenditure of money from the Consolidated fund. Under
article 150(1) of the constitution, it is necessary that a warrant,
under the hand of the Minister of Finance, should be issued
before any charge is made on the Consolidated fund

Types of Warrants (FR 90)

General warrant
Requisition warrant
Special warrant
Special law warrant
Supplementary special law warrant
Advance warrant
*
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Principles of Budget
Control
To establish a plan or target of performance
which coordinates all the activities of the
organization
Record actual performance
Compare the actual with the planned
Calculate the difference or variance and
analyze the reasons for them
Act immediately to remedy the situation if
necessary
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Objectives of Budget
Control

To combine the ideas of all levels of management in the

preparation of the budget
To coordinate all the activities of the organization
To centralize control
To decentralize responsibility on to each manager involved
To act as a guide for management decisions when
unforeseeable conditions effect the budget
To plan and control income and expenditure so that maximum
profitability is achieved
To direct capital expenditure in the most profitable direction
To ensure availability of sufficient working capital for the
efficient operation of the organization
To provide a yard stick to compare actual results
To show management where action is necessary to remedy a
situation

*
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Programme Budget System

Introduced to SLAF in

1974

Single Programme Budget

1974 1992

Two Programme Budget

1993 1999

Single Programme Budget

Since 2000

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Units of Budgetary
Classification (FR 8)
Head

A head of expenditure is assigned to each

department and Cabinet Ministry. Provision for Public
Corporations is made under a Ministry Head. Head is
a unit of appropriation and indicates the line of
authority and accountability. Classification of
expenditure into heads are based on the administrative
organization structure. Each Head is given an
Identification number

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Units of Budgetary
classification
Head 103 Ministry of Defence

Head 222 Sri Lanka Army

Head 223 Sri Lanka Navy
Head 224 Sri Lanka Air Force
Head 225 Sri Lanka Police
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Units of Budgetary
classification
Programme

Programme is a functional unit of

appropriation. Programmes should be
formulated in order to facilitate listings the
functions each department is fulfilling in order
to achieve its objectives
(SLAF Programme Number is 01)
Program 01Operational activities

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Units of Budgetary
classification
Project

Project is a sub-division of a programme

representing an activity or a group of
homogeneous activities. It facilitate the costing
of each activity and the evaluation of input
output data of that activity

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Units of Budgetary
classification
Project 1- General administration
Project 2- Air, Ground and non military Operations
Project 3- Engineering & Logistic Services
Project 4- Volunteer Force, Health & Welfare

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Object

Object is an economic component

of a project. They are grouped into
broader categories while maintaining
capital and recurrent expenditure
distinction. They are coded with 4 digit
numbers. The first 2 digits indicate the
economic categories and last 2 digits
depict the Class

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Units of Budgetary
classification
Economic Categories of Recurrent expenditure
objects

1001.
1101
1201
1401
1508

Personnel Emoluments
Traveling Expenses.
Supplies
Contractual Services
Other Recurrent

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Units of Budgetary
classification
Economic Categories of Capital expenditure objects
2001
structures
2002
capital assets
2003
2102
2103
2104
Structures

Improvements of buildings and

Rehabilitation & Improvements of
Rehabilitation of vehicles
Acquisition of barrack equipment
Acquisition of capital assets
Construction of Building and
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Units of Budgetary
classification

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Expenditure
Capital Expenditure

All expenditures for acquisition,

rehabilitation, and improvements of
assets and development of resources
Recurrent Expenditure

All current expenditure are

categorized under recurrent expenditure

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Advance Account
Certain activities of government are financed by way
of advanced accounts. Apportions for advance
account activities are made separate from the general
estimates and form a separate fund for each activity.
Types of advance accounts
Production Advance Account
Development Advance Account
Trading Advance Accounts
Stores Advance Accounts
Advance to Public Corporations
Advance to Public Officers
Miscellaneous Advance Accounts
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Transfer of Funds Between

Votes- Virement Procedure
Funds could be transferred from votes in
which excess funds are available to
exhausted votes by obtaining approval from
the General Treasury
This is governed by the FR 65 and FR 66

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Supplementary Estimates
When due to unforeseen emergencies the
provision granted in Annual Estimates is not
sufficient to meet the additional expenditure,
funds are allocated by means of a
Supplementary Estimate to meet only the
additional expenditure

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Treasury Vote
In respect of expenditure which is due
to exceed Annual Estimates due to
unforeseen commitments or shortage
of provision, the treasury may allocate
one of its miscellaneous vote heads in
lieu of a supplementary to debit the
department's additional expenditure.
Its known as a Treasury Vote
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Vote on Account
When the government fails to submit its
annual budget, for the forthcoming year, to
the Parliament, funds are allocated to the
government organizations, pending the
approval of the appropriation bill, as a Vote
on Account for only 3 months period
This is done at the time of Civil War,
Elections, Government Changes, Natural
Calamitiesetc
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Appropriation Account
At the end of the financial year Accounting
Officer will prepare an appropriation account
for each of its votes or apportionment. It
compares the actual with the planned. It
should contain the causes of any significant
variations or any unusual payments made

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Forms
Form Gen 138 A
Departmental Appropriation (vote) Ledger
Form Gen 279
Commitment Sheet
Form Gen 280
Variation in Commitment

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Public Accounts Committee

PAC set up by the Parliament to examine
the accounts showing the apportions
granted by it to meet public expenditure
together with the Auditor Generals
Report. After careful examination of
records it issues instructions to rectify
ambiguities and same are conveyed to
the Accounting Officers by a Treasury
Minute for guidance of future financial
operations
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Committee on Public
Accounts ( COPA )
Formed under the Parliament Standing Order
No. 124
*
To examine the appropriate accts &
other accts laid before the parliament along with
the AG reports
*
14 Members ( from both sides )
*
President of the committee fm
Opposition

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Committee on Public
Enterprises ( COPE )
*

Formed under the Parliament Standing

Order No. 125
*
To examine the accts of public
corporation, enterprises and any other trading
arms of the govt
*
14 Members ( from both sides )
*
President of the committee fm
Opposition

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Auditor General ( AG )
Appointed by the President
To audit the
- accts of all departments of the govt
- the Judicial service Commission
- the Public Service Commission
- the Parliamentary Commission for
Administration

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Auditor General ( AG )
- the Secretary General of Parliament
- Commission of Elections
- Local authorities
- Public corporations
* Perform & discharge duties & functions as
may be prescribed by the parliament by Law.

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Remember
The ability of the department to live within its
budget may be the single most important
measure of performance in evaluating the
overall performance of the organization

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References
Financial Regulations of the Government of the
Democratic Socialist Republic of Sri Lanka
(1992 Edition)
Financial Management Code (1999 Edition)
Notes on Introduction to Estimates and Budget
Control of the Sri Lanka Air Force

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