Ethiopia SNNP Region 2020

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Aggregate expenditure outturn was between 90% and 110% of the approved aggregate budgeted expenditure in two of the last three completed fiscal years (93% in EFY 2008, 99% in EFY 2009, and 94% in EFY 2010).

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Variance in expenditure composition by administrative classification was less than 10% in at least two of the last three years (6% in EFY 2008, 7% in EFY 2009, and 5% in EFY 2010)

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Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years (8% in EFY 2008, 16% in EFY 2009, and 10% in EFY 2010).

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Actual expenditure charged to the contingency vote was on average less than 3% in all the three completed fiscal years.

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Actual revenue was between 92% and 116% of budget revenue in at least two of the last three years (92% in EFY 2008, 91% EFY 2009, and 93% in EFY 2010).

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Variance in revenue composition was more than 10% in at least two of the last three years (13% in EFY 2008, 13% in EFY 2009, and 9% 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 which is comparable with COFOG standards.

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The budget documentation fulfils no basic element and one additional element.

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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 at the level of SNNPR.

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

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

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A framework of PIs relating to the outputs or outcomes for the majority (88%) of bureaus is in place.

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Information is published annually on the activities performed but only for some bureaus.

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Information on resources received by frontline service delivery units is collected annually and recorded only for resources in cash but not in kind at the level of the health sector. At the level of the education sector, information on resources received by frontline service delivery units is collected annually and recorded for both resources in cash and in kind. A report compiling the information collected is prepared at least annually by both bureaus.

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Evaluations of the efficiency or effectiveness of service delivery have been carried out for the majority of service delivery bureaus at least once within the last three years but are not published.

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The government makes available to the public 2 basic elements, in accordance with the specified time frames.

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The regional government does not receive financial or audit reports of public corporations.

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Unaudited reports on the financial position and performance of the majority of SNGs are published at least annually within nine months of the end of the fiscal.

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Though there are records of some significant contingent liabilities, the regional government does not report these in its AFSs.

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A feasibility study was conducted for the largest capital investment projects (93% of the total large investment projects). This was conducted by the Federal Government with support of DPs. The result is published on the federal government’s website. However, there is no evidence that the feasibility has been reviewed by an entity other than the sponsoring entities.

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Prioritization and selection of major investment projects for inclusion into the annual budget are largely based on regional government priorities. The regional government has no standard criteria for prioritization and selection of projects.

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The budget documentation only shows cost implication of projects for the current year, with no projections of forthcoming year. Nonetheless, the Project Appraisal Document provides information of total capital cost together with associated recurrent cost.

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Project monitoring is conducted by the implementing bureaus in conjunction with other stakeholders. Quarterly physical inspection report is submitted to the BoFED Planning Directorate and other stakeholders. Monthly and annual financial reports also include the budget and actual expenditure of the projects. However, these are not published.

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The AFSs disclose balances of both cash and bank and receivables but not investments in public enterprises.

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The regional government maintains a register of its holdings of fixed assets, and collects partial information on their usage and age. There are no complete records of government land, buildings, and natural resources.

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Procedures and rules for the transfer or disposal of nonfinancial assets are established, but 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 but no disclosure of the new owner(s).

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The regional government does not reconcile and update guarantees issued to zones and woredas.

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

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The SNNPR regional government does not prepare debt management strategy even though it has borrowing powers and issues loan guarantees to zones and woredas under its jurisdiction.

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Over the last three completed fiscal years, the Budget and Planning Division of BoFED prepared an MEFF that 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, plus the underlying assumptions. The projections cover the budget year and at least the two outer years.

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Over the last three completed fiscal years, the Budget and Planning Division of BoFED prepared 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 purpose only.

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The Budget and Planning Division does not prepare macro-fiscal forecasts based on alternative macroeconomic assumptions.

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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 SNNPR regional government does not produce a fiscal strategy.

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Reporting against fiscal outcomes is not undertaken.

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The annual budget document presents estimates of expenditure by administrative, functional, and economic classification for the budget year only; there are no medium-term expenditure forecasts.

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The regional cabinet does not approve the BCC with ceilings.

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At least 32% (by value) of sectors prepare fully costed medium-term strategic plans, that is, some (>25%). Some annual expenditure policies are aligned to annual action plans and the medium-term strategy.

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

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An annual budget calendar exists and allows budgetary units 2 weeks to submit their proposals. About 10% of budgetary units comply with it and meet the deadlines for completing estimates.

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A budget circular is issued to BIs, but it does not include ceilings for administrative or functional areas. 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 on the day of the start of the new fiscal year or after the start of the new fiscal year in all past three completed fiscal years.

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The legislature’s review covers fiscal policies, medium-term fiscal forecasts, and medium-term priorities 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. They include negotiation procedures and arrangements for public consultation but not for technical assistance.

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The regional council has approved the annual budget within one month of the start of the fiscal year in all 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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More than 85% of the regional tax is collected by the regional RA. It provides information through various channels on main obligations to taxpayers and redress processes and procedures.

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The RA uses a partly structured and systematic approach for assessing and prioritizing compliance risks. Case selection for tax audit is semiautomated with 41 selection criteria mostly manual.

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Currently, the RA is not using a compliance improvement plan. It has completed majority (65%) of planned audits for the last completed fiscal year.

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The stock of revenue arrears for the last completed fiscal year (EFY 2010) was 2.5% of the total revenue collection for the year and the arrears balance more than 12 months was 43%.

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The RA, which collects more than 85% of the revenue and other BIs, submits reports to the treasury monthly. These reports are consolidated into a single report.

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The RA and other BIs transfer revenue collection on a weekly basis to the treasury.

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The quarterly reconciliation, done within four weeks after the end of the quarter, does not include assessments and arrears. Reconciliation only covers collections, retention, and transfers to the treasury.

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Cash balances in the TSA are consolidated every day, but they constitute only 79% of all cash accounts owned by the regional government. All the other accounts are consolidated monthly.

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A cash flow forecast is prepared for the fiscal year and is updated at least quarterly on the basis of actual cash inflows and outflows.

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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 adjustments to budget allocation take place no more than twice a year and are done in a transparent and predictable way.

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The stock of expenditure arrears, accounted as grace period payables, was less than 2% in all three years of assessment.

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The data on stock and composition of expenditure arrears are monitored at the end of each month.

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

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Payroll changes are communicated and updated by the HRD to finance immediately and retrospective adjustments are almost nonexistent.

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Payroll changes are made against written and approved letters from the HRD and monthly staff attendance lists. There is a 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 and internal audit units.

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A consolidated procurement database is maintained by PPPAA. The data are accurate and complete for most procurement methods for goods, services, and works.

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The total value of contracts awarded through competitive methods in the last completed fiscal year represents more than 80%.

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Four of the key procurement information elements are fulfilled.

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The procurement complaint system does not meet criterion (1).

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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, enables a partial commitment coverage.

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Payment rules are generally respected for most of the payments.

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Internal audit function is established in all public bodies and audits are conducted as per annual plans.

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

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90% of the planned audits for EFY 2010 were performed.

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Management response for internal audit findings was 85% in EFY 2010.

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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 No. 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 time.

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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 the executed budget allows 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, functional, 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 monthly, within four weeks from the end of the month.

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Due to IBEX, the accuracy of reports is generally consistent from year to year, capturing expenditure at the payment stage. Concerns regarding data accuracy are not highlighted. 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 consolidated annual financial report for EFY 2010 contains information on budgeted and actual information on expenditure accounts (on a cash basis) broken down into administrative, functional, and economic classification, revenue, and cash balances. The financial statements do not provide information on stocks of assets and liabilities nor on debt and guarantees.

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The consolidated financial report of the last completed fiscal year was submitted three months after the end of the fiscal year (EFY 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 to the preceding year are not covered.

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ORAG covers more than 85% of the total expenditure and revenue of the region for the last three completed fiscal years and follows the INTOSAI regulatory audit manuals.

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ORAG submitted the audited financial statement on consolidated fund within three months for two of the last three completed fiscal years and within five months for one year.

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Audited entities responded on time and provided a comprehensive report on action taken. Implementation of audit recommendation remains low.

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ORAG is independent from the executive in all aspects including appointment and removal of the AG, publishing of its report, approval and execution of its budget, and unrestricted and timely access to records.

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The BFAASC scrutinizes the audit reports within two months from the receipt of the audit report from ORAG.

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In-depth hearings on key findings of audit reports take place regularly with responsible officers from all audited entities which received a qualified or adverse audit opinion or a disclaimer.

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The BFAASC issues recommendations to be implemented by the executive and systematically follows up on their implementation.

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Hearings are conducted in public and the committee reports are debated in the full chamber of the legislature. The regional radio and TV broadcast live the debates in the full chamber. Nonetheless, the BFAASC reports are not published on an official website or by any other means easily accessible to the public.

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Transfers from higher-level government were 100% in all the last three completed fiscal years.

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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 2015/2016, 40% in 2016/2017, and 20% in 2017/2018.

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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.