5/21/2014 Reformation Budgeting System In Malaysia Accounting Essay

http://www.ukessays.com/essays/accounting/reformation-budgeting-system-in-malaysia-accounting-essay.php 1/3
UK Essays Services Prices Order Now Essays Dissertations Quality Contact My Account
Need help? 0115 966 7955
Enter your search terms.... Search
Print Email Download Reference This Reddit This
Reformation Budgeting System In Malaysia
Accounting Essay
There are several types of budgeting system and techniques being implemented by Malaysian Government since
1960s. Budgeting system is referred to the methods or the techniques of how a budget was prepared and
presented. Different budgeting system will apply different approaches for planning, controlling and evaluation roles
of budgeting. The budgeting systems that being performed are Line Budgeting System, Program and Performance
Budgeting System (PPBS), Modified Budgeting System (MBS), and Outcome Based Budgeting (OBB).
Budgetary reform focused on greater accountability and financial discipline among the various government
agencies entrusted to carry out the socioeconomic development plans for the country. In addition to greater public
sector accountability and improved budgetary system performance, the government undertook a number of
additional reforms including improved financial compliance, quality management, productivity, efficiency in
governmental operations, and management of national development efforts.
Budget reform had been on the Malaysian government agenda for over two decades. Malaysias budget reform
efforts have been closely linked with the efforts at nation building and global competitiveness associated with Vision
2020 which is a program aimed at making Malaysia a fully developed country by the year 2020.
Reformation Budgeting System in Malaysia
Malaysia budgeting system reforms were initiated in the 1960s as part of an effort by the government to strategically
develop the country. The past two decades have witnessed a growing interest in performance management and
budgeting reforms, in response to louder public demands for government accountability in industrial countries.
These reforms are intended to transform public budgeting systems from control of inputs to a focus on outputs or
outcomes, in the interest of improving operational efficiency and promoting results-oriented accountability. These
experiences have significant relevance for public sector reforms in developing countries.
Line item Budgeting System
Government Malaysia was started to use Line Item Budgeting System after independent. Malaysia adopted Line
Item Budgeting System start from year 1960 until 1968. Line Item Budgeting System is a simply list that itemizes
every item in a budget. Line Item Budgeting System is primarily a tool for controlling expenditures. The purpose of
Line Item Budgeting System is to make the budget a tool for financial compliance. This method is relatively easy to
use and understand.
Line Item Budgeting System is a traditional method that prepares a budget by using the previous years budget as
base. Line Item Budgeting System emphasizes inputs and provides information on how much is spent and how it is
spent rather than what for it is spent. It does not link inputs with outputs, and hence say nothing about how
efficiently resources are used. The major criticism of Line Item Budgeting System is it does not deal with key issues
of government objectives, their links to the budget, the services to be delivered by the government. This budgeting
system does not provide the information related to the functions and activities of a program and department.
Because this system is not capable enough to justify the current financial situation and to achieve budget
objectives, Line Item Budgeting System has been replaced since 1969 with a new budgeting system, Program and
Performance Budgeting System (PPBS).
Program and Performance Budgeting System (PPBS)
Program and Performance Budgeting System (PPBS) was first introduced and adopted in Malaysia in 1969. The
evolution of Program and Performance Budgeting System in Malaysia from its beginning in 1969, through the in-
depth implementation phase which began in 1972, to the present day. It outlines the system in the Ministry of Health,
You are here: UK Essays Essays Accounting Reformation Budgeting System In Malaysia Accounting Essay
Tweet
Search UK Essays
Enter your search terms...
Search
Paid Writing Services
Essay writing
Dissertation writing
Assignment writing
All Services
Free Content
Essay Help
Referencing Guides
All Free Resources
About UK Essays
About Us
How We can Help
Contact Us
ORDER NOW
INSTANT PRICE
5/21/2014 Reformation Budgeting System In Malaysia Accounting Essay
http://www.ukessays.com/essays/accounting/reformation-budgeting-system-in-malaysia-accounting-essay.php 2/3
Print Email Download Reference This Reddit This
where PPBS has been extensively developed and comments on the systems established in other in-depth ministries,
in several of which little appears to have been achieved. In 1981 all other agencies were asked to adopt PPB in their
budget submissions.
Malaysia implemented the PPBS in 1969 through to 1990. The focus of the budgetary process was on line items
although information on the performance of program was available. Budget process was used more as a tool for
funds disbursement rather than a strategic management tool.
In 1990, a new budget system was introduced in order to overcome the weakness of PPBS. The system has been
adopted after PPBS is Modified Budget System (MBS).
Modified Budget System (MBS)
The Malaysian government introduced a Modified Budget System (MBS) for the 1990 annual operating budget
preparation with the issuance of Treasury Circular No.11 of 1988. The Modified Budgeting System also known as
the Malaysia Budgeting System. The Modified Budgeting System is a system of management designed to establish
logical linkages on the relationship between inputs, outputs and impacts. MBS was implemented with the explicit
objectives of trying to improve resources allocation by bringing about more efficient management of government
programs by way of improved accountability.
MBS was first introduced in three (3) pilot Ministries, these being the Ministry of Health, Ministry of Work and Ministry
of Social Welfare (Malaysia Treasury 1988). The MBS was implemented in other government organizations in 1992.
The MBS was developed to counteract weaknesses as in the Program and Performance Budgeting System (PPBS),
which has been in place 1969 and also to introduce several reform mechanisms to enhance results based
accountability. The main principals and objectives of the MBS for improving the financial management of
government organizations are to improve and modernize the process of resource allocation on the basis of
performance, to delegate greater authority over the management to a lower level of management as practicable,
and to introduce a result oriented and cost effective management.
Government Malaysian was implemented MBS from year 1990 till now. But MBS still have some problem that can be
improve to be better. The problems of MBS are:
Over-emphasis on the technical aspects and neglect of human variables.
Little attention to develop understanding, receptivity and capability in using data.
Inadequate support from top level administrators.
Lack of trained staff.
Inadequate support from the Treasury itself.
Trained staff being promoted to unrelated jobs.
To solve the problem of MBS, Government Malaysian was planning to implement a new budgeting system.
Government Malaysian hope that the new budgeting system, Outcome Based Budgeting (OOB) can adopted within
the next three years in public sector.
Outcome Based Budgeting (OOB)
The Second Finance Minister, Datuk Seri Ahmad Husni Hanadzlah said that there have five (5) selected ministries
will be use Outcome Based Budgeting (OBB) as test-bedded in 2012 and OOB will be rolled out across all the
ministries start from 2013 onward. The first five selected ministries is finance, human resources and public works,
while the other two ministries will be identified later.
Some of the countries have been successfully implemented OOB, like New Zealand and Canada. Malaysian Prime
Minister, Datuk Seri Najib Tun Razak was still debatable the idea to implement OOB in the 2010 budget. The
purpose is to ensure the concept of value for money, which is efficient, effective and economic, for the budget
expenditure management can be achieve.
OBB is an integrated system that uses goals, mission and objectives to explain why the money is being spent to
achieve a specific outcome and it enables policymakers to determine which activities are cost-effective to achieve
national priorities. The purpose of implementation of OBB is use to overcome the weaknesses and problem that
have been faced when implement MBS.
Share This Essay
5/21/2014 Reformation Budgeting System In Malaysia Accounting Essay
http://www.ukessays.com/essays/accounting/reformation-budgeting-system-in-malaysia-accounting-essay.php 3/3
Order Now Instant Price
submit Tweet
To share this essay on Reddit, Facebook, Twitter, or Google+ just click on the buttons below:
Request Removal
If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website
then please click on the link below to request removal:
Request the removal of this essay.
More from UK Essays
Free Essays Index - Return to the FREE Essays Index
More Accounting Essays - More Free Accounting Essays (submitted by students)
Accounting Essay Writing Service -find out more about how we can help you
Example Accounting Essays - See examples of Accounting Essays (written by our in-house experts)
Copyright 2003 - 2014 - UK Essays is a trading name of All Answers Ltd. All Answers Ltd is a company registered in England and Wales Company Registration No: 4964706.
VAT Registration No: 842417633. Registered Data Controller No: Z1821391. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ.
Fair Use Policy Terms & Conditions Privacy Policy Cookies Complaints Fraud About us Free Resources Sitemap Language
Join us on Google+ Find us on Facebook Follow us on Twitter