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What is Fiscal Administration?

By Sandi Johnson
Updated May 23, 2024
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Fiscal administration is the act of managing incoming and outgoing monetary transactions and budgets for governments, educational institutions, nonprofit organizations, and other public service entities. For example, local fiscal administration for a town or municipality involves receiving, budgeting, and dispersing monies to support local infrastructure. In terms of governmental administration, fiscal responsibility necessitates numerous departments or divisions to manage the large task of funding government operations. Each division or department carries responsibility for different aspects such as budgeting, reporting, collecting revenues in the form of fees and taxes or purchasing.

Constituents charge leaders, whether governmental or organizational, with establishing fiscal policy as part of their duties in relation to responsible fiscal administration. Fiscal policies are tools for the development of fiscal planning budgets, based on the receipt of anticipated funding. As fund disbursement in the form of payroll, purchases, or other expenses occur, management reports appropriate accounting information back to organizational leaders. Historical data, future revenue projections, and current budget demands determine needed adjustments. The entire process forms the basis for future fiscal decision making.

Leaders of government, nonprofits, and other public service entities have a fiduciary responsibility to those who put them in office, individuals better known as constituents. Effectively managing the fiscal administration of an entity contributes to its overall financial health and ability to continue serving constituents. As such, laws dictate much of the particulars with regard to preparing financial statements, recording transactions, and balancing budgetary demands for such organizations. Fiduciary responsibility dictates that these reports demonstrate responsible management and recording of all activities involving monies paid to or spent by the organization.

Government fiscal administration, specifically of the federal kind, creates many opportunities for error. By their very nature, governmental organizations are large and complex, requiring numerous divisions, departments, committees, and other bodies. While revenue streams follow only a few paths through these many departments, disbursements and expenses come from all areas. With so many sources of information concerning monetary transactions, errors and omissions may easily slip through unnoticed, creating compromising and difficult to decipher problems. The complexity and sheer volume of information necessary to find such errors explains how corruption often goes unnoticed in certain government sectors.

Private sector organizations, such as nonprofit agencies and public postsecondary schools, also experience difficulties deciphering errors in fiscal administration. While these organizations are also large and complex, public reporting documents require far less time to analyze. For this reason, problems with financial management in a nonprofit or public university usually present faster than governmental agencies.

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Discussion Comments
By miriam98 — On Oct 02, 2011

@David09 - I think that the private sector needs to team up with the government somehow to make it more efficient.

So far the they have both been viewed as separate entities – which they are – but I think that they should work together. After all, the government does look to private contractors for special projects like construction or military hardware.

Why shouldn’t it look to private industry to help streamline its budgeting and bring about better accountability? That would save billions in taxpayer dollars in my opinion.

By David09 — On Oct 02, 2011

@nony - I agree, and would like to add that in cases that do not involve corruption but are simply examples of extreme waste and mismanagement, then I think it’s up to the constituents to petition their representatives about the matter. There’s no criminal wrongdoing, but there can still be accountability.

I’ve seen many examples of financial waste and abuse at the federal level. But I think that in an economic downturn it’s the state governments that take the hit more than anyone else.

In our district the schools have had to drastically reduce their budgets because the states simply don’t have the money that they used to for educational purposes.

This means that as parents we are forced to buy certain supplies and that textbooks have to be rationed among students. This is a travesty in my opinion. I believe that education needs to have special focus when it comes to local fiscal administration.

By nony — On Oct 01, 2011

@Charred - Well, in general I agree with what you say about government bureaucracy and inefficiency, but it’s not true that governments do not pay for their misdeeds in deliberate cases of corruption.

If there is a scandal involving large sums of money being funneled towards some weird project that goes bust, there is a price to pay. At the governmental level, there will be congressional investigations, inquiries, special counsels and a whole lot of people pleading the fifth amendment.

So corruption does get investigated eventually. I don’t think that anyone gets away with anything in that regard.

By Charred — On Oct 01, 2011

The article is not kidding when it says that public fiscal administration opens up many avenues for errors. Whether these are innocent mistakes or deliberate acts of corruption I’ll leave open for another debate.

But I do believe it’s a fact that governments by nature are less efficient in their disbursement and management of their fiduciary responsibilities than the private sector is. That’s why we often hear of grotesque examples of waste and mismanagement like a “bridge to nowhere” or outrageous sums of money being spent on military hardware or pet projects that make no sense to the average taxpayer.

It’s sad, in my opinion, that governments don’t have to be audited like private businesses do. If they were, I think that they would operate in a leaner manner and better discharge their duties in fiscal administration.

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