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What is the budget cycle?

The budget cycle describes the annual process of preparing, enacting, and evaluating government spending policy. The budget cycle occurs through four stages: formulation, approval, execution, and audit/oversight. The formulation and approval stages are known as the “ex ante” phase, because they take place before the budget comes into event, and the audit/oversight stage is known as the “ex post” phase, because it takes place after the budget has been implemented. During the formulation phase, the government undertakes consultations to set out the priorities for expenditures and revenue in the upcoming fiscal year. The approval phase consists of the presentation and consideration of the budget bill (and other associated documentation) in Parliament. The execution stage describes the implementation of the budget, including in-year reports that the government submits.

Finally, the audit/oversight stage is where parliamentary committees, the Supreme Audit Institution, and other actors assess and evaluate the government’s performance over the year, compliance with the approved plan and relevant legislation, and the year-end financial statements. 

What is parliament’s role in the budget cycle?

• Parliament and its committees play a number of important roles throughout the budget cycle, including ex ante, execution stage, and ex post. While too often overlooked, the formulation stage offers parliamentarians an opportunity to promote underfunded policy areas or raise policy challenges in debates related to the government’s pre-Budget Statement and other key documents. The approval phase often receives the most media attention, with parliamentarians reviewing and voting on the budget itself. The execution phase is largely the purview of the government, but Parliament can promote exercise its oversight role through the review of in-year and mid-year reports to ensure that spending and revenue collection is on track and that public debt levels are declining. 
• During the ex post audit/oversight, the Supreme Audit Institution and Public Accounts Committee take centre stage as they review the implementation of the budget. The relationship between the SAI and Parliament is a crucial one, as the detailed information provided by the SAI is essential for effective parliamentary scrutiny of government spending. Three types of audit reports are typically received from the SAI: financial statement audits, compliance audits, and performance (value-for-money) audits. Parliament can support the SAI by following up on the implementation status of recommendations made.

Select publications:

• 1.) “Assessing the role of Parliament in the Budget Process: the Public Expenditure and Financial Accountability Framework” Westminster Foundation for Democracy, October 2020.
• 2.) “A Critical Review of Public Accounts Committees” Westminster Foundation for Democracy, October 2020 https://www.wfd.org/wp-content/uploads/2020/09/Budget-policy-brief-2.pdf
• 3.) “Performance-Based Budgeting: A ‘Whole of Government’ Initiative” Westminster Foundation for Democracy, October 2020
• 4.) “Are Supreme Audit Institutions fit for purpose in the age of COVID-19 and beyond?” Westminster Foundation for Democracy, October 2020
• 5.) “Strengthening the role of Parliament in the Budget Process: the Role of Parliamentary Budget Offices” Westminster Foundation for Democracy, October 2020
• 6.) “Sharing International Practices : A Profile of the Legislative Oversight Committee in Scotland” (Canadian Comprehensive Audit Foundation, 2015)
• 7.) “Parliamentary Oversight Committees and Relationships: Guide to Strengthening Public Accounts Committees”, 2nd edition (Canadian Comprehensive Audit Foundation, 2010)
• 8.) “Attributes of an Effective Public Accounts Committee” (Canadian Council of Public Accounts Committees, 2010)