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In many states with political systems derived from the Westminster system, a consolidated fund or consolidated revenue fund is the main bank account of the government. General taxation is taxation paid into the consolidated fund (as opposed to hypothecated taxes earmarked for specific purposes), and general spending is paid out of the consolidated fund.
The British Consolidated Fund was so named as it consolidated together a number of existing accounts, detailed below, and facilitated proper parliamentary oversight of the spending of the executive; it was defined as "one fund into which shall flow every stream of public revenue and from which shall come the supply of every service".
The Treasury established this account, formerly known as The Account of His Majesty's Exchequer, at the Bank of England where it remains to this day, and the legal term "Consolidated Fund" refers to the amount of credit held in this particular account. Under the Exchequer and Audit Departments Act 1866 [1] most of the revenue from taxation, and all other money payable to the Exchequer, must be paid into the Consolidated Fund.
The General Fund was established in 1617, the Aggregate Fund in 1715, the South Sea Fund in 1717. These funds were established in relation to specific government borrowing authorized by Parliament, which had a defined type of revenue appropriated to put towards the interest and repayment. That particular revenue would be paid into the fund related to the loan. For example, the South Sea Fund was related to the debts of the South Sea Company. The Aggregate Fund was paid all the hereditary revenues of the English (and later British) Crown, such as profits from the Crown Estate and the Royal Mail. The hereditary revenues of Scotland were paid into the Consolidated Fund from 1788 onwards.
From 1716 onwards the surplus of the first three funds, after the interest and principal payments, flowed into a fourth fund, the sinking fund. This was intended to be applied to the repayment of the national debt but was instead mainly used for day-to-day necessities. It was eventually placed into the hands of the National Debt Commissioners, and was abandoned in the 1820s.
In 1752, before the Consolidated Fund was formed, the debts owed to the three existing funds had themselves been consolidated, and became irredeemable (the principal would only be repaid if the government chose to do so). They, therefore, became annuities, paying an annual rate of interest of 3%, and known as consolidated annuities, or consols.
The Consolidated Fund Services of Great Britain and Ireland were merged by the Consolidated Fund Act 1816 into the single Consolidated Fund of the United Kingdom that exists to this day.
The government of Ireland established separate funds for its own purposes when it gained autonomy in 1922 and then independence in 1937. The modern equivalent to the Consolidated Fund is the Central Fund.
All tax revenue is paid into the fund unless Parliament has specifically provided otherwise by law.
Any money received by the government which is not taxation, and is not to be retained by the receiving department (for example, fines), is classed as a Consolidated Fund extra receipt (CFER). These are to be paid into the Consolidated Fund as soon as they are received.
Balancing payments are made from the National Loans Fund (NLF), to ensure negative balances (caused by a spending in excess of taxation) are not carried over to the following day. Consolidate Fund Account 2020-21 (PDF), September 2021, p. 5
Parliament gives statutory authority for the government to draw funds from the Consolidated Fund by Acts of Parliament known as Appropriation Acts and Consolidated Fund Acts. Funds are made available under the acts only for a specified financial year, a concept known as annuality, although an individual act can cover more than one financial year, listing separate amounts for each. Often a two-year period is covered by a Consolidated Fund Act, and roughly two or three are passed in each parliamentary year.
A Consolidated Fund (Appropriation) Bill is brought in and passed at the end of the parliamentary year before the Summer recess. When passed, this is known as the Appropriation Act, and allocates the monies from the Consolidated Fund to the purposes set out in the main annual departmental expenditure estimates (the annual government department budgets, known as Estimates).
In the interim period between the start of the financial year and the passing of the Appropriation Act, a process known as votes on account is used to grant to departments up to 45% of the amounts they were allocated in the preceding financial year. These votes on account, and any necessary changes to departmental budgets (supplementary estimates) are passed as Consolidated Fund Acts, normally twice each year in November and February. Additional funds may be requested at any time, and will either require an additional Consolidated Fund Act, or will be included within other legislation.
The preamble of these supply acts is different from that of most other acts of Parliament. It currently reads:
Whereas the Commons of the United Kingdom in Parliament assembled have resolved to authorise the use of resources and the issue of sums out of the Consolidated Fund towards making good the supply which they have granted to Her Majesty in this Session of Parliament:—
Until a few years ago,[ when? ] an older form of wording was used:
Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards making good the supply which we have cheerfully granted to Your Majesty in this Session of Parliament, have resolved to grant unto Your Majesty the sums hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
This follows the constitutional principle that the Crown (government) demands money, the House of Commons grants it, and the House of Lords assents to the grant. Since the Glorious Revolution of 1688 only once, in 1784, has the Commons refused to grant access to funds.
If money paid from the Consolidated Fund is not spent by the end of the financial year, it must be repaid to the fund. Grant-in-aid payments are however excluded from this rule.
Certain expenditure is by law charged directly to the Consolidated Fund and is not subject to Parliament's annual budget process, ensuring a degree of independence of the government. Services funded in this way are known as Consolidated Fund Services and include judges' salaries, the Civil List payments, the salary of the Comptroller and Auditor General, and the expenses paid to returning officers at elections. In the case of the judges, this is to ensure the judicial independence introduced by the Act of Settlement 1701.
The comptroller (who is also auditor general and head of the National Audit Office) controls both the Consolidated Fund and the National Loans Fund. The full official title of the role is Comptroller General of the Receipt and Issue of His Majesty's Exchequer.
The Comptroller must authorise each requisition request received by the Bank of England from His Majesty's Treasury, to assure that the request is compliant with the amounts and purposes authorised by Parliament in statute. If funds are mistakenly paid into the Consolidated Fund then both the Comptroller and the Treasury must agree to its return.
Payments can only be made from the Consolidated Fund to one of the principal accountants defined by law. These are His Majesty's Paymaster General, the Commissioners of His Majesty's Revenue and Customs, the National Debt Commissioners, and the Chief Cashier at the Bank of England.
Each of the devolved government consolidated funds is held in the name of the Paymaster General at the Bank of England. [3]
The Westminster Parliament provides a sum of money annually to provide a budget for the Scottish Government and fund the operation of the Scottish Parliament and the salaries for judges of Scottish courts. This money is transferred from the UK Consolidated Fund into an account known as the Scottish Consolidated Fund.
If the income tax varying powers of the Scottish Parliament were to be used (the rate can be changed by plus or minus three percent), the additional revenue raised would be paid by the HM Revenue and Customs directly to the Scottish Consolidated Fund. If the tax is reduced, then the amount paid from the UK Consolidated Fund in that year would be correspondingly reduced.
There is also a Welsh Consolidated Fund to provide a budget for the Welsh National Assembly.
In addition to the budget provided to the Welsh Government, the expenditures of the Welsh National Assembly, the Auditor General for Wales, and the Public Services Ombudsman for Wales are also paid directly from the Welsh Consolidated Fund.
Payments are normally made from the fund following the passing in the Assembly of a budget motion or supplementary budget motion, proposed by the Welsh ministers. There are limited exceptions for emergency situations, or a failure of the Assembly to pass a budget; in addition some payments are automatically authorised by law, such as the salaries of National Assembly officials.
The Auditor General has to authorise all payments out of the Welsh Consolidated Fund to the Welsh ministers, having checked that the expenditure has been approved by the National Assembly.
The Northern Ireland Consolidated Fund has existed since 1921.
The use of consolidated funds in Australian government dates back to colonial times. Today the Australian federal and state governments all maintain their own consolidated funds, with authorization for payments required from the relevant parliament.
The Australian Government's Consolidated fund is known as the Consolidated Revenue Fund (CRF). The CRF is established through sections 81 to 83 of the Constitution of Australia. The constitution gives no guidance as to how the revenues or monies that form the CRF are to be kept or accounted for as the CRF is said to be "self‑executing" – that is, all money paid to the Commonwealth automatically forms part of the CRF, whether or not it has been credited to a fund or a bank account. [4] Instead, accounting and banking practices pertaining to government funds are established in the Public Governance, Performance and Accountability Act 2013. The Act requires that the Commonwealth maintains a central bank account with the Reserve Bank of Australia [5] known as the Official Public Account (OPA). [6] The act also allows for non-corporate Commonwealth entities (NCEs) to account for and retain their receipts provided they have legislative and policy authority from the Prime Minister or Cabinet. However, most money collected by NCEs is treated as general government revenue that is not retainable and must be remitted to the OPA. [7]
Section 81 of the Constitution of Australia provides that:
All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund (CRF), to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.
"Revenues or moneys raised or received" includes for instance taxes, fines, charges, levies, borrowings, loan repayments and money held in trust. [4]
Section 83 of the Australian Constitution provides that no money shall be drawn from the Treasury of the Commonwealth except under an appropriation made by law. The "Treasury of the Commonwealth" in Section 83 is held to be the same thing as the "Consolidated Revenue Fund" referred to in section 81, so taken together these two sections mean that there must be an appropriation for the purposes of the Commonwealth made by law before money may be drawn from the CRF. [4]
Section 83 was intended to both safeguard parliament’s control over government spending, and restrict that expenditure to purposes authorised by the constitution. Over the years the meaning of "for the purposes of the Commonwealth" has been broadened considerably. It has been the subject of several High Court battles, and remains in contention. [8]
Sections 39 and 40 of the Constitution of New South Wales require that all revenues, loans and other monies collected by the state are to be paid into a single consolidated fund. This was originally formed as the Consolidated Revenue Fund in 1855, and was merged with the state's General Loan Account to be named the Consolidated Fund from 1982.
The Indian government and each Indian state government maintain their own consolidated funds.
Article 266(1) of the Constitution of India requires revenues received (direct and indirect taxes, money borrowed) by the Government of India and expenses (receipts from loans given by the government), excluding the exceptional items, are part of consolidated fund.
The Comptroller and Auditor General of India audits these funds and reports to the relevant legislatures on their management.
The budget consists of two types of expenditure – the expenditure ‘charged’ upon the Consolidated Fund of India and the expenditure ‘made’ from the Consolidated Fund of India.
The charged expenditure is non-votable by the Parliament, that is, it can only be discussed by the Parliament, while the other type has to be voted by the Parliament.
The list of the charged expenditure is:
An appropriation bill, also known as supply bill or spending bill, is a proposed law that authorizes the expenditure of government funds. It is a bill that sets money aside for specific spending. In some democracies, approval of the legislature is necessary for the government to spend money.
The comptroller and auditor general (C&AG) in the United Kingdom is the government official responsible for supervising the quality of public accounting and financial reporting. The C&AG is an officer of the House of Commons who is the head of the National Audit Office, the body that scrutinises central government expenditure.
A civil list is a list of individuals to whom money is paid by the government, typically for service to the state or as honorary pensions. It is a term especially associated with the United Kingdom and its former colonies of Canada, India, New Zealand, Singapore and many more. It was originally defined as expenses supporting the monarch.
The National Audit Office (NAO) is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments, government agencies and non-departmental public bodies. The NAO also carries out value for money (VFM) audits into the administration of public policy.
The Privy Purse is the British sovereign's private income, mostly from the Duchy of Lancaster. This amounted to £20.1 million in net income for the year to 31 March 2018.
In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq (DFI) account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority (CPA) Administrator. A part of the fund has been transferred to Baghdad and Iraq, and the DFI-Baghdad account was opened at the Central Bank of Iraq "for cash payment requirements". The fund also eventually received money from seized and "vested" Iraqi bank accounts and funds seized by coalition forces. $650 million of this amount belongs to Uday Saddam Hussein, the older son of the former Iraqi president. The DFI have been disbursed mainly for "the wheat purchase program, the currency exchange program, the electricity and oil infrastructure programs, equipment for Iraqis security forces, and for Iraqi civil service salaries and ministry budget operations".
In the Westminster system, a money bill or supply bill is a bill that solely concerns taxation or government spending, as opposed to changes in public law.
The Comptroller and Auditor General of India is the supreme audit institution of India, established under Article 148 of the Constitution of India. They are empowered to audit all receipts and expenditure of the Government of India and the State Governments, including those of autonomous bodies and corporations substantially financed by the government. The CAG is also the statutory auditor of Government-owned corporations and conducts supplementary audit of government companies in which the government has an equity share of at least 51 percent or subsidiary companies of existing government companies. The CAG is also the statutory auditor of the Lokpal.
The budget of the European Union is used to finance EU funding programmes and other expenditure at the European level.
The United States budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. It has reported that large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels—from 98 percent of gross domestic product (GDP) in 2020 to 195 percent by 2050.
Government financial statements are annual financial statements or reports for the year. The financial statements, in contrast to budget, present the revenue collected and amounts spent. The government financial statements usually include a statement of activities, a balance sheet and often some type of reconciliation. Cash flow statements are often included to show the sources of the revenue and the destination of the expenses.
Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organisations or by law. It emphasizes accountability rather than profitability, and is used by Nonprofit organizations and by governments. In this method, a fund consists of a self-balancing set of accounts and each are reported as either unrestricted, temporarily restricted or permanently restricted based on the provider-imposed restrictions.
The New York State Comptroller is an elected constitutional officer of the U.S. state of New York and head of the New York state government's Department of Audit and Control. Sixty-one individuals have held the office of State Comptroller since statehood. The incumbent is Thomas DiNapoli, a Democrat.
Title 2 of the United States Code outlines the role of Congress in the United States Code.
The Indiana Auditor of State is a constitutional officer in the executive branch of government of the U.S. state of Indiana. Fifty-seven individuals have occupied the office of auditor of state since statehood. The incumbent is Elise Nieshalla, a Republican.
Pape v Commissioner of Taxation is an Australian court case concerning the constitutional validity of the Tax Bonus for Working Australians Act 2009 (Cth) which sought to give one-off payments of up to $900 to Australian taxpayers. The decision of the High Court of Australia was announced on 3 April 2009, with its full reasons released on 7 July 2009.
Attorney-General (Vic); Ex rel Dale v Commonwealth, commonly known as the "First Pharmaceutical Benefits case", was a High Court of Australia decision. The case dealt with limits of the powers of the Australian Federal Government under section 81 of the Constitution of Australia, to take and spend money by legislation, in this case to fund reduced prices for prescription medicines.
The Ministry of Finance, abbreviated MOF, is a ministry of the Government of Malaysia that is charged with the responsibility for government expenditure and revenue raising. The ministry's role is to develop economic policy and prepare the Malaysian federal budget. The Ministry of Finance also oversees financial legislation and regulation. Each year in October, the Minister of Finance presents the Malaysian federal budget to the Parliament.
The Exchequer and Audit Departments Act 1866 is the UK Act of Parliament under which most of the revenue from taxation, and all other money payable to the Exchequer, must be paid into the Consolidated Fund.
The Legislative Branch Appropriations Act, 2015 is an appropriations bill that would make appropriations for the United States Congress for fiscal year 2015. The bill is considered one of the two easiest appropriations bills to pass each year. The bill would appropriate $3.3 billion to the legislative branch for FY 2015, which is approximately the same amount it received in FY 2014.
