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:
In no more than one out of the last three years has the actual expenditure deviated from budgeted expenditure by an amount equivalent to more than 5% of budgeted expenditure. (P. 27)
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 exceeded 15 per cent in all three years (23.5%, 33.2 %, and 34.5 %) (P. 30)
2.2 The average amount of expenditure actually charged to the contingency vote over the last three years
A
Notes:
Variance exceeded 15 per cent in all three years (23.5%, 33.2 %, and 34.5 %) (P. 30)
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 domestic revenue collection was below 92 % of budgeted revenue collection in two of the last three years (P. 32)
4. Stock and monitoring of expenditure payment arrears
D*
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
D*
Notes:
The stock of arrears (as per Albania’s own definition and as per a definition of “debt aged more than 30 days”) was 0.28 % in 2010, i.e. below 2 %. There may be delays in BIs submitting invoices for approval and payment. For lack of information on the extent of these delays, the dimension is not rated. (P. 35)
4.2 Availability of data for monitoring the stock of expenditure payment arrears
D*
Notes:
Treasury monitors, on a daily basis, invoices submitted for approval and invoices approved but not yet paid. (P. 35)
II. Comprehensiveness and Transparency
Scores by Dimension
Overall Indicator Score
5. Classification of the budget
A
Notes:
5.1 The classification system used for formulation, execution and reporting of the central government's budget
A
Notes:
The classification of government financial operations includes the administrative, economic, and functional classifications, the latter down to the sub-functional level. (P. 37)
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:
The budget documentation as submitted to the legislature for FY2011 includes 6 of the 9 components listed in Table 3.6 above. (P. 39)
7. Extent of unreported government operations
A
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:
There is no extra-budgetary expenditure (P. 41)
7.2 Income/expenditure information on donor-funded projects which is included in fiscal reports.
A
Notes:
It is highly likely that more than 90 % of the value of external assistance is included in the fiscal reports. (P. 41)
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:
Approximately 65 % of the total volume of transfers to LGUs are done on the basis of a transparent and rule-based system for un-conditional grants (P. 46)
8.2 Timeliness of reliable information to SN governments on their allocations from central government for the coming year;
B
Notes:
The level of unconditional grants is known to the LGUs with certitude in December ahead of the fiscal year. But the MTBP, together with relatively stable allocation criteria, gives a good indication of what can be expected considerably earlier than that. (P. 46)
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:
Local government revenue and expenditure is executed in the Treasury system and classified in a way identical to that of central government. Consolidated reports for general government can thus easily be produced by eliminating intra-governmental transfers. (P. 46)
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:
MoF regularly monitors the portfolio of on-lent credits, issued guarantees and AGAs and PEs are required to submit yearly financial statements., There is no consolidated report, however, summarising the fiscal risk associated with these different types of activities. (P. 49)
9.2 Extent of central government monitoring of SN government's fiscal position
A
Notes:
In principle, the present legislation should eliminate the fiscal risk from LGU borrowing. As local government revenue and expenditure is recorded in the treasury system, MoF has full, on-line, insight into to the finances of LGUs and the legal powers to enforce financial discipline in the LGUs (P. 49)
10. Public access to key fiscal information
B
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)
B
Notes:
The government makes available to the public 4 of the 6 listed types of information (P. 51)
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:
There is a detailed budget preparation calendar and it is adhered to (P. 54)
11.2 Clarity/comprehensiveness of and political involvement in the guidance on the preparation of budget submissions (budget circular or equivalent);
A
Notes:
There are detailed budget guidelines including budget preparatory ceilings set by the Council of Ministers. (P. 54)
11.3 Timely budget approval by the legislature or similarly mandated body (within the last three years);
A
Notes:
For the last three years the annual budget was enacted before the start of fiscal year (P. 54)
12. Multi-year perspective in fiscal planning, expenditure policy and budgeting
C+
Notes:
12.1 Preparation of multi -year fiscal forecasts and functional allocations
C
Notes:
Fiscal frameworks for three years are produced on a rolling basis, but the differences between the three-year frameworks and the annual budgets are not clearly explained
12.2 Scope and frequency of debt sustainability analysis
A
Notes:
DSA for external and internal debt is done annually (P. 58)
12.3 Existence of sector strategies with multi-year costing of recurrent and investment expenditure;
C
Notes:
Statements of sector strategies exist for several major sectors but are only substantially costed for a few of them (P. 58)
12.4 Linkages between investment budgets and forward expenditure estimates.
C
Notes:
Recurrent cost implications of investment are included in forward budget estimates only in a few cases (P. 58)
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 VAT, corporate and Personal income taxes, customs and excise duties, social charges are comprehensive and clear, with charges clearly set out in relevant orders. (P. 62)
13.2 Taxpayer access to information on tax liabilities and administrative procedures.
A
Notes:
The Internet sites of both tax and customs agencies are comprehensive, with timely and accurate information on all tax liabilities and their administration. On line rate determination for customs duties and filings for corporations are presently available. All changes are accompanied by extensive public information and training campaigns. (P. 62)
13.3 Existence and functioning of a tax appeals mechanism.
B
Notes:
.The appeals organization is not completely independent of the agency. Like internal audit, it reports directly to the General Director, Tax Agency. (P. 63)
14. Effectiveness of measures for taxpayer registration and tax assessment
B
Notes:
14.1 Controls in the taxpayer registration system.
C
Notes:
Database for personal income tax filers not completed. Weak linkages between the taxation database and other government databases with information on individuals and corporate entities. (P. 66)
14.3 Planning and monitoring of tax audit and fraud investigation programs.
B
Notes:
The 40% of audits that are regionally selected may be subject to abuse by tax inspectors. (P. 66)
14.2 Effectiveness of penalties for non-compliance with registration and declaration obligations
A
Notes:
Penalties are high and viewed by the Agency and business representatives as being a valid deterrent to fraud. (P. 66)
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).
D
Notes:
Average collection ratio in 2009 and 2010 was 17.2 % (P. 69)
15.2 Effectiveness of transfer of tax collections to the Treasury by the revenue administration.
A
Notes:
All accounts are received by Treasury daily and deposited into the TSA (P. 69)
15.3 Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and receipts by the Treasury.
A
Notes:
All Treasury accounts are reconciled on a daily basis. (P. 69)
16. Predictability in the availability of funds for commitment of expenditures
B+
Notes:
16.2 Reliability and horizon of periodic in-year information to MDAs on ceilings for expenditure commitments
A
Notes:
Strictly following the PEFA methodology, which is couched in terms of commitments, predictability is high. (P. 71)
16.3 Frequency and transparency of adjustments to budget allocations, which are decided above the level of management of MDAs.
B
Notes:
Significant in-year adjustments to budget allocations take place only once or twice in a year and are done in a fairly transparent way (P. 72)
16.1 Extent to which cash flows are forecast and monitored
A
Notes:
17. Recording and management of cash balances, debt and guarantees
B+
Notes:
17.1 Quality of debt data recording and reporting
B
Notes:
Foreign Debts are recorded on the DMFAS system; their debt records are complete, updated and can take up to two months to be reconciled. Excel files are used for domestic debt, on-lending and guarantees, and require regular reconciliations. Comprehensive management and statistical reports (cover debt service, stock and operations) are produced at least quarterly (P. 75)
17.2 Extent of consolidation of the government’s cash balances
B
Notes:
All cash balances are calculated daily and consolidated in the TSA, with the exception of bank remitted payments, which are deposited on the following day. (P. 75)
17.3 Systems for contracting loans and issuance of guarantees.
A
Notes:
Central government’s contracting of loans and issuance of guarantees are made against transparent criteria and fiscal targets and always approved by a single responsible government entity (P. 76)
18. Effectiveness of payroll controls
B+
Notes:
18.1 Degree of integration and reconciliation between personnel records and payroll data.
B
Notes:
Databases not linked. Monthly review of all changes and reconciliations. (P. 81)
18.2 Timeliness of changes to personnel records and the payroll
A
Notes:
Changes are updated monthly, generally in time for the next payroll. (P. 81)
18.3 Internal controls of changes to personnel records and the payroll.
A
Notes:
Rules for accessing key files may not be fully compliant with all internal control requirements. (P. 81)
18.4 Existence of payroll audits to identify control weaknesses and/or ghost workers.
B
Notes:
Payroll audits are covered on a 2-3 year cycle, reflecting the budget institutions’ risk assessments and available audit resources. (P. 81)
19. Transparency, competition and complaints mechanisms in procurement
B+
Notes:
19.1 Transparency, comprehensiveness and competition in the legal and regulatory framework
B
Notes:
Five of the six sub criteria for the regulatory framework were met (P. 86)
19.2 Use of competitive procurement methods
A
Notes:
All cases of use of non-competitive procedures by law have to be justified (P. 86)
19.3 Public access to complete, reliable and timely procurement information
B
Notes:
The majority of required key data are provided routinely on the electronic procurement system (P. 87)
19.4 Existence of an independent administrative procurement complaints system
A
Notes:
The independent Procurement Complaints Commission is in place and functioning. (P. 87)
20. Effectiveness of internal controls for non-salary expenditure
C+
Notes:
20.1 Effectiveness of expenditure commitment controls.
C
Notes:
Commitment controls are based on the limit set by total annual appropriation and not by month. (P. 89)
20.2 Comprehensiveness, relevance and understanding of other internal control rules/ procedures
C
Notes:
Other internal controls in place are comprehensive and respected (P. 89)
20.3 Degree of compliance with rules for processing and recording transactions
A
Notes:
Compliance with the controls is generally high. (P. 89)
21. Effectiveness of internal audit
C+
Notes:
21.1 Coverage and quality of the internal audit function.
C
Notes:
Systems review audits quality is uncertain and cannot justify the higher rating implicit in the statistics presented above. (P. 95)
21.2 Frequency and distribution of reports
A
Notes:
Reports are issued regularly for those entities with internal audit units and distributed to the accountable minister, the MoF and the High State Auditor. (P. 95)
21.3 Extent of management response to internal audit findings.
B
Notes:
Management implementation of recommendations is 77% within a one-year period. (P. 95)
V. Accounting, Recording and Reporting
Scores by Dimension
Overall Indicator Score
22. Timeliness and regularity of accounts reconciliation
A
Notes:
22.1 Regularity of bank reconciliations
A
Notes:
All cash balances are sub-reconciled daily with the TSA accounts in the Central Bank. (P. 97)
22.2 Regularity of reconciliation and clearance of suspense accounts and advances.
A
Notes:
Advances and all suspense accounts are cleared daily by Treasury on advice of Budget institutions. (P. 97)
23. Availability of information on resources received by service delivery units
C
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
C
Notes:
There is no consistent and regular upward flow of complete information on their resource utilisation of these resources to the accountable ministries. Periodic surveys are the only way to establish these data. (P. 98)
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:
Budget-actual comparisons are possible for payments. There is no separate commitment accounting, merely a follow-up of payments against the yearly appropriations (P. 100)
24.2 Timeliness of the issue of reports
A
Notes:
Reports are prepared monthly within one week of end of period. (P. 100)
24.3 Quality of information
A
Notes:
There are no material concerns over data accuracy. (P. 100)
25. Quality and timeliness of annual financial statements
A
Notes:
25.1 Completeness of the financial statements
A
Notes:
A consolidated financial statement for the General Government Sector is prepared annually. The most recent statements were for the 2010 financial year. They included information on revenues and expenditures, financial assets and liabilities. (P. 103)
25.2 Timeliness of submission of the financial statements
A
Notes:
The government has submitted the financial statement to the auditor within 6 months of year-end for the past 3 years. (P. 103)
25.3 Accounting standards used
A
Notes:
The annual financial statements are prepared from the Treasury’s modified cash-basis accounting system. (P. 103).
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:
Central government entities covering approximately 70 % of total spending are audited annually, covering revenues, expenditures, financial assets and liabilities. (P. 108)
26.2 Timeliness of submission of audit reports to legislature.
A
Notes:
Timely submission of all audit reports within 4 months of receipt (P. 108)
26.3 Evidence of follow up on audit recommendations
A
Notes:
Clear Evidence of follow-up with average of 78% implementation of the past two years’ recommendations. (P. 108)
27. Legislative scrutiny of the annual budget law
B+
Notes:
27.1 Scope of the legislature’s scrutiny.
A
Notes:
Legislature review includes macro-fiscal policies and forecasts, MTEF and priorities, as well as details son revenues and expenditures by budget institution. (P. 110)
27.2 Extent to which the legislature’s procedures are well-established and respected.
A
Notes:
Rules and procedures for review firmly established (P. 110)
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 has at least one month to review the government’s budget proposals (P. 110)
27.4 Rules for in-year amendments to the budget without ex-ante approval by the legislature.
B
Notes:
Clear rules exist for the executive permitting extensive reallocations (P. 110)
28. Legislative scrutiny of external audit reports
A
Notes:
28.1 Timeliness of examination of audit reports by the legislature (for reports received within the last three years).
A
Notes:
28.2 Extent of hearings on key findings undertaken by the legislature.
A
Notes:
Most adverse opinions are followed up by Parliament during their annual hearings on the SAI audit report/ (P. 112)
28.3 Issuance of recommended actions by the legislature and implementation by the executive.
A
Notes:
As required, Parliament issues recommendations arising from consideration of the auditor’s annual report. (P. 112)
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:
Albania received no budget support during the 2008-2010 period. (P. 113)
D-1.2 In-year timeliness of donor disbursements (compliance with aggregate quarterly estimates)
NA
Notes:
See above
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:
Donors do provide estimates sufficiently early to fit into the Government budget process but not in a format compatible with that of the Government’s (P. 116)
D-2.2 Frequency and coverage of reporting by donors on actual donor flows for project support.
D
Notes:
No donor provides information classified in the Government’s format and within the reference time frame. (P. 116)
D-3 Proportion of aid that is managed by use of national procedures
D
Notes:
D-3.1 Overall proportation of aid funds to central government that are managed through national procedures
D
Notes:
Only 7.7 per cent of project assistance provided to Albania is on average -- looking at procurement, payment and accounting audit, and reporting -- managed by national procedures (P. 117)
