Volume II: PEFA Assessment Fieldguide (Second Edition)

List of Abbreviations and Acronyms

Preface

1.PEFA Overview 9

1.1. Introduction 9

1.2. Scope and coverage of the framework 10

1.3. The PEFA performance indicators 13

1.4. The PEFA report 13

1.5. Overall structure of PEFA 14

2. Guidance on Scoring 15

2.1. General guidance on scoring 15

2.2. Scoring of indicators with multiple dimensions 17

2.3. Definitions 19

2.4. Composition of PEFA pillars indicators and dimensions 19

3. Measuring Performance Indicators and Dimensions 23

Pillar One: Budget Reliability 24

PI-1. Aggregate expenditure outturn 25

Dimension 1.1. Aggregate expenditure outturn 25

PI-2. Expenditure composition outturn 27

Dimension 2.1. Expenditure composition outturn by function 27

Dimension 2.2. Expenditure composition outturn by economic type 29

Dimension 2.3. Expenditure from contingency reserves 31

PI-3. Revenue outturn 33

Dimension 3.2. Revenue composition outturn 36

Pillar Two: Transparency of Public Finances 37

PI-4. Budget classification 38

Dimension 4.1. Budget classification 38

PI-5. Budget documentation 40

Dimension 5.1. Budget documentation 40

PI-6. Central government operations outside financial reports 43

Dimension 6.1. Expenditure outside financial reports 44

Dimension 6.2. Revenue outside financial reports 45

Dimension 6.3. Financial reports of extrabudgetary units 47

PI-7. Transfers to subnational governments 50

Dimension 7.1. System for allocating transfers 50

Dimension 7.2. Timeliness of information on transfers 52

PI-8. Performance information for service delivery 54

Dimension 8.1. Performance plans for service delivery 55

Dimension 8.2. Performance achieved for service delivery 58

Dimension 8.3. Resources received by service delivery units 60

Dimension 8.4. Performance evaluation for service delivery 62

PI-9. Public access to fiscal information 64

Dimension 9.1. Public access to fiscal information 64

Pillar Three: Management of Assets and Liabilities 67

PI-10. Fiscal risk reporting 68

Dimension 10.1. Monitoring of public corporations 68

Dimension 10.2. Monitoring of subnational governments 71

Dimension 10.3. Contingent liabilities and other fiscal risks 72

PI-11. Public investment management 74

Dimension 11.1. Economic analysis of investment proposals 75

Dimension 11.2. Investment project selection 77

Dimension 11.3. Investment project costing 78

Dimension 11.4. Investment project monitoring 79

PI-12. Public asset management 81

Dimension 12.1. Financial asset monitoring 82

Dimension 12.2. Nonfinancial asset monitoring 83

Dimension 12.3. Transparency of asset disposal 85

PI-13. Debt management 86

Dimension 13.1. Recording and reporting of debt and guarantees 86

Dimension 13.2. Approval of debt and guarantees 87

13.3. Debt management strategy 89

Pillar Four: Policy Based Fiscal Strategy and Budgeting 91

PI-14. Macroeconomic and fiscal forecasting 92

Dimension 14.1. Macroeconomic forecasts 92

Dimension 14.2. Fiscal forecasts 93

Dimension 14.3. Macrofiscal sensitivity analysis 95

PI-15. Fiscal strategy 96

Dimension 15.1. Fiscal impact of policy proposals 96

Dimension 15.2. Fiscal strategy adoption 99

Dimension 15.3. Reporting on fiscal outcomes 100

PI-16. Medium-term perspective in expenditure budgeting 101

Dimension 16.1. Medium-term expenditure estimates 101

Dimension 16.2. Medium-term expenditure ceilings 102

Dimension 16.3. Alignment of strategic plans and medium-term budgets 103

Dimension 16.4. Consistency of budgets with previous year’s estimates 104

PI-17. Budget preparation process 106

Dimension 17.1 Budget calendar 107

Dimension 17.2 Guidance on budget preparation 108

Dimension 17.3 Budget submission to the legislature 110

PI-18. Legislative scrutiny of budgets 111

Dimension 18.1. Scope of budget scrutiny 111

Dimension 18.2. Legislative procedures for budget scrutiny 112

Dimension 18.3. Timing of budget approval 113

Dimension 18.4. Rules for budget adjustments by the executive 114

Pillar Five: Predictability and Control in Budget Execution 116

PI-19. Revenue administration 117

Dimension 19.1. Rights and obligations for revenue measures 118

Dimension 19.2. Revenue risk management 120

Dimension 19.3. Revenue audit and investigation 122

Dimension 19.4. Revenue arrears monitoring 123

PI-20. Accounting for revenue 125

Dimension 20.1. Information on revenue collections 125

Dimension 20.2. Transfer of revenue collections 126

Dimension 20.3. Revenue accounts reconciliation 127

PI-21. Predictability of in-year resource allocation 129

Dimension 21.1. Consolidation of cash balances 129

Dimension 21.2. Cash forecasting and monitoring 130

Dimension 21.3. Information on commitment ceilings 131

Dimension 21.4. Significance of in-year budget adjustments 132

PI-22. Expenditure arrears 134

Dimension 22.1. Stock of expenditure arrears 134

Dimension 22.2. Expenditure arrears monitoring 136

PI-23. Payroll controls 138

Dimension 23.1. Integration of payroll and personnel records 138

Dimension 23.2. Management of payroll changes 139

Dimension 23.3. Internal control of payroll 140

Dimension 23.4. Payroll audit 141

PI-24. Procurement 142

Dimension 24.1. Procurement monitoring 142

Dimension 24.2. Procurement methods 143

Dimension 24.3. Public access to procurement information 144

Dimension 24.4. Procurement complaints management 145

PI-25. Internal controls on nonsalary expenditure 147

Dimension 25.1. Segregation of duties 148

Dimension 25.2. Effectiveness of expenditure commitment controls 149

Dimension 25.3. Compliance with payment rules and procedures 150

PI-26. Internal audit 151

Dimension 26.1. Coverage of internal audit 152

Dimension 26.2. Nature of audits and standards applied 153

Dimension 26.3. Implementation of internal audits and reporting 154

Dimension 26.4. Response to internal audits 155

Pillar Six: Accounting and Reporting 156

PI-27. Financial data integrity 157

Dimension 27.1. Bank account reconciliation 157

Dimension 27.2. Suspense accounts 158

Dimension 27.3. Advance accounts 159

Dimension 27.4. Financial data integrity processes 160

PI-28. In-year budget reports 161

Dimension 28.1. Coverage and comparability of reports 161

Dimension 28.2. Timing of in-year budget reports 163

Dimension 28.3. Accuracy of in-year budget reports 164

PI-29. Annual financial reports 165

Dimension 29.1. Completeness of annual financial reports 165

Dimension 29.2. Submission of reports for external audit 167

Dimension 29.3. Accounting standards 169

Pillar Seven: External Scrutiny and Audit 170

PI-30. External audit 171

Dimension 30.1. Audit coverage and standards 171

Dimension 30.2. Submission of audit reports to the legislature 173

Dimension 30.3. External audit follow-up 174

Dimension 30.4. Supreme Audit Institution independence 175

PI-31. Legislative scrutiny of audit reports 177

Dimension 31.1 Timing of audit report scrutiny 177

Dimension 31.2 Hearings on audit findings 178

Dimension 31.3 Recommendations on audit by legislature 179

Dimension 31.4 Transparency of legislative scrutiny of audit reports 180

Glossary 181