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The glossary in this Portal provides definitions of core terms closely related to the medium-term expenditure framework; and links to other online glossaries.

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An account is a tool which records, for a given aspect of economic life, (a) the uses and resources or (b) the changes in assets and the changes in liabilities and/or (c) the stock of assets and liabilities existing at a certain time; the transactions accounts include a balancing item which is used to equate the two sides of the accounts (e.g. resources and uses) and which is a meaningful measure of economic performance in itself.


Accountability is a government policy or management concept that means (i) politicians and public officials have to respond periodically to questions concerning their activities (answerability) and (ii) must be held responsible for the exercise of the authority provided to them. For effective accountability, clear lines of responsibility must be firmly established and consistently maintained. Accountability measures should address three questions: accountability by whom; accountability for what; and accountability to whom. To ensure that accountability is properly enforced, there is a need for predictable and meaningful consequences related to performance. In the public sector, accountability of individual officials, within their organisation and to external controlling bodies, is applied most often to how money has been spent and what results have been achieved. Crucial too in democratic systems is the general accountability of ministers to parliament and to the public at large.

Accounting Audit

Procedures used to verify accounting reports and statements.

Accounting controls

Accounting controls are procedures and documentation concerned with safeguarding of assets, the conduct and recording of financial transactions and the reliability of financial records. They are frequently based on standards issued by the ministry of finance or the supreme audit institution to ensure comparability of accounting practices across all ministries and conformity with national and/or international conventions.

Accrual accounting systems and cash accounting systems

Accrual accounting systems recognise transactions or events at the time economic value is created, transformed, exchanged, transferred, or extinguished - and all economic flows (not just cash) are recorded. Cash accounting systems recognise transactions and events when cash is received or paid. Unlike accrual accounting, cash accounting systems do not recognise non-cash events. A key difference is that cash accounting systems have no record of asset values, which has a significant impact on incentives concerning the use and maintenance of capital.

Accrual-based budget (accrual budgeting)

This term, accrual-based budget, can be interpreted in two ways: (i) budgetary documents that include in addition to cash-based appropriations accrual accounting information; or (ii) budgetary appropriations based on accrual accounting information, e.g. including provision for depreciation. It is a process through which the government agencies are funded and monitored on the basis of their delivery of outputs, which have been costed on full accrual basis.

Administrative controls

Administrative controls are non-financial procedures and records of ministries which ensure compliance with rules on: appointment, promotion, pay, and disciplining of personnel; public procurement (bids, tenders, contract management, etc.); equal opportunities for minority groups; the handling of information flows; and travel and entertainment allowances, etc.


Aid (or “international aid”, “overseas aid”, or “foreign aid”) is the help, mostly economic, which may be provided to communities or countries in the event of a humanitarian crisis or to achieve a socioeconomic objective. Humanitarian aid is therefore primarily used for emergency relief, while development aid aims to create long-term sustainable economic growth.

Allocations and allotments

Allocations and allotments are the authorizations or distributions of funds made by the chief executive or his designee - for example, the finance minister or the budget director - to the ministries permitting them to either commit or pay out funds, or both, within a specified time period and within the amounts appropriated and authorized.

Allocative efficiency

Allocative efficiency refers to the capacity of the government to allocate resources and select programmes and projects in conformity with its objectives. In economic theory, allocative efficiency, also called “Pareto efficiency”, occurs when resources are so allocated that it is not possible to make anyone better off without making someone else worse off. When referring to a situation as Pareto efficient, it is usually assumed that products are being produced in the most efficient (least-cost) way. Pareto optimality is sometimes used interchangeably with Pareto efficiency. Sometimes Pareto optimality is reserved for cases when both production and allocative efficiency are obtained.

Annual budget

An annual budget comprises a statement of the government’s proposed expenditures, revenues, borrowing and other financial transactions in the following year and, in many countries, for two or three further years. The budget is prepared on a cash basis in most countries. It is submitted to parliament, which authorises expenditure by approving either a budget act or an appropriation act that is consistent with the budget proposals.


Asset is a property functioning as a store of value over which ownership rights are enforced by institutional units, individually or collectively, and from which economic benefits may be derived by holding them or using them over a period of time. “Tangible” assets may either be financial (e.g., cash or government securities) or physical (e.g., buildings, roads, national parks, etc.). Assets may also be “intangible” such as copyright or mineral exploitation rights. An asset must be recognized in the statement of assets and liabilities only when: · it is probable that the service potential or future economic benefits embodied in the asset will eventuate; and · the asset possesses a cost or other value that can be measured reliably.

Asset management

The term asset management is often used to refer to the investment management of collective investments, whilst the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of so-called “private banking”. The provision of “investment management services” includes elements of financial analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Investment management is a large and important global industry in its own right responsible for caretaking of trillions of dollars, euros, pounds and yen. Coming under the remit of financial services many of the world's largest companies are at least in part investment managers and employ millions of staff and create billions in revenue.


An audit is an expert examination of legal and financial compliance or performance, carried out to satisfy the requirements of management (internal audit), or an external audit entity, or any other independent auditor, to meet statutory obligations (external audit). A particular task of internal audit is to monitor management control systems and report to senior management on weaknesses and recommend improvements. (see also financial audit and performance audit)


An employee’s ability to make independent and discrete decisions.