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QUESTION TWO (20 Marks) Suppose that you work in the office of that finance manager of the City of Johannesburg. As part of your responsibilities, you have been tasked with the preparation of the city's annual budget for 2023/2024 financial. You have been given the annual budget for 2022/2023 financial year as well as additional information to assist you in the exercise. Programme Budget City of Johannesburg Revenue Equitable share and transfers received Revenue from taxes, services, levies and fees Grants Others Expenditure Corporate Services Education Department Transport Department Social services Department Municipal Police Department Actual 2022/2023 R million 11 680 6279 3967 Budgeted 2023/2024 R million REQUIRED: 2.1. Explain the concept of incremental budgeting and state TWO main weaknesses of this approach to budgeting. (4 marks) 2.2. Using the information provided above, prepare the 2023/2024 annual budget for the City of Johannesburg (show all workings and round of all values to the nearest whole number). (16 marks) 580 (8 960) 1800 2 800 1300 1900 1160 Programme Budget 2720 City of Johannesburg Surplus(Shortfall) Additional information: For the 2023/2024 financial year, the following changes are planned: 1. Equitable share and transfers are estimated to increase by 8%. 2. Revenue from taxes, levies, services, and fees is projected to increase by a third of the 2022/2023 figure. 3. The difficult fiscal situation ensuing from COVID-19 pandemic is expected to reduce grants by R50 million. 4. "Others" is projected to shrink by R100 million. 5. Spending on corporate services is estimated to increase by 30%. 6. The budget for education is projected to increase by R560 million. 7. Due to increased decentralisation of responsibility for traffic control, the budget for the Johannesburg Metropolitan Police department (JMPD) is to be increased by 20% of the 2022/2023 amount. 8. Due to increasing incidence of unemployment, poverty and inequality, spending on social services is projected to increase by 50%. 9. The allocation for transport services is not expected to change. Revenue Equitable share and transfers received Revenue from taxes, services, levies and fees Grants Others Expenditure Corporate Services Education Department Transport Department Social services Department Actual 2022/2023 Budgeted 2023/2024 R million R million 11 680 6279 3967 854 580 (8960) 1800 2 800 1300 1900 Municipal Police Department 1160 Surplus(Shortfall) 2720