What Financial Control Is

In one line

Four stages: the executive estimates, the legislature authorises, the executive spends, and an independent auditor reports to the legislature, which then examines what he found.

In the wording a student can write in an exam: financial control is the aggregate of the constitutional and statutory arrangements by which public money is estimated, authorised, spent and accounted for, and it operates in a cycle of four stages; the estimate, in the annual financial statement laid before the House under article 112; the authorisation, in the demands for grants voted under article 113 and the Appropriation Act passed under article 114, article 266(3) forbidding appropriation from the Consolidated Fund except in accordance with law and article 265 forbidding the levy or collection of any tax except by authority of law; the expenditure, by the executive within that authorisation; and the audit, by the Comptroller and Auditor General under article 148, whose reports are laid before the House under article 151 and examined by the Public Accounts Committee.

The four stages

Stage one: the estimate. The executive prepares the annual financial statement and the President causes it to be laid before both Houses: article 112, chapter 1320. What is laid shows charged and votable expenditure separately.

Stage two: the authorisation. The votable part goes to the House of the People as demands for grants, which it may assent to, refuse, or reduce: article 113, chapter 1330. The grants are then converted into an Appropriation Act: article 114. And two prohibitions lock the stage: article 265, no tax levied or collected except by authority of law; article 266(3), no money appropriated except in accordance with law.

Stage three: the expenditure. The executive spends, within the appropriation, under the financial rules.

Stage four: audit and examination. The Comptroller and Auditor General audits under the law made under article 149, and his reports are submitted to the President and laid before each House under article 151; the Public Accounts Committee then examines the accounting officer on them, chapter 1010.

Say the four stages at the head of any answer on this label and everything that follows has a place. Chapter 1320 is stage one; 1330 and 1340 are stage two; 1360 to 1500 are stage four; and 1530 asks whether the cycle works.

Why the cycle is a cycle and not a line

Because stage four feeds back into stage two.

Article 115 provides for a supplementary, additional or excess grant, chapter 1340. An excess grant is money already spent beyond what was authorised, and it must be regularised by the House afterwards.

And the House does not regularise it blind. The excess is established by the auditor, examined by the Public Accounts Committee, and only then put to the House. So stage four is not the end of the process; it is the precondition of a later stage two. That is the sentence that turns four items into a cycle, and chapter 1340 works it.