Both budgeting and accounting are fiscal systems or processes that involve the planning, allocating, and disbursing of monetary resources. This results in an interrelationship and a need for coordination between these two fiscal disciplines. Generally, budgeting is regarded more in terms of planning and enacting a fiscal plan. However, these planning and enactment processes are dependent upon the accounting of past-year and current-year expenditures/revenues.
Accounting focuses on the recording, classifying, and interpreting of financial transactions. These accounting processes are dependent on the budgeting of expenditure authorizations (appropriations) being enacted by the legislative branch.
This write-up focuses more on the budgeting aspects and how accounting relates to it. The Department of Finance (Finance), Fiscal Systems and Consulting Unit offers the State Fund Accounting Course http://www.dof.ca.gov/FISA/FSCU/Training.htm emphasizing accounting with lesser emphasis on the budgeting process.
II. STATUTORY LINK BETWEEN BUDGETING AND ACCOUNTING
In the State of California, there are statutory requirements for an accounting system that will provide data for the budget process – for both the past-year presentation in the Governor’s Budget as well as monitoring budgeted resources for the duration of the life of appropriations. Among these statutes, the following three provisions require a specific linkage between the accounting and budgeting systems.