Public Finance and Administration
The budget being a planning tool that estimates resources available and resources required for a particular program or project, careful study and understanding of how it came to existence is important. The budgeting process in an institution enhances accountability as perceived through budgetary practices.
The history of accounting has developed over the decades with financial and budgeting theories being constructed. The construction and development of these theories resulted due to the expansion of social programs and healthcare leading to increased deficits. To counter these effects, it became inevitable for the decision makers to come up with strategies that could bring to a balance all the monetary issues. Budgeting thus grew to become a public affair rather than an inside oriented practice. The traditional public finance theory had no political or constitutional restrictions to be adhered to. Developments featuring the budgetary and financial theories gave rise to rules that had to be adhered to strictly to aid in the decision making processes in matters regarding finances (Musgrave, 1973).
As a result of the developments and theories that were introduced, the budgeting environment that was initially characterized by optimism for growth shifted to an environment characterized by constraints and cutback management. In addition to that, various agencies had to follow suit and change the norms and strategies of budgeting. Today, the situation around the world is different and changed for the better because the deficit situation has greatly improved as compared to early periods in time. In the United States of America for instance, the changes in the budgetary process had a significant impact in the political and economic arena since important changes in the composition of the federal budget were implemented. As a result, there was a huge increase in terms of spending mushrooming from liberalization of benefits and expansion of programs.
The success of the budget theory and practice are inter-linked in one way or the other. The inter link is evident because the explanation on the success of the budgetary practice is well described by the theory. Much of the modern or current budgetary theory and practice revolves around expansion of the budget and defending the reasons for such expansion. To achieve this, various strategies are being tried out. These strategies have similarities and differences as compared to the traditional budgetary theory and practice. For instance, the base that once narrowed the scope of conflict and led to the establishment of expectations that could lead to fair outcomes in matters concerning budgetary issues is the starting point in almost all budgetary discussions and agreements.
On the other hand, the differences are significant since they put to the limelight the reason or reasons why it is very difficult to stabilize budgeting in the modern world. For instance, budget allocations are done based on political choices and formulas in base and baseline budgeting respectively. In these two budgeting scenarios, the increase in spending depends on two totally different factors. For example, increase in spending in base budgeting solely depends on the availability of resources while in baseline budgeting, the increase in spending is not constrained by the available resources.
References
(1987). “Accounting, Organizations and Society” Vol. 12 Iss: 3, pp.235-265
Caiden, N. (1991). Budgeting in historical and comparative perspective. S.l.: [s.n.].
Goddard, A. (2004). “Budgetary practices and accountability habitus: A grounded theory", Accounting, Auditing & Accountability Journal, Vol. 17 Iss: 4, pp.543 – 577
Musgrave, R. A., & Musgrave, P. B. (1973). Public finance in theory and practice. New York: McGraw-Hill.