Budgeting starts with the budget and ends with the financial statement, forming an endless cycle. The scope includes planning, compilation and review of budget, implementation and control of budget, and preparation and review of financial statement.
1. Planning, compilation and review of Budget
(1)General Budget for Taipei Municipal Government (TMG)
The budget is a financial plan according to which a government carries out administration programs to attain the policy goals it has set. The budget is also a numerical presentation of the government's general administration. A government must draw up a program and raise the required funds before it launches a construction project or before it starts to provide services. In this way, it can smoothly carry out administration programs and provide the optimal allocation of resources. Each year from March, the Taipei City Government (TCG) will start to prepare the general budget proposal of TMG in accordance with the Budget Act and Principles for Preparing Central and Local Government Budget, as well as the Manual for Preparing TMG General Budget. In addition, the general budget proposal shall be prepared sequentially based on budget execution and financial condition of previous years. Then the general budget proposal will be submitted to Taipei City Council for review before the end of August.
(2)Subordinate Agency Budget and Consolidated Table
The operation of municipal business is a very important area of municipal construction, which is also prepared each year from March. The municipal business, divided into equity special fund and administration special fund, is operated under four important principles, including speeding up municipal construction, satisfying the demand of citizens, improving the welfare of citizens, and turning Taipei city into an international metropolis of industry and commerce. Based on the rule of commercial operation, the budget of equity special fund is operated to achieve three goals: improving operation performance, minimizing loss of profit, and maximizing profit of business. As to administration special fund, it should reach the settled goal of fund under the principle of maximizing benefit. Additionally, based on the autarkical principle, the administration special fund is also required to obtain more financial sources that can be repaid by itself and recover whole operation cost in order to reduce its dependence on municipal finance. The administration special fund should also be prepared in accordance with the Budget Act, budgeting policy of TCG, and other related rules. It should be submitted to Taipei City Council for review with the TMG General Budget Proposal.
(3)Relation among General Budget, Agency Budget, and Subordinate Agency Budget
The general budget for TMG consists of the total amount of budgetary revenue and expenditure for 25 competent agencies with their subordinates, which totals 117 agency budgets, and the required share of budgetary revenue and expenditure for 4 enterprise funds with 1 debt service fund, 12 operations funds, 14 special revenue funds, which totals 31 subordinate agency budgets. In addition, raising of debt, revenue from surplus of previous fiscal year and debt repayment are also included. (The amount of profits to be paid to the treasury, losses to be made up by the treasury and the increase or withdrawal of government investment of the Enterprise Fund of subordinate agency budgets shall be compiled into the general budget; for other categories of the Special Fund, losses to be made up by the treasury and the amount to be paid to the treasury shall be compiled into the general budget.)
(4)General Budget Addition/Reduction Plan or Special Budget Proposal
The general budget proposal of TMG is prepared once a year. During a fiscal year, any major administrative event may take place. A general budget addition/reduction plan or special budget proposal, which is independent from the general budget, shall be submitted in accordance with the Budget Act to meet requirements of such an event. The compilation, review, implementation and financial statement preparation of the plan or special budget shall generally follow the rules governing the general budget of TMG.
2. Budget Implementation and Control
The budget is carried out and controlled in accordance with the Budget Act, Accounting Act, Regulations for Execution of TMG General Budget, Directions for Execution of TMG Agency Budget, and Directions for Execution of Subordinate Agency Budget. The main operations are listed below:
(1)Planning and Approval of Distribution budget
a.The distribution of budget shall be carried out in accordance with the executive progress of programs. Based on accurate planning and control, it is able to achieve a perfect financial arrangement. Before the budget is implemented, each agency should prepare distribution budget, and submit it to the Department of Budget, Accounting and Statistics (DBAS) for approval. During a fiscal year, if any agency needs to change original execution program or adjust executive progress other than those distribution budgets whose execution periods expired, it should apply to modify the distribution budget for collection or expenditure in advance.
b.Restriction on Shifting Fund for Undesignated Purposes
Shifting funds from one finance activity to another activity is an important measure allowing flexibility in the execution of budget. Attaining the goals set for administrative programs depends on the flexible execution of budget In order to meet the actual demand of each agency, the Budget Act restricts such shifting to a limited number of accounts. Furthermore, in order to permit flexibility in the execution of budget and, at the same time, control of such execution, the DBAS shall set a limit on the ratio of the fund that could be shifted in or out of an account for sub-program.
c.During the period from the beginning of the budget preparation to the time of execution, some unanticipated causes or socioeconomic changes may make the budget insufficient or unable to meet the requirements. To allow flexibility and attain the goals set for administrative programs, the Budget Act authorizes the setting of the reserve fund. The first reserve fund is set in the budget of competent agencies and the secondary reserve fund is set in the general budget for TMG. In addition, some overall arranging accounts are set in general budget, including National Compensation Foundation, Reserve Foundation for Disaster, Retirement & Consolation Pay for Government Employees.
d.Evaluation of Budget Execution Performance
(a)In order to monitor government agencies for saving regular expenditures and ensuring the execution of capital expenditures, the budget execution performance of each government agency will be monthly submitted to Taipei City Executive Meeting for evaluation.
(b)Establish the "Awards and Penalties Directions for Evaluation of Budget Execution Performance of Agencies of Taipei City Government". According to this direction, if the actual execution ratio of one agency which is related to the annual revenue, capital expenditure planning budget, and supplement will be granted from the central government cannot reach 80% without any uncontrollable reasons, persons in charge of the agency will be punished. On the other hand, persons in charge of the agency with excellent budget execution performance will be rewarded.
(2)Execution and Control of the Subordinate agency budget
a.Stage-by-stage Execution Plan and Receipt/Payment Estimate Table for Reference
Based on actual operation situations, each business agency (institute) shall estimate all possible changes and divide one year into two terms, then verify and prepare the stage-by-stage execution plan and receipt/payment estimate table with prudence. Next, the agency should submit its associated plan and table to competent agency for a reference of evaluation.
b.Approval for Financial Statement Proposal with Receipt/Payment Adjustment
According to Article 87 of the Budget Act, the receipt/payment adjustment for operation requirement shall be submitted to the agency's chief for approval with the subordinate agency budget, then it can be incorporated into the financial statement. Special items, such as budget for new employees, shall be submitted to TCG for approval. Then, it will be counted into financial statement.
c.Approval for Supplementary Budget Proposal
According to Article 88 of the Budget Act, Implementation of the Subordinate Agency Budget, if there are major changes in the management environment or for normal operation needs, these changes must be done with approval by the TCG. However, when it involves construction, improvement, expansion of fixed assets, capital reinvestment, sale of assets, raising of long-term debt and debt repayment, supplementary budget procedure shall be required. If the amount is over NT$ 50 million per item, it should be submitted to Taipei City Council for reference.
d.Evaluation of Budget Execution Performance
(a)The budget execution performance of subordinate government agencies will be reported in Taipei City Executive Meeting monthly. Those agencies whose execution is behind over 20% will be urged to improve the situation.
(b)Establish the "Awards and Penalties Directions for Evaluation of Budget Execution Performance of Agencies of Taipei City Government". According to this direction, if the actual execution ratio of any agency which is related to the construction, improvement and expansion plan of fixed assets, increasing the long-term investment of funds, receivables plan with ongoing constructions, and profit/loss or surplus/deficiency falls behind over 20% without any uncontrollable reasons, persons in charge of the agency will be punished. On the other hand, persons in charge of the agency with excellent budget execution performance will be rewarded.
3. The Preparation and Review of Financial Statement
(1)Preparing General Financial Statement of TMG
The financial statement is the result of budget execution. In accordance with the Financial Statement Act and the Manual for Preparing TMG General Financial Statement, the financial statement of TCG agencies should be prepared before February 20 of the next year and transmitted to Taipei Municipality Audit Division (TMAD), Department of Finance, DBAS and competent agencies. Based on this financial statement, the DBAS can evaluate the budget execution performance of each agency. The DBAS shall submit the settlement to Taipei City Executive Meeting for first approval before the end of next April and transmit it to TMAD for review. Thus, the financial statement could show not only concrete achievements of TCG's administration, but also the trends of finance and economic development of TCG. Furthermore, it could measure and reflect the performance and shortcomings of administration programs and could be used as a reference when the budget is prepared, the administration guidelines set, and the administration programs improved in the future.
(2)Preparing Subordinate Agency Financial Statement and Consolidated Tables of General Financial Statement of Taipei Municipal Government
The subordinate agencies shall also prepare their financial statement according to the Financial Statement Act and the Manual for Preparing TMG Subordinate Agency Financial Statement for TMG. Thus, the DBAS may not only evaluate each agency's performance with the growth trend but also disclose its financial situation.
Department of Budget, Accounting and Statistics, Taipei City Government
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Copyright Department of Budget, Accounting and Statistics, Taipei City Government
5F/6F, No.1, City Hall Rd., Taipei, 11008, Taiwan, R.O.C.
TEL:886-2-27208889Updated: 2017/6/23 11:01:37