Fiscal Discipline
Local fiscal administration should provide a structure for restraining
expenditures to the revenue available, should ensure that expenditure and
revenue plans are executed as adopted, should preserve the legality of
agency expenditures, should establish a clear trail of agency responsibility
for resources intended for use in provision of public services, and should
accommodate a system of governance in which government finances serve
the interests of the citizenry. It should serve as the first line of defense
against public corruption. By erecting a sound system of internal controls
to check the execution of the budget, a strong system of internal audit to
prevent misuse of resources, and a strong system of external audit to verify
the proper use of resources and to implement corrective actions if misuse is
discovered, the local government provides a system that serves as protection against theft, misappropriation of funds, and misuse of government resources.
A structure for fiscal discipline is the most fundamental element of fiscal
administration because it contributes long-term fiscal sustainability and is
the first barrier against corruption.