Financial Mgnt and Accountability for Sustainable Local Governance

Report
BUREAU OF LOCAL GOVERNMENT FINANCE
DEPARTMENT OF FINANCE
Financial Management
and Accountability
for Sustainable Local Governance
PUBLIC FINANCIAL MANAGEMENT
The Framework
Public
Reporting on
Financial
Operations
Auditing
Revenue
Generation
Effective and
Accountable
PFM
Budgeting
(Expenditure
Management
+Procurement)
Cash
Management
Accounting
Debt
Management
PLAN
PUBLIC FINANCIAL MANAGEMENT
The Framework
Public
Reporting on
Financial
Operations
Auditing
Revenue
Generation
PFM
Effective and
Accountable
PFM
Budgeting
(Expenditure
Management)
Cash
Management
Accounting
Debt
Management
PLAN
1. THE LGU PFM REFORM
ROADMAP
2. THE PFM REFORM
IMPLEMENTATION
STRATEGY
Outline of Presentation
 2 Ws and 1 H of the LGU
PFM Reform Roadmap
Why, What and How….
 LGU PFM Reform
Implementation Strategy
Why develop the LGU PFM Reform
Roadmap?
BASIC CONSIDERATIONS:
1. CAPACITY TO HANDLE FUNDS
2. CAPABILITY TO IMPLEMENT
PROJECTS
3. OPERATIONAL ACCOUNTABILITY
MECHANISMS
Why develop the LGU PFM Reform
Roadmap?
Need for a Single and
Comprehensive Guide to
address Weak PFM
Effective and
Accountable Public
Financial Management
o
Lack of fiscal sustainability and
poor expenditure management
o
Inadequate accountability
mechanisms
o
Weak
coordination
among
Oversight Agencies (OAs) and
between OAs and LGUs
What is the LGU PFM Reform
Roadmap?
o A strategic guide on what we
(LGUs) want to do and achieve with
our PFM in the immediate, medium
and long term periods to attain
our desired end-state (goal)
o complemented by a well-designed
action program that details the
activities and timeframe on how and
when we could reach our PFM goal
and vision.
Impact of the Roadmap
o Provide LGUs with strategic
directions to strengthen their
PFM system towards improved
revenue generation and
expenditure management
Two very crucial systems
in the efficient and
effective
delivery
of
services!
Impact of the Roadmap
o Assist the OAs to strengthen
their coordination in better
supporting PFM reforms
identified, designed and being
implemented by the LGUs
o Guide Development Partners
in identifying possible entry
points for financial support
and other interventions
How was the LGU PFM
Reform Roadmap developed?
established the current state of LGU PFM
system
identified the desired end-state of the
said system
laid down the policy agenda that will
help both LGUs and Oversight Agencies
(OAs) in getting to the desired end-state
How was the LGU PFM Reform
Roadmap developed?
Current
State
Established Baseline Information
• Rapid Assessment prepared by the Technical
Assistance Team
• PFMAT results of 550 FY 2013 Grassroots
Participatory Budgeting Process (Bottom-up
Budgeting) focus LGUs
How was the LGU PFM Reform
Roadmap developed?
Current
State
Established Baseline Information
• Rapid Assessment prepared by the Technical
Assistance Team
• PFMAT results
of 550 FY 2013 Grassroots
Took stock of the current directions and
Participatory Budgeting Process (Bottom-up
initiatives undertaken by government and
Budgeting) focus LGUs
development partners
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
How was the LGU PFM Reform
Roadmap developed?
Current
State
Established Baseline Information
• Rapid Assessment
prepared by
the Technical
PFMAT is a self-assessment,
evidence-based
instrument
whichTeam
describes the characteristics of an open and orderly
Assistance
PFM system. It is a diagnostic tool which will help LGUs
identify the strengths and weaknesses of their PFM system
as basis for improvement measures.
• PFMAT results of 550 FY 2013 Grassroots
Participatory Budgeting Process (Bottom-up
Budgeting) focus LGUs
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
PFMAT Results
o FY 2013 Bottom-up Budgeting (BuB)
focus LGUs earned a total mean
rating of 2.34
o Indicates that elements of an open
and orderly PFM system are not
complete but what exist are
already fully operational
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
PFMAT Results
o Lowest ratings indicate the
elements not yet in place:
» Internal and External
Audit
» Policy-based Budgeting
» Accounting, Recording
and Reporting
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
PFMAT Results
INTERNAL & EXTERNAL AUDIT
• Most LGUs do not have Internal Audit
Service (IAS) Units
• No internal audit reports which are
prepared for management to act upon
• Settlement of disallowances and
compliance with audit recommendations by
the LGUs are low
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
PFMAT Results
POLICY-BASED BUDGETING
• Strong link between AIP and Budget
but weak linkage among development
plans (PDPFP/CDP-LDIP-AIP)
• CDP not prepared by most LGUs
• LEEs not financially self-reliant
• Only 1 to 2 PFM Improvement Policies
included in the Budgets
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PFMAT Results
ACCOUNTING, RECORDING &
REPORTING
• LGUs are not able to fully comply with
the reglementary periods for
reconciling bank accounts and
liquidating cash advances
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How was the LGU PFM Reform
Roadmap developed?
Current
State
Current Issues in PFM identified
and validated by Stakeholders (OAs
and LGUs)
• Rapid Assessment prepared by the Technical Assistance Team
• PFMAT results of 550 FY 2013 Grassroots Participatory Budgeting
Process (Bottom-up Budgeting) focus LGUs
• Consultation Workshops with stakeholders
Validated in nationwide Consultation Workshops
with OAs and LGUs (October 2013 – March
SUPPORT2014)
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Validation of PFMAT Results
POLICY-BASED BUDGETING
PFMAT RESULTS
•
Strong link between AIP and
Budget but weak linkage among
development plans (PDPFP/CDPLDIP-AIP)
•
LEEs not financially self-reliant
•
Only 1 to 2 PFM Improvement
Policies included in the Budgets
VOICE OF THE STAKEHOLDERS
•
Weak alignment between Development Plans
& Budget
•
Lack of long-term planning perspective
•
Lack of alignment between PPAs and policies
and current issues
•
Weak LEEs
•
There are bottlenecks in the budgeting
process
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Participants to the Consultations:
REGION
NO. OF
LGUs
NO. OF
PAX
REGION
NO. OF
LGUs
NO. OF
PAX
CAR
7
9
6
10
13
NCR
5
8
7
5
5
1
6
6
8
4
4
2
6
9
9
5
6
3
4
6
10
3
3
4A
5
5
11
12
16
4B
4
4
12
6
9
5
5
6
13
6
6
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Participants to the Consultations:
REGION
NO. OF
LGUs
NO. OF
PAX
REGION
NO. OF
LGUs
NO. OF
PAX
CAR
7
9
6
10
13
NCR
5
8
7
5
5
1
6
6
8
4
4
2
6
9
9
5
6
3
4
6
10
3
3
4A
5
5
TOTAL
LGUS
11
12 = 93
4B
4
4
12
6
9
TOTAL
PARTICIPANTS
= 115
5
5
6
13
6
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
16
6
Participants to the Consultations:
•18
PROVINCES
•31
CITIES
•44
MUNICIPALITIES
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How was the LGU PFM Reform
Roadmap developed?
Desired
End-State
Determined by Stakeholders (OAs & LGUs)
STAKEHOLDERS’ VOICE
•
Strong linkage of long term plans with
Annual Budget
•
Budget requirements understood by all
and stirs public involvement in the budget
process
•
Sufficient funds for programs and
projects anchored on long term plans
•
Self-reliant LGUs that generate sufficient
local revenues to support budget
expenditures
•
Simplified financial systems that yield
timely, accurate and credible financial
information
•
Functional and operational Internal Audit
Service which leads to zero COA
disallowances
•
Quality participation of CSOs in the
planning and budgeting process
GOAL
“An open and
transparent LGU PFM
System that is stable
and sustainable,
renders financial
compliance, underpins
efficient and effective
delivery of services,
ensures the highest
level of accountability
and provides genuine
citizens’
participation.”
VISION
“An LGU service
delivery system that
lowers the cost of
doing business,
stimulates private
investments,
generates
employment and
income opportunities,
improves welfare
levels for LGU
constituents and
accelerates local
economic growth.”
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
How was the LGU PFM Reform
Roadmap developed?
Issue and
Determined by Stakeholders (OAs and
Policy Agenda LGUs)
ISSUE
Link between
PDPFP / CDP –
LDIP – AIP and
Budget
POLICY AGENDA
Strengthen the
linkage between
PDPFP/ CDP –
LDIP – AIP and
Budget
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
SUPPORT TO THE LOCAL GOVERNMENT UNITS
FOR MORE EFFECTIVE AND ACCOUNTABLE
PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
This project is funded by the European Union and implemented by the Government of the Philippines
The LGU PFM REFORM
IMPLEMENTATION
ROADMAP
STRATEGY
The LGU PFM Reform
Implementation Strategy
Operationalizes
the LGU PFM
Reform
Roadmap
Lays down the specific
actions to be done to
carry out the policy
agenda that will result to
the outcomes
Anticipates the
implementation risks and
identifies mitigating
measures
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
The LGU PFM Reform
Implementation Strategy Matrix
Issue
Link
between
PDPFP/
CDP –
LDIP –
AIP and
Budget
Policy
Agenda
Implementation Implementation
Strategy
Strategy (OAs)
(LGUs)
Strengthen
Linkage
between
PDPFP/
CDP –
LDIP – AIP
and Budget
Enhance
CDP /
LDIP
Manual
Issue
policy
reiterating
compliance
with
Enhanced
CDP
Manual
Outcomes
Risks
Mitigation
2016
All LGUs
fully
capacitated
to prepare
CDPs with
matching
LDIPs from
which AIPs
are derived
Capacity of
ROs’
technical
personnel
to provide
TA to LGUs
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
CapDev for
ROs on
PFM tools
Immediate Outputs from the Oversight
Agencies
1. Enhanced Joint Memorandum Circular No. 1 on the Harmonization of Local
Planning, Investment Programming, Revenue Administration, Budgeting and
Expenditure Management
2. Enhanced Public Financial Management Assessment Tool for LGUs and
Software
3. Enhanced CDP/LDIP Manual
4. Guidebook on Local Economic Enterprises
5. Enhanced Full Disclosure Policy
6. Standard Revenue and Expenditure, Cash Flow Forecasting Tools
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Immediate Outputs from the Oversight
Agencies
7. Recommendations on the Amendment of the Local Government Code
8. Enhanced Revenue Generation Manuals (LTOM, MELTO, AEEM)
9. Harmonized Policy on CSO accreditation and Handbook on CSO
Participation in the Budget Process
10. Harmonized Financial Reports and Templates
11. Localized Internal Audit Manual
12. Revised Budget Operations Manual for LGUs
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Core Approaches to Implementation
of PFM Reforms
1. Multiply sponsorship in the implementation of
the LGU PFM Reform
Expand the engagement of all
stakeholders in the implementation
of LGU PFM Reforms to ensure
attainment of:
• Improved Capacities of OAs and LGUs
• Improved LGU PFM systems
• Improved service delivery by LGUs
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Proposed Structure
Transition Set-up
LGU PFM Reform
Roadmap
Project Steering Committee
National Inter-Agency Team
High-level representatives of OAs
supported by PTWG
High-level representatives of OAs supported
by TWG from LGU Policy Units of OAs
Regional Inter-Agency Teams
Regional Inter-Agency Teams
RIAT supported by Composite PFM Team
Supported by Composite PFM Team
LGU PFM Teams
LGU PFM Teams
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Core Approaches to Implementation
of PFM Reforms
2. Empower LGUs to customize their PFM
Improvement Plan (PFMIP)
LGU stakeholders and
sponsors will be enabled to
assess their PFM system,
design and actualize their
PFMIPs based on their own
level of readiness
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Core Approaches to Implementation
of PFM Reforms
3. Harmonize and coordinate Oversight
Agencies’ technical support to LGUs
LGU PFM Reforms seeks to
institutionalize
convergence of the OAs in
providing technical
assistance to LGUs
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Core Approaches to Implementation
of PFM Reforms
4. Capacitate Oversight Agencies and LGUs to
Manage the Reform
OA and LGU Stakeholders
and Sponsors/Champions
will be capacitated on
change management
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
SUPPORT TO THE LOCAL GOVERNMENT UNITS
FOR MORE EFFECTIVE AND ACCOUNTABLE
PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
This project is funded by the European Union and implemented by the Government of the Philippines
WHAT IS THE CONNECTION AMONG THE
ROADMAP, IMPLEMENTATION STRATEGY
AND PFMIP?
The Roadmap, Implementation Strategy
& PFMIP
Roadmap
Implementation Strategy
A strategic guide on
Lays down the
what we (LGUs) want
to do and achieve with specific actions to be
done to carry out the
our PFM in the
Details the specific
policy agenda that
immediate, medium
activities which the
will result to the
and long term periods
LGU will undertake to
outcomes, and
to attain our desired
strengthen its PFM
anticipates the
end-state (vision)
System over a given
implementation risks
period of time
and identifies
together with the
mitigating measures
resources needed to
carry them out
PFMIP
Prepared jointly by LGUs
and OAs to serve as their
overall strategic guide
Prepared by LGUs
to implement PFM
reforms
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
The LGU PFM Reform Roadmap
Issues to be
Addressed
(1)
Policy
Agenda
(2)
Link
between
PDPFP/CDP –
LDIP – AIP
and Budget
Strengthen
the linkage
between
PDPFP/CDP –
LDIP – AIP
and Budget
Outcomes (3)
2016
2019
2022
All LGUs
capacitated to
prepare
and
update
their
CDPs and
matching
LDIPs
from
which AIP
is culled
LGUs
prepare
and
update
their
CDPs and
matching
LDIPs
from
which AIP
is culled
Strong
linkage
between
PDPFP/
CDP LDIP-AIP
and
Budget
ensured
Indicators
(4)
2016
·Proportion
of LGUs with
enacted or
draft
PDPFPs/CD
Ps and LDIPs
prepared and
harmonized
according
with
DILG/NEDA
Guidelines
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Responsible
Units
(5)
DILG
NEDA
DBM
BLGF
LGUs
The Implementation Strategy
Issues to
be
Addressed
(1)
Link
between
PDPFP/
CDP –
LDIP –
AIP and
Budget
Policy
Agenda
(2)
Strengthen
the linkage
between
PDPFP/
CDP –LDIP
– AIP and
Budget
Implementation
Strategies (3)
OAs
LGUs
Enhance Issue policy
CDP/LDIP reiterating
compliance
Manual
with
including
updated
incorpora
CDP
/ LDIP
-tion of
Manual
GPBP
principles
and
alignment
with
PDPFP /
PDIP at
provincial
level
Outcomes (4)
2016 2019
All LGUs
capacitated to
prepare
and
update
their
CDPs and
matching
LDIPs
from
which AIP
is culled
2022
Strong
LGUs
linkage
prepare
between
and
PDPFP/
update
CDP their CDPs
LDIP-AIP
and
and
matching
Budget
LDIPs
ensured
from
which AIP
is culled
Risk Register (5)
Risks
Capacity
of ROs’
technical
personnel
to provide
TA to
LGUs
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Mitigation
CapDev
for ROs
on PFM
tools
The PFM Improvement Plan (PFMIP)
LGU: Municipality of San Julian
For Fiscal Year 2015
Issues to be
Addressed
(1)
Policy
Agenda
(2)
Strengthen
Link
the
linkage
between
between
PDPFP /
PDPFP/
CDP –
LDIP – AIP CDP –LDIP
– AIP and
and
Budget
Budget
Implementation
Strategies
(3)
Issue policy
reiterating
compliance
with
updated CDP
/ LDIP
Manual
Activities
(4)
Outputs
(5)
Conduct
orientation
on the
updated
CDP / LDIP
Manual
Issue
Executive
Order /
Sanggunian
Resolution
Executive
Order /
Sanggunian
Resolution
Responsible
Unit
(6)
Schedule
(7)
Budget
(8)
LPDO
January
2015
P20,000.00
LCE /
Sanggunian
February
2015
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Prioritizing the Specific Activities for
the PFMIP
Categorize Tasks
Identify what is most feasible and
have the highest value in terms of
visible impact in the shortest time
• In what order do actions need to be
taken
• What are the interdependencies in our
activities?
• What is the local capacity to absorb
change?
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PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)
Prioritizing the Specific Activities for
the PFMIP
Balance Technical with
Tactical Considerations:
• Technical Aspects – what needs to
be done to improve PFM
“What is
technically
most
important
may not be
tactically
feasible.”
• Resources – personnel, financial
and other logistics
• Political Demand – what is wanted
and can be supported by key
stakeholders (LCE & Local
Sanggunian)
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FY2009
FY2010
FY2011
Ano’ng
Iskor ng
‘yong
Bayan?
FY2012
LGU FISCAL SUSTAINABILITY SCORECARD
Financial Management Performance
Review for Local Government Units
Declining, <1%
locally sourced income to GDP
0.91%
0.89%
0.86%
0.80%
2009
2010
2011
2012
Perspective
“Supervision of revenue
operations of all LGUs”
“Monitor and support the
implementation of policies and
measures on local revenue
administration”
Assessment of fiscal
indicators necessary for
exercise of mandate
Agency has to have a
systematic, not
sporadic, process for
regular assessment of
fiscal performance of
LGUs
Directive
s
Protection of revenue integrity, data
analytics and metrics
Closer, thorough monitoring of revenue
performance of LGUs
Evidence- and policy-based
performance assessment of local
treasurers and assessors
General housekeeping of reports
Visit in BIR revenue regions / BOC ports
/LGUs
of the
Secretary
of Finance
DOF Department Order No. 08-2011:
Statement of Receipts and Expenditures
Treasurer: eSRE System in the LGUs
Assessor: Quarterly Reports on Real
Property Assessments
LGU Fiscal Performance Monitoring System
BLGF’s Local Revenue Targets
SMV Profile and Ordinances of LGUs
Basis for Evaluation
Local Government Unit
FISCAL SUSTAINABILITY
SCORECARD
Directive of the Secretary
Baselining the LGU performance
from FY2009 to FY2012
Validating the LGU data and testing
the integrity of BLGF reports
Compliance monitoring on DOF
directives and other relevant
regulations
Publication of LGU performance
Policy setting purposes
Indicators
Pass
Financial (Quantitative) - 90%
KRA 1 - Revenue Generation Capacity
KRA 2 - Local Collection Growth
Fail
KRA 3 - Expenditure Management
Non-Financial (Qualitative) - 10%
100%
KRA 4 - 6 - Reportorial Compliance
Financial Indicators
KRA 1. Revenue Generation Capacity
Indicator
1.1 Regular income level
1.2 Local revenue level
1.3 Local revenue growth (tax and non-tax revenues)
1.4 Dependence on locally sourced income
1.5 Dependence on IRA
1.6 Dep. on Other Shares from National Tax Collection
Financial Indicators
KRA 3. Expenditure Management
Indicator
3.1 Expenditure Per Capita
3.2 Use of IRA for Local Devt. Project (>=20% of IRA)
3.3 Limitation on Expenditure for PS (<=45%/55% of Regular
Income of the Next Preceding Fiscal Year)
3.4 Limitation on Debt Service (<=20% of IRA)
Focusing on Actual Utilization, not Budget Appropriation
Statutory Obligations and Limitations
Non-Financial Indicators
KRA 4. eSRE
Indicator
Submission of Timely and Accurate eSRE
7 out of 10 Treasurers Did Not Submit SRE on Time
Non-Financial Indicators
KRA 5. SMV Updating
Indicator
Regular Updating of SMV and
Conduct of General Revision of Property Assessments
15 Cities & Provinces have new SMVs effective 2014
But 130+ More Are Already DUE…
Non-Financial Indicators
KRA 6. Quarterly Report on Real Property
Assessments (QRRPA)
Indicator
Submission of Timely and
Accurate QRRPA
Is the assessor correctly accomplishing the QRRPA?
Are there properties with restrictions? Is the land area correct?
Final Rating
KRA
Quantitative
Max
Score
90
1. Revenue Generation
Capacity
60
2. Local Collection Growth
20
3. Expenditure Management
10
Qualitative
10
4. Timely & Accurate eSRE
Report
4
5. Current & Updated SMV
3
6. Timely & Accurate QRRPA
3
Final Rating
Weighted
Score
Grad
e
Rating
>=80
A
Excellent
>=70 but <80
>=60 but <70
>=50 but <60
>=40 but <50
<40
B
C
Very Good
Good
Remarks
All revenue and expenditure indicators are strong; full
compliance with reportorial requirements
Most of the revenue and expenditure indicators are met
very satisfactorily; high compliance with reportorial
requirements
Most of the revenue and expenditure indicators are
above average performance; minimum level of
compliance with reportorial requirements
D
Average
Revenue and expenditure indicators have not
significantly changed and are generally on the average;
minimum level of compliance with reportorial
requirements
E
Needs
Improvement
Almost all of the key revenue and expenditure indicators
need to be improved and validated; minimum reportorial
requirements are not complied with
Poor
All revenue and expenditure indicators are way below
the benchmarks; key reportorial requirements are
incomplete/not submitted and/or require further validation
F
Methodology
Utilized the BLGF SRE of all provinces, cities, and municipalities, and
the QRRPA of provinces and cities from FY2009-FY2012
Run date of SRE: 15 August 2013
Processed individual SRE fields per LGU (initially cities and provinces)
through pivot tables
Benchmarking and national comparison through DOF income
classification as of 2008
One-on-one data- and process- validation with LGUs and BLGF regions
Sample Preliminary Scorecard
xxx
Sample Preliminary Scorecard
RPT Collection Efficiency
& YoY Collection Performance
VISIT
ISKOR.BLGF.GOV.PH
In the pipeline…
Linking of Scorecards with “Open Data Initiative”
Credit rating for LGUs will be next
Continuous monitoring and improvement of SRE’s
integrity
Municipal scorecards release by early June
Regional BLGF staff to be trained on LGU FSS
Ano’ng
Iskor ng
‘yong
Bayan?
THANK YOU!

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