Meaning of Financial Administration:
Financial Administration refers to the management of the finance of the public authority of the Government. It includes the study of the budget, its preparation, methods of administration of public revenue with regard to the custody of public funds, manner of spending money, and keeping of financial records, etc. As a matter of fact, every act of Government in respect of management, and its finances is included in the study of financial administration. To put it in the words of Prof. M. S. Kenderic, “the financial administration refers to the financial management of government, including the preparation of the budget method of administering the various revenue resources, the custody of public funds, procedures in expending money, keeping of financial records and the like. These functions are important to the effective conduct of the operating of Public Finance.”
A sound financial policy implemented through a sound financial system is sure to produce the best results. Even the best financial policies and plans will come to naught if financial administration is weak or inefficient. Thus, Prof. W. F. Willoughby said that “Of the several factors entering into the problem of efficient Government none is of greater importance than that of financial administration.” It means an efficient and sound system of financial administration is essential for the successful implementation of financial as well as socio-economic policies of the government.
However, Prof. Marshall Edward Dimock and Gladys Dimock defined financial administration as “Financial administration consists of a series of steps whereby funds are made available to certain officials under procedures which will ensure their lawful and efficient use. The main ingredients are budgeting, accounting, auditing, and purchase and supply. To understand clearly the meaning of financial administration. Let us now define the main ingredients of financial administration.
(1) Meaning of Budget- The word Budget is derived from the French word, “Bougettee” which means a bag or a Wallet. Prof. Dimock and Dimock defined a budget in the following words, “A budget is a balanced estimate of expenditures and receipts for a given period of time. In the hands of the administration, the budget is a record of past performance, a method of current control, and a projection of future plans.” In government, the funds come largely from taxes but also from borrowings and earnings of public enterprises and are made available by the legislature through specific appropriations to particular agencies and programmes.
(2) Accounting- The basis of all financial administration is Accounting. Accounting is the art by which the financial effects of executive action are recorded, assembled, and ultimately summarized in the form of financial reports. A harmonious relationship between budget and accounts is a prerequisite to the current comparison between goals as set up in the budget, and accomplishment as reflected in the reports and financial statements prepared from accounts.
(3) Auditing- Auditing is closely related to accounting. It is the investigation of reports and the fidelity, legality, and efficiency of all financial transactions. Auditing consists of both internal auditing for control purposes within a department and external auditing by an independent body reporting to a higher authority.
(4) Purchase and Supply- Finally, as the name implies, purchasing is the acquisition of the property and materials needed in administration. Purchasing is a report of a large category called supply, which also covers specification, traffic management, inspection, property identification, storage, and issue and property utilization.
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