What's better budgetary freedom or strict controls?
Sector 1: Government
The government’s budgetary controls are much more extensive than those of the private sector.
In government, it is a violation of the Antideficiency Act (ADA) to obligate money that has not been authorized by Congress and allotted by OMB. Intentionally violating appropriation laws could result in termination, fines, or imprisonment. This is one area in government where there is heavy accountability for a misdeed. The budgetary controls are extraordinary. There are many processes in place to assure money is spent as intended by law.
Sector 2: Private
In the private sector, budgets serve as merely a general guideline.
If funds are overspent in one category of a business, another category can be adjusted to offset it—or it can simply be explained away. A key metric in the private sector is net earnings, which are driven by many different line items between revenue and expense. Being over or under budget on a particular line item may not get a lot of attention if the net-earnings targets are met.
