PI-27. FINANCIAL DATA INTEGRITY
ABOUT THE INDICATOR
This indicator assesses the extent to which treasury bank accounts, suspense accounts, and advance accounts are regularly reconciled and how the processes in place support the integrity of financial data. It contains the following four dimensions and uses the M2 (AV) method for aggregating dimension scores:
- Dimension 27.1. Bank account reconciliation
- Dimension 27.2. Suspense accounts
- Dimension 27.3. Advance accounts
- Dimension 27.4. Financial data integrity processes
IMPACT ON BUDGETARY OUTCOMES
Reliable reporting of financial information requires constant checking and verification of the recording practices of accountants. This is an important part of internal control and a foundation for good information for management and for external reports that underpin aggregate fiscal discipline, strategic allocation of resources, and the efficiency of service delivery.
INDICATOR MEASUREMENT GUIDANCE
27:1. The indicator covers three critical types of reconciliation: bank accounts, suspense accounts, and advance accounts. It also incorporates assessment of an important control function to ensure records are accurate and appropriately verified
Dimension 27.1. Bank account reconciliation
DIMENSION MEASUREMENT GUIDANCE
27.1:1. This dimension assesses the regularity of bank reconciliation. There should be regular and timely comparisons between government bank account (central or commercial) transaction data and government cash books. The results of the comparisons should be reported and action should be taken to reconcile any differences. Such reconciliation is fundamental to the integrity of the accounting records and the financial statements.
27.1:2. For this dimension, ‘central government bank accounts’ means the bank accounts of budgetary units and extrabudgetary units. In this regard, some extrabudgetary units may have substantial “own source revenues” that are effectively government resources that they can use for their own purposes.
These agencies should perform regular bank reconciliations. Equally, although the MoF may not have the power to perform reconciliations on social funds, fund manager should be required to perform regular reconciliations themselves, that can be scrutinized by the auditor and/or MoF/line ministry concerned.
27.1:3. ‘Reconciliation’ includes the identification of all mismatches and their amount (and their nature) between the government’s records of the accounting data held on its books and the government’s bank account data held by banks. The subsequent clearance could be a long process, which falls outside the scope of the time benchmarks indicated under this dimension in the Framework Document.
Dimension 27.1. Scoring
|Score||Minimum requirements for scores|
Bank reconciliation for all active central government bank accounts takes place at least weekly at
aggregate and detailed levels, usually within one week from the end of each week
Bank reconciliation for all active central government bank accounts takes place at least monthly,
usually within 4 weeks from the end of each month
Bank reconciliation for all active central government bank accounts takes place at least quarterly,
usually within 8 weeks from the end of each quarter.
|D||Performance is less than required for a C score|
| Pillar Six: Accounting and Reporting