Public vs Private Sector Budgeting

The mainstream widespread budgets in the private sector are those for cash flow, income, expenditure and capital expenditure. Private sector organisations are often divided in terms of cost centres (which control a given area of costs) and/or profit centres (which control a given area of profit and are therefore budgeting for both income and costs. Private sector organisations are also often keen to use budgets as a management tool at various different levels of the organisation. Accountants in the private sector will often focus most closely on the cash flow budget, which is critical for the short-term future of their organisation.

The Government – for managing, monitoring and controlling the Budget, and accountability to Parliament for public finances, Ministries, departments and other divisions of their government, for their share of spending, Parliament – for ultimate oversight and approval of the Budget, and electoral accountability for public finances, Donors, lenders and international and development bodies, for how external revenues are spent. Any number of “special interest” groups – commercial organisations, labour and social groups, political organisations, all of which have their own special interest in the government’s plans for raising revenue expenditure like Public sector organisations and publicly funded bodies and the public for any number of reasons, including tax policy and alleviation of poverty as a tentative flow.

Suffice it to say that by and large to achieve public sector objectives of allocation of scarce resources and poverty alleviation to promote development and growth to balance short and long term requirements to reduce corruption by increasing accountability. Macro-Economic reasons to control public finances, to control inflation, to promote growth, employment and wealth creation to generate or augment surpluses on overseas trade