Public Sector Governance and Accountability Series: Budgeting and ...

282 Daniel Tommasi
recognized. The commitment should be defined as (a) the legal commitment,
when it makes sense to define the commitment in the budgetary sense
on this basis, and (b) expenditures at the verification stage for other items (personnel,
debt servicing, utilities bills, and transfers). Therefore, the commitment
in the budgetary sense preferably should be defined as follows:
For personnel expenditures and social contributions, the commitment
should correspond to the amount of the compensations, allowances, and
contributions due.
For goods and services, the commitment should generally correspond to the
legal commitment,which consists of placing an order or awarding a contract.
However, in some special cases, the commitment in the budgetary sense may
correspond to the liability, and the commitment stage and the verification
stage may be combined. These special cases may concern (a), by necessity,
expenditures such as utilities consumption and some other expenditures
arising from the execution of medium- and long-term rental contracts and
(b), for convenience, petty expenditures and low-cost purchases.
For debt service, the commitments over a period should correspond to
the debt service due over the same period.
For transfers, what is a commitment may depend on the nature of the transfer.
For example, concerning scholarships, the commitments should correspond
to the amounts due (as for personnel expenditures), but concerning
transfers that are not related to a contract or a formal promise, the commitment
may correspond to the stage at which a payment order is issued.
For investment expenditures, the same definition as for goods and services
should preferably be used. The commitment should correspond to
the contract. For multiyear contracts, the definition of the commitment
varies from one country to another, but, whatever the budgetary jargon,
the following elements should be systematically monitored and
accounted for: (a) the legal commitment (the contract), which can be of
a multiyear nature; (b) the annual tranche of the legal commitment; and
(c) the expenditures at the verification stage (the liabilities arising from
the execution of the legal commitment).
Because what is a commitment may depend on the economic category of the
expenditure, its definition should be precisely indicated in the financial regulations,
expenditure category by expenditure category.
To monitor and control effectively commitments related to multiyear
projects, the organic budget law of many francophone countries stipulates that
the budget should include, for multiyear programs and projects, both payment