Public and Private Budget Preparation Considerations

Public and Private Budget Preparation Considerations

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Public and Private Budget Preparation Considerations

It is important to have the knowledge of budget planning and management in order to make future projections and also give advises to policy makers. Budget preparation is a process in which organizations or individual have allocated responsibilities which they must be acted upon respectively. Budget preparation is essential in for controlling expenditures, achieving the allocated resources and achieving efficient delivery to both public and private sectors Budgeting preparation may include hard tasks and choices which may also be avoided if further costs may incur (Marxen, 2009). Budgeting is therefore different between public and private sectors.

Comparison of public and private budget preparation

There are differences between public and private budgeting which come from the purpose, the accounting methods and also the processes incurred in the management. In public sector, their purpose is to serve specific need which has urgently been identified while on private sectors they focus on making the highest profit. Public needs are focused on the public amenities like schools while private organizations are out to make money (Rainey, Backoff, & Levine, 2010).

In addition, decision making in private sectors on budgets are made on the top levels whereas on public sectors decisions are made by the financial manager who has the mandate to navigate the budgets according to the demands. It needs creativity and vision to both public and private sectors to make successful organization. The managers of both public and private sectors need to be responsible of the organizational finance. Private Manager is more tied up to accounting than public sectors because private organizations must follow the designed and accepted accounting principles.

Operating and funding sources of public revenue

The government has a responsibility to take care of the citizens which in turn requires money. The government gets the money from taxation from the people and through other sources. There are three sources through which public sectors obtain their finance. There is that income obtained from private income which is done through taxing the citizens and also from fees. Government also obtains money from irregular revenue that is through gifts. State ownership can also provide money for the government. For example, through crown lands and also other income generating sources. Above all these sources, taxes are the most common and important source of revenue to the public sector. Tax is the most income generating method used by the government. Tax may be obtained from a person either direct or indirect depending on the nature to which it is obtained. Tax is made compulsory to all which is a law from the public authority (Rainey, Backoff, & Levine, 2010).

Effects of demographics on public revenue services

There have been key DE terminators of demographics affecting the public budget. There has been a rising number of life expectancy which has been witnessed to increase the cost and will extend future costs. There is also numerous number of retiring people in need of retirement pension which generally comes from the government. In public sectors there is high demand of healthcare services and pension services which affect the government finance relied upon by public sectors (Allison, 2006). These public demands are interfering with the public budget making the state unable sustain the population.

The number of aging citizens have had a profound effects on the policy making and budget planning due to the high rate of life expectancy ration and pension dependency. For instance, in Washington comparison of labor force of today and tomorrow is growing at a very slow phase. This is because of the changing demands and needs on the working places calls for an individual with skills on advanced technology. There is also demand for individuals with high skills and knowledge to fit in the high demanding economic positions in provision of currency. This therefore needs for the young generation which in some countries the aging number is bigger than the young generation due to family planning.

Conclusion

In conclusion, demographics have always have had severe effects on the budget preparation whereby even the labor provision diminishing from today and tomorrow. The aging people providing services in public sectors have experience and need to retrain which also needs capital for them to get current information. For effective budget management it requires skills and experience to attain the goals of the organization (Marxen, 2009).

References

Marxen, D. E. (2009). A behavioral investigation of time budget preparation in a competitive audit environment. Accounting Horizons, 4(2), 47-57.

Allison, G. T. (2006). Public and private administrative leadership: Are they fundamentally alike in all unimportant respects. Leadership and organizational culture: New perspectives on administrative theory and practice, 214-222.

Rainey, H. G., Backoff, R. W., & Levine, C. H. (2010). Comparing public and private organizations. Public administration review, 36(2), 233-244.