I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
B
Notes:
1.1 Aggregate expenditure outturn
B
Notes:
While the budget for 2021 was an outlier, the deviation between the adopted budget and the execution of the budget was less than 10%, 91.3% and 99.3% in 2019 and 2020, respectively.
2. Expenditure composition outturn
C+
Notes:
2.1 Expenditure composition outturn by function
B
Notes:
Variance in expenditure composition by administrative classification was less than 10% in at least two of the last three years, 7.7% and 7.3% in 2019 and 2020, respectively.
2.2 Expenditure composition outturn by economic type
C
Notes:
Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years, 8.7% and 13% in 2019 and 2020, respectively.
2.3 Expenditure from contingency reserves
A
Notes:
In 2019, the expenditure charged to a contingency vote was 0.04% of the total expenditures, while in 2020 and 2021 there was no spending from the contingency.
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, 105% and 102% in 2019 and 2020, respectively.
3.2 Revenue composition outturn
B
Notes:
Variance in revenue composition was less than 10% in two of the last three years, 8.4% and 5.4% in 2019 and 2020, respectively.
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
B
Notes:
4.1 Budget classification
B
Notes:
While Budget and Outturn are based on administrative and economic classification, only the total spending of each budget user (head) is assigned to functional classification in line with COFOG. . At BiH Institutions level of Government, GFS 2014 has been in use since 2019. MoFT has implemented the system that allows a consistent linkage of the CoA with GFS 2014 classification.
Notes:
5.1 Budget documentation
C
Notes:
6 of the 12 applicable elements are met.
6. Central government operations outside financial reports
A
Notes:
6.1 Expenditure outside financial reports
A
Notes:
All expenditures are included in the financial reports.
6.2 Revenue outside financial reports
A
Notes:
All revenues are included in the financial reports.
6.3 Financial reports of extrabudgetary units
NA
Notes:
7. Transfers to subnational governments
NA
Notes:
7.1 System for allocating transfers
NA
Notes:
NA
7.2 Timeliness of information on transfers
NA
Notes:
NA
8. Performance information for service delivery
C
Notes:
8.1 Performance plans for service delivery
C
Notes:
Information is published annually on the activities to be performed under the policies or programs for the majority of ministries
8.2 Performance achieved for service delivery
D
Notes:
Information is published annually on the quantity of outputs produced and outcomes achieved for less than 50% of the assessed sample.
8.3 Resources received by service delivery units
A
Notes:
Information on resources received by frontline service delivery units is collected and recorded for all budget users, as shown through their individual reports on budget execution and consolidated budget execution report for Institutions BiH. Two largest ministiries in terms of service delivery are selected as an example (Ministry of Justice BiH and Ministry of Civil Affairs BiH).
8.4 Performance evaluation for service delivery
D
Notes:
Performance audits are carried out by the SAI BiH. However, performance audits are focused on specific functions or policies rather than institutions as such.
9. Public access to fiscal information
D
Notes:
9.1 Public access to fiscal information
D
Notes:
Although all documents are available to the public, most of them are not available within the expected 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
D
Notes:
No evidence of performance above score D requirements.
10.2 Monitoring of subnational governments
NA
Notes:
BiH level does not have direct fiscal relations with subnational governments.
10.3 Contingent liabilities and other fiscal risks
A
Notes:
All significant contingent liabilities are reported in financial reports.
11. Public investment management
D
Notes:
11.1 Economic analysis of investment proposals
D
Notes:
There are no formal guidelines on how the economic analysis of proposed projects is to be conducted. Moreover, the opinions which Ministry of Finance and Treasury issues prior to the formal approval of each multiannual project by the Council of Ministers are only partly based on the economic evaluation of the respective project under consideration. The PIP for the period of 2022-2024 was not officially adopted by the Council of Ministers.
11.2 Investment project selection
D
Notes:
There is no evidence that relevant project selection criteria are actually applied in practice, especially in light of the fact that the Commission41 that is supposed to undertake the task of investment project appraisal and prioritization has never been established.
11.3 Investment project costing
C
Notes:
Total capital cost is presented only for the forthcoming year in the budget documentation.
11.4 Investment project monitoring
D
Notes:
Full physical and financial monitoring of the project is supposed to be conducted once a year as prescribed by the Article 15 of the relevant bylaws. However, this decree was published in the Official Gazette only at the end of 2021 and will be applied for the fiscal year 2022.
12. Public asset management
C
Notes:
12.1 Financial asset monitoring
C
Notes:
The government maintains a record of its holdings in major categories of financial assets through a balance sheet which is prepared on a quarterly basis. Information on income from interest and exchange rate differences is also separately presented in the Consolidated budget execution report.
12.2 Nonfinancial asset monitoring
C
Notes:
The government maintains a register of its holdings of fixed assets and land, including information on their usage and age, which is published annually. However, the status of state property is still unresolved.
12.3 Transparency of asset disposal
C
Notes:
Procedures and rules for the transfer or disposal of non-financial assets are established. Partial information on transfers and disposals is included in budget documents and financial reports.
Notes:
13.1 Recording and reporting of debt and guarantees
B
Notes:
Data on external debt of Institutions of BiH are updated in the information system on a daily basis and directly reconciled with creditors on a quarterly basis, while reports on external and domestic public debt stock and servicing are published on the website of the BiH MoFT on a quarterly, semi-annual, and annual basis. Data on external and domestic debt of Institutions BiH is complete and accurate.
13.2 Approval of debt and guarantees
A
Notes:
The Sector for relations with financial institutions within the MoFT BiH is authorized to borrow, issue new debt, and issue loan guarantees on behalf of the central government. 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.
13.3 Debt management strategy
B
Notes:
Debt management strategy covering existing and projected debt BiH (including debt of Institution BiH which is separately elaborated) with a horizon of four years, is publicly reported. The strategy includes target ranges for indicators such as interest rates, refinancing, and foreign currency risks. The report on the implementation of DMS is an integral part of it. Institutions BiH do not have an annual plan of borrowing.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
D+
Notes:
14.1 Macroeconomic forecasts
D
Notes:
Available forecasts of key macroeconomic indicators for the budget year and the two following fiscal years with underlying assumptions; updated at least once a year and reviewed by the Fiscal Council; not sent to the legislature. No timely adoption of the BiH GFF and BiH MTEF for three periods.
Notes:
Available forecasts of revenue, expenditure, and the budget balance for the budget year and the two following fiscal years with underlying assumptions; also an available explanation of the main differences from the forecast made in the previous years' budget; not sent to the legislature. No timely adoption of the BiH GFF and BiH MTEF for three periods
14.3 Macrofiscal sensitivity analysis
C
Notes:
There are available alternative scenarios with qualitative assessment.
Notes:
15.1 Fiscal impact of policy proposals
D*
Notes:
No sufficient information to assess.
15.2 Fiscal strategy adoption
C
Notes:
The Council of Ministers adopts and publishes the fiscal strategy, but does not send it to the legislature.
15.3 Reporting on fiscal outcomes
D
Notes:
Neither the BiH Council of Ministers nor the BiH MoFT prepares reports on fiscal outcomes, and the BiH MoFT does not prepare the report on achieved fiscal goals from the MTEF and ERP BiH for its own needs.
16. Medium-term perspective in expenditure budgeting
D+
Notes:
16.1 Medium-term expenditure estimates
B
Notes:
BiH Institutions MTEF for 2022-2024 presents an annual budget and two following fiscal years allocated by administrative and economic classification
16.2 Medium-term expenditure ceilings
D
Notes:
No link between the first budget circular and aggregate expenditure ceilings for the budget year and the two following years.
16.3 Alignment of strategic plans and medium-term budgets
D
Notes:
At BiH Institutions government level, budget requests are not systematically linked to relevant development/strategic plans and sector strategies. As strategies are not costed is not possible to establish a materiality threshold as required for score C.
16.4 Consistency of budgets with previous year’s estimates
D
Notes:
Due to the budget non-adoption for 2021.
17. Budget preparation process
D+
Notes:
Notes:
In the last few years, at the level of BiH Institutions, the budget calendar is not adhered to, mainly due to political disagreements.
17.2 Guidance on budget preparation
C
Notes:
The annual budget reflects budget users’ ceilings approved by the government after MoFT completed discussions with Budget Users on previously submitted final draft budgets.
17.3 Budget submission to the legislature
D
Notes:
In the assessed timeframe, BiH Institutions did not adhere to the approved budget calendar.
18. Legislative scrutiny of budgets
D
Notes:
18.1 Scope of budget scrutiny
D
Notes:
At the BiH Parliament, very limited legislative budget scrutiny is taking place.
18.2 Legislative procedures for budget scrutiny
D
Notes:
The legislative’s role and power over the budget process is very limited.
18.3 Timing of budget approval
D
Notes:
In the last four-five years, both Committees at BiH Parliament were not able to undertake detailed analysis/budget hearings due to the fast budget adoption procedure that was taking place.
18.4 Rules for budget adjustment by the executive
B
Notes:
Clear rules are set up for in-year budget adjustments by the executive government.
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:
Up-to-date information on obligations and rights is available to the public through various channels.
19.2 Revenue risk management
A
Notes:
BiH ITA has a risk management process presented at three levels: strategic, tactical, and operational. Strategy on Compliance Improvements on Indirect Taxation for Period from 2022 to 2024; covers all categories of revenues (VAT, excises, and customs) and taxpayers.
19.3 Revenue audit and investigation
C
Notes:
ITA as an entity that collects most of its revenue undertakes audits and fraud investigations using a compliance improvement plan and completes the majority of audits and investigations.
19.4 Revenue arrears monitoring
D
Notes:
Age of the stock arrears year-on-year is not available.
20. Accounting for revenue
A
Notes:
20.1 Information on revenue collections
A
Notes:
Revenues, that are under the authority of the BiH level, are collected through the TSA; Indirect taxes are distributed to BiH on a daily basis which provides information on revenues daily, but also the Indirect Tax Authority prepares the monthly reports with reconciled data.
20.2 Transfer of revenue collections
A
Notes:
Revenues are either paid directly to TSA or transferred on a daily basis.
20.3 Revenue accounts reconciliation
A
Notes:
Reconciliation is made at least monthly.
21. Predictability of in-year resource allocation
B+
Notes:
21.1 Consolidation of cash balances
B
Notes:
All bank and cash balances are consolidated on a weekly basis.
21.2 Cash forecasting and monitoring
A
Notes:
Cash flow planned on a quarterly and monthly level based on actual cash inflows and outflows.
21.3 Information on commitment ceilings
C
Notes:
Commitment ceilings are available one month in advance.
21.4 Significance of in-year budget adjustments
A
Notes:
Adjustments to budget allocations took place once and are done in a transparent and predictable way.
Notes:
22.1 Stock of expenditure arrears
A
Notes:
No outstanding liabilities are reported in the financial statements.
22.2 Expenditure arrears monitoring
A
Notes:
Considering overall soundness of commitment controls (PI-25.2 is A) and payments (PI-25.3 is A), the arrears monitoring meets the A score requirements.
Notes:
23.1 Integration of payroll and personnel records
B
Notes:
Reconciliation of the payroll with personnel records takes place automatically, at least monthly. All changes are made based on the decision of the Council of Ministers. New employment and promotions are checked against the approved budget and a list of approved staff positions.
23.2 Management of payroll changes
A
Notes:
Personnel records and payroll are updated at least monthly and retroactive adjustments are under 1 percent.
23.3 Internal control of payroll
C
Notes:
Sufficient control exists to ensure the integrity of the payroll data. However, the procedure itself is nonexistent.
Notes:
Financial and compliance audits cover payroll all budgetary units every year.
Notes:
24.1 Procurement monitoring
B
Notes:
The stipulated information was accurately prepared and published through E-Public Procurement Portal for all contracts.
24.2 Procurement methods
C
Notes:
The percentage of awarded contracts through competitive methods in the 2021 fiscal year was 64.56%.
24.3 Public access to procurement information
C
Notes:
The requirements are met for 3 elements out of possible 6 the score for the present dimension is C.
24.4 Procurement complaints management
C
Notes:
The requirements are met in 3 out of 6 required instances hence the score for this dimension is C.
25. Internal controls on nonsalary expenditure
A
Notes:
25.1 Segregation of duties
A
Notes:
Clear segregation of duties throughout the expenditure process has been established.
25.2 Effectiveness of expenditure commitment controls
A
Notes:
Controls on the expenditure side are systematically established through the ISFU system.
25.3 Compliance with payment rules and procedures
A
Notes:
The procedure that exists in practice is respected in all payments. All exceptions have proper authorization and reasonable justification.
Notes:
26.1 Coverage of internal audit
B
Notes:
Internal audit is operational for central government entities representing 80% of the total budget expenditure and 83% of total budget revenues.
26.2 Nature of audits and standards applied
B
Notes:
Internal auditors in all internal audit units respect and adhere to the prescribed work methodology, Code of Ethics, and Internal Audit Standards, which are focused on evaluations of the adequacy and effectiveness of internal controls
26.3 Implementation of internal audits and reporting
A
Notes:
Annual audit programs exist. 130 regular and follow-up audits out of 142 planned audits in 2021 were realized, or the percentage realization is 92%.
26.4 Response to internal audits
C
Notes:
Budget users are required by the law to prepare an annual financial report and submit it to the MoFT no later than March 1st of the current year for the past year, together with information on the implementation of the system of internal controls during the year and the activities undertaken to implement the audit recommendations from the previous year. Up to 57% of the recommendations are implemented in 2019, 2020, and 2021.
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
A
Notes:
27.1 Bank account reconciliation
A
Notes:
Bank reconciliation for all active central government bank accounts takes place at least weekly at aggregate and detailed levels, usually within one week from the end of each week.
Notes:
There are no suspense accounts in use.
Notes:
Reconciliation of advance accounts takes place at least monthly, within a month from the end of each month. All advance accounts are cleared in a timely way
27.4 Financial data integrity processes
B
Notes:
Access and changes to records are restricted and recorded and results in an audit trail.
28. In-year budget reports
D+
Notes:
28.1 Coverage and comparability of reports
A
Notes:
The in-year reports include a budget execution report, which includes revenues and expenditures, information on debt servicing, and debt stock, as well as the balance sheet. The data in the report is prepared in the same format as the annual budget - that is, by economic and administrative classifications. Coverage and classification of data allow direct comparison to the original budget. Information includes all items of budget estimates. There are no de-concentrated units at the level of Institutions BiH.
28.2 Timing of in-year budget reports
D
Notes:
Budget execution reports are prepared quarterly within 60 days after the end of the quarter but published several months after (for 1st, 2nd, 3rd, and 4th quarter of 2021, reports were published in June 2021, July 2022, July 2022, and August 2022, respectively).
28.3 Accuracy of in-year budget reports
C
Notes:
There may be concerns regarding data accuracy. The report issued for the end of the second quarter contains the analysis of trends and issues and it is useful for analysis of budget execution. Information on expenditure is covered at the commitment stage.
29. Annual financial reports
D+
Notes:
29.1 Completeness of annual financial reports
A
Notes:
Financial reports for the budgetary central government are prepared annually and are comparable with the originally approved budget. They contain full information on revenue, expenditure, financial and tangible assets, liabilities, guarantees, and long-term obligations, and are supported by a reconciled cash flow statement.
29.2 Submission of reports for external audit
C
Notes:
Financial reports for the budgetary central government for 2021 were submitted for external audit within 9 months of the end of the fiscal year, on August 17th, 2022.
29.3 Accounting standards
D
Notes:
Accounting standards applied to all financial reports are consistent with the country’s legal framework and ensure consistency of reporting over time. The standards used in preparing annual financial reports, however, are not disclosed.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
30.1 Audit coverage and standards
A
Notes:
Financial reports including revenue, expenditure, assets, and liabilities of all central government entities have been audited using ISSAIs during 2019, 2020, and 2021. The audits have highlighted relevant material issues and systemic and control risks.
30.2 Submission of audit reports to the legislature
A
Notes:
Audit reports were submitted to the legislature within three months from receipt of the financial reports by the Supreme Audit Institution for 2019, 2020 and 2021.
30.3 External audit follow-up
C
Notes:
A formal response was made by the executive or the audited entity on audits for which follow-up was expected, during 2019, 2020, and 2021. Most of the given recommendations have been repeated over the assessed period (2019-2021), and are the result of the lack of management responsibility of the institutions for their non-implementation, the absence of systemic solutions, the lack of appropriate law and by-law procedures; and additional restrictions due to non-adoption or delays in the adoption of the budget of BiH institutions.
30.4 Supreme Audit Institution independence
A
Notes:
The SAI operates independently from the executive with respect to procedures for the appointment and removal of the Head of the SAI, the planning of audit engagements, arrangements for publicizing reports, and the approval and execution of the SAI’s budget. This independence is assured by law. The SAI has unrestricted and timely access to records, documentation, and information.
31. Legislative scrutiny of audit reports
C+
Notes:
31.1 Timing of audit report scrutiny
C
Notes:
Scrutiny of audit reports on annual financial reports for 2019, 2020, and 2021 has been completed by the legislature within two, eleven, and four months from receipt of the reports, respectively.
31.2 Hearings on audit findings
A
Notes:
In-depth hearings on key findings of audit reports that
received qualified or adverse opinion take place regularly, with the SAI representatives and representatives of the subjects of the audit.
31.3 Recommendations on audit by the legislature
C
Notes:
The legislature issues recommendations on actions to be implemented by the executive. Budget users are required to report to Parliament on the actions they take to implement the recommendations. Feedback indicates, however, that the degree of recommendations implementation is limited.
31.4 Transparency of legislative scrutiny of audit reports
C
Notes:
The Committee sessions are attended by the Auditor General, the Deputy Auditor General, the audit team leaders, representatives of the institutions, and media representatives. The meeting minutes and reports of the Committee are available on the website of the Parliament of BiH.