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  • Performance-based Budgeting

    CLEAR Training Materials

    Manual

  • 1

    PerformanceBudgeting

    MarcRobinson

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    ContentsTableofAcronyms........................................................................................................................................5Introduction..................................................................................................................................................71.BudgetingandtheBudgetProcess...........................................................................................................82.OverviewofPerformanceBudgeting......................................................................................................12ExpenditurePrioritization.......................................................................................................................12ManagingforResults..............................................................................................................................13ModelsofPerformanceBudgeting.........................................................................................................14

    3.PerformanceInformationFundamentals...............................................................................................20PerformanceConcepts:theResultsChain..............................................................................................20Outcomesvs.ExternalFactors................................................................................................................23Outputsvs.OutcomesandActivities......................................................................................................24PerformanceIndicators..........................................................................................................................24

    4.PerformanceMeasuresandtheBudget.................................................................................................28EnsuringthatIndicatorsareUseful........................................................................................................30LinkingFundingtoOutcomes.................................................................................................................31LinkingFundingtoOutputs.....................................................................................................................32

    5.PerformanceMeasurementSystems......................................................................................................35EnsuringthatPerformanceInformationisCostEffective......................................................................39

    6.EvaluationandPerformanceBudgeting.................................................................................................42EvaluatingProgramEffectiveness...........................................................................................................43EfficiencyReview....................................................................................................................................45MakingEvaluationRelevanttotheBudget............................................................................................45EvaluationandtheBudget:TheChileanExample..................................................................................46InternalversusExternalEvaluations.......................................................................................................48

    7.PerformanceAuditing.............................................................................................................................508.ProgramBudgetingFundamentals.........................................................................................................52DefiningPrograms...................................................................................................................................53PerformancePressureandProgramBudgeting.....................................................................................54ProgramPerformanceInformation........................................................................................................55

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    ProgramTitlesandObjectives................................................................................................................56ProgramStatements...............................................................................................................................58TheProgramHierarchy...........................................................................................................................58Numberandsizeofprograms.................................................................................................................59DevelopingPrograms..............................................................................................................................60IntegratingStrategicPlanswiththeProgramBudget............................................................................61

    9.ProgramAppropriationandExpenditureControl..................................................................................6410.ProgramAccountingandCosting..........................................................................................................68BudgetClassificationandChartofAccounts..........................................................................................68FinancialManagementInformationSystems.........................................................................................69ProgramCostAllocation.........................................................................................................................72AdministrationPrograms........................................................................................................................75SalaryCostsandPrograms......................................................................................................................78CostAllocationandtheProgramHierarchy...........................................................................................78ProgramCostEstimationinBudgetPreparation....................................................................................79

    11.SpecialTopicsinProgramBudgeting....................................................................................................82ProgramsandOrganizationalStructure.................................................................................................82MinistryBoundariesandInternalSupportServices...............................................................................85BroaderConflictsbetweenProgramandOrganizationalStructure.......................................................87ProgramStructuresinDevelopingCountries.........................................................................................88FunctionsandPrograms.........................................................................................................................89ProgramsandFunctions:aCaseStudy...................................................................................................92ProgramsandLevelsofGovernment......................................................................................................93

    12.FormulaFundingandPurchaserProviderSystems..............................................................................95LimitstoFormulaFundingandPurchaserProvider................................................................................96

    13.TargetsandPerformanceBudgeting....................................................................................................98GamingandPerverseEffects................................................................................................................100

    14.PublicFinancialManagementReformFoundations...........................................................................10215.ExpenditurePrioritizationandPerformanceBudgeting.....................................................................105SpendingReview...................................................................................................................................105ExpenditurePrioritizationProcessesMoreGenerally..........................................................................109PlanningandPrioritization....................................................................................................................111

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    ExpenditurePrioritizationattheSectorandMinistryLevels...............................................................11116.AccrualAccountingandPerformanceBudgeting...............................................................................114WhatareAccrualAccountingandAccrualBudgeting?........................................................................114TheComplexityofAccrualAccountingandBudgeting.........................................................................119AccrualAccountingandProgramBudgeting........................................................................................120AccrualAccounting,PurchaserProviderandFormulaFundingSystems.............................................121

    17.ParliamentandPerformanceBudgeting.............................................................................................124ParliamentandPerformanceAccountability........................................................................................124ParliamentandExpenditurePriorities..................................................................................................126

    18.MediumTermBudgetingandPerformanceBudgeting......................................................................127NatureandBenefitsofMTBudgeting..................................................................................................127ForwardEstimates.............................