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

Budget Execution 283
appropriations and commitment authorizations, 3 although, in practice, this
differentiated authorization system is implemented in only a few African
countries. A commitment authorization gives the upper limit of the
amount of the contracts that can be passed for a multiyear project during
the fiscal year. It authorizes only passing the contracts. It does not authorize
the payments. The payment appropriation gives the amount that can be
paid during the fiscal year. Setting up in the budget or in an annexed document
commitment authorization for multiyear projects will reinforce
expenditure control and planning.
The Verification Stage
The verification stage immediately follows the deliveries. It consists of verifying
the conformity of the delivered goods, or rendered services, and the
bill with the contract or the order and recognizing the debt toward a third
party (the supplier). As noted, for debt service, personnel expenditures, and
a few other expenditure items, the verification stage and the commitment
phase are combined.
At the verification stage, assets and liabilities of the government are
increased and recorded in the books, if the country has an accrual—or a
modified accrual—accounting system. Expenditures at the verification stage
should be taken into account in the calculation of the net lending/borrowing
balance, as defined in the International Monetary Fund (IMF) Statistics
Department’s Government Finance Statistics Manual (IMF 2001). 4
Even though it represents an accrued liability, the verified expenditure
may not yet represent a cash liability when a 30-day or 60-day grace period
is included under the terms of the purchase order. Recording expenditures
at the verification stage differs from accounting on the due-for-payment
basis, which would consist of recognizing the expenditures at the latest times
they can be paid without incurring additional charges or penalties or, if
sooner, when the cash payment is made. 5
Recognizing expenditures on a timely basis requires goods and services to
be verified as soon as they are delivered. Actually, in some countries, physical
deliveries can precede verification by some period of time. Such weaknesses
should be identified and addressed.
The Payment Order Stage
When the goods and services are verified, the authorizing officer issues a
payment order, which is forwarded to the officer responsible for making the