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Fostering Accountability Sub-National (Local Government) PEFA Assessment in Tanzania Rorya District Council –Final Report July 2016 Table of Contents Contents Acronyms 4 1. Summary Assessment 7 1.1. Overview of Ratings 7 1.2. Context of the assessment- Data issues 8 1.3. Integrated Assessment of PFM performance 8 1.4.AssessmentoftheImpactofPFMweaknesses 14 1.5. Prospects for Reform Planning and Implementation 15 2. Introduction 16 2.1. Objectives 16 2.2.ProcessofPreparingtheReport 17 2.3. Scope of the Assignment and Rationale for Sample 19 2.4. Dependency of Rorya DC on the Central Government 20 3. Country Background 22 3.1. Country Economic Situation 22 3.2.BudgetaryOutcomes 25 3.3. Legal and Institutional Framework for Public Financial Management 26 4. LGA Background Information 35 4.1.EconomicSituation 35 4.2. Institutional Framework of LGA 36 4.3. Fiscal Performance of LGA 37 5. Assessment of the PFM systems, processes and institutions 40 5.1. Predictability of central transfers 40 5.2. PFM-out-turns: Budget credibility 42 5.3. Key Cross-Cutting Issues: Comprehensiveness and Transparency 49 5.4.BudgetCycle 62 5.5.Donorpractices 118 6. Government Reform Process 119 6.1. Recent and On-going Reforms 119 6.2. Institutional Factors Supporting Reform Planning and Implementation 121 Annexure.1 Dataissues 124 Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 2 Table of Contents Annexure.2 Mapping of Key Weaknesses 125 Annexure.3 Disclosure of the Quality Assurance Mechanism 127 Annexure.4 Scoring Methodology under the PEFA Assessment Framework 130 Annexure.5 Organizational Structure of Ministry of Finance and PM-RALG, Government of Tanzania 140 Annexure.6 Revenue and expenditure calculations 142 Annexure.7 Screenshots for HLG-1 Dimension (iii) and PI-1 and PI-2 143 Annexure.8 Performance indicators summary 149 Annexure.9 List of people met 156 Annexure.10 List of Documents Referred to 159 Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 3 Acronyms Acronyms Acrony Definition Acronym Definition m Local Government Financial ACGEN Accountant General LGFM Memorandum African Organisation of Supreme AFROSAI LGLB Local Government Loans Board Audit Institutions Local Government Reform AFS Annual Financial Statements LGRP Programme Acquired Immune Deficiency Local Government (Urban AIDS LGUA Syndrome Authorities) Act Association Local Authorities of ALAT LLG Lower Level of Government Tanzania Agriculture Sector Development ASDP LPO Local Purchase Order Programme Ministries, Departments and CAG Controller and Auditor General MDA Agencies CBO Community Based Organization MoF Ministry of Finance Constituency Development CDCF MSD Medical Store Department Catalyst Fund Medium Term Expenditure CDG Capital Development Grant MTEF Framework CFR Council Financial Reports NA Not Applicable National Audit Office of CHF CommunityHealthFund NAOT Tanzania CIA Chief Internal Auditor NHIF National Health Insurance Fund CMT Council Management Team NMB National Microfinance Bank Classification of Functions of the COFOG NR Not Rated Government District Agriculture Sector National Rural Water Supply DASIP NRWSSP Investment Programme and Sanitation Programme National Water Sector DC District Council NWSDP Development Programme DED District Executive Director OSR Own Source Revenue Department for International DFID PAA PublicAuditAct Development Prevention and Combating of DPLO District Planning Officer PCCB Corruption Bureau Elizabeth Glaser Pediatric AIDS Primary Education Development EGPAF PEDP Foundation Programme Public Expenditure and GDP Gross Domestic Product PEFA Financial Accountability Public Expenditure and GFS Government Finance Statistics PETS Tracking Survey Deutsche Gesellschaft für GIZ PFA Public Finance Act Internationale Zusammenarbeit GOT Government of Tanzania PFM Public Financial Management Public Financial Management GPG General Purpose Grant PFMRP Reform Programme Human Capital Management HCMIS PMG Paymaster General Information System HIV Human Immunodeficiency Virus PMO Prime Minister Office Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 4 Acronyms Prime Minister Office- Regional HLG Higher Level of Government PMORALG Administration and Local Government President Office-Public Sector HoD Head of Department POPSM Management HRO Human Resource Officer PPA Public Procurement Act Public Procurement Appeals HSBF HealthSectorBasketFund PPAA Authority IAF Internal Auditor's Office PPP Public Private Partnership IAG Internal Auditor General PPR Public Procurement Regulations International Accounting Public Procurement Regulatory IASB PPRA Standards Board Authority IAU Internal Audit Unit PSM Public Sector Management Information and Communication ICT PwC PricewaterhouseCoopers Technology International Federation of IFA RAM Regularity Audit Manual Accountants Integrated Financial Management Regional Administrative IFMS RAS System Secretariat Revenue Computerised IIA Institute of Internal Auditors RCMIS Management Information System Rural Water Supply and IMF International Monetary Fund RWSSP Sanitation Project International Association of INTOSAI SAI Supreme Audit Institution Supreme Audit Institutions International Public Sector IPSAS SDU Service Delivery Unit Accounting Standards International Standards on Secondary Education ISA SEDP Auditing Development Programme International Standards of Strengths, Weaknesses ISSAI SWOT Supreme Audit Institutions Opportunities And Threats KRA Key Result Areas TACAIDS Tanzania Commission for AIDS Local Authorities Accounts LAAC TASAF Tanzania Social Action Fund Committee Local Authorities Accounting LAAM TB Tender Board Manual Confederation of Tanzania LGA Local Government Authority TCI Industries Local Government Accounting LGAM TIN Tax Identification Number Manual Local Government Capital LGCDG TRA Tanzania Revenue Authority Development Grant Local Government District LGDA TZS Tanzania Shilling Authorities Act USD UnitedStatesDollar LGFA Local Government Finance Act VAT ValueAddedTax Fiscal Year 1 July to 30 June 1 USD= 2019 Tanzanian Shilling (4th of June, 2015) Exchange rate Symbol “TZS” indicates Tanzania Shillings and “USD” indicates United States Dollar Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 5 Acronyms Financial Period 2011-12 to 2013-14 Assessed Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 6 Summary Assessment 1. Summary Assessment 1.1. Overview of Ratings Table 1: Overall ratings Summary Ratings Performance Description PEFA 2015 rating Indicators HLG-1 Predictability of transfers from a Higher Level of Government NR A. PFM Out-Turns: Budget Credibility PI-1 Aggregate expenditure out-turn compared to original approved budget D Composition of expenditure out-turn compared to original approved PI-2 D+ budget PI-3 Aggregate revenue out-turn compared to original approved budget D PI-4 Stock and monitoring of expenditure arrears NR B. Key Cross-Cutting Issues: Comprehensiveness and Transparency PI-5 Classification of the budget C PI-6 Comprehensiveness of information included in budget documents C PI-7 Extent of unreported government operations B PI-8 Transparency of inter-governmental fiscal relations D PI-9 Oversight of aggregate fiscal risk from other public sector entities C PI-10 Public access to key fiscal information C C. Budget Cycle (i) Policy-Based Budgeting PI-11 Orderliness and participation in the budget process C+ Multi-year perspective in fiscal planning, expenditure policy, and PI-12 D+ budgeting (ii) Predictability and Control in Budget Execution PI-13 Transparency of taxpayer obligations and liabilities D+ PI-14 Effectiveness of measures for taxpayer registration and tax assessment D PI-15 Effectiveness of collection of tax payments D+ Predictability in the availability of funds for commitment of PI-16 D expenditures PI-17 Recording and management of cash balances, debt and guarantees C PI-18 Effectiveness of payroll controls D+ PI-19 Competition, value for money and controls in procurement D+ PI-20 Effectiveness of internal controls for non-salary expenditure D+ Sub-national (Local Government) PEFA Assessment in Tanzania – Rorya District Council PwC 7 Summary Assessment Summary Ratings PI-21 Effectiveness of internal audit C+ (iii) Accounting, Recording and Reporting PI-22 Timeliness and regularity of accounts reconciliation B Availability of information on resources received by service delivery PI-23 B units PI-24 Quality and timeliness of in-year budget reports C+ PI-25 Quality and timeliness of annual financial statements B+ (iv) External Scrutiny and Audit PI-26 Scope, nature, and follow-up of external audit C+ PI-27 Legislative scrutiny of the annual budget law D+ PI-28 Legislative scrutiny of external audit reports C+ D. Donor Practices D-1 Predictability of Direct Budget Support NA Financial information provided by donors for budgeting and reporting D-2 NA on project and program aid D-3 Proportion of aid that is managed by use of national procedures NA *NR signifies indicator has been assessed but not rated due to no/insufficient documentation or information provided to the PEFA team, “NA: Not Applicable” implies that the PFM transaction/system/process required for the assessor to assess the indicator/dimension does not exist in the LGA. 1.2. Context of the assessment- Data issues The variation in data between various source documents referred to in some detail
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