SNG PILLAR: INTERGOVERNMENTAL FISCAL RELATIONS
Scores by Dimension
Overall Indicator Score
HLG-1 Transfers from Higher Levels of Government
B+
Notes:
HLG-1.1 Outturn from higher-levels of government
A
Notes:
Actual transfers were between 97% and 106% of the original budget estimate in the last three years.
HLG-1.2 Transfers composition outturn
A
Notes:
Transfers composition outturn was less than 5% in the last three years.
HLG-1.3 Timeliness of transfers from higher-levels of government
A
Notes:
A detailed budget circular of UB City budget includes the transfers from HLG which are distributed evenly across the year.
HLG-1.4 Predictability of transfers
D
Notes:
UB City identifies and explains the composition and purpose of the transfers from the central budget for the fiscal year (FY) only.
HLG-2 Fiscal rules of monitoring of fiscal position
C+
Notes:
HLG-2.1 Fiscal rules for subnational governments
C
Notes:
There is an effective fiscal rule in place that is respected by SNGs, but with no apparent exemptions from this rule .
HLG-2.2 Debt rules for subnational governments
C
Notes:
There is effectively no ceiling on subnational debt but a monitoring system is established.
HLG-2.3 Monitoring of subnational governments
B
Notes:
Annual financial statements are submitted between 3 and 6 months following the end of the year.
I. BUDGET RELIABILITY
Scores by Dimension
Overall Indicator Score
PI-1 Aggregate expenditure out-turn
C
Notes:
PI-1.1 Aggregate expenditure out-turn
C
Notes:
Aggregate expenditure outturn (as a % of original approved budget) was 86.5% in 2019, 66.7% in 2020 and 92.8% in 2021. The aggregate expenditure outturn was between 85% and 115% in two of the last three fiscal years.
PI-2 Expenditure composition outturn
D+
Notes:
PI-2.1 Expenditure composition outturn by function
C
Notes:
Variance in expenditure composition was less than 15% in two of the last three fiscal years.
PI-2.2 Expenditure composition outturn by economic type
D
Notes:
Economic composition outturn was more than 15% in two of the last three fiscal years.
PI-2.3 Expenditure from contingency reserves.
A
Notes:
Actual expenditure charged contingency vote was 0.7% on average in the last three fiscal years.
Notes:
PI-3.1 Agregate revenue outturn
D
Notes:
The actual revenue was 91%, 69% and 103% in 2019, 2020 and 2021 respectively. This was below the threshold of 92% in two of the last three fiscal years. Therefore, the score for this dimension is D.
PI-3.2 Revenue composition outturn
C
Notes:
The revenue composition outturn was higher than 15% in only one of the last three fiscal years, hence the score for this dimension is C.
II. TRANSPARENCY OF PUBLIC FINANCES
Scores by Dimension
Overall Indicator Score
PI-4 Budget Classification
C
Notes:
PI-4.1 Budget Classification
C
Notes:
Whereas administrative and economic classification equivalent to GFS is evident in the budget, budget execution reports and financial statements, the program classification (equivalent to COFOG) is only evident in the budget.
PI-5 Budget Documentation
C
Notes:
PI-5.1 Budget Documentation
C
Notes:
The requirements for four (out of four) basic elements are met. Also, requirements for one (out of eight applicable) of the additional elements are met.
PI-6 Subnational government operations outside financial reports
A
Notes:
PI-6.1 Expenditure outside financial reports
A
Notes:
There is no expenditure outside of financial reports.
PI-6.2 Revenue outside financial reports
A
Notes:
There is no revenue outside of financial reports.
PI-6.3 Financial reports of extrabudgetary units
NA
Notes:
There are no Extra Budgetary Units (EBUs).
PI-7 Transfers to subnational governments
C
Notes:
PI-7.1 System for allocating transfers
C
Notes:
In 2021, some transfers were done transparently and rule-based but not for general education, which represents the majority of transfers.
PI-7.2 Timeliness of information on transfers
C
Notes:
Budget calendar applied in 2021 cannot be considered sufficiently clear and detailed. Final amounts were not known to the districts until the entire budget of UB City was approved.
PI-8 Performance information for service delivery
D+
Notes:
PI-8.1 Performance plans for service delivery
C
Notes:
Performance framework in the budget covers all service delivery but does not include output and outcomes measures.
PI-8.2 Performance achieved for service delivery
D
Notes:
Performance reporting exists but is defined in terms of outputsonly and in a form that is not comparable to the budget and not published.
PI-8.3 Resources received by service delivery units
C
Notes:
Data is published for each service delivery unit, but not compiled in a report.
PI-8.4 Performance evaluation for service delivery
D
Notes:
There is no performance evaluation.
PI-9 Public access to fiscal information
D
Notes:
PI-9.1 Public access to fiscal information
D
Notes:
UB City makes available to the public three (out of five) basic and two (out of three) additional elements. Since four or more basic elements are the requirement for any score higher than D, this performance indicator scores D.
9bis Public consultation
C
Notes:
9bis.1 Public consultation in budget preparation
B
Notes:
UB City conducts public consultation in multiple mechanisms, facilitated by the accessible, reader-friendly, and understandable manner giving sufficient time for the public and incorporating the inputs in the 2022 budget preparation. Inputs are not published.
9bis.2 Public consultation in the design of service delivery programs
C
Notes:
For the last three completed FYs, UB City organized public consultation on the design of service delivery programs. Inputs and response are not published.
9bis.3 Public consultation in investment planning
D
Notes:
During preparation of major investment projects for 2022, public consultation is conducted for all major investment projects managed and decided by the SNG, however no consultation document includes a summary of the key results of the economic analysis was provided.
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:
Public corporations publish their audited annual financialstatements within 6 months of the end of the financial year anda consolidated performance report is produced but it does not address risks.
PI-10.2 Monitoring of subnational governments
A
Notes:
Districts publish their audited annual financial statements within 9 months of the end of the financial year and a consolidated performance report is produced.
PI-10.3 Contingent liabilities and other fiscal risks
D
Notes:
Aggregate expenditure outturn (as a % of original approved budget) was 86.5% in 2019, 66.7% in 2020 and 92.8% in 2021. The aggregate expenditure outturn was between 85% and 115% in two of the last three fiscal years.aggregate expenditure outturn was between 85% and 115% in two of the last three fiscal years.
PI-11 Public investment management
D+
Notes:
PI-11.1 Economic analysis of investment proposals
D
Notes:
UB City applies the national PIM framework but evidence of economic analysis is not available.
PI-11.2 Investment project selection
C
Notes:
UB City applies the selection methodology from the national PIM framework however more than 50% of current major projects assessed prior to adoption of this methodology.
PI-11.3 Investment project costing
C
Notes:
Projects are costed but only total project cost and budget year costs published.
PI-11.4 Investment project monitoring
C
Notes:
There is no consolidated published report on project implementation.
PI-12 Public asset management
C+
Notes:
PI-12.1 Financial asset monitoring
C
Notes:
Financial assets are recorded at cost and there is no performance reporting.
PI-12.2 Nonfinancial asset monitoring
C
Notes:
Asset registers are maintained but do not include sub-soil assets.
PI-12.3 Transparency of asset disposal
B
Notes:
Rules are established for asset transfer and disposal, but these cover only non-financial assets.
Notes:
PI-13.1 Recording and reporting of debt and guarantees
D*
Notes:
While reporting of liabilities suggests effective accounting for debt, evidence was not provided of debt records or reconcilaitions.
PI-13.2 Approval of debt and guarantees
D
Notes:
There are no policies or procedures that guide the debt processes.
PI-13.3 Debt management strategy
D
Notes:
There is no debt management strategy.
IV. POLICY-BASED FISCAL STRATEGY AND BUDGETING
Scores by Dimension
Overall Indicator Score
PI-14new Medium term budget strategy
C
Notes:
PI-14new.1 Underlying forecasts for medium-term budget
B
Notes:
No medium-term expenditure and revenue estimates were included in the budget proposal submitted to the SNG council as all estimates and underlying information and assumptions refer to the budget year only.
PI-14new.2 Fiscal impact of policy proposals
C
Notes:
The budget proposal includes information about the fiscal impact of the most major policy changes for the budget year (but not the two forward years).
PI-14new.3 Medium-term expenditure and revenue estimates
D
Notes:
Expenditure estimates are disaggregated using economic, administrative and program classification. However, do not cover the medium term (i.e. are available for the budget year only).
PI-14new.4 Consistency of budgets with previous year's estimates
NA
Notes:
Since dimension 14.3 is scored D, this dimension is scored NA.
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
D+
Notes:
Notes:
UB City uses a clear annual budget calendar that is generally adhered to; however, because it allows budgetary units a relatively short time to meaningfully complete their detailed estimates, performance cannot be scored higher.
PI-17.2 Guidance on budget preparation
D
Notes:
The budget circular does not contain expenditure ceilings for individualbudgetary units, ministries nor administrative or functional areas.
PI-17.3 Budget submission to the subnational council
C
Notes:
Although UB City forwards its budget proposals to CRKh timely (i.e. within five weeks before the start of the FY), it receives final information about approved transfers from the State level only six weeks before the start of its FY.
PI-18 Legislative scrutiny of budgets
B+
Notes:
PI-18.1 Scope of budget scrutiny
A
Notes:
The CRKh reviewed fiscal policies and forecasts, medium-term priorities of the Government, as well as details of expenditure and revenue for 2022.
PI-18.2 Legislative procedures for budget scrutiny
A
Notes:
The CRKh’s procedures and practice for reviewing budget includes arrangements for public consultation and internal organization arrangements.
PI-18.3 Timing of budget approval
A
Notes:
The CRKh of UB City has approved the annual budget within the legal deadline and before the start of the year in each of the last three FYs.
PI-18.4 Rules for budget adjustments by the executive
B
Notes:
The 2021 budget was adjusted in-year by the executive in line with the existing clear rules, however no limits on the extent and nature were adhered to.
V. PREDICTABILITY AND CONTROL IN BUDGET EXECUTION
Scores by Dimension
Overall Indicator Score
PI-19 Tax administration
B
Notes:
PI-19.1 Rights and obligations for tax measures
A
Notes:
Capital City Tax Department (CCTD) has multiple channels to provide comprehensive and timely information to taxpayers, including rights and redress mechanisms.
PI-19.2 Property tax register and value assessment
B
Notes:
The property register contains data on address and location, use, property right and assessed value. Most properties are valued at registration price at the state registry but about 80% of the registered value of properties in UB corresponded to properties registered in the last 10 years.
PI-19.3 Tax risk management, audit and investigation
B
Notes:
The Capital City Tax Authority (CCTA) conducts tax audit and investigations based on a systematic and structured procedure and risk management plan. For most core taxes, an overall documented improvement plan exists containing mitigating activities though not in detail with respect to high risk.The majority of planned audits and investigations were completed.
PI-19.4 Tax arrears monitoring
C
Notes:
The stock of tax arrears, as a share of the total tax collection for the year, amount to 33%, while arrears older than 12 months account for 59% of the core tax arrears for the year.
PI-20 Accounting for revenue
A
Notes:
PI-20.1 Information on revenue collections
A
Notes:
A revenue report is prepared monthly using data from entities collecting all revenues.
PI-20.2 Transfer of revenue collections
A
Notes:
Revenue is transferred to the TSA daily.
PI-20.3 Tax accounts reconciliation
A
Notes:
Revenue accounts are reconciled at least monthly.
PI-21 Predictability of in-year resource allocation
B+
Notes:
PI-21.1 Consolidation of cash balances
A
Notes:
All balances are consolidated within the operation of the TSA.
PI-21.2 Cash forecasting and monitoring
A
Notes:
Cash flow forecasts project out to the end of the year and are updated at least monthly.
PI-21.3 Information on commitment ceilings
C
Notes:
Allotments provide certainty to commit funds for the month ahead.
PI-21.4 Significance of in-year budget adjustments
A
Notes:
There are no adjustments to budget unilaterally instigated by the Governor.
PI-22 Expenditure arrears
C+
Notes:
PI-22.1 Stock of expenditure arrears
A
Notes:
Arrears were less than 1% in each of the last three years.
PI-22.2 Expenditure arrears monitoring
C
Notes:
Comprehensive data on arrears is reported but only on an annual basis.
Notes:
PI-23.1 Integration of payroll and personnel records
A
Notes:
The CSC launched the Integrated Human Resource System (IHRS) in 2018 and all budget entities except Defense and Internal Affairs entities register personnel information in the system. The MoF established an Integrated Payroll System (IPS) for civil servants, which is connected to the CSC and are reconciled monthly.
PI-23.2 Management of payroll changes
A
Notes:
Required changes to the personnel records and payroll are updated within ten working days in accordance with the Regulation, Cabinet Order No. 74, 2019. Retroactive adjustments are rare and corrected to the following monthly pay calculation.
PI-23.3 Internal control of payroll
A
Notes:
Authority to change records and payroll is restricted, only the authorized person has access to both systems, and is adequate to ensure full integrityof data.
Notes:
No comprehensive payroll audit has been conducted in the last three years.
Notes:
PI-24.1 Procurement monitoring
A
Notes:
The e-procurement system (www.tender.gov.mn) used by UB City includes data on what has been procured, the value and vendor for all procurement types and is accurate.
PI-24.2 Procurement methods
A
Notes:
The Public Procurement Law of Mongolia (PPLM) ensures that procurement uses competitive methods except the low-value procurement under an established threshold by the Cabinet Resolution. As of 2021, 90.8% of the total value of the subnational contracts were awarded through competitive methods.
PI-24.3 Public access to procurement information
A
Notes:
All key procurement information elements are complete and reliable for theSNG representing all procurement operations and is made available to the public in a timely manner.
PI-24.4 Procurement complaints management
D
Notes:
The procurement complaint system meets five out of six elements, however, does not meet criteria 1 due to the involvement of the procuring entity in the complaints procedures.
PI-25 Internal controls on nonsalary expenditure
C+
Notes:
PI-25.1 Segregation of duties
B
Notes:
Segregation of duties is prescribed throughout the expenditure process. Responsibilities are clearly laid down for most key steps while further details may be needed in a few areas.
PI-25.2 Effectiveness of expenditure commitment controls
D
Notes:
No comprehensive expenditure commitment controls are in place and expenditure control is largely reliant on the cash payments within approved budget allocations.
PI-25.3 Compliance with payment rules and procedures
B
Notes:
Compliance with rules for processing and recording transactions is high, with the majority of exceptions are properly authorized and justified.
Notes:
PI-26.1 Coverage of internal audit
A
Notes:
Internal audit is operational for all SNG entities as the Internal Audit Unit at the GBGs is responsible for the relevant budgetary units.
PI-26.2 Nature of audits and standards applied
C
Notes:
Internal audit activities are primarily focused on financial compliance.
PI-26.3 Implementation of internal audits and reporting
A
Notes:
Annual audit programs exist. All programmed audits are completed, as evidenced by the distribution of their reports to the appropriate parties.
PI-26.4 Response to internal audits
A
Notes:
Management provides a full response to audit recommendations for all entities audited within twelve months of the report being produced.
VI. ACCOUNTING AND REPORTING
Scores by Dimension
Overall Indicator Score
PI-27 Financial data integrity
B
Notes:
PI-27.1 Bank account reconciliation
B
Notes:
Bank reconciliation for all active SNG bank accounts takes place monthly, usually within 5 days of each month.
PI-27.2 Suspense accounts
NA
Notes:
UB City does not maintain or use suspense accounts.
PI-27.3 Advance accounts
B
Notes:
Reconciliation of advance accounts takes place at least quarterly and most advance accounts are cleared in a timely manner.
PI-27.4 Financial data integrity processes
B
Notes:
Access and changes to records is restricted and recorded, and results in an audit trail.
PI-28 In-year budget reports
B+
Notes:
PI-28.1 Coverage and comparability of reports
B
Notes:
Coverage and classification of the in-year reports are comparable to the original budget with partial aggregation.
PI-28.2 Timing of in-year budget reports
A
Notes:
In-year reports are produced within six days after the end of the month.
PI-28.3 Accuracy of in-year budget reports
B
Notes:
There are no material concerns regarding data accuracy. An analysis of budget execution is conducted monthly with expenditures captured at payment stage.
PI-29 Annual financial reports
B+
Notes:
PI-29.1 Completeness of annual financial reports
B
Notes:
Financial reports for the UB City are prepared annually covering the relevant budget entities and LOEs and comparable with the annual budget. It contains information on revenue, expenditure, financial assets and liabilities and a cash flow statement.
PI-29.2 Submission of reports for external audit
A
Notes:
2021 Annual Consolidated Financial Statements were submitted toaudit within 3 months of the end of the FY.
PI-29.3 Accounting standards
B
Notes:
Accounting standards applied to UB City are disclosed and consistent with the country’s legal framework and are consistent over time.
VII. EXTERNAL SCRUTINY AND AUDIT
Scores by Dimension
Overall Indicator Score
Notes:
Notes:
All entities of SNG are audited annually covering revenue, expenditure, and asset/liabilities. A full range of financial audits and some performance and compliance audits are performed and generally adhere to the international audit standards, focusing on significant and systemic issues.
PI-30.2 Submission of audit reports to the subnational council
C
Notes:
Audit reports were submitted to the CRKh within nine months of receipt of the financial statements by the SAO for the last three completed FYs.
PI-30.3 External audit follow-up
C
Notes:
There is clear evidence of formal responses by the executive to most audit recommendations issued by the SAO but qualified audits point to issues of comprehensiveness and timeliness of such responses.
PI-30.4 Independence of the public audit institution in charge of subnational governments
A
Notes:
In accordance with the Law on State Audit (2020) and the latest amendments to the Constitution (2019), the SAO in charge of SNG operates independently from the executive with respect to appointment and removal of the Chief Auditor of the SAO, who is appointed by the Auditor General.
PI-31 Legislative scrutiny of audit reports
B
Notes:
PI-31.1 Timing of audit report scrutiny
A
Notes:
Scrutiny of audit reports on financial reports has been completed by the CRKh within three months from receipt of the reports.
PI-31.2 Hearings on audit findings
A
Notes:
In-depth hearings on key findings of audit reports take place regularly with responsible officers (DBGs together with their accountants) from all audited entities participating in the meeting.
PI-31.3 Recommendations on audit by subnational council
D
Notes:
As mandated by the IBL (Article 64.1.4), CRKh has the authority to conduct hearings on the audit report of the budget execution report and consolidated financial statements of UB City. However, there is no legal requirement for the CRKh to issue any recommendations based on its scrutiny. The CRKh has not issued any such recommendations in the last three years.
PI-31.4 Transparency of legislative scrutiny of audit reports
C
Notes:
The CRKh is not authorized to organize public hearings on the audit reports, however, committee reports are published on the official websites of the SAO, CRKh and the Mayor’s Office. The public is provided with an opportunity to post comments through the official websites on audit matters.