How is budget examination conducted under
PPBS?
Once
performance indicators are developed, program managers will proceed to set
performance targets - or planned levels of performance - to accomplish in the coming
fiscal year and the budget they consider would adequately cover the cost of
achieving those targets.
Performance targets provide an appropriate reference point for
comparison. They have an important motivational impact and help communicate the
main priorities of top management in more tangible terms. If realistically set and communicated, such
targets provide a goal to strive for.
Budget
examination at the ministry level and at the Ministry of Finance should focus
more on the output targets. In
particular, budget examination should consider whether the targets set:
o
Conform to past
performance trends;
o
Are ambitious yet
realistic for the budget proposed; and
o
Consistent with
performance levels of similar organizations world-wide and international
best-practices.
Budget
examinations use previous performance data and other international benchmarks
to challenge managers to establish more demanding yet realistic targets that
are a better match for the proposed budget.
To
do so, budget examination monitors previous budget and performance achievement,
that is,
assessing to what extent the planned levels of performance have been
achieved.
For the
purpose of budgeting and budget examination, a program manager is required to
report - after the previous fiscal year ends - the levels of performance reached
for each indicator. Such reporting will
highlight whether the activity has achieved the performance levels set for the
previous year. If it has not, the
program manager would then need to report what went wrong, and what needs to be
done to ensure that the activity will achieve its performance targets in the
future.
This
performance monitoring information will not only help
program managers to budget and target performance well, it would also help
budget examiners to evaluate resource requirements for the proposed levels of
performance achievement in the coming year.
Ministry of
Planning, Kuwait
20/9/03
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