Public Expenditure and Financial Accountability Assessment (PEFA) – Health Recommendations

Introduction/Background Aim of the assessment was to assess the impact of the 3 institutions MOHCDGEC, PO-RALG and MOFP in the flow of funds from national to community level for service delivery, reporting and auditing the use of public funds The Assessment used 2016 PEFA Methodology for Financial Year 2013/2014, 2014/2015 and 2015/2016 It covers line sector budget within the government‘s overall budget (i.e. MOHCDGEC, TACAIDS and PO-RALG) and regional level (i.e. regional hospital) PEFA Health asses 6 pillars (PEFA Central -7 pillars; the External Scrutiny and audit) PEFA Health 2017

Pillar I. Budget reliability Pg. 10 SI-1 Aggregate expenditure outturn PFM Sector Indicator Rating Health Rating Central Recommendations Pillar I. Budget reliability Pg. 10 SI-1 Aggregate expenditure outturn Pg. 33 D C I. Strengthen the coordination, communication and capacity in MOFP and the Health Sector institutions in the planning and budget process. II. Improve revenue forecasting, collection and overall management, especially of own revenue sources at LGA level, including reviewing the software. SI-2 Expenditure composition outturn Pg. 34 D+ SI-3 Revenue outturn Pg. 36 PEFA Health 2017

II. Transparency of public finances Pg.10 SI-4 Budget classification PFM Sector Indicator Rating Health Rating Central Recommendations II. Transparency of public finances Pg.10 SI-4 Budget classification Pg. 38 A C I. Strengthen regional and LGA revenue management systems, including software. II. It is recommended that the missing documentation be produced to give a complete picture of the sector at central level, fiscal forecasts, budget proposals and the outturn of current and previous fiscal years. III. Strengthen supervision and monitoring of plans and budget execution. IV. Ensure that the health sector has a separate bank account at local level (in line with other large sectors). Ensure that timely information on the release of funds is received so that they can be execute them in an accurate and timely manner for service delivery. V. Ensure that all health facilities submit their financial reports so that assessments can be made and control and mitigation measures are developed as necessary. VI. Ensure that all information on resources received by front line service delivery units, disaggregated by source of funds, is collected and recorded annually. VII. Publish all the Health sector fiscal information as indicated in the PEFA guidelines on the GoT website. SI-5 Budget documentation Pg. 39 D SI-6 Central government operations outside financial reports Pg. 40 B SI-7 Transfers to subnational governments Pg. 42 C+ SI-8 Performance information for service delivery Pg. 46 SI-9 Public access to fiscal information Pg. 50 PEFA Health 2017

III. Management of assets and liabilities Pg.11 SI-11 PFM Sector Indicator Rating Health Rating Central Recommendations III. Management of assets and liabilities Pg.11 SI-11 Public investment management Pg. 52 D+ I. Carry out a management review of public investment management, first internally in MOHCDGEC and then in coordination with MOFP and PO-RALG. II. The MOHCDGEC should ensure that the management and maintenance of infrastructure and equipment is given higher priority and that this is carried out in compliance with IPSAS. III. Maintain an up to date register of fixed assets. SI-12 Public asset management Pg. 54 C+ B PEFA Health 2017

IV. Policy-based fiscal strategy and budgeting Pg. 11 S-16 PFM Sector Indicator Rating Health Rating Central Recommendations IV. Policy-based fiscal strategy and budgeting Pg. 11 S-16 Medium-term Perspective in expenditure Budgeting Pg. 57 B D I. All planning instruments should be aligned in such a way that implementation is as transparent and balanced as possible. At the budget level it is recommended that the annual budget calendar be complied with by the budget units and the provision of ceilings for the preparation of budget estimates to all Votes by MOFP. This combination ensures that budget procedures are in line with the strategy and adjustments can be made when needed. SI-17 Budget preparation process Pg. 60 C+ A PEFA Health 2017

V. Predictability and control in budget execution Pg.12 SI-20 PFM Sector Indicator Rating Health Rating Central Recommendations V. Predictability and control in budget execution Pg.12 SI-20 Accounting for revenue Pg. 63 B B+ I. Ensure a complete reconciliation of the assessments, collections and transfers to the Treasury and other designated agencies at least quarterly, within 4 weeks of the end of the quarter. II. MOFP and MOHCDGEC coordinate to make funds available when they are needed and increase the frequency of the consolidation of cash and bank balances (daily is ideal); Also to reduce the adjustments to in-year budget allocations. III. Continue to strengthen the EPICOR system and health sector institutions to avoid increases in accounts payable. IV. Continue to develop efforts to strengthen monitoring of all procurement methods for goods, services and works; and to increase the use of competitive methods for the awarding of contracts. All key procurement information should be made available on the Health sector website. V. Enabling non-salary expenditure to reach the PFM international best practice as the assessment has shown to be close to that. VI. The internal audit function should cover all the Central MDAs with a focus on high risk areas. Also response to internal audits and implementation of the recommendations should be given higher priority by management. SI-21 Predictability of in-year resource allocation Pg. 64 C D+ SI-22 Expenditure arrears Pg.66 D SI-23 Payroll controls Pg. 69 SI-24 Procurement management Pg. 71 PI-25 Internal controls on non-salary expenditure Pg. 74 A SI-26 Internal audit Pg. 76 C+ PEFA Health 2017

Overall Rating Central Recommendations PFM Sector Indicator Overall Rating Health Overall Rating Central Recommendations VI. Accounting and reporting Pg. 13 SI-27 Financial data integrity Pg. 79 B+ C MOHCDGEC continue to work closely with MOFP to continue the process of aligning the legislation with the IPSAS and building capacity at sectoral level in the move towards full compliance. SI-28 In-year budget reports Pg. 80 D SI-29 Annual financial reports Pg. 81 C+ PEFA Health 2017

Way Forward I. The Final report has been submitted to the Ministry for final approval II. The MoH is expected to prepare an Action Plan to implement the recommendations III. Request the MoH to call for PFM technical working group meeting to discuss the action plan PEFA Health 2017