I. Credibility of the Budget
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure out-turn compared to original approved budget
C
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)
C
Notes:
The deviation in BSGRG’S primary expenditure during EFY 1999, 2000 and 2001 was 2.82%, 16.49% and -7.99% respectively. (P. 17)
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:
2.2 The average amount of expenditure actually charged to the contingency vote over the last three years
NU
Notes:
The total variance in excess of total deviation of the budget institution (bureaus, authorities, commissions, institutions) was 13.4%, 2.9% and 13.4% for the EFY 1999(2006/07), EFY 2000(2007/08) and EFY 2001(2008/09) respectively as indicated above. The variance was high in EFY1995 (2002/03)-EFY 1997 (2004/05), 38.58%, 21.97% and 14.28%. The variance in expenditure composition has improved (decreased) with regard to the same in EFY1995- EFY1997 (2002/2003-2004/2005) though it doesn’t change the scoring (P. 19)
3. Aggregate revenue out-turn compared to original approved budget
C
Notes:
3.1 Actual domestic revenue collection compared to domestic revenue in the originally approved budget
C
Notes:
in one out of the three years EFY1999 -EFY2001 (2006/07-2008/09) actual revenues represented less than 92% of budgeted revenue. It should be noted that execution of revenues improved significantly during the EFY 2000(2007/08) and 2001(2008/09) which was 119% and 121% respectively. (Refer Annex 2). The tax on income, profit and capital gain registered an increase of 4%, 44% and 51% in the EFY 1999, 2001 and 3002 respectively. On the other hand non-tax revenues showed a continuous under performance at a rate of 19%, 23% and 14% during the same period respectively. (P. 20)
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 below 0.3%
4.2 Availability of data for monitoring the stock of expenditure payment arrears
B
Notes:
Detailed data on the stock of arrears are available at the beginning of each EFY (As of July 7) for the previous EFY. In year invoice received are not accrued in the system and there are no aging reports to determine how long other payables are outstanding unpaid. However, the culture of compliance with rules, as emphasized by BOFED, indicates that arrears in terms of other payables are not an issue. (P. 22)
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:
The budget formulation and execution for the Regional State of Benishangul Gumuz is similar to the one at the Federal level. It is based on functional (bridgeable to COFOG), sub-functional (not bridgeable to COFOG), public bodies, programs, sub-programs, projects and items of expenditures (economic classification according to GFSM). (P. 23)
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:
The most recent budget documentation of EFY2001 (2008/09) does not fulfill any of the 8 information benchmarks (P. 24)
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.
D
Notes:
The budgets and actual expenditure of the Global Fund are not reported on by region at either federal government (to MOFED) or regional government (to BOFED) level. The magnitudes of funding are known to be large (e.g. in Amhara, the largest item of funding), however, and a D rating is quite plausible. Strictly speaking, this should be rated as No Score, but under the circumstances a D rating seems appropriate. (P. 26)
7.2 Income/expenditure information on donor-funded projects which is included in fiscal reports.
B
Notes:
Complete income/expenditure information is included in fiscal reports for at least 50 percent (by value) of grant financed projects.. (P. 26)
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:
The transparency and accuracy of the underlying data have been strengthened. (P. 27)
8.2 Timeliness of reliable information to SN governments on their allocations from central government for the coming year;
B
Notes:
Woredas still do not know with certainty their allocation until the end of the fiscal year, when the federal government budget is approved. (P. 27)
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:
Annual reports are prepared within 10 months of the end of the fiscal year. (P. 27)
9. Oversight of aggregate fiscal risk from other public sector entities.
D+
Notes:
9.1 Extent of central government monitoring of AGAs and PEs.
D
Notes:
The enterprises were operational during the year 2007. However, the indicator was not scored assuming that it was not relevant to regions. (P. 28)
9.2 Extent of central government monitoring of SN government's fiscal position
A
Notes:
No change in performance. Woredas cannot generate fiscal liabilities to the region. This dimension was not scored in 2007 with the assumption that it was not applicable. (P. 28)
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:
Only one information is met out of the six (P. 29)
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;
A
Notes:
Budget circular which includes guidance on budget preparation are sent in January. A clear budget calendar exists. It allows public bodies to complete their budget proposals on time, Accordingly, they submit within 6 weeks. Following evaluation by BOFED, public bodies are requested around mid-May to prepare detailed estimates within stipulated ceilings. They have about 3 weeks to do this; much of the estimation will already have been completed as part of the process for preparing budget proposals. (P. 30)
11.2 Clarity/comprehensiveness of and political involvement in the guidance on the preparation of budget submissions (budget circular or equivalent);
B
Notes:
The budget circular is issued in January, requesting expenditure estimates on the basis of current services and new spending proposals (based on priorities indicated in the guidelines). Ceilings, approved by Cabinet, are provided after the proposals have been reviewed, following which detailed estimates are prepared for the draft budget proclamation. (P. 30)
11.3 Timely budget approval by the legislature or similarly mandated body (within the last three years);
C
Notes:
Performance deteriorated from the 2007 PEFA. Parliament has approved the budget in the last three years within two months of the start of the fiscal year. (P. 30)
12. Multi-year perspective in fiscal planning, expenditure policy and budgeting
D+
Notes:
12.1 Preparation of multi -year fiscal forecasts and functional allocations
D
Notes:
No forward estimates of fiscal aggregates are undertaken. The scoring for 2007 seemed over rated. (P. 32)
12.2 Scope and frequency of debt sustainability analysis
NA
Notes:
No debt during the period of assessment in the region. (P. 32)
12.3 Existence of sector strategies with multi-year costing of recurrent and investment expenditure;
C
Notes:
Strategy exists for sectors representing at least 75% 17 of primary expenditures with full costing of recurrent and investment expenditures but inconsistent with the aggregate fiscal forecasts. (P. 32)
12.4 Linkages between investment budgets and forward expenditure estimates.
C
Notes:
The majority of investments 18 are selected on the basis of relevant sector strategies and recurrent cost implications, but are not included in the forward budget estimates. (P. 32)
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:
13.2 Taxpayer access to information on tax liabilities and administrative procedures.
B
Notes:
Tax laws and directives are available in the form of brochures and bulletins and are available for sale. Semi-annual consultation meeting is a new development. (P. 33)
13.3 Existence and functioning of a tax appeals mechanism.
A
Notes:
There is improvement in the tax appeal process. The business community representative is a committee member with regard to the assessment process. (P. 33)
14. Effectiveness of measures for taxpayer registration and tax assessment
C+
Notes:
14.1 Controls in the taxpayer registration system.
C
Notes:
Nearly 50% of tax payers have TINs. The only linkage with other systems is the requirement that businesses obtaining trade licenses have prior tax clearance. (P. 35)
14.3 Planning and monitoring of tax audit and fraud investigation programs.
C
Notes:
Audit is mostly not executed as planned because of logistical problems and is not based on a risk assessment criteria21. There is only one tax auditor in the Revenue Authority. The number of self assessed tax payers is so few and tax audit based on books of account is very small compared with those who do not maintain books of accounts. (P. 35)
14.2 Effectiveness of penalties for non-compliance with registration and declaration obligations
B
Notes:
Once in every two years a Tax Assessment team will go round house to house for identification of unregistered tax payers and for re-assessment of tax liabilities of those who are not required to maintain books of accounts by law. The tax penalties are sufficiently high and in some cases mainly small traders tend to close businesses. The penalty for late filing and non-filing is Birr 1,000 for the first 30 days and incremental thereafter. (P. 34)
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:
Based on the assessment made in EFY 1999, tax arrears of ETB 4 million were reported. There is no, however, yearly information on the total annual tax assessment value (receivables) and the total amount of tax collected in the period and value of any tax arrears for the period. Accordingly, it is not possible to score this dimension (P. 35)
15.2 Effectiveness of transfer of tax collections to the Treasury by the revenue administration.
C
Notes:
Tax revenue collected by Revenue Authority is transferred to BoFED account on a monthly basis. Taxes are collected in cash and in cheque at RA and zonal offices. Employee income taxes collected by Woredas will not be transferred to the regional RA, as they are the income of the Woredas. RA uses the Commercial Bank of Ethiopia to deposit revenue collections. (P. 35)
15.3 Frequency of complete accounts reconciliation between tax assessments, collections, arrears records and receipts by the Treasury.
D
Notes:
Reconciliation is made between the accounts of tax collection held by Revenue Authority against the accounts of BoFED on a monthly basis ten days after the end of the month. No reconciliation is made on tax receivables and arrears by Revenue Agency, as there is no information on tax arrears. (P. 36)
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:
Bureaus and offices are able to plan and commit expenditure for at least-six months in advance in accordance with the budgeted appropriations. (P. 37)
16.3 Frequency and transparency of adjustments to budget allocations, which are decided above the level of management of MDAs.
C
Notes:
In –year budget-adjustments are frequent, but under taken with transparency. (P. 37)
16.1 Extent to which cash flows are forecast and monitored
B
Notes:
A cash flow fore cast is prepared for the fiscal year and updated at least quarterly on the basis of actual cash inflows and outflows. (P. 37)
17. Recording and management of cash balances, debt and guarantees
B
Notes:
17.1 Quality of debt data recording and reporting
NA
Notes:
The BSGRG has not borrowed so far (P. 39)
17.2 Extent of consolidation of the government’s cash balances
B
Notes:
The single treasury account allows consolidation of government accounts (except donor and extra budgetary fund accounts) which are outside the arrangement. (P. 39)
17.3 Systems for contracting loans and issuance of guarantees.
NA
Notes:
BSGRG has not borrowed or issued guarantees. (P. 39)
18. Effectiveness of payroll controls
B+
Notes:
18.1 Degree of integration and reconciliation between personnel records and payroll data.
B
Notes:
Personnel data and payroll data are not directly linked. However, the Payrolls is supported by full documentation for all changes made to personnel records each month and checked against the previous month’s payroll data. (P. 41)
18.2 Timeliness of changes to personnel records and the payroll
A
Notes:
Required changes to the personnel records and payroll are updated monthly, in-time for the following month’s payments. (P. 41)
18.3 Internal controls of changes to personnel records and the payroll.
A
Notes:
Authority to change personnel and payroll records is restricted. There is a clear segregation of responsibilities with respect to changing and approval of payroll and personnel records. Staff in the administration services is authorized to make changes in personnel records while the head of the office approve the changes. On the other hand, staffs in the finance office are authorized to make changes in payroll record while the head of finance approves the change. There is an audit trail in terms of letters and signed (multiple signature) forms. (P. 41)
18.4 Existence of payroll audits to identify control weaknesses and/or ghost workers.
B
Notes:
A payroll audit covering all regional government public bodies has been conducted at least once in the last three years along with other audits. Audit has been conducted by the respective internal auditors and ORAG. (P. 41)
19. Transparency, competition and complaints mechanisms in procurement
C+
Notes:
19.1 Transparency, comprehensiveness and competition in the legal and regulatory framework
Notes:
No compiled data are available for the regional bureaus at BoFED or the bureaus the team visited (education and health). (P. 43)
19.2 Use of competitive procurement methods
Notes:
Other less competitive methods (despite insignificant purchases without compliance to the provision in the procurement procedure) are justified in accordance with the regulatory requirements. (P. 43)
19.3 Public access to complete, reliable and timely procurement information
Notes:
A procurement complaint mechanism is in place. A bidder can submit his compliant to the head of the procuring body, if not satisfied can submit his complain to BoFED, further if he is not satisfied with the decision he take the matter to court. This has been confirmed by the president of the region`s Chamber of Commerce and Sectoral Association. (P. 43)
19.4 Existence of an independent administrative procurement complaints system
NU
Notes:
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 approved budget allocation for all expenditures (this is stated in the Financial Administration Proclamation). Good revenue performance, and strengthened cash flow forecasting and cash management help to minimize the risk of cash unavailability at the time of payment (P. 35)
20.2 Comprehensiveness, relevance and understanding of other internal control rules/ procedures
B
Notes:
Other internal control rules and procedures incorporate a comprehensive set of controls, which are widely understood but their efficiency is not ascertained. Some control procedures will be streamlined after the BPR exercises are finalized (P. 35)
20.3 Degree of compliance with rules for processing and recording transactions
B
Notes:
Compliance with rules is fairly high but non-compliance with some procedures are reported by internal and the Regions external auditor with respect to cash (overage/shortage) and procurement (P. 35)
21. Effectiveness of internal audit
D+
Notes:
21.1 Coverage and quality of the internal audit function.
D
Notes:
Internal audit is operational in the majority of the bureaus. In spite of the distribution of the manual for internal audit standards and code of ethics and the training given to internal auditors, there is little or no internal audit focused on systems monitoring. They focus on transaction audits. (P. 47)
21.2 Frequency and distribution of reports
C
Notes:
Reports are issued regularly by the internal audit of the audited entities to the head of the entity but may not be submitted to BoFED (they are submitted to ORAG only on request as there is no legal requirement to submit reports to ORAG). (P. 47)
21.3 Extent of management response to internal audit findings.
B
Notes:
Prompt action is taken by managers on internal audit findings. Even if they fail to act BoFED will follow up to ensure that action is taken.Prompt action is taken by managers on internal audit findings. Even if they fail to act BoFED will follow up to ensure that action is taken. (P. 47)
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:
Reconciliation of treasury controlled bank accounts with the ledger held at BoFED takes place every month within a month from end of the period. Other donor funded accounts which are opened by BoFED are not part of the zero based balanced accounts and do not use the government’s budget classification system in detailed form and are reconciled only at aggregate level. (P. 49)
22.2 Regularity of reconciliation and clearance of suspense accounts and advances.
B
Notes:
Advances for travel and salaries are cleared monthly. Tax revenue collected by the tax authority is deposited primarily to the accounts of Revenue Authority and transferred to the CTA account within a month. Training and additional manpower has contributed to the improvement. (P. 49)
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:
Even though budget and actual recurrent expenditure for each school and health clinic cannot be explicitly shown in the budget document, disaggregated data on capital budget and actual expenditure is available. Further, as budget and actual expenditures are planned and reported by items of expenditures, detailed data on each school and clinic are available for tracking of information from the respective offices at the woreda level (P. 50)
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 to the budget. Expenditure is reported on actual and not at commitment stage. External assistance for capital expenditure is shown for channel 1 donors only. (P. 51)
24.2 Timeliness of the issue of reports
A
Notes:
Reports are prepared quarterly or more frequently and issued within 4 weeks of end of quarter. (P. 51)
24.3 Quality of information
A
Notes:
No material concerns regarding the accuracy of data (P. 51)
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. They include with few exceptions (some donor funded projects, cash flow statements) full information on revenue, expenditure, financial assets and liabilities (P. 53)
25.2 Timeliness of submission of the financial statements
B
Notes:
The statement is submitted for financial audit within 9 months for EFY 2000 and 2001. The statement submission for the EFY 1999 was after 11 months from the end of the fiscal year. (P. 53)
25.3 Accounting standards used
C
Notes:
The Federal Government Standard is applied which does not correspond with IPSAS (P. 53)
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:
In FY 1999, 2000 and 2001 of the total organizations 86%, 58% and 68% respectively were audited. The budget of these pubic bodies represent at least 50% of total expenditure Therefore government entities representing at least 50% are audited annually. Financial and compliance audits with a few performance audits are performed with focus on systemic issues. Audit reports are not published in accordance with AFROSAI-E standards. (P. 55)
26.2 Timeliness of submission of audit reports to legislature.
A
Notes:
The annual financial statements for 2007/08 were submitted to ORAG in March 2009 and the audited statements sent to the Regional Council in June 2009. (Note: The information on the date of submission of audit reports on public bodies is not available). (P. 55)
26.3 Evidence of follow up on audit recommendations
C
Notes:
Formal response is made by some public bodies. In EFY 1999, 2000 and 2001 17,12 and 24 public bodies respectively did not respond (P. 55)
27. Legislative scrutiny of the annual budget law
D+
Notes:
27.1 Scope of the legislature’s scrutiny.
C
Notes:
The legislature’s review covers only detailed estimates of revenue and expenditure when detailed proposals are finalized (P. 57)
27.2 Extent to which the legislature’s procedures are well-established and respected.
C
Notes:
Simple procedures exist for the legislature’s budget review and are partially respected. According to the procedure budget was supposed to be presented to the committee before ten days from the commencement of the new fiscal year. However, budget had not been approved before the end of the fiscal year. The procedure was partially respected (P. 57)
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 budget calendar allows 15 days for the legislature to review the draft budget proclamation. However, this has not been implemented. Therefore the time allowed for the legislature’s review is insufficient. (P. 57)
27.4 Rules for in-year amendments to the budget without ex-ante approval by the legislature.
C
Notes:
Clear rules exist for in-year budget amendments by the executive as long as they do not result in an increase in total expenditure and are respected but they allow extensive administrative reallocations. Ex-ante legislative approval is required for proposed adjustments to the budget that result in an increase in total spending, but this rule is not respected, as approval is given ex-post (P. 57)
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).
A
Notes:
Scrutiny of audit reports is usually completed within three months
28.2 Extent of hearings on key findings undertaken by the legislature.
D
Notes:
No in depth hearings are conducted by the legislature. The Finance and Budget Committee works on an ad-hoc basis.
28.3 Issuance of recommended actions by the legislature and implementation by the executive.
C
Notes:
The legislature issues recommendations for actions to be implemented by the executive some of which may be implemented, but the legislature does not have the evidence to check.
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:
Budget support is provided to the Federal Government. This indicator is therefore not applicable to the Benishangul Gumuz Region as the region doesn’t receive direct budget support. (p. 59)
D-1.2 In-year timeliness of donor disbursements (compliance with aggregate quarterly estimates)
NA
Notes:
Budget support is provided to the Federal Government. This indicator is therefore not applicable to the Benishangul Gumuz Region as the region doesn’t receive direct budget support. (p. 59)
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:
Reports are complete and there is a system whereby project support is known in advance. The majority of donor budget classification is not in accordance with the government budget classification. As a result of this, many of the donor funded projects are not processed in the IBEX System (P. 60)
D-2.2 Frequency and coverage of reporting by donors on actual donor flows for project support.
D
Notes:
Reporting is normally made up on accomplishment of activities; the government’s budget classification system is not used. There is no comparison with the approved budget. Reports are on a six month basis, not quarterly. (P. 60)
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:
Less than 50% of Aid Funds to regional government are managed through national procedures. The banking system is not based on zero balance account system; external auditors are assigned by MoFED and the reports are not incorporated with the existing regional government reporting system. (P. 61)
