​​​​2.1. Prepare a draft concept note or terms of reference

The purpose of the concept note is twofold: firstly, it serves to plan and guide the assessment process by articulating the objective, time frame, scope etc. of the assessment. Secondly, it serves to inform stakeholders of the upcoming assessment and seek their input and feedback to the process. It is therefore important that the draft and final concept notes are widely shared and that the final concept note is ready well in advance of the start of the assessment fieldwork (ideally, at least two weeks before).

The concept note/ToR describes the background and context of the assessment, and its objectives and purpose. The document also describes the scope and coverage of the assessment and the management, QA arrangements, skills and resources required. It details the assessment’s methodology, timeframe and desired outputs and outcomes. Once completed the concept note/ToR will serve as the basis for formally obtaining the support of government and non-government stakeholders and confirming the sources of funding.

The scope and purpose section of the concept note/ ToR provides the reasons for the assessment and describes how it relates to the PFM and public-sector reform agenda of the CG or SNG. It specifies which part of the public sector will be covered and includes a table that identifies the main units of government to be covered by the assessment. The discussion of the purpose of the assessment will reference the application of the 31 indicators and the structure of the PEFA report as described in the PEFA 2016 framework document. If the assessment is to exclude any sector (such as defense) or area of PFM, this should be stated and explained.

If one or more indicators will not be used in the assessment, the concept note/ToR will note that fact and will provide a clear explanation. As noted in the PEFA 2016 framework document available at pefa.org, under PEFA Framework, assessments that score less than two-thirds (21) of the PEFA indicators should be referred to as “partial PEFA assessments” to distinguish the assessment from

comprehensive application of the PEFA methodology. Nevertheless, partial use of the framework should be considered with care because there are many interrelationships between indicators that may be lost if some information is not collected and assessed. It may be appropriate to use particular indicators or dimensions for a specific purpose, for example, for analysis of a specific set of processes, such as budget planning, budget transparency or internal control, or as part of a government’s own internal monitoring and evaluation (M&E) system.

The timing of the assessment in the budget cycle of the host country is critical to its smooth implementation and quality. If the assessment coincides with the later stages of budget preparation, or with other in-country development partner missions, it may be difficult to get meetings and information from senior officers. The assessment should not impede government officers from carrying out their operational roles and responsibilities, so it needs to be timed when key officials are available and data for the relevant fiscal years is available.

The concept note/ToR identifies the stakeholders, the extent of their involvement in overseeing the assessment and whether the assessment is government-led, joint or non-government led. Information on the composition (names, positions, and respective organizations’ areas of expertise) and the budget resources of both the oversight team and assessment team is also presented.

The concept note/ToR explains how the assessment is to be performed, including the methodology to be applied, QA arrangements, main references and information sources, relationship to other assessments (including previous PEFA), time frame, consultation and reporting. The assessment manager is usually responsible for preparing the concept note/ToR and the oversight team will normally provide direction to the assessment manager on the objectives, scope and coverage of the assessment and approve the CN/ToR. Based on the scope of work, timing considerations and the model of assessment being used, the assessment manager will prepare initial estimates of the size of the assessment team,


PEFA Handbook Volume 1: The PEFA Assessment Process – Planning, Managing and Using PEFA