SNG PILLAR: INTERGOVERNMENTAL FISCAL RELATIONS
Scores by Dimension
Overall Indicator Score
HLG-1 Transfers from Higher Levels of Government
C+
Notes:
HLG-1.1 Outturn from higher-levels of government
C
Notes:
Actual transfers were between 92% and 116% of the original budget estimate in two of the last three years. In 2019 the deviation of actual grants from the original budgeted grants was 123.7%, in 2020, it was 93.4% and in 2021 it was 107.8%.
HLG-1.2 Transfers composition outturn
D
Notes:
Difference between the original budget estimate and actual earmarked grants was greater than 15 percent in two of the last three years.
HLG-1.3 Timeliness of transfers from higher-levels of government
A
Notes:
There are established procedures for the municipality to receive transfers from high-level governments on time.
HLG-1.4 Predictability of transfers
C
Notes:
Tbilisi municipality receives information on the amount of distribution of VAT transfers for the budget year and the two years following.
HLG-2 Fiscal rules of monitoring of fiscal position
NU
Notes:
NU
HLG-2.1 Fiscal rules for subnational governments
NU
Notes:
NU
HLG-2.2 Debt rules for subnational governments
NU
Notes:
NU
HLG-2.3 Monitoring of subnational governments
NU
Notes:
NU
I. BUDGET RELIABILITY
Scores by Dimension
Overall Indicator Score
PI-1 Aggregate expenditure out-turn
B
Notes:
NU
PI-1.1 Aggregate expenditure out-turn
B
Notes:
Actual aggregate expenditure deviates from the original budget were between 90% and 110% in two of the last three years: in 2019 – 108.8%, in 2020 – 106.1%, and in 2021 – 116.7%.
PI-2 Expenditure composition outturn
D+
Notes:
PI-2.1 Expenditure composition outturn by function
D
Notes:
The deviation (actual and budgeted expenditures) by function for all three years was more than 15%: 17.4% in 2019, 29.1% in 2020, and 22.8% in 2021.
PI-2.2 Expenditure composition outturn by economic type
D
Notes:
The deviation (actual and budgeted) expenditures by economic classification in 2 out of the 3 years was more than 15%: 4.9% in 2019, 22.1% in 2020, and 18.1% in 2021.
PI-2.3 Expenditure from contingency reserves.
A
Notes:
According to the average of the three considered years, the actual expenditures of the reserve fund amounted to 0.8% of the total budget expenditures.
Notes:
PI-3.1 Agregate revenue outturn
D
Notes:
Deviation between budgeted revenue and actual revenues collected in all three years was outside of the range of 92% to 116%: in 2019 – 120.4%, in 2020 – 81.0%, and in 2021 – 121.2%.
PI-3.2 Revenue composition outturn
D
Notes:
Variance in revenue collection was more than 15% in two of the three years: 2019, 11.2%, and 24.5% in 2020, and in 2021 to 21.0%.
II. TRANSPARENCY OF PUBLIC FINANCES
Scores by Dimension
Overall Indicator Score
PI-4 Budget Classification
A
Notes:
PI-4.1 Budget Classification
A
Notes:
Budget formulation, execution, and reporting are based on every level of economic and functional classification (10 functions) using GFS/COFOG. standards. Program classification is derived from the administrative classification in Georgia.
PI-5 Budget Documentation
A
Notes:
PI-5.1 Budget Documentation
A
Notes:
Budget documentation fulfils seven out of the nine applicable elements, including the four basic elements and three 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 financial reports.
PI-6.2 Revenue outside financial reports
A
Notes:
All revenues are included in financial reports.
PI-6.3 Financial reports of extrabudgetary units
NA
Notes:
There are no extrabudgetary units.
PI-7 Transfers to subnational governments
NA
Notes:
PI-7.1 System for allocating transfers
NA
Notes:
NA
PI-7.2 Timeliness of information on transfers
NA
Notes:
NA
PI-8 Performance information for service delivery
B+
Notes:
PI-8.1 Performance plans for service delivery
B
Notes:
Information is annually prepared and published according to program objectives of the municipality in the budget documentation.It includes performance indicators, programs about intermediate and final results or outcomes.
PI-8.2 Performance achieved for service delivery
B
Notes:
Information is provided on results of the priority programs /subprograms implemented by municipality spending units. Performance Assessment Indicators are published in the annual budget execution report.
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 at least annually.
PI-8.4 Performance evaluation for service delivery
B
Notes:
Assessment of efficiency and effectiveness for the majority of service delivery units has been prepared and published in reports of the Sakrebulo’s Audit Commission. the Municipality’s Internal Audit Unit and the Supreme Audit Office compliance audits covering the municipality’s expenditure in the previous three years.
PI-9 Public access to fiscal information
C
Notes:
PI-9.1 Public access to fiscal information
C
Notes:
Out of 7 applicable elements 5 of basic elements are available to the public
9bis Public consultation
D+
Notes:
9bis.1 Public consultation in budget preparation
C
Notes:
Consultation in budget preparation is conducted prior to approval of the budget by the Sakrebulo.
9bis.2 Public consultation in the design of service delivery programs
D
Notes:
Public consultation for service delivery programs was not conducted.
9bis.3 Public consultation in investment planning
D
Notes:
Public consultation for some major investment projects was not conducted.
III. MANAGEMENT OF ASSETS AND LIABILITIES
Scores by Dimension
Overall Indicator Score
PI-10 Fiscal risk reporting
C
Notes:
PI-10.1 Monitoring of public corporations
C
Notes:
Of the 13 active municipality owned enterprises, 9 submitted financial statements (representing most by turnover). A consolidated report on the financial performance of the public corporation sector is produced by the Municipality Property Agency but is not published.
PI-10.2 Monitoring of subnational governments
NA
Notes:
PI-10.3 Contingent liabilities and other fiscal risks
NA
Notes:
PI-11 Public investment management
C+
Notes:
PI-11.1 Economic analysis of investment proposals
C
Notes:
Economic analyses are conducted to assess some (30%) major investment projects but are not independently reviewed or published.
PI-11.2 Investment project selection
C
Notes:
Prior to their inclusion in the budget, the major investment projects are prioritized but not based on standard criteria.
PI-11.3 Investment project costing
B
Notes:
Projections of the total capital cost of investment projects for the implementing timeframe, together with the collective recurrent costs for the forthcoming budget year, and next three years are included in the budget documents.
PI-11.4 Investment project monitoring
B
Notes:
The monitoring of cost and physical progress of investment projects are outsourced and monitored by the Supervisory Unit. Information on implementation of projects is prepared quarterly and annually and reported to the Sakrebulo.
PI-12 Public asset management
B
Notes:
PI-12.1 Financial asset monitoring
B
Notes:
The municipality maintains a record 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:
The municipality maintains a register of its holdings of fixed assets and collects partial information on their usage and age.
PI-12.3 Transparency of asset disposal
A
Notes:
Procedures and rules for the transfer or disposal of financial and nonfinancial assets are established.
Notes:
PI-13.1 Recording and reporting of debt and guarantees
C
Notes:
Debt records are complete, accurate, and updated when payments have been made or loans undertaken. Statistical reports covering debt service, stock, and operations are produced quarterly as part of the budget execution reports, but reconciliation is done semi-annually.
PI-13.2 Approval of debt and guarantees
NA
Notes:
Primary legislation grants authorization to borrow, issue new debt, and issue loan guarantees on behalf of the subnational 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 management transactions by a single debt management entity.
PI-13.3 Debt management strategy
D
Notes:
The assessment of the municipality’s capacity to undertake and service debt is carried out by the lending agencies. Municipality does not have a 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:
Estimates of revenue and expenditure for the budget year are based on information on transfers, revenue, and expenditure assignments and on key demographic and macroeconomic indicators.
PI-14new.2 Fiscal impact of policy proposals
NA
Notes:
In 2021, no proposals in Tbilisi municipality impacted budget revenues or expenditures.
PI-14new.3 Medium-term expenditure and revenue estimates
B
Notes:
Medium-term estimates include information on expenditures by economic, administrative, and program classification.
PI-14new.4 Consistency of budgets with previous year's estimates
D
Notes:
The budget documents do not explain any changes to expenditure estimates between the second year of the last medium-term budget.
PI-14 Macroeconomic and fiscal forecasting
NU
Notes:
NU
PI-14.1 Macroeconomic forecasts
NU
Notes:
NU
PI-14.2 Fiscal forecasts
NU
Notes:
NU
PI-14.3 Macro-fiscal sensitivity analysis
NU
Notes:
NU
Notes:
NU
PI-15.1 Fiscal impact of policy proposals
NU
Notes:
NU
PI-15.2 Fiscal strategy adoption
NU
Notes:
NU
PI-15.3 Reporting on fiscal outcomes
NU
Notes:
NU
PI-16 Medium term perspective in expenditure budgeting
NU
Notes:
NU
PI-16.1 Medium-term expenditure estimates
NU
Notes:
NU
PI-16.2 Medium-term expenditure ceilings
NU
Notes:
NU
PI-16.3 Alignment of strategic plans and medium-term budgets
NU
Notes:
NU
PI-16.4 Consistency of budgets with previous year estimates
NU
Notes:
NU
PI-17 Budget preparation process
B+
Notes:
Notes:
The budget calendar is clear and adhered to. Budgetary units have more than 6 weeks from receipt of the budget circular with ceilings to meaningfully complete their detailed estimates on time.
PI-17.2 Guidance on budget preparation
A
Notes:
The budget circular is comprehensive and covers total expenditure for the fiscal year. The budgetary units’ ceilings reflected in the circular are approved before the circular’s distribution to budgetary units.
PI-17.3 Budget submission to the subnational council
C
Notes:
The municipality executive submitted the annual budget proposal six weeks before the end of the year in each of the last three fiscal years.
PI-18 Legislative scrutiny of budgets
A
Notes:
PI-18.1 Scope of budget scrutiny
A
Notes:
The Sakrebulo’s review covers fiscal policies, medium-term fiscal forecasts, and medium-term priorities as well as details of expenditure and revenue.
PI-18.2 Legislative procedures for budget scrutiny
A
Notes:
The Sakrebulo’s procedures 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. They also include arrangements for public consultation.
PI-18.3 Timing of budget approval
A
Notes:
During the last three fiscal years the Sakrebulo approved the annual budget law before the start of the fiscal year.
PI-18.4 Rules for budget adjustments by the executive
A
Notes:
Clear rules exist for in-year budget adjustments by the executive.
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:
NA
PI-19.2 Property tax register and value assessment
NA
Notes:
NA
PI-19.3 Tax risk management, audit and investigation
NA
Notes:
NA
PI-19.4 Tax arrears monitoring
NA
Notes:
NA
PI-20 Accounting for revenue
A
Notes:
PI-20.1 Information on revenue collections
A
Notes:
The municipality obtains revenue data at least monthly from the data on revenues administered by Georgia Revenue Services and paid into the Treasury Single Account. This information is broken down by revenue type and is consolidated into a report.
PI-20.2 Transfer of revenue collections
NA
Notes:
All revenues are transferred directly to the Treasury Single Account daily.
PI-20.3 Tax accounts reconciliation
NA
Notes:
Entities collecting most municipal revenue undertake complete reconciliation of assessments, collections, arrears and transfers to Treasury Single Account daily.
PI-21 Predictability of in-year resource allocation
B+
Notes:
PI-21.1 Consolidation of cash balances
A
Notes:
The consolidated information about all bank and cash balances is available at the municipality subaccount at the State Treasury Service at the end of the day.
PI-21.2 Cash forecasting and monitoring
B
Notes:
A cash flow forecast is prepared annually for the fiscal year, broken down by quarter and updated quarterly on the basis of actual cash and outflows.
PI-21.3 Information on commitment ceilings
A
Notes:
Budgetary units are able to plan and commit expenditure for twelve months in advance in accordance with the budgeted appropriations and commitment releases.
PI-21.4 Significance of in-year budget adjustments
C
Notes:
Adjustments to budget allocations were made 9 times in 2021 and amounted to 21% of the original budget. These were done in a transparent and predictable way.
PI-22 Expenditure arrears
A
Notes:
PI-22.1 Stock of expenditure arrears
A
Notes:
The municipality reported that it did not have any expenditure arrears.
PI-22.2 Expenditure arrears monitoring
A
Notes:
The e- Treasury system allows for the recording and monitoring of arrears in real time.
Notes:
PI-23.1 Integration of payroll and personnel records
A
Notes:
The municipality maintains the personnel databases under the E-Treasury (payroll module) system that is managed by State Treasury. Personnel and payroll records are reconciled at least monthly, before salaries are paid to staff bank accounts. There is a validation mechanism built into the payroll module that automatically blocks salary payments of any person that is not reflected in the personnel database of the E-Treasury system.
PI-23.2 Management of payroll changes
A
Notes:
Records are updated monthly in time for the month’s payments. Updates are real-time and reflected in the payroll modue of the E-Treasury system. In addition, retroactive changes to the existing data in the system are not allowed.
PI-23.3 Internal control of payroll
A
Notes:
Changes to the payroll records, are retricted to only authorized persons in the municipality. The changes are certified by an authorized person and approved by the supervisors. There is an audit trail of payroll changes as supporting documentation are kept, and there are access controls for authorized persons to get into the E-Treasury system that require password and identification. External auditors assess payroll risk as low, hence integrity of payroll data is high.
Notes:
No audit had been conducted to identify payroll control weaknesses and accountability issues for 2019-202
Notes:
PI-24.1 Procurement monitoring
NA
Notes:
Databases or records are maintained for all contracts including data on what has been procured, value of procurement, and who has been awarded contracts.
PI-24.2 Procurement methods
A
Notes:
As per public procurement legislation open competition above GEL 5,000 is the default method. 92% of contracts by value procured in 2021 were conducted through competitive selection.
PI-24.3 Public access to procurement information
A
Notes:
All the key procurement information is made available to the public.
PI-24.4 Procurement complaints management
A
Notes:
The Council of Dispute Resolution is an impartial and independent body established under the Public Procurement Law.
PI-25 Internal controls on nonsalary expenditure
A
Notes:
PI-25.1 Segregation of duties
A
Notes:
Segregation of duties is prescribed throughout the expenditure process with responsibilities clearly laid out at at different levels in the PFMIS.
PI-25.2 Effectiveness of expenditure commitment controls
A
Notes:
Commitment control applies to all payments made from the Treasury Single Account. Actual expenditures incurred are in line with approved budget allocations and does not exceed committed amounts and projected available cash resources.
PI-25.3 Compliance with payment rules and procedures
A
Notes:
All the key procurement information is made available to the public. These include but are not limited to: (1) legal and regulatory framework for procurement
Notes:
PI-26.1 Coverage of internal audit
A
Notes:
Indicator/Dimension Minimum Requirements (Scoring Method M2 AV) (2) government procurement plans (3) bidding opportunities (4) contract awards (purpose, contractor and value) (5) data on resolution of procurement complaints (6) annual procurement statistics
PI-26.2 Nature of audits and standards applied
A
Notes:
Internal audit activities are focused on high risk areas. The municipality carried out system, performance, compliance and financial audits as well as one IT audit. Internal audit activities are guided by the Internal Audit Methodology and System Audit Manual/Instruction that complies with the International Professional Practices Framework issued by the Institute of Internal Auditors.
PI-26.3 Implementation of internal audits and reporting
A
Notes:
Annual audit programs exist, and they are monitored by the Center for Harmonization Unit at the Ministry of Finance.
PI-26.4 Response to internal audits
A
Notes:
Data supplied by Management show that all of internal audit recommendations are implemented in a timely manner.
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 Finance Department of the municipality reconciles daily all its balances with the TSA sub-accounts and other bank accounts in the National Bank of Georgia.
PI-27.2 Suspense accounts
NA
Notes:
There are no expenditure suspense accounts operated by the municipality.
PI-27.3 Advance accounts
A
Notes:
Reconciliation of advance accounts takes place monthly (within 20 days after the end of each month).
PI-27.4 Financial data integrity processes
A
Notes:
Access and changes to records is restricted and recorded, and results in an audit trail. Financial data integrity is done by Treasury.
PI-28 In-year budget reports
B+
Notes:
PI-28.1 Coverage and comparability of reports
A
Notes:
Coverage and classification of data allows direct comparison to the original budget. Information includes all municipality expenditure and revenues.
PI-28.2 Timing of in-year budget reports
A
Notes:
Consolidated budget execution reports are prepared monthly. Quarterly reports are issued to the Sakrebulo and are published.
PI-28.3 Accuracy of in-year budget reports
B
Notes:
There are no material concerns regarding data accuracy. Information on expenditure is covered at the payment stage in the e-Treasury system.
PI-29 Annual financial reports
D+
Notes:
PI-29.1 Completeness of annual financial reports
A
Notes:
The financial reports for the municipality are prepared annually and are comparable with the approved budget. They contain full information on revenue, expenditure, financial and tangible assets, liabilities, guarantees and long-term obligations. There is a reconciled cash flow statement.
PI-29.2 Submission of reports for external audit
D
Notes:
Auditing by the State Audit Office is not mandatory on an annual basis.
PI-29.3 Accounting standards
B
Notes:
Municipalities are required to prepare financial statements that comply with the standards established by the Ministry of Finance which are based on international standards.
VII. EXTERNAL SCRUTINY AND AUDIT
Scores by Dimension
Overall Indicator Score
Notes:
Notes:
Financial reports that covered the entire municipality’s activities (PI.29.1) have been audited twice in the last three fiscal years following International Standards of Supreme Audit Institutions.
PI-30.2 Submission of audit reports to the subnational council
B
Notes:
There is no mandatory requirement by law for the financial statements or the budget execution report of a municipality to be audited on an annual basis.
PI-30.3 External audit follow-up
A
Notes:
There is an effective system for monitoring and follow up of recommendations.
PI-30.4 Independence of the public audit institution in charge of subnational governments
A
Notes:
The State Audit Office is independent from the executive with respect to procedures for appointment and removal of the Auditor General.
PI-31 Legislative scrutiny of audit reports
C
Notes:
PI-31.1 Timing of audit report scrutiny
A
Notes:
The Audit Commission meets monthly and tables an audit report for the month following its receipt.
PI-31.2 Hearings on audit findings
D
Notes:
There is an established process for reviewing audit reports.
PI-31.3 Recommendations on audit by subnational council
NA
Notes:
The Audit Commission supports the SAO recommendations but it does not issue its own recommendations.
PI-31.4 Transparency of legislative scrutiny of audit reports
D
Notes:
Hearings are conducted only at the Sakrebulo Audit Commission and conducted in public.