- 04
- May
Corporate accountants are used to two buckets — revenue and expense — flowing through one company account. Thai government agencies operate with three distinct fund types, each separated by law, recorded in different ledgers, and governed by different regulations.
Misunderstanding the three funds — for example, assuming fees collected by the agency can be reinvested directly, or that grants from external donors can be used freely — leads to decisions that violate fiscal regulations and create disciplinary risk.
This article continues the foundational series, following Budget (Government) vs Budget (Accounting) — Aligning Understanding First, to deepen the understanding by one more layer.
Why Three Funds — The Legal and Management Rationale
Under the Constitution and the State Fiscal and Financial Discipline Act B.E. 2561 (2018), "every baht of state money must be controlled". But state money comes from different sources, governed by different laws, requiring different controls — hence the explicit categorization.
| Fund | Source | Owner | How used |
|---|---|---|---|
| 1. Budget | Annual Appropriations Act | State (via Parliament) | Per the appropriated purpose |
| 2. Non-Budget | Revenue / donations / fund balances | Agency (under specific law) | Per the specific fund's regulation |
| 3. Treasury Revenue | Taxes, fees, fines | State (Treasury cash) | Remit first; usable only via budget appropriation |
Fund #1 — Budget Fund
This is the fund people think of when they hear "agency budget" — allocated by the Annual Appropriations Act passed by Parliament, structured into 5 expenditure categories (Personnel / Operating / Investment / Subsidy / Other).
Characteristics
- Tied to the fiscal year 1 Oct – 30 Sep; must be used within
- Surplus returns to the Treasury (unless approved as "carryover")
- Cannot be used for off-purpose — formal transfer required
- Disbursed via GFMIS per the Treasury Disbursement Regulations B.E. 2562 (2019)
Examples
- Personnel — salary, allowances
- Operating — materials, water, electricity
- Investment — equipment, construction
- Subsidy — grants via state programs
Fund #2 — Non-Budget Fund
Non-Budget Fund is money the agency receives without going through the Appropriations Act. But it is not "free money to spend at will" — each subtype has its own governing law.
Subtypes
| Subtype | Examples | Governing law |
|---|---|---|
| Established Funds | ThaiHealth, revolving funds | Each fund's own statute |
| Deposit Funds | Contract performance bond, escrow | MoF deposit-fund regulations |
| External Grants | Donor / international organization funding | Donor terms + agency rules |
| Special Aid | Disaster relief funds | Cabinet resolution + specific regulation |
| Special Revenue | Project-specific research grants | Agency regulation + grant contract |
Characteristics
- No mandatory fiscal-year cycle (unless statute says otherwise)
- Surplus can be retained for future use (unless statute requires return)
- Each subtype has its own regulation — cross-use forbidden
- Reporting to control body + audit by SAO
Fund #3 — Treasury Revenue
This is the fund corporate executives find most counter-intuitive — money the agency collects on behalf of the state must be remitted to the Treasury immediately, because it is state revenue, not agency money.
Examples
- Statutory fees (e.g., registration fees)
- Fines under various laws
- Taxes (Revenue Department, Customs)
- Treasury cash interest
- Proceeds from selling state assets (where statute does not allow retention)
Characteristics
- Remit daily or weekly per regulation
- Agency cannot use directly unless statute permits
- To use it the agency must request a budget appropriation → it becomes Fund #1
3-Fund Comparison — Quick Reference
| Dimension | Budget | Non-Budget | Treasury Revenue |
|---|---|---|---|
| Source | Appropriations Act | Revenue/donation/fund | Fees/taxes |
| Cycle | Within fiscal year | Per regulation | Remit immediately |
| Surplus | Return to Treasury | Retain | N/A (all remitted) |
| Encumbrance | Yes — at PO issuance | Some funds yes, some no | No (not spendable) |
| Disbursement | GFMIS | Fund system + GFMIS | Remitted, not spent |
| SAO audit | Heavy | Audited; focus on purpose compliance | Audit remittance compliance |
Real Example — A Research Agency
A government research agency typically operates all three funds simultaneously:
| Item | Fund | Why |
|---|---|---|
| Researcher salary | 1 (Budget) | From Personnel category in Appropriations Act |
| Inspection fee collected by agency | 3 (Treasury Revenue) | Collected on behalf of the state — remit |
| Donor ABC research grant for Project X | 2 (Non-Budget) | Earmarked deposit fund |
| Statutory research fund | 2 (Non-Budget) | Established fund |
| Lab equipment purchase | 1 (Budget) | Investment category |
| Publication sales | 3 (Treasury Revenue) | Statute does not allow retention |
The agency therefore needs an accounting system that tracks all three separately — separate ledger, separate control account, separate report.
FAQs
Q: Can prior-year surplus be used?
Depends on which fund:
- Fund 1 (Budget): typically returned, unless approved as "carryover"
- Fund 2 (Non-Budget): retain per the fund's regulation
- Fund 3 (Treasury Revenue): n/a (already remitted daily)
Q: Can the agency use revenue it generates?
It depends on the specific statute empowering the agency. Some have establishing acts that permit retaining revenue (Fund 2); some require full remittance (Fund 3). Check the founding statute for a definitive answer.
Q: Can one fund pay another?
Generally no — each fund has separate control accounts and bank accounts. "Borrowing across funds" raises immediate SAO red flags.
Q: Does the ERP support this?
Corporate-built ERP systems do not — they are designed around a single-fund company model. A government-grade ERP must:
- Chart of Accounts segmented by fund type
- Budget control per fund
- Bank-account mapping per fund
- Reports separated by fund + consolidated views
Implications for ERP Selection
Because the system must track three funds simultaneously — separate ledgers, separate controls, separate reports — corporate ERPs retrofitted into government usually fail:
- Architecture must be set on Day 1 — much harder to add later
- Integration with GFMIS — GFMIS uses 3-fund control accounts itself
- Audit trail must trace fund source/destination — SAO checks for fund-crossing
About Saeree ERP
Saeree ERP is built specifically for the Thai public sector — supporting Multi-Fund Accounting at the architectural level:
- Chart of Accounts segmented by fund type per CGD standards
- Budget control per fund + consolidated reports
- Encumbrance accounting for Funds 1 and 2 (per regulation)
- GFMIS schema integration
Government research-agency customers: TGO, NVI, ARDA, MHESI.
3 Sentences to Remember
- The 3 funds — Budget, Non-Budget, Treasury Revenue — are governed by different laws and tracked in different ledgers.
- Money the agency "collects" is mostly Treasury Revenue — cannot be used directly.
- The ERP must separate the 3 funds at the architectural level — much harder to add later.
Collecting money is not the same as having budget — the State has revenue, but the agency has no budget to spend until the Appropriations Act passes.
- The Saeree ERP Team
Related in the public-sector budget series:
- Budget (Government) vs Budget (Accounting) — Aligning Understanding First
- Government Budget Code — The 23-Digit Structure Every Executive Must Read
This article was prepared from over 20 years of ERP implementation experience for Thai government agencies. For consultation, contact sale@grandlinux.com or 02-347-7730.
