Public Expenditure and Financial Accountability Assessment PEFA Self-Assessment
Ministry of Finance Federal Government of Somalia June 2016
Table of Contents 1 SCOPE AND APPROACH OF THE STUDY .................................................................................3 1.1 BASELINE STUDY.................................................................................................................................3 1.2 PEFA METHODOLOGY .......................................................................................................................3 1.3 PFM ACTION PLAN 2016-2020 ...........................................................................................................3 2 SUMMARY OF FINDINGS ..............................................................................................................4 2.1 2.2 2.3 2.4 2.5 2.6 2.7
BUDGET RELIABILITY .........................................................................................................................4 TRANSPARENCY OF PUBLIC FINANCES .............................................................................................5 MANAGEMENT OF ASSETS AND LIABILITIES ...................................................................................5 POLICY-BASED FISCAL STRATEGY AND BUDGETING ......................................................................5 PREDICTABILITY AND CONTROL IN BUDGET EXECUTION ..............................................................5 ACCOUNTING AND REPORTING .......................................................................................................7 EXTERNAL SCRUTINY AND AUDIT ....................................................................................................7
3 DEVELOPMENTS AND COMPARISONS ...................................................................................8 3.1 IMPROVEMENTS BETWEEN 2015 AND 2016 ......................................................................................8 3.2 COMPARISON AGAINST PEER COUNTRIES .......................................................................................9 4 DETAILED FINDINGS ....................................................................................................................10
2
1
Scope and approach of the study
1.1
Baseline study
This report is assessing the performance of the Public Financial Management (PFM) System of the Federal Government of Somalia during the first half of 2016. It is prepared to enable the Government to track progress of the PFM Reform Action Plan during 20162020. The assessment sets the baseline for 2016 against which progress can measured. The plan is to conduct subsequent full PEFA assessments during 2018 and 2020.
1.2
PEFA methodology
The methodology for the assessment is based upon the internationally accepted PEFA. PEFA is a methodology for assessing public financial management performance. It provides the foundation for evidence-based measurement of countries’ PFM systems. The assessment measures the extent to which PFM systems, processes and institutions contribute to the achievement of desirable fiscal and budgetary outcomes. This study is using the 2016 version of the PEFA methodology. This methodology is a significant upgrade of the framework, originally from 2001. PEFA identifies seven pillars of performance in an open and orderly PFM system that are essential to achieving the PFM objectives. The seven pillars thereby define the key elements of a PFM system. They also reflect what is desirable and feasible to measure. In addition, this report also presents high level results from a PEFA self-assessment conducted during 2015 although this is not directly comparable against the 2016 framework, this enables comparisons against other countries as few countries have yet to conduct assessments using the 2016 methodology.
1.3
PFM action plan 2016-2020
The report should be read in conjunction with the PFM Reform Action Plan that has been developed in parallel. The Reform Action Plan sets out targets and activities in order to achieve a fully functioning PFM system by 2020. The plan is prioritized, sequenced and costed. Implementation of the plan has commenced.
3
2
Summary of findings
This summary presents the main findings across seven areas. This summarizes 125 individual assessment points that have all be evaluated and assigned a score in accordance with the PEFA 2016 methodology. The detailed assessment of the 125 items is included in chapter 4.
2.1
Budget reliability
This area focuses on assessing the reliability of aggregate budget expenditure outturn, expenditure composition outturn, and the change in revenue between the original approved budget and end-of-year outturn. Budgets are prepared annually although the reliability is poor. Revenues fall short of targets resulting in lower than budgeted expenditures. Domestic revenues are more reliably budgeted than grants. Expenditure composition, considering aggregate shortfalls, is also not very reliable, with priority expenditure types being disproportionately funded. Exhibit: Illustration of PEFA ratings during 2016 for the Federal Government of Somalia across the seven main pillars Findings
Performance of the PFM system of the Federal Government of Somalia is mostly rated in the lower quantiles Area
PEFA scores
Low 0
1
PI: Budget reliability
1.17
PII: Transparency of public finances
1.60
PIII: Management of assets and liabilities
1.13
PIV: Policy-based fiscal strategy and budgeting
1.40
PV: Predictability and control in budget execution
1.38
PVI: Accounting and reporting
1.67
PVII: External scrutiny and audit
1.25
PEFA self-assessment 2016
2
High 3
4
Notes: Average scores of 31 second level scores across seven main areas. 125 individual elements are rated.
4
2.2
Transparency of public finances
This area focuses on assessing the comprehensiveness and understandability of budgetary and fiscal information, including that for central government and transfers to sub-national governments, as well as information on service delivery in the executive’s budget proposal or related documentation. An internationally accepted budget classification system is used and budget documentation includes basic elements. The public has access to basic fiscal information. Allocation of transfers to sub-national government are not, as apparent from the budget documentation, determined by transparent and rule based systems. There is no information on service delivery included in budget documentation.
2.3
Management of assets and liabilities
In this area the focus is on assessing the extent to which fiscal risks to the central government are reported and how the government manages public investment, monitors government assets and manages debt. The government does not describe or quantify fiscal risks, whether stemming from own operations, investments and financing, or from those of related entities (i.e. sub-national government, public corporations). Public investment management is nascent and core government project economic analysis, selection, costing and monitoring are to be developed, while donor financed projects implemented through special units address these elements to varying degrees. Public asset management is not formalized or consistent across core government. Debt management policy, per legacy legislation, is dated and debt strategy is not articulated.
2.4
Policy-based fiscal strategy and budgeting
This pillar addresses the government’s ability to develop robust macroeconomic and fiscal forecasts, to develop and implement clear fiscal strategy, and considers the extent to which expenditure budgets are developed within explicit medium term expenditure ceilings. Participation by relevant stakeholders in the budget preparation process as well as the nature and extent of legislative scrutiny of the budget are also addressed. Fiscal policy and strategy are expressed as basic rules in the appropriation act, such as the prioritization of one expenditure category over another, and the prohibition against borrowing. More advanced fiscal strategies are not articulated reflecting the very basic nature of the cash-based fiscal system. The appropriation act or other budget documentation does not include macroeconomic forecasts or analysis, and there is not a medium term expenditure framework. Basic elements of legislative review are in place and the appropriation act has been passed prior to the start of each year 2016 and 2015.
2.5
Predictability and control in budget execution
This pillar addresses collection, monitoring, recording and reporting on government revenues, Ministry of Finance cash commitment forecasting ability, as well as the existence and management of arrears. The strength of civil service payroll processes and 5
non-salary expenditure processes, including procurement management, are addressed as are standards and procedures applied in internal audit. Revenue collection entities exist and collections are remitted to the government through the central bank. Payers do not generally have easy access to comprehensive and up-todate information on obligations and rights, there is no comprehensive, structured approach by which government assesses and prioritizes compliance risks, nor is there timely and broad insight into revenue arrears. Cash forecasting capability is inhibited by, among other factors, lack of complete and timely flow or balance data. Basic controls are in place for civil servant payroll processing and for personnel records. For nonsalary expenditures, procurement practice is fragmented with respect to control and implementation, and the legal and regulatory framework incomplete. Expenditure processes are not documented in detail and there is noncompliance with respect to regular payment procedures. There is no effective internal audit function.
Exhibit: Illustration of PEFA ratings during 2016 for the Federal Government of Somalia across the 31 level 2 areas Findings
Selected areas shows better performance Area 0 1. Aggregate expenditure out-turn 2. Expenditure composition out-turn 3. Revenue out-turn 4. Classification of the budget 5. Budget documentation 6. Central government operations outside financial reports 7. Transfers to sub-national governments 8. Performance information for service delivery 9. Public access to fiscal information 10. Fiscal risk reporting 11. Public investment management 12. Public asset management 13. Debt management 14. Macroeconomic and fiscal forecasting 15. Fiscal strategy 16. Medium-term perspective in expenditure budgeting 17. Budget preparation process 18. Legislative scrutiny of budgets 19. Revenue administration compliance 20. Accounting for revenues 21. Predictability of in-year resource allocation 22. Expenditure arrears 23. Payroll controls 24. Procurement 25. Internal controls on non-salary expenditure 26. Effectiveness of internal audit 27. Financial data integrity 28. In-year budget reports 29. Annual financial reports 30. External audit 31. Legislative scrutiny of audit reports
PEFA self-assessment 2016
PEFA scores
Low 1
2
High 3
4
1 1.5 1 2 2 #N/A 1 1 2 1 1 1 1.5 1 1 1 1.5 2.5 1 2.5 1.5 1.5 1.5 1 1 1 1 1.5 2.5 1.5 1
Notes: Scores of 31 aggregate areas calculated from 125 individual ratings using PEFA specified methodology for aggregating scores.
6
2.6
Accounting and reporting
This pillar addresses the integrity of financial data as well as the quality if in-year budget reports and annual financial statements. Data integrity considers the regularity of reconciliation of bank, suspense and advance accounts, as well as how access and changes to records is restricted and recorded. In-year budget reports are assessed with respect to the comprehensiveness, accuracy and timeliness of information on budget execution and annual financial reports on completeness, timeliness, and consistency with generally accepted accounting principles and standards. Not all government bank accounts are recorded in the centralized accounting system, precluding central Ministry of Finance from performing or assessing regular reconciliation. Access controls to the accounting system are designed, although not subject to regular operational effectiveness testing. The form of automated budget reports supports in-year reporting, while the accuracy of underlying data is uncertain. Annual financial statements are prepared regularly and are comparable with the approved budget. They include all basic elements and are prepared per the standards of the country’s legacy legal framework.
2.7
External scrutiny and audit
This pillar addresses external audit coverage and standards, submission of audit reports to the legislature, legislative scrutiny, and external audit follow-up by the executive. It also addresses the independence of the country’s Supreme Audit Institution (SAI). Audit reports are submitted to the legislature annually and in a timely manner. National auditing standards, prescribed by legacy law, do not however suitably support audit opinions of financial statements. The law also does not support an effectively independent SAI. Formal documentation detailing executive follow-up of audit findings is not easily available. Legislative scrutiny of audit findings y the legislature exists although committee reports are not published in a manner easily accessible to the public.
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3
Developments and comparisons
This sections presents the performance of the PFM system of the Federal Government compared against; (i) itself during 2015, whereby a select few areas of the PEFA assessment allows for direct comparisons of the methodologies over time; and (ii) With peer countries based upon a self-assessment conducted during 2015 in Somalia. This uses the old PEFA methodology of 2011.
3.1
Improvements between 2015 and 2016
There have been improvements in the PFM system over the last 12-18 months. Many reform efforts are ongoing and the results are manifested in improvements of practices and performance. When comparing the results of the PEFA 2016 against the findings of 2015, we note improvements across 11 of the 125 areas. In some of these areas, there is now acceptable performance levels. The ambition remains high and improvement actions are addressed in the PFM Action Plan 2016-2020. Note that the methodology for comparing the 2011 and 2016 PEFA framework requires some discretion. We still believe, however, that this represents a reasonably accurate presentation of progress. Exhibit: Illustration of improvements in PEFA ratings between 2015 and 2016 for the Federal Government of Somalia Findings
Since 2015, performance has improved across several areas Area
PEFA scores
Low 0
1
2
High 3
4
5.1 Budget documentation 13.1 Reporting of debt and guaantees 17.2 Guidance on budget preparation 19.1 Rights and obligations for revenue measures 21.4 Significance of in-year budget adjustments 22.2 Expenditure arrears monitoring 27.2 Suspense accounts 28.2 Timing of in-year budget reports 29.2 Submission of reports for external audit 30.2 Submission of audit reports to the legislature 31.3 Recommendations on audit by the legislature PEFA self-assessment 2016
Notes: Compared against PEFA self assessment during 2015. Only select few areas are comparable to the 216 methodology.
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3.2
Comparison against peer countries
Compared against other countries, the PFM system of the Federal Government has much improvement potential. Compared to fragile states, the performance of Somalia is lower across all areas. However, performance follows much the same pattern. As for other fragile states, there is relatively better performance in the areas of “comprehensiveness and transparency”, as well as “external scrutiny and audit”. Performance compared to countries in East-Africa is some distance away in most key areas. However, in the area of external scrutiny and audit the Somali systems performs relatively well much do to the parliamentary scrutiny.
Exhibit: Illustration of PEFA ratings for the Federal Government of Somalia (2015) compared against peer countries using the 2011 PEFA methodology Findings
Compared against peer countries, the Federal Government PFM system has much improvement potential Area
PEFA scores
Low 1
1. Credibility of the budget
Actual expenditures and revenues vary significantly from plan. Arrears exist.
2. Comprehensiveness and transparency
Lack of budget transparency including inter-governmental fiscal relations.
3. Policy-based budgeting
Lack of transparency and approval delays.
0
2
2
4
4. Predictability and control in Legal framework incomplete. Limited cash forecasting. Budget execution budget execution unpredictable. 5. Accounting, recording and reporting
Reconciliation infrequent. Data collection limited. Reporting of limited value.
6. External scrutiny and audit
Relevant processes exist. Scrutiny is not strong or not well evidenced.
7. Donor practices
Information on donor practices limited. Support has been unpredictable.
PEFA self-assessment 2016
3
High 4
Fragile States Eastern Africa Somalia
Notes: Compared against PEFA self assessment during 2015. Benchmark data from PEFA.org
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4
Detailed findings
Indicator 1.
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
Budget reliability 1.0 1.1
Aggregate expenditure out-turn Aggregate Aggregate expenditure out- expenditure outturn turn. The extent to was between 95% which aggregate and 105% of the approved aggregate budget budgeted expenditure expenditure in at outturn reflects least two of the last the amount three years. originally approved.
Aggregate expenditure outturn was between 90% and 110% of the approved aggregate budgeted expenditure in at least two of the last three years.
Aggregate Performance is less expenditure outturn than required for a C was between 85% score. and 115% of the approved aggregate budgeted expenditure in at least two of the last three years.
10
D
Actual expenditure outturn for the last three years: 2013) 82%, 2014) 70%, 2015) 83%.
Indicator 2.0 2.2
2.3
Description
Grade A
Expenditure composition out-turn Variance in Expenditure composition out- expenditure turn by economic composition by type. measures the economic classification was difference less than 5% in at between the original, approved least two of the last three years. budget and endof-year outturn in expenditure composition by economic classification during the last three years including interest on debt but excluding contingency items. Expenditure from Actual expenditure charged to the contingency contingency vote reserves. was on average less Measures the average amount of than 3% of the original budget. expenditure actually charged to a contingency vote over the last three years.
Grade B
Grade C
Grade D
Score
Comment
Variance in expenditure composition by economic classification was less than 10% in at least two of the last three years.
Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years.
Performance is less than required for a C score.
D
Economic classification based on the "sectors" as defined in the FGS Appropriation Acts: Administrative, Economic, Social and Security. Composition variance ranges from 71% to 45% after adjustment for total outturn effect.
Actual expenditure charged to the contingency vote was on average more than 3% but less than 6% of the original budget.
Actual expenditure Performance is less charged to the than required for a C contingency vote score. was on average more than 6% but less than 10% of the original budget.
A
Percentage of total budget booked to Contingency Vote (either based on original or revised budget) is 3% or less than 3% over the past three years.
11
Indicator
Description
3.0
Revenue out-turn
3.1
3.2
Grade A
Grade B
Aggregate revenue out-turn. Measures the extent to which revenue outturns deviate from the originally approved budget.
Actual domestic revenue was between 97% and 106% of budgeted revenue in at least two of the last three years
Actual domestic revenue was between 94% and 112% of budgeted revenue in at least two of the last three years
Revenue composition outturn. Measures the variance in revenue composition during the last three years.
Variance in revenue composition was less than 5% in two of the last three years.
Variance in revenue composition was less than 10% in two of the last three years.
Score
Comment
Actual domestic Performance is less revenue was than required for a C between 92% and score. 116% of budgeted revenue in at least two of the last three years
D
Actual Domestic Revenue/ Budgeted Domestic Revenue: 2013: 128%, 2014) 78%, 2015) 93%. This is based on originally approved budget as per the PEFA definition.
Variance in revenue Performance is less composition was than required for a C less than 15% in two score. of the last three years.
D
Disaggregated at highest level (GFS level 1 or equivalent) into: Tax revenue, non-tax revenue, Domestic loan and grants, external grants. Composition variance ranges from 61% to 183% after adjustment for total outturn effect.
Grade C
Grade D
12
Indicator 2
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
Transparency of public finances 4.0 4.1
Classification of the budget Budget formulation, (i) The execution, and classification reporting are based system used for on every level of formulation, administrative, execution and economic, and reporting of the functional central classification using government's GFS/COFOG budget standards or a classification that can produce consistent documentation comparable with those standards. Program classification may substitute for subfunctional classification if it is applied with a level of detail at least corresponding to sub-functional classification.
Budget formulation, execution, and reporting are based on administrative, economic (at least “Group” level of the GFS standard—3 digits), and functional/subfunctional classification, using GFS/COFOG standards or a classification that can produce consistent documentation comparable with those standards.
Budget formulation, Performance is less execution, and than required for a C reporting are based score. on administrative and economic classification using GFS standards (at least level 2 of the GFS standard—2 digits) or a classification that can produce consistent documentation comparable with those standards.
13
C
GFS standard is applied up to 4 digits. COFOG is not applied.
Indicator
Description
Grade A
Grade B
5.0
Budget documentation
5.1
Budget documentation
6.0
Central government operations outside financial reports Outside financial Expenditure outside Expenditure outside government reports. Assesses government the magnitude of financial reports is financial reports is less than 1% of total less than 5% of total expenditures BCG expenditure. BCG expenditure. incurred by
6.1
budgetary and extrabudgetary units that are not reported in the government’s financial reports.
Budget documentation fulfills 10 elements, including every basic element (1-4).
Budget documentation fulfills 7 elements, including at least 3 basic elements (1-4).
Grade C
Grade D
Score
Comment
Budget Performance is less documentation than required for a fulfills at least 3 C score. basic elements (1-4).
C
Basic elements of the Budget Documentation: 1) Forecast of the fiscal deficit or surplus, 2) previous year's budget outturn. 3) Current fiscal year's budget 4) Aggregated budget data for both revenue and expenditure, have been covered in the 2016 Appropriation Act.
Expenditure outside Performance is less government than required for a C financial reports is score. less than 10% of total BCG expenditure.
D*
Assessing the completeness of information for this question has not been possible under the scope of this assessment.
14
Indicator
Description
Grade A
Grade B
Grade D
Score
6.2
Revenue outside financial reports. Assesses the magnitude of revenues received by budgetary and extra budgetary units (including social security funds) that are not reported in the government’s financial reports.
Revenue outside government financial reports is less than 1% of total BCG revenue.
Revenue outside government financial reports is less than 5% of total BCG revenue.
Revenue outside government financial reports is less than 10% of total BCG revenue.
Performance is less than required for a C score.
D*
Assessing the completeness of information for this question has not been possible under the scope of this assessment.
6.3
Financial reports of extra-budgetary units. Assesses the extent to which expost financial reports of extra budgetary units are provided to central government.
Detailed financial reports of all extra budgetary units are submitted to government annually within three months of the end of the fiscal year.
Detailed financial reports of most extra budgetary units are submitted to government annually within six months of the end of the fiscal year.
Detailed financial Performance is less reports of the than required for a C majority of extra score. budgetary units are submitted to government annually within nine months of the end of the fiscal year.
D*
There is currently no sufficient information to assess and review the existence of units defined as extra budgetary unit (as per IMF GFSM 2014). Federal entities (regions) are institutional units in their own right.
Grade C
15
Comment
Indicator 7.0 7.1
7.2
Description
Grade A
Transfers to sub-national government The horizontal System for allocation of all allocating transfers. Assesses transfers to subnational the extent to which transparent, governments from central government rule-based is determined by systems are transparent, rule applied to based systems. budgeting and the actual allocation of conditional and unconditional transfers. The process by Timeliness of which subnational information on transfers. Assesses governments receive the timeliness of information on their annual transfers is reliable managed through information the regular budget provided to calendar, which is subnational generally adhered to governments on and provides clear their allocations and sufficiently from central detailed information government for for subnational the coming year. governments to allow at least six weeks to complete their budget planning on time.
Grade B
Grade C
Grade D
Score
Comment
The horizontal allocation of most transfers to subnational governments from central government is determined by transparent, rule based systems.
The horizontal Performance is less allocation of some than required for a C transfers to score. subnational governments from central government is determined by transparent, rule based systems.
D
The rules and systems for fiscal federalism are not developed or implemented yet. Principles for functions, expenditure responsibilities and revenue transfers are not defined.
The process by which subnational governments receive information on their annual transfers is managed through the regular budget calendar, which provides clear and sufficiently detailed information for subnational governments to allow at least four weeks to complete their budget planning on time.
Substantial delays Performance is less may be experienced than required for a C in implementation score. of the budget procedures. Information on annual transfers to subnational governments is issued before the start of the subnational governments’ fiscal year, which could be after budget plans are decided.
D
The rules and systems for fiscal federalism are not developed or implemented yet.
16
Indicator 8.0 8.1
Description
Grade A
Grade B
Performance information for service delivery Information is Performance plans Information is published annually published annually for service on policy or delivery. Assesses on policy or program objectives, program objectives, the extent to key performance key performance which key indicators, outputs indicators, and performance indicators for the to be produced, and outputs to be the outcomes produced or the planned outputs planned for most outcomes planned and outcomes of ministries, for most ministries. programs or disaggregated by services that are program or function. financed through the budget are included in the executive’s budget proposal or related documentation, at the function, program or entity level.
Grade C
Grade D
Information is Performance is less published annually than required for a on the activities to C score. be performed under the policies or programs for the majority of ministries or a framework of performance indicators relating to the outputs or outcomes of the majority of ministries is in place.
17
Score
Comment
D
Some ministries do publish partial information on the activities to be performed under the policies or programs, as well as performance indicators related to the outputs or outcomes. For those ministries that do publish such information, it is done out of their own initiative and there are no centralized process, control or incentive for ministries to publish such information.
Indicator
Description
8.2
Performance achieved for service delivery. Examines the extent to which performance results for outputs and outcomes are presented either in the executive’s budget proposal or in an annual report or other public document.
8.3
Information on Resources received by service resources received by frontline service delivery units. delivery units is Measures the collected and extent to which recorded for at least information is two large ministries, available on the disaggregated by level of resources source of funds. A actually received report compiling the by service delivery information is units of at least prepared at least two large annually. ministries and the sources of those funds.
Grade A
Grade B
Information is Information is published annually published annually on the quantity of on the quantity of outputs produced outputs produced or and outcomes the outcomes achieved for most achieved for most ministries ministries. disaggregated by program or function.
Information on resources received by frontline service delivery units is collected and recorded for at least one large ministry. A report compiling the information is prepared at least annually.
Grade C
Grade D
Score
Comment
Information is published annually on the activities performed for the majority of ministries.
Performance is less than required for a C score.
D
Partial and incomplete information is published annually by a minority of ministries on the activities performed under the budget.
D
In the majority of ministries, frontline service delivery units have not been defined as such and hence compiling information on their resources cannot currently be done.
A survey carried out Performance is less in one of the last than required for a C three years provides score. estimates of the resources received by service delivery units for at least one large ministry.
18
Indicator
Description
8.4
Performance evaluation for service delivery. Considers the degree the design of public services and the appropriateness, efficiency, and effectiveness of those services is assessed in a systematic way.
9.0
Public access to fiscal information The government Public access to fiscal information. makes available to the public eight Assesses the comprehensivenes elements, including all five basic s of fiscal elements, in information accordance with the available to the specified time public based on frames. specified elements of information to which public access is considered critical.
9.1
Grade A Independent evaluations of the efficiency and effectiveness of service delivery have been carried out and published for most ministries at least once within the last three years.
Grade B
Grade C
Grade D
Score
Comment
Independent evaluations of the efficiency and effectiveness of service delivery have been carried out and published for the majority of ministries at least once within the last three years.
Evaluations of the Performance is less efficiency or than required for a effectiveness of C score. service delivery have been carried out for some ministries at least once within the last three years.
D
Evaluations of efficiency and effectiveness are currently not performed for any ministries.
The government makes available to the public six elements, including at least four basic elements, in accordance with the specified time frames.
The government Performance is less makes available to than required for a the public four basic C score. elements, in accordance with the specified time frames.
C
1) Annual executive budget proposal documentation is not made publicly available. 2) Enacted budget is made publicly available, although not always within the required two weeks. 3) Two in-year budget execution reports have been published in the past two years (2014 & 2015). Reports are not always published within one month of issuance. 4) The annual budget execution report is made
19
Indicator
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment public within 6 months of the FY’s end. There are issues of completeness and often last fiscal months are estimates based on revised budgets, not actuals. 5) Annual financial reports are audited but not easily accessible to the public.
3
Management of assets and liabilities 10.0 10.1
10.2
Fiscal risk reporting Audited annual Monitoring of financial statements public corporations. The for all public corporations are extent to which information on the published within six months of the end of financial the fiscal year. A performance of consolidated report the central on the financial government’s performance of the public public corporation corporations is sector is published available through by central audited annual government financial annually. statements. Monitoring of sub- Audited annual financial statements national for all subnational government governments are (SNG). Assesses
Audited annual financial statements are published for most public corporations within six months of the end of the fiscal year.
Government Performance is less receives financial than required for a reports from most C score. public corporations within nine months of the end of the fiscal year.
D*
Completeness of reporting for public corporations is not sufficient to assess the question.
Audited annual financial statements for most subnational governments are
Unaudited reports on the financial position and performance of the
D
Rules and processes for fiscal federalism are not developed or implemented yet. This
Performance is less than required for a C score.
20
Indicator
10.3
Description
Grade B
Grade C
published within the extent to which information nine months of the end of the fiscal on financial year. A consolidated performance, report on the including the financial position of central all subnational government’s governments is potential exposure published at least to fiscal risks, is annually. available through the audited annual financial statements of subnational governments.
Grade A
published at least annually within nine months of the end of the fiscal year.
majority of subnational governments are published at least annually within nine months of the end of the fiscal year.
Contingent liabilities and other fiscal risks. Assesses monitoring and reporting of government’s explicit contingent liabilities from its programs and projects.
Central government entities and agencies quantify most significant contingent liabilities in their financial reports.
Central government Performance is less entities and agencies than required for a C quantify some score. significant contingent liabilities in their financial reports.
A report is published by central government annually that quantifies and consolidates information on all significant contingent liabilities and other fiscal risks of central government.
Grade D
Score
Comment includes reporting. It is yet to be defined what entities should be reporting, scope and frequency of such reporting.
21
D
Central government entities and do not report on contingent liabilities.
Indicator 11.0 11.1
11.2
Description
Grade A
Public investment management Economic analysis Economic analyses are conducted, as of investment established in proposals. assesses the extent national guidelines, to assess all major to which robust investment projects appraisal and the results are methods, based on published. The economic analysis, analyses are are used to reviewed by an conduct feasibility entity other than the or prefeasibility sponsoring entity. studies for major investment projects and whether the results of analyses are published. Investment project selection. Assesses the extent to which the projectselection process prioritizes investment projects against clearly defined criteria.
Prior to their inclusion in the budget, all major investment projects are prioritized by a central entity on the basis of published standard criteria for project selection.
Grade B
Grade C
Grade D
Score
Comment
Economic analyses are conducted, as established in national guidelines, to assess most major investment projects, and some results are published. The analyses are reviewed by an entity other than the sponsoring entity.
Economic analyses Performance is less are conducted to than required for a C assess some major score. investment projects.
D
The FGS carries out very few major investment projects on its own. No major investment project was reported for 2015. When projects are sponsored by donors, economic analyses may be carried based on donor guidelines/ frameworks. There are no known guidelines or framework for the economic analysis of major investment projects at the FGS level.
Prior to their inclusion in the budget, most major investment projects are prioritized by a central entity on the basis of standard criteria for project selection.
Prior to their Performance is less inclusion in the than required for a C budget, some of the score. major investment projects are prioritized by a central entity.
D
Public investments are of low value. There are no "standard criteria" defined for the selection of major investment projects by the FGS.
22
Indicator
Description
11.3
Investment project costing. Evaluates whether the budget documentation includes mediumterm projections of investment projects on a fullcost basis and whether the budget process for capital/recurrent spending is fully integrated.
Projections of the Projections of the total life-cycle cost of total capital cost of major investment major investment projects, including projects, together both capital and with a year-by-year recurrent costs breakdown of the together with a year- capital costs and by-year breakdown estimates of the of the costs for at recurrent costs for least the next three the next three years, years, are included are included in the in the budget budget documents. documents
11.4
Investment project monitoring. Assesses the extent to which prudent project monitoring and reporting arrangements are in place for ensuring value for money and fiduciary integrity.
The total cost and physical progress of major investment projects are monitored during implementation by the implementing government unit. There is a high level of compliance with the standard procedures and rules for project implementation. There is full access to information on the implementation.
Grade A
Grade B
The total cost and physical progress of major investment projects are monitored by the implementing government unit. Standard procedures and rules for project implementation are in place, and information on implementation of major investment projects is published annually.
Score
Comment
Projections of the Performance is less total capital cost of than required for a C major investment score. projects, together with the capital costs for the forthcoming budget year, are included in the budget documents.
D
Total capital costs of major investment projects, together with the capital costs for the forthcoming budget year, are not included in the budget documents.
The total cost and Performance is less physical progress of than required for a C major investment score. projects are monitored by the implementing government unit. Information on implementation of major investment projects is prepared annually.
C
There are only very few investment project, and none of them are major. Some investment projects, externallyfunded, are monitored by government implementing units.
Grade C
Grade D
23
Indicator 12.0 12.1
12.2
Description
Grade A
Public asset management The government Financial asset maintains a record monitoring. of its holdings in all Assesses the nature of financial categories of asset monitoring, financial assets, which is critical to which are recognized at fair or identifying and market value, in line effectively with international managing the key accounting financial standards. exposures and Information on the risks to overall performance of the fiscal portfolio of financial management. assets is published annually. The government Non-financial asset monitoring. maintains a register of its holdings of Assesses the fixed assets, land, features of non and (where relevant) financial asset subsoil assets, monitoring for including BCG. information on their usage and age, which is published at least annually.
Grade B
Grade C
Grade D
Score
Comment
The government maintains a record of its holdings in major categories of financial assets, which are recognized at their acquisition cost or fair value. Information on the performance of the major categories of financial assets is published annually.
The government maintains a record of its holdings in major categories of financial assets.
Performance is less than required for a C score.
D
The FGS currently does not maintain a consolidated record of its financial assets.
The government maintains a register of its holdings of fixed assets, including information on their usage and age, which is published. A register of land, and (where relevant) subsoil assets is also maintained.
The government Performance is less maintains a register than required for a C of its holdings of score. fixed assets, and collects partial information on their usage and age.
D
MoF maintains a registry of fixed assets (mostly real estate) with partial information on usage and age. Completeness of the registry is unknown.
24
Indicator
Description
Grade A
Grade B
12.3
Transparency of asset disposal. Assesses whether the procedures for transfer and disposal of assets are established through legislation, regulation, or approved procedures. It examines whether information is provided to the legislature or the public on transfers and disposals.
Procedures and rules for the transfer or disposal of financial and nonfinancial assets are established, including information to be submitted to the legislature for information or approval. Information on transfers and disposal is included in budget documents, financial reports, or other reports.
Procedures and rules for the transfer or disposal of nonfinancial assets are established. Information on transfers and disposals is included in budget documents, financial reports, or other reports.
Grade C
Grade D
Procedures and Performance is less rules for the transfer than required for a C or disposal of non- score. financial assets are established. Partial information on transfers and disposals is included in budget documents, financial reports, or other reports.
25
Score
Comment
D
Procedures and rules for the transfer or disposal of non-financial assets are partially established in the Procurement, concessions and disposal of assets Act. Regulations, procedures and guidelines are partially issued and not fully implemented.
Indicator
Description
13.0
Debt management
13.1
Reporting of debt and guarantees. Assesses the integrity and comprehensivenes s of domestic, foreign, and guaranteed debt recording and reporting.
Grade A
Grade B
Domestic and foreign debt and guaranteed debt records are complete, accurate, updated, and reconciled monthly. Comprehensive management and statistical reports covering debt service, stock, and operations are produced at least quarterly.
Domestic and foreign debt and guaranteed debt records are complete, accurate, and updated quarterly. Most information is reconciled quarterly. Comprehensive management and statistical reports covering debt service, stock, and operations are produced at least annually.
Grade C
Grade D
Domestic and Performance is less foreign debt and than required for a guaranteed debt C score. records are updated annually. Reconciliations are performed annually. Areas where reconciliation requires additional information to be complete are acknowledged as part of documentation of records.
26
Score C
Comment A debt record has been established within the MoF, however processes for maintenance and reconciliation are not fully implemented. Completeness of the record is unknown.
Indicator
Description
Grade A
Grade B
13.2
Approval of debt and guarantees. Assesses the arrangements for the approval and control of the government’s contracting of loans and issuing of guarantees, which is crucial to proper debt management performance.
Primary legislation grants authorization to borrow, issue new debt, and issue loan guarantees on behalf of the central government to a single responsible debt management entity. Documented policies and procedures provide guidance to borrow, issue new debt and undertake debtrelated transactions, issue loan guarantees, and monitor debt management transactions by a single debt management entity. Annual borrowing must be approved by the government or legislature.
Primary legislation grants authorization to borrow, issue new debt, and issue loan guarantees on behalf of the central government to entities specifically included in the legislation. Documented policies and procedures provide guidance for undertaking borrowing other debt-related transactions and issuing loan guarantees to one or several entities. These transactions are reported to and monitored by a single responsible entity. Annual borrowing must be approved by the government or legislature.
Grade C
Grade D
Primary legislation Performance is less grants authorization than required for a to borrow, issue new C score. debt, and issue loan guarantees on behalf of the central government to entities specifically included in the legislation. Documented policies and procedures provide guidance for undertaking borrowing and other debt-related transactions and issuing loan guarantees to one or several entities. These transactions are reported to and monitored by a single responsible entity.
27
Score D
Comment Primary legislation covers some aspect of debt issuance, etc, however legislation is legacy legislation dated prior to civil war and must be updated. Document, policies and procedures for undertaking borrowing are not developed.
Indicator
Description
Grade A
Grade B
13.3
Debt management strategy. Assesses whether the government has prepared a debt management strategy (DMS) with the long-term objective of contracting debt within robust cost–risk tradeoffs.
A current mediumterm debt management strategy covering existing and projected government debt, with a horizon of at least three years, is publicly reported. The strategy includes target ranges for indicators such as interest rates, refinancing, and foreign currency risks. Annual reporting against debt management objectives is provided to the legislature. The government’s annual plan for borrowing is consistent with the approved strategy.
A current mediumterm debt management strategy, covering existing and projected government debt, with a horizon of at least three years, is publicly reported. The strategy includes target ranges for indicators such as interest rates, refinancing, and foreign currency risks.
Grade C
Grade D
A current medium- Performance is less term debt than required for a C management score. strategy covering existing and projected government debt is publicly available. The strategy indicates at least the preferred evolution of risk indicators such as interest rates and refinancing, and foreign currency risks.
28
Score
Comment
D
The FGS does not have a debt management strategy. What is currently available in the budget documents is a strategy for the management of arrears.
Indicator 4. 14.0 14.1
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
D
There are no macroeconomic forecasts or analysis in the Appropriation Act or other budget documentation.
Policy-based fiscal strategy and budgeting Macroeconomic and fiscal forecasting The government Macroeconomic forecasts. Assesses prepares forecasts of key macroeconomic the extent to indicators, which, which together with the comprehensive underlying medium-term assumptions, are macroeconomic included in budget forecasts and documentation underlying submitted to the assumptions are legislature. These prepared for the forecasts are purpose of updated at least informing the once a year. The fiscal and budget- forecasts cover the planning budget year and the processes and are two following fiscal submitted to the years. The legislature as part projections have of the annual been reviewed by an budget process. entity other than the preparing entity.
The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature. These forecasts cover the budget year and the two following fiscal years.
The government Performance is less prepares forecasts of than required for a C key macroeconomic score. indicators for the budget year and the two following fiscal years.
29
Indicator 14.2
Description Fiscal forecasts. Assesses whether the government has prepared a fiscal forecast for the budget year and the two following fiscal years based on updated macroeconomic projections and that rejects governmentapproved expenditure and revenue policy settings.
Grade A
Grade B
The government prepares forecasts of the main fiscal indicators, including revenues (by type), aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. These forecasts, together with the underlying assumptions and an explanation of the main differences from the forecasts made in the previous year’s budget, are included in budget documentation submitted to the legislature.
The government prepares forecasts of the main fiscal indicators, including revenues (by type), aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. These forecasts, together with the underlying assumptions, are included in budget documentation submitted to the legislature.
Grade C
Grade D
The government Performance is less prepares forecasts of than required for a C revenue, score. expenditure and the budget balance for the budget year and the two following fiscal years.
30
Score
Comment
D
The government prepares forecast of revenues and expenditure and the budget balance for the upcoming year only (see Appropriation Act).
Indicator 14.3
Description
Grade A
The government Macro-fiscal prepares a range of sensitivity analysis. Assesses fiscal forecast scenarios based on the capacity of alternative governments to macroeconomic develop and publish alternative assumptions, and these scenarios are fiscal scenarios published, together based on plausible with its central unexpected forecast. changes in macroeconomic conditions or other external risk factors that have a potential impact on revenue, expenditure, and debt.
Grade B The government prepares, for internal use, a range of fiscal forecast scenarios based on alternative macroeconomic assumptions. The budget documents include discussion of forecast sensitivities.
Grade C
Grade D
The macro fiscal Performance is less forecasts prepared than required for a C by the government score. include a qualitative assessment of the impact of alternative macroeconomic assumptions.
31
Score
Comment
D
The government does not prepare macroeconomic forecasts.
Indicator
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
15.0
Fiscal strategy
15.1
Fiscal impact of policy proposals. Assesses the capacity of the government to estimate the fiscal impact of revenue and expenditure policy proposals developed during budget preparation.
The government prepares estimates of the fiscal impact of all proposed changes in revenue and expenditure policy for the budget year and the following two fiscal years, which are submitted to the legislature.
The government prepares estimates of the fiscal impact of all proposed changes in revenue and expenditure policy for the budget year and the following two fiscal years.
The government Performance is less prepares estimates than required for a C of the fiscal impact score. of all proposed changes in revenue and expenditure policy for the budget year.
D
Fiscal policy and strategy are not consistently documented. No forecast of impact of fiscal policy proposals are prepared. In addition, there is no consolidated fiscal policy.
15.2
Fiscal strategy adoption. Assesses the extent to which government prepares a fiscal strategy that sets out fiscal objectives for at least the budget year and the two following fiscal years.
The government has adopted, submitted to the legislature, and published a current fiscal strategy that includes explicit time-based quantitative fiscal goals and targets together with qualitative objectives for at least the budget year and the following two fiscal years.
The government has adopted and submitted to the legislature a current fiscal strategy that includes quantitative or qualitative fiscal objectives for at least the budget year and the following two fiscal years.
The government has Performance is less prepared for its than required for a C internal use a score. current fiscal strategy that includes qualitative objectives for fiscal policy.
D
Few basic fiscal rules mentioned in the Appropriation Act, two main ones: Sequestration rule (for prioritisation of expenditure) and the rule on borrowing (no borrowing is allowed, with exception). There are no complete fiscal strategy.
32
Indicator
Description
Grade A
Grade B
15.3
Reporting on fiscal outcomes. assesses the extent to which the government makes available— as part of the annual budget documentation submitted to the legislature—an assessment of its achievements against its stated fiscal objectives and targets.
The government has submitted to the legislature and published with the annual budget a report that describes progress made against its fiscal strategy and provides an explanation of the reasons for any deviation from the objectives and targets set. The report also sets out actions planned by the government to address any deviations, as prescribed in legislation.
The government has submitted to the legislature along with the annual budget a report that describes progress made against its fiscal strategy and provides an explanation of the reasons for any deviation from the objectives and targets set.
Grade C
Grade D
The government Performance is less prepares an internal than required for a C report on the score. progress made against its fiscal strategy. Such a report has been prepared for at least the last completed fiscal year.
33
Score D
Comment No reports on fiscal outcomes or progress made against fiscal strategy are made.
Indicator 16.0 16.1
16.2
Description
Grade A
Grade B
Medium-term perspective in expenditure budgeting The annual budget The annual budget Medium-term presents estimates presents estimates of expenditure estimates. Assesses of expenditure for expenditure for the the extent to which the budget year and budget year and the the two following two following fiscal medium-term fiscal years allocated years allocated by budget estimates by administrative, administrative and are prepared and economic updated as part of economic, and program (or classification. the annual budget functional) process. classification.
Assesses whether expenditure ceilings are applied to the estimates produced by ministries to ensure that expenditure beyond the budget year is consistent with government fiscal policy and budgetary objectives.
Aggregate and ministry-level expenditure ceilings for the budget year and the two following fiscal years are approved by government before the first budget circular is issued.
Aggregate expenditure ceilings for the budget year and the two following fiscal years and ministrylevel ceilings for the budget year are approved by government before the first budget circular is issued.
Grade C
Grade D
Score
Comment
The annual budget Performance is less presents estimates of than required for a C expenditure for the score. budget year and the two following fiscal years allocated by administrative or economic classification.
D
The FGS does not have medium-term budgeting or planning processes and frameworks.
Aggregate Performance is less expenditure ceilings than required for a C for the budget year score. and the two following fiscal years are approved by the government before the first budget circular is issued.
D
The FGS does not have medium-term budgeting or planning processes and frameworks.
34
Indicator
Description
Grade A
Grade B
16.3
Alignment of strategic plans and medium-term budgets. Measures the extent to which approved expenditure policy proposals align with costed ministry strategic plans or sector strategies
Medium-term strategic plans are prepared and costed for most ministries. Most expenditure policy proposals in the approved medium-term budget estimates align with the strategic plans.
Medium-term strategic plans are prepared for the majority of ministries, and include cost information. The majority of expenditure policy proposals in the approved mediumterm budget estimates align with the strategic plans.
16.4
The budget Consistency of documents provide budgets with an explanation of all previous year estimates. Assesses changes to the extent to which expenditure estimates between the expenditure the last mediumestimates in the last medium-term term budget and the current mediumbudget establish term budget at the the basis for the ministry level. current mediumterm budget.
The budget documents provide an explanation of most changes to expenditure estimates between the second year of the last mediumterm budget and the first year of the current mediumterm budget at the ministry level.
Score
Comment
Medium-term Performance is less strategic plans are than required for a prepared for some C score. ministries. Some expenditure policy proposals in the annual budget estimates align with the strategic plans.
D
The FGS does not have medium-term budgeting or planning processes and frameworks.
The budget Performance is less documents provide than required for a an explanation of C score. some of the changes to expenditure estimates between the second year of the last mediumterm budget and the first year of the current mediumterm budget at the aggregate level.
D
The FGS does not have medium-term budgeting or planning processes and frameworks.
Grade C
Grade D
35
Indicator
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
17.0
Budget preparation process
17.1
Budget calendar. Assesses whether a fixed budget calendar exists and the extent to which it is adhered to.
A clear annual budget calendar exists, is generally adhered to and allows MDAs at least six weeks from receipt of the budget circular to meaningfully complete their detailed estimates on time.
A clear annual budget calendar exists and is largely adhered to. The calendar allows budgetary units at least four weeks from receipt of the budget circular. Most budgetary units are able to complete their detailed estimates on time.
An annual budget Performance is less calendar exists and than required for a C some budgetary score. units comply with it and meet the deadlines for completing estimates.
C
Challenges adhering to budget calendar, which prescribes two months for parliamentary consideration.
17.2
Guidance on budget preparation. Assesses the clarity and comprehensivenes s of top-down guidance on the preparation of bud- get submissions.
A comprehensive and clear budget circular or circulars are issued to budgetary units, covering total budget expenditure for the full fiscal year. The budget reflects ministry ceilings approved by the cabinet (or equivalent) prior to the circular’s distribution to budgetary units.
A comprehensive and clear budget circular or circulars are issued to budgetary units, covering total budget expenditure for the full fiscal year. The budget reflects ministry ceilings submitted to the cabinet (or equivalent).
A budget circular or Performance is less circulars are issued than required for a C to budgetary units, score. including ceilings for administrative or functional areas. Total budget expenditure is covered for the full fiscal year. The budget estimates are reviewed and approved by Cabinet after they have been completed in every detail by budgetary units.
C
Substantive cabinet review and approval when budget is quite developed.
36
Indicator
Description
Grade A
Grade B
17.3
Assesses the timeliness of submission of the annual budget proposal to the legislature or similarly mandated body so that the legislature has adequate time for its budget review and the budget proposal can be approved before the start of the fiscal year.
The executive has submitted the annual budget proposal to the legislature at least two months before the start of the fiscal year in each of the last three years.
The executive has submitted the annual budget proposal to the legislature at least two months before the start of the fiscal year in two of the last three years and submitted it before the start of the FY in the third year.
18.0
Legislative scrutiny of budgets Assesses the scope The legislature's review covers fiscal of legislative scrutiny. Should policies, medium term fiscal forecasts cover review of and medium term fiscal policies, priorities as well as medium-term details of fiscal forecasts, and medium-term expenditure and revenue. priorities, and the specific details of expenditure and revenue estimates.
The legislature's review covers fiscal policies and aggregates for the coming year as well as details of expenditure and revenue.
18.1
Score
Comment
The executive has Performance is less submitted the than required for a C annual budget score. proposal to the legislature at least one month before the start of the fiscal year in two of the last three years.
C
Annual budget submitted at least one month before fiscal year in two of last three years.
The legislature's review covers details of expenditure and revenue.
C
Fiscal policy not articulated alongside appropriation acts put to parliament, since 2014. No budget policy framework paper since 2014.
Grade C
Grade D
Performance is less than required for a C score.
37
Indicator
Description
Grade A
18.2
Legislative procedures for budget scrutiny. Assesses the extent to which review procedures are established and adhered to. This includes public consultation arrangements, internal organizational and committee arrangements, technical support, and negotiation procedures.
The legislature’s procedures to review budget proposals are approved by the legislature in advance of budget hearings and are adhered to. The procedures include arrangements for public consultation. They also include internal organizational arrangements, such as specialized review committees, technical support, and negotiation procedures.
The legislature’s procedures to review budget proposals are approved by the legislature in advance of budget hearings and are adhered to. The procedures include internal organizational arrangements such as specialized review committees, technical support, and negotiation procedures.
The legislature’s procedures to review budget proposals are approved by the legislature in advance of budget hearings and are adhered to.
Performance is less than required for a C score.
C
There are parliamentary guidelines for reviewing reports of the auditor general.
18.3
Timing of budget approval. assesses the timeliness of the scrutiny process in terms of the legislature’s ability to approve the budget before the start of the new fiscal year
The legislature has approved the annual budget before the start of the year in each of the last three fiscal years.
The legislature has approved the annual budget before the start of the year in two of the last three fiscal years, with a delay of up to one month in the third year.
The legislature has Performance is less approved the annual than required for a budget within one C score. month of the start of the year in two or more of the last three fiscal years.
C
2016 and 2015 passed before start of year. 2014 passed in May 2015.
Grade B
Grade C
Grade D
38
Score
Indicator 18.4
5.
Description
Grade A
Grade B
Rules for budget adjustments by the executive. Assesses arrangements made to consider in-year budget amendments that do not require legislative approval.
Clear rules exist for in-year budget adjustments by the executive. The rules set strict limits on the extent and nature of amendments and are adhered to in all instances.
Clear rules exist for in-year budget adjustments by the executive, and are adhered to in most instances. Extensive administrative reallocations may be permitted.
Score
Comment
Clear rules exist Performance is less which may be than required for a C adhered to in some score. instances or they may allow extensive administrative reallocation as well as expansion of total expenditure.
B
Clear rules are presented in annual appropriation acts; administrative reallocations are common.
Entities collecting Performance is the majority of less than required revenues provide for a C score. payers with access to information on the main revenue obligation areas and on rights including, as a minimum, redress processes and procedures.
D
Information on obligation areas is available in annual appropriation acts; limited available information on redress processes and procedures
Grade C
Grade D
Predictability and control in budget execution 19.0 19.1
Revenue administration compliance Entities collecting Assesses the most revenues use extent to which multiple channels to individuals and enterprises have provide payers with easy access to access to information about comprehensive and up-to-date their rights and information on the obligations, and main revenue also to obligation areas and administrative on rights including, procedures and as a minimum, processes that redress processes allow redress, incl. and procedures. a fair and independent body outside of the general legal system.
Entities collecting the majority of revenues provide payers with access to comprehensive and up-to-date information on the main revenue obligation areas and on rights including, as a minimum, redress processes and procedures.
39
Indicator
Description
Grade A
Grade B
19.2
Revenue risk management. Assesses the extent to which a comprehensive, structured and systematic approach is used within the revenue entities for assessing and prioritizing compliance risks.
Entities collecting most revenues use a comprehensive, structured and systematic approach for assessing and prioritizing compliance risks for all categories of revenue and, as a minimum for their large and medium revenue payers.
Entities collecting the majority of revenues use a structured and systematic approach for assessing and prioritizing compliance risks for some categories of revenue and, as a minimum, for their large revenue payers.
Entities collecting Performance is less the majority of than required for a C revenues use score. approaches that are partly structured and systematic for assessing and prioritizing compliance risks for some revenue streams.
D
Structured processes are not in place with respect to compliance risks.
19.3
Revenue audit and investigation. Assesses whether sufficient controls are in place to deter evasion and ensure that instances of noncompliance are revealed
Entities collecting most revenue undertake audits and fraud investigations managed and reported on according to a documented compliance improvement plan, and complete all planned audits and investigations.
Entities collecting the majority of revenue undertake audits and fraud investigations managed and reported on according to a documented compliance improvement plan, and complete all planned audits and investigations.
Entities collecting Performance is less the majority of than required for a C government revenue score. undertake audits and fraud investigations using a compliance improvement plan and complete the majority of planned audits and investigations.
D
No formal audits are undertaken by these entities.
Grade C
Grade D
40
Score
Comment
Indicator
Description
Grade A
19.4
The stock of revenue Revenue arrears arrears at the end of monitoring. Assesses the extent the last completed fiscal year is below of proper 10 percent of the management of arrears within the total revenue revenue entities by collection for the year, and the focusing on the revenue arrears level and age of older than 12 revenue arrears. months are less than 25 percent of total revenue arrears for the year.
20.0
Accounting for revenues Assesses the extent A central agency to which a central obtains revenue data ministry, i.e., the at least monthly from entities Ministry of Finance (MOF) or collecting all central government a body with revenue. This similar information is responsibilities, broken down by coordinates revenue type and is revenue consolidated into a administration report. activities and collects, accounts for, and reports timely information on collected revenue.
20.1
Grade B
Grade C
Grade D
Score
Comment
The stock of revenue arrears at the end of the last completed fiscal year is below 20 percent of the total revenue collection of the year and the revenue arrears older than 12 months are less than 50 percent of total revenue arrears for the year.
The stock of revenue Performance is less arrears at the end of than required for a C the last completed score. fiscal year is below 40 percent of the total revenue collection for the year and the revenue arrears older than 12 months are less than 75 percent of total revenue arrears.
D
Insight into revenue not collected (in a timely manner) is limited.
A central agency obtains revenue data at least monthly from entities collecting most central government revenue. This information is broken down by revenue type and is consolidated into a report.
A central agency Performance is less obtains revenue data than required for a C at least monthly score. from entities collecting the majority of central government revenue and consolidates the data.
C
Revenue receipts are recorded in the government’s core accounting system. Classification by revenue type is reliable at more aggregated levels only.
41
Indicator
Description
Grade A
Grade B
20.2
Transfer of revenue collections. Assesses the promptness of transfers to the Treasury or other designated agencies of revenue collected.
Entities collecting most central government revenue transfer the collections directly into accounts controlled by the Treasury, or transfer the collections daily to the Treasury and other designated agencies.
Entities collecting most central government revenue transfer the collections to the Treasury and other designated agencies at least weekly.
Entities collecting Performance is less most central than required for a C government revenue score. transfer the collections to the Treasury and other designated agencies at least every two weeks.
B
Increased revenue sources and collection locations may challenge this rating.
20.3
Assesses the extent Entities collecting to which aggregate most central amounts related to government revenue assessments/charg undertake complete reconciliation of es, collections, assessments, arrears and transfers to (and collections, arrears, and transfers to receipts by) the Treasury and other Treasury or designated agencies designated other at least quarterly agencies take place within four weeks of regularly and the end of quarter. are reconciled in a timely manner.
Entities collecting most central government revenue undertake complete reconciliation of assessments, collections, arrears, and transfers to Treasury and other designated agencies at least half-yearly within eight weeks of the end of the half-year.
Entities collecting Performance is less most government than required for a C revenue undertake score. complete reconciliation of collections and transfers to Treasury and other designated agencies at least annually within 2 months of the end of the year.
C
Collections are reconciled to transfers to Treasury.
Grade C
Grade D
42
Score
Comment
Indicator 21.0 21.1
Description
Grade A
Score
Comment
Most cash balances Performance is less are consolidated on than required for a C a monthly basis. score.
D
Central Treasury does not record or consolidate account balances or transactions for MDA accounts.
A cash flow forecast A cash flow forecast Performance is less is prepared for the is prepared for the than required for a C fiscal year and fiscal year. score. updated at least quarterly, on the basis of actual cash inflows and outflows.
D
Cash flow forecasting is not prepared for the fiscal year.
Grade B
Predictability of in-year resource allocation All bank and cash Consolidation of All bank and cash balances are balances are cash balances. consolidated on a consolidated on a Assesses the daily basis. weekly basis. extent to which
Grade C
Grade D
the Ministry of Finance can identify and consolidate cash balances as a basis for informing the release of funds. 21.2
Cash forecasting and monitoring. Assesses the extent to which budgetary unit commitments and cash flows are forecast and monitored by the Ministry of Finance.
A cash flow forecast is prepared for the fiscal year, and are updated monthly on the basis of actual cash inflows and outflows.
43
Indicator
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
21.3
Information on commitment ceilings. Assesses the reliability of in-year information available to budgetary units on ceilings for expenditure commitment for specific periods.
Budgetary units are able to plan and commit expenditure for at least six month in advance in accordance with the budgeted appropriations and cash/commitment releases.
Budgetary units are provided reliable information on commitment ceilings at least quarterly in advance.
Budgetary units are Performance is less provided reliable than required for a C information on score. commitment ceilings at least one month in advance.
D
Commitment ceilings can be communicated as late as the month to which spending relates.
21.4
Significance of inyear budget adjustments. assesses the frequency and transparency of adjustments to budget allocations. Governments may need to make inyear adjustments to allocations in the light of unanticipated events that affect revenues or expenditures.
Significant in-year adjustments to budget allocations take place only once or twice in a year and are done in a transparent and predictable way.
Significant in-year adjustments to budget allocations take place only once or twice in a year and are done in a fairly transparent way.
Significant in-year Performance is less budget adjustments than required for a C are frequent, but score. undertaken with some transparency.
B
Significant adjustments are infrequent and are visible to MDAs in the financial management information system.
44
Indicator 22.0 22.1
Description
Grade A
Expenditure arrears The stock of Stock of expenditure arrears expenditure is no more than 2% arrears of total expenditure in at least two of the last three completed fiscal years.
22.2
Data on the stock, Expenditure arrears monitoring age, and composition of expenditure arrears is generated quarterly within four weeks of the end of each quarter.
23.0
Payroll controls
23.1
Integration of payroll and personnel records. Assesses the degree of integration between personnel, payroll, and budget data.
Approved staff list, personnel database, and payroll are directly linked to ensure budget control, data consistency, and monthly reconciliation.
Grade B
Grade C
Grade D
Score
Comment
The stock of expenditure arrears is no more than 6% of total expenditure in at least two of the last three completed fiscal years.
The stock of Performance is less expenditure arrears than required for a C is no more than 10% score. of total expenditure in at least two of the last three completed fiscal years.
D
Arrears in 2015 of > 10% of expenditures. Uncertainty with respect to prior years arrears.
Data on the stock and composition of expenditure arrears is generated quarterly within eight weeks of the end of each quarter.
Data on the stock Performance is less and composition of than required for a C expenditure arrears score. is generated annually at the end of each fiscal year.
C
Arrears data gathered annually.
The payroll is supported by full documentation for all changes made to personnel records each month and checked against the previous month’s payroll data. Staff hiring and promotion is controlled by a preapproved staff list.
Reconciliation of the Performance is less payroll with than required for a C personnel records score. takes place at least every six months. Staff hiring and promotion is checked against the approved budget prior to authorization.
C
Level of full documentation for all changes yet to be achieved.
45
Indicator
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
23.2
Management of payroll changes. Assesses the timeliness of changes to personnel and payroll data.
Required changes to Personnel records the personnel and payroll are records and payroll updated at least are updated at least quarterly and monthly, generally require a few in time for the retroactive following month’s adjustments. payments. Retroactive adjustments are rare. If reliable data exists, it shows corrections in a maximum of 3% of salary payments.
Personnel records and payroll are updated at least quarterly and require some retroactive adjustments.
Performance is less than required for a C score.
C
Changes to payroll that are not reflected in personnel records occur.
23.3
Internal control of payroll. Assesses the controls that are applied to the making of changes to personnel and payroll data.
Authority to change records and payroll is restricted, results in an audit trail, and is adequate to ensure full integrity of data.
Sufficient controls Performance is less exist to ensure than required for a C integrity of the score. payroll data of greatest importance.
C
Authority for changes and access to standing data are not formalized. Audit trails exist but in an untested general control environment.
Authority and basis for changes to personnel records and the payroll are clear and adequate to ensure high integrity of data.
46
Indicator
Description
23.4
Payroll audit. Assesses the degree of integrity of the payroll. Payroll audits should be undertaken regularly to identify ghost workers, ll data gaps, and identify control weaknesses.
24.0
Procurement
24.1
Procurement monitoring. Assesses the extent to which prudent monitoring and reporting systems are in place within government for ensuring value for money and for promoting fiduciary integrity.
Grade A
Grade B
Grade C
Grade D
Score
Comment
A strong system of annual payroll audits exists to expose control weaknesses and identify ghost workers.
A payroll audit covering all central government entities has been conducted at least once in the last three years (whether in stages or as one single exercise).
Partial payroll Performance is less audits or staff than required for a C surveys have been score. undertaken within the last 3 completed fiscal years.
D
Payroll audits and staff surveys have not been undertaken within the last 3 completed fiscal years.
Databases or records are maintained for contracts including data on what has been procured, value of procurement and who has been awarded contracts. The data are accurate and complete for all procurement methods for goods, services and works.
Databases or records are maintained for contracts including data on what has been procured, value of procurement and who has been awarded contracts. The data are accurate and complete for most procurement methods for goods, services and works.
Databases or records Performance is less are maintained for than required for a C contracts including score. data on what has been procured, value of procurement and who has been awarded contracts. The data are accurate and complete for the majority of procurement methods for goods, services and works.
D
Data on procurement is fragmented and difficult to consolidate.
47
Indicator
Description
Grade A
Grade B
24.2
Procurement methods. Analyzes the percentage of the total value of contracts awarded with and without competition.
The total value of contracts awarded through competitive methods in the last completed fiscal year represents 80% or more of total value of contracts.
The total value of contracts awarded through competitive methods in the last completed fiscal year represents 70% or more of total value of contracts.
The total value of Performance is less contracts awarded than required for a through C score. competitive methods in the last completed fiscal year represents 60% or more of total value of contracts.
D
Data is not available to calculate the % of value of total contracts competitively awarded.
24.3
Publicly available procurement information. (1) legal and regulatory framework for procurement (2) government procurement plans (3) bidding opportunities (4) contract awards (5) data on resolution of procurement complaints (6) annual procurement statistics
Every key procurement information element is complete and reliable for government units representing all procurement operations and is made available to the public in a timely manner.
At least four of the key procurement information elements are complete and reliable for government units representing most procurement operations and are made available to the public in a timely manner.
At least three of the Performance is less key procurement than required for a C information score. elements are complete and reliable for government units representing the majority of procurement operations and are made available to the public.
D
Procurement law and policy is in development and procurement plans are not mature.
Grade C
Grade D
48
Score
Comment
Indicator 24.4
Description
Grade A
Complaints are reviewed The procuremen by a body which: (1) is not involved in any t complaint capacity in procurement system meets every transactions or in the process leading to contract criterion. award decisions (2) does not charge fees that prohibit access by concerned parties (3) follows processes for submission and resolution of complaints that are clearly defined and publicly available (4) exercises the authority to suspend the procurement process (5) issues decisions within the timeframe specified in the rules/regulations, and (6) issues decisions that are binding on every party (without precluding subsequent access to an external higher authority)
Grade B The procurement complaint system meets criterion (1), and three of the other criteria.
Grade C
Grade D
The procurement Performance is less complaint system than required for a C meets criterion (1), score. and one of the other criteria.
49
Score D
Comment There is no formalized procurement complaints management system.
Indica tor
Description
Grade A
Grade B
25.0 Internal controls on non-salary expenditure Appropriate Segregation of duties 25.1 Segregation of duties. segregation of is prescribed assesses the existence of throughout the the segregation of duties, duties is prescribed expenditure process. which is a fundamental throughout the Responsibilities are element of internal control clearly laid down for to prevent an employee or expenditure process. most key steps while group of employees from Responsibilities further details may being in a position both to are clearly laid be needed in a few perpetrate and to conceal down. areas. errors or fraud in the normal course of their duties. 25.2 Effectiveness of expenditure commitment controls. Assesses the effectiveness of expenditure commitment controls. This process is singled out as a separate dimension of this indicator due the importance of such controls for ensuring that the government’s payment obligations remain within the limits of annual budget allocations (as revised) and within projected cash availability, thereby
Comprehensive expenditure commitment controls are in place and effectively limit commitments to projected cash availability and approved budget allocations (as revised).
Expenditure commitment controls are in place and effectively limit commitments to projected cash availability and approved budget allocations for most types of expenditure.
Score
Comment
Segregation of duties Performance is is prescribed less than required throughout the for a C score. expenditure process. More precise definition of important responsibilities may be needed.
D
Policies and procedures are not formalized to the level of detail to prescribe all important segregation of duties matters.
Expenditure Performance is commitment control less than required procedures exist for a C score. which provide partial coverage and are partially effective.
D
Expenditure commitment control procedures exist in design but are not yet effective.
Grade C
Grade D
50
Indica tor
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
D
Expenditure commitment control procedures exist in design but are not yet effective.
avoiding creation of expenditure arrears. Comprehensive 25.2 Effectiveness of expenditure commitment expenditure commitment controls. Assesses the controls are in effectiveness of expenditure commitment place and effectively limit controls. This process is commitments singled out as to projected a separate dimension of cash this indicator due the availability and importance of such approved controls for ensuring that budget the government’s allocations (as payment obligations revised). remain within the limits of annual budget allocations (as revised) and within projected cash availability, thereby avoiding creation of expenditure arrears.
Expenditure commitment controls are in place and effectively limit commitments to projected cash availability and approved budget allocations for most types of expenditure.
Expenditure Performance is commitment control less than required procedures exist for a C score. which provide partial coverage and are partially effective.
51
Indica tor
Description
25.3 Compliance with payment controls. Assesses the extent of compliance with the payment control rules and procedures based on available evidence.
Score
Comment
D
Payments recorded as expenditures are regularly made as advances from treasury to MDA accounts or representatives.
Internal audit is operational Performance is less than for central government required for a C score. entities representing the majority of budgeted expenditures and for central government entities collecting the majority of budgeted government revenue.
DThere is no effective internal audit function.
Grade A
Grade B
Grade C
Grade D
All payments are compliant with regular payment procedures. All exceptions are properly authorized in advance and justified.
Most payments are compliant with regular payment procedures. The majority of exceptions are properly authorized and justified.
The majority of payments Performance is are compliant with regular less than required payment procedures. The for a C score. majority of exceptions are properly authorized and justified.
Internal audit is operational for central government entities representing most total budgeted expenditures and for central government entities collecting most budgeted government revenue.
26.0 Effectiveness of internal audit 26.1 Coverage of internal audit. Assesses the extent to which government entities are subject to internal audit. This is measured as the proportion of total planned expenditure or revenue collection of the entities covered by annual audit activi- ties, whether or not substantive audit work is carried out.
Internal audit is operational for all central government entities
52
Indica tor
Description
26.2 Nature of audits and standards applied. assesses the nature of audits performed and the extent of adherence to professional standards
Grade A Internal audit activities are focused on evaluations of the adequacy and effectiveness of internal controls. A quality assurance process is in place within the internal audit function and audit activities meet professional standards, including focus on high risk areas.
Grade B
Grade C
Grade D
Internal audit Internal audit activities are Performance is activities are primarily focused on less than required focused on financial compliance. for a C score. evaluations of the adequacy and effectiveness of internal controls.
53
Score D
Comment There is no effective internal audit function.
Indica tor
Description
Grade C
Grade D
Score
Comment
Grade A
Grade B
26.3 Implementation of internal audits and reporting. Assesses speci c evidence of an effective internal audit (or systems monitoring) function as shown by the preparation of annual audit programs and their actual implementation including the availability of internal audit reports.
Annual audit programs exist. All programmed audits are completed, as evidenced by the distribution of their reports to the appropriate parties.
Annual audit programs exist. Most programmed audits are completed, as evidenced by the distribution of their reports to the appropriate parties.
Annual audit programs Performance is exist. The majority of less than required programmed audits are for a C score. completed, as evidenced by the distribution of their reports to the appropriate parties.
D
There is no effective internal audit function.
26.4 Response to internal audits. Assesses the extent to which action is taken by management on internal audit findings.
Management provides a full response to audit recommendatio ns for all entities audited within twelve months of the report being produced.
Management provides a partial response to audit recommendations for most entities audited within twelve months of the report being produced.
Management provides a partial response to audit recommendations for the majority of entities audited.
D
There is no effective internal audit function.
Performance is less than required for a C score.
54
Indica tor
Description
Grade C
Grade D
Score
Comment
Grade A
Grade B
27.1 Bank account reconciliation. Assesses the regularity of bank reconciliation. There should be regular and timely comparisons between government bank account (central or commercial) transaction data and government cash books.
Bank reconciliation for all active central government bank accounts takes place at least weekly at aggregate and detailed levels, usually within one week from the end of each week.
Bank reconciliation for all active central government bank accounts takes place at least monthly, usually within 4 weeks from the end of each month.
Bank reconciliation Performance is for all active central less than required government bank for a C score. accounts takes place at least quarterly, usually within 8 weeks from the end of each quarter.
D
There is no consistent requirements for reconciliation of all central government bank accounts including MDA accounts.
27.2 Suspense accounts. Assesses the extent to which suspense accounts, including sundry deposits/liabilities, are reconciled on a regular basis and cleared in a timely way.
Reconciliation of suspense accounts takes place at least monthly, within a month from the end of each month. Suspense accounts are cleared in a timely way, no later than the end of the fiscal year unless duly justified.
Reconciliation of suspense accounts takes place at least quarterly within two months from the end of each quarter. Suspense accounts are cleared in a timely way, no later than the end of the fiscal year unless duly justified.
Reconciliation of Performance is suspense accounts less than required takes place annually, for a C score. within two months from the end of the year. Suspense accounts are cleared in a timely way, no later than the end of the fiscal year unless duly justified.
C
Limited use of suspense accounts.
6. Accounting and reporting 27.0 Financial data integrity
55
Indica tor
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
27.3 Advance accounts. Assesses the extent to which advance accounts are reconciled and cleared. Advances cover amounts paid to vendors under public procurement contracts as well as travel advances and operational imprests.
Reconciliation of advance accounts takes place at least monthly, within a month from the end of each month. All advance accounts are cleared in a timely way.
Reconciliation of advance accounts takes place at least quarterly within two months from the end of each quarter. Most advance accounts are cleared in a timely way.
Reconciliation of Performance is advance accounts less than required takes place annually, for a C score. within two months from the end of the year. Advance accounts may frequently be cleared with delay.
D
Policies and processes for advance accounts are yet to be effective.
27.4 Financial data integrity processes. Assesses the extent to which processes support the delivery of financial information and focuses on data integrity defined as accuracy and completeness of data
Access and changes to records is restricted and recorded, and results in an audit trail. There is an operational body, unit or team in charge of verifying financial data integrity.
Access and changes to records is restricted and recorded, and results in an audit trail.
Access and changes Performance is to records is less than required restricted and for a C score. recorded.
D
Physical access controls are strong. Many records are paper based and changes difficult to track. Uncertainty on access and audit trails in the government’s core accounting system.
56
Indica tor
Description
Grade A
Grade B
28.1 Coverage and comparability of reports. Assesses the extent to which information is presented in in-year reports and in a form that is easily comparable to the original budget
Coverage and classification of data allows direct comparison to the original budget. Information includes all items of budget estimates. Expenditures made from transfers to de-concentrated units within central government are included in the reports.
Coverage and classification of data allows direct comparison to the original budget with partial aggregation. Expenditures made from transfers to de-concentrated units within central government are included in the reports.
28.2 Timing of in-year budget reports. Assesses whether this information is submitted in a timely manner and accompanied by an analysis and commentary on budget execution.
Budget execution reports are prepared monthly, and issued within two weeks from the end of each month.
Budget execution reports are prepared quarterly, and issued within four weeks from the end of each quarter.
Grade D
Score
Coverage and classification of data allows direct comparison to the original budget for the main administrative headings.
Performance is less than required for a C score.
C
Transfers to deconcentrated units within central government are recorded as expenditures.
Budget execution reports are prepared quarterly (possibly excluding first quarter), and issued within 8 weeks from the end of each quarter.
Performance is less than required for a C score.
B
Reports are generated frequently.
Grade C
Comment
28.0 In-year budget reports
57
Indica tor
Description
28.3 Accuracy of in-year budget reports. Assesses the accuracy of the information submitted, including whether expenditure for both the commitment and the payment stage is provided.
Grade A
Grade B
Grade C
Grade D
Score
Comment
There are no material concerns regarding data accuracy. An analysis of the budget execution is provided on at least a half-yearly basis. Information on expenditure is covered at both commitment and payment stages.
There may be concerns regarding data accuracy. Data issues are highlighted in the report and the data is consistent and useful for analysis of budget execution. An analysis of the budget execution is provided on at least a half-yearly basis. Expenditure is captured at least at payment stage.
There may be concerns regarding data accuracy. Data is useful for analysis of budget execution. Expenditure is captured at least at payment stage.
Performance is less than required for a C score.
D
Expenditure data can reflect advances made to MDAs, rather than the ultimate transactions, as expenditures.
58
Indica tor
Description
Grade A
Grade B
29.1 Completeness of the annual financial reports. assesses the completeness of financial reports. Annual financial reports should include an analy- sis providing for a comparison of the outturn with the initial government budget.
Financial reports for budgetary central government are prepared annually and are comparable with the approved budget. They contain full information on revenue, expenditure, financial and tangible assets, liabilities, guarantees, and long-term obligations, and are supported by a reconciled cash flow statement.
Financial reports for budgetary central government are prepared annually and are comparable with the approved budget. They contain information on at least revenue, expenditure, financial assets, financial liabilities, guarantees, and long-term obligations.
29.2 Submission of reports for external audit. Assesses the timeliness of submission of reconciled year-end financial reports for external audit as a key indicator of the effectiveness of the accounting and financial reporting system.
Financial reports for budgetary central government are submitted for external audit within 3 months of the end of the fiscal year.
Financial reports for budgetary central government are submitted for external audit within 6 months of the end of the fiscal year.
Score
Comment
Financial reports for Performance is budgetary central less than required government are for a C score. prepared annually, and are comparable with the approved budget. They include information on revenue, expenditure, and cash balances.
C
Financial reports do not reflect all financial assets and do not address guarantees and long-term obligations.
Financial reports for Performance is budgetary central less than required government are for a C score. submitted for external audit within 9 months of the end of the fiscal year.
A
2016 accounts were finalized on 30 March 2016
Grade C
Grade D
29.0 Annual financial reports
59
Indica tor
Description
29.3 Accounting standards. Assesses the extent to which annual financial reports are understandable to the intended users and contribute to accountability and transparency.
Grade A
Grade B
Accounting standards applied to all financial reports are consistent with international standards. Most international standards have been incorporated into the national standards. Variations between international and national standards are disclosed and any gaps are explained. The standards used in preparing annual financial reports are disclosed in notes to the reports.
Accounting standards applied to all financial reports are consistent with the country’s legal framework. The majority of international standards have been incorporated into the national standards. Variations between international and national standards are disclosed and any gaps are explained. The standards used in preparing annual financial reports are disclosed.
Grade C
Grade D
Accounting Performance is standards applied less than required to all financial for a C score. reports are consistent with the country’s legal framework and ensure consistency of reporting over time. The standards used in preparing annual financial reports are disclosed.
60
Score
Comment
C
Financial statements are prepared in accordance with the requirements of the Financial and Accounting procedure of the State, 1961 and Regulations for the Accounts of the State, 1962.
Indica tor
Description
Grade A
Grade B
Financial reports including revenue, expenditure, assets, and liabilities of all central government entities have been audited using ISSAIs or consistent national auditing standards during the last three completed fiscal years. The audits have highlighted any relevant material issues and systemic and control risks.
Financial reports of central government entities representing most total expenditures and revenues have been audited using ISSAIs or national auditing standards during the last three completed fiscal years. The audits have highlighted any relevant material issues and systemic and control risks.
Grade C
Grade D
Score
Comment
D
National auditing standards prescribed by legacy law do not suitably support an audit opinion on the financial statements. Transition to ISSAI compliance approach.
7. External scrutiny and audit 30.0 External audit 30.1 Audit coverage and standards. Assesses key elements of external audit in terms of the scope and coverage of audit, as well as adherence to auditing standards.
Financial reports of Performance is central government less than required entities representing for a C score. the majority of total expenditures and revenues have been audited, using ISSAIs or national auditing standards during the last three completed fiscal years. The audits have highlighted any relevant significant issues.
61
Indica tor
Description
Grade A
Grade B
Grade C
Grade D
Score
Comment
30.2 Submission of audit reports to the legislature. Assesses the timeliness of submission of the audit report(s) on budget execution to the legislature, or those charged with governance of the audited entity, as a key element in ensuring timely accountability of the executive to the legislature and the public.
Audit reports were submitted to the legislature5 within three months from receipt of the financial reports by the audit office for the last three completed fiscal years
Audit reports were submitted to the legislature within six months from receipt of the financial reports by the audit office for the last three completed fiscal years.
Audit reports were Performance is submitted to the less than required legislature within for a C score. nine months from receipt of the financial reports by the audit office for the last three completed fiscal years.
A
Audits have been completed and submitted.
30.3 External audit follow-up. Assesses the extent to which effective and timely follow-up on external audit recommendations or observations is undertaken by the executive or audited entity.
There is clear evidence of effective and timely follow-up by the executive or the audited entity on audits for which follow-up was expected, during the last three completed fiscal years.
A formal, comprehensive, and timely response was made by the executive or the audited entity on audits for which follow-up was expected during the last three completed fiscal years.
A formal response was made by the executive or the audited entity on audits for which follow up was expected, during the last three completed fiscal years.
D
Responses by the executive are not formalized.
Performance is less than required for a C score.
62
Indica tor
Description
30.4 Supreme Audit Institution (SAI) independence. Assesses the independence of the SAI from the executive. Independence is essential for an effective and credible system of financial accountability, and should be laid down in the constitution or compa- rable legal framework.
Grade A
Grade B
The SAI operates independently from the executive with respect to procedures for appointment and removal of the Head of the SAI, the planning of audit engagements, arrangements for publicizing reports, and the approval and execution of the SAI’s budget. This independence is assured by law. The SAI has unrestricted and timely access to records, documentation and information.
The SAI operates independently from the executive with respect to procedures for appointment and removal of the Head of the SAI, the planning of audit engagements, and the approval and execution of the SAI’s budget. The SAI has unrestricted and timely access to records, documentation and information for most audited entities.
Grade C
Grade D
The SAI operates Performance is independently from less than required the executive with for a C score. respect to the procedures for appointment and removal of the Head of the SAI as well as the execution of the SAI’s budget. The SAI has unrestricted and timely access to the majority of the requested records, documentation and information.
63
Score
Comment
D
The legacy legal framework, which has yet to be repealed or amended, does not support an effectively independent SAI.
Indica tor
Description
Grade C
Grade D
Score
Comment
Grade A
Grade B
31.1 Timing of audit report scrutiny. Assesses the timeliness of the legislature’s scrutiny, which is a key factor in the effectiveness of the accountability function.
Scrutiny of audit reports on annual financial reports has been completed by the legislature within three months from receipt of the reports.
Scrutiny of audit reports on annual financial reports has been completed by the legislature within six months from receipt of the reports.
Scrutiny of audit Performance is reports on annual less than required financial reports has for a C score. been completed by the legislature within twelve months from receipt of the reports.
N/A
31.2 Hearings on audit findings. Assesses the extent to which hearings on key ndings of the SAI take place.
In-depth hearings on key findings of audit reports take place regularly with responsible officers from all audited entities which received a qualified or adverse audit opinion or a disclaimer.
In-depth hearings on key findings of audit reports take place with responsible officers from most audited entities which received a qualified or adverse audit opinion or a disclaimer.
In-depth hearings Performance is on key findings of less than required audit reports take for a C score. place occasionally, covering a few audited entities or may take place with ministry of finance officials only.
N/A
31.0 Legislative scrutiny of audit reports
64
Indica tor
Description
31.3 Recommendations on audit by the legislature. Assesses the extent to which the legislature issues recommendations and follows up on their implementation.
Grade A
Grade B
The legislature issues recommendations on actions to be implemented by the executive and systematically follows up on their implementation.
The legislature issues recommendations on actions to be implemented by the executive and follows up on their implementation.
Grade C
Grade D
The legislature Performance is issues less than required recommendations for a C score. on actions to be implemented by the executive
65
Score C
Comment The Legislature has issued recommendations.
