Section 4 in The Karnataka Local Fund Authorities Fiscal Responsibility Act, 2003
4. Financial management principles.
- Every local fund authority will be guided by the following financial management principles, namely:-(a)ensuring transparency at all stages of policy making and implementation;(b)introducing performance linked budget policies;(c)providing for effective and sustained fiscal monitoring systems;(d)introducing robust financial management principles;(e)maintaining local fund authority's debt at prudent levels;(f)managing guarantees and other contingent liabilities prudently, with particular reference to the quality and level of such liabilities;(g)ensuring that policy decisions of the local fund authority have due regard to their current financial position and the financial implications on future generations;(h)adopting accrual system of accounting for payables and receivables;(i)ensuring that borrowings are used for productive purposes and accumulation of capital assets, and are not applied to finance current expenditure;(j)ensuring a reasonable degree of predictability in the flow of funds;(k)pursuing tax policies with due regard to economic efficiency and compliance costs;(l)pursuing fiscal policies with due regard to cost recovery and equity;(m)pursuing expenditure policies that would provide impetus for economic growth, poverty reduction and improvement in human welfare;(n)ensuring that physical assets of the local fund authority are properly maintained;(o)disclosing sufficient information to allow the public to scrutinize the conduct of fiscal policy and the state of local fund authority finances;(p)ensuring that local fund authority uses resources in ways that give best value for money, and also ensure that public assets are put to best possible use;(q)managing expenditure consistent with the level of revenue generated;(r)formulating budget in a realistic and objective manner with due regard to the general economic outlook and revenue prospects, and minimize deviations during the course of the year;(s)ensuring collection of dues and taxes in an expeditious manner;(t)ensuring discharge of current liabilities in a timely manner;(u)adopting appropriate techniques for measuring the cost of the services provided by the local fund authority.
