Question 3

Does the Executive’s Budget Proposal or any supporting budget documentation presents expenditures for the budget year by functional classification, is the functional classification compatible with international standards?
 * a. Yes, the functional classification is compatible with international standards.
 * b. No, the functional classification is not compatible with international standards, or expenditures are not presented by functional classification.
 * c. Not applicable/other (please comment).

Note on expenditure classifications
There are three different types of expenditure classification. Each classification system has different advantages and answers a different question:
 * Administrative unit ==> who spends the money
 * Functional classification ==> for what purpose is the money spent
 * Economic classification ==> what is the money spent on

Unlike classification by administrative unit, which tends to be unique to each country, functional and economic classifications for government budgeting have been developed and standardized by international institutions. Cross-country comparisons are facilitated by adherence to these international classification standards.

Questions about expenditure classification are repeated throughout the questionnaire, for each of the various budget documents. It is important that budget data are presented in a consistent format throughout the different stages of the budget process to facilitate transparency and accountability.

Guidelines
Question 3 asks whether a country’s functional classification meets international standards. To answer “a,” a country’s functional classification must be aligned with the OECD and the UN’s Classification of the Functions of Government (COFOG), or provide a cross-walk between the national functional presentation and COFOG.

The OECD Best Practices for Budget Transparency can be viewed here.

COFOG can be viewed here or here.

External references

 * OECD Best Practices for Budget Transparency
 * UN Classifications of Expenditure According to Purpose
 * Classification of the Functions of Government, IMF Government Finance Statistics Manual 2001