Performance-Based Budgeting and Performance Auditing in Turkish Public Finance

Performance-Based Budgeting and Performance Auditing in Turkish Public Finance

Murat Aydın (Uşak University, Turkey)
DOI: 10.4018/978-1-5225-8970-9.ch012
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In order to use public resources effectively, budgeting and audit processes should be compatible. There is a performance term in base of this harmony. Public Financial Management and Control Law No. 5108 has brought performance-based budgeting and performance audit institutions to Turkish public finance. According to this law, public administrations should prepare performance-based budgeting with respect to strategic plans. On the other hand, a performance audit, which is a kind of internal audit should be performed according to predetermined performance indicators. This process is called performance management in the literature. This study is a literature review which examine topic of performance-based budgeting and performance audit. Some terms have been researched that are thought to be important in the legislation. One hundred seventeen national and international abstracts have been read and full texts of twenty studies directly related to the subject have been analyzed according to the 4N1K literature screening method.
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Basic Terms In The Law No 5018

To make a quality performance audit in public financial management, there are some important conditions. If these conditions are not fulfilled, it is difficult to ensure effectiveness in the audit. Some terms entered to the Turkish public finance for the first time under the Law on Public Financial Management and Control No. 5018. These terms are economy, effectiveness and efficiency and efficiency. These three terms are provided by the law in six different places. In addition, accountability and financial transparency are important principles in the law too.

1 “The purpose of this Law is to regulate structure and functioning of the public financial management, preparation and implementation of the public budgets, accounting and reporting of all financial transactions, and financial control in line with the politics and objectives covered in the development plans and programs, in order to ensure accountability, transparency and the effective, economic and efficient collection and utilization of public resources” it is stated that these terms are very vital for public financial management. Effectiveness, economicy and efficiency are among the performance indicators of both public and private institutions (Yükçü and Atağan, 2011:1). Performance indicators allow a comprehensive measurement of performance. Performance indicators are also used to measure the performance of the activity, personnel and production factors (Yükçü and Atağan, 2011:1). In this part, these terms in article 1 will be explained.


The general definition of effectiveness is the best use of resources and the best possible result (Yükçü and Atağan, 2011, p. 1). In other words, the goal of reaching the targeted plans is the most important description of effectiveness. Effectiveness is an important performance indicator that shows the extent to which organizations and organizations achieve their goals at the end of their activities (Horngren and.,2010). The effectiveness goes into division; organizational effectiveness and managerial effectiveness. Organizational effectiveness is the realization of the target at the highest level with the opportunities and resources in the hands of the organization. Managerial effectiveness is the management's contribution to achieve organizational effectiveness (Işıkgöz, 2016, pp. 79-90). Quality organizational effectiveness depends on a managerial effectiveness (Karatepe, 2005, pp. 307-326). According to “Working Procedures and Principles of Internal Auditors Regulation” effectiveness is defined that relationship between the planned and actual effect of an activity and refers to the degree and availability of the goal. In the light of these definitions, it is understood that the term of effectiveness is included in the legislation in order to measure the performance of public administrations.

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