IV Assurances of Integrity
- Dawn Rehm, and Taryn Parry
- Published Date:
- October 2007
261. It is essential for fiscal transparency that fiscal data reported to the government meet basic criteria that attest to their quality, and that mechanisms be in place that provide assurances to the legislature and the public about data integrity. Internal oversight mechanisms are necessary for the conduct of public officials, public service employment, internal audit, procurement, purchases and sales of public assets, and national revenue administration. External oversight mechanisms also provide assurances through an independent national audit body, a national statistical body, and engagement with external independent experts.
Data Quality Standards
Fiscal data should meet accepted data quality standards.133
262. The Code includes good practices relating to (1) realism of budget data, (2) accounting standards, and (3) data consistency and reconciliation.
263. Basic requirements under this principle are to ensure that
accounting policies meet generally accepted accounting standards;
final accounts are fully reconciled with budget appropriations, and fiscal aggregate outcomes are compared with previous forecasts; and
countries subscribe to the GDDS if they are not able to adhere to the SDDS.
Realism of budget data
Budget forecasts and updates should reflect recent revenue and expenditure trends, underlying macroeconomic developments, and well-defined policy commitments.
264. It is important that budget estimates and forecasts take into account all the information available at the time of presentation, including the latest projections for the economic outlook and the most recent evidence on spending, revenue, and financing.134 In updating the budget estimates during the year, it can at times prove difficult to determine whether discrepancies between the original projections and the trends implied by the latest outturn information reflect deviations in the macroeconomic assumptions or in the forecasting parameters, such as execution rates for investment or collection rates for taxes. Judgment must be exercised about the relative quality of the different sources of information and reconciliations made between conflicting data items. When major revisions are made to budget estimates, explanations should be provided to ensure the integrity of the forecasting process. The effects of any changes in policy commitments should also be clearly distinguished.
The annual budget and final accounts should indicate the accounting basis used in the compilation and presentation of fiscal data. Generally accepted accounting standards should be followed.
265. Fiscal transparency requires that the accounting policies135 that are being followed be referenced and that generally accepted accounting standards be met.136 It should be clear where accountability lies within government for setting accounting standards and policies, and for monitoring and certifying compliance with standards. Any recent revisions in accounting methodology and practices should be disclosed, together with the reasons for the changes and an indication of their impact on fiscal aggregates (to facilitate comparability between years). In-year reports should be prepared using the same accounting basis as the original budget. Advance notice should be given of any significant planned changes in accounting policies or practices. Best practice involves mechanisms for setting standards for government accounting and financial reporting that are open and independent of government.137
266. The IFAC-IPSASB has developed prescriptive standards and some associated descriptive guidance on existing government accounting practice (see Box 14).
Data consistency and reconciliation
Data in fiscal reports should be internally consistent and reconciled with relevant data from other sources. Major revisions of historical fiscal data and any changes to data classification should be explained
267. A precondition of the reliability of all fiscal reports as identified in Table 1 is that they be based on internally consistent data. Cross-checks of internal consistency of fiscal data should be undertaken and the effectiveness of these procedures reported. The security of data should also be ensured.
268. Fiscal transparency requires that final accounts be fully reconciled with budget appropriations, and that each be reconciled with GFSM 2001 reports. The former provides assurance that all relevant accounts are covered by GFSM 2001 reports. GFSM 2001 reports should be compiled parallel to budget reports, and should be actively used in the process of formulating and evaluating fiscal policy. The change in the stock of debt (and financial assets) should be reconciled with the reported budget balance. Maintenance of a comprehensive government balance sheet is a systematic way of tracking changes in debt and assets, and can therefore provide a means of checking overall data reliability.
269. A background paper should be included with the budget documentation that analyzes the differences between forecasts of the main fiscal aggregates made in previous budgets and relevant outturn information. In particular, differences between previous fiscal forecasts and outturns should be broken down into divergences owing to macroeconomic factors that affected forecasts of revenues or expenditures, such as those related to income support, and those that reflected other factors, including unexpected changes in the demand for public services, natural or other types of calamities, wars, or civil conflict. Where it is known that data are internally inconsistent, or that the reconciliation necessary to verify consistency has not been done, this should be clearly stated.
Reconciliation with other data
270. Reconciliation should be undertaken between fiscal data and related nonfiscal data, primarily monetary data but also balance of payments and national accounts data.138 There should be rigorous reconciliation of fiscal and monetary data, and where reconciliation processes are weak, this fact should be brought to public attention (e.g., in audit reports) in a timely manner. The overall balance measured as the difference between revenue and expenditure should be reconciled with financing data as reported both by the government and by its counterparts—the central bank, the rest of the banking system, and other domestic and external lenders. Data on government financing should also be reconciled with detailed information on changes in debt and financial assets. For all reports, any unexplained discrepancy between the government ledger accounts and bank accounts should be disclosed.
271. One way for countries to signal a commitment to improving the quality of fiscal data is to participate in the GDDS. A key purpose of the GDDS is to help countries develop their statistical systems so that they can reach a stage at which they will be able to disseminate timely and reliable data to the public on a regular basis. This is necessary for countries that are not participating in the SDDS. The GDDS provides a framework for evaluating needs for data improvement and setting priorities in this respect. Participation requires, among other things, a commitment to using the GDDS as a framework for statistical development, preparing metadata139 describing current practices in the production and dissemination of official statistics, and announcing plans for short- and long-term improvements in these practices.
Box 26.Data Quality Framework: Main Dimensions
|Prerequisites of quality||The legal and institutional environment is supportive of statistics; resources are commensurate with the needs of statistical programs; statistics cover relevant information; and quality is recognized as a cornerstone of statistical work.|
|Integrity||Professionalism is a guiding principle for statistical policies and practices; this requires transparency of statistical policies and guidance for ethical standards.|
|Methodological soundness||Concepts and definitions used are in accordance with standard statistical frameworks; internationally accepted standards are met for the scope of statistics, the classification and sectorization of systems, and the validation and recording of flows and stocks (basis for recording).|
|Accuracy and reliability||Source data provide an adequate basis to compile statistics; statistical techniques employed conform to sound statistical procedures; there is regular assessment and validation of source data; and revision studies form a gauge of reliability.|
|Serviceability||Statistics follow a predictable revisions policy with periodicity and timeliness, follow internationally accepted dissemination standards, and are consistent over time and with other major data sets; and revision policy and practice follow a regular and publicized procedure.|
|Accessibility||Statistics are presented in a clear and accessible manner; forms of dissemination are adequate, and statistics are made available on an impartial basis; up-to-date and pertinent metadata are made available; and prompt and knowledgeable assistance to users is available.|
272. The IMF has produced a generic Data Quality Assessment Framework (DQAF).140 It covers the various quality aspects of data dissemination collection, processing, and dissemination under the IMF’s DQAF umbrella. A specific application for fiscal data has been developed that is consistent with the revised GFSM 2001. The DQAF gives structure and provides a common language for the assessment of data quality. It is designed to be a flexible, comprehensive tool that can be used in a variety of country situations by experts and nonexperts alike. The framework aims to bring together best practices and internationally accepted concepts and definitions in statistics, including those of the UN Fundamental Principles of Official Statistics141 and the SDDS and GDDS.
273. A summary of the generic DQAF is presented in Box 26. The framework follows a cascading structure that flows from the identified prerequisites of data quality and the main dimensions that have been identified as critical constituents of data quality. The framework identifies pointers, or observable features, that can be used in assessing quality. These pointers to quality are broken down into elements (major identifiers of the quality dimensions) and further into more detailed and concrete indicators (not shown in Box 26). The DQAF recognizes that the quality of an individual data set is intrinsically bound with that of the institution producing it.
274. Major revisions to historical fiscal data should be explained. Assurance should also be provided as to the consistency of quality over time. For instance, where aggregate fiscal data are presented in the budget documentation for prior years, it should be clear whether there have been changes in classification and whether the numbers are provisional or final. Any changes to the classification and treatment of transactions should be accompanied by a reconciliation between the old and new presentation of historical data. Reasons for the changes and their approximate fiscal consequences should also be explained. Revisions to fiscal data should follow a regular, established, and published schedule.
Fiscal activities should be subject to effective internal oversight and safeguards.
275. The Code includes good practices relating to (1) ethical standards, (2) employment procedures, (3) procurement regulations, (4) purchases and sales of assets, (5) internal audit systems, and (6) national revenue administration.
276. Basic requirements under this principle are to ensure that
standards for procurement, financial transactions involving the public sector, and the ethical behavior of public servants are clear, publicly accessible, and observed; and
internal audit procedures are clear and observed.
Ethical standards of behavior for public servants should be clear and well publicized.
277. The government should have effective institutional arrangements to promote public sector values, and a code of ethics or guidelines for the appropriate conduct of public officials, which should be clear, accessible, and publicly available. This is often supported by arrangements to enlist public servants in support of these ethical standards in their departments or ministries.
278. Officials handling or making decisions about the receipt or use of public funds, and otherwise exercising their official powers, should be subject to a code of conduct that precludes unethical behavior. Some aspects of such a code could be included in the budget and tax legislation; other aspects may need separate policy, legislation, or regulations. The United Nations’ International Code of Conduct for Public Officials,142 which is summarized in Box 27, provides a basis for implementing a standard of ethics and for strengthening an existing standard.143 Best practices for the Principles for Managing Ethics in the Public Sector should be observed.144 These principles assume that an adequate statement of core ethical standards is in place and emphasize the necessary supporting environment, including the legal framework, clear procedures for exposing wrongdoing, political commitment, and the active promotion of ethical conduct. The Observatory on Ethics Codes and Codes of Conduct in OECD Countries145 provides examples of recent codes of conduct and ethics codes.
279. Although a code of conduct is an important component in supporting integrity relating to fiscal matters, its mere existence is not sufficient. Accompanying the code should be an active promotion and education program to increase dialogue and understanding of the appropriate public sector values and ethics. In an expanding number of countries, governments have one or more independent ombudsperson functions to provide an avenue for public officials to come forward, in a safe environment, to raise concerns about perceived wrongdoing. These functions have the mandate to investigate cases and suggest remedial action. In addition, some countries have adopted legal and institutional mechanisms to ensure the ethical behavior of public officials.146 Further, comprehensive employee surveys are often conducted in order to obtain feedback on matters of integrity, morale, and workplace well-being.
Public sector employment procedures and conditions should be documented and accessible to interested parties
280. Selection based on merit is the foundation for a competent, professional, nonpartisan public service. Application of merit principles147 in public employment should be clear. Procedures governing recruitment and promotion within the public service should be clearly specified and accessible. Conditions of employment should be published. Vacancies should be advertised and filled through competition, with clearly defined and fair selection criteria, which should be merit based.
281. In a number of advanced, and some developing, economies, significant powers related to employment conditions are being delegated to selected agencies. These agencies are allowed to set their own recruitment policies and to determine pay (within varying limits) outside the general scope of a public service central employer authority. This is the case in a number of revenue authorities in developing countries, which are now freed from the restrictions of the civil service code. One motivation has been the perception that corrupt practices, and particularly the incentive for collusion with taxpayers, can be reduced by pay flexibility that allows well-trained revenue administrators to receive salaries higher than elsewhere in the civil service, buttressed by stringent codes of conduct. Clarity and openness of human resource procedures, including conditions of employment, are core requirements.
Box 27.Code of Conduct for Public Officials
The International Code of Conduct for Public Officials, adopted by the United Nations on December 12, 1996, takes as its starting point that a public official is in a position of trust, implying a duty to act in the public interest. It includes the following provisions:
Public officials shall avoid conflicts of interest.
Public officials shall comply with any applicable requirements to disclose their personal assets and liabilities.
Public officials shall not solicit or accept any gift or favor that may influence the performance of their duties.
Public officials shall respect the confidentiality of any information in their possession.
Public officials shall not engage in political activity outside the scope of their office such that it impairs public confidence in the impartial performance of their duties.
Procurement regulations, meeting international standards, should be accessible and observed in practice.
282. Arrangements for contracting goods and services, particularly where large contracts are involved, must be undertaken in an open and publicly accessible manner in order to provide assurance that opportunities for corruption are minimized and that public funds are being properly used. Similar considerations should apply to contracting out government services or management processes. The strict observance of procurement regulations is a prerequisite for a robust procurement system.148
283. Appropriate and transparent tendering mechanisms should be set up for contracts above a threshold size, and procurement regulations should give independent authority to a tender committee or board and require that its decisions be open to audit.149 Where services formerly provided within government are contracted out to the private sector, these procedures should be subject to the same or similar procurement regulations.150 Some countries developed a procurement law based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Procurement of Goods, Construction, and Services.151
Purchases and sales of assets
Purchases and sales of public assets should be undertaken in an open manner, and major transactions should be separately identified.
284. The purchase and sale of assets and liabilities, through privatization and other means, should be conducted in an open manner.152 Decision-making processes, using standardized regulations, should clearly allow for scrutiny. Transparency concerns arise particularly over the manner in which public corporations are privatized. All aspects of the process should be governed by sound marketing considerations, including the need for open tendering and contracts and the manner in which concessions are granted. Purchases and sales of all public assets should be open to independent audit (e.g., by a national audit body) to ensure that the transactions are carried out in accordance with the law, that the business is properly valued, and that there is competition among bidders. Indemnities given to purchasers should also be disclosed (and included in a statement of contingent liabilities). INTOSAI has published Guidelines on Best Practice for the Audit of Privatizations.153
285. The sale of assets may sometimes obscure the underlying fiscal position. It is important therefore to identify one-off transactions fully in the reporting framework and to make clear their impact on the fiscal balance.
Internal audit systems
Government activities and finances should be internally audited, and audit procedures should be open to review
286. From a fiscal transparency viewpoint, one objective for the internal control environment is to develop and maintain reliable financial data and to disclose the data in a timely manner. INTOSAI has identified objectives of internal control systems: to promote orderly, economical, efficient, and effective operations; to safeguard resources against loss owing to waste, abuse, mismanagement, errors, and fraud; to adhere to laws, regulations, and management directives; to develop and maintain reliable financial and management data; and to disclose these data in timely reports. To be effective, internal controls must be appropriate, function consistently as planned throughout the period, and be cost-effective. A set of guidelines for internal control standards issued by INTOSAI is summarized in Box 28. Internal control systems in all countries should embrace INTOSAI guidelines.
287. One important component of internal control systems is internal audit. Effective internal audit by government agencies is one of the first lines of defense against misuse and/or mismanagement of public funds.154
Box 28.INTOSAI Guidelines for Internal Control Standards
The International Organization of Supreme Audit Institutions (INTOSAI) has issued a set of general and detailed standards defining a minimum level of acceptability for a system of internal control.
Specific control objectives are to be set for each activity of the organization, and are to be appropriate, comprehensive, reasonable, and integrated into the organization’s overall objectives.
Managers and employees are to maintain a supportive attitude to the standards at all times, and are to have the integrity and sufficient competence to meet the standards.
The system provides reasonable assurance that the objectives of an internal control system will be met.
Managers are to continually monitor their operations and to take prompt remedial action where necessary.
Full documentation of all transactions and of the control system itself are to be provided.
Transactions and events should be promptly and properly recorded.
Execution of transactions and events should be properly authorized.
Key responsibilities at different stages of a transaction should be divided among individuals.
Competent supervision is to be provided to ensure that control objectives are being achieved.
Access to resources and records is to be limited to authorized individuals who are accountable for their custody or use.
It should be based on a sound internal control environment, and not seen as a substitute for one. Checking by internal auditors also provides valuable material for the review of financial compliance by external audit agencies. The existence and effectiveness of internal audit should be ensured by requiring that internal audit procedures be clearly described in a way that is accessible to the public, and that the effectiveness of these procedures be open to review by external auditors. Further, the independence of internal audit from day-to-day management ensures objectivity of its evaluations. Standards of internal audit should be consistent with international standards, such as those of the Institute of Internal Auditors (IIA).155 The IIA has a comprehensive set of standards for the practice of internal auditing, attribute standards, and performance.
288. Internal audit systems are intended to provide assurance that management’s objectives are being achieved.156 They provide management with objective assessments about the design and operation of management practices and “objective assurance on the adequacy and functioning of an organization’s risk management, control, and governance processes.”157
Internal audit contributes to a continuous management improvement and accountability program.158 Responsibility for internal audit therefore rests with the head of each individual government agency. However, a central government agency might be assigned responsibility for developing a government-wide standard approach to internal audit. In some countries, the internal audit reports are also made available to the national audit body.
National revenue administration
The national revenue administration should be legally protected from political direction, ensure taxpayers’ rights, and report regularly to the public on its activities.
Independence of national revenue administrations
289. The legislation that sets up national revenue administrations should provide for their independence to ensure fair and impartial treatment, free from political intervention. For this reason, heads of revenue administrations should be appointed by law and be given some statutory protection against removal from office and political direction in interpreting revenue laws. The statutory appointment of revenue commissioners with clearly specified powers over interpretation of tax, customs, and any other revenue collection laws and regulations is one approach that helps provide the assurance of integrity.
290. The tax collection process should also be open, and to this end revenue collection agencies should provide timely annual reports to the legislature on their activities and results. These reports provide details of actions being taken to improve compliance with tax laws, as well as cover performance data such as actual collections relative to the budget.
291. Equally important aspects of transparency in revenue collection legislation and regulations and their administration are the openness to review administrative decisions and the extent to which government is obliged to make taxpayers aware of their rights. See practice 1.2.2 for a discussion of taxpayer rights.
Scrutiny of Fiscal Information
Fiscal information should be externally scrutinized.
292. The Code includes good practices relating to (1) a national audit body, (2) audit reports and follow-up mechanisms, (3) independent assessments of forecasts and assumptions, and (4) independence of data verification.
293. Basic requirements under this principle are to ensure that a national audit body, which is independent of the executive, provides timely reports (at a minimum on an annual basis) for the legislature and public on the financial integrity of government accounts.
National audit body
Public finances and policies should be subject to scrutiny by a national audit body or an equivalent organization that is independent of the executive
294. A national audit body should be set up under law. National audit bodies, also known as supreme audit institutions (SAIs), can only “accomplish their tasks objectively and effectively, if they are independent of the audited entity and are protected against outside influence.”159 In francophone countries, such institutions are known as the Cour des Comptes, in Commonwealth countries they are often designated as the National Audit Office or Auditor-General’s Office,160 and in Latin American countries as the Contraloría General. Their essential function is to uphold and promote public accountability. Their role can take on added importance in ensuring adequate public accountability as many governments move to devolve decision-making authority. INTOSAI’s Lima Declaration of Guidelines on Auditing Pillars provides a comprehensive list of all goals and issues relating to government auditing (see Box 29).
295. Standards of external audit practice should be consistent with international standards, such as those set by INTOSAI, which are described in Box 29. The national audit body should have the necessary core of professionally trained staff, and all staff should be required to exhibit independence in thought and action in the conduct of their duties. The work of the office should be subject to internal assurances of quality and independent appraisal. Some advanced economies give national audit bodies a mandate to report to the public and the legislature on a broad range of issues, including auditing nonfinancial performance information against announced performance targets. It is therefore best practice that a national audit body or equivalent organization report to the legislature and the public on all public financial management matters relating to the integrity and transparency of fiscal policy. Ideally, there should be an external audit of the government’s performance on budget programs.
296. The core component of government auditing is the regularity audit. This covers attestation of financial accountability of individual agencies—involving evaluation of financial records—and the expression of opinions on financial statements; attestation of the financial accountability of the government as a whole; and audit of financial systems and transactions, and of internal control and audit functions—including an evaluation of compliance with regulations and statutes.
297. In completing a regularity audit, the auditor expresses a written opinion on his or her findings. An unqualified opinion is given when the auditor is satisfied that the financial statements have been prepared using acceptable accounting bases and consistently applied policies, the statements comply with statutory requirements and regulations, the view presented by the financial statements is consistent with the auditor’s knowledge of the audited agency, and there is adequate disclosure of all material matters relevant to the financial statements.
Box 29.INTOSAI Lima Declaration and Auditing Standards
Lima Declaration of Guidelines on Auditing Pillars
The chief aim of the Lima Declaration is to call for independent government auditing. Adopted by the IXth Congress of the International Organization of Supreme Audit Institutions (INTOSAI) in October 1977, it identifies the following critical features of the powers and functioning of a supreme audit institution (SAI):
Independence: should be established by constitution for the SAI and its members, and include the financing of its activities.
Relationship to parliament, government, and the administration: should be clearly specified in the constitution.
Powers of supreme audit institution: should include power of investigation, enforcement of findings, and the use of the SAI’s expert opinions; regulation for accounting procedures should be agreed to with the SAI.
Audit methods, audit staff, and freedom to establish international exchange of experiences: should have the capacity and independence to self-determine its working program, methods of recruitment, and training of its staff.
Reporting: should be empowered to report its findings to parliament and to the public.
Basic principles: the development of adequate information, control, evaluation, and reporting systems within the government will facilitate the accountability process; appropriate authorities should ensure the promulgation of acceptable accounting standards for financial reporting and disclosure relevant to the needs of the government; and each audit body should establish a policy on which INTOSAI standards, or other specific standards, it will follow in order to ensure its work is of high quality.
General standards: individual auditors and the audit body must be independent of the executive, of the individual entity being audited, and of any political influence; they must possess the required competence; they should avoid conflicts of interest; and they must exercise due care and concern in complying with INTOSAI or other specific auditing standards.
Field standards: auditors should plan the audits properly, and design procedures for the completion of regularity audits to provide reasonable assurance of detecting errors, irregularities, and illegal acts that could have a direct and material effect on the financial statement amounts; auditors should evaluate the reliability of internal control; a regularity audit should provide assurance that the budget and accounts are complete and valid; and the work of the audit staff should be properly supervised.
Reporting standards: following each audit, the chief auditor should prepare a written opinion or report setting out the findings in an easy-to-understand form, including only information that is supported by competent and relevant audit evidence; audit reports should be independent, objective, fair, and constructive (i.e., they should address future remedial action).
Audit reports and follow-up mechanisms
The national audit body or equivalent organization should submit all reports, including its annual report, to the legislature and publish them. Mechanisms should be in place to monitor follow-up actions
298. The Lima Declaration guidelines call for SAIs to be laid out in the constitution, and for their independence to be protected by a supreme court. Establishment of procedures independent of the executive for the appointment of the chief auditor, and for his or her removal from office, is a common mechanism to ensure independence. The practice, in a number of countries, of the chief auditor being appointed by and reporting to the president or prime minister imperils the independence of the institution.
299. The chief auditor should report directly to the legislature.161 There should also be a presumption that all reports of the national audit body are automatically publicly available once submitted to the legislature—either immediately or within a specified period of time. The SAI should report to the legislature on at least an annual basis. Some countries currently fall short of meeting this requirement of fiscal transparency because the audit office’s report on the final accounts is transmitted to the legislature, or to the speaker of the legislature, but may not be tabled in the legislature and become public information until some considerable time later.
300. One area in which external audit reports are often not published is military or security spending. National security considerations may warrant special provisions limiting publication of audit reports. In these situations it is important, however, that all military spending be audited by a nonmilitary authority, and that the results of the audit be presented to a legislative body, such as a public accounts committee.162
301. Mechanisms should be in place to help ensure that remedial action is taken in response to adverse findings in external audit reports. One mechanism would be a regulatory requirement that the audited agency respond to the findings publicly, in writing, and indicate the actions it will take in response. Another mechanism would be for a public accounts committee to review the public accounts, to consider the chief auditor’s report, and to hold the executive accountable for remedying deficiencies exposed through audit.163 Transparent follow-up to external audits is an important feature that promotes concrete action for improvement.
302. To ensure that the executive cannot render the national audit body ineffective by denying it adequate funding, by controlling its staffing, or by delaying consideration of its reports—which are problems in some countries—there should be procedural mechanisms for providing a greater-than-usual degree of legislative oversight of the operation of the office. One mechanism is to assign to a legislative committee the responsibility for proposing the office’s annual budget and for setting broad areas of priority for the office, while leaving chief auditors some flexibility to initiate reports on any aspect of concern within their purview. It is important that the national audit body be given full access to all necessary records, documents, and personnel. Legislative requirements to this effect assist in obtaining the cooperation of audited agencies.
Box 30.The UN Fundamental Principles of Official Statistics
The following features of the UN Fundamental Principles of Official Statistics are particularly important in fostering the integrity of fiscal statistics:
Official statistics are to be compiled and made available on an impartial basis by official statistical agencies.
Methods and procedures for the collection, processing, storage, and presentation of fiscal data are to be determined solely by the head of the statistical agency according to professional considerations.
Statistical agencies are to be entitled to comment on the erroneous interpretation and misuse of statistics.
Independent assessments of forecasts and assumptions
Independent experts should be invited to assess fiscal forecasts, the macroeconomic forecasts on which they are based, and their underlying assumptions
303. A number of steps are necessary to facilitate independent assessment of budget forecasts. Inclusion with the budget forecasts of a statement specifying which agencies have produced the fiscal and macroeconomic forecasts, respectively, would facilitate assessment of the forecasts by making it clear who within the government is accountable for the quality of the forecasts.164 Regular publication in budget background papers of ex post assessments of the fiscal and macroeconomic forecasts to previous budgets against the actual outcomes would contribute to informed discussion by the citizenry and specialists alike. Regular publication by the central bank or statistical or economic agencies of its macroeconomic forecasts, including the technical basis underpinning them, would also facilitate informed debate over the robustness of the government’s official macroeconomic forecasts.165 Working methods and assumptions used in producing fiscal and macroeconomic forecasts should be made publicly available at the time the annual budget is presented to the legislature, and preferably sometime in advance of budget presentation. Advance presentation allows time for policymakers, independent forecasters and analysts, the financial press, and the general media to scrutinize and comment on the robustness of the macroeconomic forecasts.166
304. Best practice is that institutional mechanisms be established to provide the public with independent assurance that fiscal and macroeconomic forecasts are of high quality.167 This could include making the fiscal and macroeconomic models available to outside experts.168 The macroeconomic assumptions used in the budget could also be drawn from those produced by private sector forecasters.169 Some countries have formal quality reviews by experts that are made public. Others give an independent public agency the task of critiquing and reporting on the quality of forecasts.170
Independence of data verification
A national statistical body should be provided with the institutional independence to verify the quality of fiscal data
305. The national statistics agency or other equivalent office should be protected by legislation that grants it technical independence in the verification of the compilation and publication of official statistics.171 To enhance the integrity of fiscal and other statistics, national statistical agencies can play a vital role by coordinating the collection of basic fiscal data by other official bodies, and by serving as the focal point for the production and dissemination of government finance statistics.
306. In addition, terms and conditions under which fiscal data are produced and disseminated should be available to the public, and guidelines for the behavior of the staff of the statistics agency should be clear and well publicized. One way to promote these aspects of quality is through observance of the UN Fundamental Principles of Official Statistics (Box 30) and by meeting the standards for data integrity contained in the SDDS/GDDS.
307. To build confidence among users of official statistics, transparency of the practices and procedures of the national statistics agency is also required. Among other things, this means that the statistics agency should be provided with all the basic data it requires, it should compile fiscal data on an impartial basis, it should be entitled to comment on erroneous interpretation and misuse of the information, and it should reveal any government access to fiscal data prior to their release. Where expertise does not exist within a national statistics agency to perform quality checks of fiscal data, countries are encouraged to seek external assistance.