Liberia 2021

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Aggregate expenditure outturn was between 90 and 110 percent of the approved aggregate expenditures in two of the last three fiscal years (2016/17 and 2018/19).

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Variance in expenditure composition by function was less than 15 percent in all three years, but it was more than 10 percent in two of the last fiscal years (2016/17 and 2018/19).

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Variance in expenditure composition by economic type exceeded 15 percent for each fiscal year.

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The average level of expenditure charged directly to the Contingency Fund was less than 1 percent of the original budget.

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Actual revenues were less than 92 percent of budgeted revenues in 2017/18 and 2018/19.

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Variance in revenue composition was more than 10 percent in all three years.

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Budget formulation, execution, and reporting are based on administrative and economic classifications comparable with GFS standards.

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Budget documentation fulfils all required information benchmarks except for: (i) financial assets; (ii) summary information of fiscal risks; (iii) explanation of budget implications of new policy initiatives; and (iv) quantification of tax expenditures.

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As donor-funded expenditures are not reported in annual financial statements, more than 10 percent of budget expenditures are not included in annual financial statements of the Consolidated Fund Account.

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As noted, revenues outside of government financial reports are more than 10 percent of total revenues.

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As externally funded project expenditures are reported annually, detailed financial reports of most of the extrabudgetary expenditures are submitted to the government.

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The horizontal allocation of some transfers to Counties and Districts from the central government is not determined by transparent, rule-based systems.

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Counties and districts receive information about annual transfers from national governments, usually when the proposed budget is published on the MFDP website.

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A framework of performance indicators relating to the outputs or outcomes is published by the Ministries of Education and Health, but, taken together, they account for less than 25 percent of the budget.

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Ministries and agencies do not use to publish an annual performance report or any comparable report.

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No documentation was provided showing that surveys were conducted regarding estimates of resources received by service delivery units for at least one major department.

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The evaluation of the efficiency or effectiveness of services was conducted by the M&E Unit of the MFDP. However, this unit accounts for less than 25 percent of the budget. Also, it is not required to publish the results.

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Only the Annual Budget Execution Report and the Audit Reports from the General Auditor were made available to the public in a timely manner.

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Most SOEs do not submit their annual reports to the SOE Financial Reporting and Coordination Unit of the MFDP.

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Annual reports concerning the financial position and performance of Counties and Districts are not published in a timely manner.

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The central government entities and agencies do not quantify significant contingent liabilities in their financial reports.

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Economic analyses are conducted to assess most major investment projects. The analyses are reviewed by an entity other than the sponsoring entity.

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As most of the projects are externally financed projects (for which there is no pipeline and central review process), less than 25 percent of the major investment projects are prioritized by a central entity.

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Projections of the total capital cost of major investment projects are not included in the budget documents.

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The total cost and physical progress of major investment projects are monitored by the implementing government unit. Standard procedures and rules for project implementation are in place, but no information about the implementation of major investment projects is published annually.

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Insufficient information is generated about non-current assets because of the current use of the cash basis IPSAS.

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The government maintains a register of its holdings of fixed assets, but it does not collect information about their usage and age.

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Procedures and rules are established for the transfer or disposal of non-financial assets, but only partial information about transfers and disposals is included in the annual financial reports.

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Domestic and foreign debt and guaranteed debt records are complete and updated monthly. Data are reconciled quarterly, but not monthly. Comprehensive statistical reports are produced quarterly and annually.

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The central government's contracting of loans and issuance of guarantees are made against transparent criteria and fiscal targets, and they are always approved by the Minister of Finance.

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A Debt Sustainability Analysis (DSA), with a horizon of at least three years, is prepared by the IMF and the World Bank under the Extended Credit Facility. It is also publicly reported. Annual reporting against debt management objectives is provided to the legislature. The government’s annual plan for borrowing is consistent with the approved strategy.

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The MFDP prepares medium-term forecasts of key macroeconomic indicators, which are included in the budget documentation submitted to the legislature. However, the projections are not reviewed by an external entity.

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The government prepares medium-term forecasts of the main fiscal indicators, including revenues, aggregate expenditures, and the budget balance. These forecasts, together with the underlying assumptions, are included in the budget documentation submitted to the legislature.

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The government prepares, for internal use, a range of fiscal forecast scenarios based on alternative macroeconomic assumptions. However, the budget documents do not include a discussion of forecast sensitivities.

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The MFDP prepares estimates of the fiscal impact of all proposed changes in revenue and expenditure policy for the next fiscal year.

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The government has adopted, along with the last budget submitted to the legislature, a medium-term fiscal strategy, including quantitative and/or qualitative fiscal objectives.

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The government has prepared an internal report concerning the progress made against its fiscal strategy, but it was not submitted to the legislature.

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The annual budget presents an estimate of expenditures for the budget year and the two following fiscal years by administrative and economic classification.

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The budget circular does not contain medium-term expenditure ceilings. Also, multi-year appropriations are not yet permitted.

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Sector strategies have been prepared for some sectors, but they do not present a substantially complete costing of investments and recurrent expenditures. Budget proposals are not aligned with estimates presented in the strategic plans.

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Budget documents do not provide an explanation of changes to expenditure estimates between the second year of the previous medium-term budget and the first year of the current medium-term budget.

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A budget calendar exits, but the MACs did not have enough time to complete their detailed estimates in a timely manner.

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A budget circular is issued to budgetary units, but it does not include ceilings for administrative or functional areas.

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

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The legislature’s review covers fiscal policies and aggregates for the coming year, as well as detailed estimates of expenditures and revenues. However, they do not cover medium-term details of expenditures and revenues.

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Legislative procedures include internal legislative committees, technical support, and negotiation procedures. However, public consultations have not yet taken place.

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The legislature has approved the annual budget within one month of the start of the year in two of the last three fiscal years.

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Clear rules exist for in-year budget changes by the executive, but they allow for significant administrative reallocations. Moreover, it is not clear that they are followed in most cases.

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The Liberian Revenue Authority (LRA) provides easy access and up-to-date information regarding taxpayers' obligations and rights, including appeal processes and procedures.

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The LRA uses a structured and systematic approach for assessing and prioritizing compliance risks for the majority of revenue streams.

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Entities collecting most government revenues undertake audits and fraud investigations using a compliance improvement plan. However, less than 75 percent of planned audits were completed.

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The stock of revenue arrears at the end of the last completed fiscal year was below 10 percent of the total revenue collection for the year. However, the revenue arrears older than 12 months were more than 75 percent of the total revenue arrears.

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The LRA obtains weekly data from entities collecting all central government revenues. This information is disaggregated by revenue type and is consolidated into a report.

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All tax revenues are paid directly into the Consolidated Fund Account, or transfers to the Treasury are made daily.

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The LRA does not prepare a consolidated revenue accounts reconciliation.

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Bank and cash balances are consolidated daily into the TSA. However, extra-budgetary funds remain outside of the arrangement.

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A cash flow forecast is prepared for the fiscal year, and it is updated monthly based on actual cash inflows and outflows.

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Spending entities are provided with reliable information about resources available for commitments only one month in advance.

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Significant in-year adjustments are frequent. They are done in a transparent, but unpredictable way.

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The stock of expenditure arrears to suppliers was more than 50 percent of the total arrears. Information about the other types of arrears was not available.

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Data concerning the stock and composition of expenditure arrears is produced when annual financial statements are prepared. However, monitoring is not done for all types of arrears.

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The approved staff list, personnel database, and payroll are not directly linked. Staff hiring and promotions are controlled by a list of approved staff positions. All changes made to personnel records are reconciled manually against the previous month’s payroll data. However, monthly reconciliation data was not provided.

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Changes to the personnel records and payroll are usually updated monthly, but no information was provided about personnel records and payroll updates.

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Sufficient controls exist, but only to ensure integrity of the payroll data of greatest importance. Contractors were still not part of the payroll as of the time of the assessment.

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Partial payroll audits or staff surveys have been undertaken within the last three completed fiscal years. The GAC undertook a payroll audit in 2019.

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Databases regarding procurements are maintained only through the prior review mechanism, which represents less than the majority of procurement methods for goods, services and works.

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The total value of contracts awarded through competitive methods represented much less than 60 percent of the total value of contracts in FY 2018/19.

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The legal and regulatory framework for procurement, the government procurement plans, bidding opportunities, and contract awards are made available to the public. However, they represent less than the majority of procurement operations.

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The procurement complaints system in Liberia meets only 3 benchmarking criteria, namely: Criteria 4) exercises the authority to suspend the procurement process; Criteria 5) issues decisions timely; and Criteria 6) issues decisions that are binding on every party, are not met.

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Appropriate segregation of duties is prescribed through the entire expenditure process. Responsibilities are clearly articulated.

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Expenditure commitment controls are in place and limit commitments to projected cash availability and approved budget allocations. However, the coverage does not include more than 75 percent of the budget expenditures in terms of value.

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The majority payments are compliant with regular payment procedures, and the majority of exceptions are properly authorized and justified.

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Internal audit is operational for central government entities representing more than 75 percent of budgeted expenditures, as well as for government entities collecting more than 90 percent of budgeted revenues.

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Internal audit activities are focused on evaluations of the adequacy and effectiveness of internal controls, as well as financial compliance. However, internal audits and related controls and inspections only partially meet the professional standards of internal auditing.

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Annual audit programs exist, but there was not enough information provided to check the percentage of programmed audits being completed for the FY 2018/19.

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There is no evidence that management provides a partial response to audit recommendations.

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Bank reconciliations are not prepared.

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The GoL uses cash accounting, and it has not established a system for monitoring suspense accounts on an extra-accounting basis.

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Reconciliation of advance accounts does not generally take place, even annually.

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Access and changes to records are restricted and recorded, but not all operations result in an audit trail.

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The classification allows for comparison to the budget with partial aggregation. Expenditures are covered at both the allotment and payment stages. Expenditures made from transfers to deconcentrated units are not included in the reports.

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Budget execution reports are prepared quarterly, but they are not issued in a timely manner.

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Expenditures are captured in quarterly reports at the payment stage. There may be concerns regarding data accuracy, which are not highlighted in the reports. An analysis of the budget execution is provided on a semi-annual basis.

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A statement on the Consolidated Fund is prepared annually. Information about revenues, expenditures and bank account balances is not complete, but the omissions are not significant.

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Unaudited financial statements of the Consolidated Fund Account for the FY 2018/19 were published within six months by the Office of the Comptroller General to the General Auditor. However, the report was not complete, and it was not completed within 9 months after the end of the fiscal year.

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Statements are presented in a consistent format over time, but the GAC’s reports often mention that they are not prepared in accordance with International Public Sector Accounting Standards (IPSAS) cash basis. Variations between international and national standards are not disclosed in the AFS.

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Financial reports of central government entities representing more than 75 percent of total expenditures and revenues have been audited according to national auditing standards. The audits have highlighted relevant material issues.

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The GAC reports on financial statements were submitted to the legislature more than nine months from the date of receipt by the GAC of the AFS from the government.

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A formal response is usually provided by the audited entity, but it is often not complete and/or timely.

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The GAC operates independently from the executive with respect to the procedures for appointment and removal of the Auditor General. However, the MFDP has significant influence on the release of the GAC’s budget. Also, the GAC had difficulties in obtaining the requested documents and information in a timely manner.

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Examination of audit reports by the legislature is generally taking more than 12 months to complete.

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The PAC conducted public hearings about various special audit reports, but they did not refer to key findings of the GAC audit reports.

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The legislature provides some recommendations about actions to be implemented by the executive, but the PAC does not have a specific follow-up system. These recommendations are not specifically linked to those made by the GAC concerning the AFS.

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Reports of the Public Accounts Committee are not published on any official website or other means that are easily accessible to the public.