Tools Used In Budget Control

Introduction

The budget is an essential tool on its own in that it is used to control the economic social cultural environmental and political aspects of any country. The control of an economy involves setting up financial requirements that determine the allocation of money to different sectors. For proper budgeting to be effective, the application of some factors needs to be put in place so that the budget can be viable (Khan & Bartley, 2002).

The purpose of this paper is to write a memo on the tools used in the budget control and how it relates to political power. This will be done by the analysis of the book Budget theory on the public sector and other alternative sources of information.

One of the tools of budgeting control is the application of the imaginary utility theory to the public sector. This type of control involves the application of financial method to project the expenditure of the public sector. This tool is efficient in that it focuses on the entire amount of revenue received by the country. This amount is then distributed to different public sectors depending on the activities they perform. The amount of money distributed varies on the intensity of the workload that the sector is experiencing in the financial year. This method is ideal in that it assist the government in gauging the amount of money to tax the public (Sheptycki, 2004).

Another tool used in budgeting is the use of the walker’s progressive theory. This theory entails the evaluation of the living standard of the members of the society. The focus in this case is the monitoring of the quality of services that the government avails to its citizens. The use of the indifferent point is mandatory in that it concentrates on the government’s provision of services to the public sector and the general members of the public. This is compared with the rate of the demand of goods and services by the public such as the basic amenities. The budget is thus based on the amount of money that the government can release which in turn have to reflect on the quality of standards that the public is accustomed. This tool reduces the political power of the authorities in that they have to submit to the demands of the public. Despite this, the correct application of this theory ensures the proper structure of the economy which in turn makes the public satisfied with the government’s services (Khan & Bartley, 2002).

The environments and policy focus theory is another method of budget control. This is done by the projection of the economic growth of that particular financial year. This type of method depends on the performance of the economy as a whole. If the economy performs well in terms of the GDP, the government is liable to increase the funding of the different sectors vice versa. The main aim of this type of tool is to expand on the sectors that require the most growth. It is also a good way of measuring the condition of the economy and making future projections (Paauwe, 2009).

Conclusion

The budget is used to control the financial activities of all the public sectors of the country. There are many tools that are used to determine this factor. All the tools have their advantages and disadvantages. The tools reflect on the political power of the government in that a successfully applied theory results in the strength of the government in power.

References

Khan Aman. , Bartley, Hildreth. W. (2002). Budget theory in the public sector. Westport: Connecticut. Quorum books.Paauwe, J. (2009). Budgeting and Performance: Achievement, Methodological Issues and Prospects’ Journal of Management Studies, 46 (1) 56-76

Sheptycki, J. (2004). ‘The Accountability of Transnational Policing Institutions: The Strange Case of Interpol’ The Politiical Journal of Law and Society, Vol.19 (1)107-134