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RHD Operational Procedure – Management Services Wing
 
Audit and Accounts - Accounts
 
OP/AA/2.1- Preparation of RHD Revenue & Development Budgets
 
Purpose and Scope :

This procedure is for the supervision, co-ordination and management of the RHD system for preparation of Departmental Revenue & Development budgets and finalisation of budgetary submissions to the MoC. This includes preparation of the Budget note.
 
Definitions :

Revenue Budget - In the RHD context, the Revenue Budget represents the whole process for securing an allocation of funds from central government for expenditure on pre-determined RHD revenue expenditure activities. The process is intended to act as a means of allocating financial resources to achieve a specific set of objectives. Within RHD, the Revenue Budget is sometimes referred to as the 'Non-Development Budget' or as the 'Maintenance Budget' (because 'maintenance costs' constitute the largest proportion of the Revenue Budget).

Development Budget - In the RHD context, the Development Budget represents the whole process for securing allocations of funds from central Government for expenditure on individual, pre-determined RHD development projects. The process is separate, in terms of timing and personnel involvement, from the Revenue Budget above.

MoC - Although RHD's budget submission and internal distribution of allocation is essentially determined within the Department, both budget processes are legally the domains of RHD's host Ministry, the MoC.

Medium Term Budgetary Framework (MTBF) - A key management tool for the strategic allocation of resources in line with pre-determined policies and priorities. In the RHD context, this is a transparent, planning and budget generation process to aid decision making in the allocation of limited central resources between specific activities and individual projects in the RHD sphere of operations, by considering a rolling (e.g. five year) future programme.

RHD Budget Committee - This internal RHD body is drawn from the senior officers involved in the RHD budgetary process. It aims for a more systematic and better co-ordinated approach in all areas of the RHD Budget process to ensure the limited funding available is prioritised in an efficient and timely manner.

Budget Note - This is a detailed document prepared on behalf of the Chief Engineer. It outlines the specific justifications for individual budgetary submissions, to support their inclusion in accordance with departmental priorities and plans.
 
Responsibility :

Divisional Accountant (DA) - The DA will assist in preparing the Revenue Budget submission including the detailed verification of individual budgeted amounts, the confirmation of codings and the overall management of the submission within pre-determined cost limits: for the Development Budget, the DA's main responsibility is to assist the Divisional Officer to ensure PCPs and PPs are compiled in a manner consistent with Departmental objectives and are based on realistic and objective cost estimates. With ongoing projects, there is a similar responsibility to ensure that the project allocations requested have been calculated objectively and accurately and are consistent with the physical works described and proposed.

Divisional Officer - The Divisional Officer has overall responsibility for the calculation, compilation and submission of the divisional Revenue Budget submission, which includes verification of amounts with planned physical works, profiling to appropriate financial periods and confirmation of accuracy and completeness.

For the Development Budget, the Divisional Officers must ensure that PCPs and PPs are consistent with Departmental objectives, have been properly and accurately compiled and that they represent a realistic and objective estimate of the costs anticipated for the physical works specified. With ongoing projects, there is a similar responsibility to ensure that the project allocation requested has been calculated objectively and accurately and that the amounts are consistent with the physical works described and proposed.

RHD Budget Committee -

· Examines the way in which the RHD Budget proposals are prepared and identifies specific weaknesses and areas where improvements can be made.

· Recommends a set of guidelines for efficient budget preparation (within limitations for approval by the Chief Engineer), which should be followed for the preparation of the draft budget.

· Reviews the proposed budget (including T&P budget) and verify this against the approved guidelines, and recommend the draft budget for approval by the Chief Engineer, RHD.

· Assists in recommending rational distribution of budget allocations between different projects and activities, and help ensure productive utilisation of available funds by recommending any necessary re-appropriations.

The principal activities of the Budget Committee are: -

· Review timeliness and quality of individual budget submissions, by exercising a 'quality assurance' role over all aspects of the draft departmental budget submission before it is passed to the Chief Engineer;

· Ensuring mutually dependant activities are reflected (and are consistent) in both the Revenue and Development budgets;

· Preparation of annual departmental budget strategy and procedures for breakdown of budget allocation;

· Reviewing monthly monitoring procedures (to establish whether actual performance is being adequately measured against budget) and quarterly budgetary expenditure patterns;

· Overseeing all patterns and trends of fund utilisation and recommending re-appropriations/ transfers of allocations;

· Ensuring all measures adopted are consistent with GoB regulations;

· Ensuring regular liaison with the Office of the Director, Audit & Accounts and the Financial Management Unit on all areas of budgetary activity.

Additional Chief Engineer - Wings & Zones - are responsible for finalising and consolidating all individual budget requirements into a summarised statement of budgetary requirement in a form suitable for presentation to the Chief Engineer.
 
Method :

4.1 GENERAL POINTS

The Divisional Officers must ensure the budget submitted is transparent & timely, with all individual budgeted amounts clearly defined, accurately calculated and verifiable in relation to physical works or activities proposed. All amounts should be properly coded in line with the classification structure in use (internal and external) and the overall submission is within the pre-determined cost limits.

4.2 REVENUE BUDGET

For the MoC, as with all other Ministries, the Revenue Budget process usually begins in early September each year when the Finance Division of the MoF distributes the 'Budget Submission Forms' for the next financial year. The procedures, which are followed thereafter, are:

· After what should be a short delay to permit review of the submission forms, the MoC passes the submission forms to the Chief Engineer, who in turn relays the documents to the Director-Audit & Accounts. The Director assumes de facto responsibility for co-ordination, submission and collation of the departmental budget (on behalf of the Chief Engineer's Office).

· The forms are circulated down to ACE level, including the seven field zones, Planning & Maintenance Wing and Technical Services Wing, Mechanical Zone and the Security Office of the Chief Engineer.

· Each ACE circulates the budget forms to the Executive Engineers heading all the circles in his region/wing. In the zones, these sixteen circles, in turn circulate them to all 65 divisions who collect data from the sub-divisions.

· The Director A&A should set a deadline for all returns from the ACE's. This should allow adequate time for detailed analysis, review and amendment of the individual submissions. (Currently, this is about a week prior to the deadline for submissions to the MoF. This only gives time to perform a basic check on the accuracy of the submissions and consolidate them into one RHD submission).

· The returns come back by the same route and are consolidated at each step before being passed on. In due course, the Director A&A therefore receives eleven separate consolidated returns. He consolidates this data into one document. Therefore only when all returns are received from the ACE's can he prepare this RHD budget submission. In practice, at least some of the ACE's consistently miss the deadline, so the Director instead prepares estimates on their behalf, based on the experience of previous years and on current levels of expenditure.

· It should be noted that the Executive Engineers have very little meaningful input into the Revenue Budget. In theory they submit details for their area to the ACE. However in practice, the ACE often calculates the estimate without waiting for a return from his sub-ordinate offices (This contrasts sharply with the Development Budget where the Executive Engineers have a very significant input and influence on the overall process).

· Following a final review meeting of the RHD Budget Committee, the Director, Audit & Accounts should consolidate RHD's budget submission into a document that would be approved by the CE, RHD.

· When the departmental submission is received by the MoF (usually late November), it is reviewed (along with all other Ministerial submissions) until February of the following year. A series of Budget meetings then take place. In the last of these meetings (late March) which the Finance Secretary chairs, the MoF presents the final Budget estimate for MoC agreement. This is the last opportunity for the Secretary to argue for amendments to the MoC allocation. In practice, it is very difficult to get an increased allocation at this late stage.

· In early April the Revenue estimates are received by the Cabinet for approval. The Budget is then final and is printed for the Minister of Finance's ' Budget speech' to Parliament in early June.

4.3 DEVELOPMENT BUDGET

The timeframe for the start of the annual Annual Development Programme (ADP) round is much later than for the Revenue Budget, with the call notices for submissions only being issued from the Planning Commission in late February. Clearly, the intention is that all Ministries and Departments will have prepared the appropriate level of detail to support their submissions well in advance. Unfortunately, this is not usually the case in RHD and the call notice prompts the beginning of input preparation. The procedures followed are:

· The Budget process requires individual proposals for individual projects - both for new projects and year-on-year allocations for ongoing projects. Allocations for individual ongoing projects must be consistent with the existing details prescribed in the Departmental Medium Term Budgetary Framework (MTBF)

· The Executive Engineers effectively start the detailed consultation process for new projects which results in the 'Planning & Programming Circle' (Dhaka) preparing 'Project Concept Papers' (PCPs) for all RHD projects.

· The selection process for new projects should be informed by objective evaluation criteria established within the RHD. Evaluation would be based on the economic feasibility study (together with EIA, social impact and technical feasibility), ideally within a uniform appraisal framework, setting out project costs and benefits. These criteria must be applied to clearly evaluate and prioritise projects.

· The Chief Engineer (through the Planning & Programming Circle) will be guided on the number of new projects added to the ADP of RHD by the 'Budget Committee'. The Committee’s advice and analysis should permit the Chief Engineer to act as the primary 'filter' for all the project submissions by considering budget already required for the completion of existing projects (under the MTBF). He should ensure that an adequate regime for project evaluation, with a clear mechanism for rating individual project activities, one against the other, is firmly established within RHD.

· This final list of Projects (both new and ongoing), with associated costs, then passes to the Ministry of Communications, from where it is routed to the Planning Commission for approval. The RHD budget allocations are then dependent on the outcome of negotiations, involving the Planning Commission and various wings and departments of the Ministry of Finance (the RHD and MoC then play a very limited role).
 
References :

a) General Financial Rules

b) Central Public Works Account (CPWA) Code

c) Treasury Rules and Subsidiary Rules

d) Account Code (Volume III)

e) Classification Chart of the Government of Bangladesh (November 1997)

f) Financial Management Reform in the RHD and the role of the FMU (Inception Report -Mar 2001)

g) Project Monthly progress reports
 
Procedure Flowchart :

 


 


 

 

For duties associated with each grade of personnel see

 

Updated on : 1/1/2004

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