Albania Tirana Municipality 2017

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Aggregate expenditure outturn was below 85% in each of the last three years. Actual expenditure outturn was 71.2%; 71.0% and 53.1% respectively, in years 2013, 2014 and 2015. Although data for 2015 are not completely in line with indicator requirements and not directly comparable to the previous year before TAR, the deviations are considered sufficient significant to score the indicator with confidence.

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Variance in expenditure composition by function is 14% in 2013 and it exceeds 15% in 2014 at 19%. A reliable estimate cannot be given for FY2015, given the data availability on 2015 budget estimates

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Variance in expenditure composition by economic classification is was higher than 15% in all of the three last years, at 31.5%, 37.5% and 32.0% respectively in 2013, 2014 and 2015. Even though 2013 and 2014 represent the pre-TAR municipality and 2015 data is not comparable to data from earlier years due to TAR, the variances are so significant that a score can be assigned with confidence.

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Actual expenditure charged to a contingency vote was nil in each of the last three years 2013 – 2015.

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Revenue collection was 55% of budget estimates in 2013, 64% in 2014 and 48% in 2015; i.e. it actual revenue was far below 92% of the budgeted revenues in all years. Even though 2013 and 2014 represent the pre-TAR municipality and 2015 data is not comparable to data from earlier years due to TAR, the variances are so significant that a score can be assigned with confidence.

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Variance in revenue composition exceeded 15% in two of the three years: it was 24.5% in 2013, 12.1% in 2014 and 51.3% in 2015. As with dimension 3.1 the findings are sufficiently robust to assign a score.

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The budget classification and Chart of Accounts are based on economic, administrative and functional (and sub-functional) classification and can produce information compatible with the GFS 2014 standards.

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The budget classification and Chart of Accounts are based on economic, administrative and functional (and sub-functional) classification and can produce information compatible with the GFS 2014 standards.

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Only the requirements for one of the four basic elements are fulfilled. Two additional requirements are also fulfilled.

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All of the municipality’s expenditure is reported in the municipality’s budget execution and annual financial reports.

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All of the municipality’s revenue is reported in the municipality’s budget execution and annual financial reports.

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No extra-budgetary units were identified under Tirana Municipality.

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Not applicable as there is no tier of government below municipalities.

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Not applicable as there is no tier of government below municipalities.

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Information is published annually only on the mission and objectives by all service delivery programs. Performance plans for the delivery of key municipal services are nonetheless missing for next budget year.

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Information is not published on the activities performed with the respective output (and outcome) indicators for the majority of public service programs and departments.

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An internal audit has been carried out for the past three fiscal years and level of resources received is known only for one large service delivery program.

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Evaluations of the efficiency or effectiveness of public service delivery have not been carried out within the last three years.

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The Municipality makes available to the public only one out of five basic elements, as well as two of the four additional elements.

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All companies with municipal ownership submit annual financial statements to the Municipality. Key financial data is consolidated into a report to the Municipal Council. Only the Water & Sewerage Company has recently had its statements audited. None of this information is made publicly available.

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Not applicable. There is no subnational level below municipalities.

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There is no financial report that quantifies and consolidates information on contingent liabilities and other fiscal risks inherent to the Municipality’s service delivery programs and projects and the associated public corporations.

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Economic analyses are not carried out to assess the feasibility of the major investment projects proposed for the next year’s budget.

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Prior to their inclusion in the budget, most major investment projects with identified funding are prioritized internally by the Department of Public Works. These, however, are not selected on the basis of standard or clearly defined criteria for project selection following national or regional development priorities.

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Projections of capital cost of major investment projects, together with the capital costs for the forthcoming two fiscal years, are included in the budget documents. The information, however, is not fully costed thus omitting the operating and maintenance expenses.

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Total cost and physical progress of major investment projects are monitored and reported by the Public Works Department on an annual basis. Standard procedures are in place and yet, modern rules governing project implementation are lacking

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The Municipality maintains records of balance sheets for public enterprises in which it has an equity share, but the standards for valuation of the enterprises are not clear. The information on financial performance is not published.

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The municipality maintains a register of its holdings of fixed assets, and collects partial information on their usage, location and ag

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Procedures for disposal of non-financial assets have recently been strengthened. Partial information included in annual financial reports and submitted to the local council, not disclosed to the public.

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Procedures for disposal of non-financial assets have recently been strengthened. Partial information included in annual financial reports and submitted to the local council, not disclosed to the public.

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The municipality is allowed to borrow, by all loans must obtain prior approval by MOF. Loans, depending on the amount, are also approved by either the Parliament or the local council. Legislation sets out clearly the authority to borrow and the procedures to be followed.

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This dimension is not applicable as such a strategy does not apply to a municipality

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Macroeconomic forecasting is not applicable to municipalities

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During each of the last three years, the municipality has prepared forecasts of revenue and expenditure aggregates for the budget year and the following two years (with fiscal balance implicit but obvious). Detailed explanation of estimates and underlying assumptions were included for revenue and capital expenditure but not for recurrent expenditure. All of this information was included in the budget documentation.

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This dimension is not assessed, it is not apply to a municipality.

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The municipality does not prepare estimates of the impact of revenue and expenditure policy changes but shows only estimates based on changed policy.

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The municipality does not have an overall fiscal strategy.

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No reporting can be done against a fiscal strategy as such a strategy does not exist.

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Three year estimates of expenditure are presented in the budget with breakdown by program, economic and administrative classification, but only for capital expenditure. Recurrent expenditure estimates for the two outer years are presented only in aggregate with no breakdown.

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No medium-term budget ceilings have been issued to the administrative/spending units during the past several years.

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There are no strategic medium-term development plans on which to base budget priorities and expenditure estimates.

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This dimension is not rated as it would not be useful to compare the MTB 2016-2018 for the new municipality with the estimates of the previous MTB for the pre-TAR municipality.

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A clear budget calendar exists which allows budgetary units sufficient time to complete their estimates. The calendar was generally not adhered to in 2015 (FY2016 budget) but this was due to the amalgamation of municipality and communes in the middle of the year.

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Guidance issued for preparation of the last budget submitted to the Council prior to this assessment (budget for FY2016) was limited and did not follow usual standards as the budget preparation process during 2015 was disrupted by the transition arrangements of TAR.

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In none of the last three years has the annual budget proposal been submitted to the Council at least a month before the start of the budget year.

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The Council’s review covers fiscal policies, mediumterm fiscal forecasts, medium term priorities and details of revenue and expenditure as all of these items are included in the budget proposals.

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The Council has established simple procedures for budget review but they are only partially adhered to and insufficient for effective budget scrutiny.

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The Council has approved the budget before the 31st of December for both the FY2016 and FY2015 budgets. The FY2014 budget was approved almost two months after the start of the year.

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There are clear rules for the Mayor powers to amend the budget in-year without Council approval. They set strict limits for the Mayor’s powers and are adhered to in most cases.

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Information on taxes and fee rates, including rights and redress procedures are easily accessible for businesses but are not actively shared with households.

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The GDTF has adopted a systematic approach for assessing and prioritising compliance risks for revenues from businesses; but it has not intensified efforts towards improved household compliance throughout the territory.

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A simple compliance improvement plan is prepared and implemented on an annual and monthly basis, covering audits mainly for the business taxpayer segment (more than 50% of revenue). The household taxpayer segment is not covered systematically. The majority of planned audits are implemented.

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The stock of revenue arrears at the end of 2015 constitutes more than 200% of own revenue collections. No data has been made available on the age of revenue arrears, but indications are that more than 75% of the tax debt is more than a year old.

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The Revenue section of the Budget Department obtains revenue collection data at least monthly from all entities and consolidates the information into progress reports for the management.

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Revenues collected by tax agents are transferred monthly to the municipality’s Treasury account. All other revenue is directly paid to the Treasury account.

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While reconciliation of payments with the Treasury District Office takes place monthly, it is not clear when reconciliation of payments with liabilities take place in all collecting agencies.

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Cash balances for the Treasury account are consolidated on a daily basis, whereas consolidation with the project bank account is done monthly.

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A cash flow forecast is prepared for the fiscal year.

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Departments and Programs are not provided with information on commitment ceilings.

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Significant in-year adjustments to budget allocations are frequent, and are partially transparent.

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The stock of expenditure arrears is 62% of total expenditure in 2015 (59% in 2014). Data for 2013 not available.

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Data on the stock and composition of expenditure arrears is generated annually at the end of each fiscal year. There are no set deadlines for such a report and no age profile is presented.

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The payroll is supported by full documentation for all changes made to personnel records each month and checked against the previous month’s payroll data. Staff hiring and promotion is controlled by a list of approved staff positions.

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Required changes to the personnel records and payroll are updated at least monthly, generally in time for the following month’s payments. Retroactive adjustments are few.

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Sufficient controls exist to ensure integrity of the payroll data of greatest importance, but audit trails are generally missing

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Partial payroll audits have been undertaken within the last three completed fiscal years.

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Databases or records are maintained for contracts including data on what has been procured, value of procurement and who has been awarded contracts

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74% of total value of contracts were procured through competitive bidding procedures in 2015.

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The legal framework for procurement, procurement plan for 2016, realisation of procurement operations for 2015 as well as bidding opportunities and contract awards are posted on the PPA website in a timely manner.

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The procurement complaint system meets criterion (1), and three of the other criteria.

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Segregation of duties is prescribed throughout the expenditure process. More precise definition of important responsibilities may be needed.

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Expenditure commitment control procedures exist which provide partial coverage and are partially effective.

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All payments are compliant with regular payment procedures. All exceptions are properly authorized in advance and justified.

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The audit scope and coverage period varies from an entity to another and during the audit planning preparation process the % of coverage in terms of expenditures / revenues subject to audit is not taken into consideration.

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Internal audit activities are focused on evaluations of the adequacy and effectiveness of internal controls but the reporting is not detailed as per the standards.

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Annual audit programs exist, but the number of audit engagement completed during 2015 fell behind the plan (17 out of 39 or 43.6% of the plan).

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Management provides a full response to audit recommendations for all entities audited within twelve months of the report being produced.

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Bank reconciliation for all active municipal bank accounts takes place at least monthly, usually within 4 weeks from the end of each month.

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Reconciliation of suspense accounts takes place at least monthly, within a month from the end of each month. Suspense accounts are cleared in a timely way, no later than the end of the fiscal year unless duly justified.

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No advance payments take place.

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Access and changes to records are not restricted. There is no unit or team in charge of verifying the data integrity.

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Coverage and classification of data does not allow direct comparison to the original budget for the main administrative headings.

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Budget execution reports are prepared monthly, and issued within four weeks from the end of each month

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Concerns exist regarding data accuracy thus weakening the analysis of budget execution. Expenditure is captured at payment stage only. Analysis of changes in initial allocations between administrative headings is lacking.

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Annual financial reports are prepared annually by the Municipality. They include information on revenue, expenditure, and certain assets and liabilities. Serious gaps exist in regards to fixed assets contingent liabilities. The statements on operating revenues and expenses do not present a comparison between the original budget and actual figures.

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Financial reports for the Municipality are not submitted for external audit.

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Accounting standards applied to all financial reports are consistent within the existing legal framework and ensure consistency of reporting over time. The national standards used in preparing annual financial reports, however, are distant from international standards and differences are not disclosed.

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Accounting standards applied to all financial reports are consistent within the existing legal framework and ensure consistency of reporting over time. The national standards used in preparing annual financial reports, however, are distant from international standards and differences are not disclosed.

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Financial audits of the municipality’s annual financial reports for any of the last three years have not taken place.

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Financial audits of the municipality’s annual financial reports for any of the last three years have not taken place.

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A new HSC Law regulates the functional, operational and financial independence, mandate and organization of the High State Control apart from a subjective criterion in the dismissal clause for the HSC Chairman. The HSC has unrestricted and timely access to most of the requested records, documentation and information. HSC has unrestricted access to municipal records, documents and information, but its mandate is heavily dependent on the MOF for the planning of its budget.

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Audit reports are not submitted to the legislature

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Audit reports are not submitted to the legislature

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Audit reports are not submitted to the legislature

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Audit reports are not submitted to the legislature

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HLG1.1 Outturn of transfers from higher level government A Aggregate transfers from the national government were higher than 95% of the original estimates in 2013 and 2014, but lower in 2015 (suggesting score A). Even though 2013 and 2014 represent the pre-TAR municipality and 2015 data is not comparable to data from earlier years due to TAR, the outturns are considered a proper reflection of the predictability of transfers.

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Compositional variance was higher than 10% in each of 2013 and 2015, and just over 5% in 2014. As for HLG1.1 these outturns are considered a proper reflection of the predictability of transfers.

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Transfer disbursements are timely and regular, in accordance with a pre-defined schedule. Delays occur in the transfer of the first tranche of the unconditional block grant but its weight is lower than 25% of actual disbursements.