Local authorities decide on medium-term local budget expenditure plans and annual local budget expenditure estimates within the framework of central government regulations; local budget expenditure execution organizations must comply with the decisions of state authorities.
The development and decision of the State budget expenditure plan and estimate, the organization of implementation of the plan and estimate, and the finalization of the local budget expenditure must comply with the provisions of the State's legal documents. All levels, sectors, budget estimate units, organizations and individuals participating in the development, implementation, and finalization of the local budget expenditure must comply with the procedures, schedules, methods, forms, etc. prescribed by competent state agencies. The accounting of local budget expenditure must comply with the provisions on the system of state budget items, accounting vouchers and books, accounting operations, etc. The procedures for developing investment projects and planning investment capital, making advances and payments for construction investment capital from the local budget, and the procedures for making advances and payments for local budget expenditure must strictly comply with the provisions of law.
Recognizing this characteristic shows that the legality and administrative nature of state budget expenditure management in general and local budget expenditure management in particular is very high. Unnecessary administrative procedures in state budget expenditure management are one of the reasons for the reduction in the efficiency of local budget expenditures. Therefore, state budget and local budget expenditure management needs to focus on streamlining administrative procedures, enhancing decentralization and accountability for all levels, sectors, management agencies, budgeting units and local budget-using units to improve the efficiency of local budget expenditures.
1.2.2. Principles of local budget expenditure management
1.2.2.1. Budget management
Local government expenditures may only be made according to the budget expenditure estimates assigned by competent authorities. All local government expenditure needs must be estimated and may only be made according to the estimates decided by competent authorities to ensure the goal of fiscal discipline.
All local budget expenditure tasks must be estimated and fully summarized into the local budget expenditure estimate according to the prescribed schedule to be submitted to the competent authority for decision. The allocation and assignment of local budget expenditure estimates must be consistent with the budget estimate in terms of both total amount and details for each assigned field and expenditure task. The financial agency is responsible for
responsible for checking the allocation of the local budget expenditure estimates to budget-using units; in case the allocation is not consistent with the content in the budget estimates assigned by competent state agencies, or is not in accordance with policies and regulations, the budget allocation agency shall be requested to make adjustments. Apart from the competent agency assigning the budget estimates, no organization or individual shall be allowed to change the assigned budget expenditure tasks. Adjustments and supplements to the local budget expenditure estimates must be made in accordance with the correct authority.
During the budget execution process, the financial agency is responsible for ensuring the budget source and the State Treasury is responsible for ensuring the funds to promptly pay for the tasks of the local budget expenditure according to the estimate and progress of the expenditure. Budget-using units must use the budget according to the estimate and progress of the expenditure.
The final settlement of local budget expenditures must assess the implementation of the assigned budget expenditure estimates. The content of the report on the final settlement of local budget expenditures must be consistent with the content recorded in the assigned budget estimates. Only final settlement of local budget expenditures included in the assigned budget expenditure estimates is performed.
1.2.2.2. Correct regime, standards, and budget expenditure norms
The general state budget expenditure norm and the local budget expenditure norm in particular are the budget levels determined for a unit subject to calculating the budget expenditure norm. According to the purpose of use, the budget expenditure norm includes the budget allocation norm and the usage norm or budget expenditure norm. Local budget expenditure must comply with the regime, standards, and norms prescribed by the competent authority.
Budget allocation norms are the budget levels allocated to a budget allocation unit. Budget allocation norms prescribed by competent authorities are the legal basis for determining the budget ceiling and developing local budget expenditure estimates of all levels and local budget estimate units.
Budget usage norms are the budget levels used for a budget-using unit or object. Budget usage norms prescribed by competent authorities are the legal basis for controlling budget expenditures and use in budget-using units, mainly used in the implementation and settlement of local budget expenditures.
In addition, budget usage norms are also used to build budget expenditure estimates for expenditure items and items that do not have budget allocation norms.
1.2.2.3. Year
The principle of annual management is a classic principle in state budget management. Local budget expenditure management is carried out according to each budget year. The budget year is equal to the calendar year. Annual management of local budget aims to ensure fiscal discipline, encourage good spending planning and allow detailed examination of budget expenditure policies of all levels and annual budget estimate units.
The local budget must be prepared, implemented and settled according to the budget year. State power agencies must decide on the annual budget expenditure estimates. The local budget expenditure estimates approved for the budget year are only valid for implementation during the budget year. At the end of the budget year, unused budget expenditure estimates will be canceled. The principle of annual budget management does not allow for the transfer of budget sources from the previous year to the following year or the advance of the next year's budget estimates for use in the current budget year.
1.2.2.4. Publicity and transparency
Publicity and transparency in the management of state budget expenditures are understood as information on state budget expenditures being publicly disclosed fully, promptly, accurately, easily understood and suitable for those who need to access the information.
Publicity and transparency in the management of local budget expenditures aim to enhance accountability, internal supervision and external supervision of the implementation of budget expenditure tasks of governments at all levels and budget estimate units; thereby contributing to preventing loss, waste, corruption and ensuring fiscal discipline, allocation efficiency and efficiency of local budget expenditure activities.
In addition to publicizing and making transparent the provisions of law, regimes, standards and norms on budget expenditures, publicizing the local budget must publicize budget expenditure documents and procedures. Documents on local budget expenditures that must be made public include: budget expenditure estimates submitted to local state power agencies; budget expenditure estimates decided by competent authorities; reports on the situation.
implementation of budget expenditures; budget expenditure settlement approved by competent authorities; estimates, implementation status, budget expenditure settlement of budget estimate units, organizations supported by the local government budget and investment programs and projects in construction using local government budget funds. The publicized contents include: data and reports explaining the budget expenditure estimates submitted to local state power agencies, estimates decided by competent authorities, implementation status of local government budget expenditures and settlement of local government budget expenditures; results of implementation of recommendations of the State Audit.
Disclosure of local budget expenditures must be carried out promptly and can be carried out in one or several forms: announcement at meetings, posting at the headquarters of agencies, organizations and units; issuing publications; written notice to relevant agencies, organizations, units and individuals; posting on electronic information pages; announcement on mass media.
Publicity of budget expenditure procedures includes regulations on processes, procedures for control, advance payment, allocation, and payment of budget expenditures. Publicity is carried out in the form of posting at transaction locations and publication on the websites of agencies related to local budget revenue and expenditure.
1.2.2.5. Management by results
Budget expenditure management based on results is the establishment, allocation, implementation and settlement of budget expenditures based on clearly defining budget expenditures associated with tasks, services and products that need to be completed with volume, quantity and quality, prescribed technical standards and socio-economic impacts.
Managing budget expenditures based on results aims to achieve the goals of allocation efficiency and operational efficiency in implementing local budget expenditure tasks.
The results of implementing budget expenditure tasks have different levels such as performance results or outputs, development results... Budget allocation to implement state budget expenditure tasks requires linking with strategic priority goals of policies and socio-economic development plans to achieve the set socio-economic development results; based on macroeconomic forecasts, clear budget allocation priority criteria and medium-term budget capacity. Using local budgets to implement
Expenditure tasks must achieve the results of performing the tasks of expenditure items and within the budget estimates decided by competent authorities.
The budget for local budget expenditures must clearly present and explain the results of the implementation of spending tasks. During the budget implementation process, the financial agency is responsible for ensuring the budget source and the State Treasury is responsible for ensuring the funds to promptly pay for local budget expenditure tasks in accordance with the progress and results of the implementation of spending tasks. Budget-using units must use the budget in accordance with the progress and results of the implementation of assigned spending tasks.
The final settlement report of the budget using unit, the superior budget estimate unit, and the local budget must be accompanied by an explanatory note assessing the results and effectiveness of budget expenditures associated with the results of the implementation of tasks of the unit, locality, field, program, and assigned target.
Budget expenditure management based on results applies to budget spending units that meet the following conditions :
- Determine volume, quantity, quality, and completion time.
- There is a basis and basis for calculation to establish and assign budget estimates according to technical and economic standards, spending standards or the value of tasks, services, and equivalent products of the same type provided under similar conditions; including taxes, fees, and charges payable according to regulations.
- Have criteria and mechanisms to monitor and evaluate task performance.
- There is a written agreement between the task assigning agency and the task receiving agency on budget expenditure management based on task performance results.
Budget expenditure management based on results is applied according to the following principles :
- Increasing authority is associated with increasing personal responsibility and self-responsibility before the law of unit heads.
- Simplify the budget expenditure management process in expenditure control and budget settlement.
- The volume, quantity, quality, technical standards, delivery time, and cost estimates of tasks, services, and products must be guaranteed to be at least equal to or
better than the input-based budgeting method.
1.2.3. Method of managing local budget expenditures
There are many specific methods of budget expenditure management applied in different countries. However, based on the focus of control in budget expenditure management and the level of budget linkage with budget expenditure results, budget expenditure management includes two basic methods: budget expenditure management based on input; budget expenditure management based on results.
1.2.3.1. Budget expenditure management by input
Budget expenditure management by input, also known as the traditional budget expenditure management method, appeared in the late 19th century. Budget expenditure management by input is a management method that focuses on the costs of inputs in the production process, providing goods and services according to the regimes, standards, and budget usage norms prescribed by competent state agencies.
The budget is managed in detail according to the lines corresponding to the inputs of the production and supply of goods and services of the budget-using units. Management of the process of budget preparation, implementation and settlement focuses on compliance and control of compliance with inputs according to the correct regime, standards and norms of budget use.
The method of managing budget expenditures based on input is easy to control; easy to implement; prevents arbitrariness in the use of local budgets; contributes to ensuring fiscal discipline because budget spending units can hardly spend more than the allocated budget. However, the method of managing budget expenditures based on input causes many procedural complications when spending units need to adjust the allocated budget items; the efficiency of allocation and the efficiency of operations in budget expenditure management have not been focused on, thereby limiting the accountability for budget expenditure results.
1.2.3.2. Results-based budget management
Since the 1990s, results-based management has been widely applied in both the private and public sectors, in developed and developing countries. Accordingly, public expenditure management, state budget expenditure management in general and local budget expenditure management in particular, has been transformed.
Gradually move from input-based management to results-based management.
Results-based budget management is a management method that focuses on the results of budget expenditures.
Managing the process of budget preparation, implementation and settlement is closely linked to the results of expenditures. Preparing the local budget must clearly present the target results to be achieved in order to have a basis for choosing priorities for budget allocation based on results. Implementation and settlement of local budget expenditures are linked to the level of achievement of committed target results in both quantity and quality. Monitoring and evaluating budget expenditures based on results is the basis for payment and settlement of local budget expenditures.
Budget expenditure results have different levels. The direct results of expenditures are outputs. Direct and indirect impacts or short-term and long-term impacts are the development results of budget expenditures. Therefore, budget expenditure management according to results has different levels.
Level of completion | fruit | |||||||
Input | Work | Output | Result direct, short term | Indirect, long-term results | ||||
Development results | ||||||||
Figure 1.1. Logical framework of development results | sea | |||||||
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Source: Bui Tien Hanh, 2018 [10]
Development outcomes are socio-economic changes due to the impact and influence of outputs or goods and services created. Socio-economic changes due to the impact of outputs can be quantitative or qualitative changes and increase social welfare, reflecting the desired socio-economic development goals. Development outcomes can be direct or indirect impacts, short-term or long-term results of outputs.
Outputs are goods and services created by organizations, agencies and units.
and supply to society. The outputs or goods and services provided by organizations, agencies and units to society must aim to satisfy social needs or contribute to socio-economic development.
Activities are actions, work or tasks carried out or performed by organizations, agencies and units to transform input factors such as human resources, material resources, financial resources... to create outputs.
Inputs are resources used by organizations, agencies, and units to carry out activities to create intended outputs. To have inputs, organizations, agencies, and units must have a budget to cover input costs.
Management of state budget expenditures based on results has the following basic characteristics :
- Must determine the results of policies, programs, projects and tasks using NSDP.
- Have a system to evaluate the results of policies, programs, projects and tasks using NSDP.
- Allocate and use local budget according to the results of policies, programs, projects and tasks using local budget that have been evaluated.
By linking the budget with outputs and outputs with development results, budget expenditure management based on results enhances efficiency and effectiveness in allocating and using the State budget; promotes the autonomy and responsibility of budget-using units; and reduces administrative procedures in budget expenditure management. Efficiency reflects the proportional relationship between outputs and inputs or the proportional relationship between outputs and the budget allocated and used to create outputs. Effectiveness reflects the impact of outputs on desired socio-economic development results or indicates the level of achievement of socio-economic goals of the allocated and used budget.
However, managing local budget expenditures based on results poses challenges such as how to identify specific results of policies, programs, projects and tasks using local budgets; establishing a comprehensive and transparent information system; building a monitoring and evaluation system based on results; and management capacity of local authorities at all levels, budgeting units and units using local budgets.
The subjects implementing NSDP management according to task performance results are: