Process of Budget Formulation

The process/steps for the formulation of the budget is called budgetary process.
The budgetary process, also known as budget cycle, can be divided into four key
steps. They are:
Step 1: Preparation: A budget is prepared by the ministry of finance in
collaboration with various other stakeholders such as planning commission,
line ministries, experts, etc. In this step, a draft of budget or estimated
expenditure and revenue sources is prepared.

Step 2: Enactment/Legislation: In this step, the finance minister presents the
budget for the upcoming fiscal year before the parliament for its approval. A
discussion on budget is held among the parliamentary members and then it is
approved/passed by the parliament.
Step 3: Execution/Implementation: Budget is implemented by the ministry of
finance and other government ministries/agencies/offices. Expenditure is
made by respective government agencies and offices and revenues and
collected from tax offices and other offices.
Step 4: Auditing: It is the act of testing the legality of the funds spent and
revenue collected by the executive. In Nepal, the final auditing of the budget is
performed by the attorney general and a report is prepared and submitted to
the head of state.