PURPOSE OF BUDGETARY ACCOUNTING - 8310

Budgeting is an essential element of the financial planning, control, and evaluation processes of governments.  The purpose of budgetary accounting is to monitor and control the state’s financial activities to the level and purpose specified in the annual Budget Act and other pertinent legislation.  The primary objective is to ensure that expenditures stay within the legal limits provided in the Budget Act and other authorizing legislation. To ensure budgetary control, an agency/department must be able to determine, on an ongoing basis, the balance of resources available for spending for a given purpose and ensure that actual spending does not exceed authorized spending.

State Administrative Manual (SAM) Chapter 6000, Budgeting, describes the state's budget process, which consists of the development of the Governor's Budget, the Legislature's enactment of a budget, and the executive branch's administration of the budget.

Agencies/departments must understand the relationship between budgeting and accounting and the statutory links between these two fiscal disciplines.  For additional information about the relationship and statutory links, refer to the Department of Finance, Budget Analyst Guide. 

The Government Code (GC) sections below require specific linkage between budgeting and accounting:

• GC 13320 requires every state agency/department and court for which an appropriation has been made, to submit for approval to the Department of Finance, a completed and detailed budget with proposed expenditures and estimated revenues for the ensuing fiscal year. The state’s budget format primarily follows the program budget concept.
  
  
• GC 13344 requires state agencies/departments to maintain accounting data for inclusion in the Governor’s Budget, Budget Act and related documents and the Budgetary Legal Basis Annual Report according to the methods and bases in regulations, budget letters and other directives of the Department of Finance.
  
  
• GC 12460 requires the Controller to submit an annual report to the Governor containing a statement of the funds of the state, its revenues, and the public expenditures during the preceding fiscal year. The annual report shall be known as the Budgetary-Legal Basis Annual Report and prepared in a manner that will account for prior year adjustments, fund balances, encumbrances, deferred payroll, revenues, expenditures and other components on the same basis as that of the applicable Governor’s Budget and the Budget Act, as determined by the Director of Finance in consultation with the Controller.

SAM section 7650, describes the Budgetary Accounts.  The budgetary ledger in FI$Cal, also known as Commitment Control, is used to track appropriation, encumbrance, expenditure and reimbursement balances.