SNG PILLAR: INTERGOVERNMENTAL FISCAL RELATIONS
Scores by Dimension
Overall Indicator Score
HLG-1 Transfers from Higher Levels of Government
D+
Notes:
HLG-1.1 Outturn from higher-levels of government
D
Notes:
Table HLG.1 shows that in two of the last three years under assessment, actual transfers were less than 92% of the original budget estimates. Actual deviation made up: 2018 - 85.6%; 2019 - 79.8%; 2020 - 112.3%.
HLG-1.2 Transfers composition outturn
D
Notes:
Variance in transfer composition was more than 15% in two of the last three years: 2018 - 30.8%; 2019 - 29.7%; 2020 - 8.9% .
HLG-1.3 Timeliness of transfers from higher-levels of government
A
Notes:
Transferring grants from state budget to local budgets, including the budget of Vinnytsia CTC, is provided in accordance with the Procedure developed at the central level and approved by the Cabinet Decree No. 1132.
HLG-1.4 Predictability of transfers
D
Notes:
FY2021 was the first year when the Ministry of Finance provided the SNG with information on budget transfers forecast for the fiscal year and the two following fiscal years (2022-2024).
HLG-2 Fiscal rules of monitoring of fiscal position
A
Notes:
HLG-2.1 Fiscal rules for subnational governments
A
Notes:
Basic rules and procedures (budget rules) used in local budgets’ preparation, consideration, approval, implementation, as well as budgets’ reporting are governed by the BCU, which contains prescribes restrictions on local budgets adoption with deficit/surplus.
HLG-2.2 Debt rules for subnational governments
A
Notes:
Debt policy rules for SNGs are regulated in the BCU. According to Article 16 of the Code, city councils have the right to carry out: local internal borrowings; local external borrowings by obtaining credits (loans) from international financial organizations; other local external borrowings (city councils of city territorial communities with the administrative centre in the city of oblast significance).
HLG-2.3 Monitoring of subnational governments
A
Notes:
The law provides for the submission of annual financial statements up to three months after the end of the previous financial year. Available evidence from the National Treasury indicates that all sub-national governments submit their annual financial statements on or before the 31st of March following the previous financial year. Each year, the National Treasury also prepares a consolidated report of all local government financial statements.
I. BUDGET RELIABILITY
Scores by Dimension
Overall Indicator Score
PI-1 Aggregate expenditure out-turn
A
Notes:
PI-1.1 Aggregate expenditure out-turn
A
Notes:
Actual aggregate expenditure outturn stood at 98.6%, 102.4%, and 93.5% in 2018, 2019, and 2020 respectively. That means less than 5% deviation in two of the last three completed Fys.
PI-2 Expenditure composition outturn
D+
Notes:
PI-2.1 Expenditure composition outturn by function
D
Notes:
Variance in expenditure composition by functional classification was more than 15% in each of the last three FYs: 20.5%, 15.6% and 15.8% in 2018, 2019, and 2020 respectively.
PI-2.2 Expenditure composition outturn by economic type
D
Notes:
Variance in expenditure composition by economic categories is somewhat higher comparing with the function criteria. As it is presented in Table 2.1 and Annex 4, actual variances were 21.9%, 18% and 22.4% in 2018, 2019, and 2020 respectively.
PI-2.3 Expenditure from contingency reserves.
A
Notes:
There were no actual expenditures from contingency reserves over 2018-2020, however such expenditures were planned in amount no more than 1% of the general fund of the city budget.
Notes:
PI-3.1 Agregate revenue outturn
C
Notes:
Actual aggregate revenue outturn by years: 115.3%, 117.2%, and 95.0% in 2018, 2019, and 2020 respectively.
PI-3.2 Revenue composition outturn
C
Notes:
Actual revenue composition outturn by years: 13.4%, 16.0% and 7.1% in 2018, 2019, and 2020 respectively.
II. TRANSPARENCY OF PUBLIC FINANCES
Scores by Dimension
Overall Indicator Score
PI-4 Budget Classification
D
Notes:
PI-4.1 Budget Classification
D
Notes:
Budget preparation and execution are based on administrative, economic, functional, and program classification using GFS/COFOG standards. However, budget reporting is based only on economic, functional and program classification. The classification follows GFS 2001.
PI-5 Budget Documentation
B
Notes:
PI-5.1 Budget Documentation
B
Notes:
Budget documentation submitted to Vinnytsia City Council in 2020 fulfils three (3) out of four basic elements and four (4) out of eight additional elements as shown in Table 5.1.
PI-6 Subnational government operations outside financial reports
B
Notes:
PI-6.1 Expenditure outside financial reports
C
Notes:
The ratio of extra-budgetary expenditure of healthcare institutions to total expenditures of Vinnytsia city budget stood at 5.93% in FY2020. These expenditures were not included in the budget reports of Vinnytsia City Council.
PI-6.2 Revenue outside financial reports
C
Notes:
Share of total extra-budgetary revenues outside the Vinnytsia city budget reports was 5.85% of total city government revenue for FY2020.
PI-6.3 Financial reports of extrabudgetary units
A
Notes:
Annual financial statements were prepared by all budget and extra-budgetary units and submitted to their respective supervisory KSUs within two months after the end of the previous budget period as it is prescribed by the law.
PI-7 Transfers to subnational governments
NA
Notes:
PI-7.1 System for allocating transfers
NA
Notes:
This dimension is not applicable since there is no lower-tier government of Vinnytsia City Council.
PI-7.2 Timeliness of information on transfers
NA
Notes:
This dimension is not applicable since there is no lower-tier government of Vinnytsia City Council.
PI-8 Performance information for service delivery
A
Notes:
PI-8.1 Performance plans for service delivery
A
Notes:
Annual performance plans (budget program passports) specify purpose, tasks, and performance indicators of respective budget program implementations and are to be developed separately for every budget program according to the budget legislation.
PI-8.2 Performance achieved for service delivery
A
Notes:
All KSUs prepared and submitted reports on budget program passport implementation to the Finance Department in line with the requirements prescribed by the budget legislation.
PI-8.3 Resources received by service delivery units
A
Notes:
All KSU and budgetary institutions are obliged to report quarterly on resources received in-kind and monthly on resources received in cash. These monthly and quarterly reports are submitted by KSUs to the Finance Departments and the Treasury.
PI-8.4 Performance evaluation for service delivery
B
Notes:
All KSUs ensured annual budget program evaluation over 2018-2020: most of them in each of the last three completed FYs, others at least in two of the three years.
PI-9 Public access to fiscal information
A
Notes:
PI-9.1 Public access to fiscal information
A
Notes:
Local governments of Vinnytsia CTC provide the public with wide and free access to fiscal information. In particular, it is true for four basic elements and one additional element, as indicated in Table 9.1 below. Elements 5 and 7 are NA since the legislation does not require external audits of local budgets.
9bis Public consultation
B
Notes:
9bis.1 Public consultation in budget preparation
A
Notes:
The Regulations on public consultation in Vinnytsia CTC (hereinafter – the Regulations) are approved by the City Council Decree dated 30.09.2016 No.395. In 2020, public consultations on draft budget preparation for 2021 were provided in accordance with the Executive Committee’s Decree dated 26.11.2020 No. 2512 "On providing public consultation to discuss draft program on economic and social development of Vinnytsia City Territorial Community for 2021 and the annual draft budget of the Vinnytsia City Territorial Community for 2021."
9bis.2 Public consultation in the design of service delivery programs
C
Notes:
Evidence received from the Vinnytsia City Government suggests that service delivery programs were discussed in 2018 and 2020. Consultation was provided prior to the city budget approval; however, it did not cover all of the service delivery budget programs (in FY2018 – 25.2% of total city budget expenditure).
9bis.3 Public consultation in investment planning
C
Notes:
Consultation on investment projects was conducted within the framework of the Capital Construction Program, which includes all investment projects implemented in Vinnytsia City by means of budget funds.
III. MANAGEMENT OF ASSETS AND LIABILITIES
Scores by Dimension
Overall Indicator Score
PI-10 Fiscal risk reporting
C
Notes:
PI-10.1 Monitoring of public corporations
C
Notes:
2020 annual audited financial statements of the two out of ten largest PCs were published on the city council website within six months from the end of the fiscal year.
PI-10.2 Monitoring of subnational governments
NA
Notes:
This dimension is not applicable since there is no lower-tier government of Vinnytsia City Council.
PI-10.3 Contingent liabilities and other fiscal risks
NA
Notes:
This dimension is not applicable since there are neither PPP nor contingent liabilities among the fiscal risk of Vinnytsia City Council.
PI-11 Public investment management
B
Notes:
PI-11.1 Economic analysis of investment proposals
C
Notes:
There are no guidelines established/approved by the local authority for the economic analysis of public investment projects. However, an economic analysis of seven major investment projects (No. 1, 2, 4, 5, 8, 9 and 10 in Table 11.1) was conducted in line with the terms of reference template established by the Ministry for Regional Development (order dated 24.04.2015 No.8013).
PI-11.2 Investment project selection
A
Notes:
Key criteria for investment projects to be selected and included in the Capital Construction Program are specified in the Procedures for the development of the Capital Construction Program approved by the Vinnytsia City Council Executive Committee (Decree dated 04.07.2019 No. 168914).
PI-11.3 Investment project costing
C
Notes:
Capital investment project costing does not include recurrent cost estimates. Only the total capital investment cost with estimates for the budget year and the two following years are provided in the budget documentation.
PI-11.4 Investment project monitoring
A
Notes:
The entities responsible for project implementation prepare quarterly reports on project implementation and submit them to the Economic Development and the Investments Affairs Department of Vinnytsia City Council before the 10th day of the month following the reporting quarter.
PI-12 Public asset management
B
Notes:
PI-12.1 Financial asset monitoring
C
Notes:
All budget institutions and public corporations of Vinnytsia City Council maintain their individual records of financial assets through the accountant software centralised at the city level. Financial assets are recognized at fair value.
PI-12.2 Nonfinancial asset monitoring
C
Notes:
All budget institutions and public corporations of Vinnytsia City Council maintain their individual registers on all items of fixed assets (buildings, vehicles, facilities, equipment) including information on their usage and age through the accountant software centralised at the city level. The register information is complete; SNG updates it on a regular basis. The land register is maintained by the central government (State Cadastre).
PI-12.3 Transparency of asset disposal
A
Notes:
Procedures and rules for asset disposal are established. Any asset disposal requires an individual local council decision. Information on communal property disposal is included in the budget reports as budget revenues. Furthermore, the Communal Property Department of Vinnytsia City Council issues an annual analytical report on assets disposal, which is published on the city council website.
Notes:
PI-13.1 Recording and reporting of debt and guarantees
A
Notes:
The Finance Department of Vinnytsia City Council prepares and submits to the Treasury quarterly information on local debt and local guarantees following the template prescribed in the Ministry of Finance Order dated 17.01.2018 No.12.
PI-13.2 Approval of debt and guarantees
A
Notes:
According to Article 16 of the BCU, the legal right to make local borrowings and issue local guarantees within the limits set by the local budget decision belongs to the head of the local financial body on behalf of the City Council.
PI-13.3 Debt management strategy
D
Notes:
Vinnytsia City Council annually approves the Local Debt Management Program of Vinnytsia CTC for the next budget period, which covers information on existing and projected local debt, local debt, and local guarantees portfolio, interest rate limits, and potential risks assessment.
IV. POLICY-BASED FISCAL STRATEGY AND BUDGETING
Scores by Dimension
Overall Indicator Score
PI-14new Medium term budget strategy
C+
Notes:
PI-14new.1 Underlying forecasts for medium-term budget
A
Notes:
For FY2021 city budget forecast was based on historical information on transfers, revenue, and expenditure assignments. The budget forecast’s estimates were calculated based on macroeconomic forecast, fiscal strategy, sectoral strategies, new initiatives in expenditure and revenue policy implementation, and key demographic indicators.
PI-14new.2 Fiscal impact of policy proposals
D
Notes:
Estimates of the fiscal impact of proposed changes in revenue and expenditure policy for the budget year of 2021 and the following two fiscal years were not provided in the city budget forecast.
PI-14new.3 Medium-term expenditure and revenue estimates
B
Notes:
Medium-term estimates of budget expenditure and revenue for the budget year of 2021 and two following fiscal years are included in the local budget forecast submitted to the City Council in 2020. Revenues are presented by type.
PI-14new.4 Consistency of budgets with previous year's estimates
D
Notes:
Budget documentation does not include explanation on changes to expenditure estimates between the last medium-term budget forecast and the current medium-term budget forecast.
PI-14 Macroeconomic and fiscal forecasting
NU
Notes:
PI-14.1 Macroeconomic forecasts
NU
Notes:
PI-14.2 Fiscal forecasts
NU
Notes:
PI-14.3 Macro-fiscal sensitivity analysis
NU
Notes:
Notes:
PI-15.1 Fiscal impact of policy proposals
NU
Notes:
PI-15.2 Fiscal strategy adoption
NU
Notes:
PI-15.3 Reporting on fiscal outcomes
NU
Notes:
PI-16 Medium term perspective in expenditure budgeting
NU
Notes:
PI-16.1 Medium-term expenditure estimates
NU
Notes:
PI-16.2 Medium-term expenditure ceilings
NU
Notes:
PI-16.3 Alignment of strategic plans and medium-term budgets
NU
Notes:
PI-16.4 Consistency of budgets with previous year estimates
NU
Notes:
PI-17 Budget preparation process
D+
Notes:
Notes:
The budget calendar is strictly adhered to by all the budget process players. Based on the measures and timelines defined in the budget calendar KSUs have less than four weeks (actual period – 9 days) to meaningfully complete their budget requests (detailed budget estimates).
PI-17.2 Guidance on budget preparation
C
Notes:
A budget circular which reflects the guidelines on budget requests preparation and expenditure ceilings for each KSU was issued by the Finance Department of the Vinnytsia City Council and distributed to KSUs on the 13th of October, 2020.
PI-17.3 Budget submission to the subnational council
D
Notes:
For all three years under assessment (2018-2020) the Executive Committee submitted the annual budget to the Vinnytsia City Council (legislature) less than a month before the start of the next fiscal year. Actual submission dates were as follows: for 2019 budget – 06.12.2018; 2020 budget – 12.12.2019; 2021 budget – 10.12.2020.
PI-18 Legislative scrutiny of budgets
B+
Notes:
PI-18.1 Scope of budget scrutiny
A
Notes:
The City Council’s review covers budget indicators for both annual and medium-term perspectives. Statements of the fiscal strategy are included in the local budget forecast as well.
PI-18.2 Legislative procedures for budget scrutiny
A
Notes:
The Budget regulations is approved by the City Council Decree dated 29.04.2016 No.214. The regulations contain clear procedures for budget preparation, scrutinizing, approval, debating and adoption in the council, and presenting budget performance reports.
PI-18.3 Timing of budget approval
A
Notes:
In each of three years under assessment (2018-2020), the budget of Vinnytsia CTC was approved by the City Council before the start of the next fiscal year (see Table 18.3 below).
PI-18.4 Rules for budget adjustments by the executive
B
Notes:
There are clear legal requirements and rules for in-year budget adjustments, which are adhered to in all instances. However, they allow for extensive administrative reallocations (among KSUs) without any limits.
V. PREDICTABILITY AND CONTROL IN BUDGET EXECUTION
Scores by Dimension
Overall Indicator Score
PI-19 Tax administration
NA
Notes:
PI-19.1 Rights and obligations for tax measures
NA
Notes:
Core taxes and fees are administered and collected by central authority – the State Fiscal Service of Ukraine.
PI-19.2 Property tax register and value assessment
NA
Notes:
Property tax, land tax, and fees from rent are administered and collected by central authority – the State Fiscal Service of Ukraine.
PI-19.3 Tax risk management, audit and investigation
NA
Notes:
Administered by central authority – the State Fiscal Service of Ukraine.
PI-19.4 Tax arrears monitoring
NA
Notes:
Administered by central authority – the State Fiscal Service of Ukraine.
PI-20 Accounting for revenue
A
Notes:
PI-20.1 Information on revenue collections
A
Notes:
The Finance Department receives monthly revenue reports from the City Treasury office presenting information on total tax collections broken down into tax types.
PI-20.2 Transfer of revenue collections
A
Notes:
All taxes are paid directly into the accounts registered in the Treasury – separately for each type of tax revenue. Therefore, all tax revenues are directly transferred to the Treasury within 24 hours.
PI-20.3 Tax accounts reconciliation
NA
Notes:
Since Vinnytsia City Government does not administer and collect core taxes directly, this dimension is not applicable.
PI-21 Predictability of in-year resource allocation
B+
Notes:
PI-21.1 Consolidation of cash balances
A
Notes:
All cash balances on the city budget accounts are consolidated by the Treasury on a daily basis.
PI-21.2 Cash forecasting and monitoring
A
Notes:
After the budget is approved by Vinnytsia City Council, an annual cash flow forecast is prepared by the Finance Department. It is updated regularly (at least monthly) on the basis of actual cash inflows (revenue) and outflows (expenditure payments).
PI-21.3 Information on commitment ceilings
A
Notes:
After the city budget is approved by the Vinnytsia City Council, the Finance Department issues reliable monthly expenditure commitment ceilings to each KSU, which set such ceilings to each subordinated budgetary unit.
PI-21.4 Significance of in-year budget adjustments
C
Notes:
Vinnytsia city budget analysis demonstrates significant in-year budget adjustments. The budget was amended thirteen times within the FY2020 in line with the procedures and rules established by the Budget Code of Ukraine.
PI-22 Expenditure arrears
A
Notes:
PI-22.1 Stock of expenditure arrears
A
Notes:
In each of the last three completed fiscal years 2018, 2019, and 2020, there were no stock of expenditure arrears.
PI-22.2 Expenditure arrears monitoring
A
Notes:
Even though there are no stock of expenditure arrears, all budget institutions prepare, as part of the monthly financial reporting requirements, a statement to show any commitment that is unpaid even if the arrears are zero.
Notes:
PI-23.1 Integration of payroll and personnel records
B
Notes:
The process of human resource management and payroll management is fully automized.
PI-23.2 Management of payroll changes
A
Notes:
Any changes to the personnel and payroll records are updated within 24 hours and reconciled every month before the monthly payroll is processed and paid.
PI-23.3 Internal control of payroll
A
Notes:
There are clear rules and procedures for making changes to the personnel and payroll database and records. They envisage digital signature authorization that consequently results in an audit trail that is adequate to maintain a permanent history of transactions together with details of the authorizing officers.
Notes:
The SAS, the Pension Fund, and social security funds are empowered to conduct payroll audit (the Pension Fund and social security funds – in part of respective salary deduction).
Notes:
PI-24.1 Procurement monitoring
A
Notes:
Data available on the ProZorro are accurate and complete for all procurement methods for goods, services and works
PI-24.2 Procurement methods
C
Notes:
The Public Procurement Law establishes the following public procurement methods: 1) open bidding; 2) competitive dialogue; 3) procurement under the framework contract; and 4) negotiation procurement procedure.
PI-24.3 Public access to procurement information
A
Notes:
Findings on public access to procurement information led to the conclusion that all six requirements to information accessibility were met by KSUs and budgetary institutions of Vinnytsia City Council.
PI-24.4 Procurement complaints management
B
Notes:
Procurement complaints are managed by the Antimonopoly Committee of Ukraine (hereinafter – AMCU) as a body responsible for complaints management process at both national and sub-national levels.
PI-25 Internal controls on nonsalary expenditure
B
Notes:
PI-25.1 Segregation of duties
A
Notes:
The City of Vinnytsia has established and documented a clear segregation of duties which is in force for the PFM procedures throughout the City Administration. As it is required by the law, the procedure for the document’s endorsement is specified in the instructions developed within each KSU.
PI-25.2 Effectiveness of expenditure commitment controls
C
Notes:
In line with documented internal procedures and under the supervision of the internal control procedures, spending units exercise control to make sure that commitments are kept only within the scope of budgets and monthly budget allocations.
PI-25.3 Compliance with payment rules and procedures
B
Notes:
Presently, the absence of a functional internal audit unit as well as the non-existence of external audit reports as evidence in principle limits the base for assessors’ judgement on the effectiveness and the level of compliance with payment rules and procedures.
Notes:
PI-26.1 Coverage of internal audit
D
Notes:
Budgetary institutions in the city of Vinnytsia have not established any internal audit divisions or appointed an official responsible for internal audit.
PI-26.2 Nature of audits and standards applied
NA
Notes:
As there is no functional internal audit unit, this dimension is not applicable.
PI-26.3 Implementation of internal audits and reporting
NA
Notes:
As there is no functional internal audit unit, this dimension is not applicable.
PI-26.4 Response to internal audits
NA
Notes:
As there is no functional internal audit unit, this dimension is not applicable.
VI. ACCOUNTING AND REPORTING
Scores by Dimension
Overall Indicator Score
PI-27 Financial data integrity
A
Notes:
PI-27.1 Bank account reconciliation
A
Notes:
The 1652 bank accounts are directly linked to the TSA. The local government financial bodies received daily transactional report on the movement of funds from each of the 1652 accounts, which it reconciles with its cash ledgers.
PI-27.2 Suspense accounts
NA
Notes:
There are no suspense accounts.
PI-27.3 Advance accounts
A
Notes:
Advance payments to staff for salary and operational activities are very rare. Contractors receive up to 30% mobilization which is set-off against any future payment.
PI-27.4 Financial data integrity processes
B
Notes:
Only authorised staff have access to financial records. All changes to these records are duly authorised by the head of department and/or budget institution; changes result in audit trail.
PI-28 In-year budget reports
D+
Notes:
PI-28.1 Coverage and comparability of reports
D
Notes:
Coverage and classification of financial reports do not allow direct comparison between the originally approved expenditure budget and actual expenditure outturns for the main administrative headings.
PI-28.2 Timing of in-year budget reports
A
Notes:
As indicated in Table 28.2 below, the local government prepares monthly in-year budget execution reports; these are issued within one week after the end of the previous month.
PI-28.3 Accuracy of in-year budget reports
C
Notes:
The in-year budget execution reports include planned and actual expenditures but do not cover expenditure at commitment stage.
PI-29 Annual financial reports
D+
Notes:
PI-29.1 Completeness of annual financial reports
D
Notes:
The annual financial statements present information on revenue and expenditure according to program, functional and economic classifications, cash balances and receivables, tangible assets, payables and long-term liabilities, plus a reconciled cash flow statement. However, the annual financial reports are not comparable with the approved budget.
PI-29.2 Submission of reports for external audit
D
Notes:
Vinnytsia City Government has not submitted the FY2020 annual financial statement for external audit.
PI-29.3 Accounting standards
B
Notes:
Though the local government has never been audited within the last three completed FY 2018-2020, it prepares annual financial statements in accordance with the National Public Sector Accounting Regulations prescribed by the Ministry of Finance, which are generally in line with IPSAS; the annual financial statements have been consistent over time.
VII. EXTERNAL SCRUTINY AND AUDIT
Scores by Dimension
Overall Indicator Score
Notes:
Notes:
Over the last three completed fiscal years, the Supreme Audit Institution known as the Accounting Chamber of Ukraine (ACU) has not conducted any external audit of the financial record and operation activities of the Vinnytsia City Government.
PI-30.2 Submission of audit reports to the subnational council
D
Notes:
The Accounting Chamber of Ukraine has not conducted any external audit of the financial records of the Vinnytsia City Government; therefore, it has also not submitted any audit reports to the Vinnytsia City Council for scrutiny.
PI-30.3 External audit follow-up
NA
Notes:
Within the assessment period (2018-2020), the Accounting Chamber of Ukraine has not undertaken any external audit follow-up within the Vinnytsia City Council.
PI-30.4 Independence of the public audit institution in charge of subnational governments
D
Notes:
ACU is not fully independent. Its staff are civil servants under the authority and control of the executive government. Again, it has no full mandate to audit all public funds.
PI-31 Legislative scrutiny of audit reports
D
Notes:
PI-31.1 Timing of audit report scrutiny
D
Notes:
The City Council has not received any external audit and/or audited annual financial report for scrutiny from the ACU or SAS.
PI-31.2 Hearings on audit findings
NA
Notes:
The City Council has not conducted any hearing on external audit findings and also hearing on any audited financial reports from the Finance Department of the Vinnytsia City Council.
PI-31.3 Recommendations on audit by subnational council
NA
Notes:
The City Council has not issued any recommendations on audit and/or financial findings derived from annual reports.
PI-31.4 Transparency of legislative scrutiny of audit reports
NA
Notes:
The City Council has not conducted any public scrutiny of annual audit reports.