SNG PILLAR: INTERGOVERNMENTAL FISCAL RELATIONS
Scores by Dimension
Overall Indicator Score
HLG-1 Transfers from Higher Levels of Government
C
Notes:
HLG-1.1 Outturn from higher-levels of government
C
Notes:
Table HLG.1 shows that in two of the last three years under assessment, actual transfers were between 92% and 116% of the original budget estimates.
HLG-1.2 Transfers composition outturn
D
Notes:
Variance in transfer composition was more than 15% in each of three years under assessment: 2018 – 15.8%; 2019 – 17.6%; in 2020 – 18.3%.
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 Zhytomyr CTC, is provided in accordance with the Procedure developed at the central level and approved by Cabinet Decree No. 1132. Before the start of the next budget period, the Finance and Budget Department prepares an annual budget allocation plan (cash flow forecast) that defines the schedule of transferring grants from state budget to local budgets.
HLG-1.4 Predictability of transfers
D
Notes:
2021 was the first year when the Ministry of Finance of Ukraine 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, and implementation, as well as local 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 Budget Code of Ukraine (Articles 60 and 61) mandates all SNGs to prepare and submit annual financial statements to the Treasury before the 31st of March of the year following the previous budget period.
I. BUDGET RELIABILITY
Scores by Dimension
Overall Indicator Score
PI-1 Aggregate expenditure out-turn
B
Notes:
PI-1.1 Aggregate expenditure out-turn
B
Notes:
Actual aggregate expenditure outturn stood at 111.1%, 105.2% and 104.4% in 2018, 2019, and 2020 respectively. That means less than 10% deviation in two of the last three completed FYs.
PI-2 Expenditure composition outturn
C+
Notes:
PI-2.1 Expenditure composition outturn by function
C
Notes:
Variance in expenditure composition by functional classification was less than 15% in each of the last three FYs: 8.2%, 12.4% and 10.7% in 2018, 2019, and 2020 respectively.
PI-2.2 Expenditure composition outturn by economic type
C
Notes:
Variance in expenditure composition by economic categories was significantly higher in 2019 comparing with the function criteria.
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
A
Notes:
Actual aggregate revenue outturn by years: 105.4%, 109.1% and 101.8% in 2018, 2019, and 2020 respectively.
PI-3.2 Revenue composition outturn
B
Notes:
Actual revenue composition outturn by years: 9.7%, 6.6% and 7.4% 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 Zhytomyr 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
B
Notes:
The ratio of extra-budgetary expenditure of healthcare institutions to total expenditures of Zhytomyr city budget stood at 1.9% in FY2020. These expenditures were not included in the budget reports of Zhytomyr City Council.
PI-6.2 Revenue outside financial reports
B
Notes:
Share of total extra-budgetary revenues outside the Zhytomyr city budget reports was 1.8% 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 Zhytomyr 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 Zhytomyr City Council.
PI-8 Performance information for service delivery
A
Notes:
PI-8.1 Performance plans for service delivery
A
Notes:
All fourteen (14) KSUs develop passports (annual performance plans) for all the budget programs they are responsible for. Passports specify purpose, tasks, and performance indicators of respective budget program and are to be developed separately for each budget program according to the budget legislation.
PI-8.2 Performance achieved for service delivery
A
Notes:
All KSUs prepare and submit reports on budget program passport implementation to the Finance and Budget Department in line with 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 and Budget Departments and the Treasury.
PI-8.4 Performance evaluation for service delivery
B
Notes:
Budget program effectiveness evaluation is provided by KSUs, hence there is no independent evaluation of service delivery programs. Evaluation results by budget programs as well as consolidated results are published on the Zhytomyr City Council website.
PI-9 Public access to fiscal information
A
Notes:
PI-9.1 Public access to fiscal information
A
Notes:
Local governments of Zhytomyr CTC provide the public with wide and free access to fiscal information. In particular, it is true for four (4) basic elements and one (1) additional element, as indicated in Table 9.1 below.
9bis Public consultation
D+
Notes:
9bis.1 Public consultation in budget preparation
D
Notes:
The City Government uses “citizens budget” as an instrument for considering public view in the budget preparation, however it does not envisage public discussion of the whole budget proposal.
9bis.2 Public consultation in the design of service delivery programs
C
Notes:
The City Government reported on the consultation for secondary education budget program in 2020. Inputs received from citizens are included in the annual reports of the schools’ principals, which are published on the websites of the respective educational institutions.
9bis.3 Public consultation in investment planning
D
Notes:
Public consultation on investment projects were not conducted in 2020.
III. MANAGEMENT OF ASSETS AND LIABILITIES
Scores by Dimension
Overall Indicator Score
PI-10 Fiscal risk reporting
D
Notes:
PI-10.1 Monitoring of public corporations
D
Notes:
FY2020 annual audited financial statements of the three largest PCs were published on the city council website within nine months from the end of the fiscal year. These three audited PCs constitute 65.7% by their value.
PI-10.2 Monitoring of subnational governments
NA
Notes:
This dimension is not applicable since there is no lower-tier government of Zhytomyr 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 Zhytomyr City Council.
PI-11 Public investment management
C+
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.
PI-11.2 Investment project selection
C
Notes:
The four major investment projects (66% by value) funded by means of SRDF were selected, according to standard criteria defined (published) in the Cabinet Decree dated 18.03.2015 No. 196.
PI-11.3 Investment project costing
C
Notes:
The total life-cycle cost of all investment projects (including major ones), as well as projected cost for the planning budget period, is included in the annual budget of Zhytomyr CTC. However, the budget documents do not contain such information for the next three years.
PI-11.4 Investment project monitoring
A
Notes:
In line with the City Program on Economic and Cultural Development all the executives of the City Council, responsible for investment project implementation, are obliged to submit quarterly reports on the program implementation (including investment projects) to the Economic Development Department, which provides investment projects monitoring and its results publication on the city council website.
PI-12 Public asset management
B
Notes:
PI-12.1 Financial asset monitoring
C
Notes:
All budget institutions of Zhytomyr City Council maintain their individual records of all items of financial assets, which are recognized at fair value. Information on financial assets performance portfolio is not published.
PI-12.2 Nonfinancial asset monitoring
C
Notes:
All budget institutions of Zhytomyr City Council maintain their individual registers on all items of tangible assets (buildings, vehicles, facilit
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.
Notes:
PI-13.1 Recording and reporting of debt and guarantees
A
Notes:
The Finance and Budget Department of Zhytomyr 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:
Zhytomyr City Council annually approves the Local Debt Management Program of Zhytomyr CTC for the next budget period, which covers information on existing and projected local debt, local debt, and local guarantees portfolio, interest rate limits, potential risks assessment. Medium-term debt management strategy is not developed.
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:
The city budget forecast submitted to the City Council in 2020 includes estimates of revenue, expenditure, and budget transfers for the next budget period and two following fiscal years.
PI-14new.2 Fiscal impact of policy proposals
D
Notes:
Estimates of the fiscal impact of all 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 and two following fiscal years are included in the local budget forecast.
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 largely adhered to by the budget process players. Based on the measures and timelines defined in the budget calendar KSUs have less than four weeks (actual period – up to 10 days) to meaningfully complete their budget requests and supporting calculations.
PI-17.2 Guidance on budget preparation
C
Notes:
The budget circular for FY 2021 was sent to KSUs on the 27th of October 2020, and expenditure ceilings – on the 2nd of November.
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 City Council (legislature) less than a month before the start of the next fiscal year.
PI-18 Legislative scrutiny of budgets
C+
Notes:
PI-18.1 Scope of budget scrutiny
A
Notes:
The City Council’s review covers budget indicators for both annual and medium-term perspective. Statements of the fiscal strategy are included in the local budget forecast as well. The review also covers detailed indicators of budget revenues and expenditures.
PI-18.2 Legislative procedures for budget scrutiny
C
Notes:
As of September 17, 2021, there were no the budget regulations of the City Council.
PI-18.3 Timing of budget approval
A
Notes:
In each of three years under assessment (2018-2020), the budget of Zhytomyr 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:
Although there are clear legal requirements and rules for in-year budget adjustments, 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 and Budget Department receives monthly revenue reports from the city tax office presenting information on total tax collections broken down into tax types. Furthermore, the city tax office provides for daily information on tax revenues (broken down also by taxpayers).
PI-20.2 Transfer of revenue collections
A
Notes:
All taxes are paid directly into the accounts registered in the Treasury, though 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 Zhytomyr 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 Zhytomyr City Council, an annual cash flow forecast is prepared by the Finance and Budget Department before the start of the budget period. 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 Zhytomyr City Council, the Finance and Budget Department issues reliable expenditure commitment ceilings to each KSU for a full fiscal year divided by 12 months.
PI-21.4 Significance of in-year budget adjustments
C
Notes:
Analysis of Zhytomyr city budget for FY2020 demonstrates significant in-year budget adjustments. The cite budget was amended thirteen times (13) 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 prepared, as part of the monthly financial reporting requirements, statements to show any commitment that is unpaid even if the arrears are nil.
Notes:
PI-23.1 Integration of payroll and personnel records
B
Notes:
The process of human resource management and payroll management is fully automized. The human resource management software and payroll management software are both linked to the approved staff list to ensure internal control, data consistency, and monthly data reconciliation.
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. The basis for changing records is always respective legal acts of the City Council as well as supporting documents.
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.
Notes:
The SAS, the Pension Fund, and social security funds are empowered to conduct payroll audit (the Pension Fund and the 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. Information is presented in real time showing the purpose, subject, conditions, the value, and winner(s) of the contract.
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 Zhytomyr 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 level.
PI-25 Internal controls on nonsalary expenditure
B
Notes:
PI-25.1 Segregation of duties
A
Notes:
The city of Zhytomyr has established and documented a clear segregation of duties which is in force for the PFM procedures. The procedures for segregation of duties are clear and appropriate, as they prescribe who is responsible for generating an expenditure (raising a local purchase order – LPO), who authorizes such expenditure and who approves and pays expenditures.
PI-25.2 Effectiveness of expenditure commitment controls
C
Notes:
In line with documented internal procedures and under supervision of the Internal Control Division, spending units have autonomy in exercising 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 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 Zhytomyr 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 government of Zhytomyr has 1073 bank accounts opened for KSUs, spending units of lower-tier and recipients of budget funds, including EBUs.
PI-27.2 Suspense accounts
NA
Notes:
Not applicable. There are no suspense accounts.
PI-27.3 Advance accounts
A
Notes:
Advances to staff for salary and operational activities are short term. Contractors receive up to 30% mobilization which is set-off against any future payment. All advances are reconciled every month when submitting budget arrears reports to the Treasury.
PI-27.4 Financial data integrity processes
B
Notes:
The Treasury keeps its records in the automated accounting and reporting system. Access is strictly restricted by a password system. Records cannot be created or modified without registration in the electronic checklist.
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 originally approved expenditure budget and actual expenditure outturns for the main administrative headings (spending units).
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 two weeks 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 include complete information on assets, liabilities, including long-term, revenue, and cash flow statement.
PI-29.2 Submission of reports for external audit
D
Notes:
The city of Zhytomyr has not submitted the FY2020 annual financial statement for external audit.
PI-29.3 Accounting standards
B
Notes:
Annual financial statements on budget execution are developed 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 Zhytomyr City Government administration.
PI-30.2 Submission of audit reports to the subnational council
D
Notes:
The ACU has not conducted any external audit of the financial records of Zhytomyr city administration; therefore, it has also not submitted any audit reports to the City Council for scrutiny.
PI-30.3 External audit follow-up
NA
Notes:
Within the assessment period (2018-2020), the ACU has not undertaken any external audit follow-up within the Zhytomyr city administration.
PI-30.4 Independence of the public audit institution in charge of subnational governments
D
Notes:
The 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:
PI-31.2 Hearings on audit findings
NA
Notes:
The City Council has not received any external audit and/or audited financial report for scrutiny from the ACU or the SAS.
PI-31.3 Recommendations on audit by subnational council
NA
Notes:
The City Council has not conducted any hearing on external audit findings and on any audited financial reports from the Finance and Budget Department of the City Council.
PI-31.4 Transparency of legislative scrutiny of audit reports
NA
Notes:
The City Council has not issued any recommendations on audit and/or financial findings.