PI-29. ANNUAL FINANCIAL REPORTS
ABOUT THE INDICATOR
This indicator assesses the extent to which annual financial statements are complete, timely, and consistent with generally accepted accounting principles and standards. This is crucial for accountability and transparency in the PFM system. It contains the following three dimensions and uses the M1 (WL) method for aggregating dimension scores:
- Dimension 29.1. Completeness of annual financial reports
- Dimension 29.2. Submission of reports for external audit
- Dimension 29.3. Accounting standards
IMPACT ON BUDGETARY OUTCOMES
Annual budgetary central government financial reports are critical for accountability and
transparency in the PFM system. Such reports support governments in achieving aggregate fiscal discipline and ensuring that resources are allocated to strategic priorities. They provide a record of how resources were obtained and used, as a basis for comparison with plans and for accountability
regarding the use of resources. Data from annual financial reports also provide vital input in assessing the efficiency of service delivery.
INDICATOR MEASUREMENT GUIDANCE
29:1. 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. Completeness of annual financial reports
DIMENSION MEASUREMENT GUIDANCE
29.1:1. This dimension 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
Dimension 29.1. Scoring
| Score | Minimum requirements for scores |
|---|---|
|
A |
Financial reports for budgetary central government are prepared annually and 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. |
| B |
Financial reports for budgetary central government are prepared annually and are comparable with the approved budget. They contain information on at least revenue, expenditure, financial assets, financial liabilities, guarantees, and long-term obligations |
| C |
Financial reports for budgetary central government are prepared annually, and are comparable with the approved budget. They include information on revenue, expenditure, and cash balances |
| D | Performance is less than required for a C score |
Pillar Six: Accounting and Reporting
