Fostering Accountability Sub-National (Local Government) PEFA Assessment in Tanzania Kigoma Ujiji Municipal Council –Final Report
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Fostering Accountability Sub-National (Local Government) PEFA Assessment in Tanzania Kigoma Ujiji Municipal Council –Final Report July 2016 Table of Contents Contents 1. Summary assessment 6 1.1. Overview of ratings 6 1.2. Context of the assessment- Data issues 7 1.3. Integrated Assessment of PFM performance 7 1.4.AssessmentoftheimpactofPFMweaknesses 12 1.5. Prospects for Reform Planning and Implementation 13 2. Introduction 14 2.1. Objectives 14 2.2.ProcessofPreparingtheReport 16 2.3. Scope of the Assignment and Rationale for Sample 17 2.4. Dependency of Kigoma Ujiji MC on the Central Government 18 3. Country Background 20 3.1. Country Economic Situation 20 3.2.BudgetaryOutcomes 23 3.3. Legal and Institutional Framework for Public Financial Management 24 4. LGA Background Information 33 4.1.EconomicSituation 33 4.2. Institutional Framework of LGA 34 4.3. Fiscal Performance of LGA 35 5. Assessment of the PFM systems, Processes and Institutions 37 5.1. Predictability of Central Transfers 37 5.2.PFMout-turns:Budgetcredibility 39 5.3. Key Cross-Cutting Issues: Comprehensiveness and Transparency 45 5.4.BudgetCycle 57 5.5.Donorpractices 110 6. Government Reform Process 111 6.1. Recent and On-going Reforms 111 6.2. Institutional Factors Supporting Reform Planning and Implementation 113 Annexure.1 Dataissues 116 Annexure.2 Mapping of Key Weaknesses 117 Annexure.3 Disclosure of the Quality Assurance Mechanism 119 Annexure.4 Scoring Methodology under the PEFA Assessment Framework 122 Annexure.5 Organizational Structure of Ministry of Finance and PMO-RALG, Government of Tanzania 132 Table of Contents Annexure.6 Revenue and Expenditure Calculations 134 Annexure.7 Screenshots for HLG -1 and PI -1 and PI -2 135 Annexure.8 Performance indicators summary 144 Annexure.9 List of people met 150 Annexure.10 List of Documents Referred To 153 Acronyms Acronyms Acronym Definition Acronym Definition ACGEN Accountant General LGFM Local Government Financial Memorandum African Organisation of Supreme AFROSAI LGLB Local Government Loans Board Audit Institutions AFS Annual Financial Statements LGRP Local Government Reform Programme Acquired Immune Deficiency AIDS LGUA Local Government (Urban Authorities) Act Syndrome Association Local Authorities of ALAT LLG Lower Level of Government Tanzania Agriculture Sector Development ASDP LPO Local Purchase Order Programme CAG Controller and Auditor General MDA Ministries, Departments and Agencies CBO Community Based Organization MoF Ministry of Finance Constituency Development CDCF MSD Medical Store Department Catalyst Fund CDG Capital Development Grant MTEF Medium Term Expenditure Framework CFR Council Financial Reports NA Not Applicable CHF Community Health Fund NAOT National Audit Office of 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 and Sanitation DASIP NRWSSP Investment Programme Programme National Water Sector Development DC District Council NWSDP Programme DED District Executive Director OSR Own Source Revenue Department for International DFID PAA PublicAuditAct Development Prevention and Combating of Corruption DPLO District Planning Officer PCCB Bureau Elizabeth Glaser Pediatric AIDS Primary Education Development EGPAF PEDP Foundation Programme Public Expenditure and Financial GDP Gross Domestic Product PEFA Accountability GFS Government Finance Statistics PETS Public Expenditure and Tracking Survey Deutsche Gesellschaft für GIZ PFA Public Finance Act Internationale Zusammenarbeit GOT Government of Tanzania PFM Public Financial Management Public Financial Management Reform GPG General Purpose Grant PFMRP Programme Human Capital Management HCMIS PMG Paymaster General Information System HIV Human Immunodeficiency Virus PMO Prime Minister Office Prime Minister Office- Regional HLG Higher Level of Government PMORALG Administration and Local Government Sub-national (Local Government) PEFA Assessment in Tanzania – Kigoma Ujiji Municipal Council PwC 4 Acronyms HoD Head of Department POPSM President Office-Public Sector Management HRO Human Resource Officer PPA Public Procurement Act HSBF Health Sector Basket Fund PPAA Public Procurement Appeals Authority IAF Internal Auditor's Office PPP Public Private Partnership IAG Internal Auditor General PPR Public Procurement Regulations International Accounting IASB PPRA Public Procurement Regulatory Authority Standards Board IAU Internal Audit Unit PSM Public Sector Management Information and Communication ICT PwC PricewaterhouseCoopers Limited Technology International Federation of IFA RAM Regularity Audit Manual Accountants Integrated Financial Management IFMS RAS Regional Administrative Secretariat System Revenue Computerised Management IIA Institute of Internal Auditors RCMIS Information System IMF International Monetary Fund RWSSP Rural Water Supply and 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 Development ISA SEDP Auditing Programme International Standards of Strengths, Weaknesses Opportunities And ISSAI SWOT Supreme Audit Institutions 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 LGA Local Government Authority TCI Confederation of Tanzania 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 Local Government Capital LGCDG USD UnitedStatesDollar Development Grants VAT Value Added Tax LGFA Local Government Finance Act WDC Ward Development Committee Fiscal Year 1 July to 30 June 1 USD= 2019 Tanzanian Shillings (4th of June, 2015) Exchange rate Symbol “TZS” indicates Tanzania Shillings and “USD” indicates United States Dollar Financial Period 2011-12 to 2013-14 Assessed Sub-national (Local Government) PEFA Assessment in Tanzania – Kigoma Ujiji Municipal Council PwC 5 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 D+ 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 D+ 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 NR 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 D 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 NR 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 – Kigoma Ujiji Municipal Council PwC 6 Summary Assessment Summary Ratings PI-21 Effectiveness of internal audit C+ (iii) Accounting, Recording and Reporting PI-22 Timeliness and regularity of accounts reconciliation C 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 D+ 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 in this assessment is an area of concern. While the basis of compilation of each document is standardized and well established, reconciliation of different figures from documents