QCM : Fundamentals of Public Budget Principles — 18 questions

Questions et réponses du QCM

1. What is the main role of budgetary principles in public finance?

They structure how public money is authorized and used by the state
They regulate only the collection of local taxes
They replace parliamentary approval with administrative discretion
They determine private companies’ accounting standards

They structure how public money is authorized and used by the state

Explication

Budgetary principles are core rules that organize state finances and govern how public money is authorized and spent. They are meant to constrain government action, not replace it.

2. Which historical event is linked to the idea that taxes should be authorized?

The Constitution of 1958
The French Revolution of 1789
The Treaty of Rome of 1957
The Magna Carta of 1215

The Magna Carta of 1215

Explication

The 1215 Magna Carta is presented as the English charter that led to requiring authorization for raising taxes. The other events are important historically but are not the origin mentioned here.

3. What does the principle of annuality require for the state budget?

It must be adopted before year-end and executed during the following calendar year
It may be adopted at any time as long as spending remains lawful
It is limited to revenue authorization without spending execution
It must be voted every two years and executed over two fiscal cycles

It must be adopted before year-end and executed during the following calendar year

Explication

Annuality means the budget law is adopted before 31 December and then executed from 1 January to 31 December of the next year. It is a yearly authorization and execution cycle.

4. Which statement best describes payment credits?

They are used only to vote tax authorizations
They authorize annual payments due during the year as work progresses
They authorize commitments that may extend beyond the year
They replace the need for any finance law voting deadline

They authorize annual payments due during the year as work progresses

Explication

Payment credits cover the annual payments due during the year, following the progress of the committed works. By contrast, commitment authorizations can extend beyond the year.

5. What does the unity principle require in budget presentation?

Every ministry should publish its own separate budget law
All revenues must be assigned to specific expenditures
The state budget should appear in a single document
Credits should be grouped only by economic category

The state budget should appear in a single document

Explication

Unity means the budget is presented in one document, the finance law, so parliamentary control is not dispersed. It is about form and concentration of information.

6. What does the universality principle prevent?

Using one single finance law for the whole state budget
Keeping payment credits separate from commitment authorizations
Presenting revenues and expenditures in netted form
Voting the budget before the end of the year

Presenting revenues and expenditures in netted form

Explication

Universality requires gross presentation and forbids contraction, meaning revenues and expenditures are shown separately rather than netted. This helps prevent hidden items.

7. Which situation is an exception to the non-affectation of revenues?

A general income tax used to fund all state spending
An incentive tax used to support a behavior-changing public policy
A borrower's repayment of a past loan
A ministerial transfer of credits between programs

An incentive tax used to support a behavior-changing public policy

Explication

Incentive taxes are designed to change behavior, and their proceeds may be directed to the related public objective. This is a recognized exception to non-affectation.

8. What are fonds de concours?

Loan proceeds reserved for debt repayment
General taxes that may never be earmarked
Resources contributed for a specific purpose that must be used as intended by the contributor
Credits transferred between ministries under a decree

Resources contributed for a specific purpose that must be used as intended by the contributor

Explication

Fonds de concours are contributed resources that must be used according to the contributor’s intended purpose. The Constitutional Council accepted this arrangement as compatible with property rights.

9. What does the specialization of credits require?

All credits must be voted as a single lump sum
Credits may be freely moved across ministries during execution
Spending authorizations must be unlimited once voted
Credits must be voted in a detailed and separated way by divisions and sub-divisions

Credits must be voted in a detailed and separated way by divisions and sub-divisions

Explication

Specialization requires the finance law to present credits in a detailed, structured way, so their allocation cannot be changed freely during execution. This is the opposite of the old lump-sum approach.

10. What was the former abonnement system?

A system where Parliament voted lump-sum credits and the government redistributed them freely
A system limited to social security budgets
A procedure for carrying credits over into the next year
A system where each credit had to be voted individually by law

A system where Parliament voted lump-sum credits and the government redistributed them freely

Explication

The abonnement system allowed Parliament to vote global sums, after which the government could redistribute them freely. It was abandoned in 1817 in favor of the specialty approach.

11. What does the specialization of credits principle require in a finance law?

Credits must be detailed by divisions and sub-divisions so their allocation is fixed in advance
Credits must be grouped only by the type of expenditure, without further detail
Credits must be voted as one global amount for each ministry to preserve flexibility
Credits must be attached to the revenue source that finances them

Credits must be detailed by divisions and sub-divisions so their allocation is fixed in advance

Explication

Specialization of credits means Parliament votes appropriations in a detailed and separated way, by divisions and sub-divisions. This prevents the government from freely reshuffling allocations during execution.

12. Which reform marked the abandonment of the old lump-sum voting system in favor of the specialty approach?

The system was abandoned in 2012 when the European Semester introduced new budget rules
The system was abandoned in 1959 when annuality replaced all multi-year spending
The system was abandoned in 1817 in favor of specialized voting by structured credits
The system was abandoned in 2001 when all credits became non-carryover

The system was abandoned in 1817 in favor of specialized voting by structured credits

Explication

The course states that the abonnement system, under which Parliament voted global sums, was abandoned in 1817 in favor of the specialty approach. The other dates relate to different budgetary reforms.

13. What does the budget balance principle require in its strict mathematical form?

Public debt must be entirely eliminated before any new spending is authorized
State spending must always remain below the previous year’s spending
Each ministry must finance its own budget without transfers
Expenditures must match authorized resources so the budget is not systematically deficit-funded

Expenditures must match authorized resources so the budget is not systematically deficit-funded

Explication

In its strict form, the budget balance principle means mathematical equality between expenditures and credits, so resources cover spending. It does not require eliminating all debt before new spending.

14. How is balance treated for local public budgets under the course’s rule?

Local authorities may borrow freely to refinance older loans
Each section must be balanced in real terms, and borrowing cannot be used to repay past debt
The overall budget may be unbalanced if one section shows a surplus
Only investment spending must be balanced, while operating spending is flexible

Each section must be balanced in real terms, and borrowing cannot be used to repay past debt

Explication

Local budgets must achieve real balance section by section, and borrowing cannot be used to repay an existing loan. If they fail to do so, state supervision can follow.

15. Which statement best describes the preventive arm of European budget surveillance?

Member States submit medium-term objectives and annual stability programmes without immediate sanctions
The EU requires all budgets to be approved by the European Parliament before national vote
Member States are fined automatically whenever debt exceeds 60% of GDP
The preventive arm applies only after an excessive deficit has already been declared

Member States submit medium-term objectives and annual stability programmes without immediate sanctions

Explication

Under the preventive arm, Member States set medium-term budget objectives and submit annual stability programmes, initially without sanctions. Sanctions are associated with the corrective arm.

16. Under the six-pack rules, what corrective requirement applies when public debt exceeds 60% of GDP?

The deficit must be capped at exactly 1% of GDP each year
Member States must immediately eliminate all structural deficits
Public spending must be frozen until the debt falls below 3% of GDP
Debt must be reduced by one-twentieth over three years

Debt must be reduced by one-twentieth over three years

Explication

The six-pack adds a corrective debt rule requiring reduction by one-twentieth over three years when debt is above 60% of GDP. The 1% figure relates to the structural objective in the preventive framework, not the debt rule.

17. What is the unity of cash principle in state finances?

Tax revenue must be earmarked for the spending that generated it
Each ministry keeps its own separate treasury account
Temporary resources and definitive resources are managed in different cash desks
The state collects and handles resources through a single public cash desk

The state collects and handles resources through a single public cash desk

Explication

Unity of cash means the state uses a single public cash desk to collect and manage resources. It is about cash centralization, not earmarking or separate ministry treasuries.

18. How does the financial classification of state resources distinguish definitive resources from temporary resources?

Definitive resources are kept without repayment, while temporary resources are tied to borrowing and interest
Temporary resources are grants from third parties, while definitive resources are user fees
Definitive resources come only from borrowing, while temporary resources come from taxes
Definitive resources must be linked to a specific expenditure, while temporary resources cannot be used for debt

Definitive resources are kept without repayment, while temporary resources are tied to borrowing and interest

Explication

Definitive resources are collected without any obligation to repay or return, whereas temporary resources relate to borrowing, including principal and interest. Taxes, patrimonial income, and donations are examples of definitive resources.

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Budgetary principles — definition?

Core rules structuring public finances.

Loi de finance — role?

Legal act setting revenues and expenditures.

Annuality principle — requirement?

Budget law adopted before year-end; executed annually.

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