I. Credibility of the Budget
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure out-turn compared to original approved budget
D
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)
D
Notes:
Actual expenditure deviated more than 15% from budget in all the past three years
2. Composition of expenditure out-turn compared to original approved budget
D+
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)
D
Notes:
Variance has exceeded 15% in all 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 below 92% 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 was 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/COFOG standards or a standard that can produce consistent documentation according to those standards.
6. Comprehensiveness of information included in budget documentation
B
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)
B
Notes:
Three of the seven applicable benchmarks are met
7. Extent of unreported government operations
C+
Notes:
7.1 The level of extra-budgetary expenditure (other than donor funded projects) which is unreported i.e. not included in fiscal reports.
A
Notes:
No unreported expenditure identified
7.2 Income/expenditure information on donor-funded projects which is included in fiscal reports.
C
Notes:
Information on loan financed projects is included in fiscal reports, but not grant-financed projects
8. Transparency of inter-governmental fiscal relations
A
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:
In the current year’s budget, 69% of the total grants are unearmarked and allocated based on a formula. The rest are specific project grants, which are individually negotiated.
8.2 Timeliness of reliable information to SN governments on their allocations from central government for the coming year;
A
Notes:
Sub-cities receive reliable information on their allocations before the start of their detailed budget process
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 is collected from all sub-cities and consolidated into annual reports within 10 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:
PEs submit fiscal reports to the City Mayor or City Manager 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:
Sub-cities and woredas cannot generate fiscal liabilities
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:
The Government makes available to the public five of the six 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 showing the ceilings previously approved by the City Cabinet
11.3 Timely budget approval by the legislature or similarly mandated body (within the last three years);
A
Notes:
Parliament approves the budget close to the start of the year, for the past three years
12. Multi-year perspective in fiscal planning, expenditure policy and budgeting
B
Notes:
12.1 Preparation of multi -year fiscal forecasts and functional allocations
A
Notes:
Forecasts of fiscal aggregates are prepared for three years on a rolling annual basis, and links between multi-year estimates and subsequent budget ceilings are clear
12.2 Scope and frequency of debt sustainability analysis
NA
Notes:
Not applicable
12.3 Existence of sector strategies with multi-year costing of recurrent and investment expenditure;
C
Notes:
Sector strategies are prepared for several sectors but cover capital expenditure only and are inconsistent with aggregate fiscal forecasts
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 only major 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
B
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.
A
Notes:
A tax appeals system of transparent administrative procedures is functional
14. Effectiveness of measures for taxpayer registration and tax assessment
B
Notes:
14.1 Controls in the taxpayer registration system.
B
Notes:
Taxpayers are registered in a complete database with some linkages to trade licensing and company registration systems
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 exist but are not always effective due to inconsistent administration
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 average debt collection ratio for the past two years was over 90%.
15.2 Effectiveness of transfer of tax collections to the Treasury by the revenue administration.
B
Notes:
Revenue collections are transferred to Treasury at least weekly.
15.3 Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and receipts by the Treasury.
D
Notes:
Revenue collections reconciled with receipts by Treasury but no overall reconciliation of assessments, collections and arrears seen
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
B
Notes:
BIs are provided reliable information for the three months in advance
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 done after consultation
16.1 Extent to which cash flows are forecast and monitored
B
Notes:
A cash forecast is prepared for the year and updated quarterly
17. Recording and management of cash balances, debt and guarantees
A
Notes:
17.1 Quality of debt data recording and reporting
A
Notes:
Debt data are of good quality and complete due to the very small number of loans
17.2 Extent of consolidation of the government’s cash balances
B
Notes:
BoFED can consolidate the balances of most of the more than 800 bank accounts monthly. Some bank accounts (mainly for donor projects) remain outside the system
17.3 Systems for contracting loans and issuance of guarantees.
A
Notes:
The contracting of loans and issue of guarantees are made against Federal criteria and fiscal targets, and approved by MoFED
18. Effectiveness of payroll controls
B+
Notes:
18.1 Degree of integration and reconciliation between personnel records and payroll data.
B
Notes:
Personnel and payroll data are not directly linked, but payroll changes are fully documented and used for reconciliation with the previous month’s payroll
18.2 Timeliness of changes to personnel records and the payroll
A
Notes:
Changes are updated monthly, usually in time for the following month’s payroll
18.3 Internal controls of changes to personnel records and the payroll.
B
Notes:
Authority for changes is clear, but there is no audit trail
18.4 Existence of payroll audits to identify control weaknesses and/or ghost workers.
B
Notes:
Payroll audits cover all personnel
19. Transparency, competition and complaints mechanisms in procurement
B
Notes:
19.1 Transparency, comprehensiveness and competition in the legal and regulatory framework
Notes:
Five of the requirements are met.
19.2 Use of competitive procurement methods
Notes:
At least 80% of the total value of contracts awarded through non-competitive methods are fully justified.
19.3 Public access to complete, reliable and timely procurement information
Notes:
Two of the information elements (bidding opportunities, procurement plans) are made available to the public in a timely manner for all procuring entities
19.4 Existence of an independent administrative procurement complaints system
B
Notes:
The complaint system meets criteria (i), (ii) and (iii) of the 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 and effectively limit commitments to projected cash availability and approved budget allocations for most types of expenditure with minor areas of exception.
20.2 Comprehensiveness, relevance and understanding of other internal control rules/ procedures
B
Notes:
Other internal control rules are comprehensive and generally understood
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 without adequate justification in some BIs
21. Effectiveness of internal audit
C+
Notes:
21.1 Coverage and quality of the internal audit function.
C
Notes:
Internal audit is functional in most entities and undertakes some systems review (at least 20% of staff time).
21.2 Frequency and distribution of reports
B
Notes:
Reports are issued regularly for most BIs and distributed to the BI, BoFED and (constructively) to the City Auditor General
21.3 Extent of management response to internal audit findings.
C
Notes:
A fair degree of action is taken by many managers but often with delay
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 reconciliations are made monthly within four weeks at detail level.
22.2 Regularity of reconciliation and clearance of suspense accounts and advances.
B
Notes:
Suspense accounts and most advances are cleared within the year or within two months of the year’s end
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 data collection provides reliable information on all resources received by primary schools and health centers.
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 accrual and payment stages, not at commitment stage
24.2 Timeliness of the issue of reports
B
Notes:
Consolidated reports on the City BIs are prepared monthly and are issued within six weeks of the end of the month
24.3 Quality of information
C
Notes:
There are some concerns about data accuracy, which may not always be highlighted in reports, but these do not undermine their basic usefulness
25. Quality and timeliness of annual financial statements
C+
Notes:
25.1 Completeness of the financial statements
A
Notes:
The annual City government statement includes full information on revenue, expenditure, and financial assets/liabilities.
25.2 Timeliness of submission of the financial statements
A
Notes:
Statements have been submitted 3-4 months from the end of the year
25.3 Accounting standards used
C
Notes:
Statements are presented in consistent format over time with disclosure of accounting standards
VI. External Scrutiny and Audit
Scores by Dimension
Overall Indicator Score
26. Scope, nature and follow-up of external audit
D+
Notes:
26.1 Scope/nature of audit performed (incl. adherence to auditing standards).
D
Notes:
Audit coverage is less than 50% of total expenditure
26.2 Timeliness of submission of audit reports to legislature.
C
Notes:
Audit reports are submitted to the legislature within 12 months of receipt of financial statements by the auditors.
26.3 Evidence of follow up on audit recommendations
A
Notes:
There is clear evidence of effective and timely follow up.
27. Legislative scrutiny of the annual budget law
D+
Notes:
27.1 Scope of the legislature’s scrutiny.
C
Notes:
The FEDC review covers detailed estimates of revenue and expenditure, but only after detailed proposals have been finalized.
27.2 Extent to which the legislature’s procedures are well-established and respected.
B
Notes:
The legislature’s procedures are well established and respected
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
D
Notes:
The time allowed for the legislature’s review is significantly less than one month.
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 allow extensive administrative reallocations
28. Legislative scrutiny of external audit reports
D+
Notes:
28.1 Timeliness of examination of audit reports by the legislature (for reports received within the last three years).
C
Notes:
The financial audit review is completed by May, 10 months after receipt of the CAG 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 entities on which the CAG has commented
28.3 Issuance of recommended actions by the legislature and implementation by the executive.
D
Notes:
No separate recommendations are made by the FEDC
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.
D
Notes:
Donors do not provide quarterly forecasts of disbursements
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:
64% of funds to the City Government are managed through national procedures
