The term ‘Financial Administration’ is used in a broad sense to include all the processes involved in collecting, budgeting, appropriating and expending public money; crediting income and expenditures and receipts and disbursements; accounting for assets and liabilities and for the financial transactions of the government and reporting upon income and expenditures, receipts and disbursements and the condition of funds and appropriations. It has three objectives, namely, fiscal policy, accountability and management. Fiscal policy is the technical aspect of financial administration and includes matters like the taxation theory, the debt theory, the social implications of taxes, etc. It does not form a part of our study as it falls under economics. But a student of Public Administration is very much concerned with its two other aspects of accountability and responsibility. Public administration requires the administrators not only to act honestly but also to show that they did act honestly. They are supposed to follow the prescribed rules and procedures. The financial officers should maintain the accounts in proper forms and follow the rules of expenditure without any departure. Public money is a trust and it should be spent cautiously.
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