Budget Execution & Payroll Forecasting

Budget Execution and Payroll Forecasting

Budget Execution is the governmental term for forecasting and analysis that is typically used in the commercial sector. This process and its related sub-processes seek to monitor spending against the budget, make adjustments as needs and circumstances arise and provide adequate reporting – including justification, reasoning for changes, and reallocation of resources.

Monitoring as Part of Budget Execution

Each of the agencies has developed a spending plan for the year and as actual spend starts coming through the day to day functioning of the agency, it is compared to or tracked against these spending plans. This is done through the Financial Review Process (FRP) reports and activities to create these reports. Officers and support staff work to summarize current month spending, spend-to-date, and forecast projections for the remainder of the fiscal year.

This is done in order to carefully monitor activities and spending against the approved budget or CR with the intent of achieving agency operational excellence. These monitoring activities allow for early identification of pressures or new or differing needs that require review and could lead to potential changes in spending patterns and/or adjustments to the budget.

Adjusting as Part of Budget Execution

One of the common terms in the federal budget process is re-programming. This represents a movement of budget authority from within or between agency priorities. This shift in the budget could be a result of changed priorities, un-expected internal circumstances, external factors not foreseeable at the time of budget creation or spending plan creation. These reprogramming’s go through a formal process of identifying the changes, detailed supporting write-ups or justification, approvals and re-appropriation as needed.

Other forms of adjustments can be grant modifications, supplemental budget requests, rescissions, and emergency requests. All having the same concept of justification, review, and approval.Adjustments can span any number of line items that make up an agency budget. It could be payroll related if increases or decreases of personnel are needed or physical assets to be acquired to meet the circumstance.

Reporting as Part of Budget Execution

Question: What is Federal Financial Reporting Really?

According to the Federal Accounting Standards Advisory Board (FASAB), the committee that establishes accounting standards for federal entities:

Financial reporting may be defined as the process of recording, reporting, and interpreting, in terms of money, an entity’s financial transactions and events with economic consequences for the entity. Reporting in the federal government also deals with nonfinancial information about service efforts and accomplishments of the government, i.e., the inputs of resources used by the government, the outputs of goods and services provided by the government, the outcomes and impacts of governmental programs, and the relationships among these elements.

There are four objectives to federal financial reporting according to FASAB “Authoritative Source of Guidance” which are as follows:

  • Budgetary Integrity
  • Operating Performance
  • Stewardship
  • Systems & Control

From a budget execution perspective, reporting is a key element in the budget execution process and falls into the budget integrity objective of federal financial reporting. Budgeted amount and spending against this budget with supporting summaries and differing views are captured in the Financial Status Reports (FSRs). The reporting cycle starts with data as of December, the 3rd month in the government’s fiscal calendar, and ends at the end of August – the 11th month of the fiscal year.