SECTION A [60 MARKS]

Answer ALL the questions in this section.

QUESTION 1 (60 Marks)

Financing local government activities is considered an overriding factor in in local government management and administration. Without sound financial management systems, local government will be forced out of business. It is incumbent upon local authorities to ensure that all role players and stakeholders have a sound knowledge of local government financial management. In view of the above, and using your organisation or any government entity that you are familiar with perform a critical analysis of the budget process of that municipality/Department. The report must demonstrate a detailed application of relevant theories/models and should include the following areas:

1 Introductory background

2 Reasons for having a budget

3 Sources of income

4 Steps in the compilation of a capital budget

5 The importance of the accounting system in sound budget administration

6 an example of a typical income and expenditure budget.

7 The responsibilities of the different management levels in the budget process

8 Conclusions and recommendations