Fund accounting and capital budgeting: European experiences

Budgets have to meet a number of principles in order to fulfil their functions properly. This paper focuses on two of three budget principles. First, it addresses the principle of unity and universalism, and in particular, discusses the issue of earmarking receipts. It is concluded that most of the perceived benefits of special fund accounting do not occur in practice. Second, the paper deals with the principle of an efficient division of the budget. It is concluded that the credibility of the main argument in term of a capital budget, being that it reinforces the allocation function of the budget, is questionable.