How the Spanish State budgets, spends and audits public money

Automatic summary, not yet reviewed

1. The law regulates the budgetary, economic-financial, accounting, audit and financial control regime of the entire State public sector, and lists the entities that make it up: the State Administration, autonomous bodies, public business entities, Social Security, State-owned companies, foundations and other entities.
2. The State public sector is divided into three blocks: administrative, business and foundation. Each block applies different accounting principles (public, commercial or nonprofit).
3. Rights of the State Treasury lapse after four years, the same as State obligations. Debts to the Treasury may be deferred or paid in installments, usually with a guarantee, and accrue late-payment interest.
4. The General State Budgets follow the principles of stability, multi-year planning, transparency and efficiency. They fit within three-year budget scenarios, and funding allocations to spending centers take into account how well objectives were met in previous years.
5. Budget appropriations are binding: no one may spend more than authorized. Spending commitments can extend up to four fiscal years, with maximum yearly percentages, and a Contingency Fund is created, equal to two percent of non-financial spending, for urgent, non-discretionary needs.
6. The budget bill must be sent to the Cortes Generales (Spanish Parliament) before October 1 of the prior year. If it is not approved in time, the previous year's budgets are automatically extended.
7. The Intervención General de la Administración del Estado (state audit office) carries out internal control through three modes: prior audit of spending, permanent financial control and public audit. State public sector entities must render their accounts to the Tribunal de Cuentas (Court of Auditors).
8. Authorities and staff of the State public sector who cause damage to the Treasury through intent or gross negligence while breaking this law must pay compensation. Liability is joint and, if there is intent, several.

Who it affects

• Individuals and companies with debts or claims against the State Treasury: Their debts lapse after four years, can be deferred or paid in installments, and accrue late-payment interest.
• State public sector entities: They must follow the law's rules on budgeting, accounting, control and rendering accounts.
• Public employees and authorities: They must pay compensation out of their own assets if they damage the Treasury through intent or gross negligence.
• Autonomous communities and local governments: They receive State funds under distribution, advance payment and reporting rules set by the law.

Words worth knowing

Crédito presupuestario (budget appropriation)

The maximum amount of money the budget law assigns to a specific expense.

Prescripción (statute of limitations)

Loss of the right to collect or demand a debt once the period set by law has passed.

Función interventora (prior audit function)

A prior check confirming that a public expense is legal before it is approved.

Aval del Estado (State guarantee)

A guarantee under which the State pays if the guaranteed person or entity fails to pay its debt.

Remanente de tesorería (treasury surplus)

Money left over from a fiscal year that was neither spent nor committed.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries