I. Credibility of the Budget
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure out-turn compared to original approved budget
A
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)
A
Notes:
Since actual expenditure did not deviate from the budget by more than 5% in any of the last three years, the score for this indicator is A. (p. 10)
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:
As the variance in expenditure composition exceeded 5% in two years, but did not exceed 10% in any year, the score on dimension (i) is B. (p. 11)
2.2 The average amount of expenditure actually charged to the contingency vote over the last three years
A
Notes:
There is no charging of expenditure against the contingency provision, so the score on dimension (ii) is A. (p. 11)
3. Aggregate revenue out-turn compared to original approved budget
B
Notes:
3.1 Actual domestic revenue collection compared to domestic revenue in the originally approved budget
B
Notes:
Annex B shows that revenue collections were 109.7%, 96.6% and 97.3% of budget in the last three years. Score = B. (p. 12)
4. Stock and monitoring of expenditure payment arrears
A
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:
Arrears are nil. (p. 13)
4.2 Availability of data for monitoring the stock of expenditure payment arrears
A
Notes:
Since reliable data are generated and there are no arrears, the rating is A. (p. 13)
II. Comprehensiveness and Transparency
Scores by Dimension
Overall Indicator Score
5. Classification of the budget
D
Notes:
5.1 The classification system used for formulation, execution and reporting of the central government's budget
D
Notes:
Budget formulation and execution is not based on a GFS compatible classification, nor a functional classification that can be aligned with COFOG. Score = D. (p. 15)
6. Comprehensiveness of information included in budget documentation
D
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)
D
Notes:
As only one of the benchmarks is fulfilled, the score is D. (p. 16)
7. Extent of unreported government operations
B+
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:
As explained in section 1.4 above, government business corporations (FPCs and NFPCs) are not part of government, and are excluded from this indicator. The above table shows that only Enterprise St Helena and the St Helena National Trust are within the GFS definition of government and are extra-budgetary. Their annual expenditure, from latest available accounts, added up to £1,103,000 and they received SHG grants totalling £649,000. Only the grants are accounted for within the SHG budget and Statement of Accounts. The additional expenditure of £454,000 was funded from other revenues, including several grants to the National Trust. This represents 1.4% of total recorded expenditure for the year. Score = B. (p. 19)
7.2 Income/expenditure information on donor-funded projects which is included in fiscal reports.
A
Notes:
Donor project funds are fully budgeted and accounted for. Score = A. (p. 19)
8. Transparency of inter-governmental fiscal relations
NA
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);
NA
Notes:
SNG has no sub-national level of government, so this indicator is not applicable. (p. 19)
8.2 Timeliness of reliable information to SN governments on their allocations from central government for the coming year;
NA
Notes:
SNG has no sub-national level of government, so this indicator is not applicable. (p. 19)
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.
NA
Notes:
SNG has no sub-national level of government, so this indicator is not applicable. (p. 19)
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:
All the bodies listed in table 7 above submit their audited annual accounts to Finance Department. Monthly performance reports track events/areas that are likely to hinder or impede progress in achieving strategic priorities to ensure that any negative impact is kept to a minimum. However there is no formal regular or consolidated overview of fiscal risk. Score = C. (p. 20)
9.2 Extent of central government monitoring of SN government's fiscal position
NA
Notes:
10. Public access to key fiscal information
A
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)
A
Notes:
At the time of this assessment, five of the above elements are provided, either in hard copy or on the SHG website. The annual budget is posted on the website at the time it is presented to LegCo. Monthly performance reports, annual statements of accounts and audit reports are also posted on the website within the respective time limits. Contract awards have started being posted. Resources available to primary schools and primary health clinics are known to the respective directorates, but are not published. Score = A. (p. 21)
III. Policy-Based Budgeting
Scores by Dimension
Overall Indicator Score
11. Orderliness and participation in the annual budget process
A
Notes:
11.1 Existence of and adherence to a fixed budget calendar;
A
Notes:
The budget calendar is fixed in advance and is generally adhered to (though the calendar itself was delayed in election year 2013). Directorates have about 8 weeks from receipt of Budget Guidelines to complete and submit their detailed recurrent estimates. The timetable for capital expenditure estimates is more extended. Score = A. (p. 24)
11.2 Clarity/comprehensiveness of and political involvement in the guidance on the preparation of budget submissions (budget circular or equivalent);
A
Notes:
The recurrent budget circular and PMU advertisement together are comprehensive and reflect ceilings which are known to LegCo and Exco members. Ceilings are determined mainly by DFID and other donors. Score = A. (p. 24)
11.3 Timely budget approval by the legislature or similarly mandated body (within the last three years);
A
Notes:
LegCo consistently approves the budget before the start of the budget year (1 April). Score = A. (p. 24)
12. Multi-year perspective in fiscal planning, expenditure policy and budgeting
B
Notes:
12.1 Preparation of multi -year fiscal forecasts and functional allocations
C
Notes:
Forecasts of fiscal aggregates (on the basis of main categories of economic and functional/sector classification) are prepared for three years on a rolling annual basis, but links between multi-year estimates and subsequent setting of annual budget ceilings are not clear. Score = C. (p. 26)
12.2 Scope and frequency of debt sustainability analysis
NA
Notes:
There is no debt, other than accounts payable and the liability on pensions, and this dimension is not applicable. (p. 26)
12.3 Existence of sector strategies with multi-year costing of recurrent and investment expenditure;
A
Notes:
Sector strategies are prepared by each Directorate. Strategies for sectors representing at least 75% of primary expenditure exist with full costing of recurrent and investment expenditure, broadly consistent with fiscal forecasts. Score = A. (p. 26)
12.4 Linkages between investment budgets and forward expenditure estimates.
B
Notes:
Capital and development projects are funded and managed through the Capital Programme Board. The recurrent implications of capital expenditure are brought into the operational and maintenance budgets with some exceptions. The majority of important investments are selected on the basis of relevant sector strategies and recurrent cost implications in accordance with sector allocations and included in forward budget estimates for the sector. Score = B. (p. 26)
IV. Predictability and Control in Budget Execution
Scores by Dimension
Overall Indicator Score
13. Transparency of taxpayer obligations and liabilities
B
Notes:
13.1 Clarity and comprehensiveness of tax liabilities
A
Notes:
Legislation and procedures for all major taxes are comprehensive and clear, with strictly limited discretionary powers of the government entities involved. Score = A. (p. 29)
13.2 Taxpayer access to information on tax liabilities and administrative procedures.
B
Notes:
Taxpayers have easy access to comprehensive, user friendly and up-to-date information on tax liabilities and administrative procedures for some of the major taxes, while for other taxes the information is limited. Score = B. (p. 29)
13.3 Existence and functioning of a tax appeals mechanism.
C
Notes:
A tax appeals system of administrative procedures has been established, but is not independent of the revenue authority. Score = C. (p. 29)
14. Effectiveness of measures for taxpayer registration and tax assessment
B
Notes:
14.1 Controls in the taxpayer registration system.
C
Notes:
Taxpayers are registered in database systems for individual taxes, which are not linked. Linkages to other registration/licensing functions are also weak but are supplemented by occasional surveys of potential taxpayers and information received. Score = C. (p. 30)
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 for audits in at least one major tax area that applies self-assessment. Score = B. (p. 30)
14.2 Effectiveness of penalties for non-compliance with registration and declaration obligations
A
Notes:
Penalties for all areas of non-compliance are set sufficiently high to act as deterrents and are consistently administered. Score = A. (p. 30)
15. Effectiveness in collection of tax payments
A
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. Score = A. (p. 32)
15.2 Effectiveness of transfer of tax collections to the Treasury by the revenue administration.
A
Notes:
All tax revenue is paid directly into accounts controlled by the Finance Department. Score = A. (p. 32)
15.3 Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and receipts by the Treasury.
A
Notes:
Complete reconciliation of tax assessments, collections, arrears and transfers to Treasury takes place at least monthly within one month of end of month. Score = A. (p. 32)
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:
Directorates are able to plan and commit expenditure for at least six months in advance in accordance with the budgeted appropriations. Score = A. (p. 34)
16.3 Frequency and transparency of adjustments to budget allocations, which are decided above the level of management of MDAs.
A
Notes:
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. Score = A. (p. 34)
16.1 Extent to which cash flows are forecast and monitored
C
Notes:
A cash flow forecast is prepared for the fiscal year, but is updated only after six months. Score = C. (p. 34)
17. Recording and management of cash balances, debt and guarantees
B
Notes:
17.1 Quality of debt data recording and reporting
NA
Notes:
There is no substantial debt. This dimension is not applicable. (p. 36)
17.2 Extent of consolidation of the government’s cash balances
B
Notes:
Most cash balances are calculated and consolidated daily, but funds with two extrabudgetary bodies (SHNT and ESH) remain outside the arrangement. Score = B. (p. 36)
17.3 Systems for contracting loans and issuance of guarantees.
NA
Notes:
SHG gives no guarantees. This dimension is not applicable. (p. 36)
18. Effectiveness of payroll controls
C+
Notes:
18.1 Degree of integration and reconciliation between personnel records and payroll data.
C
Notes:
Personnel data and payroll data are not directly linked but the payroll is supported by full documentation for all changes made to personnel records each month. It is not checked against the previous month’s payroll data. Rating = C. (p. 38)
18.2 Timeliness of changes to personnel records and the payroll
A
Notes:
Required changes to the personnel records and payroll are updated monthly, generally in time for the following month’s payments. Retroactive adjustments are rare. Rating = A. (p. 38)
18.3 Internal controls of changes to personnel records and the payroll.
A
Notes:
Authority to change records and payroll is restricted and results in an audit trail. Rating = A. (p. 38)
18.4 Existence of payroll audits to identify control weaknesses and/or ghost workers.
B
Notes:
Internal Audit Department did a full payroll audit in 2011. Rating = B. (p. 38)
19. Transparency, competition and complaints mechanisms in procurement
C+
Notes:
19.1 Transparency, comprehensiveness and competition in the legal and regulatory framework
B
Notes:
As can be seen above, the legal framework meets four of the six listed requirements. Score = B. (p. 42)
19.2 Use of competitive procurement methods
B
Notes:
When contracts are awarded by methods other than open tender, they are justified in accordance with the legal requirements in almost all cases. Score = B. (p. 42)
19.3 Public access to complete, reliable and timely procurement information
B
Notes:
Two of the key procurement information elements are complete and reliable for government units representing most procurement and made available to the public through the SHG website. There are no data on procurement complaints. When contract awards are posted on the website, the score will go up. Present score = B. (p. 42)
19.4 Existence of an independent administrative procurement complaints system
D
Notes:
The procurement complaints system does not meet criteria (i) & (ii). Score = D. (p. 42)
20. Effectiveness of internal controls for non-salary expenditure
C+
Notes:
20.1 Effectiveness of expenditure commitment controls.
C
Notes:
Expenditure commitment controls are in place and effectively limit commitments to approved budget allocations, but not to cash availability. Score = C. (p. 45)
20.2 Comprehensiveness, relevance and understanding of other internal control rules/ procedures
C
Notes:
Other internal control rules and procedures consist of a basic set of rules for processing and recording transactions, which are understood by those directly involved in their application. Score = C. (p. 45)
20.3 Degree of compliance with rules for processing and recording transactions
B
Notes:
Compliance with rules is fairly high, but simplified/emergency procedures are used occasionally without adequate justification. Score = B. (p. 45)
21. Effectiveness of internal audit
C+
Notes:
21.1 Coverage and quality of the internal audit function.
A
Notes:
Internal audit is operational for all central government entities, and generally meets professional standards. It is focused wholly on systemic issues. Score = A. (p. 46)
21.2 Frequency and distribution of reports
A
Notes:
Reports are issued regularly for most audited entities and distributed to the audited entity, Finance Department and the Audit Service. Score = A. (p. 46)
21.3 Extent of management response to internal audit findings.
C
Notes:
A fair degree of action taken by many managers on major issues but often with delay. Score = C. (p. 46)
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
A
Notes:
Bank reconciliation for all central government bank accounts takes place weekly at aggregate and detailed levels, within the following week. Score = A. (p. 48)
22.2 Regularity of reconciliation and clearance of suspense accounts and advances.
B
Notes:
Reconciliation and clearance of suspense accounts and advances takes place at least annually within two months of end of period. Some accounts have uncleared balances brought forward. Score = B. (p. 48)
23. Availability of information on resources received by service delivery units
A
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
A
Notes:
Routine accounting systems provide reliable information on all types of resources received in cash and in kind by both primary schools and primary health clinics across the country. The information is compiled into reports at least annually. Score = A. (p. 49)
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:
Comparison to budget is possible only for main administrative headings. Expenditure is captured only at accrual stage, not commitment stage. Score = C . (p. 50)
24.2 Timeliness of the issue of reports
A
Notes:
Reports are prepared monthly, and issued within four weeks of end of month. Score = A. (p. 50)
24.3 Quality of information
B
Notes:
There are some concerns about accuracy, but data issues do not compromise overall consistency/usefulness. Score = B. (p. 50)
25. Quality and timeliness of annual financial statements
C+
Notes:
25.1 Completeness of the financial statements
B
Notes:
A consolidated government statement is prepared annually. It includes, with few exceptions, full information on revenue, expenditure and financial assets/liabilities. Score = B. (p. 54)
25.2 Timeliness of submission of the financial statements
C
Notes:
The accounts for 2011/12 were submitted for audit 12 months after the end of the year. Score = C. (p. 54)
25.3 Accounting standards used
B
Notes:
Accrual IPSAS standards are applied with some exceptions that are disclosed. Score = B. (p. 54)
VI. External Scrutiny and Audit
Scores by Dimension
Overall Indicator Score
26. Scope, nature and follow-up of external audit
B+
Notes:
26.1 Scope/nature of audit performed (incl. adherence to auditing standards).
A
Notes:
All entities of central government are audited annually covering revenue, expenditure and assets/liabilities. A full range of financial audits and some aspects of performance audit are performed and adhere to auditing standards, focusing on significant and systemic issues. Score = A. (p. 56)
26.2 Timeliness of submission of audit reports to legislature.
B
Notes:
Audit reports are submitted to the legislature within 8 months of the receipt of the annual financial statements. Score = B. (p. 56)
26.3 Evidence of follow up on audit recommendations
A
Notes:
There is clear evidence of effective and timely follow up. Score = A. (p. 56)
27. Legislative scrutiny of the annual budget law
A
Notes:
27.1 Scope of the legislature’s scrutiny.
A
Notes:
The legislature’s review covers fiscal policies, medium term fiscal framework and medium term priorities as well as details of expenditure and revenue. Score = A. (p. 58)
27.2 Extent to which the legislature’s procedures are well-established and respected.
A
Notes:
The legislature’s procedures for budget review are well established and respected. They include review by specialised committees. Score = A. (p. 58)
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
A
Notes:
The legislature has at least two months to review the budget proposals. Score = A. (p. 58)
27.4 Rules for in-year amendments to the budget without ex-ante approval by the legislature.
A
Notes:
Clear rules exist for in-year budget amendments by the executive, set strict limits on the extent and nature of amendments and are consistently respected. Score = A. (p. 58)
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:
Scrutiny of audit reports is usually completed by LegCo within 6 months from receipt of the reports. Score = B. (p. 60)
28.2 Extent of hearings on key findings undertaken by the legislature.
A
Notes:
In-depth hearings on key findings take place consistently with responsible officers from all or most audited entities, which receive a qualified or adverse audit opinion. Score = A. (p. 60)
28.3 Issuance of recommended actions by the legislature and implementation by the executive.
B
Notes:
Actions are recommended to the executive, some of which are implemented, according to existing evidence. Score = B. (p. 60)
Donor Practices
Scores by Dimension
Overall Indicator Score
D-1 Predictability of Direct Budget Support
A
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).
A
Notes:
In none of the last three years has direct budget support outturn fallen short of the forecast. Score = A. (p. 61)
D-1.2 In-year timeliness of donor disbursements (compliance with aggregate quarterly estimates)
A
Notes:
Disbursement estimates have been agreed with donors before the beginning of the fiscal year and there have been no delays in actual disbursements in the last three years. Score = A. (p. 61)
D-2 Financial information provided by donors for budgeting and reporting on project and program aid
A
Notes:
D-2.1 Completeness and timeliness of budget estimates by donors for project support.
A
Notes:
All donors (with the possible exception of a few donors providing insignificant amounts) provide budget estimates for disbursement of project aid at stages consistent with the government’s budget calendar and with a breakdown consistent with the government’s budget classification. Score = A. (p. 63)
D-2.2 Frequency and coverage of reporting by donors on actual donor flows for project support.
A
Notes:
Donors provide monthly reports within one month of end-of-month on all disbursements made for the only externally financed and managed project in the budget, with a breakdown consistent with the government budget classification. Score = A. (p. 63)
D-3 Proportion of aid that is managed by use of national procedures
B
Notes:
D-3.1 Overall proportation of aid funds to central government that are managed through national procedures
B
Notes:
75% or more of aid funds to central government are managed through national procedures. Score = B. (p. 64)
