SNG PILLAR: INTERGOVERNMENTAL FISCAL RELATIONS
Scores by Dimension
Overall Indicator Score
HLG-1 Transfers from Higher Levels of Government
D+
Notes:
HLG-1.1 Outturn from higher-levels of government
D
Notes:
The outturns for FY 2016, 2017 and 2018 were 177.5%, 162.7% and 131.7%, respectively. While the deviation of actual grants from the original budgeted grants steadily declined, it was still above 116% in all three FYs.
HLG-1.2 Transfers composition outturn
D
Notes:
The composition variance of earmarked grants in FY 2016, 2017 and 2018 was 54.0%, 47.4% and 6.8%, respectively. The composition variance was above 15% in two of the last three years.
HLG-1.3 Timeliness of transfers from higher-levels of government
A
Notes:
A disbursement timetable is prescribed by law and agreed between the HLG and the City Government. In all of the last three completed FY, more than 75% of actual transfers were on time.
HLG-1.4 Predictability of transfers
D
Notes:
The HLG provides no information on transfers for the current FY and the following FY, and there is no explanation for changes between the current and the previous FY.
HLG-2 Fiscal rules of monitoring of fiscal position
NU
Notes:
HLG-2.1 Fiscal rules for subnational governments
NU
Notes:
HLG-2 is a pilot indicator. Liuyang city government chose not to use this indicator in this assessment.
HLG-2.2 Debt rules for subnational governments
NU
Notes:
HLG-2.3 Monitoring of subnational governments
NU
Notes:
I. BUDGET RELIABILITY
Scores by Dimension
Overall Indicator Score
PI-1 Aggregate expenditure out-turn
D
Notes:
PI-1.1 Aggregate expenditure out-turn
D
Notes:
Aggregate expenditure outturn deviated significantly from the budgeted amounts in the last three FYs. The outturn was 148.4%, 165.6% and 161.2% of the approved budget, respectively.
PI-2 Expenditure composition outturn
D+
Notes:
PI-2.1 Expenditure composition outturn by function
D
Notes:
Variance in expenditure composition by functional classification was more than 15% in each of the last three FYs. Variance of the three years was 30.9%, 29.2%, and 28.8%, respectively.
PI-2.2 Expenditure composition outturn by economic type
NA
Notes:
There was no economic classification for the GFB in FYs 2016-2018.
PI-2.3 Expenditure from contingency reserves.
A
Notes:
In FYs 2016-2018, actual expenditure charged to a contingency vote was on average 0.7% of the original budget (i.e. less than 3% of the original budget).
Notes:
PI-3.1 Agregate revenue outturn
C
Notes:
In FY 2016 - 2018, the variance in aggregate revenue was 103.5%, 115.8% and 116.5%, respectively. The actual revenues were between 92% and 116% of budgeted revenues in two of the three FYs.
PI-3.2 Revenue composition outturn
D
Notes:
Composition variance in revenue collection in the three FYs was 15.9%, 30.0% and 25.3%, respectively, all more than 15%.
II. TRANSPARENCY OF PUBLIC FINANCES
Scores by Dimension
Overall Indicator Score
PI-4 Budget Classification
D
Notes:
PI-4.1 Budget Classification
D
Notes:
Budget documentation is nationally consistent. The GPB is based on functional and economic classification, but the GFB is only based on functional classification.
PI-5 Budget Documentation
C
Notes:
PI-5.1 Budget Documentation
C
Notes:
Budget documentation contains three basic elements and one additional elements.
PI-6 Subnational government operations outside financial reports
A
Notes:
PI-6.1 Expenditure outside financial reports
A
Notes:
All expenditures are included in the budget/financial reports.
PI-6.2 Revenue outside financial reports
A
Notes:
All revenues are included in the budget/financial reports.
PI-6.3 Financial reports of extrabudgetary units
A
Notes:
The social security fund budget is included in the budget execution report and submitted to the government within three months of the end of the FY.
PI-7 Transfers to subnational governments
NA
Notes:
PI-7.1 System for allocating transfers
NA
Notes:
There are no separate lower-level SNGs, rather deconcentrated units of the City Government.
PI-7.2 Timeliness of information on transfers
NA
Notes:
There are no separate lower-level SNGs, rather deconcentrated units of the City Government.
PI-8 Performance information for service delivery
B
Notes:
PI-8.1 Performance plans for service delivery
C
Notes:
The published performance plans or work plans for activities under the policy objectives accounted for about 77.55% of the total expenditure on the provision of these public services in FY 2019.
PI-8.2 Performance achieved for service delivery
B
Notes:
9 of the 14 public service departments in Liuyang published their performance achieved in FY 2018. 7 of the 14 service delivery departments conducted self-assessments of their overall expenditure performance, the other departments carried out self-assessments of project expenditure performance.
PI-8.3 Resources received by service delivery units
A
Notes:
Information on the resources received by the service providers at spending units is available, and the public service departments in the sample have established a financial account, recording the details of the funds allocated to each service delivery unit.
PI-8.4 Performance evaluation for service delivery
C
Notes:
The evaluation of the efficiency or effectiveness of service delivery covered 26.14% of total service delivery expenditures in FY 2018, but they were not published.
PI-9 Public access to fiscal information
D
Notes:
PI-9.1 Public access to fiscal information
D
Notes:
The Liuyang Government makes available to the public three basic elements within the specified time frame.
9bis Public consultation
NU
Notes:
9bis.1 Public consultation in budget preparation
NU
Notes:
This is a pilot indicator. Liuyang city government chose not to use this indicator in this assessment.
9bis.2 Public consultation in the design of service delivery programs
NU
Notes:
9bis.3 Public consultation in investment planning
NU
Notes:
III. MANAGEMENT OF ASSETS AND LIABILITIES
Scores by Dimension
Overall Indicator Score
PI-10 Fiscal risk reporting
B+
Notes:
PI-10.1 Monitoring of public corporations
B
Notes:
6 out of the 10 largest SOEs (accounting for 78.63 percent of total assets) published their audited financial reports within 6 months of the end of the FY. A consolidated report on the financial performance of the PC sector is published by the SNG annually.
PI-10.2 Monitoring of subnational governments
NA
Notes:
There are no lower-tier SNGs in Liuyang.
PI-10.3 Contingent liabilities and other fiscal risks
A
Notes:
The contingent liabilities and other financial risks of Liuyang City are recorded in the government debt management system. In 2018, a report including contingent liabilities was published.
PI-11 Public investment management
C+
Notes:
PI-11.1 Economic analysis of investment proposals
C
Notes:
In FY 2018, economic analyses of all major investment projects were conducted according to national guidelines by professional institutes and reviewed by experts from universities and government departments other than the sponsoring department. However, results of the reports were not published.
PI-11.2 Investment project selection
A
Notes:
The Major Investment Project Office (MIPO) of the DRC is responsible for selecting the investment projects and making proposals to the County Committee. There are clearly stipulated criteria for prioritizing investment projects.
PI-11.3 Investment project costing
D
Notes:
Investment project costing information is not included in the budget documents.
PI-11.4 Investment project monitoring
C
Notes:
The MIPO monitors the total cost and physical progress monthly and publicizes the result biannually on the government website. Standard procedures and rules governing project implementation are available.
PI-12 Public asset management
B
Notes:
PI-12.1 Financial asset monitoring
B
Notes:
Liuyang maintains records of its holdings in all categories of financial assets, which are recognized at their acquisition cost and in rare cases at real (market) value. Information on the performance of the major categories of financial assets is published annually.
PI-12.2 Nonfinancial asset monitoring
C
Notes:
Liuyang maintains records of its holdings of fixed assets and collects partial information on their usage and age. The information is mostly not available to the public.
PI-12.3 Transparency of asset disposal
A
Notes:
Procedures and rules for the transfer or disposal of nonfinancial assets are established. Information on asset disposal is included in the stateowned assets management report submitted to the People’ s Congress.
Notes:
PI-13.1 Recording and reporting of debt and guarantees
C
Notes:
Debt records are complete, accurate, and updated when transactions are made. They are updated monthly via the debt management system and reconciled annually. Comprehensive reports are issued by the Liuyang Government annually.
PI-13.2 Approval of debt and guarantees
A
Notes:
The Liuyang Bureau of Finance is the responsible debt management entity and is authorized to borrow on behalf of the City Government, and monitor the debt transactions according to the debt management rules.
PI-13.3 Debt management strategy
D
Notes:
There is no medium-term DMS indicating risk indicators such as interest rates and refinancing, and foreign currency risks.
IV. POLICY-BASED FISCAL STRATEGY AND BUDGETING
Scores by Dimension
Overall Indicator Score
PI-14new Medium term budget strategy
D+
Notes:
PI-14new.1 Underlying forecasts for medium-term budget
C
Notes:
Budget preparation is based on information of transfers, revenue and expenditure, but the referred data are not submitted to the legislature. There is no evidence budget preparation is built on projections of macroeconomic indicators or fiscal and sectoral strategies.
PI-14new.2 Fiscal impact of policy proposals
D
Notes:
There are no estimates of fiscal impact about proposed changes in revenue and expenditure policy for the FY.
PI-14new.3 Medium-term expenditure and revenue estimates
D
Notes:
No medium-term expenditure and revenue estimates are prepared.
PI-14new.4 Consistency of budgets with previous year's estimates
NA
Notes:
No medium-term expenditure and revenue estimates are prepared.
PI-14 Macroeconomic and fiscal forecasting
NU
Notes:
PI-14.1 Macroeconomic forecasts
NU
Notes:
PI-14.2 Fiscal forecasts
NU
Notes:
PI-14.3 Macro-fiscal sensitivity analysis
NU
Notes:
Notes:
PI-15.1 Fiscal impact of policy proposals
NU
Notes:
PI-15.2 Fiscal strategy adoption
NU
Notes:
PI-15.3 Reporting on fiscal outcomes
NU
Notes:
PI-16 Medium term perspective in expenditure budgeting
NU
Notes:
PI-16.1 Medium-term expenditure estimates
NU
Notes:
PI-16.2 Medium-term expenditure ceilings
NU
Notes:
PI-16.3 Alignment of strategic plans and medium-term budgets
NU
Notes:
PI-16.4 Consistency of budgets with previous year estimates
NU
Notes:
PI-17 Budget preparation process
B
Notes:
Notes:
Date of the 2019 budget circular was September 18, 2018. Deadline for submission of the budget drafts was January 3, 2019. I.e., there is more than 6 weeks from receipt of the budget circular to meaningfully complete detailed estimates.
PI-17.2 Guidance on budget preparation
B
Notes:
The expenditure ceilings were provided on January 1, 2019, after the distribution of the budget circular to the budget units (September 18, 2018), but before the budget units submitted their revised budget on January 3, 2019.
PI-17.3 Budget submission to the subnational council
D
Notes:
Budget submission to the legislature was after the start of the FY for two of the three FYs.
PI-18 Legislative scrutiny of budgets
C+
Notes:
PI-18.1 Scope of budget scrutiny
B
Notes:
Budget scrutiny by the Liuyang People’s Congress covers details of expenditure, revenue and fiscal policies, but not medium-term fiscal forecasts and medium-term priorities.
PI-18.2 Legislative procedures for budget scrutiny
B
Notes:
Procedures for reviewing budget proposals are approved by the City People’s Congress in advance of budget hearings and are adhered to. Legislature carries out an array of organizational arrangements, including a technical investigation by a specialized review committee, preliminary budget scrutiny, negotiation of the budget proposals with representatives of the functional departments, and re-submission of the budget proposals.
PI-18.3 Timing of budget approval
C
Notes:
The subnational legislature approved the annual budget within one month of the start of the FY in two of the last three FYs.
PI-18.4 Rules for budget adjustments by the executive
C
Notes:
The Budget Law sets rules and procedures for in-year budget adjustment by the executive. However, these rules are adhered to only in instances.
V. PREDICTABILITY AND CONTROL IN BUDGET EXECUTION
Scores by Dimension
Overall Indicator Score
PI-19 Tax administration
NA
Notes:
PI-19.1 Rights and obligations for tax measures
NA
Notes:
PI-19.2 Property tax register and value assessment
NA
Notes:
PI-19.3 Tax risk management, audit and investigation
NA
Notes:
PI-19.4 Tax arrears monitoring
NA
Notes:
PI-20 Accounting for revenue
A
Notes:
PI-20.1 Information on revenue collections
A
Notes:
The Liuyang Government obtains revenue data at least monthly from the collecting units. The information is consolidated into a report, broken down by revenue type.
PI-20.2 Transfer of revenue collections
A
Notes:
All tax revenues collected are transferred directly to the TSA on a daily basis. Units collecting non-tax revenue transfer almost all the collections daily to a designated agency, and to the Treasury 3 to 10 days later.
PI-20.3 Tax accounts reconciliation
NA
Notes:
Governments at county level are not authorized to administrate and collect taxes. The duty of tax revenue reconciliation is NA to Liuyang City.
PI-21 Predictability of in-year resource allocation
C+
Notes:
PI-21.1 Consolidation of cash balances
A
Notes:
More than 90% of the balance of all bank accounts are consolidated daily.
PI-21.2 Cash forecasting and monitoring
B
Notes:
The forecasting of tax revenues and non-tax revenues is conducted at the beginning of the FY and updated monthly. Daily expenditure payments are made according to specified standards and a time schedule, forecasting for non-basic expenditures is conducted mainly for the holidays.
PI-21.3 Information on commitment ceilings
D
Notes:
The budgetary units can largely make payment within the approved budget, and there are no restrictions like commitment ceilings. But original approved budget expenditure accounts for less than one third of the actually executed expenditure.
PI-21.4 Significance of in-year budget adjustments
D
Notes:
Significant in-year budget adjustments occur, but information on timing, amount and process for each budget adjustment is not available.
PI-22 Expenditure arrears
D
Notes:
PI-22.1 Stock of expenditure arrears
D*
Notes:
Since Liuyang City has not set up a monitoring system for expenditure arrears, data on stock of arrears are not available.
PI-22.2 Expenditure arrears monitoring
D
Notes:
The City did not systematically register and monitor possible payment arrears.
Notes:
PI-23.1 Integration of payroll and personnel records
A
Notes:
The approved employee list, personnel database and payroll are directly linked to each other through an IT system and updated on a real time basis, effectively ensuring budget control, data consistency, and monthly reconciliation.
PI-23.2 Management of payroll changes
A
Notes:
Changes to the personnel records and payroll are updated monthly. Retroactive changes to the existing payroll records are not allowed in the efinancial management system.
PI-23.3 Internal control of payroll
A
Notes:
A complete internal control system is in place for changes to the payroll. The e-financial management system assigns unique passwords and identification numbers to each approver to ensure the approval process can be traced.
Notes:
In the assessed FYs, payroll-related audits were conducted for more than 90% of the budgetary units and a special inspection of ‘ghost employees’ covered all budgetary units.
Notes:
PI-24.1 Procurement monitoring
D*
Notes:
Databases or records are maintained for contracts above the threshold, but data for small contracts are not available.
PI-24.2 Procurement methods
D*
Notes:
In the last FY, 98.6% of the total value of recorded contracts were awarded through competitive methods. However, procurement data for small contracts are generally not available.
PI-24.3 Public access to procurement information
C
Notes:
Three out of six criteria are met.
PI-24.4 Procurement complaints management
A
Notes:
All six criteria are met.
PI-25 Internal controls on nonsalary expenditure
B+
Notes:
PI-25.1 Segregation of duties
A
Notes:
Segregation of duties is prescribed throughout the whole budget execution process with responsibilities clearly defined for each stage.
PI-25.2 Effectiveness of expenditure commitment controls
C
Notes:
The double control system effectively controls expenditure commitment, but some expenditures take place outside control. During the assessedperiod, cash-based accounting was still widely used in the government financial management system, and some payables were not recorded by the budget units.
PI-25.3 Compliance with payment rules and procedures
A
Notes:
Compliance with payment rules and procedures is very high (more than 90%), and all exceptions are authorized in advance.
Notes:
PI-26.1 Coverage of internal audit
A
Notes:
Every budget unit has set up the internal audit function in its unit which is responsible for the auditing of its subordinate.
PI-26.2 Nature of audits and standards applied
B
Notes:
Internal audit activities focus on internal control and risk audit. The internal audit work is guided by the Internal Audit Standards. However, internal audit quality assurance is not established in Liuyang City.
PI-26.3 Implementation of internal audits and reporting
A
Notes:
The internal auditors of the five largest budget units, representing 83% of total expenditure, carry out audit in accordance with the internal audit standards.
PI-26.4 Response to internal audits
A
Notes:
During FYs 2016-2018, all audited units took remedial actions to address the issues disclosed by internal auditors within 12 months and submitted the rectification report to the superior authorities.
VI. ACCOUNTING AND REPORTING
Scores by Dimension
Overall Indicator Score
PI-27 Financial data integrity
A
Notes:
PI-27.1 Bank account reconciliation
A
Notes:
The Treasury Centralized Payment Center reconciles the balance with the PBOC on a daily basis. The Treasury Section of the City Finance Bureau reconciles the balance and details of the special accounts with the related commercial banks daily as well.
PI-27.2 Suspense accounts
NA
Notes:
There are no suspense accounts.
PI-27.3 Advance accounts
NA
Notes:
There are no advance accounts.
PI-27.4 Financial data integrity processes
A
Notes:
All financial data are recorded in a computerized system which is managed by the Information Center housed in the Liuyang FB and meets a high information security standard.
PI-28 In-year budget reports
B+
Notes:
PI-28.1 Coverage and comparability of reports
A
Notes:
Monthly budget execution and quarterly analysis reports are prepared. All revenues and expenditures including those for deconcentrated SNG units are included in the in-year budget reports. Coverage and classification of data are comparable to the original budget.
PI-28.2 Timing of in-year budget reports
B
Notes:
The budget execution reports are prepared monthly and mostly published on the website of the Finance Bureau within two weeks after the end of the reported month.
PI-28.3 Accuracy of in-year budget reports
B
Notes:
A set of in-year budget execution reports are prepared and data are reliable. However, information on expenditure is covered at payment and not at commitment stage.
PI-29 Annual financial reports
D+
Notes:
PI-29.1 Completeness of annual financial reports
C
Notes:
Annual budget execution reports are prepared and are comparable with the approved budget. The reports include information on revenue, expenditure, and cash balances, but do not provide any information on financial and tangible assets.
PI-29.2 Submission of reports for external audit
A
Notes:
The 2018 budget execution report was submitted to the Audit Bureau within 3 months of the end of the FY.
PI-29.3 Accounting standards
D
Notes:
The budget execution reports for FY 2016-2018 were prepared in line with the national standards stipulated by the MOF.
VII. EXTERNAL SCRUTINY AND AUDIT
Scores by Dimension
Overall Indicator Score
Notes:
Notes:
In FYs 2016-2018, the Audit Bureau audited more than 90% of budgetary expenditures.
PI-30.2 Submission of audit reports to the subnational council
C
Notes:
In FYs 2016-2018, audit reports on budget execution were submitted to the City People's Congress within 9 months upon receipt of the financial reports.
PI-30.3 External audit follow-up
A
Notes:
The rectification reports show that in FYs 2016-2018, required follow-up action on the issues disclosed by auditors was taken by the concerned entities effectively and timely.
PI-30.4 Independence of the public audit institution in charge of subnational governments
B
Notes:
The Audit Law and related regulations provide concrete basis to secure the independence of the SAI. Although the Audit Office is one of the line bureaus under the leadership of the County Government and uses of executive procedure for budget request submission and execution, the executives do not interfere in the budget approved by the People’s Congress for the SAI.
PI-31 Legislative scrutiny of audit reports
B
Notes:
PI-31.1 Timing of audit report scrutiny
A
Notes:
The time period between the issuance of the audit report and its scrutiny by the People’s Congress was 11 days, 53 days and 60 days in 2017, 2018 and 2019, respectively, which was less than three months in each year.
PI-31.2 Hearings on audit findings
C
Notes:
Only the heads of the Finance Bureau and Audit Bureau attend the hearing on audit findings organized by the People’s Congress.
PI-31.3 Recommendations on audit by subnational council
A
Notes:
The subnational legislature issues recommendations on actions to be implemented by the executive and systematically follows up on their implementation.
PI-31.4 Transparency of legislative scrutiny of audit reports
D
Notes:
The review process is carried out only between the members of the Standing Committee and several chiefs from the governmental departments. The Committee’s reports are published in pamphlets with limited circulation.