I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
B
Notes:
1.1 Aggregate expenditure outturn
B
Notes:
Deviation from original budget exceeded 10% in only one of the last three years 2015-17
2. Expenditure composition outturn
C+
Notes:
2.1 Expenditure composition outturn by function
C
Notes:
Variance was less than 15% in two of the last three years 2015-17
2.2 Expenditure composition outturn by economic type
C
Notes:
Variance less than 15% in two of last three years 2015-17
2.3 Expenditure from contingency reserves
A
Notes:
No expenditure was charged to contingency in budget execution statements for 2015-17
Notes:
3.1 Aggregate revenue outturn
D
Notes:
Outturns were between 92% and 116% of original budget in only one of last three years 2015-17
3.2 Revenue composition outturn
B
Notes:
Composition variances were less than 10% in two of the three years 2015-17
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
D
Notes:
4.1 Budget classification
D
Notes:
Budget proposals lack a breakdown by economic classification
Notes:
5.1 Budget documentation
B
Notes:
Documentation fulfils 3 basic elements and 5 others
6. Central government operations outside financial reports
D+
Notes:
6.1 Expenditure outside financial reports
D
Notes:
Expenditure outside financial reports exceeded 10% of the Republican Budget expenditure in 2017
6.2 Revenue outside financial reports
D
Notes:
Revenue outside financial reports exceeded 10% of RB revenue in 2017
6.3 Financial reports of extrabudgetary units
B
Notes:
Financial reports of most extra-budgetary units are made within 6 months of the end of year
7. Transfers to subnational governments
C
Notes:
7.1 System for allocating transfers
C
Notes:
Less than 60% of transfers are made in accordance with a formula in amounts fixed for 3 years
7.2 Timeliness of information on transfers
C
Notes:
Information on targeted transfers is made available less than 4 weeks before the start of the next fiscal year
8. Performance information for service delivery
C+
Notes:
8.1 Performance plans for service delivery
C
Notes:
About 60% of programme expenditure is covered by performance targets
8.2 Performance achieved for service delivery
C
Notes:
About 60% of programme expenditure is the subject of performance reports against targets
8.3 Resources received by service delivery units
A
Notes:
Integrated Information System of Treasury tracks the resources received by individual schools and health clinics. Information is provided in annual reports to sponsor Ministries or SNGs where SDUs are established as corporate bodies.
8.4 Performance evaluation for service delivery
D
Notes:
Accounts Committee has carried out some performance audits, and the Ministry of Information and Communication some public satisfaction surveys, but it does not appear that the coverage is as much as 25 per cent of expenditure.
9. Public access to fiscal information
D
Notes:
9.1 Public access to fiscal information
D
Notes:
Only 3 of 5 basic elements are published. Any score of C or above requires publication of at least 4.
III. Management of assets and liabilities
Scores by Dimension
Overall Indicator Score
10. Fiscal risk reporting
C+
Notes:
10.1 Monitoring of public corporations
C
Notes:
Most SOEs publish audited financial statements by the end of the following August, but no consolidated report is published on the financial performance of the SOE sector.
10.2 Monitoring of subnational governments
A
Notes:
All SNG publish audited budget execution reports within 9 months of year-end, and these are consolidated in the report of the State Budget with the report on Republican Budget execution. SNG borrowing is very small and fully controlled by MOF
10.3 Contingent liabilities and other fiscal risks
D
Notes:
No reports have been published on the fiscal risks arising from unguaranteed SOE borrowing. A limit has been set for the total of PPP projects at RB level, but outstanding amounts have not yet been published.
11. Public investment management
C+
Notes:
11.1 Economic analysis of investment proposals
C
Notes:
Economic analyses of all major investment projects are conducted by the Government’s PPP Centre in accordance with published criteria, but there is no systematic publication of the results.
11.2 Investment project selection
A
Notes:
Projects are prioritised in accordance with the Government’s Socio-Economic Development Plan (PSED) which is updated each year, with the priorities set by the President’s annual address at the beginning of each year.
11.3 Investment project costing
D
Notes:
Budget documents include the amounts, capital and current, to be spent on each project in each of the next three years, but not the total capital or lifetime costs of each project.
11.4 Investment project monitoring
C
Notes:
A consolidated report on project execution is prepared annually for submission to the President, but it is not published.
12. Public asset management
C
Notes:
12.1 Financial asset monitoring
B
Notes:
Full audited financial reports in accordance with International Financial Reporting Standards are published annually by the three major holdings which cover most of the Government’s financial assets other than those held by NFRK and NBRK.
12.2 Nonfinancial asset monitoring
D
Notes:
The Register of state-owned non-financial assets is kept by the RSE Information Registration Centre under MoF, with access to elements of information through the web portal. But information about all elements of state property is not generally available, and a consultancy study found the Register to be incomplete.
12.3 Transparency of asset disposal
C
Notes:
Disposals are managed by the State Property and Privatisation Committee under MoF in accordance with the Law on State Property. Prices but not the identity of purchasers are published.
Notes:
13.1 Recording and reporting of debt and guarantees
A
Notes:
Public debt records are accurate, complete and regularly reconciled. Reports are published quarterly.
13.2 Approval of debt and guarantees
A
Notes:
Debt is managed by MoF in accordance with Government decisions on the contracting of loans, and within borrowing limits set in the budget each year.
13.3 Debt management strategy
D
Notes:
MoF Strategic Plan includes some very general debt management objectives, but there is no publication of the intended evolution of risk factors such as interest rates and refinancing, and foreign currency risks.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
C
Notes:
14.1 Macroeconomic forecasts
D
Notes:
Macro-economic forecasts for three years ahead are included in budget documentation, but they are not subject to any independent review and do not include information on interest rates and the exchange rate.
Notes:
Forecasts of the main fiscal indicators for 3 years ahead are included in budget documentation, but there are no explanations of changes since the previous year.
14.3 Macrofiscal sensitivity analysis
C
Notes:
There is some discussion of the possible impact of alternative economic assumptions in the Socio-Economic Forecast, but without quantification.
Notes:
15.1 Fiscal impact of policy proposals
A
Notes:
Budget documentation submitted to Parliament includes an explanation of the fiscal impact of the main decisions on revenue and expenditure.
15.2 Fiscal strategy adoption
A
Notes:
The Socio-Economic Forecast sets out quantified fiscal goals for the period of three years ahead.
15.3 Reporting on fiscal outcomes
B
Notes:
The Government’s report on budget execution for the previous year includes an explanation of deviations from objectives set, but does not mention any corrective action.
16. Medium-term perspective in expenditure budgeting
B
Notes:
16.1 Medium-term expenditure estimates
C
Notes:
Estimates of expenditure are presented with allocation by function and administrative unit, but not by economic classification.
16.2 Medium-term expenditure ceilings
A
Notes:
Aggregate and Ministry-level expenditure ceilings are approved by the Republican Budget Commission before they are issued by MoF.
16.3 Alignment of strategic plans and medium-term budgets
A
Notes:
Ministries’ strategic plans are adjusted to reflect the expenditure figures in each year’s budget proposals.
16.4 Consistency of budgets with previous year’s estimates
C
Notes:
The explanatory material presented to Parliament with the 2018 budget proposals was stated to include some explanation of the changes in 2018 provision as between the 2017 and 2018 budgets.
17. Budget preparation process
B+
Notes:
Notes:
The calendar allows Ministries only two weeks to prepare their budget submissions after receipt of the ceilings at end-April.
17.2 Guidance on budget preparation
A
Notes:
Expenditure ceilings are approved by the Republican Budget Commission chaired by the Prime Minister before they are issued to spending Ministries.
17.3 Budget submission to the legislature
A
Notes:
Budget proposals were submitted to the Parliament 4 months before year-end.
18. Legislative scrutiny of budgets
B+
Notes:
18.1 Scope of budget scrutiny
A
Notes:
Parliamentary review covers medium-term priorities and estimates as well as those for the year immediately ahead.
18.2 Legislative procedures for budget scrutiny
B
Notes:
Proposals are reviewed in detail by specialist Committees, but there is no provision for public consultation.
18.3 Timing of budget approval
A
Notes:
Last three budgets have been approved before the end of November each year.
18.4 Rules for budget adjustment by the executive
A
Notes:
Clear rules limit the scope for the Government to reallocate provision without the approval of Parliament.
V. Predictability and control in budget execution
Scores by Dimension
Overall Indicator Score
19. Revenue administration
B+
Notes:
19.1 Rights and obligations for revenue measures
A
Notes:
Ready access is available to taxpayers on their rights and obligations, including redress procedures.
19.2 Revenue risk management
A
Notes:
A risk-based approach to tax audit planning is used.
19.3 Revenue audit and investigation
C
Notes:
Most planned tax audits were completed
19.4 Revenue arrears monitoring
B
Notes:
Over 40% of arrears at the end of 2016 were still outstanding at the end of 2017
20. Accounting for revenue
A
Notes:
20.1 Information on revenue collections
A
Notes:
All central and local Government revenue is paid daily into the revenue collection account of the TSA from which daily reallocations are made to Ministries, SNGs and NFRK.
20.2 Transfer of revenue collections
A
Notes:
All revenue is transferred daily into the TSA.
20.3 Revenue accounts reconciliation
A
Notes:
The systems of NBRK, State Revenue Committee and Treasury are fully integrated, and reconciled daily. Individual taxpayer accounts are updated daily.
21. Predictability of in-year resource allocation
A
Notes:
21.1 Consolidation of cash balances
A
Notes:
All RB (and SNG) balances are consolidated daily.
21.2 Cash forecasting and monitoring
A
Notes:
A cash flow forecast is prepared at the beginning of the year and updated monthly in the light of experience.
21.3 Information on commitment ceilings
A
Notes:
Ministries are assured that cash will be available throughout the year to meet approved commitments.
21.4 Significance of in-year budget adjustments
A
Notes:
Two major adjustments (“Clarifications”) were made to the 2017 budget.
22. Expenditure arrears
B+
Notes:
22.1 Stock of expenditure arrears
A
Notes:
Amounts payable were less than 1% of budget expenditure at the ends of the years 2015-17.
22.2 Expenditure arrears monitoring
B
Notes:
Expenditure arrears are measured at the end of each quarter, but end-year and half-year reports are not due until 7 weeks after period-end.
Notes:
23.1 Integration of payroll and personnel records
A
Notes:
Links between payroll and personnel record systems ensure that correct amounts are paid.
23.2 Management of payroll changes
A
Notes:
Payroll changes require the approval of the heads of both the personnel and accounting functions.
23.3 Internal control of payroll
A
Notes:
Internal financial control procedures are strong, and there is always a clear audit trail.
Notes:
Only limited attention has been paid to payroll audit during 2015-17.
Notes:
24.1 Procurement monitoring
A
Notes:
The data are complete, although audits have identified a significant incidence of errors in procurement.
24.2 Procurement methods
D
Notes:
Less than 60% of contracts in 2017 were awarded by competitive methods.
24.3 Public access to procurement information
B
Notes:
Five of the six elements of information are available to the general public. Consolidated annual statistics are not available.
24.4 Procurement complaints management
D
Notes:
The reviewing body is not entirely separate from the process leading to contract awards.
25. Internal controls on nonsalary expenditure
A
Notes:
25.1 Segregation of duties
A
Notes:
Automated financial systems ensure that responsibilities for a transaction are separated as between the stages of initiation, approval, authorisation and execution.
25.2 Effectiveness of expenditure commitment controls
A
Notes:
The IT system ensures that an order cannot be placed unless budget provision has been identified and finance reserved.
25.3 Compliance with payment rules and procedures
A
Notes:
Internal auditors confirm that the incidence of non-compliance is very low.
Notes:
26.1 Coverage of internal audit
A
Notes:
Internal audit as a service to management has been operational throughout Central Government since the beginning of 2017.
26.2 Nature of audits and standards applied
B
Notes:
Although effort is still devoted to compliance checks, audits do address the performance of systems.
26.3 Implementation of internal audits and reporting
A
Notes:
Audits were almost all completed according to plan in 2017, and the reports given to Accounts Committee (AC) and Committee on Internal Public Audit (CIPA) under MoF.
26.4 Response to internal audits
NA
Notes:
There is as yet insufficient experience of responses to internal audit work (the PEFA criteria look for evidence over three past years).
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
B+
Notes:
27.1 Bank account reconciliation
D
Notes:
Daily bank reconciliation of the TSA is carried out but information is not available about procedures in relation to other CG bank accounts.
Notes:
Suspense accounts are routinely cleared and reconciled on a prompt basis.
Notes:
Advances are very limited and accounts are cleared promptly. Reconciliation is undertaken monthly.
27.4 Financial data integrity processes
A
Notes:
Processes are effective with a clear audit trail and integrity has been confirmed by the National Bank.
28. In-year budget reports
A
Notes:
28.1 Coverage and comparability of reports
A
Notes:
Reports give the same breakdown, administrative, functional and programme as the original budget.
28.2 Timing of in-year budget reports
A
Notes:
Monthly reports are issued by the MoF two weeks after period-end.
28.3 Accuracy of in-year budget reports
A
Notes:
Reports are derived from the Treasury IT system, and cover commitments as well as payments.
29. Annual financial reports
C+
Notes:
29.1 Completeness of annual financial reports
C
Notes:
The budget execution reports which are the focus of audit work and Parliamentary review cover only revenue, expenditure and movements in public debt.
29.2 Submission of reports for external audit
A
Notes:
The latest report was submitted for audit within 3 months of year-end.
29.3 Accounting standards
C
Notes:
Budget execution reports are consistent from year to year, but much information needed to comply with IPSAS is not provided.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
30.1 Audit coverage and standards
B
Notes:
Most Central Government expenditures have been audited in accordance with international standards during 2015-17, and systemic and control risks have been identified.
30.2 Submission of audit reports to the legislature
A
Notes:
Audit reports have been submitted within 2 months of receipt of the Government’s budget execution reports.
30.3 External audit follow-up
A
Notes:
Audited entities are required to respond to recommendations and instructions given by AC. Two-thirds of amounts of financial errors identified in 2017 were recovered.
30.4 Supreme Audit Institution independence
D
Notes:
Head of AC is appointed and can be removed from office by the President. AC’s resources are very limited, and are determined by the Government, not the Parliament.
31. Legislative scrutiny of audit reports
B+
Notes:
31.1 Timing of audit report scrutiny
A
Notes:
Work is completed within 6 weeks of receipt of the report from AC.
31.2 Hearings on audit findings
C
Notes:
AC does not give opinions on financial statements of Ministries. Hearings cover the Government’s budget execution reports as well as AC’s.
31.3 Recommendations on audit by the legislature
A
Notes:
AC’s report is used as the basis for Parliament’s recommendations to the Government in response to the budget execution report.
31.4 Transparency of legislative scrutiny of audit reports
A
Notes:
Parliamentary discussions of budget execution and audit reports are open to the public, and the recommendations to Government are published on Parliamentary websites.
