I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
B
Notes:
1.1 Aggregate expenditure outturn
B
Notes:
Total expenditures were 93.5% and 104.6% of the originally approved budget in 2019 and 2020, respectively, which means the total expenditure outturn did not deviate by more than 10% in at least two of the three observed years.
2. Expenditure composition outturn
C+
Notes:
2.1 Expenditure composition outturn by function
C
Notes:
Variance in expenditure composition by administrative classification was less than 15% in at least two of the last three years, 9.1% and 14% in 2019 and 2021, respectively.
2.2 Expenditure composition outturn by economic type
B
Notes:
Variance in expenditure composition by economic classification was less than 10% in at least two of the last three years, 6.8% and 8.5% in 2019 and 2020, respectively.
2.3 Expenditure from contingency reserves
A
Notes:
Expenditure from the contingency reserve was 1% in 2019, 2.7% in 2020, and 0.1% in 2021, therefore the average amount of expenditure from the contingency reserve for the assessed period 2019- 2021 was 1.26%.
Notes:
3.1 Aggregate revenue outturn
B
Notes:
Actual revenue was between 94% and 112% of budgeted revenue in at least two of the last three years, 100% and 111% in 2019 and 2021, respectively.
3.2 Revenue composition outturn
A
Notes:
Variance in revenue composition was l 4% in 2019 and 2021.
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
D
Notes:
4.1 Budget classification
D
Notes:
Functional classification (COFOG) is recognized and required by reporting rules at Federation BiH, but in practice, only budget execution (outturn) is presented in functional classification.
Notes:
5.1 Budget documentation
C
Notes:
6 of the 12 applicable elements are met.
6. Central government operations outside financial reports
D
Notes:
6.1 Expenditure outside financial reports
D*
Notes:
No sufficient information to assess.
6.2 Revenue outside financial reports
D
Notes:
Revenue outside government financial reports is at least 13%.
6.3 Financial reports of extrabudgetary units
D*
Notes:
No sufficient information to assess.
7. Transfers to subnational governments
C
Notes:
7.1 System for allocating transfers
B
Notes:
All current and capital transfers are allocated by a transparent rule-based system, while the most are budgeted in a transparent and rule-based system.
7.2 Timeliness of information on transfers
D
Notes:
Subnational governments receive information about transfers during the current year, and not when preparing their own budgets.
8. Performance information for service delivery
D+
Notes:
8.1 Performance plans for service delivery
C
Notes:
Information is published annually on the activities to be performed under the programs for the majority of ministries in the evaluated sample.
8.2 Performance achieved for service delivery
D
Notes:
Information on service delivery performance is not published for most of the ministries.
8.3 Resources received by service delivery units
C
Notes:
At least two large ministries – the Ministry of Labor and Social Policy and the Ministry of Veterans and Disabled People, have information on all resources received by its service delivery units. There is no evidence of the annual report compiling the information.
8.4 Performance evaluation for service delivery
D
Notes:
The Supreme Audit Office of the FBiH is the only institution which conducts performance audits in Federation BiH. Examination of these reports indicates that they are focused on specific functions or policies rather than institutions as such. The number and institutional coverage of performance audits is less than required for a C score.
9. Public access to fiscal information
D
Notes:
9.1 Public access to fiscal information
D*
Notes:
No sufficient information to assess.
III. Management of assets and liabilities
Scores by Dimension
Overall Indicator Score
10. Fiscal risk reporting
D+
Notes:
10.1 Monitoring of public corporations
D*
Notes:
No arrangements for consolidated review of the financial position of public companies including to whom and when they report.
10.2 Monitoring of subnational governments
C
Notes:
There are published financial reports for the majority of subnational governments within nine months of the end of the fiscal year.
10.3 Contingent liabilities and other fiscal risks
D
Notes:
Contingent liabilities are not reported in the financial reports.
11. Public investment management
D+
Notes:
11.1 Economic analysis of investment proposals
C
Notes:
Economic analysis is conducted as part of feasibility studies for at least 50% of major investments. However, no formal guidelines on how economic analysis is conducted exist at the level of FBiH.
11.2 Investment project selection
C
Notes:
Each investment project application with a value of BAM 1 million or more is reviewed by the Public Investment Commission and scored against standard criteria which are published. Project application review findings of the Public Investment Commission are not published except for average scores assigned by the Commission for each project application. These scores are included in a Draft Public Investment Program covering a period of 3 years. Some of those projects appraised by the FBiH PIP Commission may or may not be prioritized by the FBiH Government. Explanations and justifications for such FBiH Government decisions are not published and included in the adopted PIP. In fact, the list of projects appraised by the Commision serves as a basis for the Government for negotiations with IFIs which in turn identify and select projects to fund on the basis of their own respective mandate and or preference.
11.3 Investment project costing
D
Notes:
A sufficient cost overview of the public investment projects is not included in the budget documentation
11.4 Investment project monitoring
D
Notes:
Financial and fiscal monitoring is conducted by an implementing agency and is reported annually. This information is not publicly available.
12. Public asset management
D+
Notes:
12.1 Financial asset monitoring
C
Notes:
The government maintains a record of its holdings in major categories of financial assets. There is no information on the performance of the portfolio of financial assets on an annual basis, apart from what can be concluded from the balance sheet and Consolidated Budget Execution Report.
12.2 Nonfinancial asset monitoring
C
Notes:
The government maintains a register of its holdings of fixed assets through the fixed assets module in the ISFU system 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 non-financial assets are established. However, asset disposal is not transparent.
Notes:
13.1 Recording and reporting of debt and guarantees
B
Notes:
Domestic and foreign debt and guaranteed debt records of FBiH are complete, accurate, and updated quarterly. Most information is reconciled quarterly with the BiH MFoT which is in charge of the reconciliation of debt information with creditors. Comprehensive management and statistical reports covering debt service, stock, and operations are produced annually.
13.2 Approval of debt and guarantees
A
Notes:
The Sector for Debt within the FBiH Ministry of Finance 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. The procedure prescribed by the Law is followed in the practices and FBiH Government approves annual borrowing plans.
13.3 Debt management strategy
B
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. The last available report on the implementation of DMS is from 2020. The draft version of the report for 2019 was prepared, but it was neither adopted nor published. The report for 2021 was not prepared. The annual borrowing plans for 2019, 2020, and 2021 were aligned with FBiH DMS.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
C
Notes:
14.1 Macroeconomic forecasts
C
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; although the FBiH MTEF for 2020- 2022 is not adopted, macroeconomic forecasts are available in the BiH GFF for 2020-2022 but not sent to the legislature.
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; although the FBiH MTEF for 2020-2022 is not adopted, macro-fiscal forecasts are available in the BiH GFF for 2020- 2022 but not sent to the legislature.
14.3 Macrofiscal sensitivity analysis
C
Notes:
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
B
Notes:
The FBiH Government submits the fiscal strategy to the legislature (MTEF) that includes qualitative and quantitative fiscal objectives.
15.3 Reporting on fiscal outcomes
D
Notes:
Neither the FBiH Government nor the FBiH MoF prepares reports on fiscal outcomes, and the FBiH MoF does not prepare the report on achieved fiscal goals from the MTEF and ERP for its own need.
16. Medium-term perspective in expenditure budgeting
C+
Notes:
16.1 Medium-term expenditure estimates
A
Notes:
Federation BiH MTEF for 2022 - 2024 presents an annual budget and two following fiscal years allocated by administrative, economic and functional classification.
16.2 Medium-term expenditure ceilings
A
Notes:
Federation BiH Government had adopted MTEF 2022-2024 including aggregate and budget heads expenditure ceilings for the 2022-budget year and two following fiscal years before the first (2022) budget circular was issued.
16.3 Alignment of strategic plans and medium-term budgets
D
Notes:
FBiH government institutions are preparing their three-year work programs that, in some cases, are linked directly to budget heads’ budget programs. but, as strategies are not costed, it’is not possible to establish a materiality threshold as required.
16.4 Consistency of budgets with previous year’s estimates
D
Notes:
Budget documents provide an explanation between the last two macro-fiscal and expenditure projection periods but with no specific data.
17. Budget preparation process
B
Notes:
Notes:
At the level of FBiH, a clear budget calendar exists and is largely adhered to.
17.2 Guidance on budget preparation
A
Notes:
Comprehensive and clear first annual budget is issued with budget ceilings approved by FBiH Government prior to distribution of Budget Instructions No.2.
17.3 Budget submission to the legislature
D
Notes:
FBiH Government submitted annual budget proposals to the FBiH Parliament one month before the start of the fiscal year in 2019 for the 2020 budget year.
18. Legislative scrutiny of budgets
D
Notes:
18.1 Scope of budget scrutiny
C
Notes:
FBiH Parliament reviews details of expenditure and revenue but with limited legislative scrutiny.
18.2 Legislative procedures for budget scrutiny
D
Notes:
In Federation BiH, the legislature’s role and power over the budget process is very limited.
18.3 Timing of budget approval
C
Notes:
In Federation BiH, in the last two years, the legislature was not able to approve the annual budgets within one month of the start of the fiscal year.
18.4 Rules for budget adjustment by the executive
B
Notes:
In Federation BiH, clear rules are set up for in-year budget adjustments.
V. Predictability and control in budget execution
Scores by Dimension
Overall Indicator Score
19. Revenue administration
D+
Notes:
19.1 Rights and obligations for revenue measures
B
Notes:
FBiH Tax Administration as an entity administering the majority of revenues collected at this level (74.3%). It provides taxpayers with access to comprehensive and up-to-date information on obligations and rights.
19.2 Revenue risk management
D*
Notes:
No sufficient information for assessment.
19.3 Revenue audit and investigation
D*
Notes:
No sufficient information for assessment.
19.4 Revenue arrears monitoring
D*
Notes:
No sufficient information for assessment.
20. Accounting for revenue
C+
Notes:
20.1 Information on revenue collections
A
Notes:
FBiH budgetary revenues, which are under the authority of the FBiH level, are collected through the Treasury Single Account by type of revenues and can be put into a report on a daily basis. Information on revenues that are not part of TSA, but also on revenues that are part of TSA, are available in RAS files by revenue type and can be put into report on a daily basis. Indirect taxes are distributed to the FBiH 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:
The FBiH budgetary revenues, which are under the authority of the FBiH level, are paid to the Treasury Single Account through banks, and funds are made available immediately. EBUs’ revenues are not transferred to TSA, but are EBUs’ own revenues. In some cases, revenues from TSA are transferred to EBUs. Revenues from indirect taxes are transferred on a daily basis.
20.3 Revenue accounts reconciliation
C
Notes:
Treasury is not cross-checking the data with and not receiving reconciled data (including assessments and arrears) from the FBIH Tax Administration.
21. Predictability of in-year resource allocation
B+
Notes:
21.1 Consolidation of cash balances
A
Notes:
All bank and cash balances are consolidated on a daily basis.
21.2 Cash forecasting and monitoring
B
Notes:
Cash flow planned quarterly, expressed by month, based on actual cash inflows and outflows.
21.3 Information on commitment ceilings
C
Notes:
Commitment ceilings available one month in advance.
21.4 Significance of in-year budget adjustments
A
Notes:
In-year budget adjustments are rules-based and transparent, carried out in limited number of instances across the year.
Notes:
22.1 Stock of expenditure arrears
A
Notes:
The share of stock of expenditure arrears is 1% and 0.8% for 2020 and 2021, respectively
22.2 Expenditure arrears monitoring
A
Notes:
Data on the stock, age to a certain extent and to some extent the composition of expenditure arrears for BCG are generated quarterly within four weeks of the end of each quarter. Although the age is reported as +90 days and reports by responsible entities are generated on demand, everything is available in the system.
Notes:
23.1 Integration of payroll and personnel records
D*
Notes:
Insufficient information to assess CG practices. BCG practices would merit score B.
23.2 Management of payroll changes
D*
Notes:
Insufficient information to assess CG practices. BCG practices would merit score B.
23.3 Internal control of payroll
D*
Notes:
Insufficient information to assess CG practices. BCG practices would merit score B.
Notes:
Financial audits are partly directed to payroll audits for budgetary units (and occasionally for EBUs) so payroll audit is considered to have taken place in stages.
Notes:
24.1 Procurement monitoring
NA
Notes:
Please refer to the explanation on IBIH PI-24 assessment
24.2 Procurement methods
NA
Notes:
Please refer to the explanation on IBIH PI-24 assessment
24.3 Public access to procurement information
NA
Notes:
Please refer to the explanation on IBIH PI-24 assessment
24.4 Procurement complaints management
NA
Notes:
Please refer to the explanation on IBIH PI-24 assessment
25. Internal controls on nonsalary expenditure
B
Notes:
25.1 Segregation of duties
B
Notes:
Segregation of duties throughout the expenditure process has been established. Scheme of steps may need further details in some areas.
25.2 Effectiveness of expenditure commitment controls
B
Notes:
Controls on the expenditure side are systematically established through the ISFU system for BCG. For CG institutional units practices are not standardized. Limited arrears still exist.
25.3 Compliance with payment rules and procedures
B
Notes:
The procedure that exists in practice is respected in all payments. The Rulebook and Instruction are explained under Segregation of duties and may need some further details.
Notes:
26.1 Coverage of internal audit
B
Notes:
Internal audit is operational for central government entities representing 90% of the total budgeted expenditures and for central government entities collecting 75% of the budgeted government revenue.
26.2 Nature of audits and standards applied
B
Notes:
Internal audit is focused on monitoring and evaluating the system of internal controls that includes all financial and non-financial processes in the organization, its adequacy, functionality, and effectiveness.
26.3 Implementation of internal audits and reporting
B
Notes:
Annual audit programs exist. Most programmed audits are completed (more then 80%), as evidenced by the distribution of their reports to the appropriate parties.
26.4 Response to internal audits
C
Notes:
Management provides a partial response to audit recommendations for majority of entities audited within twelve months of the report being produced. Up to one-third of given recommendations is implemented.
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.
Notes:
Reconciliation of advance accounts takes place at least monthly, within a month of 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 is restricted and recorded, and results in an audit trail.
28. In-year budget reports
C+
Notes:
28.1 Coverage and comparability of reports
A
Notes:
The FBiH Ministry of Finance prepares official reports during the year in the same format as the original annual budget – that is, by economic and administrative classification – and they represent spending in both the commitment phase and the disbursement phase. These reports are directly comparable to the original budget. Information includes all items of budget estimates.
28.2 Timing of in-year budget reports
C
Notes:
Budget execution reports are prepared quarterly and issued within 8 weeks from the end of each quarter.
28.3 Accuracy of in-year budget reports
C
Notes:
There may be concerns regarding data accuracy. Data is useful for the analysis of budget execution. Information on expenditure is covered at both commitment and payment stages.
29. Annual financial reports
D+
Notes:
29.1 Completeness of annual financial reports
A
Notes:
Financial reports for the budgetary central government for 2021 are comparable with the 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
A
Notes:
Financial reports for the budgetary central government for 2021 were submitted for external audit within 3 months of the end of the fiscal year, on 16th March 2022.
29.3 Accounting standards
D
Notes:
The standards used in preparing annual financial reports are not disclosed. The IPSAS standards are not yet adopted.
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 the last three completed fiscal years (2019, 2020, and 2021). The audits have highlighted any relevant material issues and systemic and control risks with a special focus on managing funds during the Covid-19 pandemic.
30.2 Submission of audit reports to the legislature
C
Notes:
Audit reports were submitted to the legislature within six months from receipt of the financial reports by the Supreme Audit Institution for 2020 and 2021, while for audit report from 2019 it took slightly more than 6 months (6 months and 13 days).
30.3 External audit follow-up
C
Notes:
Subjects of the audit are obliged to submit a response on the actions taken to the SAI within 60 days of receiving the final report, in order to overcome the weaknesses, irregularities, and violations identified in the audit report. In 2019, two audit subjects did not submit a response on the actions taken after the conducted audits, in 2020, ten audit subjects did not submit a response on the actions taken. In 2021, five audit subjects did not submit a response on the actions taken. Around one-third of recommendations is implemented each year.
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
D+
Notes:
31.1 Timing of audit report scrutiny
D
Notes:
Legislative scrutiny of Audit Report of FBiH Budget Execution Report for 2019, 2020 and 2021 has not been completed by the legislature in the assessed period. Legislative scrutiny of 25 audit reports from 2019, 43 audit reports from 2020, and 14 audit reports from 2021 was conducted within 3, 6, and 3 months, respectively.
31.2 Hearings on audit findings
B
Notes:
In-depth hearings on key findings of most audit reports that received qualified or adverse opinions are held regularly with the SAI representatives and representatives of the subjects of the audit.
31.3 Recommendations on audit by the legislature
D
Notes:
The Parliamentary Committee in their Report for 2019 and 2020 particularly points out that a significant number of recommendations have not been implemented or have been partially implemented, which means that previously addressed failures and irregularities have not been eliminated. The Parliamentary Committee did not provide any information regarding recommendations implementation by the subjects of audit for 2021.
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. Committee reports are published on the official website of the FBiH Parliament.
NO PILLAR
Scores by Dimension
Overall Indicator Score
HLG-1 Predictability of transfers from higher level of Government
Notes:
HLG-1.1 Annual deviation of actual total HLG transfers from the original total estimated amount provided by HLG to the SN entity for inclusion in the latter’s budget
Notes:
HLG-1.2 Annual variance between actual and estimated transfers of earmarked grants
Notes:
HLG-1.3 In-year timeliness of transfers from HLG (compliance with timetables for in-year distribution of disbursements agreed within of month of the start of the SN fiscal year)
Notes: