I. Credibility of the Budget
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure out-turn compared to original approved budget
B
Notes:
1.1 The difference between actual primary expenditure and the originally budgeted primary expenditure (i.e. excluding debt service charges, but also excluding externally financed project expenditure)
B
Notes:
Actual expenditure deviated more than 10% from budget in only one of the past three years.
2. Composition of expenditure out-turn compared to original approved budget
B+
Notes:
2.1 Extent of the variance in expenditure composition during the last three years, excluding contingency items (the methodolodgy to rate this dimension is set out in the footnote of the PFM PMF booklet)
B
Notes:
Variance has exceeded 10% in one of the past three years.
2.2 The average amount of expenditure actually charged to the contingency vote over the last three years
A
Notes:
Actual expenditure charged to the contingency budget has been nil in the past three years.
3. Aggregate revenue out-turn compared to original approved budget
D
Notes:
3.1 Actual domestic revenue collection compared to domestic revenue in the originally approved budget
D
Notes:
Actual revenue was above 116% of budget in all three years
4. Stock and monitoring of expenditure payment arrears
B+
Notes:
4.1 Stock of expenditure payment arrears (as a percentage of actual total expenditure for the corresponding fiscal year) and any recent change in the stock
A
Notes:
The stock of arrears is less than 2% of total expenditure.
4.2 Availability of data for monitoring the stock of expenditure payment arrears
B
Notes:
The annual accounts show payables in detail, but they are not analyzed by age.
II. Comprehensiveness and Transparency
Scores by Dimension
Overall Indicator Score
5. Classification of the budget
B
Notes:
5.1 The classification system used for formulation, execution and reporting of the central government's budget
B
Notes:
Budget formulation and execution is based on administrative, economic, and functional classification (using at least the 10 main COFOG functions), using GFS and COFOG standards or a standard that can produce consistent documentation according to those standards.
6. Comprehensiveness of information included in budget documentation
C
Notes:
6.1 Share of the listed information under PI-6 in the PFM PMF booklet in the budget documentation most recently issued by the central government (in order to count in the assessment, the full specification of the information benchmark must be met)
C
Notes:
Two of the six applicable information elements are completely provided.
7. Extent of unreported government operations
D+
Notes:
7.1 The level of extra-budgetary expenditure (other than donor funded projects) which is unreported i.e. not included in fiscal reports.
B
Notes:
The level of unreported extra-budgetary expenditure (other than donor-financed projects) was 2.6% of total expenditure in FY 2012/13.
7.2 Income/expenditure information on donor-funded projects which is included in fiscal reports.
D
Notes:
Information on donor-financed projects is deficient.
8. Transparency of inter-governmental fiscal relations
B+
Notes:
8.1 Transparent and rules based systems in the horizontal allocation among SN governments of unconditional and conditional transfers from central government (both budgeted and actual allocations);
B
Notes:
For the EFY 2005 and 2006 budgets, at least 90% of the total grants to woredas were in the form of the formula-based block grant. WoFEDs tend to have some trouble understanding the basis for the allocation of the block grant.
8.2 Timeliness of reliable information to SN governments on their allocations from central government for the coming year;
B
Notes:
Zones and woredas are provided reliable information on their grant ceilings before they complete their budgets.
8.3 Extent to which consolidated fiscal data (at least on revenue and expenditure) is collected and reported for general government according to sectoral categories.
A
Notes:
Fiscal data are collected from all zones and woredas using the same chart of accounts as at higher levels. BoFED consolidates these into annual reports within six months of the end of the fiscal year.
9. Oversight of aggregate fiscal risk from other public sector entities.
C+
Notes:
9.1 Extent of central government monitoring of AGAs and PEs.
C
Notes:
Extra-budgetary AGAs and PEs submit fiscal reports to the Oromia PPESA at least annually, but a consolidated overview of fiscal risk is missing.
9.2 Extent of central government monitoring of SN government's fiscal position
A
Notes:
Zones and woredas cannot generate fiscal liabilities
10. Public access to key fiscal information
C
Notes:
10.1 Number of the above listed elements of public access to information that is fulfilled (in order to count in the assessment, the full specification of the information benchmark must be met)
C
Notes:
The government makes available to the public three of the applicable seven elements of information.
III. Policy-Based Budgeting
Scores by Dimension
Overall Indicator Score
11. Orderliness and participation in the annual budget process
B
Notes:
11.1 Existence of and adherence to a fixed budget calendar;
C
Notes:
A clear annual budget calendar exists but is not generally adhered to and does not allow BIs enough time (at least four weeks) to meaningfully complete their estimates on time.
11.2 Clarity/comprehensiveness of and political involvement in the guidance on the preparation of budget submissions (budget circular or equivalent);
A
Notes:
A comprehensive and clear budget circular is issued to BIs that shows the ceilings previously approved by the Oromia cabinet.
11.3 Timely budget approval by the legislature or similarly mandated body (within the last three years);
C
Notes:
Council has approved the budget within two months of the start of the year for the past three years.
12. Multi-year perspective in fiscal planning, expenditure policy and budgeting
D*
Notes:
12.1 Preparation of multi -year fiscal forecasts and functional allocations
C
Notes:
A MEFF has been established since the 2010 PEFA assessment. Under this, aggregate spending ceilings are projected over the next three years. The second year is the starting point for establishing the aggregate spending ceiling for the next budget preparation period. An MTEF, under which medium-term expenditures are estimated on a functional and sectoral basis, is not yet in place.
12.2 Scope and frequency of debt sustainability analysis
NA
Notes:
12.3 Existence of sector strategies with multi-year costing of recurrent and investment expenditure;
D*
Notes:
No sector strategies seen.
12.4 Linkages between investment budgets and forward expenditure estimates.
C
Notes:
Many investment decisions have weak links to sector strategies, and their recurrent cost implications are included in forward budget estimates in some cases.
IV. Predictability and Control in Budget Execution
Scores by Dimension
Overall Indicator Score
13. Transparency of taxpayer obligations and liabilities
A
Notes:
13.1 Clarity and comprehensiveness of tax liabilities
A
Notes:
Legislation and procedures for most taxes are comprehensive and clear, with limited discretionary powers of the revenue authority.
13.2 Taxpayer access to information on tax liabilities and administrative procedures.
A
Notes:
Taxpayers have easy access to comprehensive, user-friendly, and up-to-date information on tax liabilities and procedures, and the revenue authority supplements this with taxpayer education campaigns.
13.3 Existence and functioning of a tax appeals mechanism.
B
Notes:
A tax appeals system of transparent administrative procedures is functional, but some issues relating to access and fairness need to be addressed.
14. Effectiveness of measures for taxpayer registration and tax assessment
B+
Notes:
14.1 Controls in the taxpayer registration system.
A
Notes:
Taxpayers are registered in a complete database with comprehensive direct linkages to other government registration systems and financial sector regulations.
14.3 Planning and monitoring of tax audit and fraud investigation programs.
B
Notes:
Tax audits and fraud investigations are managed and reported on according to a documented audit plan with clear risk assessment criteria.
14.2 Effectiveness of penalties for non-compliance with registration and declaration obligations
B
Notes:
Penalties for noncompliance exist but are not always effective in terms of getting people to pay their taxes on time.
15. Effectiveness in collection of tax payments
D+
Notes:
15.1 Collection ratio for gross tax arrears, being the percentage of tax arrears at the beginning of a fiscal year, which was collected during that fiscal year (average of the last two fiscal years).
A
Notes:
The total amount of tax arrears is insignificant (less than 2% of total annual collections).
15.2 Effectiveness of transfer of tax collections to the Treasury by the revenue administration.
C
Notes:
Revenue collections are transferred to BoFED at least monthly.
15.3 Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and receipts by the Treasury.
D
Notes:
No complete reconciliation seen. There is monthly reconciliation of revenues collected by ORG branches with amounts credited to BoFED bank account, but complete reconciliation of assessments, arrears, and collections not conducted.
16. Predictability in the availability of funds for commitment of expenditures
C+
Notes:
16.2 Reliability and horizon of periodic in-year information to MDAs on ceilings for expenditure commitments
A
Notes:
16.3 Frequency and transparency of adjustments to budget allocations, which are decided above the level of management of MDAs.
C
Notes:
Significant in-year budget adjustments are frequent, but undertaken with some transparency.
16.1 Extent to which cash flows are forecast and monitored
A
Notes:
A cash forecast is prepared for the year and updated monthly based on actual cash inflows and outflows.
17. Recording and management of cash balances, debt and guarantees
C
Notes:
17.1 Quality of debt data recording and reporting
NA
Notes:
There is no formal debt.
17.2 Extent of consolidation of the government’s cash balances
C
Notes:
Most government cash balances are calculated and consolidated at least monthly.
17.3 Systems for contracting loans and issuance of guarantees.
C
Notes:
The contracting of loans and guarantees are subject to approval by BoFED but are not subject to clear guidelines.
18. Effectiveness of payroll controls
B+
Notes:
18.1 Degree of integration and reconciliation between personnel records and payroll data.
B
Notes:
Payroll and personnel database are not linked directly electronically, but payroll data is updated within a month based on personnel documentation and payroll of the month reconciled against the previous month payroll.
18.2 Timeliness of changes to personnel records and the payroll
A
Notes:
Payroll changes are updated in the month of the change if received before the 20th of the month, and if the change occurs after the end of the 20th day of the month, changes will be reflected on the subsequent month’s payroll.
18.3 Internal controls of changes to personnel records and the payroll.
A
Notes:
There is a separation of role between maintenance of personnel records and preparation of payroll. Only payroll accountants have access to the Excel spreadsheet, and changes made to the payroll can be trailed back to the personnel documents copied to finance and those retained by the personnel department.
18.4 Existence of payroll audits to identify control weaknesses and/or ghost workers.
B
Notes:
There is no comprehensive, systemic audit of payroll. However, a separate audit of personnel records and payroll payment is conducted by both internal and external auditors as part of the financial audit.
19. Transparency, competition and complaints mechanisms in procurement
C
Notes:
19.1 Transparency, comprehensiveness and competition in the legal and regulatory framework
Notes:
Five of the listed requirements are fully met.
19.2 Use of competitive procurement methods
Notes:
Reliable data were not available to the team.
19.3 Public access to complete, reliable and timely procurement information
Notes:
The government does not systematically make key procurement information available to the public
19.4 Existence of an independent administrative procurement complaints system
B
Notes:
The complaints system meets criteria 1 and 2 and four of the other five criteria.
20. Effectiveness of internal controls for non-salary expenditure
B
Notes:
20.1 Effectiveness of expenditure commitment controls.
B
Notes:
Expenditure commitment controls are in place. Together with strong cash management, they effectively limit commitments to projected cash availability and budget allocations with minor exceptions.
20.2 Comprehensiveness, relevance and understanding of other internal control rules/ procedures
B
Notes:
Financial and non-financial controls are comprehensive, well documented, and widely understood.
20.3 Degree of compliance with rules for processing and recording transactions
B
Notes:
Compliance with rules is fairly high, but certain procedures may not be respected occasionally by some BIs.
21. Effectiveness of internal audit
C+
Notes:
21.1 Coverage and quality of the internal audit function.
C
Notes:
Although the manuals and guidelines are in line with the international standards, due to high staff turnover and vacancies the coverage is about 40% and there is insufficient time for systemic audit.
21.2 Frequency and distribution of reports
A
Notes:
Reports are issued generally on a fixed schedule at least on a quarterly basis.
21.3 Extent of management response to internal audit findings.
C
Notes:
About 50% of the managers respond on time.
V. Accounting, Recording and Reporting
Scores by Dimension
Overall Indicator Score
22. Timeliness and regularity of accounts reconciliation
B
Notes:
22.1 Regularity of bank reconciliations
B
Notes:
Bank accounts are reconciled on a monthly basis for the majority of treasury bank accounts within 4 weeks from the end of the month.
22.2 Regularity of reconciliation and clearance of suspense accounts and advances.
B
Notes:
Suspense accounts and advances are reconciled at least annually and only a few balances are carried forward to the following year. Balances are mainly attributable to previous years
23. Availability of information on resources received by service delivery units
B
Notes:
23.1 Collection and processing of information to demonstrate the resources that were actually received (in cash and kind) by the most common front-line service delivery units (focus on primary schools and primary health clinics) in relation to the overall
B
Notes:
Routine data collection provides reliable information on resources received by primary schools and health centers, both in-kind and in cash form. The education and health bureaus compile annual reports, although there may be gaps if woreda offices do not report routinely to zonal offices on resources provided to SDUs in kind.
24. Quality and timeliness of in-year budget reports
C+
Notes:
24.1 Scope of reports in terms of coverage and compatibility with budget estimates
C
Notes:
Classification of data allows direct comparison with the budget, but only at the payment stage, not at commitment stage.
24.2 Timeliness of the issue of reports
C
Notes:
Consolidated reports are prepared quarterly and issued within eight weeks of the end of the quarter (although the law requires them within one month).
24.3 Quality of information
B
Notes:
There are some concerns about data accuracy, but these do not undermine their overall consistency or usefulness
25. Quality and timeliness of annual financial statements
C+
Notes:
25.1 Completeness of the financial statements
B
Notes:
Financial statements are comprehensive (except for the omission of some extra-budgetary funds and donor funded projects), but accounts for FY 2010/11 could not be reconciled.
25.2 Timeliness of submission of the financial statements
A
Notes:
The latest financial statements were submitted six months after the end of the fiscal year.
25.3 Accounting standards used
C
Notes:
Financial statements are prepared in line with government account procedure except some of the reporting requirements are yet to be fulfilled.
VI. External Scrutiny and Audit
Scores by Dimension
Overall Indicator Score
26. Scope, nature and follow-up of external audit
C+
Notes:
26.1 Scope/nature of audit performed (incl. adherence to auditing standards).
C
Notes:
The coverage is about 65%, about the same as at the time of the 2010 assessment. ORAG follows INTOSAI standards and conducts a systemic audit.
26.2 Timeliness of submission of audit reports to legislature.
C
Notes:
Audit reports on financial statements are submitted to the Council 10 to 11 months after receipt of the statements.
26.3 Evidence of follow up on audit recommendations
A
Notes:
There is a strong follow up through a separate follow-up unit in ORAG, established in 2010. The role of PAC, also established in 2010, and the publicity of audit findings by ORAG and PAC in radio and TV programs has enhanced the responsiveness of BIs to audit findings.
27. Legislative scrutiny of the annual budget law
B+
Notes:
27.1 Scope of the legislature’s scrutiny.
B
Notes:
The BFC review covers fiscal policies and aggregates (the MEFF) as well as detailed estimates of revenue and expenditure.
27.2 Extent to which the legislature’s procedures are well-established and respected.
A
Notes:
The legislature’s procedures are well established and respected and include inputs from specialized review committees.
27.3 Adequacy of time for the legislature to provide a response to budget proposals both the detailed estimates and, where applicable, for proposals on macro-fiscal aggregates earlier in the budget preparation cycyle (time allowed in practice for all stag
B
Notes:
The legislature had about seven weeks to review the draft FY 2013/14 budget between January and July 2013.
27.4 Rules for in-year amendments to the budget without ex-ante approval by the legislature.
B
Notes:
Clear rules exist and are respected, but they allow extensive administrative reallocations.
28. Legislative scrutiny of external audit reports
B+
Notes:
28.1 Timeliness of examination of audit reports by the legislature (for reports received within the last three years).
B
Notes:
The financial audit review is completed by May, four months after receipt of the OFAG report.
28.2 Extent of hearings on key findings undertaken by the legislature.
A
Notes:
In-depth hearings take place consistently, with responsible officers from defaulting entities.
28.3 Issuance of recommended actions by the legislature and implementation by the executive.
A
Notes:
BFC recommendations are strongly followed up and generally implemented.
Donor Practices
Scores by Dimension
Overall Indicator Score
D-1 Predictability of Direct Budget Support
NA
Notes:
D-1.1 Annual deviation of actual budget support from the forecast provided by the donor agencies at least six weeks prior to the government submitting its budget proposals to the legislature (or equivalent approving body).
NA
Notes:
D-1.2 In-year timeliness of donor disbursements (compliance with aggregate quarterly estimates)
NA
Notes:
D-2 Financial information provided by donors for budgeting and reporting on project and program aid
D+
Notes:
D-2.1 Completeness and timeliness of budget estimates by donors for project support.
C
Notes:
Channel 1b DPs (UN agencies) provide estimates of project aid for the coming year at least three months prior to the start of the year, although not using GoE classification, except at very aggregated level.
D-2.2 Frequency and coverage of reporting by donors on actual donor flows for project support.
D
Notes:
Donors (at least the largest five) do not provide quarterly reports of actual disbursements within two months of the end of each quarter.
D-3 Proportion of aid that is managed by use of national procedures
C
Notes:
D-3.1 Overall proportation of aid funds to central government that are managed through national procedures
C
Notes:
At least 50% of aid funds are managed through national procedures, due to the large amount of PBS aid that is incorporated in the block grant.
