Nathaniel D.

Arizala FIN 3209-2

BSBA FM 3-2 Prof. Ragrciel G. Manalo

Module 1 - Chapter 1: Overview of Public Fiscal Administration

Public finance refers to the administration of a nation's income, outlays, and debt
load by various governmental and quasi-governmental entities. This tutorial gives a
general overview of how public finances are handled, describes the many parts of public
finance, and explains how to grasp all the figures. The financial position of a nation can
be assessed similarly to how financial statements of a company are analyzed. The
primary activities that make up public finance are those involved in revenue collection,
societal support expenditures, and the implementation of a financial strategy (such as
issuing government debt). The following are the important parts: The primary source of
income for governments is tax collection. Sales tax, income tax (a sort of progressive
tax), estate tax, and property tax are a few examples of taxes that are collected by the
government. Duties and taxes on imports as well as money from any kind of fee-based
public services are additional sources of income that fall under this category. Next, The
budget is a projection of the expenses the government expects to incur within a fiscal
year. In the United States, for instance, the House and Senate draft laws for particular
budgetary provisions, which the President subsequently signs into law. The president
then makes a budget request to Congress. Read a copy of the Office of Management
and Budget's 2017 Budget for the United States government. Next, Everything that a
government actually spends money on, such as social services, education, and
infrastructure, is referred to as an expenditure. A large portion of government spending
is redistribution of income or wealth with the intention of enhancing society as a whole.
The actual expenses may exceed or fall short of the budget. Next, A deficit occurs in a
year when the government spends more than it brings in. A surplus exists when the
government spends less than it takes in through taxes. Next, A deficit occurs in a year
when the government spends more than it brings in. A surplus exists when the
government spends less than it takes in through taxes. Next, If the government has a
deficit (its spending exceeds its receipts), it will borrow money and issue national debt to
make up the shortfall. The U.S. Treasury is in charge of issuing debt, and the Office of
Debt Management (ODM) decides whether to sell government securities to investors
when there is a deficit. Managing incoming and outgoing financial transactions and
budgets for governmental bodies, academic institutions, nonprofit organizations, and
other providers of public services is known as fiscal administration. For instance, a town
or municipality's local fiscal management includes collecting, budgeting, and allocating
funds to support local infrastructure. Fiscal responsibility in terms of governmental
administration demands a large number of departments or divisions to manage the
challenging task of funding government activities. Each division or department is in
charge of a separate task, such as purchasing, budgeting, reporting, and collecting
money in the form of fees and taxes. As part of their responsibilities in respect to
competent fiscal administration, constituents hold leaders—whether governmental or
organizational—responsible for creating fiscal policies. Budgets for fiscal planning are
created using fiscal policies as instruments, based on the expected receipt of funding.
Management provides the proper accounting information to organizational executives
as fund distribution takes place in the form of salaries, purchases, or other expenses.
The necessary modifications are determined by historical data, projected future
revenues, and present budget demands. Future financial decisions are built on the
basis of the entire procedure. Government, nonprofit, and other public service leaders
have a fiduciary duty to the people who elect them, also referred to as constituents. An
organization's overall financial health and capacity to continue providing services to
constituents are both impacted by how well it manages its financial administration. As a
result, many of the specifics relating to creating financial statements, documenting
transactions, and balancing budgetary demands for such entities are dictated by
legislation. These reports must show responsible administration of all operations
involving money paid to or spent by the organization, in accordance with fiduciary duty.
Federal fiscal administration in particular presents numerous potential for
miscalculation. Governmental organizations are by definition big and complicated,
requiring a lot of divisions, departments, committees, and other entities. Disbursements
and expenses come from all directions, yet revenue streams only travel along a few
routes across these numerous departments. With so many sources of data on financial
activities, mistakes and omissions might easily go overlooked, leading to problematic
and challenging-to-understand issues. Why corruption frequently goes undiscovered in
some government areas is explained by the complexity and vast number of data
required to find such errors. Nonprofit organizations and public postsecondary
institutions in the private sector struggle to identify financial management mistakes as
well. Despite the size and complexity of these enterprises, analyzing public reporting
materials takes far less time. Because of this, nonprofit organizations and public
universities tend to experience financial management issues more quickly than
governmental organizations. The Philippines' public finance system typically evolved in
five stages. It starts off by (1) establishing monetary and fiscal policy. The term "fiscal
policy" refers to decisions made about taxation, other sources of income, spending, and
borrowing that are meant to support the stabilization and expansion of the economy.
The level of the money supply in the economy, on the other hand, is thought to be
influenced by monetary policy. Fiscal and monetary policy are developed in conformity
with the International Monetary Fund's (IMF) structural adjustment plans (SAPs) (IMF).
The cycle is followed by the (2) production of income from taxes and other sources. Any
monetary inflows into the national government's (NG) treasury that are received to pay
for government expenses but do not raise the NG's liabilities are referred to as revenue.
On the other hand, a tax is a mandatory payment required by law and collected by the
government for a public purpose. It is thought of as the primary source of the national
budget. The Bureau of Internal Revenue and the Bureau of Customs are the main tax
collection organizations for the federal government.