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System of Financial Control and Budgeting QUESTION #5647
Question 1
Under the system if the current expenditure in the first half of the financial year is restricted to 40% of total budget allocation what is the LOGICAL implication for a Ministry that has already spent 38% of its annual budget by the end of Month 5?
  • The Ministry may only spend 2% more in Month 6 from within the first-half restriction and must wait for Finance Division instructions for the remaining 60%✔️
  • The Ministry should apply for a Supplementary Grant to cover the shortfall in the first half
  • The Ministry can freely spend the remaining 60% in the second half without Finance Division instructions
  • The Ministry must surrender the unspent 2% of its first-half allocation
Correct Answer Explanation
Current Expenditure in the first half shall be restricted to 40% of total budget allocation. Since 38% has been spent only 2% more is permissible in the first half. In the second half Finance Division shall issue separate instructions in respect of the balance 60% of the budgetary allocation.