PI-4 Stock and monitoring of expenditure payment arrears M1 C D D+ B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency PI-5 Classification of the budget M1 D D PI-6 Comprehensiveness of information included in budget documentation M1 B B PI-7 Extent of unreported government operations M1 A A A PI-8 Transparency of inter-governmental fiscal relations M2 A B C B PI-9 Oversight of aggregate fiscal risk from other public sector entities M1 C B C+ PI-10 Public access to key fiscal information M1 C C C. BUDGET CYCLE C(i) Policy-Based Budgeting PI-11 Orderliness and participation in the annual budget process M2 B A D B PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting M2 C D C D D+ C(ii) Predictability and Control in Budget Execution PI-13 Transparency of taxpayer obligations and liabilities M2 D C B C PI-14 Effectiveness of measures for taxpayer registration and tax assessment M2 C C C C PI-15 Effectiveness in collection of tax payments M1 A C D D+ PI-16 Predictability in the availability of funds for commitment of expenditures M1 A D D D+
DENR 20 5 10 5 Army 21 7 12 2 DBM 9 6 2 1 DOF 19 5 9 5 DOST 12 1 8 3 NEDA 25 6 12 7 DILG 23 15 8 BIR 62 15 27 20 BoC 94 7 73 14 DND 4 1 2 1 DOTC 121 30 31 60 Agency Total Implemented Partial Not Court of Appeals 12 5 4 3 CBAA 3 1 2 Justice 11 2 5 4 Office of the President 7 3 2 2 Procurement Service 5 1 4 Total 737 189 351 190 26% 48% 26% Source: FY2005 COA Audit Reports of various government agencies (Source: COA website) Indicator Score Meaning of PEFA score Evidence PI-26. Scope, nature and follow-up of external audit B+ (i) Scope/nature of audit performed (incl. adherence to auditing standards). A All entities of central government are audited annually covering revenue, expenditure and assets/liabilities. A full range of financial audits and some aspects of performance audit are performed and generally adhere to auditing standards, focusing on significant and systemic issues. Examination of sample of 2005 COA financial audit reports (ii) Timeliness of submission of audit reports to legislature - Not Applicable PD 1445 of the “Government Auditing Code of the Philippines” provides that annual audit reports are to be submitted to the head of the agency concerned and not to congress. (iii) Evidence of follow up on audit recommendations. B A formal response is made in a timely manner, but there is little evidence of systematic follow up. Various COA Audit reports for FY2005, particularly for DA, DoH, DBM, GPS, DepED Scoring methodology M1 PI-27 Legislative scrutiny of the annual budget law In order to assess the role of the legislature in the annual budget process, this indicator reviews (i) the scope of the legislature’s scrutiny, (ii) the procedures followed, (iii) the time allowed, and (iv) the rules for in-year budget amendments.
Indicator Score Meaning of PEFA score Evidence PI-27. Legislative scrutiny of the annual budget law C+ (i) Scope of the legislature’s scrutiny. B The legislature’s review covers fiscal policies and aggregates for the coming year as well as detailed estimates of expenditure and revenue. Budget Documents Hearings of Senate Budget committee and House Appropriations Committee (ii) Extent to which the legislature’s procedures are and respected. A The legislature’s procedures for budget review are firmly established and respected. They include internal organizational arrangements, such as specialized review committees, and negotiation procedures. Internal procedures within Congress are firmly established and generally respected. (iii) Adequacy of time for the legislature to provide a response to budget proposals both the detailed estimates and, where applicable, for proposals on macro-fiscal aggregates earlier in the budget preparation cycle (time allowed in practice for all stages combined). A The legislature has at least two months to review the budget proposals. The Legislature took 8 and 10 months respectively on budget review for two years and in one year never finished at all. (iv) Rules for in-year amendments to the budget without ex-ante approval by the legislature. C Clear rules exist, but they may not always be respected OR they may allow extensive administrative reallocation as well as expansion of total expenditure. Significant resource allocation shifting is achieved from shifting special purpose funds to overspending agencies and from reallocating appropriated funds from “saving” (i.e., unused obligation authority for an activity or a project that has completed). Scoring methodology M1 PI-28 Legislative scrutiny of external audit reports The legislature has a key role in exercising scrutiny over the execution of the budget that it approved. A common way in which this is done is through a legislative committee that examines external audit reports and questions responsible parties about the findings of the reports. The effectiveness of legislative scrutiny is assessed by timeliness of audit reports, extent of hearings and issuance and response to recommendations. Timeliness of examination of audit reports by the legislature: As discussed in reference to the PI-26, the COA audit reports are not formally submitted to the legislature. A copy of each report is submitted to the Office of the Speaker of the House. The audit reports on individual departments are formally submitted to departmental secretaries while an audit of performance reporting around the social and justice sectors of government is addressed to the Director General NEDA.
findings. D. Donor Practices D-1 Predictability of Direct Budget Support Not rated Not applicable as direct budgetary support not in place during the years under review. D-2 Financial information provided by donors for budgeting and reporting on project and program aid D Information tends to be provided on a project by project basis and forward estimates tend not be provided by donors. D-3 Proportion of aid that is managed by use of national procedures D National procedures are used for local purchases but all ICBs are managed through bilateral or multilateral agency’s procurement and procedures framework. ANNEX 2: DETAILS OF THE AND INSTITUTIONAL FRAMEWORK FOR PFM Key constitutional provisions related to PFM The Constitution sets forth a number of general and specific provisions related to matters of budgeting and fiscal and financial management. For example, it includes a number of provisions intended to guard against fiscal indiscipline, such as the prohibition for Congress to increase appropriations beyond the level proposed by the executive, or financial impropriety, such as the Section 29 of Article VI that proscribes inappropriate uses of appropriated and/or Treasury funds. The Constitution grants the President a broad range of discretionary authorities over budgetary matters including line item veto and the rule that the congress’s failure to enact an appropriations bill automatically leads to “re-enactment” of the previous year’s budget, while allowing the president to reallocate savings. It defines a set of constitutional or independent bodies and grants fiscal autonomy to some of them. It defines the jurisdiction and the mandates of one of these constitutional bodies, the Commission on Audit (COA), a key institutional player in PFM, as the body in charge of both matters related to audit and accounting of the entire public sector and public money. The Constitution establishes a broad range of policy concerns as matters of general principles (e.g., “The State shall pursue an independent foreign policy”) without any budgetary implication. An exception is the Section 5 of Article XIV, which specifically requires that the State “assign the highest budgetary priority to education.” On matters related to fiscal transparency, the Section 7 of Article III guarantees “the right of the people to information on matters of public concern” and declares that “access to official records, and to documents and papers pertaining to official acts,