Dimension 29.2: Last annual financial report submitted for audit.

Dimension 29.3: Last three years’ financial report.

Measurement guidance

Annual budgetary central government financial reports are critical for accountability and transparency in the PFM system. While certain countries have their own public sector financial reporting standards, set by government or another authorized body, in many cases, national accounting standards for the private sector, regional standards, or international standards such as IPSAS are applied. In any event, the outcome should be a set of financial reports that are both complete and consistent with generally accepted accounting principles and standards. For the purpose of this indicator, the annual financial statements or the budget execution reports produced by the government may be treated as financial reports and used for scoring.

Dimension 29.1 assesses the completeness of financial reports. Annual financial reports should include an analysis providing for a comparison of the outturn with the initial government budget. Financial reports should include full information on revenue, expenditure, assets, liabilities, guarantees, and long-term obligations. This information can be either incorporated into financial reports in a modified cash or accrual-based system, or presented by way of notes or ad hoc reports, as is often done in a cash-based system. The usefulness of reports depends on whether they are compiled after the clearance of any suspense accounts and after advance and bank account reconciliation, as assessed in PI-27.

Dimension 29.2 assesses the timeliness of submission of reconciled year-end financial reports for external audit as a key indicator of the effectiveness of the accounting and financial reporting system. In certain systems, individual ministries, departments and deconcentrated units and other public entities within the central government issue reports that are subsequently consolidated by the MOF. In more centralized systems, every detail or part of the information for the report is held by the MOF. The actual date of submission is the date on which the external auditor considers the report complete and available for audit.

Dimension 29.3 assesses the extent to which annual financial reports are understandable to the intended users and contribute to accountability and transparency. This requires that the basis of recording the government’s operations and the accounting principles and national standards used be transparent. Higher scores require that the standards used for accounting are consistent with recognized international standards such as IPSAS. For ‘A’ and ‘B’ scores the assessment report should explain which international standards methodology has been used and where the information on compliance with those standards is disclosed.