החדש הזה לכם ראש חדשים
שמות יב ב
What
Sanctification of the day as Rosh Chodesh, on the basis of testimony that the new moon appeared.
Why
To keep the relationship of the seasons and the months constant, so that Pesach comes out in spring and Sukkos in fall.
When
When the new moon is seen or when it is supposed to be seen.
How
After accepting testimony, the Bais Din declares היום מקודש
Who
Bais Din or the Gadol Hador who has Semicha
Also included
Is the Mitzva of Iibur Shana, making a leap year, because it too is needed to make sure Pesach is in spring and Sukkos is in fall.
In our times
Since Hillel Ha`Nasi, son of Rabbi Yehuda Ha`Nasi Klal Yisrael has not done Kiddush Ha`Chodesh. Hillel did Kiddush in advance for all the years until Eliyahu HaNavi comes.
Additional details
Brachos 63, Sanhedrin perek 1, Rosh Ha`Shana, Megila 5