The Keynesian Doctrine and its Impact on Public Budgeting

The Keynesian Doctrine and its Impact on Public Budgeting

Introduction:

The Keynesian doctrine, named after renowned British economist John Maynard Keynes, revolutionized the way governments interact with the economy. This doctrine introduced the idea that the public budget could be used as a tool for fiscal policy, a concept that contrasted with prevailing economic concepts at the time. Keynes argued that in times of economic recession, the government could intervene and stimulate the economy through increased public spending. On the other hand, during economic expansion, the government could use the public budget to prevent overheating of the economy. This approach, known as expansionary fiscal policy, aims to increase aggregate demand and stimulate production and employment.

The Role of Public Budgeting:

One of the key aspects of the Keynesian doctrine is the systematic use of the public budget as an instrument to achieve economic goals. The sufficiency of information in budgeting is crucial to ensure that it is factual and convincing, both to a prudent and informed person and to internal auditors. The adequacy of information, achieved through the correct use of internal auditing techniques, is essential for its reliability. Additionally, the relevance of information is paramount to support the conclusions and recommendations of internal auditing.

Auditing in Public Budgeting:

In the context of public budgeting, auditing plays a vital role in ensuring the effectiveness and efficiency of budget allocation. The purpose of auditing is to add value and improve the operations of the entity. Auditors assess the utility of information, its sufficiency, adequacy, and relevance. By doing so, they provide assurance that the budget is being used effectively and that the entity's goals are being met.

Evidences of Internal Auditing:

Internal auditors rely on various evidences to support their conclusions and recommendations. These evidences may include financial statements, reports, and documentation related to budget execution. By examining these evidences, auditors can assess the accuracy and reliability of the information provided. This helps auditors identify any discrepancies or irregularities in the budgeting process and take appropriate actions to rectify them.

Actionable Advice:

• 1. Foster a culture of transparency and accountability in public budgeting. This can be achieved by ensuring that all relevant information is readily available and accessible to internal auditors. Additionally, promoting open communication channels and encouraging stakeholders' participation can enhance the effectiveness of auditing processes.

• 2. Utilize technology to streamline budgeting and auditing processes. Implementing automated systems for budget preparation, execution, and monitoring can improve the efficiency and accuracy of auditing. These systems can also provide real-time data that facilitates decision-making and enhances the overall effectiveness of budgeting.

• 3. Invest in the professional development of internal auditors. Continuous training and education programs can equip auditors with the necessary skills and knowledge to effectively carry out their responsibilities. Staying updated with the latest auditing techniques and practices ensures that auditors can adapt to the evolving demands of public budgeting.

Conclusion:

The Keynesian doctrine's impact on public budgeting cannot be understated. It introduced the concept of using the public budget as a tool for fiscal policy, emphasizing the importance of information sufficiency, adequacy, and relevance. Internal auditing plays a crucial role in ensuring the effectiveness and efficiency of budget allocation, relying on various evidences to support conclusions and recommendations. By implementing actionable advice such as fostering transparency, utilizing technology, and investing in professional development, governments can enhance the effectiveness of public budgeting and auditing processes.