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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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Capital budget

Capital budget (see capital expenditure)

Capital charge

In a very limited number of countries (e.g. New Zealand), a capital charge is applied to the assets of government ministries/agencies. Introducing a capital charge is aimed at giving incentives to spending agencies to use their capital more efficiently. It requires a proper system for accounting for, and valuing capital assets.

Capital expenditure

Capital expenditure incurred for the acquisition of land and other physical assets, intangible assets, government stocks, and non-military, non-financial assets, of more than a minimum value, with an expected lifetime of more than one year. Capital expenditures are often recorded in a separate section (or capital account) of the budget, or into an entirely separate budget for capital expenditures. All expenditures that are not capital are “current”.

Capital expenditure on education

Expenditure for assets that last longer than one year. It includes expenditure for construction, renovation and major repairs of buildings and the purchase of heavy equipment or vehicles.

Capital expenditures budget

A type of budget that involves a plan for the acquisition or divestiture of major fixed assets, such as land, buildings, or equipment.

Cash accounting systems

Cash accounting systems (see accrual accounting systems)

Cash budget

A financial budget that projects future cash flows arising from cash receipts and disbursements by the organization during a specified period.

Cash flow

Cash flow is an accounting term that refers to the amounts of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Measurement of cash flow can be used · to evaluate the state or performance of a business or project. · to determine problems with liquidity. Being profitable does not necessarily mean being liquid. A company can fail because of a shortage of cash, even while profitable. · to generate project rate of returns. The time of cash flows into and out of projects are used as inputs to financial models such as internal rate of return, and net present value. · to examine income or growth of a business when is believed that accrual accounting concepts do not represent economic realities. Alternately, cash flow can be used to validate the net income generated by accrual accounting.

Cash flow as a generic term may be used differently depending on context, and certain cash flow definitions may be adapted by analysts and users for their own uses. Common terms (with relatively standardized definitions) include operating cash flow and free cash flow.

Cash management

The process of developing agency and central cash flow forecasts, the release of funds to spending agencies, the monitoring of cash flows and expected cash requirements, the issue and redemption of government securities for financing government programmes.

Cash-based budgeting

Cash-based budgeting: a situation in which there is no cash borrowing to fund expenditure so spending is limited to cash receipts. In this environment, any fall in revenue relative to forecast immediately feeds though into cuts in within-year expenditure.


Centralisation (or centralization), as opposed to decentralization, is the act to gather power to the center level from the local level, and it is the process by which the activities an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group. In political science this refers to the condition of a government’s power – both geographically and political, into a centralized government. At the organizational level, centralization is a vertical coordination method that addresses the extent to which power and authority are retained at the top organizational levels.

Chart of accounts

The charts of accounts is the the classification of transactions and events (payments, revenues, depreciation, losses, etc.) according to their economic, legal, or accounting nature. It defines the organisation of the ledgers kept by government accountants.

Civil society

Civil society is composed of the totality of voluntary civic and social organizations and institutions that form the basis of a functioning society as opposed to the force-backed structures of a state (regardless of that state's political system) and commercial institutions.

There are myriad definitions of
civil society. The London School of Economics Centre for Civil Society working definition is illustrative:Civil society refers to the arena of uncoerced collective action around shared interests, purposes and values. In theory, its institutional forms are distinct from those of the state, family and market, though in practice, the boundaries between state, civil society, family and market are often complex, blurred and negotiated. Civil society commonly embraces a diversity of spaces, actors and institutional forms, varying in their degree of formality, autonomy and power. Civil societies are often populated by organisations such as registered charities, development non-governmental organisations, community groups, women's organisations, faith-based organisations, professional associations, trade unions, self-help groups, social movements, business associations, coalitions and advocacy groups.


The element of the task environment that includes those individuals and organizations that purchase an organization's products and/or services.

Contingent liability

A contingent liability is one that depends on the occurrence of a specific event to materialize (e.g., default by a guaranteed debtor). Obligations are therefore not yet actual liabilities, and may never be if the specific contingency does not materialise.

Contingency perspective

An approach to the study of management proposing that the managerial strategies, structures, and processes that result in high performance depend on the characteristics, or important contingencies, of the situation in which they are applied.


A contract is a legally binding exchange of promises or agreement between parties that the law will enforce.


Financial control

Aspects of management (or internal) control that relate to financial issues and performance. See also management control.

Management control (internal control)

Defined as “the organisation, policies and procedures used to help ensure that government programmes achieve their intended results; that the resources used to deliver these programmes are consistent with the stated aims and objectives of the organisations concerned; that programmes are protected from waste, fraud and mismanagement; and that reliable and timely information is obtained, maintained, reported and used for decision-making” (INTOSAI). In practice, management control systems embrace a wide range of specific procedures, including, for example, controls on accounting, processes, procurement, separation of duties and financial reporting. Management control systems require effective communications within an organisation and need to be supported by sound internal audit procedures. It is the responsibility of an organisation’s management to establish and monitor management control systems, not that of the external auditor. However, an external auditor should comment on the absence or adequacy of such systems since a consequence of good management controls is that less detailed auditing of individual documents and transactions will be necessary.

Accounting controls

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.

Administrative controls

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.


There are many different definitions of corruption. The simplest, and broadest, is “the misuse of public or private position for direct or indirect personal gain”.

Cost-benefit analysis

Cost-benefit analysis is a technique for deciding whether to make a change. As its name suggests, it compares the values of all benefits from the action under consideration and the costs associated with it. Cost-benefit analysis involves the application of three logical steps: (i) defining objectives and alternatives for accomplishing those objectives; (ii) analysing incremental changes with each alternative intervention versus without the respective alternative; and (iii) comparing costs and benefits of the various alternatives.

Current expenditure

Current expenditure is expenditure other than for capital transfers or the acquisition of land, intangible assets, government stocks, or nonmilitary durable goods of greater value than a minimum amount and to be used in the process of production for more than a period of one year.

Current expenditure on education

Expenditure for goods and services consumed within the current year and which would be renewed if needed in the following year. It includes expenditure on: staff salaries, pensions and benefits; contracted or purchased services; other resources including books and teaching materials; welfare service; and other current expenditure such as subsidies to students and households, furniture and minor equipment, minor repairs, fuel, telecommunications, travel, insurance and rents.

Current revenue

All revenue from taxes and from nonrepayable or nonrepaying receipts other than from grants, from the sale of land, intangible assets, government stocks, or fixed capital assets, or from capital transfers.