I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
B
Notes:
1.1 Aggregate expenditure outturn
B
Notes:
Aggregate expenditure outturn was between 90% and 110% of the approved aggregate budgeted expenditure in at least two of the last three years (91.7% in 2018, 87.8% in 2019, and 93.3% in 2020.
2. Expenditure composition outturn
D+
Notes:
2.1 Expenditure composition outturn by function
D
Notes:
Variance in expenditure composition by, administrative classification was more than 15% in at least two of the last three years.
2.2 Expenditure composition outturn by economic type
D
Notes:
Variance in expenditure composition by economic classification was more than 15% in at least two of the last three years.
2.3 Expenditure from contingency reserves
A
Notes:
Actual expenditure charged to a contingency vote was on average less than 3% of the original budget (around 1%).
Notes:
3.1 Aggregate revenue outturn
A
Notes:
Actual revenue was between 97% and 106% of budgeted revenue in at least two of the last three years.
3.2 Revenue composition outturn
B
Notes:
Variance in revenue composition was less than 10% in two of the last three years.
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
A
Notes:
4.1 Budget classification
A
Notes:
Budget formulation, execution and reporting are based on every level on GFS/COFOG standards. Program classification substitutes sub-functional classification.
Notes:
5.1 Budget documentation
D
Notes:
The budget documentation contains one basic element (out of four) and six additional elements (out of eight). For any score higher than D, minimum of three basic elements is required.
6. Central government operations outside financial reports
A
Notes:
6.1 Expenditure outside financial reports
A
Notes:
Kosovo operates using the Single Treasury Account system and all expenditures incurred are recorded in financial reports.
6.2 Revenue outside financial reports
A
Notes:
Kosovo operates using the Single Treasury Account system and no funds are transacted outside of it (nor financial reports).
6.3 Financial reports of extrabudgetary units
NA
Notes:
There are no extra-budgetary funds/units.
7. Transfers to subnational governments
A
Notes:
7.1 System for allocating transfers
A
Notes:
The horizontal allocation of all transfers to subnational governments from central government is determined by a transparent, rule-based system.
7.2 Timeliness of information on transfers
A
Notes:
The dates are managed through the regular budget calendar, which is largely adhered to. The deadline for municipalities to complete their planning is more than 6 weeks away.
8. Performance information for service delivery
D+
Notes:
8.1 Performance plans for service delivery
C
Notes:
Across different budget-related documents, information is published annually on policy and sector objectives, activities, key performance indicators, and to some extent planned and measurable outputs and outcomes, for all government ministries
8.2 Performance achieved for service delivery
B
Notes:
Information is published semi-annually on the number of outputs produced or the outcomes achieved (mixed), for all Government ministries.
8.3 Resources received by service delivery units
D
Notes:
The information on resources received by frontline service delivery units is collected and recorded in the KFMIS for two of the largest ministries (Ministry of Education and Ministry of Health), disaggregated by sources of funds. While reports can be extracted from the system at any time, no evidence has been presented showing that any such information has been extracted and used in the past three years.
8.4 Performance evaluation for service delivery
D
Notes:
Independent evaluations of the efficiency and/or the effectiveness of service delivery are carried out by the Kosovo National Audit Office. NAO carries out such evaluations in form of performance audits, the reports of which are published on NAO’s website.
9. Public access to fiscal information
B
Notes:
9.1 Public access to fiscal information
B
Notes:
Supporting evidence has been provided to validate those seven elements, including all five basic elements, are published in accordance with the specified time frame.
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:
Information on the financial performance of public corporations is monitored by the MoED but the respective audited annual financial statement is not captured in the annual budget report of the Government, nor were they found published for FY 2020. MoED publishes a consolidated report on the financial performance of the public corporation sector annually covering all audited financial statements of PoE.
10.2 Monitoring of subnational governments
A
Notes:
Audited annual financial statements for all subnational governments are published within nine months of the end of the fiscal year. A consolidated report on the financial position of all subnational governments is published at least annually as part of the annual budget execution report.
10.3 Contingent liabilities and other fiscal risks
D
Notes:
The contingent liabilities of the CG are included in the annual report (Annex 13) that is published. It presents the data by BO and it is not quantified by type. The report does not show details of liabilities by category and hence it is not possible to quantify the data.
11. Public investment management
C+
Notes:
11.1 Economic analysis of investment proposals
C
Notes:
Economic analysis is conducted for all capital investment projects and a few of the results are published. The analyses of not all proposed projects are reviewed by the Budget Department at MoFLT any other entity than the one proposing the capital project, let say by the MoFLT. There are unified guidelines for preparation, review, and monitoring of investment projects.
11.2 Investment project selection
A
Notes:
Prior to their inclusion in the budget, all major investment projects are prioritized by the Budget Department at MoFLT on the basis of standard and published criteria for project selection.
11.3 Investment project costing
C
Notes:
Projections of the total capital cost of major investment projects, together with the capital costs for the forthcoming budget year, are included in the budget documents.
11.4 Investment project monitoring
C
Notes:
The total cost and physical progress of major investment projects are monitored by the implementing budget organization in PIP system. Information on implementation of major investment projects is prepared annually but is not published.
12. Public asset management
C+
Notes:
12.1 Financial asset monitoring
A
Notes:
The government maintains a record of its holdings in all categories of financial assets, which are recognized at fair or market value, in line with international accounting standards. Information on the performance of the portfolio of financial assets is published annually.
12.2 Nonfinancial asset monitoring
C
Notes:
The government maintains a register of its holdings of fixed assets and collects partial information on their usage and age.
12.3 Transparency of asset disposal
D
Notes:
Procedures and rules for the transfer or disposal of nonfinancial assets are established, however information on transfers and disposals is NOT included in budget documents, financial reports, or other reports.
Notes:
13.1 Recording and reporting of debt and guarantees
A
Notes:
Domestic and foreign debt and guaranteed debt records are complete, accurate, updated, and reconciled monthly. Comprehensive management and statistical reports covering debt service, stock, and operations are produced at least quarterly.
13.2 Approval of debt and guarantees
A
Notes:
Primary legislation grants authorization to borrow, issue new debt, and issue loan guarantees on behalf of the central government to a single responsible debt management entity. Documented policies and procedures provide guidance to borrow, issue new debt and undertake debt-related transactions, issue loan guarantees, and monitor debt.
13.3 Debt management strategy
A
Notes:
A current medium-term debt management strategy covering existing and projected government debt, with a horizon of at least three years, is publicly reported. The strategy includes target ranges for indicators such as interest rates, refinancing, and foreign currency risks. Annual reporting against debt management objectives is provided to the legislature. The government’s annual plan for borrowing is consistent with the approved strategy.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
B
Notes:
14.1 Macroeconomic forecasts
C
Notes:
The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature. These forecasts cover the budget year and the two following fiscal years.
Notes:
The government prepares forecasts of the main fiscal indicators, including revenues (by type), aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. These forecasts, together with the underlying assumptions, are included in budget documentation submitted to the legislature.
14.3 Macrofiscal sensitivity analysis
B
Notes:
The government prepares for internal use—a range of fiscal forecast scenarios based on alternative macroeconomic assumptions. The budget documents include discussion of forecast sensitivities.
Notes:
15.1 Fiscal impact of policy proposals
C
Notes:
MoFLT prepares estimates of the fiscal impact of all proposed changes in the revenue and expenditures, but not for the medium term.
15.2 Fiscal strategy adoption
A
Notes:
The government has adopted, submitted to the legislature, and published a current fiscal strategy that includes explicit time-based quantitative fiscal goals and targets together with qualitative objectives for at least the budget year and the following two fiscal years.
15.3 Reporting on fiscal outcomes
C
Notes:
The government prepares an internal report on the progress made against its fiscal strategy. Such a report has been prepared for at least the last completed fiscal year.
16. Medium-term perspective in expenditure budgeting
B+
Notes:
16.1 Medium-term expenditure estimates
A
Notes:
The annual budget presents estimate of expenditure for the budget year and the two following fiscal years allocated by administrative, economic, and program (or functional) classification.
16.2 Medium-term expenditure ceilings
A
Notes:
Aggregate and ministry-level expenditure ceilings for the budget year and the two following fiscal years are approved by government .
16.3 Alignment of strategic plans and medium-term budgets
A
Notes:
Medium-term strategic plans are prepared and costed for most of ministries. Most of expenditure policy proposals in the approved medium-term budget estimates align with the strategic plans.
16.4 Consistency of budgets with previous year’s estimates
D
Notes:
The budget documents do not provide an explanation of the changes to expenditure estimates between the second year of the last medium-term budget and the first year of the current medium-term budget at the aggregate level.
17. Budget preparation process
B+
Notes:
Notes:
A clear annual budget calendar exists, is generally adhered to, and allows all budgetary units at least six weeks from receipt of the budget circular to meaningfully complete their detailed estimates on time.
17.2 Guidance on budget preparation
A
Notes:
A comprehensive and clear budget circular or circulars are issued to budgetary units, covering total budget expenditure for the full fiscal year. The budget reflects ministry ceilings submitted to the cabinet (or equivalent).
17.3 Budget submission to the legislature
C
Notes:
The executive has submitted the annual budget proposal to the legislature at least one month before the start of the fiscal year.
18. Legislative scrutiny of budgets
D+
Notes:
18.1 Scope of budget scrutiny
A
Notes:
The legislature’s review covers fiscal policies, medium-term fiscal forecasts, and medium-term priorities as well as details of expenditure and revenue.
18.2 Legislative procedures for budget scrutiny
B
Notes:
The legislature’s procedures to review budget proposals are approved by the legislature in advance of budget hearings and are adhered to. The procedures include internal organizational arrangements such as specialized review committees, technical support, and negotiation procedures.
18.3 Timing of budget approval
D
Notes:
The legislature has NOT approved the annual budget within one month of the start of the year in two or more of the last three fiscal years.
18.4 Rules for budget adjustment by the executive
A
Notes:
Clear rules exist for in-year budget adjustments by the executive. The rules set strict limits on the extent and nature of amendments and are adhered to in all instances.
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:
Both Tax and Customs entities collect most government revenues and use multiple channels to provide payers with easy access to up-to-date information on the main revenue obligation, there are redress processes and procedures.
19.2 Revenue risk management
A
Notes:
Both revenue collecting entities use comprehensive, structured, and systematic approach for prioritizing compliance risk for all categories of revenue.
19.3 Revenue audit and investigation
A
Notes:
Both entities undertake audit (control activities) and report according to their compliance improvement plans (e.g., Tax=projects, Customs=Strategic plans) and completed 90% of planned activities in FY2020.
19.4 Revenue arrears monitoring
C
Notes:
The stock of revenue arrears at the end of the last completed fiscal year is below 40 (26%) percent of the total revenue collection of the year. The revenue arrears are nearly all collected during the year and those older than 12 months are insignificant.
20. Accounting for revenue
A
Notes:
20.1 Information on revenue collections
A
Notes:
Treasury at MoFLT obtain revenue data daily from both revenue collecting entities.
20.2 Transfer of revenue collections
A
Notes:
Both revenue collecting entities transfer on daily basis the collection directly to TSA.
20.3 Revenue accounts reconciliation
A
Notes:
Both entities reconcile assessments, collections, arrears, and transfers to the Treasury at least monthly.
21. Predictability of in-year resource allocation
A
Notes:
21.1 Consolidation of cash balances
A
Notes:
All cash balances are consolidated on a daily basis.
21.2 Cash forecasting and monitoring
A
Notes:
A cash flow plan is prepared by each BO for the fiscal year and is updated monthly considering all actual inflows and outflows.
21.3 Information on commitment ceilings
A
Notes:
Budget organizations can plan and commit expenditure for at least 12 months in advance in accordance with budget appropriations.
21.4 Significance of in-year budget adjustments
A
Notes:
There were no significant in-year adjustments in FY 2020.
Notes:
22.1 Stock of expenditure arrears
A
Notes:
The stock of expenditure arrears is less than 2% of total expenditure in the last three completed fiscal years.
22.2 Expenditure arrears monitoring
A
Notes:
Data on stock, age and composition of expenditure arrears is generated monthly within two weeks of the end of each month.
Notes:
23.1 Integration of payroll and personnel records
B
Notes:
There is full documentation supporting all changes made in the payroll and the personnel records each month. Data is updated monthly and checked against the previous month’s payroll data. Payment, staff hiring, and promotion is controlled by a direct link of the payroll system with the approved budget personnel allocations/staff positions.
23.2 Management of payroll changes
A
Notes:
Changes in the personnel records and payroll are updated monthly in time for the following month’s payment. The retroactive adjustments show correction of less than 1% for both FY2020 and as of the time of assessment.
23.3 Internal control of payroll
B
Notes:
Authority and basis for changes to personnel records and the payroll are clear and adequate to ensure high integrity of data.
Notes:
Payroll is conducted annually for all central government bodies, weaknesses identified are consistently addressed by the Payment Division to implement the audit .
Notes:
24.1 Procurement monitoring
A
Notes:
The procurement database covers information and data for all contracts including what has been procured, value, duration, who has been awarded the contract. The data is accurate and complete and subject to annual audit by NAO.
24.2 Procurement methods
A
Notes:
The total value of contracts awarded through competitive methods in the last FY 2020 represent 86% of the total value of procurement contracts.
24.3 Public access to procurement information
A
Notes:
The key procurement information is made available to the public and covers legal framework, procurement plans, bidding opportunities, contract awards, resolution of complaints and annual procurement statistics.
24.4 Procurement complaints management
A
Notes:
There is a Public Procurement Review Body which meets all criteria.
25. Internal controls on nonsalary expenditure
A
Notes:
25.1 Segregation of duties
A
Notes:
There is appropriate segregation of duties prescribed in the rules and procedures for expenditure payment, there are clear responsibilities.
25.2 Effectiveness of expenditure commitment controls
A
Notes:
The rules and procedures of payment enforce level of controls that limit the expenditure commitments to the projected to appropriated budget allocations.
25.3 Compliance with payment rules and procedures
A
Notes:
All payments are compliant with regular payment procedures. The rejected payments which represent the exception to the payment rules and procedures are about 1% in FY 2020.
Notes:
26.1 Coverage of internal audit
B
Notes:
Internal audit is operational in 83% of the total planned budget expenditures and 100% of the total planned revenue collections for FY 2020.
26.2 Nature of audits and standards applied
A
Notes:
International internal audit standards are applied. The internal audit checks the effectiveness of the internal control system, and the practice of quality assurance exists for all 42 units.
26.3 Implementation of internal audits and reporting
B
Notes:
Annual audit plans exist for all internal audit units. Most of the plans are completed, as evidenced by data provided and internal audit reports.
26.4 Response to internal audits
A
Notes:
There is documentary evidence of management response to internal audit recommendations for all audits performed with two weeks timing of the response.
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
A
Notes:
27.1 Bank account reconciliation
A
Notes:
Due to the STA system, reconciliation of all active bank accounts takes place daily at aggregate and detailed level .
Notes:
There are no suspense accounts.
Notes:
Advance accounts are reconciled monthly within a month. All advance accounts are cleared in a timely way usually within two weeks.
27.4 Financial data integrity processes
B
Notes:
Access and changes to records is restricted by passwords, they are recorded and result in audit trail (enabling individual accountability), however there is no operational unit in charge of verifying financial data integrity.
28. In-year budget reports
B+
Notes:
28.1 Coverage and comparability of reports
A
Notes:
In-year reports cover data that allows comparison to the original budget, and it includes all items of budget estimate.
28.2 Timing of in-year budget reports
A
Notes:
Budget execution reports are prepared monthly quarterly and are issued within two weeks and four weeks, respectively, from the end of the period.
28.3 Accuracy of in-year budget reports
B
Notes:
There may be concerns regarding data accuracy, issues are highlighted in the report and the data is useful for analysis of budget execution, which is provided in the six-month report. Expenditures are captured at both commitment and payment stages.
29. Annual financial reports
A
Notes:
29.1 Completeness of annual financial reports
A
Notes:
Financial reports are prepared and are comparable with the classification used in the approved budget. They contain information on revenue, expenditure, financial and tangible assets (Annex 7 and 8 in AFS), liabilities and guarantees, and a reconciled cash flow statement.
29.2 Submission of reports for external audit
A
Notes:
The annual financial reports are submitted for external audit within 3 months of the end of the fiscal year.
29.3 Accounting standards
A
Notes:
International IPSAS cash-basis accounting standards as applied in all financial reports. The standards used are disclosed in notes.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
30.1 Audit coverage and standards
A
Notes:
The National Audit Office has analysed financial reports including revenues, expenditures, assets, and liabilities of all central government entities for fiscal years 2017, 2018 and 2019. ISSAIs were applied consistently. The audits have highlighted any relevant material issues and systemic and control risks.
30.2 Submission of audit reports to the legislature
B
Notes:
All Annual Audit Reports were submitted to the legislature within six months from their receipt by the Kosovo National Audit Office for the last three completed fiscal years.
30.3 External audit follow-up
B
Notes:
There is clear evidence of a formal and comprehensive, and to some extent also timely response made by the executive or the audited entity on audits for which follow-up was expected, during the last three completed fiscal years.
30.4 Supreme Audit Institution independence
A
Notes:
Clear evidence exists of effective and timely follow-up by the executive of all audited entities (hence, not limited only to those for which follow-up was expected), during the last three completed FY.
31. Legislative scrutiny of audit reports
C+
Notes:
31.1 Timing of audit report scrutiny
D
Notes:
The Oversight Committee for Public Finances typically scrutinises the audit reports within less than three months, and also considers and debates them in plenary sessions (full chamber). However, this was not the case in 2019 no Oversight Committee existed when the whole-of-the government report was sent in) and neither has this been done afterwards nor do there seem to be plans to do this in the future.
31.2 Hearings on audit findings
A
Notes:
In-depth interviews were held with all budget organisations that received a qualified or adverse opinion or disclaimer from NAO.
31.3 Recommendations on audit by the legislature
C
Notes:
Typically, the legislature endorses NAO’s recommendations on actions to be implemented by the executive. There is very little, if any, follow-up on these recommendations during the year.
31.4 Transparency of legislative scrutiny of audit reports
B
Notes:
All hearings are conducted in public. Around one half of the Committee, reports are debated in the full chamber of the legislature (the ones that require a vote), while the others are reviewed at the level of the Committee. The plenary sessions are broadcasted in the media and proceedings are published on General Assembly’s website.