Federal government budgeting is the forecast or estimate of revenue and expenditures for each fiscal year. The federal budget, like a household budget, itemizes government spending for the following fiscal year (Amadeo, 2021). Every year on October 1st, the federal government's fiscal year begins. Expenses that are not covered by the budget are classed as mandatory or discretionary. Mandatory expenditure includes entitlement programs like Medicaid, Social Security and Medicare, which are all mandated by law (Kenton, 2020). Permanent appropriation is another term for such costs. Spending that is not required to be approved by individual appropriations bills is known as discretionary spending. The federal budget is supported by tax income, although the United States has had a budget deficit every year since 2001 (and many years before that).

The Government of Malaysia presents federal budgets every year to outline planned government income and spending, expected economic circumstances for the following year, and its fiscal strategy for the coming years. The federal budget contains the government's revenue and expenditure projections, as well as new policy initiatives. Budgets for the federal government are generally issued in October, just before the fiscal year begins. Budgets are also presented by all Malaysian states. Because state finances are reliant on federal funds, state budgets are generally issued after the federal budget. The federal budget is a significant governmental financial plan for the fiscal year that is signed into law by the Yang di-Pertuan Agong after being approved by the Malaysian parliament (Wikipedia, 2021). The Malaysian taxation system raises revenue forecasts outlined in the budget, with government spending accounting for a significant proportion of the total economy. The federal budget, in addition to detailing the government's anticipated income and expenditures, is also a political declaration of the government's goals and priorities, with significant macroeconomic repercussions. In this report, we will be discussing more on the Analysis of Malaysian Federal Government Budgeting.

The Minister of Finance, who usually wears baju Melayu while doing so, announces the budget in the Dewan Rakyat (House of Representatives). The House then votes on the Budget. Budgets represent a vote of confidence in the government, and if the House votes against it, the government will collapse, however this has never occurred to the Prime Minister (Wikipedia, 2021). Almost all opposition parties vote against the budget. Since 2008, the opposition group has prepared a comprehensive alternative budget and presented it alongside the regular budget to the Malaysian people. In minority government situations, the government has typically had to make substantial concessions to one of the smaller parties in order to have the budget passed.

The process of developing a budget is complicated, and it starts with the Federal Government's employees. The Treasury Board Secretariat receives 'The Main Estimates' from the different ministries and agencies that make up the government each year. These documents detail each department's and agency's anticipated spending, tying these proposed costs to programs, objectives, and, ultimately, the present government's priorities. The Treasury Board Secretariat compiles a first recommended budget by combining these budget projections. The budget is then adjusted by the Cabinet and the Prime Minister's Department depending on a variety of political, economic and social variables (Wikipedia, 2021). In fact, decisions are frequently made with the goal of re-election in mind, and so frequently contain benefits for crucial areas and lobby organizations.

2.0 RESEARCH METHOD

In order to complete and achieve the objective of the study, data collection methods are used to gain information on the topic related to “The Federal Government Budgeting”. All of the information presented in this research is secondary data. Secondary data is the data that are collected from reliable resources such as articles, evidence, notes, or reports based on public and unpublished documentary material. The following are the approaches employed in the data collection process:

1. Surfing the Internet. We used ICT facilities to surf the website and obtain information from the internet for reference. Information gathering, and application covered in related topics are gained from e-resources or publications.
2. Reviewing article and book research. Information from Public Sector Accounting books, journals, periodicals and other scientific sources are read and analyzed. The data and information related to the issue will then be gathered

3.0       ANALYSIS AND DISCUSSION

Prior to this analysis, the expenditure estimates discussed and debated annually in Parliament were common practice before they were gazette as a Supply Bill. To explain more about the analysis of the estimated expenditure and revenue of the Malaysian government, we have obtained data from the Ministry of Finance, the Accountant General's Department of Malaysia and the National Audit Department of Malaysia. The data has been compiled for the purpose of adapting to the objectives of this study. We have collected data for the purpose of data comparison for a period of five years from 2017 to 2021. We have also obtained data for year 2016 for the purpose of comparative analysis for the following year. We have conducted horizontal and vertical analysis as well as made comprehensive comparative analysis such as increase and decrease of any amount, drastically changed amount, normal annual change and share and composition of an item or item in the budget details. We also make an analysis with actual expenses and revenue for the purpose of comparison more clearly and comprehensively.

3.1      Deficit Budget         

Deficit is a type of budget in addition to surplus and also balanced. Our analysis found that for the 5 years of our study, Malaysia has adopted a deficit budget. This means that the Government has spent more than what is collected. The highest budget deficit was recorded in 2021. This is the largest expenditure estimate where expenditure exceeds revenue by 30%. A total of RM307.54 billion was made for expenditure compared to the estimated revenue of RM236.89 billion. This is because many allocations will be channeled due to the Pandemic that is plaguing the world at this time. The government has certainly identified the problem of how to get revenue and sustainable spending methods and fiscal analysis, but the people must spend prudently and play their part well so that this bolted annual budget can be utilized properly.

3.2      Changes In Expenditure Budget

The analysis conducted aims to look at trends of change covering the increase or decrease of expenditure estimates made for the period 2017 to 2021. We have detailed these estimates to operating and development expenditure. Operating expenses for charge showed the most significant increase for 2017 compared to 2016 where a 9.21% increase in estimates was made. As for supply expenditure, the highest estimated increase is for 2019 by 12.56% compared to the previous year. There was a decrease in estimates for 2017, 2020 and 2021 compared to the previous year respectively. As for development expenditure, direct sources showed the most significant increase for 2021 of 25.87% while a decrease of 9.73 for 2017. As for loan sources, the most significant increase was for 2019 by 26.53% while the most significant decrease was for 2018 by 53.20%.  No change for contingency source. Overall, for this estimate expenditure, the highest increase is for 2019 by 12.15% over the previous year.

3.3      Share In Expenditure Budget

This analysis aims to see the percentage composition between operating and development expenses as well as details for charge expenditure, supply expenditure, direct sources, loans and also contingency. This analysis makes a comparison between the details and also a comparison between the years. We find that overall the percentage composition is for supply expenditure with the lowest percentage being 53.38% for 2021 while the highest composition is 61.49 for 2019. The smallest composition is for loan sources and contingency. Moreover, the smallest percentage composition is for 2021 for Loan source of 0.55%.

3.4      Estimated Expenditure By Sector

Estimates of expenditure by sector are made with the aim of achieving the original objectives of the allocation made and the distribution of public money is made effectively and prudently. The sectors involved in the distribution of this allocation are comprised of administrative, economic, social, security and other sectors. For the administrative sector, among the estimates made are for general services, refunds and reimbursement, foreign services as well as repairs and renovations. For the economic sector, among these allocations are channeled for transportation, trade and industry, energy and public utilities, agriculture and rural development and environment. For the social sector, it involves education and training, health and housing. The security sector involves internal security and defense. For other sectors, it involves pensions and remuneration as well as expenditure due to national debt. Overall, the largest composition is the economic sector and the social sector exceeding 57.52% to 66.86% respectively. The smallest percentage composition is for the general administration sector at 10.82%. This percentage composition shows how important the economic and social sectors are to the development and management direction of a country.

3.5      Trends in Allocation Changes by Sector

This analysis is made with the aim of looking at the trend of change for each sector between 2017 to 2021. Although the importance of social and economic sectors cannot be denied, there is also a downward trend of operating expenditure estimates for the sector that is for 2017 and 2019 decreased 16.14% respectively. and 32.29%. As for the development estimate, the decrease was for the economic sector by 16.48%. The highest budget increase is for 2017 for the general administration sector of 40.38% for development expenditure. On the other hand, the largest decrease was for the same sector by 54.05% for operating expenditure. Other sectors for development expenditure have not changed for the past 5 years.

3.6      Changes In Estimate Revenue, Composition And Actual Revenue

For the estimated government revenue receipts, our analysis covers the percentage trend of increase and decrease of the estimate, the percentage composition of revenue received as well as analysis of actual receipts to see how it is directly proportional to the relationship of annual expenditure and budget deficit made by the government. As for the trend of changes in revenue estimates, there is a decrease in revenue estimates for 2017, 2020 and 2021 by 2.96%, 7.22% and 3% respectively. An increase was recorded in 2018 and 2019 of 8.65% and 10.65% respectively. As for the composition of the estimated revenue receipts, there is a change in the annual tax rate caused by changes in the individual and corporate tax rates which in turn causes the receipt rate to change.

As for the analysis of actual revenue receipts, the highest percentage increase was for 2019 for non-revenue receipts of 56.16% while the highest decrease was recorded in 2018 for the non-tax revenue category of 28.57%. We were unable to identify this issue further due to information constraint factors

In addition, the percentage composition between direct taxes, indirect taxes, non-taxes revenue and non-revenue receipts can be seen clearly where direct taxes comprise a minimum of 50.65% to 55.84% for actual government revenue receipts for the same period. The smallest composition percentage is from the category of non-revenue receipts for 2017 by 1.46%.

Finally, we make an analysis of the actual information and the estimated revenue receipts and we can conclude whether the estimates made are favorable or adverse.

REQUIRED:

EXPLAIN THE CONCLUSION AND RECOMMEDATION FOR THE ANALYSIS OF FEDERAL GOVERNMENT BUDGETING ABOVE.