Impact of Human Aspects in the Budget

It is no surprise to acknowledge that the entire budget and reporting cycle is an outcome of a complex series of tasks and outputs managed and controlled by individuals either solely (as in the CFO or Municipal Manager) or collectively (as in the elected council body or board of a municipal entity). The success or otherwise of the budget and reporting cycle therefore depends on the contribution of many individuals to do what is required of them.

Whilst there is a potential for human behavior to have a negative impact in achieving the goals of the organisation, public expenditure management will eliminate or attempt to eliminate the risk of negative impacts. The risk can be addressed through the establishment of rules, policies, procedures, roles, responsibilities, codes of behavior and the like, and by making role players accountable for outcomes.

All participants in the budget process must have the skills and capacity to contribute. A lack of skills is often raised in the municipal context as a reason for failure to manage or control the budget appropriately. These issues relate to poor planning, a lack of controls and uncoordinated activities and result in a failure to implement the budget.

Roles and responsibilities need to be clearly defined and adhered to with officials possessing adequate knowledge, skills and experience being a core requirement of the budget and reporting cycle.

The human aspect in budget control therefore makes it a dynamic process. Below are some of the ways humans’ impact on the budget and follow up with some examples of how these can be addressed in the budget and reporting cycle.

The human aspect in budget control therefore makes it a dynamic process. Below are some of the ways humans’ impact on the budget and follow up with some examples of how these can be addressed in the budget and reporting cycle.  

Impact of human aspects on budget preparation process: 

• Potential Negative Impacts: Solutions in     Municipal Context 
• Councilors allocating resources for:    
• Performance budgeting: 
• Personal benefit 
• Measurable performance objectives are linked to IDP objectives 
• Re-election 
• Multi-year budgets focusing on sustainability    over budgeting by managers 
• Zero based budgeting  
• Performance budgeting  
• Interest groups having undue influence: Wider consultation on IDP and budget