Source: https://pefa.org/assessment/ma-may09-pfmpr-public-en
Timestamp: 2019-01-18 01:41:13
Document Index: 341044124

Matched Legal Cases: ['Art. 29', 'Art. 201', 'Art. 19', 'Art. 124', 'Art. 51', 'Art. 33']

Morocco 2009 | PEFA
MA-May09-PFMPR-Public.pdf
In only one of the last three fiscal years has budget out-turn exceeded budgeted expenditures by an amount equivalent to more than 5 percent of the amount initially budgeted. During the period under review, the total of final out-turns exceeded the total of fund allocations initially voted in the budget act by less than 5 percent, except in 2005, when the overrun was 8.36 percent. The 2005 overrun, compared to those of 2.4 percent and 3.1 percent in 2006 and 2007. (p. 10)
Overall, the variance of primary budget components as percent of approved expenditure exceeded 5 percent for each of the three years under review, which means that a score of B may not be assigned; however, they did not exceed 10 percent and their average was 3.2 percent. (p. 11)
On the basis of information found in the budget review acts and data centralized by the Trésorerie générale du Royaume/Treasury and presented by the Budget Directorate in its annual reports, revenue out-turns exceeded revenue forecasts by an increasing percent during the period under review. As % of revenue in initial budget act: - 2005: 111.63 % - 2006: 115.60% - 2007: 122.80% (p. 12)
From estimates based on the information received, it does not appear that the actual amount of arrears represents more than 2 percent of the total expenditure out-turns, even in 2005. (p. 13)
"The Treasury Directorate’s definition of arrears does not meet PEFA criteria, especially regarding Compensation Fund back payments. The public sector accounting system in Morocco uses both a cash basis approach to payments and also a commitment basis; its reliability and clarity are therefore dependent on rigorous adherence to charging expenditure during the year it was disbursed. Only approved (visés par le contrôle) expenditures covered by legal commitments may be paid out during the short supplementary period of the following year. Scoring for this indicator should also take into account the recognized impact of ongoing efforts to clear arrears that began in the early 2000s, following the proper funding of the civil service retirement fund in 2005. (p. 14)"
"The classification system for expenditures is designed in accordance with provisions in Art. 29 of the Organic Finance Law of November 26, 1998: under the three main type headings of the general budget (operating costs, investment, and public debt,) spending is presented by chapters that are subdivided into articles, paragraphs and lines according to their purpose (destination, objet ou nature), breaking out payroll and supply costs, miscellaneous spending, and investment spending. This classification system is both detailed, stable and viable, including the sub-functional classification. Certain changes in the budget and accounting classification systems are planned in order to facilitate direct monitoring of priority program implementation, in the framework of amendments that may be made to the Organic Finance Law. (p. 14-15)"
"Recent budget documents satisfy five to six of the nine information criteria. Benchmarks satisfied in the annual budget documentation: - Macro-economic assumptions; - Budget deficit; - Deficit financing; - Debt stock; - Summarized budget date for both revenue and expenditure according to the main heads of the classifications used (cf. PI-5); - Explanation of budget implications of new policy initiatives. Benchmarks not satisfied in the annual budget documentation: - Financial Assets (avoirs financiers); - Prior year’s budget out-turn; - Current year’s budget in the same format as the budget proposal. (p. 15-16)"
"The level of unreported extra-budgetary expenditure (other than donor-funded projects) is insignificant (less than 1 percent of total expenditure). The Budget Directorate’s activity reports, available on the Finance Ministry website, provide clear information on the movements of totals for expenditure by purpose category, and compared to allocations and forecasts for revenue and expenditure in the previous fiscal year. Detailed information for central government support of activities of the Public Enterprises that manage public services (services d’interet general) and carry out public investment programs is provided in the Public Enterprise reports annexed to the budget acts. Subsidies and capital grants are clearly presented. The same is done for activities of the Hassan II Fund, which by law receives 50 percent of income from privatization and reallocates these funds to development projects. This Fund was created in 2003 as an autonomous public entity and is subject to the same controls as the Public Enterprises (cf. PI-9). It issues an annual report describing its activities. (p. 16)"
"Morocco treats information for donor-funded projects differently from most other countries : the funding shown in the budget combines national or counterpart funding with that provided by donors. Donor financing is thus highly integrated into the budget for Morocco’s public sector, in direct contrast to countries where donor funding is not shown in the national budget even though it may constitute most of the investment budget. As a result, however, it is not always possible to clearly distinguish and track the use and evolution of donor funds in the information provided on the budget. The score for this indicator reflects, in spirit if not the letter of the PEFA criteria, the Moroccan practice that certainly tracks the receipt and use of donor funds, but does not comprehensively document them in the budget reports. (p. 16-17)"
"The horizontal allocation of most transfers from central government (at least 50 percent of transfers) is determined by transparent and rules-based systems. The horizontal allocation of central government support, through the relations between central authorities and locally elected officials, follows set rules for the most part, but more flexible (contingents) ones in the case of interventions that can only be decided at the central level on the basis of state priorities, in particular for investments. Three fiscal sources —VAT, business tax (Impôt sur les Sociétés or IS), and income tax (Impôt sur le Revenue or IR)— provide funds for central transfers to local governments, passing through special treasury accounts. (p. 18)"
"In general, central government notifies the Walis and local government authorities about their allocations of shared revenue funds from the VAT, Impôt sur les sociétés /Business tax (IS) and Impôt sur le revenu /Income tax (IR) beginning in September of the previous fiscal year. Budget funds that have been thus set (arrêtés) and voted upon are approved in a timely fashion to become effective (exécutoires) from the January 1 of the new fiscal year. Central funds in the appropriate amounts are deposited (versées) in four tranches between January and August at the latest. However, while the amounts initially budgeted comprise the largest source of funding and spending for most communes, the same is not true for many local governments with large ongoing investment programs or those that are receiving state support for economic, social and water and sanitation programs. Such investment and support programs are part of Government’s priority initiatives and are therefore presented (exposées) in the draft budget presentation report that is submitted to Parliament at the end of October : they are broken down, for the most important ones even by geographical area, in this report and the report on special accounts. Therefore, in practice, budget changes are required for the amounts initially provided for local governments: during each of the three years under review (2005-07), more than 1,300 such change authorizations were made by the Ministries of Interior and Finance (Budget Directorate), accompanied by specific sectoral allocations (affectations). A significant proportion of local government budgets are so modified following the adoption of the initial budget act, which includes the overall initial amounts of revenue shared: 40 percent on average (39 percent in 2005, 35 percent in 2006, and 50 percent in 2007). (p. 18)"
"In the strictest sense of the accounting concept of consolidation, until 2007 there was no systematic and comprehensive process of centralizing or processing (traitement) ex ante or ex post budget data for local governments or local public sector establishments. The most detailed information is given in the activity reports for the final quarter of the following fiscal year from the Finance Ministry’s Budget Directorate, which along with the Interior Ministry plays an essential role in the approval of the initial budgets and of major changes during the course of the year. However, there is no way to track the execution of these modified budgets. (p. 19)"
"The Directorate of Public Enterprises and Privatization (DEPP) within the Finance Ministry has considerably improved methods of oversight and control for public sector entities, while at the same time proceeding with the privatization and reorganization (assainissement) of public enterprises. A large number of public institutions and enterprises present semiannual budget reports to their guardian ministries and to DEPP, only a few do not. All accounts for all of these entities, without exception, are audited every year. These accounts are consolidated in the DEPP annual report annexed to the draft budget act. This report also contains detailed information on the portfolio of public enterprises and the main financial data on the 257 public establishments. However the data is a year old: the 2005 and 2006 data were annexed to the draft budget for 2008. Treasury guarantees for internal financial operations or mechanisms (promotional activities for small and medium sized enterprises, low-income housing, rural development, innovation incentives) are carried out through the Central Guarantee Fund (CCG), a public financial institution under DEPP guardianship. The CCG produces very detailed annual reports presenting central government’s commitments through guarantees granted through this fund. (p. 19-20)"
"The financial risk to central government of sub-national governments is well in hand (bien encadré). The Trésorerie générale du Royaume/Treasury exercises continuous oversight of their spending and revenue collection, carried out through the network of the Treasury’s communal and regional collections offices (réseau de recettes communales et régionales). Local finances are subject to the rules of the budget law. Sub-national budgets are submitted for approval to the Interior and Finance Ministries and any deviation in commitments brings obligations for the state; in other words it is a priori impossible for local governments to go into debt. Any borrowing by local governments is financed by the Local Government Infrastructure Fund, itself under the guardianship of the Finance and Interior Ministries. This fund publishes a very detailed annual report on financing operations for local governments. The state’s aggregate fiscal risk is analyzed by both the Budget Directorate and the Treasury Directorate. (p. 20)"
"The Government makes available to the public, five to six of the six listed types of information. The following are available to the public: - Annual budget documentation; - In-year budget execution reports; - End-of-year cash flow, which is published; - Reports of the Court of Accounts, the most recent of which was for fiscal year 2007, submitted to the King on July 10, 2008 and published in October 2008; - Contract awards; - Resources available to primary service units. (p. 21)"
"A budget calendar is set every year. The Prime Minister issues the budget circular, which sets priorities and ceilings for the ministries’ budgets, before the end of July (the dates were July 21 in 2006 and June 27 in 2007), except in 2005 (August 18). The ministers thus had four weeks to respond in 2006 and 32 days in 2007, with 2005 again being the exception (five days). The main technical ministries consider these intervals too short. In effect, the ministerial budget departments start work their budget outlines as soon as the first Cabinet meeting conclusions are known, in mid-July at the latest. However, their work is facilitated by the stability of the budget structure, the detailed budget booklet (morasse) listings for the ministerial budgets having been regularly updated (reconduites) at the beginning of the year. (p. 22)"
A comprehensive and clear budget circular is issued to ministries, departments and agencies, which reflects ceilings approved by Cabinet (or equivalent) prior to the circular’s distribution to the ministries, departments and agencies. (p. 22)
The timetable in the Organic Law for the submission of the draft budget act to one of the two houses of Parliament has been scrupulously respected, at the latest 70 days before the end of the current budget year. Parliament has therefore been able to debate and vote on the year’s budget act before the end of the previous fiscal year. (p. 23)
"During the preparation of draft budget acts, multi-annual projects for three years have been gradually introduced by Treasury Directorate (DTFE) as a way of assessing the impact of budgetary choices on macro-economic equilibrium and on the domestic/internal and external debt ratios. In this way, the need and importance of a more detailed and more comprehensive multi-year approach for budget income and expenditure have became fully understood by the Moroccan authorities, who since 2005 have also been involved in setting up a Medium-term Expenditure Framework (CDMT or Cadre de dépenses à moyen terme) with support from the World Bank and EU. However it is not clear that these efforts actually resulted in usable rolling multi-year forecasts, even from 2007 (and much less during the 2005-07 period under review) covering at least two years at a time, whether at an overall level based on alternate macro-economic scenarios or at the detailed level by category or budget mission/program. (p. 23)"
Debt sustainability is regularly taken into account in the preparation of the budget act. For example, in the framework of its consultations under Article IV, on July 14, 2005, the IMF along with the Finance Ministry and the Bank Al-Maghrib (central bank) prepared the first report on public finance trends and medium-term projections for 2005-10 (report No. 05/418), in order to assess the viability of Morocco’s external debt situation in light of Government resources and expenses under several scenarios based on different macro-economic and financial assumptions. This analysis favored a rapid growth scenario, presented as both indispensable and doable but not without risk. An additional sustainability diagnostic was done with IMF support under Article IV starting in August 2007. It took into account 2007’s good economic outcomes along with the impact of international price increases for energy and grains on inflation and on the level of compensation subsidies in the budget. Thus, debt sustainability analysis following IMF criteria have been carried out regularly with the support of the Government of Morocco during the three years under review. (p. 23-24)
"The statement of budget spending allocated to sector strategies developed by the Budget Directorate indicates that monitoring of these funds is assured under the budget classification system by ministry. For some ministries, such as Education, spending in support of sector strategies accounts for nearly the entire budget. However, until 2007, there was no single overview document that brought together all the many sectoral programs launched in response to Government’s economic, social, infrastructure and housing priorities, including their planned and actual cost, multi-year investment and recurrent costs, their framework/evolution and actual achievements. Until 2007, reviewing the often incomplete sequence of information provided on the monitoring and financing of these many programs, it remains somewhat problematic to find precise, consolidated and consistent figures on their total cost, status of completion for works or activities, and on the actual receipt of program funds from the financing entity (la mobilisation effective des contributions de ceux qui les financent). (p. 24)"
"Each year, the financing of most sector programs linked to government priorities is analyzed in terms of resources and spending in the usual budget documents, including reference for certain priority programs of their estimated total cost at the time of the document’s publication. However no comparison of actual medium-term costs and those initially estimated at the time of program launch is published. Annual allocations to sector investment pools (groupements sectoriels) for major programs programs are included in the investment budgets of the ministries involved as appropriated funds (crédits de paiement) for a given year and as commited funds (crédits d’engagement) for the following years. But overall financing required for major investment programs expected to take more than two years, even when they are known and tracked by the technical ministries, is neither regularly documented nor integrated into annual approved funding committments (allocations de crédits d’engagement votées). The Finance Ministry has a good handle on recurrent costs linked to public investment spending and is in a good position to include proper estimates in the draft budget and, with the technical ministries, to manage these costs during budget execution. However it would appear that such a multi-year approach for investment programs was never systematically formalized during 2005-7, even though it appears to have been carried out for the most important programs beginning in 2008. (p. 24-25)"
"For at least the past five years, Morocco’s fiscal administration has sustained much-appreciated efforts to both clarify and simplify taxpayer obligations. A series of laws and regulations has spelled out in detail what taxpayers must declare, a process consolidated (couronne) and stabilized in 2007 with the preparation of a General Tax Code including an essential Procedural Guidelines (Livre des procedures). From the first of January, 2004, modernization of the fiscal system and its management entered a significant new phase with the decision for the Direction générale des impôts/Tax directorate to gradually take over recovery of the business tax (impôt sur les sociétés or IS), the VAT, and income tax (l’impôt sur le revenu or IR). By the end of 2007, the Tax directorate had opened 65 tax offices (Recettes de l’administration fiscale), covering the whole of the country. All that remained at the end of 2007 was to extend this accounting network to provide full service at a convenient distance to all users. Nonetheless, the main goals of this reorganization of tax recovery appear to have been largely achieved. Last but not least, there were measures to halt the growth of overly complicated or overly specific tax exemptions and to promote a small number of simplified exemptions that would encourage, for example, new business startups during the first five years (patente or professional license fee) and new artisanal enterprises (a 50 percent reduction in income or business tax). Such changes also put limits on the discretionary powers of tax officials. They have also contributed to increasing tax collection rates and reducing the administrative costs of tax collection, which since 2006 have been broken out and analyzed in a special report attached to the draft budget act. (p. 25)"
"Revision (mise à niveau) of tax-related legal texts undertaken since 2000, reform of registration fees (droits d’enregistrement ) in 2004, preparation of guidelines for fiscal procedures in 2005, and of guidelines for the tax base and recovery procedures in 2006 were topped off (couronne) in 2007 by the publication of the first edition of the General Tax Code. This code, both methodical and practical, reorganizes all the rules on the definition of the tax bases, recovery procedures, and penalties for non-payment of the Impôt sur les sociétés /Business tax (IS), Impôt sur le revenu /Income tax (IR), VAT and registration rights, along with fiscal procedures and rules for audit and dispute resolution (contentieux). Information and education campaigns are regularly organized by the Tax directorate (Direction générale des impôts or DGI), as in 2006 and 2007, in order to publicize the reforms being paid for under the Government’s budget. Handbooks and brochures in both Arabic and French have been published and widely distributed, for example, the income tax handbook and the guide for Moroccans living abroad. All the laws, regulations, and brochures are available on DGI’s website. At the same time, information and training for regional accounting and finance staff are also delivered via internal website. The Customs Directorate (Direction générale des douanes or DGD) has prepared and begun installing an automatic customs datebase network (base automatisée des Douanes en réseau or BADR), a system for clearing customs for both imports and experts covering every phase of the process, from the submission of customs declarations through the entry or dispatch of merchandise, while ensuring payment of all applicable fees and taxes and providing a basis for gauging fraud risk and better targeting customs inspections (contrôles). With the new system, it is or will be possible for enterprises to carry out customs procedures from their offices, from declaration through payment, and even to track the progress of their goods clearing customs. All that remained in 2007 was to roll out the system, in particular at the port of Casablanca, through which flow 40 percent of Morocco’s merchandise exports. DGD also launched publicity campaigns directed at customs brokers (transitaires), small and medium-sized import companies, and travelers, especially in order to explain the scope of measures during and preceding the period under review to disarm customs officers (désarmement douanier). (p. 25-26)"
"The General Tax Code carefully defines the appeals routes open to taxpayers to obtain revisions to their tax bills. Should the taxpayer not be satisfied by the pre-payment appeals process, which may be sought during the six months following receipt of his tax bill, or if he receives no response for six months, the taxpayer may during the next 30 days, or 60 in cases of tax audit (verification), to appeal to the appropriate court. Disputes (litiges) concerning fiscal control may be heard by Tax Commissions which include representatives of the same professional category of taxpayer, or referred to a court if necessary; these commissions must rule within 24 months at a departmental level and within 12 months at a national level. Recourse may also be sought, though generally with shorter decision periods, for customs disputes regarding the assessment or tariff classification applied for customs duties and/or VAT. Appeals mechanisms for taxpayers provided under current regulations are fully functional. The evolution and tracking of appeals recorded by the Direction générale des impôts/Tax directorate indicates that taxpayers usually prefer to negotiate rather than appeal. (p. 26)"
"Under the framework of the Integrated PFM Project, a cross-cutting (Projet transverse) Finance Ministry project, the main objective of broadening the fiscal base is being accomplished by the creation of a unique fiscal identifier (identifiant fiscal unique or IFU). Implementation of this project for the Tax directorate (Direction générale des impôts or DGI), Customs and the Treasury (Trésorerie générale du Royaume or TGR) occurred over the 2005-07 period. DGI created an IFU for the Impôt sur les sociétés /Business tax (IS) and Impôt sur le revenu /Income tax (IR) for each taxpayer, corresponding to their tax article number (numéro d’article d’imposition) for each of these taxes. This benchmark database was communicated to TGR and Customs and is now being regularly updated. The information technology/ computer systems of these three offices are gradually being adapted to use the IFU. A link established by DGI between the fiscal identifier and the Commerce Register number that has been in use until now by Customs should help facilitate the changeover. DGI and Customs have begun cross-checking (recoupement) and cross-controls (controles croises) of purchases imported with suspended VAT (achats en suspension de VAT à l’importation). Since 2005, the DGI’s identification base has been regularly communicated to DGI and Customs, with bimonthly updates. Field staff have been registering taxpayers through the period under review as part of their active processing of declarations of fiscal identity for the IR, or of fiscal existence for the IS, IR and VAT, along with data searches and analysis of legally accessible internal and external information sources. (p. 27-28)"
"The rather low level of penalty for failure to register one’s tax identity as per Art. 201 of the General Tax Code —a fine of dirham 500— seems to have provided little deterrent to those who do not register, whether out of negligence or for purposes of fraud, as required within 30 days of starting a business or acquiring a new source of earned or unearned income from salary, rental or investment sources. On the other hand, enforcement of surcharges on 15 types of fees owed for non-declaration or late declaration for Impôt sur les sociétés /Business tax (IS), Impôt sur le revenu /Income tax (IR), VAT and business registration fees (droits d’enregistrement), along with automatic or peremptory taxation (taxation d’office) of delinquent taxpayers, have both certainly contributed to the rapid growth in the number of registered taxpayers (cf. i) above) and of fiscal revenue between 2005 and 2008 (38 percent increase for IS and IR). (p. 28)"
Tax audits and fraud investigations are managed and reported on according to a documented audit plan, with clear risk assessment criteria for audits in at least one major tax area that applies self-assessment. Regional Tax directorate (Direction générale des impôts or DGI) offices establish action plans for tax audit every year, with revenue collection goals based on the number of taxpayers and on the expected impact of both pursuit of delinquent taxpayers and of publicity activities and opening of new tax offices. DGI’s annual tax audit program is organized according to procedures and general selection criteria set by central government. Tax audits to be expedited are selected in cooperation with regional and local offices, and then assigned on the basis of their size to national, regional or local work programs. Until a new integrated information system (Integrated Taxation System or SIT) becomes operational, weaknesses in the linkages among data files, the lack of a shared mechanism for accessing bank account information via computer, and other gaps now being addressed through the digitization of tax schedules, have however not made it any easier to select files to be audited and carry out the audit. (p. 28-29)
"Precise analysis of collections by the Finance Ministry’s various revenue offices for the 2005-07 period is not easy because their accounting methods differ and also because of the gradual shifting of collection responsibilities for the three main taxes from the Treasury (Trésorerie générale du Royaume or TGR) to the Tax directorate (Direction générale des impôts or DGI) starting in January 2004. For the purposes of this PEFA assessment, TCR and DGI prepared a reconciled statement (état intégré) for tax billings (prises en charge) and collections for the years 2005 to 2007, showing amounts outstanding. The total outstanding amounts rolled over into amounts due/billed in the next tax year around to 18.5 percent of total billings in 2005, 17.8 percent in 2006, and 15.98 percent in 2007; outstanding amounts recovered amounted to between 14 and 16 percent of billings. The collections ratio for current billings amounts to 95 percent in 2005 and 96 percent for 2006 and 2007. The gap is explained by the inherent difficulty of collecting taxes that are disputed, since registering the dispute legally suspends further collections action. Therefore the average collections ratio is between 80 and 83 percent, showing steady growth by one or two points between 2005 and 2007. (p. 29)"
Tax revenue collected for the main central government taxes is paid into Treasury accounts, which are kept by government accounting officers (comptables publics) and managed by the Bank Al-Maghrib (central bank). Tax collections, carried out mainly by Tax directorate (Direction générale des impôts or DGI), the Treasury (Trésorerie générale du Royaume or TGR) and Customs, are pooled (centralisés) by the regional Treasurers and recorded in central government accounts. Delays in the transfer of funds to the Treasury account are very limited and generally occur only with small cash deposits. TGR and the central bank work closely together to track the balance of income collected and credited to the Treasury account on a daily basis. (p. 30)
Reconciliation between tax assessments, collections, and transfers to the Treasury is carried out at regular intervals each day by Treasury, Budget Directorate, and Bank Al-Maghrib teams. A running statement (état cumulé) of the difference between forecast and actual amounts is issued at the end of each week and each month. These statements include a brief analysis of trends and reasons for the differences and a more detailed analysis is carried out at the end of the first quarter and used in the drafting of the budget act for the next fiscal year. (p. 30)
"Even without being able to make direct use of computerized systems to collect information and forecast data from the ministries, departments and agencies, the Treasury Directorate did issue cash flow forecasts that were updated every month during 2005-07. These forecasts, compared (confrontées) on a daily basis with Treasury account balances at the central bank, and with changes in current accounts of local governments and Public Enterprises and Public Establishments, are also regularly reconciled with the weekly statements of budget execution issued by the Budget Directorate, in liaison with the Treasury (Trésorerie générale du Royaume or TGR). Since 2006, it is no longer possible for the Government to overdraw its account and earlier advances to cover previous shortfalls were fully repaid to the central bank in 2007. The forecasting mechanism set up by the Treasury Directorate should also make it possible to manage the four bond auctions (adjudications de bons ou d’obligations), whose amounts and maturities are scheduled each month to meet Treasury’s forecast cash needs, with the greatest possible transparency. These cash flow forecasts have in fact been updated each month, on the basis of actual cash inflows and outflows. But the recorded differences between forecast and actual flows in 2006 and 2007 have been frequent and large. (p. 31)"
"Ceilings for expenditure commitment by the ministries, departments and agencies are set by the budget act. Operating allocations and investment commitments allocated in their budgets are authorized and therefore available (utilisables) beginning in January of each year. During the course of the year, the Budget Directorate closely follows budget execution, in liaison with the ministries, departments and agencies and their financial comptrollers (contrôleurs financiers). The Budget Directorate is directly involved in preparing and approving transfers of budget allocations from one use to another, including decisions to release (déblocage) subsidies, which represent more than a fifth of total budget expenditures (27 percent in 2006 and 29 percent in 2007). (p. 31)"
"Direct adjustments to budget allocations for significant amounts are authorized and carried out during the course of the year through Finance Ministry orders (décrets ou arrêtés). These adjustments came to 24.9 percent of total budget expenditures on average during the 2005-07 period. These adjustments are carried out in a transparent way and in accordance with provisions in the 1998 Organic Law No. 7. However the orders for assignment of aid funds and raising the expenditure ceilings are not published in the Official Bulletin; they are signed by the Budget Director, the assistant budget director, or persons designated by them, under authority delegated from the Finance Minister. All these adjustments are however fully included in regularly published budget execution information and in the mid-term progress report submitted to Parliament’s finance commissions in the second half of the year. It must also be noted that more than a thousand transfers (virements) of funds from one budget line, paragraph or article to another have taken place each year between 2005 and 2007, with the approval of the Finance Minister (and until 2005, the Prime Minister as well, when the amount was more than 10 percent of the chapter total). But on average such transfers only amounted to 2.2 percent of total expenditures. Overall, the largest adjustments were for raising expenditure ceilings in response to additional revenue collected and carryover revenue from a previous fiscal year, more often during the second half of the year. Increased allocations via transfer from the contingency allowance are made only in response to genuinely urgent or emergency situations. (p. 31-32)"
External debt is efficiently monitored by the Treasury Directorate, which issues very detailed regular reports on the movement of all components of debt and debt service. The report is called the Statistical Bulletin for External Debt (Bulletin statistique de la dette extérieure), available in French, Arabic, and English, and also includes debt forecasts for current debt for 2008-14 and quarterly short-term forecasts for principal and interest charges. The Treasury Directorate also issues a very detailed annual report on debt that includes an analysis of trends in its composition by debtor, borrower, currency type, interest rate, and type of interest charged. It also includes statistical data on drawdowns and new commitments, along with an analysis of active debt management (conversion to investment instruments, repayment of high-cost debt, and repurchase of rescheduled debt). (p. 32)
Cash flow management is monitored by the Treasury and External Financing Directorate (Direction du Trésor et des finances extérieures or DTFE) and by the Treasury/public revenue office itself (Trésorerie générale). The DTFE is in charge of forecasting Government costs and resources and therefore financing needs, and for managing internal and external public debt. The Treasury (TGR) verifies daily accounting entries for the central account for expenditure and revenue collections transactions that are booked by government accounting officers (comptables publics) on behalf of central government, local governments, and Public Enterprises, all of whom are required by law to deposit their assets with the Treasury and have their transactions checked by the government accounting officers. The Bank Al-Maghrib acts as central government’s agent and keeps a single account where all public sector transactions are booked. As a result, the Treasury does not need to consolidate several bank accounts and the degree of consolidation is as high as it is possible to achieve. These arrangements also mean that the daily cash balance is visible on a daily basis. (p. 32-33)
"Morocco’s public sector debt management, both internal and external, is meticulously monitored by the Finance Ministry, sole authority responsible for authorizing and guaranteeing external borrowing. The ministry’s Treasury and External Financing Directorate (Direction du Trésor et des finances extérieures or DTFE) is quite well equipped in human and computer resources to do the job. Debt held by Public Enterprises is monitored by the Public enterprises directorate (Direction des entreprises publiques et de la Privatisation or DEPP) and taken into account by DTFE for those public establishments lacking financial autonomy and bank accounts other than the main one at the Treasury. Loans are only taken out to finance investment projects and never to finance a budget deficit. A loan was recently taken out on the international financial market in order to test Morocco’s credibility vis a vis international investors. It was well received by the market. Government guarantees for the external debt of public enterprises may only be granted with the authorization of the Finance Minister. (p. 33)"
"Direct linkage of individual personnel files (fichiers nominatifs) at the ministries and payroll data that are centralized in the Treasury (Trésorerie générale du Royaume or TGR)’s @jour software was not yet consistently functional at the end of 2007. In fact it is not completely clear whether such a linkage can be both functional and efficient in the near term, without at the same time fundamentally reorganizing personnel administration and restructuring the division of responsibility between the ministries and the Finance Ministry. In the meantime, TGR has taken steps to ensure the best possible conditions for reconciliation between personnel records and payroll data. Under the current organization of procedures and responsibilities, all the steps involved in making and verifying changes to the payroll are well documented on a monthly basis. The changes are prepared by the Human resources directorate (Direction des ressources humaines or DRH) and the most important ones are submitted to the financial comptroller for regularity control (contrôle de régularité) and then sent to TGR’s data entry center for control, verification, and payment . During this last stage, the data is compared with that for the previous month and additional justification may be required for the most important changes, such as payment of back pay owed, terminations, and reinstatements (rappels, radiations, réintégrations). (p. 34)"
During the 2005-07 period, progress was made with the active support of the Treasury (Trésorerie générale du Royaume or TGR) in the updating of changes made following approval by the technical ministries. For terminations following retirement, resignation or death, the time required to process the change was reduced from 4.77 months in 2005 to 2.45 months in 2007. Measures were implemented in the recruitment process to meet the objective of making an initial hiring decision (premier règlement) within two months, an objective set by Government in 2007. (p. 34)
"Thanks to the Treasury (Trésorerie générale du Royaume or TGR)’s diligence, and to the gradual adoption of internal control procedures in the main technical ministries, reconciliation between personnel records and payroll data have been carried out to control the validity of indicators (paramètres) that TGR takes into account on the basis of documentation (pièces justificatives) on the changes in numbers of staff and changes in pay scale and grade (d’échelon et de grade). Since 2007, the principle of making a minimum of five joint audits per year has been adopted. Statistics communicated by TGR document the rectifications (redressements) and adjustments made in 2007 following the audits, along with the time required for these actions. The outcomes reported are exemplary, even though they appear relatively slow and limited in scope: 22 months and 211 cases amounting to DH 8 M. Finally, the authority to make changes in personnel records and payroll data is strictly limited to managers in the ministries at a level that gives them due authority, and that have been given access by the IT system administrator to the TGR @jour software and database. The management of the required system passwords and their monitoring is very carefully organized, on the basis of signed authorizations that are kept up to date by the heads of the ministerial HR offices (Human resources directorate). (p. 35)"
"Since 2006, as soon as the annual data become available, a cross-verification exercise is undertaken to compare the personnel records with the payroll data in order to compare the staffiing budget (effectifs budgétaires), the corresponding expenditures, and statutary changes made before December 31. Internal control operations are also launched by the individual technical ministries, in liaison with, or more often at the request of the Treasury (Trésorerie générale du Royaume or TGR): these operations contribute to uncovering directly or indirectly certain errors (failles). Information communicated by the Payroll Office (Paierie principale des rémunérations or PPR) also document (faire etat de) non-trivial rectifications carried out following PPR-initiated control activities revealing irregular or unapproved absences: the procedure of “mise en numéraire” of staff whose presence does not appear justified has led to 363 terminations and 225 suspensions between 2005 and 2007. This type of intervention, even when the outcomes remain rather modest, sets a strong example and has a powerful dissuasive effect. What remains is to prepare and update a complete and accurate compilation (bilan) of internal and external payroll audit measures and of who is responsible for carrying them out (habilitations): because detection of improper salary payments (paies indues) and higher than justified pay grade (surclassements indiciaires) also fall within the scope of audit and control missions assigned to the Inspector General (Inspection générale des finances or IGF), the Ministerial Inspector Generals, and the Court of Accounts. (p. 35)"
"Accurate data on the method used to award public contracts exists and shows that more than 75 percent of contracts above the threshold are awarded on the basis of open competition. Broad use of a competitive procurement method for award of contracts exceeding the national threshold set for low value purchases was incorporated in the complete revision of Morocco’s regulations for award of public sector contracts that was issued as a Cabinet decree dated February 5, 2007 and went into effect on October 1 of that year. All contracts over DH 5 M must be checked by the Inspector General (Inspection générale des finances or IGF) and audited by the Inspector Generals in the major technical ministries such as infrastructure and agriculture. (p. 35-36)"
"Use of less competitive procurement methods is in principle reserved for Defence Ministry contracts and to works or services requiring a high degree of technological specialization or the use of patent-protected processes. It is also possible to have recourse to a negotiated contract in a case where the request for proposal is ruled unsuccessful because the bids were all found to be unacceptable. On the basis of information obtained on the effective extent of such exceptions and on the measures in place to prevent the most serious violations of the principle of competition, bidders simply do not attempt to find a way around the procedures set up in the regulations. Any further attempt to track down abuses would require a review of audits carried out in the ministries, departments and agencies for the purpose of detecting irregularities in the choice of procurement methods, in particular for calls for bids that were subsequently unsuccessful. (p. 36)"
"Current regulations specify the procedures for filing and processing procurement complaints, in particular the time limits and the stages of appeals to higher levels of authority (from the primary client or maître d’ouvrage, to the minister and Prime Minister). Provision is made for the Government’s Secretary General to seek counsel from the Contracts Commission for a appeal outside the formal appeals process (recourse gracieux) by a rejected bidder. However no time limit is set for processing a complaint by the Contracts Commission. Moreoever, this body is an ad hoc commission composed entirely of central government representatives and therefore cannot be considered a truly independent and efficient appeals body. Plaintiffs may also file an appeal at the Administrative Tribunal. But this process is said to take a long time, even though the option of recourse to an independent referee may lead to imposition of protective measures (mesures conservatoires). There is no specific provision for timely adjudication of complaints during the contract award period (en cours de passation). It was not standard practice between 2005 and 2007 to systematically record complaints filed or to monitor their processing, except at the Administrative Directorate (Direction des affaires administratives et générales or DAAG) in the Finance Ministry, though even they had only kept track of a very limited number of complaints. The Public Works Federation did not dispute this finding, nor did the secretariat of the Contracts Commission. It also appears that, apart from certain large construction contracts, appeals are few in number and a direct resolution outside the formal appeals process may well be preferred (traitement direct et gracieux). The creation of a procurement website in 2007 and its gradual enrichment since then to cover all aspects of government procurement, from requests for proposal that are planned by the ministries through the contract award stage, along with comprehensive information on current regulations, has created a resource that should facilitate the formulation of complaints and the exercise of the right of appeal by rejected bidders. (p. 37)"
"A priori control of all budget committments has been carried out over the 2005-2007 period according to the procedures specified in a December 30, 1975, degree as amended in 2002 and 2005: a priori committment control applies to all purchases of goods and services, subsidies and transfers, capital expenditures, and salaries of non- permanent civil servants (non titulaires) for the purpose of verifying the availability and use (imputation) of funds, the authority (habilitation) of the commitment officer, and the regularity of the entire set of procurement procedures for purchase of goods and infrastructure works. Furthermore, should an expenditure mistakenly be approved and committed over the limit of the funds ceiling, the accounting officer will not be able to pay it, as this officer is required to make a second verification on receipt of the payment order (ordonnancement). A number of other measures were also taken starting in 2002 and broadened in 2005-07 in order to suppress certain practices of carrying over to the next budget year, payment adjustments (régularisation) of expenditure commitments for goods and services received at the end of the year. For facilities and equipment expenditures, the commitment control officer (contrôleur des engagements) would undertake a funds consolidation (consolidation des crédits) at the beginning of the year in order to set aside program funds required to cover commitments made in the previous year under continuing programs that were already underway then. The procedures (diligences) required to ensure that the procurement rules and price revision clauses are properly followed were very carefully spelled out by TGR instructions to control officers and accounting officers. Commitment controls are applied across the entirety of expenditures, that is, according to the current regulations, to the entirety of expenditures which the administrative entity is obligated to fund for the entire fiscal year, and for any eventual repercussion of these commitments on the entire use of funds for the current and future years. As so defined, expenditures for investment allocations may therefore not exceed the total of program funds available in the current year and committed funds available to cover payments anticipated in the coming years. Overall, expenditure commitment control procedures appear to have effectively limited the level of commitments to the level of available budget appropriations, that is, to budget allocations authorized (ouvertes) by the budget act and as eventually revised during the course of the year by orders or decrees of the Finance Ministry. (p. 37-38)"
"The underlying conditions of internal control practice appear to have remained fundamentally unchanged by either the organizational change of putting the expenditure committment control unit within the Treasury (Trésorerie générale du Royaume or TGR) (order of February 13, 2006), nor by various measures taken during the period under review to give deconcentrated local ministerial offices greater autonomy in managing their budgets (globalisation), and to introduce audit methods and arrangements that are better adapted to results-based budgeting. Risk assessment and adaptation of control procedures in order to better manage risk are both fully incorporated in the Government’s reform action programs and are beginning to be put in place, especially at the Inspector General (Inspection générale des finances or IGF) and in a few Ministerial Inspector General offices, which are in charge of demonstrating and then diffusing these new procedures within their ministries. In the meantime, the rules governing management of budget allocations, in particular those for a priori control of funds commitment and payment authorization are clear, well known, and enforced. There are also rules governing the management and safegarding of public assets in the form of many provisions, not only in the accounting and budget codes and orders, but also in the legal texts on public lands and other assets of central and local governments, as well as public road, forest and maritime reserves (domaines routier, forestier, et maritime). Increasingly, the Inspector Generals’ reports on the audit work assigned to them goes beyond the usual verification of accounting and juridical regularity to audit the viability and relevance of the organizational and management procedures of the ministries, departments, and agencies. Lastly, the control of procurement practices is carried out by TGR at the moment of approving expenditure commitments and by the Budget Directorate, which participates in the Central Contracts Commissions for contracts over DH 30M. However even by 2007 it was not possible to consider that the rules and procedures for internal control in place “incorporate a comprehensive set of controls such as error prevention and timely preparation of financial statements.” (p. 38-39)"
"Apart from commitment control, the rules for processing and recording transactions at the level of the disbursement officer (comptable payeur) cover accuracy in the calculation of payment for services rendered or goods delivered; proper identification of the payee; final checking of the entire file for anomalies or omissions regarding, for example, procurement procedures; and certification that the service has in fact been rendered and the goods delivered as contracted. According to the fairly consistent responses of the the Treasury (Trésorerie générale du Royaume or TGR) and the Inspector General (Inspection générale des finances or IGF) during PEFA mission discussions, the basic rules are followed and recourse to simplified or emergency procedures that bypass budget authorization regulations is neither feasible nor necessary. However the mission was not provided with any documentation summarizing the differences recorded in the application of rules for processing and committing transactions; it is not clear whether such a summary was ever prepared during the period under review. (p. 39)"
"During the period under review, significant improvements were achieved in internal audit, both in terms of the number of public services and entities covered, administrative organization and audit methods, and in the follow-up of audit report conclusions and recommendations. At the central government level, an order of December 2, 2005, requires all Government ministers to include in the ministry’s organizational structure, an Inspector General’s office and an audit and management control office: by 2007, this had been done in the most important ministries (Health, Agriculture, Fisheries) but to varying degrees and with varying capabilities. The Inspector General’s office in the Finance Ministry, created by Royal Dahir on April 14, 1960, has a staff of 95 auditors (inspecteurs) and covers the entire public sector. Its working methods have considerably evolved over five decades, from classic audit practices to those more closely in tune with international standards. Since 2006, the Inspector General (Inspection générale des finances or IGF) has been using a very comprehensive manual of audit norms that comply with international audit standards applicable to private and public sectors, and with best practice in public enterprise audit. This manual, financed with World Bank support, was prepared with the help of the Order of Accounting Experts, the Company of Statutary Auditors (Compagnie des commissaires aux comptes), and of the French Institute of Audit and Internal Control (IFACI): it constitutes an accurate reference work for the increasing number of IGF public sector audit missions, and also a useful teaching tool for training auditors and the inspectors general who are managing this ever-expanding audit intervention work. An internal audit unit for centralized accounting offices (centres comptables) has also been created at the Treasury (Trésorerie générale du Royaume or TGR). However it is difficult to assess the extent of audit verification work that has focussed on the systemic aspects of public sector audit reports during the 2005-07 period. It is certainly greater than the 20 percent [PEFA] threshold and has been estimated at more than 50 percent by IGF. In light of the next indicator (ii), the cumulative share of public sector financial and performance audits, both of which include systemic aspects that are however not comprehensive, does in effect exceeds the 50 percent threshold in 2006 and 2007 (60 percent in 2006 and 57 percent in 2007). (p. 39-40)"
"Reports on the internal audits of ministerial departments carried out by the Moroccan Government were prepared by the Inspector General (Inspection générale des finances or IGF) in 2006 and 2007, with greater detail in the 2007 report. Following seven “management capacity commitment audits” (audits des capacités de gestion des ordonnateurs) for seven ministries —Health, Justice, Culture, Finance, Agriculture, Waterways and Forests, Infrastructure— IGF carried out in 2007 eleven “performance audits” in several technical ministries. Some of the reports were prepared in concert with competent Ministry Inspector Generals —including the sections covering system audit, which appear to be getting longer (don’t la part parait s’etre accrue). IGF has prepared more than 200 audit reports between 2005 and 2007 and is carrying out an increasing number of audits of Public Enterprises and Public Establishments and Special accounts (Comptes d’affectation spéciale or CAS) (of which 61 for the Initiative nationale pour le développement humain/National initiative for human development), along with audits of donor-financed projects (86 during the period under review). (p. 40)"
"The difficulty of objectively evaluating the effectiveness of the new internal audit system stems from the dispersed and sometimes inaccessible nature of the information base that the PEFA mission would have needed, such as the Inspector General (Inspection générale des finances or IGF) and Ministerial Inspector General reports, and the reports of bodies responsible for following up audits (interministerial central government bodies, Public Enterprises’ boards of directors). There is no avoiding the conclusion that the terms of reference (lettres de mission) addressed to IGF, while they clearly specify the deadlines for completing the audits themselves, do not cover how the auditors’ recommendations should be followed up. A few activity reports for ministries, departments and agencies and certain Autonomous Public Services (Services de l’État gérés de manière autonome or SEGMAs) do however mention IGF interventions and any follow-up actions completed or planned. IGF is clearly interested in the outcomes of any action taken to implement audit recommendations and intends to give such outcomes a prominent role in its annual audit programs. IGF would do well to better target its own monitoring of measures recommended by auditors. IGF already systematically communicates its own reports to the Court of Accounts and when appropriate to the Minister of Justice, when their findings cast doubt on the conduct of an audited entity’s managers or directors. During 2006 and 2007, 27 such reports were forwarded to the Court of Accounts. (p. 41)"
"Bank reconciliation for all central government bank accounts takes place at least monthly at aggregate and detailed levels, usually within 4 weeks of end of period. Government bank accounts are reconciled daily at the central level of the Treasury account between TGR and the central bank, Bank Al-Maghrib (BAM). At the regional level, each treasurer receives from the regional representative of the central bank a daily statement of debit and credit transactions for the Treasury current account. On this basis, the treasurer proceeds to reconcile expenditure transactions initiated by his office on their own account and on behalf of accounting offices down the line; only the treasurer is authorized to debit Treasury’s current account. The regional treasurer also verifies (constate) revenue collected and deposited by third parties and reconciles revenue transactions initiated by accounting offices down the line; it will have received the required paperwork for each funds deposit at the BAM’s regional branches. Each regional treasurer posts a monthly statement file (fichier) with the central Treasury (Trésorerie générale du Royaume or TGR) that records debit and credit transactions with the regional branch of the BAM. The BAM’s central office prepares and sends to TGR a daily statement and data file summarizing transactions for each regional treasurer as recorded by its regional branches. (p. 42)"
"At the budget chapter and article levels, ministries, departments and agencies reconcile accounts on a monthly basis; the accounts are balanced each month and closed on December 31st in order to prepare the central government’s general account that forms the basis of the next draft budget act. Current accounting regulations provide for the temporary assignment (imputation) of an expenditure or income item given insufficient information or when the transaction is in suspense (attente de transfert). Such temporary cost or income assignments are usually regularized during the fiscal year and finalized when the general account is closed (bouclage) on December 31st. During the fiscal year, payment of advances provided for in contracts for construction works or for consultants’ reports that are to be carried out in stages, are booked against appropriations appearing in the current budget. These payments are regularized when the works and reports are delivered and accepted. In order to facilitate decentralized management (gestion déconcentrée) of running expenses and revenue sharing (redevances affectées), the general accounting regulation (Art. 19 of Order No. 330-66 of April 21, 1967, on delegated collections and disbursement officers (régisseurs et payeurs délégués)) provides for a system of imprest expenditure and collection accounts (régies d’avances et de recettes). Advance payments must be justified at the end of the month, before they are carried forward (renouvellement) and the income received must be promptly deposited as it is collected, thus regularizing the budget assignment of these funds. Accounting officers are vigilant in their oversight of the imprest administrators (régisseurs). (p. 42)"
"Since the creation in 2000 of the Autonomous Public Services (Services de l’État gérés de manière autonome or SEGMAs) and the implementation of Organic Law 7.98, it may be considered that the most important public health and education facilities have access to clearly identified resources allocated specifically for their use, even if the amounts are subject to adjustments during the year. A special report on the SEGMAs is annexed to the draft budget act submitted to Parliament. In 2005 and 2006 — but not in 2007— it gave a detailed breakdown of own income and subsidies as well as of operating and capital expenditures for the 151 SEGMAs for the two previous years. Fifty-eight of the SEGMAs are part of the Health Ministry (hospital centers and military and civilian hospitals) and 38 belong to the Education Ministry (institutes and training centers). The budget booklets (morasses) provide detailed breakdowns of preliminary resources included in the initial budget act for SEGMAs as well as allocations for their running and investment expenditures. Supplementary allocations funded by their own income or financial aid received in excess of the ceilings in the initial budget act are summarized at the end of the year but are not systematically reported by the SEGMAs either during or at the end of the year, until the next budget act is drafted.  Health centers prepare and distributed an annual report on their activities and funding.  However, detailed information on education spending that is kept at the central level in the budget execution monitoring reports is not regularly published either for individual educational institutions or for primary schools.  The central education authorities approve and oversee operating and investment budgets as well as cash flow for the 16 regional academies of education and formation (AREF), which operate under the same statute as public enterprises and manage programs to increase school enrollment, improve the quality of education, and modernize teaching materials.  At the local level, directors of deconcentrated public services should be prepared to provide on demand, particularly to elected local officials, any information required to monitor, and if necessary make public, the funding made available to primary schools and other local service delivery units. (p. 43)"
"The TGR plays an essential role in the monitoring of budget execution, as directed by Art. 124 of the General Accounting Regulation (Order No. 330-66 of April 21, 1967), which stipulates that the Treasury (Trésorerie générale du Royaume or TGR) must “send a monthly report to the Finance Ministry presenting a statement of budget transactions, special account transactions, and cash flow transactions for the month,” accompanied by statements for previous periods. TGR summarizes this data in its “Monthly Statistical Bulletin for Public Finance,” published on its website. Through TGR’s database (à partir des relevés de la TGR), the central offices of the technical ministries have access to detailed data on the execution of their budgets; the main ministries use this information to prepare a quarterly update of budget execution. The Budget Directorate prepares a budget execution report for each ministry at the end of the year, and the main ministries’ own financial staff prepare the administrative accounts (compte administratif) by budget chapter, article, paragraph and line. These documents are sent to the Court of Accounts for their report on the budget review act. Likewise, the Treasury Directorate prepares a consolidated monthly budget execution and funding situation report (note de conjoncture) based on budget and accounting data after certain adjustments (retraitements), also widely distributed. (p. 43-44)"
Budget execution reports prepared by the Treasury (Trésorerie générale du Royaume or TGR) are in fact produced at the end of each month and a summary is distributed a few days later. However at the end of the year, final figures on budget execution may be subject to regularisation transactions at the initiative of the budget authorizing officers (ordonnateurs) and regional treasurers until March 31 of the next budget year. (p. 44)
The quality of information is soundly based on the rigorous practices and rules for centralization of information that are carried out by the network of accountants (comptables publics), under the Treasury (Trésorerie générale du Royaume or TGR)’s supervision. The information produced is also subject to control by TGR’s central level office when required, along with the Budget Directorate and Treasury Directorate, in order to verify its consistency. Lastly, the preparation by September 30 of the final general statement of budget execution for the previous year verifies every detail of expenditure recorded in the books, right down to the last hundredth of a Dirham. (p. 44)
"The Government’s general accounts (compte générale) are prepared at the end of the year by the Treasury (Trésorerie générale du Royaume or TGR): they include detailed information on the execution and funding of central government’s budget. During the period under review, general accounts were kept in accordance with the provision in the general regulations for public accounting that require that “revenue collected is recorded during the budget year when it is received by the public accounting officers,” and “expenditures are recorded during the budget year when the payment orders are signed by the disbursing accounting officer (assignataire) and paid with funds from that year, regardless of the date when the obligation was created (créance).” Under these conditions and given its current configuration, the public sector chart of accounts does not incorporate all the data required to calculate and monitor changes in the assets and liabilities of Government’s balance sheet. However, from the point of view of Treasury accounting, TGR’s general balances do record the position of assets and liabilities, and budgetary and treasury transactions (retracent en masse et en solde l’état) for all public accounts, including those for loans, securities (titres), and cash assets (disponibilités). (p. 44)"
"The dates of submission of the financial statements to the Court of Accounts exceeded the 15-month limit for this PEFA indicator component for 2004 to 2006. Beginning in 2005, an effort was launched to close the gap for the outstanding accounts since 2004 and for fiscal years 1999 through 2006. The Court received the accounts for fiscal year 2006 on June 12, 2008, thus reducing the time required for that year to 17 months and 12 days. (p. 45)"
Government accounts are not presented according to IPSAS or equivalent national standards. The public sector chart of accounts does nonetheless refer to national standards approved by the National Accounting Council and adopted in 2002 (but not yet implemented). (p. 45)
"The Court of Accounts, and the Regional Courts of Account set up in 2004, perform the external audit function for management and use of public funds in the fullest sense. The scope of their mission was broadened to include management audit by the promulgation of the Code of Financial Jurisdictions on June 13, 2002 (Law. No. 62-99). The Courts’ audit officers (magistrats), charged with jurisdictional audit under the 1996 Constitution, also have the requisite prerogatives and independence in the performance of their extra-judicial powers that are specified in INTOSAI and IFAC international standards. Moreover, since 2005, the Regional Courts of Account have been auditing local governments and their public establishments. Under the new approach, these reports —supported by verification of the regularity of transactions and the accuracy of public sector financial statements for Government and for the Public Enterprises and Public Establishments— also assess the reliability and relevance of internal control systems of the most important entities. Except for military expenditures (in 2007, 15 percent of the total public operating budget and 10.7 percent of the investment program funds), all expenditures and revenues of central government entities are audited every year. (p. 46)"
"The Court of Accounts’ audit reports on central government’s general account, which form the basis for the draft budget review act, may be prepared only after the Secretary General of Government (SGG) has handed over the account details as drawn up by the Finance Minister (the Treasury). As indicated under PI-25 above, these accounting reports for 2004, 2005, and 2006 were handed over by the SGG more than 18 months after the end of the fiscal years. The Court of Account also submits an activity report to the King every year in July, and this is then submitted to Parliament and published in October : the report (727 pages long in 2008) also covers the activities of the Regional Courts (408 pages in 2008). The Court’s activity report presents the results of its management audits and the use of public funds (40 audits in 2008), of jurisdictional controls, of budget execution reports, and of general declarations of compliance (based on the audit reports on the general account). (p. 46)"
"Every audit report must begin with a statement on follow-up of the recommendations made in the previous audit report. This rule is followed, in particular for the annual activity report of the Court of Accounts, which also incorporates the responses of the audited central government offices to its observations and reminders. On the other hand, neither the Prime Minister nor the Finance Minister prepares any kind of summary on the follow-up required for these reports, which should also be accompanited by a justification on the corrective measures selected or rejected and a timetable for their implementation. (p. 47)"
"The draft budget act is accompanied by a presentation report that provides “an overview of economic and financial equilibrium, the budget results as known and the future prospects, along with any changes made during the year to revenue and expenditure.” Other documents are also provided with the draft budget act:  Several other very detailed reports present transactions of the special treasury accounts and of Autonomous Public Services (Services de l’État gérés de manière autonome or SEGMA) and Public Enterprises and Public Establishments accounts, in support of the expenditure and revenue figures included in the draft budget, with reference to budget execution results for the current year.  In 2006, a special report on fiscal expenditures was prepared and produced in order to provide strong evidence in support of proposed legislative changes intended to better restrict and target tax exemptions.  Medium-term priorities for action programs in light of current achievements and future needs are presented in the presentation report, and in the Finance Minister’s remarks when opening the sessions to review the budget in each of Parliament’s two chambers. Reports on the special and Public Enterprises and Public Establishments accounts set forth the achievements and next steps for strategic projects.  All known central government resources are included in the budget act, not only taxes and duties but also service and license fees, aid funds and grants, income from sale of state property and from the state’s investment portfolio, and borrowed funds. It also must record any authorization to collect public revenue and sign loans, and any other action that creates, changes, or abolishes any source of public funds. Government retains the power to create new parafiscal taxes and service fees. (p. 47)"
"The procedures for Parliament’s review and vote on the budget, as set in the Constitution, the Organic Law and the Houses’ own internal rules carefully lay out the conduct required for the two chambers’ budgetary sessions. Parliament’s Finance Commissions play a key role in the draft budget review. In the House of Representatives, a budget analysis office (Bureau d’analyse budgétaire) was created within the Finance Commission. The advisory reports for these commissions are prepared with the assistance of the Budget Directorate, the the Tax Directorate (Direction générale des impôts or DGI) and the Treasury Directorate in the Finance Ministry. The main technical ministries are also consulted, to provide information and also reply to the Agriculture and Economic Commissions on the resources mobilized for certain sectoral policy programs in the five-year plans. The Finance Commissions are also involved in reviewing the draft parliamentary amendments, in particular to vet the amendments according to Art. 51 of the Constitution on the inadmissibility of any amendments intended to diminish public resources or to create or increase any public sector obligation. (p. 47-48)"
"The draft budget act must be “filed with office of one of the two chambers no later than 70 days before the end of the current budget year,” according to Art. 33 of the Organic Law. This deadline has been met by Government in 2005, 2006, and 2007. As provided in the Organic Law, meeting this milestone allows the first chamber 30 days to review the draft and reach a vote, and 30 days for the other chamber to do the same. Only once in the last ten years, in 2001, was the filing of the draft budget act delayed, due a change of government. In order to prepare their reports, the Finance Commissions may request and obtain information on budget execution progress, in particular on the status of revenue collection and on the largest or most politically sensitive expenditures, such as Compensation Fund subsidies of consumer food and energy expenses. (p. 48)"
"According to the Organic Law, changes to budget allocations during the current year may be authorized by order or decree in case of “urgent (impérieuse) necessity in the national interest.” A provision included in every annual budget act during the period under review allows the Government to augment the allocations above the amounts voted, “for the purpose of ensuring coverage of urgent needs not foreseen at the time the budget was set, when funds are insufficient,” provided the Parliament ratifies Government’s action. Such allocation changes were made by decree in each of the years under review, in particular for the carrying forward of investment payment allocations (DH 9 billion in 2006 and 2007) and to release additional funds from the contingency expenditures budget chapter (DH 2.3 billion in 2006 and DH 3.2 billion in 2007). Moreover, many orders were issued, as also provided in the Organic Law, in order to release (rattacher) supplementary apapropriations (fonds de concours). The total amount of such in-year reallocations reached 21 percent of the initial appropriations in 2005 and more than 26 percent in 2006 and 2007. But in all cases, these changes were reflected in the monthly budget execution statements and in central government allocations and expenditures in the current year, as detailed in the documents attached to the draft budget act for the following year. (p. 48-49)"
"Beginning in 2005, an effort was made to reduce tardy filing of the budget review acts. The draft budget review acts for fiscal years 2000, 2001, 2002, 2003, and 2004 were filed with the House of Representatives, along with the Court of Account’s budget execution reports for the general account, with delays decreasing from more than two years to 18 months. There was practically no delay in the filing of the accounts for 2005. Members of Parliament are understandably not much interested in closely examining these budget review acts, whose presentation is somewhat challenging in the first place, and particularly when they are received so long after the fact. The legislature has thus had no problem quickly reviewing them and voting to accept them, following the positive recommendations of its Finance Commissions, with little delay—in less than three months following their filing. Nor do the Court of Accounts’ activity reports receive much systematic or formal examination by Parliament, nor are hearings held to question their auditors or the government entities to which the Court has called attention in their reports. (p. 49)"
Apart from the presentation of the draft budget acts by the Finance Minister to the two Houses of Parliament, it does not appear that the Parliament has called any formal hearings for the ministers or department or agency directors to answer for the comments on their performance presented in the activity reports of the Court of Accounts, although the power to call such hearings is clearly one of their prerogatives. On the other hand, the Finance Commissions and their heads have initiated specific discussions (échanges) in 2007. (p. 49)
The PEFA team received no documentation containing recommendations from the legislature to Government. What the team gathered from newspaper accounts and from interviews with the presidents of the Finance Commissions was rather opinions (avis) in the form of oral comments and proposed amendments to the draft budget acts submitted to Parliament, in particular during the review of the draft by the two chambers. (p. 50)
Budget support does not affect budget management. The criteria for assessing its predictability do not apply to the situation in Morocco. In Morocco, budget support has not been an important source of Government income, even though aid and grant funds from international donors are sought after, well integrated into the budget, and their use monitored, both at the commitment phase and the annual drawdown amounts. The recent report by international donors in the Paris Club have also emphasized that “forecasting aid is much less problematic for Morocco, due to its low level of dependence on international assistance,” which amounts to only $US1,046M or 1.8 percent of GDP. (p. 50-51)
Sub-indicator (ii) involves the timeliness of donor disbursements during the current year in accordance with quarterly forecasts. Given the different donor-specific conditions for the current set of aid agreements with country and international donors, there are no quarterly or annual funding schedules for this aid, not even for reference use and much less for use in managing these funds. (p. 51)
"The inclusion of financial support in the budget is done under the best possible conditions, since the gap between expected ($US 1,338 M) and actual ($US 1,668 M) deposits was +20 in 2007. This difference, while it testifies to the prudence of the Budget Directorate’s income forecasts, is also explained by the fact that “transactions take place via direct liaison between donors and certain beneficiaries,” without the Finance Ministry being notified in timely fashion. Looking at the amounts programmed by the eleven donors covered in the survey ($US 2,159 M total), the gap —in this case, negative— is much greater: actual disbursements recorded in the public sector accounts ($US 1,474 M) are 32 percent less than programmed in 2007. In the absence of better coordination, the conservative margin for aid figures included in the budget is therefore well justified. The interpretation or conversion of funding forecasts from the donors’ classification systems to the Moroccan budget funds classification system does not appear to have created any difficulties in the transcription of aid funds for the reports annexed to the budget act, nor for the Budget Directorate’s activity reports. (p. 51-52)"
No indications were found on this topic in reports for the Paris Club nor in any Finance Ministry reports. (p. 52)
"According to the June 2008 Paris Club donors’ report, on average 75 percent of donor aid to Morocco is managed by use of national procedures. The procedures and control measures applying to public expenditure are also followed for aid funds, including use of public procurement procedures for 81 percent of aid expenditures. Audits are also carried out by the Inspector General (Inspection générale des finances or IGF) and the ministries, and by the Court of Accounts and the Regional Courts of Accounts, for donor-supported projects implemented by local governments or local public enterprises. A limited number of exceptions involve certain project aid, such as the EU’s Green Circle (le circuit vert) and a few other donors, who prefer to direct their own activities following the example of (à l’instar du) global funds for the fight against AIDS, tuberculosis and malaria. (p. 52)"