No. 3

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The Budget: A Guarantee for the Transparency of the Public Sector

18 June 2001

Studies

RiTo No. 3, 2001

The budget of the public sector determines the trustworthiness and effectiveness of a state and has a significant effect on other sectors within it. As a result, the organisation of budgeting continues to remain a subject for topical discussion. Different budgeting methods have their respective strengths and weaknesses: if the mathematical time sets method is suitable for financial managers then the result-based verbal method is much more suitable for politicians. The price of realising these methods is also very different.

A budget’s level of accuracy is a relatively complicated issue. From the perspective of financial management a budget’s thoroughness is a virtue. The precise forwarding of such a budget to a legislative body, however, would stun the operational ability of both organs. In addition, it would not be comprehensible to the public. As a result, a legislative body has to be presented with a budget in its summary form (e.g. institutions or organisations in a combined reporting form) for approval and supplement it with a detailed comparative report in the form of an explanatory letter. In the case of the public, a contribution should be made towards the development of general budgeting skills, at least in higher education. This is because this particular skill could affect most the everyday living environment and the general well being of citizens.

In order to transform budgetary information (reports) into a comprehensible form, its huge mathematical tables have to be changed into a visually understandable appearance. This can be combined with the opportunities offered by the digital card, hence taking a further step in creating a virtual Estonia.

In order to increase the operativeness of managing the resources of the public sector, a transfer into real time, the accounting and budgeting systems have to be integrated into a single computer program. By equipping such an integrated program with various report generators, which would present necessary intersections and analysis for required periods, it is in turn possible to use this information for the modelling of future processes, and through this, the reduction of risks.

Several solutions to the above mentioned problems are beginning to become rooted into the budget organisation of Estonia’s public sector.

Full article in Estonian

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