Lack of a credible expenditure authorization/appropriation framework, including cost underestimation by spending agencies.
Payments authorized in annual budget do not fully reflect commitments carried forward from previous years (e.g., investment projects contracts).
Insufficient allocation for expenditure authorized through standing/permanent legislations.
Expenditure not appropriated/authorized by the start of fiscal year.
Accurate costing of policies and programs, and a comprehensive expenditure authorization framework that captures all expenditure measures.
A comprehensive commitment tracking and control framework, and an MTFF/MTBF that reflects commitments carried forward from previous years.
Expenditures authorized through standing/ permanent legislations are forecast and included in the budget documents.
Budget calendar revised—and, if necessary, legal framework amended—to ensure budget approval before the start of the fiscal year.
PI-5 & 6; PI-11.3; PI-17.3; PI-18.3
Inordinate delay in issuance of spending authority to line agencies.
No cash availability to make payments within the time horizon of apportionment.
Time horizon of apportionment too short for expenditure planning and execution by line agencies.
Spending agencies submit month-wise expenditure plans (along with their budget submission) to serve as the basis for issuance of spending authority (warrant/allotment) after budget approval.
Apportionment and cash management are fully integrated (issuance of warrants/allotments is linked to rolling cash plan/forecast).
Warrants/allotments are not used as a cash rationing tool. They are at least issued on a quarterly basis or, preferably, for the full year divided into quarterly tranches.
Excessive time lag between reservation and commitment resulting in unnecessary encumbrance on available funds.
Expenditure committed but respective reservation/ encumbrance not annulled.
Advancing the procurement cycle and/or streamlining the process to reduce the time lag between reservation and commitment; reserved funds are integrated with the TSA.
Commitment approval is linked to (and cancels) the respective reserved amount.
|Percentage of reserved amount that materializes as commitment; and average time lag between reservation and commitment.|
Commitments not tracked and controlled.
Commitment control is not comprehensive, i.e., it focuses only on commitments likely to materialize during the year.
Commitment approval delinked from apportionment and cash management frameworks.
Non-contractual commitments (subsidies, transfers, etc.) not tracked.
A comprehensive commitment control system is in place that captures not only one-off (purchase order type) but also multi-year (e.g., projects contacts) commitments. New commitments are authorized after ascertaining uncommitted balance within the authorized expenditure limit.
Apportionment framework and cash plans/ forecasts take account of commitment profiles and associated expected payment schedules.
An estimate of obligation to pay should be made for non-contractual items and treated as a commitment.
|PEFA PI-25.2; PI-23|
No verification/certification system (i.e., payment orders issued without verification).
Large delay between actual delivery and verification (leading to late payments, interests, arrears, etc).
Payment orders are issued after documentary proof of verification.
Delivery date is captured and time lag between delivery and verification monitored. If accounting is on cash-basis, there is regular reporting and monitoring of overdue payables.
|PEFA PI-22; and average time lag between delivery and verification.|
Large delay between verification (recognition of liability) and payment order (arrears, etc).
Funds/cash not available in government bank accounts to implement the payment order.
Payment order issued under exceptional procedure (i.e., bypassing previous stages).
Payment order is issued within the payment due date to discharge the recognized liability. There is regular reporting and monitoring of overdue liabilities.
Issuance of payment orders is integrated with a well established cash plan that is updated regularly with inputs from spending and revenue agencies.
Exceptional procedures eliminated by streamlining the control framework and business processes to address priority needs.
|Overdue liabilities/payables as a percentage of the value of total payment orders issued; PEFA PI-21.2; and PI-25.3|
Checks are not cashed and/or electronic transfers are not made in favor of the beneficiary expeditiously.
Checks and/or electronic transfer instructions bounce due to lack of cash.
Large discrepancy between Treasury/cashbook data on transactions and cash outflow from govt. bank accounts (as reflected in bank statements).
Shorter check validity period to minimize check float; monitoring of check floats and delay in electronic transfers.
Government cash manager and issuer of checks and/or electronic transfer instructions work in coordination to ensure funds are available for payments.
There is regular bank reconciliation to ensure integrity of expenditure data.
|PEFA PI-27; and value of check float (or float of electronic transfer instructions) as a percentage of total value of checks (or electronic transfer instructions) issued.|