Ethiopia Amhara Region 2019

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Aggregate expenditure outturn was between 95% and 105% of the approved aggregate budgeted expenditure in all three last fiscal years.

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Variance in expenditure composition by administrative classification was less than 15% in at least two of the last three years.

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Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years.

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Actual expenditure charged to the contingency vote was on average less than 3%.

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Actual revenue was between 94% and 112% of budget revenue in all last three years (105% in EFY 2008, 94% EFY 2009, and 95% in EFY 2010).

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Variance in revenue composition was more than 15% in all the last three years (24.7% in EFY 2008, 47.1% in EFY 2009, and 32.4% in EFY 2010).

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Budget formulation, execution, and reporting are based on administrative, economic (at least ‘Group’ level of the GFS standard-3 digits), and functional classification using a classification that can produce consistent documentation with comparable with COFOG standards.

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The budget documentation fulfills no elements.

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There is no expenditure outside government financial reports.

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There is no revenue outside government financial reports.

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There are no EBUs.

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The horizontal allocation of all transfers to woreda and city administration from the regional government is determined by transparent and rule-based system.

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Information on annual transfers to woredas and city administrations is issued after the start of the fiscal year.

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A framework of performance indicators relating to the outputs or outcomes of the majority (66%) of ministries is in place.

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Information is prepared annually but not published on the activities performed for the majority (66%) of ministries.

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Information on resources received by frontline service delivery units is collected and recorded for at least two large ministries, disaggregated by sources of funds. A report compiling the information is prepared at least annually.

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Evaluations of the efficiency or effectiveness of service delivery have been carried out for some ministries at least once within the last three years.

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Evaluations of the efficiency or effectiveness of service delivery have been carried out for some ministries at least once within the last three years.

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74.3% by value of public enterprises submitted their 2017/2018 annual audited accounts to the Public Enterprises Supervision and Follow-up Authority within six months. 25.7% by value submit after 6 months but within 9 months. This means that 100% submit within 9 months. The authority prepares an annual fiscal risk report. However, neither the fiscal risk report nor the annual audited report of each public enterprise is published.

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Neither the consolidated audit reports (which contain woreda financial statements) nor the unaudited financial reports of woredas are published.

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Though there are records of some significant contingent liabilities, the regional government does not report these in its AFSs. Also, it does not monitor or report fiscal risks arising out of PPPs.

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The Planning Commission has adopted an EC 2006 federal project investment management guideline but this is rarely used and also not known to implementing units. It is also not published. That said, implementing units undertake feasibility studies for all projects but the results are not published.

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Project selection for inclusion into the annual budget is largely based on regional government priorities (which include water, irrigation, health, education, animal grazing, and rural roads), even though some of these projects are selected purely based on the results of feasibility studies conducted.

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At present, the annual budget has no MTEF; the budget only shows cost implication of projects for the current year, with no projections of forthcoming year. Nonetheless, the project appraisal document provides information on total capital cost together with associated recurrent cost.

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The M&E Directorate of the Planning Commission is weak in terms of project monitoring and supervision, as it has only one staff. That said, the implementing unit monitors investment projects through physical inspection and periodic (quarterly) financial progress reports. The AFSs also report on actual expenditure of the projects. Both physical and financial progress reports are not published.

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The Public Enterprises Supervision and Follow-up Authority keeps records of investments in public and private entities, but this is not published. The AFSs disclose balances of both cash and bank but not investments in public enterprises.

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The regional government does not maintain a consolidated register of its fixed assets; there are no records of government land and natural resources. Presently, management of fixed assets is decentralized at the budget unit (and extra-budgetary) level. The asset registers maintained by these budget units provide information on the age and usage of assets.

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Disposal of fixed assets is regulated by Article 54 of the Amhara Regional Government Procurement and Property Administration Proclamation No. 179/2011, dated July 5, EC 2011, and Directive No. 1/2011. There are no clear legal provisions for the disposal of financial assets. Proceeds from the sale of fixed assets are disclosed in the financial reports; there is no disclosure of the new owner(s).

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The regional government does not reconcile and update guarantees annually.

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BoFED is solely responsible for authorizing and approving these guarantees. Nonetheless, there are no guidelines, policies, and procedures that guide the issuance of these guarantees.

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Although the region provides guarantees, debt management strategy is not prepared.

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The Regional Planning Commission prepares an MEFF, which is part of the medium-term regional strategic plan known as GTP II 2016/2017–2020/2021. The budget document submitted to the regional council also contains macroeconomic forecasts. The projections cover the budget year and at least the two outer years.

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The Regional Planning Commission prepares medium-term macro-fiscal forecasts, with assumptions on GDP and investment rates. The forecasts, for the budget year and the two outer years, include aggregate revenues by type and expenditures. These are submitted to the regional council for information only.

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The Regional Planning Commission prepares a simulation of different scenarios of macro-fiscal forecasts to ascertain the impact on the annual budget and the regional economy at large. These qualitative analyses are for internal use only and are not contained in the budget documents submitted to the regional council.

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The regional government prepares partial explanation of budget implications on new policy initiatives and major new public investments.

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The regional government of Amhara does not produce a fiscal strategy.

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Not applicable

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The annual budget document presents estimates of expenditure by administrative, function, and economic classification for the budget year only. There is no medium-term expenditure perspective.

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Aggregate and sector bureau expenditure ceilings for the budget are approved by the regional cabinet after the BCC is issued to budgetary units.

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At least 54% (by value) of sectors prepare fully costed medium-term strategic plans. Some annual expenditure policies are aligned to annual action plans and the medium-term strategy. Most of these sector strategies are unrealistic.

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The government does not prepare an MTEF: it is not therefore possible to analyze the consistency of budgets to previous year's estimates.

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An annual budget calendar exists and some budgetary units comply with it and meet the deadlines for completing estimates.

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A budget circular is issued to BIs, including ceilings for administrative areas. Total budget expenditure is covered for the full fiscal year. The budget estimates are reviewed and approved by the cabinet after they have been completed in every detail by budgetary units.

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The executive has submitted the annual budget proposal to the legislature significantly less than one month before the start of the fiscal year in all the last three years.

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The legislature’s budget scrutiny covers fiscal policy and aggregates for the coming year as well as details of expenditure and revenue.

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The legislature’s procedures to review budget proposals are approved by the legislature in advance of budget hearings and are adhered to.

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The regional council has approved the annual budget within one month of the start of the fiscal year in all of the last three fiscal years.

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Clear rules exist for in-year budget adjustments by the executive and are adhered to in all instances (>90% in value). Extensive administrative reallocations are permitted.

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About 88% of the regional tax is collected by the Regional Revenue Bureau. It provides information through various channels on main obligations to taxpayers and provides for complaints resolution.

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There is a risk assessment and management function, which registers and monitors the usual risks in the area of tax registration, declaration, and payment. There is a comprehensive, structured, and systematic approach for assessing and prioritizing risks covering all groups of taxpayers.

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Sound system of audit is performed and managed in accordance with a documented compliance improvement plan with all planned audits and investigations completed for the last fiscal year.

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The actual stock of revenue arrears for the EC 2010 year-end is 1.7% (less than 10%). Previous year arrears are carried forward and collected during the next fiscal year. The age of revenue arrears is not specifically monitored even if the data exist. The balance is materially insignificant.

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The data are complete with source and period of collection. The collected revenue data are consolidated into a monthly report.

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AmRRB, which collects most government revenue, transfers 100% of the collections directly into the TSA controlled by the Treasury within one working day. The tax is paid either directly to a Treasury-controlled account or to a CBE account, which is reconciled on daily basis.

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Frequency of complete accounts reconciliation between revenue assessments, collections, arrears, and receipts by the Treasury is monthly, within 15 days of the end of the month.

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Cash balances in the TSA are consolidated every day but they constitute only 76% of all cash accounts owned by the regional government.

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There is no practice of preparing annual cash flow forecasts and hence no update on actual inflow and outflow. Therefore, cash needs are not based on budgetary commitments and are not updated and monitored by BoFED.

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Budgetary units are able to plan and commit expenditure for one year in advance in accordance with the budgeted appropriations and commitment releases.

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Significant in-year adjustment to budget allocation takes place no more than twice a year and is done in a transparent and predictable way.

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The stock of expenditure arrears, accounted as grace period payables, was less than 1% in all three years of assessment.

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The data on stock and composition of expenditure are monitored at the end of each fiscal year but are not disclosed in the AFSs.

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Payroll is reconciled against changes in payroll records and staff lists monthly and also against previous month payroll.

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Payroll changes are communicated and updated by the HRD to finance within a week and retrospective adjustments are rare, and if any, the retrospective adjustment is less than 1%.

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Payroll changes are made against written and approved letters from the HRD and monthly staff attendance lists. There is segregation of duty between payroll preparation and maintaining of HR records. Internal audit reviews monthly payroll payments.

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A partial payroll audit has been conducted by ORAG, internal audit units, and the BSCHRD.

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No procurement database or record is maintained.

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Competitive procurement method represents about 33%, based on the sampled five major public bodies.

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Three of the key procurement information elements are fulfilled.

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The procurement complaint system does not meet criterion (1) but three of the other criteria are met.

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Appropriate segregation duties are prescribed throughout the payment process, and responsibilities are clearly laid down.

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The monthly cash flow forecast, the commitment control exercise using Excel, enable a partial expenditure commitment limit.

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Payment rules are generally respected for most of the payments.

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An internal audit unit of 25 public bodies at the regional level (which represents about 75% of the central regional government budget) covers 68% of the total expenditures and revenue in 2017/2018.

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The internal audit practice generally follows best practices in audit planning, execution, and follow-up of implementation. The audit largely focuses on compliance audit.

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22 internal audit units which represent public bodies that constitute about 86% of the regional budget performed about 80% of their annual audit plan.

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The executive responds to all of the audit findings.

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The active bank accounts are reconciled at least monthly, usually within four weeks from the end of each month.

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Suspense accounts appear in the Chart of Accounts with number 4201 but they stand for advance payment of petty cash.

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Reconciliation of advance accounts takes place at least monthly, within a month from the end of each month. All advance accounts are cleared on timely.

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The financial data integrity process is not sound enough to ensure personal accountability resulting in audit trail.

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Coverage and classification of data on executed budget allow for direct comparison to the original budget. Information includes all items of budget estimates allowing for direct comparison between approved budget estimates and actual expenditure by detailed economic and administrative classification and source of funds; the reports also show transfers to zones and woredas.

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Budget execution reports are prepared quarterly and issued within 8 weeks from the end of each quarter. The bottleneck is the delay of reporting on budget execution from the lowest level (woreda).

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Due to IBEX, the accuracy of reports is generally consistent from year to year, capturing expenditure at payment stage. There is no analysis of budget execution on half-year basis. Expenditure is not captured at the commitment stage.

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The annual financial reports consolidate the financial budget execution data provided by all budget entities. The last year EC 2010 consolidated annual financial report contains information on budgeted and actual information on expenditure accounts (on a cash basis) broken down into functional and economic classification, revenue, and cash balances. The financial statements do not produce information on stocks of assets and liabilities and no information was provided on debt and guarantees.

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The consolidated financial report of the last completed fiscal year was submitted six months after the end of the fiscal year (EC 2010).

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The accounting standards applied to all financial reports are consistent with the national accounting standards (Modified Cash Basis Accounting Standards). The standards and accounting policies used are disclosed but comparative data for the preceding year are not covered.

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ORAG covers more than 57% of the total expenditure and revenue of the ANRS for the last completed fiscal years and follows the INTOSAI regulatory audit manuals.

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ORAG submitted the audited financial statement on consolidated fund within 9 months from the receipt of the draft report from BoFED for the last completed fiscal year and within 13 months for one of the completed fiscal years.

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Audited entities responded on time and provided a comprehensive report on action taken. About 75% of them responded within a year.

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ORAG is independent from the executive in all respects including appointment and removal of the Auditor General, publishing of its report, and unrestricted and timely access to records. However, its budget is still approved by BoFED.

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The BFSC scrutinizes the audit reports within two to three weeks from the receipt of the audit report from ORAG.

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No hearing is conducted.

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The BFSC submits its recommendation report to the speaker following the scrutiny of the audit report but not to the respective audited entities. The BFSC is a member of the audit implementation task force, which follows up the implementation of audit findings.

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The scrutiny of the audit reports is conducted in the presence of representatives of certain civil societies. The committee reports are not published and are not accessible to the public.

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Transfers were more that 95% compared to the original budget in all the last three completed fiscal years. Actual transfers have been 100% in 2015/16, 108% in 2016/17, and 99% in 2017/18.

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Transfers of earmarked grants deviated by more than 10% in at least two of the three years under review. Actual deviations were 0% in 2015/16, 40% in 2016/17, and 20% in 2017/18.

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Actual disbursements of both recurrent and capital grants have been evenly spread within each of the last three years under review.