Definition of Budgetary Principles | Meaning and Concept

The budget is responsible for negotiating and calculating in advance the income and expenses of a financial activity (family, personal, a company, a government, a business, an office) during a period, on an annual basis. It is a procedure of action to fulfill a foreseen end, indicated in values ​​and economic terms that must be fulfilled in a categorical time and under certain predicted situations, this notion is used to each commitment center of the organization. The budget is the tool of annual progress of the institutions or companies whose programs and projects are manifested for a term of one year.



On the other hand, it is said that budgetary principles are all those rules that establish the content and scope of budgets , forming, from the formal point of view, a guarantee of the rights of the administered. In addition, they reflect the existing political criteria on the role of local entities, as well as the need for clarity in the management of public revenues and expenditures.

It is important to mention that the traditional categorizations of the principles that govern the municipal budgets differentiate between political, accounting and economic principles. The first group includes the principles of competence , generality, unity, singularity, non-simulation, equalization and propaganda . The precepts of the area of ​​accounting are those of gross budget, cash unit and description, and finally, the economic principles are those of proportion, minimum management and neutrality.

Political Principles

Principle of generality: the budget must attach all income and cats that cause the financial activity of the state without any deletions.

Principle of competition: the Legislative Power is the only one that belongs to conclude what the payments and collections that allow the realization of the budget have to be, only it represents the sovereign power of the citizenship.

Budget unit principle: all state actions must be accumulated in a single statement of income and expenses.

Principle of publicity: all the stages through which the budget document passes must be public.

Annuity principle: the budget is an order transitorily given by the Legislature to the Executive, so it refers to a specific time (usually the year). The budget is an installation of a cyclical nature that is repeated every year.

Principle of clarity: the budget document must be prepared in a natural language so that it can be understood by the majority of the population.

Principle of specialty: the authorization to spend granted to the executive through the budget is not a generic allowance of expenditure, but determined and restricted, which also has three different meanings: qualitative specialty, quantitative specialty and temporary specialty.

Accounting Principles

Gross budget principle: (accounting word of the principle of generality) budget items should always arise at their gross value (without deductions).

Principle of specification: (accounting term of the specialty principle) all income and payments must be cataloged according to logical criteria determined according to their objective nature.

Cash unit principle: (accounting word of the unit principle) all income and payments that allow the realization must be grouped in a single treasury to provide control.

Beginning of closed exercise: (accounting term of the principle of annuity) the budget accounts are closed with their performance.

Economic principles

Limitation of public spending: for traditional economists, public spending was unproductive consumption, restricting public expenditures to save .

Principle of self-liquidation of debt: the original indebtedness of the public sector should only be used to investpublic investment expenses.

Tax naturalness: the loan of a small and selective list of public expenses must be done through taxes that do not separate anyone or anything. For the traditional, the tax should not hinder the economic advance, because they distrusted that the state was able to effect political social through the budget.

Principle of annual budgetary balance: accredited as the " golden rule " of the classic treasury. It is considered that budgetary expenditures had to be invested by ordinary public income from representation, since considering public expenditure as use and not as investment, the budgetary balance had the advantage of restricting its figures to what could be collected through taxes.