2009 country financial accountability assessmentdocuments.worldbank.org/curated/en/...oumou g....

REPUBLIC OF THE GAMBIA

2009 COUNTRY FINANCIAL ACCOUNTABILITY

ASSESSMENT

The World Bank

Africa Region

AFTFM

2009

69692

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The 2009 Country Financial Accountability Assessment for The Gambia. Page i

ABREVIATIONS AND ACRONYMS

AfDB African Development Bank

GBMAA Government Budget Management and Accountability (Act)

CFAA Country Financial Accountability Assessment

COSO Committee of Sponsoring Organizations

DfID Department for International Development

DNT Directorate of the National Treasury

DOSFEA Department of State for Finance and Economic Affairs

FPAC Finance and Public Accounts Committee

GDP Gross domestic product

GFS Government Finance Statistics

GMD Gambian Dalasi (local currency)

GRA Gambia Revenue Authority

HIPC Highly Indebted Poor Countries

IDA International Development Association

IFAC International Federation of Accountants

IFMIS Integrated Financial Management Information System

IMF International Monetary Fund

INTOSAI International Organization of Supreme Audit Institutions

IPSAS International Public Sector Accounting Standards

IT Information Technology

LGA Local Government Act

LGFA Local Government (Financial and Audit) Act

MTEF Medium-term expenditure framework

PEFA Public Expenditure and Financial Accountability

PFM Public financial management

PI Performance indicator

PRSP Poverty Reduction Strategy Paper

ROSC Report on Observance of Standards and Codes

SWAp Sectorwide approach

TIN Taxpayer Identification Number

The 2009 Country Financial Accountability Assessment for The Gambia. Page ii

Republic of The Gambia

2009 Country Financial Accountability Assessment

Contents

EXECUTIVE SUMMARY ......................................................................................................................................... v

INTRODUCTION ...................................................................................................................................................... 1

SECTION 1. FINANCIAL PLANNING AND BUDGET PREPARATION ................................................. 4 1.1. The legislative framework ...................................................................................................................................................... 4 1.2. Budget preparation ................................................................................................................................................................... 4 1.3. Multi-year and strategic budget perspective ................................................................................................................... 6 1.4. Budget comprehensiveness and transparency ................................................................................................................ 8 1.5. Assessment and Recommendations ..................................................................................................................................... 8

SECTION 2. ACCOUNTING, FINANCIAL REPORTING, INTERNAL CONTROL, AND INTERNAL AUDIT .................................................................................................................................................... 10

2.1. Accounting system and IFMIS .............................................................................................................................................. 10 2.2. Financial reporting .................................................................................................................................................................. 12 2.3. Internal controls and effectiveness of internal audit ................................................................................................. 13 2.4. Challenges and recommendations ..................................................................................................................................... 14

SECTION 3. EXTERNAL AUDIT ................................................................................................................. 17 3.1. National Audit Office: Constitutional and legal mandates....................................................................................... 17 3.2. Resources and financial autonomy .................................................................................................................................... 18 3.3. Audit reports ............................................................................................................................................................................... 19 3.4. Assessment and recommendations .................................................................................................................................... 20

SECTION 4. LOCAL GOVERNMENT ......................................................................................................... 22 4.1. Legislation and regulation .................................................................................................................................................... 23 4.2. Budget planning and preparation ..................................................................................................................................... 23 4.3. Accounting, reporting, and internal control .................................................................................................................. 24 4.4. Executive oversight .................................................................................................................................................................. 26 4.5. Assessment and recommendations .................................................................................................................................... 27

SECTION 5. STATE-OWNED (PUBLIC) ENTERPRISES ...................................................................... 29 5.1. Legislative and institutional framework and corporate governance .................................................................. 29 5.2. Corporate governance ............................................................................................................................................................ 30 5.3. Budget preparation ................................................................................................................................................................. 31 5.4. Accounting, internal control, reporting, and internal audit .................................................................................... 31 5.5. External audit and legislative oversight .......................................................................................................................... 32 5.6. Assessment and recommendations .................................................................................................................................... 32

SECTION 6. LEGISLATIVE SCRUTINY, PUBLIC ACCESS TO INFORMATION, ETHICS AND INTEGRITY .................................................................................................................................................... 34

6.1. Legislature and its institutions ............................................................................................................................................ 34 6.2. Legislative scrutiny of the annual budget law .............................................................................................................. 35 6.3. Legislative scrutiny of external audit reports ............................................................................................................... 36 6.4. Capacity issues ........................................................................................................................................................................... 36 6.5. Assessment and recommendations .................................................................................................................................... 37

SECTION 7. PROPOSED REFORM ACTION PLAN ............................................................................... 39

ANNEX A. PEFA PFM Performance Measurement Framework ........................................................... 41

The 2009 Country Financial Accountability Assessment for The Gambia. Page iii

ANNEX B. Fiduciary Risk Analysis ................................................................................................................ 83

ANNEX C. Calculation of Deviations by Budget Heads 2005-2007 .................................................... 85

ANNEX D. Terms of Reference for PFM Reform Oversight Steering Committee and Sub-Committee ............................................................................................................................................................. 91

ANNEX E. The Gambia Government’s Self Assessed Progress on PFM Reforms ........................... 94

The 2009 Country Financial Accountability Assessment for The Gambia. Page iv

PREFACE

The Country Financial Management Accountability Assessment (CFAA) for the Gambia was

conducted between March and June 2008, culminating in the in-country mission over two weeks

in March 2008 by a joint team of the Government officials, African Development Bank and

World Bank staff. The exercise covered six modules set out in the initiating memorandum

prepared and distributed in February 2008 to lay out the ground work and scope of this exercise.

Areas covered are in the public sector at both national and local government level only.

It is against this backdrop that exercise was designed with a view to assess the reforms and

progress made on the implementation of the 2003 CFAA recommendations, especially on key

PFM reforms such as IFMIS. The assessment was also intended to identify areas of continued

weaknesses that would require further effort and focused attention. The findings were of the

CFAA were communicated in forma of draft CFAA report in June 2009 and subsequently

validated at a workshop with key stakeholder facilitated by DOSFEA (now named as Ministry of

Finance and Economic Affairs). Comments from the Government of The Gambia arising from

the workshop and the draft CFAA have been incorporated in the final report.

The CFAA core team comprised of John Nyaga (Team Leader, AFTFM, HQ), Winston Cole

(AFTFM, Nigeria), and Loxly M Epie (AfDB), with the assistance of consultants Ulrich Johnson

(Local Government financial management) and Prof. James Ato Ghartey (Public Audit and

Parliamentary Oversight). The team also benefited from regular consultations with Hoon Soh,

Country Economist (AFTP4). The team also wishes to acknowledge the support provided by

Oumou G. Hainikoye (Program Assistant, AFTFM) for which the team is very grateful.

Mr. McDonald Benjamin (Country Program Coordinator) and Edward Olowo-Okere (Regional

Manager for Financial Management, AFTFM) ensured that appropriate quality assurance

arrangements were in place. The peer reviewers were Fily Sissoko (Senior Financial

Management Specialist, LCSFM), Joseph Kizito (Senior Financial Management Specialist,

LCSFM), Gert Van der Linde, (Lead Financial Management Specialist, AFTFM), and Ivor

Beazly (Sr. Financial Management Specialist, OPCFM). Valuable comments were also received

from Parminder Brarr (Lead Financial Management Specialist, AFTFM).

ACKNOWLEDGMENTS

The assessment team is grateful for the commitment demonstrated by the former Secretary of

State DOSFEA, Honorable Moussa Bala Gaye during the exercise. The team also appreciates the

contributions made by Mr. Mod Secka. Permanent Secretary, DOSFEA; Mr. Abdoulie Jallow,

Director of Budgets; Mr. Gabriel Mendy, Director of National Treasury; Mr. Baboucarr

Sankareh, Auditor General; Honorable Fatoumatta J. Ceesay, The Speaker, National Assembly

and members of the Finance and Public Accounts Committee, as well as the Quality Assurance

Manager; IFMIS Project Manager (Capacity Building and Economic Management Project); and

others. Mr. Badara Joof, Officer-in-Charge, World Bank Liaison Office, provided the team with

useful guidance in conducting the assessment. Also, the administrative support by Ms. Yassin

Saine Njie (Program Assistant, Banjul Liaison Office) was highly appreciated.

The 2009 Country Financial Accountability Assessment for The Gambia. Page v

Republic of The Gambia

2009 Country Financial Accountability Assessment

EXECUTIVE SUMMARY

The Country Financial Accountability Assessment (CFAA) is a diagnostic tool used to describe a

country’s public financial management (PFM) and accountability arrangements. The main

objectives of a CFAA are to identify systemic weaknesses in the use of public funds and suggest

ways of mitigating risks to the achievement of the country’s development objectives. Financial

accountability is critical because it is a reflection of the responsibility for the financial decisions

taken, their implications and results measured against agreed outcomes and expectation.

Generally, the fundamental fiduciary expectation is that public funds are used effectively,

economically, and efficiently for the purposes intended.

A CFAA considers the strengths of the financial accountability processes in both the entire

public sector. It is an assessment and not an audit; its findings cannot therefore provide complete

assurance on the status of financial accountability processes, procedures or systems. This report

focuses specifically on institutional arrangements and structural strengths and weaknesses in

processes, procedures, and systems in the public sector in The Gambia.

A CFAA is a "snapshot" at a particular point in time. This report acknowledges that in The

Gambia, there are ongoing PFM reforms which are at different stages of implementation. The

CFAA is not intended to supersede any of these reforms, but rather to highlight those issues that

are more directly associated with fiduciary risk.

A CFAA would therefore provide evidence-based assessment of issues, their diagnosis, and

suggested advice on their likely resolution and level of their fiduciary risk. Conducting a CFAA

or its equivalent is generally a necessary prerequisite for preparing the World Bank Country

Assistance Strategy. Many bilateral and multilateral development partners use these tools as a

basis for their programs, particularly in areas related to public financial management.

The CFAA in the Gambia

This draft CFAA for The Gambia updates the 2003 CFAA and is intended to inform the

proposed jointly funded development policy operation of the critical fiduciary risks that need to

be addressed.1 This development policy operation is intended to provide support to the

government in implementing the second Poverty Reduction Strategy Paper (PRSP) 2007-2011.

The World Bank Board of Directors discussed and approved the PRSP II along with the Joint

1 Development policy operation (budget support) under the name of ‘Public Sector Reform and Growth Grant’ was

approved by the World Bank’s Board in 2009.

The 2009 Country Financial Accountability Assessment for The Gambia. Page vi

Staff Advisory Note in July 2007. Subsequently, the second Joint Assistance Strategy that was

prepared together with AfDB in support of the PRSP II was presented to the World Bank’s

Board of Executive Directors and endorsed in February 2008. The Joint Assistance Strategy II

has taken into account the various PFM reform actions implemented following the 2003 CFAA

recommendations. Continuing development partner support is envisaged. Future plans include an

IDA disbursement of a single-tranche US$7 million operation in FY09, in which disbursements

from AfDB and the European Commission are expected to follow within the subsequent 6 and

12 months, respectively.

Since the 2003 CFAA, the World Bank, in partnership with multilateral and bilateral

development partners has established a Public Expenditure and Financial Accountability (PEFA)

framework. The PEFA approach uses a set of 28 high-level indicators of country PFM

performance structured into 3 broad categories (plus 3 indicators of development partner

practices) and a standard PFM performance report based on the indicator analysis to provide an

assessment of PFM performance. This report, however, is structured as a CFAA not a PEFA

report; it follows a similar format to the 2003 CFAA. The PEFA indicators, as applied in Annex

‘A’, support the CFAA fiduciary risk-oriented assessment, consolidate the factual database, and

allow transition to the PEFA framework in the future if desired. The analyses are based on

budget and financial statements for 2005-20072 reviewed by the assessment team, which

conducted the fieldwork in Banjul in March 2008.

These complementary analytical perspectives are summarized in the annexes. In particular,

Annex A provides a summary of the current status of the PFM system against PEFA indicators

and Annex B summarizes progress achieved to date in relation to the fiduciary risk benchmarks

identified in the 2003 CFAA.

Progress since the 2003 CFAA and Key PFM Risks that Remain

The authorities have implemented many of the recommendations made in the 2003 CFAA and

subsequent supporting studies. Though much remains to be done, elements of the PFM

framework have been significantly improved and fiduciary risk lessened in important respects. In

particular, the legal and regulatory framework has been strengthened by the enactment of the

Government Budget Management and Accountability Act (GBMAA) and issuance of revised

Financial Instructions (for the Implementation of the Budget Management and Accountability

Act) in 2004. Timeliness of financial reporting has also been improved significantly; the

introduction of an Integrated Financial Management Information System (IFMIS) has helped

achieve more timely and comprehensive within-year reports and facilitated preparation of the

annual financial statements.

Together, these changes have given more scope for an orderly, policy-oriented central

government budget process and help set a solid basis for further improvement. There are

however many remaining weaknesses, and progress in many important PFM areas has been less

rapid than advocated in the 2003 CFAA. The internal control system remains inadequate, lacking

capacity and systems to follow-up on known weaknesses in reconciliation and clearing of

2 These were the most complete financial statements available at the time of the assessment. Substantial work

subsequently to update the financial data as indicated in the Government’s Self Assessed Progress Note in Annex

‘E’.

The 2009 Country Financial Accountability Assessment for The Gambia. Page vii

suspense balances and other internal control flaws identified by audit. The internal audit function

remains relatively weak, unsupported, and ineffective. While efforts have been made to clear the

backlog of audit reports to be considered by the Finance and Public Accounts Committee

(FPAC) of the National Assembly (accounts covering the period 1992-1999 have now been

reviewed by FPAC), remedial action on these reports is neither timely nor effective; executive

response to these issues has been largely absent.

In order to realize the benefit of the positive changes that have occurred and to reduce overall

fiduciary risk, the Gambian authorities, together with development partners, will need to

intensify and sustain efforts in strategic areas of PFM reform. Current gains must be consolidated

and the remaining gaps in PFM accountability addressed. Overall systemic fiduciary risks will

remain high unless these issues are tackled in a sustained manner. Key points from the individual

PFM sections of the CFAA analysis are summarized below.

Government financial planning and budgeting. The main areas of concern in this component of

the PFM system are (a) to establish an orderly and policy-oriented budget process, and (b) to

ensure that budget execution is effectively monitored and remains in line with the fiscal policies

in the original budget. These conditions should apply both to management of domestic and

external resources. Good progress has been made, particularly in establishing a more orderly

budget process, as advocated in the 2003 CFAA. The enactment of the GBMAA Act has

strengthened the institutional and legislative framework. Significant improvements have also

been made to the budget classification/chart of accounts that now bring the classification broadly

into line with IMF-formulated standards of Government Finance Statistics (GFS), as well as

allowing activities to be linked to objectives and outputs. This latter feature of the classification

has provided a basis for implementation of a medium-term expenditure framework (MTEF) now

being put in place, consistent with the requirements of the GBMAA Act. Considerably more

work is required to develop a comprehensive MTEF, to align expenditure programs with PRSP

priorities and to improve review and adjustment of the budget during implementation. Many of

the tools to do so are now in place.

Accounting, internal control and financial reporting. The 2003 CFAA recorded unsatisfactory

performance on most aspects of the accounting, reporting, and control system, although it noted

that work was underway to strengthen the legislation and introduce an IFMIS. Significant

progress is now being made to remedy many of the weaknesses noted in the 2003 CFAA,

including improvement in bank reconciliation and timeliness of financial reports. Internal

controls however remain weak; and capacity for internal audit is still almost non-existent. It is

suggested that the authorities should maintain vigilance in the reconciliation of bank accounts to

ensure the credibility of financial reports. Challenges with respect to internal audits were noted

in the 2003 CFAA, but little appears to have been done to address them. Many of the potential

benefits now being put in place through the IFMIS and other control system improvements will

be lost unless timely action is taken in this area. A major and sustained effort to establish internal

audit processes that meet international standards is strongly emphasized in echoing the 2003

CFAA recommendation.

Local government. Local government administration and the decentralization process face a

multitude of challenges. Councils are unable to acquire the material resources required for

service delivery (e.g., waste disposal management) in view of their low revenue base. Local

The 2009 Country Financial Accountability Assessment for The Gambia. Page viii

government salary structure is in accordance with the Central Government’s integrated pay scale

structure, which is relatively uncompetitive when compared to the compensation framework

available in the private sector, not-for-profit organizations, as well as in some of the state-owned

(public) enterprises and donor agencies. While significant steps have been taken to improve the

legislative framework for a more decentralized system of government, the overall environment

for financial accountability of local councils has changed little since the 2003 CFAA. Many steps

are underway, but a sustained and long-term effort will be needed to establish a satisfactory level

of performance and reduce fiduciary risks in this area. This current CFAA recommends a long-

term program to address these issues, focusing first on establishing the local government

commission to provide an institutional basis for local councils to meet their mandate under the

Local Government Act, (LGA), 2002. However, in view of the weak capacity in the Local

Government across the board, it is appreciated that the recommendations may have to take a

much longer time to implement unless Technical Assistance is provided.

State-owned (public) enterprises. Little has changed in the overall environment of state-owned

enterprise (referred to as public enterprises in The Gambia) reporting and governance

arrangements since the 2003 CFAA. The risks of quasi-fiscal indebtedness remain high—and

this may possibly have increased in the current global financial environment. The framework for

financial accountability of public enterprises will need to be radically transformed to reduce

fiduciary risk from this perspective. The legislative framework under which public enterprises

are operating needs to be updated to take account of the changes and realities of present-day

challenges. The current legislation (the Public Enterprise Act and the Companies Act) need to be

updated and made mutually consistent with regard to the treatment of public enterprises. An

overarching public enterprise governance framework would be a desirable tool for the

government to consider. All of these reforms will in reality take considerable time to be fully

realized owing to the prevailing weak capacity to undertake the reform agenda in the sector.

Consequently, this CFAA recommends that a high-level council guide the long-term program

with technical assistance support from development partners.

External audit. Notable progress has been made in addressing the backlog of audit reports that

needed to be submitted to the FPAC of the National Assembly. This is an important step, but few

other substantive issues regarding quality of audit reports and responsiveness of the Executive

branch to audit recommendations of the 2003 CFAA have not been fully and adequately

addressed. Fundamental underlying weaknesses remain: on one hand, there is a lack of sufficient

capacity in the Auditor General’s Office to produce high-quality reports on time while, on the

other, accountability and compliance of the Executive agencies of government to implement

audit recommendations are quite weak and ineffective. One of the central recommendations of

this CFAA is that a high-priority program be initiated at the earliest time possible to establish a

stronger legislative framework for the Auditor General and provide resources and training to

ensure the National Audit Office has adequate capacity. Such an initiative would be a keystone

of future PFM reform—and would be closely linked to programs to build up the capacity of the

National Assembly and its FPAC to help ensure prompt and effective follow-up of the Auditor

General’s observations, which brings us to the following point.

Legislative scrutiny, public access to information, and ethical oversight. Relative to the 2003

CFAA, improvements in both FPAC discussions of the Auditor General’s report and in the

quality of budget information are having impact on the quality of National Assembly oversight

The 2009 Country Financial Accountability Assessment for The Gambia. Page ix

and giving the public better access to PFM information. These steps are encouraging and

demonstrate what can be achieved with well-directed efforts. The magnitude of the remaining

task is very large however, and addressing it will require a sustained commitment from the

Government and development partners. More work has yet to be done to provide the full range

of quality information needed to inform the public on PFM performance; and many of the

fundamental issues raised in the 2003 CFAA regarding FPAC consideration of the Auditor

General’s reports are a continuing concern. A sustained program of support is recommended to

establish a sound legal and institutional framework for the National Assembly and its key PFM-

related committees and to promote better access to budget information by the public.

Applying PEFA Framework in this CFAA

This CFAA attempts to act as a bridging platform for transiting to the PEFA Financial

Management Performance Measurement Framework by applying relevant performance

indicators (PI) as appropriate. The scores for these performance indicators are indicated and

discussed in Annex A. However, some of the indicators could not be scored because of either

lack of or limited access to sufficient data and information for analysis. In particular, the

following performance indicators were not scored: PI-4, Stock and Monitoring of Expenditure

Payment Arrears; PI-15, Effectiveness in Collection of Tax Payments; PI-19, Competition, Value

for Money and Controls in Procurement; and D1-3, Donor Practices related Indicators. The

Government has just recently created a donor aid coordination unit in the Department of State for

Finance and Economic Affairs (DOSFEA).3

Table 1 gives a summary of proposed activities (more fully discussed in chapter 8) for inclusion

in the action plan in relation to strategic priorities and desirable timeframe. These activities have

been drawn from the assessments and recommendations given in the PFM thematic sections. The

bolded activities (in left column of Table 1) mark the critically important areas that should be

given priority. The Government of The Gambia and development partners supporting the PFM

reforms should review and agree upon this draft action plan. Full recognition has been taken into

account of the progress and achievements already accomplished by the Government as well as

those at an advance stage of completion since the CFAA fieldwork was undertaken. In addition,

DOSFEA has documented its own self assessed progress made in some of key reforms which is

presented in Annex E of this report.

3 DOSFEA, which recently changed its name to Ministry of Finance (MOF), will be used throughout this report.

The 2009 Country Financial Accountability Assessment for The Gambia. Page x

Table 1. Draft Action Plan and Strategic Priorities

Activity Description Timeframe

National Coordination and Oversight

1. Establish PFM Reform

Oversight Steering

Committee

Set up PFM-ROSC under chairmanship of DOSFEA Permanent

Secretary and establish role, procedures, and agenda.

Short term

2. Establish thematic

subcommittees

As part of activity 1, set up subcommittees to plan, monitor,

review, and report on performance in each area.

Short term

3. Establish a PFM Monitoring

and Evaluation Unit Establish a technical monitoring and evaluation unit to prepare a

framework for tracking and evaluating performance in

compliance with agreed objectives and outcome targets.

Short term

Addressing Critical Institutional Weaknesses

4. Enact a National Audit

Act

Develop a stand-alone National Audit Act, incorporating

modern audit principles and strengthening independence and

authority of the Auditor General to replace the outdated 1964

legislation.

Medium term

5. Build capacity in the

National Audit Office

Develop comprehensive capacity-building and training

programs for audit staff. This could include specific education

and training for technician and terminal professional accounting

qualifications, training on audit standards and practices, risk

assessment techniques, and computer-assisted techniques. It

could also include twinning arrangements and exchange

programs.

Medium to

long term

6. Establish an effective

internal audit capacity in

Central Government

This activity should include (a) a detailed functional review of

the organizational structure of DOSFEA, the accounting

functions of the line ministries, and current business processes;

(b) strategy development for internal audit function throughout

the Central Government; and (iii) develop guidelines for internal

audit that will apply risk-based methods using the COSO

framework and meeting the International Standards on Auditing

(ISA) promulgated by the International Federation of

Accountants (IFAC)

Earliest

possible time

start—

progressive to

long term

7. Develop the National

Assembly Service to

strengthen parliamentary

review

Establish the National Assembly Service by an act of Parliament

to provide support services to facilitate the work of the National

Assembly.

Build capacity to support the National Assembly and the

National Assembly Service to enhance their effectiveness and

efficiency. This would include provision of study tours and

logistical support.

Earliest

possible time

start —

progressive to

long term

8. Enhance budget

transparency and public

A program that would (a) enhance technical standards of budget

presentation in line with international standards; (b) open the

sittings of the National Assembly and FPAC deliberations and

Short term to

long term

The 2009 Country Financial Accountability Assessment for The Gambia. Page xi

Activity Description Timeframe

access to budget and

accounts information

reports to the public; and (c) campaign to raise awareness of the

public’s right to PFM information, including:

Publishing budget on Government websites and specifying

that monthly or quarterly in-year outturn reports should be

published in the Government Gazette;

Annual accounts made public once presented in the

National Assembly: placed in public libraries, colleges, and

Government websites.

Consolidation of Successful Reform

9. Strengthening the budget

formulation and

thereafter consider the

merits for establishing

and adopting an effective

MTEF

DOSFEA to focus on strengthening the budget formulation

process by addressing existing weaknesses before moving

forward to applying MTEF in the process. A comprehensive

MTEF development program should include (a) an aggressive

PFM capacity-building program both within DOSFEA and line

ministries, departments, and agencies to train staff in program

budgeting techniques and development of programs linked to

national PRSP objectives; (b) development of the IFMIS

platform to support program management; and (c) development

of budget presentation to provide program performance

information to the National Assembly and the public.

Medium to

long term

10. Further improve

reconciliation by clearing

below-the-line account

balances

Eliminate miscellaneous postings by proper classification of

transactions. Clear outstanding balances on suspense and below-

the-line accounts.

Latest

feedback

indicated this

has been done

11. Improve reporting on

externally funded programs

Review reporting on externally funded programs with donors

and establish systemic improvements and mechanisms and

sanctions to improve reporting performance. The newly created

Donor Coordination Unit of DOSFEA will play a significant

role in this issue

Earliest

possible time

Long-term Reforms

12. Building a base for local

government effectiveness

and accountability

Establish a long-term program focused on (a) establishing the

local government commission; (b) a scheme of service for local

government; (c) a training and capacity-building program for

local council financial management staff; (d) personnel audit of

local councils; (e) resolution of the backlog of annual reports by

councils; (f) drafting of a financial manual as required by the

LGFA Act should be put in place; and (g) design and pilot

implementation of an integrated accounting system with strong

accounting controls.

Immediate

start— long

term

13. Public enterprise reform and

governance program

A long-term program of reform to focus on the following

critical issues: (a) monitoring and reporting on public enterprise

financial positions, with particular emphasis on payment arrears

or contingent liabilities that may give rise to future fiscal deficit

increases; (b) high-level review of the legislative, institutional,

and governance framework in which public enterprises operate;

(c) drafting of relevant legislation and regulations, and

governance frameworks; and (d) a capacity-building program

for financial management in public enterprises.

Immediate

start—long

term

The 2009 Country Financial Accountability Assessment for The Gambia. Page 1

INTRODUCTION

The Gambia is the smallest country on the African continental mainland, covering an area of just

over 11,290 square kilometers. It is geographically surrounded by Senegal except for the 80

kilometer coastal line interrupted by the mouth of the River Gambia, where it empties into the

Atlantic Ocean on the west coast of Africa. The Gambia acquired independence from the United

Kingdom in 1965. It suffered severe economic crisis in the 1980s leading to a coup d’état in July

1994 that interrupted democratic processes. It was not until 1997 that the country resumed civil

rule following an open national election. Since then, the ruling party has won a series of national

elections. In January 2007, a new government under the ruling party (Alliance for Patriotic

Reorientation and Construction Party of President of The Gambia, His Excellency Sheikh

Professor Alhaji Dr. Yahya A. .J. J. Jammeh) was elected, ushering a renewed hope for good

governance and the continuation of a working democracy.

Economic Performance in The Gambia

In 2003, The Gambia was ranked 160 out of 173 countries in the UN Human Development Index

but improved to 155 out of 177 in the 2007 ranking. The Gambia has an estimated population of

1.6 million, with an average per capita GDP of US$320 (Atlas method, 2007). Given its small

size, The Gambia is extremely vulnerable to external shocks. The country’s economy is

relatively undiversified and limited by a small internal market. Liberal trade policies and an

efficient port infrastructure have allowed the country to act as a regional re-export hub. Tourism

is a key driver of the economy and the country’s most significant foreign exchange earner.

Agriculture accounts for approximately one-third of GDP and more than 75 percent of

employment in crops and livestock farming. Groundnut farming is the most important

agricultural engagement in the country. Groundnuts account for approximately 60 percent of

domestic exports, and 55 percent of rural households engage in groundnut production. However,

groundnut farmers are among the poorest in the country, and the performance of the sector has

been poor in recent years. There are small-scale manufacturing activity features in processing of

peanuts, fish, and hides. Re-export trade normally constitutes a major segment of economic

activity. Gambia has benefited substantially from a rebound in tourism in the last decade.

However, the ongoing financial crisis and economic meltdown being experienced in the West

and the European financial capitals is expected to have a serious impact by scaling down the

number of tourists visiting The Gambia in the winter season. In turn, job loss for The Gambians

in the hospitality industry is probably going to be the most significant shock.

The country’s economic performance in recent years has been relatively strong but growth is

currently slowing down due to the global recession. The annual real GDP growth rate has

averaged 6.2 percent in the previous 5 years, compared to the estimated annual population

growth rate of approximately 2.8 percent. However, growth is expected to slow down to 4.6

percent in 2009 due to the impact of the global economic slowdown. Further downside risks

remain given the unstable global climate. The country also remains quite vulnerable to

exogenous shocks, including low rainfall and surface water shed on agriculture, and surging

import prices. The country’s relatively low levels of integration with the international markets

could protect it to a limited degree from the global economic slowdown. The tourism and

construction sectors will be adversely impacted by expected drop in tourists, remittances, and


foreign direct investment, but the performance of the agricultural sector is likely to be more

influenced by domestic crop production as opposed to external factors.

The average inflation rate declined from a high of 17.0 percent in 2003 to 2.1 percent in 2006.

Fiscal discipline, characterized by reduced government domestic borrowing, provided the basis

for a significant slowdown of broad money growth. However, surging costs of consumer goods

such as food, energy, and oil imports pushed the annual rate of inflation to 5.0 percent in 2007

and 5.1 in 2008. Inflationary pressures were contained by a tight monetary policy and the

significant appreciation of the local currency due to strong inflow of remittances and reduced

debt service payments.

In general, the macroeconomic impact of international price increases has been relatively

modest, although the impact on the poor could have been significant. The Government

responded to the food price increases by reducing the sales tax on rice imports from 15 percent to

5 percent in July 2007 and eliminating it altogether in May 2008.

Governance in The Gambia

The political system is characterized by a relatively weak opposition; and the media is equally

weak, with limited public access to information. International observers, including Reporters

without Borders, the International Bar Association, and Amnesty International, have cited the

country’s shortcomings with freedom of the press and independence of the judiciary.

Strengthened governance could enhance the transparency and accountability of the public sector

and reduce the risk of policy slippages through greater country ownership.

The Government of The Gambia has been working with a range of development partners. In

addition to IDA, the other large development partners are the African Development Bank

(AfDB), European Union; Department for International Development of the United Kingdom

(DfID), the IMF, and multiple agencies of the United Nations. The Gambia has developed a

Poverty Reduction Strategy Paper (PRSP) for 2007-2011, which outlines a country strategy for

pro-poor inclusive growth. The PRSP is organized into 5 pillars:

Macroeconomic stability and public sector reform;

Promotion of pro-poor growth and employment through private sector development;

Improved basic social services;

Decentralization and strengthened local governance; and

Multisectoral programs on gender, HIV/AIDS, environment, nutrition, and population.

The PRSP initiatives were chosen based on their contribution toward the achievement of the

Millennium Development Goals. The PRSP was developed through a participatory and

consultative process. Stakeholder consultative workshops and focus group discussions were held

with representatives of the public and private sectors and civil society. Consultations reached

into local communities. Participatory Poverty Assessments, Community Scorecards, and “budget

games” were incorporated into the preparatory process. Nongovernmental organizations directly

participated in the drafting of the PRSP document.


The IDA has been assisting The Gambia to establish a sound macroeconomic and sectoral

environment that is conducive to economic growth, and to develop its economic and social

infrastructure and human resources. The IDA-financed portfolio is presently comprised of 5

operations adding up to US$55.9 million equivalent. In aggregate, IDA has approved a total of

31 operations for The Gambia since the country became a member of the World Bank Group.

The current active portfolio is comprised of (a) Capacity Building for Economic Management

(closed December 2008); (b) Gateway Project; (c) Third Education Project, Phase 2; (d)

Community-Driven Development; and (e) The Gambia’s portion of a regional operation called

Africa Emergency Locust Project. There are also 3 trust fund-supported operations of which 2

are associated with IDA-funded projects while the other is a stand-alone operation named

Transformation of the Central Statistics Department into a Bureau of Statistics for The Gambia.

Public Financial Management Reform

Since the 2003 Country Financial Accountability Assessment (CFAA), significant gains in

several areas have been noted. Foreign direct investments have averaged 12.9 percent of GDP.

There has been notable improvement in domestic revenue averaged at 21 percent of GDP since

2004. Fiscal discipline has been improved, and this has brought domestic borrowing under

control from a high of 38 percent of GDP in 2001 to about 28 percent in 2007. Sustained fiscal

and monetary discipline has been complemented by significant improvements in public financial

management. The PFM reforms have helped to enhance accountability and transparency in the

use and management of public resources. This has resulted in shrinking the opportunities for

official corruption and abuse of public resources in the public sector. These reforms, for

example, have resulted in the establishment of the legislative framework that governs public

expenditures and revenue management as well as public procurement management. This led to

the creation of the Gambia Public Procurement Authority. Perhaps the most notable of the PFM

reforms is the design and installation of an Integrated Financial Management Information System

(IFMIS). The system is now operational in the Treasury, Department of State for Finance and

Economic Affairs (DOSFEA), Department of Education, Personnel Management Office,

National Audit Office, and Gambia Revenue Authority. This has had significant impact on the

backlog of the government financial statements. Other noteworthy reforms that contributed in

improving the public financial management are (a) strengthening the independence and

supervision and control function of the Central Bank of The Gambia; and (b) improved debt

management at both DOSFEA and the Central Bank.

The CFAA report continues in the following sections with a detailed analysis of the various

components of the PFM system, reviewing progress since the 2003 CFAA and assessing current

status. This CFAA has also attempted to apply the Public Expenditure and Financial

Accountability (PEFA) Public Financial Management Performance Framework where

appropriate and, by doing so, help to provide a bridging platform for transiting to full application

of the PEFA framework in future diagnostic studies. The PEFA scores for the applicable

Performance Indicators (PIs) are summarized in Annex A along with an accompanying analysis.


SECTION 1. FINANCIAL PLANNING AND BUDGET PREPARATION

The key conditions of the budget process emphasized by the CFAA are that (a) the rules

governing the planning and resource allocation are clear and are implemented effectively; (b) the

process is comprehensive and links allocations clearly and reliably to government policies; and

(c) budget execution is effectively monitored and remains in line with the fiscal policies in the

original budget. These conditions should apply to management of both domestic and external

resources. Very similar requirements are specified under the PEFA framework.

Substantial improvement has taken place in the institutional and legislative framework for these

processes since the 2003 CFAA as a result of the enactment of the Government Budget

Management and Accountability (GBMAA) Act, 2004 and updating of Financial Instructions

that support the implementation of the Act. Combined with the introduction of a revised and

modernized chart of accounts, these changes are helping to establish a more orderly budget

process. Detailed description of the changes and the CFAA assessment is discussed in this

section.

Description of Performance

The institutional and legislative framework in The Gambia now sets out norms that are broadly

up to par with the international practice. The Constitution (1997) of The Gambia defines the

principles and overall legal and institutional framework for the management of public resources.

Section 102(b) empowers the National Assembly to review and approve proposals to raise

revenue by the government. It also stipulates that all revenues mobilized for the government

must be paid into the Consolidated Fund. The DOSFEA is mandated by the Constitution and the

BMAA Act to prepare and present the Annual Government Budget to National Assembly, which

in turn issues an Appropriation Act, authorizing the withdrawal of funds from the Consolidated

Fund. The Secretary of State for Finance and Economic Affairs has the administrative

responsibility to authorize withdrawal of public funds from the Consolidated Funds in

accordance with the limits set out in the Appropriation Act. The Directorate of National Treasury

is responsible for the preparation of the national accounts while the Auditor General has the

constitutional mandate and responsibility of auditing the public accounts.

The BMAA Act (article 31) allows that where there are substantial changes in the economic and

social conditions requiring larger expenditures than the original and revised budgets allow, the

Secretary of DOSFEA shall submit a supplementary budget to the National Assembly, detailing

the additional expenditures and sources of their financing. The revised and supplementary

budgets shall be presented and documented in the same manner and format as the original

Government Budget.

As part of the implementation of the 2003 CFAA recommendation, the formulation of the budget

has improved with the integration of the recurrent and development budget that was achieved


under the 2006 Budget. In addition, allocation resources have to some extent been based on

broad, DOSFEA-issued policy guidelines. However, sector-specific policies do not seem to be

reflected in the budgetary expenditures incurred, implying there is disconnect with the policy.

The poverty programs developed by sectors to implement the PRSP initiatives are costed and

included in their budget estimate submissions to the Directorate of National Treasury. However,

these have not yet been included and adopted in overall government budget estimates in view of

their variable quality. For the time being, the budget would continue to appropriate funds for a

single year on basis of the size of the overall resource pot and broad policy framework. As

capacity in sector departments improves over time, it is expected that the quality of future

estimates will improve to a point that will allow these projections to be included to provide

information on baseline costs of government programs in the medium term.

The most recent public expenditure reviews in education, health, agriculture and works,

construction, and infrastructure sectors have shown weakness in the formulation of budgets

implied by the weak linkages between expenditures and policies and unrealistic costing. This is

an important aspect for future capacity development efforts to focus on before too much attention

can be directed to the establishment of a MTEF in the budget management system.

The Secretary for DOSFEA draws up a detailed budget timetable, indicating the program and

activities of the budget exercise in its entirety, 10 months (due in February) before the end of the

financial year. The timetable is circulated to all Secretaries of State for various sector

departments (in line ministries) for their information and guidance requesting compliance by

March 31 each year. By the end of April each year, the Secretary for DOSFEA is required by law

to submit a Budget Framework Paper to the Office of the President outlining the draft

preliminary constraints (aggregate ceiling) and the outlook for the next fiscal period along with

an analysis of the current year’s budget performance for review.

The main budget preparation process begins each June when the Secretary of DOSFEA issues

the call circular to all sector departments and agencies. The call circular outlines the

Government’s macro-economic policy statement and the economic forecast for the next financial

year. It is against this backdrop that the budget ceilings are allocated to sector-specific

departments for both recurrent and development expenditures within which to limit their annual

budget estimates and expenditure proposals. All the departments are required to submit their

budget proposal to DOSFEA. Budget meetings are scheduled for bilateral consultations and

negotiations in defense of the proposals. The National Planning Commission plays a critical role

in reviewing the budget during the bilateral discussions. Sectors and departments also defend

their human resources budget proposals at the Personnel Management Office for approval of all

newly created staff positions. However, these discussions do not appear to persuade DOSFEA to

vary the set ceilings issued to sector departments. Subsequently, DOSFEA consolidates the

proposals and develops the final draft budget for the following financial year. The Secretary of

DOSFEA finally presents the draft final annual budget to the Cabinet for approval and

subsequently to the National Assembly for approval at least 30 days before the end of the

financial year. The entire budget process cycle, illustrated in Figure 1, shows the clockwise

sequence of events and the approximate timeframe in the year when they take place.


Figure 1. The Gambia: Budget Preparation Process Calendar

January

April

Passing the budget

February

March

May

JuneJuly

August

September

October

November

December

DOSFEA draws

Budget processing

timetable)

Timetable issued

to Departs of

State

Budget Circular issued to

Depts of State

Chief Justice; Auditor General &

other Agencies authorized send to OP onwn Estimates

Submission to Parliament

Budget Framework Paper to OP

Consultatio

n with

Dep

arsof State

Clear guidance is given to the departments on how to prepare the estimates. The sector

departments in the IFMIS pilot use the Active Planner module to enter their estimates, while

those that are not online as yet are provided with templates that are in turn entered at the data

center in the budget office. Estimates for all departments are then consolidated to form the

overall budget estimates. All Permanent Secretaries and Heads of departments are instructed to

adhere to the budget preparation guidelines and observe the time by when their submissions are

due.

The GBMAA Act, 2004, article 22 (1) requires the Secretary of State to observe section 152 of

the Constitution (i.e., to prepare and lay before the National Assembly the Appropriation Bill

documents, at least 30 days before the end of the financial year). The law is explicit in the

manner and time of the presentation. The National Assembly is required to deliberate on the draft

estimates within 14 days of their receipt. Subsequent to the budget approval by the National

Assembly, an Appropriation Bill is laid before the Assembly and given due consideration before

it is passed within 7 days of its presentation. For the past 3 years, this requirement has been met

with the budget passed by the National Assembly before the start of the new financial year.

The Government has completed its second Strategy for Poverty Alleviation and plans to

implement it through a sectorwide approach (SWAp) and subsequently through the MTEF with

strong focus on attaining the targets of the Millennium Development Goals, subject to

strengthening its human resource and institutional capacity in the departments. As noted in the

PRSP, detailed sector plans will need to be developed and consistency with the PRSP must be


ensured. However, to achieve this level of reform in the budget process, capacity must first be

developed in DOSFEA on macro-economic analysis and forecasting. This also requires accurate

statistics for the various fiscal and monetary variables. Key sector data will need to be collected

and analyzed. All these actions will require time, commitment, and the support of the

development partners.

The Gambia Bureau of Statistics has developed a strategic plan for 2008-2011 in which pillar

two aims at “improving economic statistics for a better monitoring of program implementation

towards a sustainable economic growth”. Within this pillar the objective of producing key

economic indicators as well as other statistics through surveys will contribute to the preparation

of Medium-Term Sector Strategies. This work will ultimately contribute to the development of

the Medium-Term Expenditure Framework.

Since the introduction of IFMIS in DOSFEA, there has been gradual improvement in the

management of public resources, greater transparency, and improved Government

accountability. This has also resulted in timely financial reporting and imposition of controls to

ensure that expenditure is within budget and the available cash. However, it has proved much

more difficult to establish a strategic and policy-based budget formulation process from the

traditional incremental process that builds on past patterns of spending rather than analysis of

national policies and priorities. Despite there being the second PRSP (2008-2011) and a series of

Public Expenditure Reviews that were completed in the last 5 years, there has been relatively

little use for this information in influencing resource allocation and reflecting sectoral goals and

policies that are consistent with the PRSP.

More effort is needed to embed PFM review and output information systematically in the budget

process. The introduction of a GFS-based chart of accounts4 with the 2006 budget estimates has

been a significant step toward the goal of integrating the recurrent and development budgets. The

chart of accounts now permits allocations and analyses to be examined on a program basis and

thus be related to outputs, outcomes, and objectives. The classification is made up of 30

alphanumeric characters divided into 4 segments; but the segment for MTEF, which captures

outputs, outcomes, and objectives, is not yet being used.

Although the Government has also initiated the adoption of an MTEF from 2006, many issues

remain to be resolved. For an MTEF to materialize fully, it will be necessary to have (a) a

comprehensive macroeconomic framework, (b) clear sector goals that are embraced in the PRSP

(c) realistic estimate of available resources for the medium term, and (d) an effective and

efficient budget execution arrangement. Given this scenario, sectoral managers have little option

but to continue to prepare incremental annual estimates. The Government however remains

determined to adopt MTEF gradually over time when adequate capacity is developed.

Continuing this commitment will be the basis for success in establishing clear medium-term

linkages between PRSP priority outcomes and public expenditures programs.

4 This is based largely on the IMF GFS Manual (1986); the current GFS Manual (2001) has become the recognized

international standard.


Section 22 of the Government Budget Management and Accountability Act, 2004, expounds the

provision of Section 152 of the Constitution, 1997, which require the Secretary for DOSFEA to

prepare and lay before the National Assembly the Appropriation Bill documents at least 30 days

before the end of the financial year. This should include the Government revenues and other

receipts that include tax revenues such as tax on personal income, corporate tax that is charged

on profits earned by the private companies, domestic taxes on goods and services (sales tax), tax

on accrued international trade gains, etc. Also included are non-tax revenues that are usually

levied on services rendered such as user charges, court fines, licenses, and proceeds from

disposal of public assets. The Appropriation Bill also includes revenues arising from domestic

and external grants, loans, and any other receipts paid to the Government.

Expected inflows from donors for development expenditure are captured in the budget

framework as shown and discussed in Section 6 on public access to information. Procedures are

not yet in place, however, to record actual expenditure in executing the projects. Donor-financed

project bank accounts are held in commercial banks and outside the control of the Directorate of

National Treasury. Steps are being taken to open ledgers for donor-assisted project bank

accounts in IFMIS so that returns from the executing agencies can be captured and reported in

IFMIS. Discussions are ongoing between the Government and the development partners with a

view to upgrade and harmonize reporting of actual spending with the Government’s IFMIS

through monthly and annual reports.

The budget is the main tool used to translate Government policy into practice. Therefore, it is

important for the Executive to be able to execute the budget as passed by the Legislature and

advise the Legislature promptly if economic and fiscal conditions change. A schedule of all

changes to the budget is disclosed in the annual financial statements.

The budget is revised during the year but the aggregate does not change. A schedule of all the

virements during the year is reported in the financial statements, and this provides an opportunity

for Legislature to seek explanation for the virements. The changes in the composition of the

budget across departments and economic classification means that the policy intent of the budget

is not followed stringently during execution. For the past 3 years, deviation from approved

budgets was more than 5 percent. These details are shown in Annex C. The credibility of the

budget is undermined as a result of the deviations. This indicates weaknesses in budget planning,

costing of activities, and procedures in expenditure control. Underlying these aggregate

variations are substantial variations at budget head level. A detailed analysis of compositional

variance between budget and actual is given in Performance Indicators 1 and 2 summarized in

Annex A. The budget remains an unreliable indicator of out-turns, though (partly as a result of

Public Expenditure Review efforts) aggregate deviations in expenditure have reduced in recent

years.

Good progress has been made in establishing an orderly financial planning and budget process,

as advocated in the 2003 CFAA. The enactment of the GBMAA Act has strengthened the

institutional and legislative framework. Significant improvements have also been made to the


budget classification/chart of accounts, bringing the classification broadly into line with IMF

GFS standards, as well as allowing activities to be linked to objectives and outputs. This latter

feature of the classification has provided a basis for the implementation of a medium-term

expenditure framework being put in place, consistently with the requirements of the GBMAA

Act. As a result of these changes, there is an integrated recurrent and development budget, even

though linkages between policies and budgets remain weak especially in sector departments.

The improvements described in Section 1 have significantly enhanced the potential to link

budget allocations effectively to policies over the medium term. However, additional work is

required to develop a comprehensive medium-term framework to align expenditure programs

with PRSP priorities and to improve review and adjustment of the budget during implementation.

It is worthwhile to note that many of the tools to do this are now in place. While the revised

classification and IFMIS provide valuable mechanisms that can help link expenditure programs

to national PRSP objectives, staff training, a viable career path, and a continuing political and

public interest in the process are essential for long-term success.

Recommendations:. The Government with the support of the development partners should

support efforts to strengthen budget formulation and thereafter support a comprehensive MTEF

development program that includes (a) a capacity-building program for both DOSFEA and sector

departments with a view to train staff in program budgeting techniques and development of

programs linked to national PRSP objectives; (b) further development of the IFMIS platform to

support program management; and (c) improvement of budget presentation to provide program

performance information to the National Assembly and the public.


SECTION 2. ACCOUNTING, FINANCIAL REPORTING, INTERNAL CONTROL,

AND INTERNAL AUDIT

Both the PEFA and the CFAA frameworks place a strong emphasis on the establishment of a

sound, effective, and comprehensive accounting system. Increasingly, such systems require a

robust IFMIS as the basis for control, accounting, reporting, and analysis. The system should

embody effective internal controls and timely, comprehensive, and reliable financial and fiscal

reports both within-year and at year-end. An effective system of internal audit is an essential

PFM component to provide financial managers with continuing oversight of the integrity of all

aspects of the financial management system and beyond.

The 2003 CFAA recorded unsatisfactory performance on most aspects of the accounting,

reporting, and control system, although it noted that work was underway to strengthen the

legislation and introduce an IFMIS. Significant progress is now being made to remedy many of

the weaknesses noted in the 2003 CFAA, including improvement in bank reconciliation and

timeliness of financial reports. Internal controls however remain relatively weak, and capacity

for internal audit is still almost non-existent. Details on progress and performance status in each

area of the accounting, reporting, and control system is given in this section.

Description of Performance

Section 7(2) of the GBMAA Act enjoins the Head of the Directorate of National Treasury to

perform their functions under the supervision of the Permanent Secretary in accordance with the

Financial Instructions for the Implementation of the GBMAA Act. These Financial Instructions,

which were issued in 2004, detail the processes and procedures for implementing, managing and

accounting for government budget, and cash and bank account. It also details the duties and

responsibilities of the Directorate of National Treasury, Vote Controllers, and other public

officers. Regulation 59 enjoins the National Treasury with the approval of the Secretary of State

and in consultation with the Auditor General to prepare an Accounting Procedures Manual from

which departmental accounting instructions shall be derived.

Accounting policies are explicitly stated in the Annual Financial Statements of the Government

of The Gambia. These policies state the accounting basis — cash basis as defined by

International Public Sector Accounting Standards (IPSAS) — and principles of recognition of

revenue, expenditure, and fixed assets. Further clarification in the policies in relationship to

international standards, such as IPSAS and GFS 2001, will be required over time.

The Gambia, in line with most countries, has begun implementing a comprehensive IFMIS. The

EPICOR5 software-based platform was initiated in January 2007 and is being piloted in the

following departments and agencies:

5 EPICOR is off-the-shelf software that was configured to meet requirements of The Gambia and implemented as a

turnkey contract, including with training and support. Upgrades are provided as part of the annual maintenance and

support licenses.


Department of State for Finance and Economic Affairs,

Directorate of National Treasury,

Department of Education,

Personnel Management Office,

National Audit Office,

Gambia Revenue Authority.

The Directorate of National Treasury maintains 4 types of bank accounts in the Gambia Central

Bank. The Accounting Unit in the National Treasury is responsible for bank reconciliation. This

Unit has 8 staff supervised by a principal accountant. The responsibility of this principal

accountant to authorize checks before printing and also be responsible for the supervision and

review of bank reconciliation reports goes against the key internal control principle of

segregation of duties. However, the Directorate of National Treasury has been reorganized, and

units are now headed by deputy directors and supported by principal or senior accountants in

charge of various sections. The reconciliation and payment processing responsibilities have been

separated from payments now handled by the Treasury Unit of the Directorate of National

Treasury.

The Gambia Central Bank provides details of all transactions going through the government

bank accounts on a daily basis in electronic format to the Directorate of National Treasury. The

transactions are imported into the IFMIS for automated bank reconciliation. The automated

system has greatly improved the timeliness and accuracy of bank reconciliation. [Note: The

EPICOR software system had a technical problem that caused the bank reconciliation reports

that the CFAA team reviewed not to balance. The Government has issued the certificate of final

acceptance of the phase-1 IFMIS implementation indicating that the technical problems have

now been resolved.]

Travel advances and operational imprest when issued should be accounted for before a

subsequent one can be authorized. The accounting system has been configured so that a request

for new advance or imprest on a budget line that has an outstanding balance cannot be processed.

Staff interest free loans based on a single month’s basic salary are given as an advance on salary

to be repaid typically over a period of six months. A ledger tracks payment directly through the

payroll system inputs, with reports showing outstanding loans for each employee and in total. An

end date is stipulated that automatically stops repayment when the loan is fully recovered.

Significant amounts of transactions are recorded below the line (suspense account). This

undermines the completeness of financial reports especially when they are not fully investigated

and cleared when compiling the annual financial statements. In principle, all transactions should

be identified either as revenue, expenditure, or financing to allow a clear picture of the overall

fiscal position.

Although a number of significant systemic improvements have been put in place, further work is

required to ensure that the system functionality is fully utilized. Through sustained effort by the

authorities, the IFMIS implementation achieved final acceptance on February 1, 2009, and all

outstanding functionalities, deliverables, and incidents had been delivered and resolved. The

challenges, good practice, and lessons learned documented in the Phase-1 IFMIS post-


implementation review should be used in rolling out the system and shared with other countries

that are considering implementation of IFMIS.

The Directorate of National Treasury operates a centralized payment system and is responsible

for the production of consolidated annual accounts. Departments are required to submit returns

for transactions on retained departmental revenues for consolidation by the National Treasury.

The statutory deadlines are March 31 and June 30 of each year for the preparation and audit of

government accounts for a financial year ending every December 31. Sub-section 41 (3) of the

GBMAA Act enjoins DOSFEA, following the reconciliation of its own accounts with

transactions of the Treasury main account, to consolidate and submit to the Auditor General the

annual statement of government accounts not later than 3 months after the financial year-end.

With IFMIS in place, the Directorate of National Treasury has been in a better position to

improve on the timeliness of completing the annual accounts for audit. The DfID is providing

technical support for the review of the controls and reporting capabilities of IFMIS to assess how

much reliance can be placed on the IFMIS reports.

With the assistance and intervention of key development partners, notably the World Bank and

DfID, in providing expatriate technical support to both the Directorate of National Treasury and

the National Audit Office, the Government has prepared Annual Statements of Public Accounts

covering the period 1992 to 2008 (at time of this CFAA). The accounts covering the period 1992

to 1999 have been prepared and audited and have also been subjected to scrutiny and review by

the Finance and Public Accounts Committee (FPAC).

Accounts for the periods 2000-2004 have also been prepared and audited. The draft audit report,

which was issued with a disclaimer opinion by the Auditor General because most of the

shortcomings in the 1992-1999 accounts had not been remedied, was submitted to the Treasury

in January 2008 for review and comments. The 2000-2004 audit reports were submitted to the

National Assembly in January 2009.

The 2005 and 2006 accounts were also prepared and submitted to the Auditor General in August

and September 2007, respectively. The 2007 accounts were independently prepared by the

Directorate of National Treasury and were submitted to the National Audit Office on August 29,

2008 (i.e., 8 months after the year-end, which is a great achievement). The 2008 account was

submitted within the statutory deadline on March 27, 2009. Government completely eliminated

the backlog of accounts preparation.

The Government does not have a national accounting reporting standard. The GBMAA Act,

2004 (42), requires certain information to be disclosed in the financial statements. However,

most of the required information is not disclosed. The annual financial statements for FY2005

and FY2006 basically show balance sheet for financial assets and a table of revenue and

financing statements supported by detailed schedules for departmental expense items for the

approved and revised budget, expenses, and variances. With the introduction of IFMIS,

significant improvements in the format of budget performance reports and annual financial

statements were made and designed in the system. The 2007 annual financial statements follow

the format of IPSAS 24, Presentation of Budget Information in Financial Statements. The


accuracy and timeliness of the annual financial statements has also improved as a result of

adopting a practice of preparing daily bank reconciliations.

Unreported extra-budgetary expenditure is relatively standard in public finance legislation to

allow spending that is authorized outside the annual Appropriation Act. It is important however

that all such expenditures or receipts be shown in the budget estimates and recorded in the annual

accounts and monthly budget reports. The GBMAA Act, 8(2) provides the following:

Notwithstanding the provisions of subsection 8(1) (which establishes the

principle of a single consolidated fund), an Act of the National Assembly

may provide: (a) for the payment of particular revenue or other money

into some other fund, which for the purpose of this Act is called extra-

budgetary fund, established for a specific purpose; and (b) for the

retention of revenue or other money by the budget agency that received it

for the purpose of defraying expenses of that budget agency, which for

the purpose of this Act is called departmental self-raised revenue.

Problems with recording and reporting such transactions commonly occur with respect to special

accounts set up to handle development partner funds. Vote Controllers that are authorized to

operate special bank accounts are required by GBMAA Act (40) to submit statements of revenue

and expenditure to the Directorate of National Treasury within 5 days of the end of each month.

However, this is not done by most of the departments; lack of reports makes it very difficult to

ascertain the value of such unreported transactions.

The budget estimates provide details of inflows expected from the major multilaterals and some

bilateral by economic classification. For FY2008, The Gambia Government is expected to

receive GMD 1,444,520 for development projects in the form of grants and loans to support a

total budget of GMD 5,873,114. This shows that 25 percent of the budget is donor funded,

increasing the importance that the budget be disclosed in financial statements under legislative

scrutiny.

There are two main types of voucher processing for non-salary expenditure; the IFMIS pilot sites

and the non-online sites. Segregation of duties and authorization controls are in place as

explained in PI-20 (Annex A). In the absence of internal audit reports and surveys to track the

rejection rate of payment vouchers for noncompliance with internal controls, it is difficult to

ascertain if the controls are applied as intended.

The Internal Audit Unit has 5 staff members who mainly carry out audit/inspection of banking of

revenue collections. Their internal audit work is not focused on system risk issues in the

operations. The DOSFEA can apply the GBMAA Act section 4 2(a) and (b) to prescribe

appropriate standards for internal auditing by adopting the International Standards for the

Professional Practice of Internal Auditing.

As noted in the 2003 CFAA, although the Internal Audit Unit reports directly to the Permanent

Secretary of DOSFEA, all staff in the unit are seconded from the National Audit Office.

Seconding of staff is based on the powers conferred by GBMAA Act, Article 160 (1) to the

Auditor General to undertake pre-audit. There is no formal scheme of training in internal audit


standards and practice. Often government staffs who receive training to tend leave the civil

service for better prospects elsewhere. To exacerbate the matter, the sector departments and

agencies do not have audit committees to direct and oversee an internal audit. The absence of an

effective public sector internal audit function weakens the control framework and poses a high

fiduciary risk to the use and accountability of public funds.

The Internal Audit Unit should be restructured in the short to medium term and change its

approach to audit and redirect its focus on risk-based auditing by adopting the COSO Enterprise

Risk Management Framework.6 The Unit should provide reasonable assurance regarding the

achievement of objectives of government departments in the following categories:

Conformity to the organization’s strategy,

Effectiveness and efficiency of operations,

Reliability of financial reporting,

Compliance with applicable laws and regulations.

Accounting: The introduction of IFMIS has greatly improved the accounting environment. The

challenge now is to periodically review the controls and reporting capabilities of IFMIS to

provide assurance that there are no security breaches and that reliance can continue to be placed

on IFMIS-generated reports. This CFAA recommends the strengthening of the control

framework that is appropriate for a computer-based environment. One option to explore is

providing for a well-trained staff with computer-based auditing skills in the Internal Audit Unit

that can focus on risk.

Financial reporting: It is important that all expenditures or receipts be shown in the budget

estimates and recorded in the annual accounts and monthly budget reports. Significant progress

has been made in improving the timeliness of presentation of year-end financial statements to the

National Audit Office, and the format of 2007 financial statements represents a good step

forward from those of previous years. Nonetheless, the challenge will be on the consolidation of

this work and achievement of a satisfactory level of performance that meets international

standards.

However, improvement of the quality of the accounts to enable the National Treasury to get a

clean report from the Auditor General and the FPAC would depend on the prompt

implementation of the outstanding recommendations (mainly to clear a number of longstanding

items) of the Auditor General, the FPAC, and the CFAA, as well as other related observations

and recommendations from other sources.

Reporting on donor funds, and more generally on extra-budgetary operations, remains a major

challenge. The extent of the problem needs to be accurately determined and properly managed. It

is recommended that the Directorate for Central Projects Management and Aid Coordination

6

Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a U.S. private-sector initiative,

formed in 1985. Its major objective is to identify the factors that cause fraudulent financial reporting and to make

recommendations to reduce its incidence. COSO has established a common definition of internal controls, standards,

and criteria against which companies and organizations can assess their control systems.

http://en.wikipedia.org/wiki/U.S.

http://en.wikipedia.org/wiki/1985


should take the lead on timely reporting on donor funds. Consultation with development partners

will be necessary. In both cases, continuing monitoring and reporting on progress will be

essential. This will ultimately enhance the quality of financial reporting that meets international

standards.

Internal controls: The introduction of IFMIS promises to bring into play major reforms to

internal control processes. It will be challenging for these controls to be consistently applied as

IFMIS is deployed to other sector departments and agencies. In this regard, it is recommended

that further work be undertaken to ensure that stronger controls are embedded in the IFMIS and

these are fully understood and subjected to independent oversight or third party review from time

to time.

As a consequence of improved bank reconciliation through IFMIS, reporting has become

timelier. It is however recommended that further effort be made (a) to improve reconciliation and

clearance of below-the-line (suspense) accounts; and (b) to address the continuing difficulties in

getting timely reports on externally financed accounts. It is also recommended that

improvements in bank reconciliation should be followed up with clearance of long outstanding

items in suspense accounts (below-the-line accounts).

Internal audit - Unless operations, especially those transacted through IFMIS, are subjected to

independent scrutiny, the reliability of reporting will be difficult to assure. Internal audit is a key

PFM criterion but is not operational in The Gambia. The challenges and constraints noted with

regard to internal audit in the 2003 CFAA remain unchanged in all respects. The Internal Audit

Unit does not comply with International Standards for the Professional Practice of Internal

Auditing as promulgated by the Institute of Internal Auditors. Capacity of the Internal Audit Unit

is seriously under-resourced in terms of human capacity and skills as well as financial and

logistical support.

Virtually no progress has been made in establishment of internal audit since the 2003 CFAA.

Several fundamental institutional changes should be made to allow for a proper internal audit

function that meets international standards. A clear environment of effective internal control

should be established, and the Government should develop a clear strategy for establishing

internal audit capacity as part of the management and control culture of its sector departments

and agencies. Only clear progress in these areas will provide an environment in which internal

audit can function effectively.

It is strongly recommended that the Government, with the assistance of development partners,

examine the options for establishing a well-functioning Internal Audit Unit. The option selected

should be guided by the strategy the Government is expected to prepare in the next 1 to 2 years,

drawing from a concept note prepared in December 2006 for the strengthening of the internal

audit function. This is in line with the policy measure in the Public Sector Reform and Growth

Grant to analyze and prepare options for establishing internal audit and control functions. To

help the Government in this work, these are the suggested options for consideration:

Independent audit agency that will be set up by an Act of the National Assembly,

Appropriate and comprehensive amendment in the GBMAA Act,


An internal audit unit located within and reporting directly to each Department of State,

or

A centralized Internal Audit Unit in DOSFEA providing a service to all other

departments.

The selected option will require legal backing and should be given due consideration in the

Government’s plan to review GBMAA Act, 2004. Considering the size of the country and the

limited number of qualified accountants in the public sector, a pragmatic way forward could be a

centralized Internal Audit Unit within DOSFEA that is responsible for setting standards and

monitoring compliance and able to provide an effective internal audit service for the whole

Government. Director-level leadership would be desirable, similar to that in the Budget and

Treasury, and with reporting to the Secretary of DOSFEA. The revised GBMAA Act should also

provide for the setup of audit committees preferably on basis of sectors considering the size of

the Government.


SECTION 3. EXTERNAL AUDIT

An effective National Audit Office that has the authority, capacity, and independence to carry

out external audit of the Executive branch of Government is one of the most important elements

of a fully operational PFM system. Its absence poses a high degree of fiduciary risk in terms of

both potential misappropriation and likely failure to achieve public policy objectives. The 2003

CFAA highlighted the extremely limited resources available to the National Audit Office in The

Gambia, the lack of a modern Finance and Audit Act, and the problematic consequence in

meeting constitutional requirements on accounting, reporting, and auditing. Section 3 looks at

the issues relating to the National Audit Office and its institutional framework.

Description of Performance and Assessment

The Auditor General and the National Audit Office are dealt with under Part 2, Articles 158 to

160 of the Constitution. This also provides the manner of the appointment and removal of the

Auditor General, Article 158 (2) states that the President shall appoint the Auditor General after

consultation with the Public Service Commission. The President may terminate the Auditor

General’s appointment, giving unconditional powers to the President generally regarded as

impairing the independence of the external auditor.7

The Auditor General appoints the staff of

the National Audit Office after consultation with the Public Services Commission. In the case of

senior or professional staff, the appointments are as prescribed by Regulations of the Public

Service Commission.

Article 160 (1c) of the Constitution enjoins the Auditor General to audit and report on the

Government and public accounts of The Gambia at least once every year. The report is submitted

to the National Assembly within 6 months of the end of the immediately preceding financial year

to which each of the accounts relates. The report is to draw attention to any irregularities and any

other matter that, in the Auditor Generals’ opinion, ought to be brought to the attention of the

National Assembly [Article 160 (1d)]. Article 160 (1e) of the Constitution provides that after the

National Assembly has discussed the report, the Auditor General shall have the report published

for public information. It further provides that if there is any undue delay in the discussion of any

such accounts in the National Assembly, the Auditor General may publish the report in advance

of such discussion. However, it does not provide specific guidance on the threshold of such a

delay. Finally, Article 161 (9) grants the FPAC with the prerogative to extend the 6-month

period required by the Auditor General under Article 160 (1d) to report on the accounts to the

National Assembly.8

7 Between 1994 and 2008, there have been only 2 Auditors General: one from 1994 to 2000 and the other from 2000

to present. This creates an appearance of reasonable stability of tenure. However, any changes that do occur, as

noted, under the sole authority of the President, do raise questions regarding the independence of the Auditor

General. 8 Section 151 (3) of the Constitution appears to give unusual authority to the Auditor General over government

spending. It states that “No money shall be withdrawn from the Consolidated Fund or any other public fund of The

Gambia, including a withdrawal under subsection (4), unless the withdrawal has been approved by the Auditor-

General or a member of the National Audit Office designated by him or her for the purpose and it is made in the


Article 160 (2) provides the normal powers and protections granted to the Auditor General under

the International Organization of Supreme Audit Institutions (INTOSAI). These include (a) not

being subject to the direction or control of any other person or authority in the exercise of their

functions; (b) having power to disallow any item of expenditure that is contrary to the law and to

levy a surcharge;9 and (c) power to call for and to be provided access to all data and information

required for the performance of their functions. Article 161 (8) states that nothing in the

Constitution shall preclude the Auditor General, at the request of the head or governing body of

any public body, corporation, or institution referred to in Article 160 (1c), or on their own

initiative, from carrying out any special audit of such body, corporation, or institution. Where the

Auditor General carries out such a special audit, it shall be reported to the FPAC.

The National Audit Office checks and verifies calculations for pension and gratuity payments for

all civil servants. While this function is important because of the long-term nature of these

payments, it is questionable whether it is properly assigned as a function of an external audit;

normally it would be construed as an Executive responsibility, the effectiveness and propriety of

which would be subject to audit. In recognition of this anomaly, there are future plans to transfer

the payment of pensions and gratuities to the Social Security and Housing Finance Corporation.

Subsection 159 (4) of the Constitution reinforces the Auditor General’s financial independence

concept espoused in Article 152. The Auditor General is required to submit the annual estimates

of expenditure for the National Audit Office for the following financial year for presentation to

the National Assembly. The President shall cause the estimates to be placed before the National

Assembly without amendment but may attach to them his or her comments and observations. In

practice, the activities of the National Audit Office are constrained as a result of limited resource

allocation since the budget of the National Audit Office is still subjected to ceilings from the

Executive. The National Audit Office recognizes that it is not the only constitutional body, which

also includes the Legislature and Judiciary, which has been accorded a constitutional protective

financial shield, although it is actually not practiced. However, in 2007 the National Audit Office

used only 60 percent of its budgeted GMD 7,163,000 because it lacked the technical capacity to

undertake all its planned programs for the year.

The 1997 Constitution envisaged an autonomous audit service. An Act of the National Assembly

to establish such an independent institution is required and should be followed by specific human

resource policies and practices to attract and retain qualified professional auditors. The

remuneration structure for the National Audit Office makes it difficult to attract qualified

personnel. At the moment the National Audit Office has a staff compliment of 81, of whom 65

are in the professional cadre and 16 in administrative and support functions. Vacancies exist for

4 principal auditors and 9 senior auditors. In the absence of separate dedicated legislation to

provide for the independence of the National Audit Office, recruitment of auditors is still

processed though the Personnel Management Office; however, the National Audit Office is

allowed to participate in the recruitment process and in the interview of candidates.

manner prescribed by an Act of the National Assembly”. In practice, this provision does not appear to be

operational. 9 Under Section 45 of GBMAA Act, 2004, the Permanent Secretary of DOSFEA is also granted powers to surcharge

and is required to notify the Auditor General and Vote Controller of any surcharges.


Because of this lack of capacity in the National Audit Office, the audit of most public enterprises

is outsourced to private audit firms. The National Audit Office is centralized in Banjul with no

physical presence in the regions making the audit of public enterprises in the regions irregular.

The National Audit Office has included in its strategy an objective for transforming itself into a

modern Supreme Audit Institution. Work is progressing on a bill to establish the National Audit

Office as articulated in the 1997 Constitution. A code of conduct that meets INTOSAI standard

has been developed and should be signed by all National Audit Office staff. The code of conduct

includes requirement for continuing professional development. However, since most National

Audit staff are not members of any recognized professional accountancy bodies, it is difficult to

implement continuing professional development in a structured manner.

Support for such reforms is also needed from the media and non-state actors to enable them to be

in a position to analyze the budget and annual financial statements. However, because of the

weak civil society and media in the country, it is unlikely to expect wide-spread public access to

information on use of public finances any time soon.

The National Audit Office receives direct support from development partners and other sources.

Also, the National Audit Office outsources some of its audit assignments, especially those of

state-owned enterprises and local authorities, to private accounting/auditing firms. The audited

body generally pays the fees. The National Audit Office continues to explore other avenues of

financial and technical support to improve its effectiveness and efficiency.

Sub-section 159 (3) of the Constitution provides for the accounts of the National Audit Office to

be audited by an appropriately qualified auditor or firm of auditors appointed by the FPAC. This

provision has not been exploited.

In addition to exercising such other functions as may be conferred by an act of the National

Assembly, Article 160 (1) of the Constitution outlines the functions of the Auditor General to

include both pre- and post-compliance audit and specifies the requirements to audit and report on

the public accounts of The Gambia at least once every year, and on the authorities, the courts, the

National Assembly, and all public enterprises within 6 months of the end of the immediately

preceding financial year to which each of the accounts relates.

After the Auditor General’s annual report on the accounts has been discussed in the National

Assembly, the Auditor General is required have the report published for public information.

Where there is any undue delay in the discussion of any such accounts or reports in the National

Assembly, Article 160 (e) permits the Auditor General to publish the report in advance of such

discussion. To complement this provision, Regulation 298 (2) of the Financial Instructions

directs that copies of publications relating to finance for limited or restricted circulation shall be

sent immediately upon publication to the DOSFEA library, the Department of Registry, and the

National Archives.

Some progress is being made on clearing the backlog of Auditor General’s reports not yet

submitted to the FPAC. The Audit Report of the Auditor General on the audited accounts of the

Government of The Gambia for the period July 1992 to December 1999 was submitted to the


National Assembly in September 2005. The FPAC recommended the need to address several

systemic issues.

The Audit Report raises two issues. First, technical accounting issues raised in the management

letter are not always fully acted upon by the Directorate of National Treasury in a timely manner.

Other issues raised concern the repetition of unresolved audit queries and findings year after

year. These issues, for example the recovery of monies due to the Government from public

officers, are referred to the FPAC, which then forwards to the Executive for a public response to

any pertinent queries. Recommendations are then made to the Executive for action. Non-

completion of audited accounts over the past 10 years means that accountability for such issues

has not been established. As a consequence, many of the same issues are repeated each year in

the audit reports.10

For the audit of the 2000-2004 accounts, the National Audit Office issued its draft report to the

Executive (DOSFEA). After comments and feedback from the Executive, the National Audit

Office will facilitate finalization and transmission of the report to the National Assembly. In its

reporting, the National Audit Office noted that the shortcomings in previous reports are still

recurring. The National Audit Office emphasized that it is critical for the Directorate of National

Treasury to improve on the accounts for 2005 and 2006. This would enable the most accurate

figures to be entered into IFMIS and give the most accurate opening balances for the beginning

of January 2007 operations. The IFMIS has helped to improve timeliness of bank reconciliation

at the Treasury and placed the Treasury in a better position to complete the annual statement of

public accounts in a timely manner as required by law.

The manner of publishing the Director of National Treasury’s accounts and the Auditor

General’s Annual Report for public information is not clearly articulated in the legislation. It is

not clear whether the Directorate of National Treasury and the National Audit Office should

publish its accounts and its audit opinion and report, respectively, or whether one set of audited

financial statements comprising both should be published. If the report is to be published for

public interest and promote and enhance accountability and transparency, then limited or

restricted publication as defined in the Financial Instruction 298 (2) is not the answer.

Publication through a website and other media avenues would provide the desired wide

circulation.

Good progress has been made in addressing the backlog of audit reports that needed to be

submitted to the FPAC for scrutiny. But, as reflected in PEFA PI-26 (Annex A), other

substantive issues regarding scope and quality of audit reports and responsiveness of the

Executive to audit recommendations should be addressed.

10

Issues on Treasury accounts by the Auditor General noted in the 2003 CFAA include limited internal controls and internal

audit, noncompliance with financial legislation, regulations and instructions, non-responsiveness of Government agencies to audit

queries, theft of funds, failure to collect revenue, missing revenue, lack of supporting documentation, failure to obtain

competitive tenders, poor recordkeeping and accounting, failure to recover salary and imprest advances, failure to maintain

inventories and inventory records, and lack of capacity or inadequate capacity.


Despite the measures taken to clear the backlog of accounts being submitted to the FPAC,

fundamental underlying weaknesses remain. On the one hand, there is a lack of capacity in the

Auditor General’s Office to produce high-quality reports on time. On the other hand,

accountability and compliance of the Executive agencies with audit recommendations is almost

non-existent. This situation is generally met by mutual attempts to shift responsibility: the

inability of the Auditor General to meet statutory responsibilities is often attributed to the failure

by the Directorate of National Treasury to present timely financial statements. In a counter

response, the Directorate of National Treasury typically cites such things as lack of institutional

and human resource capacity, lack of supporting documentation, missing records and documents

resulting from commissions of inquiry in the mid-1990s, and other causes. What results a cyclic

blame-passing game.

Recommendation: It is imperative that steps be taken to resolve the cycle of inaction. These

steps should enjoy support and political goodwill from the highest level of the Government. One

of the central recommendations of this CFAA is that a high-priority program be initiated

immediately or in the short term with the aims of (a) establishing a stronger legislative

framework for the Auditor General; and (b) providing resources and training to establish

adequate capacity. In this regard, capacity building would likely depend initially on strong

support from development partners and include twinning arrangements and exchange programs.

Such an initiative would be a keystone of future PFM reform. It would also need to be closely

linked to programs to build up the capacity of the National Assembly and its FPAC to help

ensure prompt and effective follow-up to the Auditor General’s observations.


SECTION 4. LOCAL GOVERNMENT

The Local Government (LG) Act 2002 (Schedule 1, part 1) specifies 7 local authorities each

subdivided into districts and wards for the election of council members. Eligible voters in the

local government area elect the chairperson, and the wards elect the councilors. Additional non-

voting members of the council include an alkalo or seyfo representative,11

a chief representative,

a youth nominee, a woman nominee, and other nominated members of local interest groups.

Each council is administratively headed by a chief executive officer who is responsible for the

management of the affairs of the local council. Most chief executive officers have experience

though few possess formal qualifications.

The legislative frameworks — LG Act, 2002 and the Local Government Finance and Audit

(LGFA) Act, 2004 — have been enacted to facilitate local government reforms and

decentralization programs. Following the adoption of the LG Act, election of all local councils

was held. In all local government areas, such structures as village development committees ward

development committees, and multi-disciplinary facilitation teams have also been established.

The institutional reforms embodied in the LG Act and associated policies center on developing

democratic and participatory processes and establishing community-level ownership of the

development process. This requires both local-level development of an accountable process and

increasing participation of local communities in public service decisions and delivery. Thus far

the main emphasis has been on establishing an adequate legal framework and developing local

administrative capacity.

The 2003 CFAA noted delays in promulgating the subsidiary legislation needed to implement

the institutional reforms envisaged under the LG Act — notably, the LGFA Bill had not been

enacted. As a consequence, local government budgetary controls and financial accountability

were recorded as an area needing improvement. Some advances have been made, but PFM and

accountability performance remains at a very low level in local government. The LG Act

provides for the collaboration of state and non-state actors with local authorities in the

implementation of the planning and development process. In Section 91, the LG Act states

“technical departments operating within the area of jurisdiction of every council shall support the

development process of the council through extension workers operating at ward and village

levels”. For these provisions to be implemented effectively, it is essential that effective financial

accountability mechanisms be established at local level. Addressing these issues is the key local

government focus of this CFAA, as discussed in this section.

11

Alkalo (plural, alkalolu) means village headperson. Seyfo means a district chief, the chairperson of district

authority comprising of all the alkalolu in the district.



The LGFA Act was passed in 2004. Nonetheless, a backlog of needed supporting regulations,

manuals, and instructions still remains. Continuing delays in providing such guidance has led to

a considerable confusion over the roles and responsibilities of the local government executive,

particularly in the area of financial accountability. For instance, the LGFA Act provides for the

financial administration of all local authorities, but it does not prescribe what accounting records

are to be kept. This task is left to the financial manual, which is provided for in the Act.

However, the manual has yet to be formulated; once done, it would go before the National

Assembly and approved to become effective. The accounting system that is currently being used

is based on a 1985 financial memorandum for municipal and area councils.

As provided for in the LGFA Act, financial administration of the local authorities starts with the

preparation and approval of the budget, which must be done by September for the following year

after incorporating comments of the Secretary of State for Local Government. However, as yet,

the form and content of the budget is not prescribed except that it shall reflect (a) all revenues to

be collected or received and to be appropriated for each year and (b) take into account the

approved 3-year development plan. Definition of the budget form is required to be included in

the financial manual. The current practice is that the budget takes the form of a statement of

income and expenditure for the general operations and management of the council’s affairs and

for the performance of its functions.

The LGFA Act requires that a council allocates at least 60 percent of its budget for development

activities, excluding the recurrent costs of those activities. The remaining 40 percent of budget

shall fund recurrent costs, which include (a) emoluments and salaries of the council staff, (b) the

operation of wards and village development committees, and (c) all allowances for any services

rendered to councils as may be determined by the Secretary of State for Local Government.

Budgetary control in the councils is weak for the following reasons:

The budgets are not broken down into manageable cycles (e.g., monthly or quarterly) so

as to identify the timing of the cash flow.

The assumptions surrounding the budget preparation are sometimes unrealistic due to

incomplete financial information.

Budgeted revenues are consistently over-estimated with the effect that while recurrent

administration costs are maintained, expenditure on the provision of services and

development is cut to make up for budget shortfalls.

Expenditure is more or less dependent on the availability of cash rather than on budgetary

constraints.

Not all council budgets are approved on time according to statutory provisions.

Although the LGFA Act provides 60 percent of council revenue to development activities and 40

percent to recurrent activities, these targets have not been achievable in practice. Realistically,


these targets are not feasible for area councils given their high administrative overheads and low

revenue base. Furthermore, conditions vary between councils; municipal or town councils might

spend a greater proportion of their budget on day-to-day services such as road maintenance,

cleansing services, etc., while provincial councils might focus more on development aspects of

the local community. At the moment, councils fund up to 45 to 50 percent of development

expenditure. To ensure compliance with the legislation, councils are consequently forced to set

unrealistic or unattainable budgets either by underestimating recurrent expenditure or

overestimating revenues.

The LGFA Act and the financial manual are meant to specify the prescriptive rules and

regulations for the accounting framework. The draft manual has not yet been approved by

Parliament and is therefore not operational. The LGFA Act provides for accounts to be kept but

does not prescribe what accounting records are to be maintained. Current practice is still based

on the 1985 financial memorandum for municipal and area councils.

The accounting system in all but one council is maintained manually. Recordkeeping practices

do not follow good practice. While cashbooks, ledgers, vouchers, and receipt books are

maintained, other subsidiary books such as commitment control ledgers and vote books are not

maintained to ensure proper budgetary control and accountability of funds.

The level of accounting and recordkeeping is generally inadequate due to factors such as the

following:

Few skilled staff can be recruited; only a few councils have limited qualified personnel.

Most revenue and expense transactions are performed using cash and are not immediately

recorded in the cashbook. This practice gives rise to opportunities for fraudulent

operations.

Because of the limited number of staff, there is little segregation of duties between

recordkeeping and authorization of expenditure (i.e., weak internal control environment).

Revenue collectors maintain separate cashbooks and issue receipts; this gives rise to cut-

off errors arising from delays in submission of receipts to update the main cashbook. This

further distorts reporting and complicates bank reconciliations.

Collection of monies is largely unsupervised and increases the risk of fraud across

councils. Although some of the councils have introduced some solutions, there is no

established best practice.

With the issuance of fixed value tickets for car parks, markets, canteens, and other fees, it

is difficult to demonstrate that all tickets invoiced have been recorded in the counterfoil

receipt register.

Subsidiary control ledgers are not reconciled to daybooks recording the totals of invoices

and assessments raised or to the cashbook as means to reconcile collection of receipts

recorded.

All councils do not have the ability to produce auditable financial statements.

All councils have their accounting records on ‘paper based’ spreadsheets. This is not

recommended as the prime source of data recording in an accounting system because of

the lack of audit trail and lack of security on spreadsheet-based systems.


The accounting procedures set out in the draft financial manual are not adequate to ensure that

standard reporting requirements are met. The following omissions represent significant

weaknesses:

The proposed manual provides for the maintenance of cashbooks to record all receipts;

apart from that, it does not specify what subsidiary records are to be maintained.

The classification of payments makes no provision for the analysis of expenditure

between development activities and other activities. It is therefore not possible to

determine whether councils have complied with the requirement that at least 60 percent

of the budget is allocated to development activities and not include recurrent costs of

such activities.

The proposed manual specifies that expense payments are to be recorded in the

cashbooks, but there is no requirement to maintain a commitment ledger or vote book.

The proposed manual provides no mechanism for the capture and reporting of

expenditure made against general grant, grant-in-aid, and equalization grant (the 3 forms

of central subvention to local government).

The proposed manual does not provide for differentiation of expenditure funded through

donor contributions. Lack of such transparency fails to demonstrate to donors that their

funds are properly and correctly applied — and as a consequence there will be less

incentive for development partners to use the local government accounting system.

The proposed manual does not prescribe any procedure to reconcile the general ledger to

the cashbook.

The proposed manual does not specify procedures to ensure that store’ ledgers or

inventory are reconciled to the expenditure on stock purchases as recorded in the main

accounting records nor to the revenue derived from disposal proceeds.

Beyond the pre-audit of expenditure outflows, internal controls are weak due to several factors

— including lack of segregation of duties in the accounting function, limited substantive internal

checks, failure to adequately specify many essential control procedures (as illustrated in the

preceding bullet points) and lack of an effective internal audit function — and do not correspond

to international good practice. It is evident also that there are inadequate reconciliation

mechanisms or controls that are necessary to ensure completeness and accuracy of the

accounting records.

Financial reporting is limited to the production of a trial balance only. A full set of financial

statements, including the production of a balance sheet and revenue statement, are not produced

by any of the councils.

With regard to the internal audit function, the LGFA Act specifies that the internal audit unit

shall prepare and submit quarterly audit reports to the council and forward a copy to the Local

Government Accounts Committee, the Auditor General, and the Secretary of State for Local

Government. The Act does not specify the scope of the internal audit function in any greater

detail. However, by observing the internal audit activities, it is evident that the unit’s work has

been limited to the pre-audit of expenditures. The internal audit function does not extend to

systems evaluation or internal controls evaluation, nor does it focus on risk management.


Because of prevailing circumstances, any consideration to extend this service to village or ward

level would be unrealistic. Although the Act specifies the requirement for the creation of internal

audit unit in each council, it remains silent on their technical and professional requirements as

well as the need to set up appropriate policies, guidelines, and procedures.

The Directorate of Local Governance is responsible for performance reporting and monitoring

and evaluation of all local councils. This Directorate is under the responsibility of the Secretary

of State for Local Government within the Department of Local Government. The Directorate

supervises the overall administration of councils and assists them in budgetary and financial

management in addition to general administrative matters. The internal audit unit of each council

is expected to report quarterly to the Directorate of Local Governance on the financial

administration of all councils. On receipt and study of these reports, the Directorate dispatches its

inspectors to visit the councils for an on-site assessment of situation.

In addition, the LGFA Act establishes a Local Government Accounts Committee for all councils.

The Committee is charged with examination of reports produced by the Auditor General and the

internal audit unit(s). This Committee in turn reports to the Secretary of State for Local

Government, the Secretary of State responsible for finance, and the Auditor General. The

chairperson and the chief executive of the councils are required under the Act to implement the

recommendations of the Local Government Accounts Committee. The Auditor General is

required under the Act to incorporate the comments and recommendations of the Committee in

his own report to the National Assembly.

The LGFA Act does not, however, prescribe any sanctions on councils for poorly administered

council affairs, except that the LG Act provides that the Secretary of State for Local Government

may institute a commission of inquiry with regard to occurrence of a grave misdemeanor. When

the findings of the commission of inquiry confirm an offence has been committed, the Secretary

of State refers the matter to the President for appropriate action. The President may, with the

approval of a simple majority of the National Assembly, assume the executive powers of the

local council.

The Directorate of Local Governance is leading efforts to build institutional capacity in local

governments. Actions under way include the following:

Drafting legislation to establish the local government commission (this has been

delayed).

Establishing a scheme of service for local government.

Conducting personnel audits of local councils to streamline local government and address

the problem of excess staffing capacity.

Investigating optimal staffing establishment for local councils.

Identifying and attracting potential personnel to key positions in local government.

Developing a financial manual for local government.

With respect to external audit, the LGFA Act provides that the Auditor General shall at least

once a year have the accounts of the council audited and reported. The Act is silent about the


type of audit that is required. The current practice is that the Auditor General carries out an audit

on a transactional basis, which does not extend to an effective review of operational controls or

the provision of an opinion on councils’ financial statements. Local government councils do not

produce and publish a full set of traditional financial statements in accordance with IPSAS.

Reports on audited council accounts produced by the Auditor General have limited usefulness

since they are by their nature and structure basic management letters that are not backed up by

financial statements, thus giving no disclosure about the financial resource base and capacity of

the reporting entity. Furthermore, because of this limitation, there is neither an indication as to

whether the audit carried out by the Auditor General is in accordance with International

Standards on Auditing, nor is there any opinion given on the audit.

Local government councils are unable to acquire the material resources for service delivery (e.g.,

waste management disposal) because of their low revenue base. Local government salaries are in

accordance with Central Government’s Integrated Pay Scales, which are highly uncompetitive

when compared to rates paid in the private sector or by donor organizations. The combination of

overstaffing, low salaries, and history of political interference in the appointment and dismissal

of staff makes it impossible to attract and retain properly qualified personnel. In addition, there is

no formal performance appraisal system to identify, encourage, and remunerate well-performing

staff. Movement from one grade point to the next is automatic (within grade) annually.

Promotion from one grade to the next depends on the recommendation by the respective head of

the department.

These problems reflect directly with public financial management. Staff engaged in the finance

function has limited professional accountancy and public finance qualifications. Only a few

councils possess personnel with recognized accounting qualifications, and this general lack of

qualified accounting personnel consequently impacts negatively on the quality, accuracy, and

timeliness of financial recordkeeping and the production of financial statements.

By their nature, these problems will require long-term resolutions. The immediate emphasis

should be to establish a sound basic institutional infrastructure and initiate a long-term program

of capacity building. Key recommendations to improve financial accountability are as follows:

Ensure that legislation establishing the local government commission is passed to provide

an institutional basis for local councils to meet their mandate under the LG Act.

Establish a scheme of service for local government that will govern appointments,

promotions, discipline, and pay and reward to employees.

Initiate training and capacity-building programs for local council financial management

staff.

Undertake personnel audit of local councils to streamline their staffing capacity.

Initiate a process to resolve the backlog of annual reports by councils for FY2006 and

FY2007.

The financial manual as required by the LGFA Act should be accepted and passed

legislatively and put in place so as to prescribe the requirements of the accounting records

to be maintained by local authorities.


Design and initiate pilot implementation of an integrated accounting system with strong

accounting controls (manual or computerized as appropriate).

While significant steps have been taken to improve the legislative framework for a more

decentralized system of government in The Gambia, the overall environment for financial

accountability of local councils has changed little since the 2003 CFAA. Many steps geared to

this are underway, but a sustained and long-term effort will be needed to establish a satisfactory

level of performance and reduce fiduciary risks in this area.

The PEFA analysis looks at sub-national government only to the extent that it affects the national

fiscal aggregates. The main PEFA performance indicator of relevance, PI-8, Transparency of

Inter-Governmental Relations, does not link directly to local government financial

accountability. This indicator would have been more useful if service delivery functions were a

responsibility of the local government. Functional devolution is yet to happen and fiscal transfers

from the Central Government mainly cover administration expenses. Development of the

capacity of the Directorate of Local Governance, sub-sectoral departments, and other

Departments of State to assist the decentralization process is a key objective of the Public Sector

Reform Sector Strategy Paper 2007-2011. However, in view of the weak capacity of the local

government subsector, it is doubtful that this reform will be realized any time soon as initially

envisaged.


SECTION 5. STATE-OWNED (PUBLIC) ENTERPRISES

With respect to state-owned enterprises, the main fiduciary risk and PFM management concerns

are the extent to which the Central Government has a formal oversight role that enables it to

monitor and manage fiscal risks with national-level implications arising from these entities. In

The Gambian context, state-owned enterprises are generally referred to as public enterprises.

The 2003 CFAA noted several national-level fiscal risks that could arise from public enterprises

and many weaknesses in the institutional arrangements that are necessary to monitor and manage

such risks. Progress in strengthening the public enterprise management framework is reviewed in

this section.12


The legislation and regulation framework governing the existence and operation of public

enterprises is based on The Gambia Constitution, 1997. Key elements of supporting legislation

are the Public Enterprise Act, 1990, and, to some extent, the Companies Act, 1955 as amended.

In addition, there are the specific individual acts of the National Assembly creating respective

public enterprises. Section 175 of the Constitution defines a public enterprise as a body corporate

or other institution, wholly owned or controlled (i.e., at least 51 percent or more) by the

Government. Section 175 also provides for the establishment of the board of directors or other

governing body (commission or agency) of a public enterprise. It confers to the President of The

Gambia the authority to appoint members of the board of directors, and also lays down the basic

eligibility criteria for appointment to a public enterprise board.

Those appointed to the position of director should be citizens of The Gambia, even though the

legal framework is not as explicit on this aspect. Out of necessity, the practice has required the

appointees to be Gambian nationals of integrity, who are competent and mature enough to

undertake the responsibility of the position. The Constitution has clearly excluded certain

persons from qualifying to be directors of public enterprises by virtue of the position or

responsibilities they hold at the time. The President appoints the chief executives of public

enterprises in consultation with the board of directors or its equivalent body and the Public

Service Commission. Although this procedure is the norm, there are rare exceptions to this

practice. For example, the Secretary of State for DOSFEA is empowered to appoint the Board of

Directors of The Gambia Divesture Agency under the same legislation that created the Agency.

In a rare occurrence, this legislation is in conflict with the Constitution, which always prevails

being the supreme law of The Gambia. As the rule, except for the chief executive of a public

enterprise appointed by the President, the board of directors or equivalent governing body

appoints every other staff person of a public enterprise.

12 Representatives interviewed for this assessment were visited at The Gambia Civil Aviation Authority, The

Gambia Ports Authority, The Gambia Public Procurement Authority, The Gambia Revenue Authority, and The

Gambia Divesture Agency.


Section 175 provides for establishment of a monitoring committee of the National Assembly.

This committee has a mandate to prescribe the manner in which a public enterprise should be

accountable to the National Assembly and should be able to monitor efficiency, transparency,

and probity of public enterprise operations. The reality however is that, largely because of a lack

of resources, the monitoring committee has never been set up. As a consequence, The Gambia

Divesture Agency has taken on the de facto role of supervising the performance of public

enterprises. The legal basis for such operations is dubious. The limited capacity of The Gambia

Divesture Agency with only 4 staff makes it difficult to provide effective oversight of public

enterprise performance. The last report on the performance of The Gambian public enterprises in

2006 covered two sections, one on enterprises with accounts and the other on enterprises without

accounts. The analysis was simply a presentation of audit reports.

The Public Enterprise Act and the Companies Act, complemented by the individual public

enterprise acts, provide a corporate governance framework broadly in line with international

benchmarks. The framework sets out the responsibilities of the board of directors, the rights of

equity holders, and the requirement for full disclosure of financial information through annual

financial plans and budgets and accurate and timely financial reporting. In theory, the National

Assembly would provide an additional assurance of governance through its proposed monitoring

committee if this measure becomes operational. In practice, implementation of governance

practices has been inadequate.

A governance issue of concern is that the law is unspecific about the role of senior government

officials who double in roles as ex officio board members of public enterprises. In such cases,

Government could appear to be in breach of rules of conflict of interest by influencing Board

decisions as well as Government enterprise policy. In addition, because government institutions

are a major consumer of goods and services produced by public enterprises, these senior

government officials could influence payment decisions by virtue of their official government

position. Lack of clear articulation of this potential conflict of roles has been a major underlying

concern in public enterprises that provide or supply services, such as utilities, to government

institutions that have had long outstanding arrears.

The absence of the audit committees within the boards of some public enterprises exacerbates the

inadequacy of governance in public enterprises, even though audit committees are not legally

required. An effective audit committee can strengthen the oversight mechanisms and monitoring

of how management implements auditors’ recommendations. An audit committee typically

draws its membership from among the independent directors, one of whom would be a financial

expert. An audit committee would watch against poor or fraudulent financial reporting, oversee

the audit process and engagement of the auditor, assess the independence of the auditor, and

scrutinize the financial reports and the auditor’s report and management letter. The audit

committees facilitate discussion with the auditors on a whole array of issues ranging from

accounting treatment to identification of risks and practical and effective ways of mitigating

them.


Public enterprises, by and large, define their source of funds as being (a) a DOSFEA subvention,

(b) internally generated revenues, (c) legally authorized loans or grants as authorized by friendly

countries and lending institutions, and (d) any other monies as may legally be received by or

made available for the purpose of performing its functions. With these funds, a public enterprise

is required to meet its day-to-day recurrent operating costs such as staff salaries, office rent,

allowances to the board members, and capital costs used for expansion.

Public enterprises in The Gambia are required to prepare their budget estimates according to the

same timetable as the ministries, departments, and agencies. This ensures that public enterprises,

which receive substantial level of government subventions, have their budgetary needs included

in the Government budget. Generally, public enterprises receive budget preparation guidelines

from DOSFEA circulars reflecting the policy framework and national economic factors

necessary to consider in preparing budgets. Public enterprises that require government

subventions usually consult with DOSFEA on their budget proposals before agreement is

reached with DOSFEA on the final budget. However, any cutbacks of requested subventions

could mean a cutback in services — or an accumulation of unpaid debt. Some public enterprises

have tried to augment their revenue base by increasing fee tariffs in consultation with the

Government.13

The Public Enterprise Act, the Companies Act, and individual enterprise acts together impose

basic accountability and reporting requirements, including submission of annual reports and

establishment of effective financial management structures and procedures. With regard to

annual reports, public enterprises are required to prepare a report of their activities during the

preceding year and submit by each April 30 to the Secretary of State of their respective parent

ministries. The Secretary of State is obliged to table the report to the National Assembly.

Each of the public enterprises assessed for this CFAA was found to have the finance and

accounting department headed by a senior-level manager who is a professionally qualified

accountant. However, this will not be the case in every public enterprise finance and accounting

department because of the few professionally qualified accountants in the country,. Most of the

enterprises (except for the Gambia Revenue Authority that has a couple of professionally

qualified accountants) struggle to retain the single accountant they have on staff. Staff

development strategy among the public enterprises could help to reverse this trend in the next 10

years if special attention is paid to utilizing the training institutions for accountants in sub-

regional countries such as Ghana, Nigeria, Kenya, and South Africa.

Most of the public enterprises assessed by the CFAA have documented their accounting

procedures in manuals and folders of instructions. These procedures have established systems of

13

For example, the Gambia Public Procurement Authority receives a subvention for only part of its staff wage bill,

which accounts for 50 percent of the total budget. The Authority is expected to close the wide gap with internally

generated revenues from sale of tender documents and other services rendered to its clients, some of whom are

ministries, departments, and agencies that have no funds for such a service.


internal control and set authorization limits for various levels of expenditures on the basis of

budgets sanctioned by their respective board of directors.

Internal audit in most public enterprises in The Gambia is relatively weak. Only a few of the

public enterprises have an internal audit unit that can claim to practice an effective modern

internal audit function, primarily because they do not have the independence and capacity to

meet international benchmarks. Even then, internal audit units are staffed with 1-3 persons, with

maybe one who is a qualified accountant. This limited level of competence, capacity, and

independence does not meet the required standards of an effective internal audit function in a

large public enterprise such as The Gambia’s Revenue Authority and Ports Authority. It has also

been shown that recommendations made by the internal auditors are in most cases not

implemented. Under these limited circumstances, there is little use of an enforcement

mechanism, such as an audit committee provides, to oversee the implementation of

recommendations of both the internal and external auditors.

Public enterprises are required to prepare and submit their annual financial statements (annual

accounts) within 3 months following the end of the financial period (January to December) to the

Auditor General who has the constitutional mandate to audit public enterprises. The audited

annual financial statements of public enterprises and the Auditor General’s report are required to

form part of the Auditor General’s overall annual report to the National Assembly.

Failure of the relevant committees of the National Assembly to consider reports of the Auditor

General on public enterprises in a timely manner has been a long-standing issue. In late 2007, the

FPAC met with the Public Enterprise Committee and jointly reviewed and interviewed chief

executive officers and finance managers of 40 public enterprises and agencies on their financial

reports for 2003/04. Continuation of this effort, together with an emphasis on follow-up by the

relevant Secretaries of State, would help to improve governance and PFM performance in this

area.

Little has changed in the overall environment of public enterprise reporting and governance since

the 2003 CFAA. The risks of quasi-fiscal indebtedness remain high and have possibly increased

in the current global environment especially as recessions in advanced economies triggered by

the global financial crisis are adversely affecting The Gambia’s tourism receipts and remittances

inflows. This has widened the current account deficit and the international reserves falling by

nearly 2 months of imports and slower growth compared to the IMF projections in the third

Poverty Reduction Growth Facility review. The decline in Government revenue would impact on

subventions to public enterprises.

The environment for financial accountability of public enterprises should be radically

transformed to reduce fiduciary risk from this source. The legislative framework under which

public enterprises are operating should be updated to take account of the changes and realities of

present day needs and competitiveness. Current legislation (the Public Enterprise Act and the

Companies Act) should be updated and made mutually consistent with regard to the treatment of


public enterprises. An overarching need in this regard is the establishment of a public enterprise

governance framework. All of these reforms will take considerable length of time to be

completely put in place, but action should be urgently taken in order to reduce the potential fiscal

risks that could arise from the mismanagement of public enterprises. The following are some of

the key recommended actions:

The DOSFEA and specifically the Directorate of National Treasury should take a lead

role in monitoring and reporting on public enterprise financial positions, with particular

emphasis on payment of arrears or contingent liabilities that may give rise to future fiscal

deficit increases.

A high-level public enterprise governance council should be established to review the

legislative, institutional, and governance framework in which public enterprises operate.

The proposed council should oversee drafting of relevant legislation and regulations,

governance frameworks (including capacity and skills mix of board members, conflict of

interest, internal audit arrangements, and establishment of audit committees).

A capacity-building program for financial management in public enterprises should be

initiated.

Consideration should be given to the divestiture program for public enterprises and, if

needed, a program that is realistic could be developed and implemented.


SECTION 6. LEGISLATIVE SCRUTINY, PUBLIC ACCESS TO INFORMATION,

ETHICS AND INTEGRITY

Oversight of the Executive branch of government by the Legislature and, more generally, public

access to information and participation in public decision-making are key factors in establishing

sustainable accountability in PFM systems and tangentially averting corruption. The 2003 CFAA

expressed concern that continuing lack of capacity in the National Assembly and limited access

to information by the public would seriously endanger and threaten the entire public

accountability system. This section reviews the current status of this element of PFM and

progress in addressing the 2003 CFAA concerns.


The unicameral National Assembly consists of 53 members, of which 48 members are directly

elected by the public citizenry while the remaining 5 are nominated by the President. Members

serve a 5-year term. For the 2007-2012 National Assembly, there are 44 members in the majority

side (39 elected and 5 Presidential nominees) and 9 minority members.

Article 100 of the Constitution empowers the National Assembly to exercise legislative power of

The Gambia by passing bills to be assented by the President. Article 102 provides oversight

functions and additional powers to the National Assembly. These include (a) review of reports

on the activities of the Government and such other reports as are required to be made in

accordance with the Constitution, (b) review and approval of proposals for raising revenue by the

Government, (c) examination of the accounts and expenditure of the Government and other

public bodies funded by public monies and the reports of the Auditor General thereon, and (d)

advise the President on any matter which lies within his or her responsibility. In the exercise of

its powers and performance of its functions, Article 108 grants absolute operational

independence and immunity to the National Assembly from any court action.

Article 109 enjoins the National Assembly to appoint the following 4 standing committees —

Public Appointments, Finance and Public Accounts, Privileges, and Defense and Security — and

such other type committees that it considers necessary for the exercise of its functions. Article

109 vests all the trial powers, rights, and privileges in the High Court in each of the National

Assembly Committees for the purpose of effectively performing their functions.

There are 33 standing committees of the National Assembly. The Speaker of the National

Assembly chairs 12 of these committees. Except for the Privileges Committee, the Speaker

chairs the 4 constitutionally mandatory standing committees. The Finance and Public Accounts

Committee has 9 members, 3 of whom are from the opposition (i.e. the minority party). The

FPAC is typically responsible for overseeing government expenditure and operations to ensure

that they are efficient, effective, and honest. It is seen as a crucial mechanism for ensuring

accountability and transparency in government financial operations and management. However,


the FPAC secretariat is incapable of providing well-researched technical analytic financial

management input and advice of any value to the oversight process; its audit reports mainly

cover findings from transaction audits and less on systems and performance management issues.

Also, in The Gambia, the fact that the FPAC is chaired by the Speaker of the National Assembly

with the Majority Leader as the Vice Chair appears unconventional relative to common practice

in many countries. The conventional practice is to have a minority member chair the FPAC to

provide for reasonable assurance of objectivity, and checks and balances.

The minority constitutes only 17 percent (9 out of 53) of the membership of the National

Assembly. With this mix of membership, the most plausible decision-making process would

appear to be through consensus building. This presents a strong argument for having someone

other than the National Assembly Speaker serve as FPAC Chair due to the appearance of conflict

of interest.

Article 111(1) provides for the establishment of a National Assembly Service to provide services

and support for the National Assembly. The National Assembly Service has not been

legislatively established as envisaged by the Constitution. Subsection (2) provides for the

establishment of a National Assembly Authority with the Speaker as Chairman who appoints 4

other members to supervise the National Assembly Service. The Clerk of the National Assembly

serves as Secretary of the National Assembly Service and the Administrative Head of the

National Assembly.

The budget documents submitted to the National Assembly do not contain detailed explanation

of the fiscal policies and the medium-term fiscal framework, except for summary statements in

the Budget Speech. For this reason, scrutiny of the budget mainly covers the revenue and

expenditure estimates for Government programs.

After the DOSEFEA Secretary presents the proposed budget to the National Assembly by

November, it is passed to the FPAC. In order for FPAC to perform its function effectively,

GBMAA Act 2004, section 28, empowers the National Assembly to appoint technical staff to

assist in gathering information, conducting research, and analyzing issues pertinent budget

scrutiny. The National Assembly is constrained by lack of skilled staff required to provide the

FPAC with technical support and therefore uses simple traditional procedures to scrutinize the

budget estimates by calling Vote Controllers to defend their respective budgets.

According to section 152 (1A) of the Constitution, the National Assembly is required within 14

days of submission of the proposed budget to consider and approve the estimates. The estimates

should be laid at least one month before the end of the preceding financial year. Once laid, the

National Assembly is required within 7 days of the introduction of the Appropriation Bill to

consider and pass the Bill [section 152 (3A) of the Constitution].

To meet these tight deadlines, Financial Instruction 75 requires the Secretary for DOSFEA to

ensure that the budget estimates are submitted to the President not later than 60 days before the

end of the current financial year. In effect, if the Executive lays the budget estimates according to

the maximum time allowed (no later than November 30), The National Assembly has only 3


weeks to pass the budget. The National Assembly has over the past 3 years taken up to 3-4

weeks to pass the budget.

The GBMAA Act, 2004 allows for supplementary budgets to be submitted to the National

Assembly when there are changes in economic circumstances warranting such an action. The

revised and supplementary budgets would be presented and documented in the same manner and

format as the original budget. The expenditure statements in the annual accounts show details of

the approved budget, the revised budget, the actual expenditure for the reporting year, and the

variance. This disclosure provides an opportunity for the National Assembly to ascertain whether

the budget has been implemented as passed.

Section 160 of the Constitution provides that within 6 months of the end of the immediately

preceding financial year, the Auditor General’s audit report is first discussed in open sessions by

the FPAC that then submits a report to the National Assembly. It is only at this point that the

audit report is generally made public. As noted in Section 5, the Auditor General submitted

reports from 1992-1999 in September 2005 to begin tackling the backlog of overdue audit

reports. The FPAC commenced deliberations on the said reports in October and November 2005.

The FPAC reconvened in December 2006 to complete its deliberations and proceedings, and

write its report for ratification and adoption by the National Assembly in December 2006. With

the assistance of some senior members of the Gambia Association of Accountants and others, the

FPAC made extremely useful, insightful, and professional observations and recommendations.

The Auditor General’s reports raised 58 issues and queries. After its thorough review, the FPAC

regrouped the issues into following thematic areas for policy guidance and necessary action:

Implications of the Auditor General’s disclaimer.

Nonconformity/noncompliance of the Accountant General and Director of National

Treasury with the statutory reporting format and disclosure requirements.

Backlog of accounts resulting in loss/misplacement of accounting records, payments

vouchers, other source documents, and institutional memory.

Imbalance of over GMD 800 million accumulating from 1992 to 1999.

Determining a cut-off point and restating the beginning/opening balances to continue

preparation of accounts from that point forward.

Perennial, rampant, and widespread shortage of Revenue Collection Books (official

receipts) at the Directorate of National Treasury, sub-treasuries, and other revenue-

collection departments and centers.

Implications for ‘IFMIS and the National Emergency Fiscal Committee.’

Functions and placement of public sector internal auditing.

Non-settlement of bills by Government to quasi-government service providers.

When there is a huge backlog of public accounts, there is difficulty in how to assess the extent to

which audit recommendations will be pursued. However, the FPAC and the Public Enterprises

Committee held joint committee sessions to review the accounts of 49 government agencies in


open public sessions for the first time in the Republic of The Gambia. As exemplified by this

exercise in public participation and information sharing, the FPAC expressed desire to work

more closely with the media and relevant civil societies. Past presidents of the Gambia

Association of Accountants provided technical assistance to the National Assembly that enabled

them to review 49 government agencies. The FPAC will follow this exercise with a report. The

latest FPAC report available was in December 2006 on the annual accounts covering the periods

1991-1999.

Significant improvements have been introduced to the budget format and the quality of budget

information available to the National Assembly and the public, largely because of the

introduction of the IFMIS and introduction of a GFS-compliant chart of accounts. More work

should be done to provide the full range of quality information needed to inform the public on

PFM performance and enhance quality of public expenditure.

Basic procedures continue to be in place and are operational. No major progress has been made

since the 2003 CFAA in strengthening the roles of National Assembly and the FPAC in

reviewing the budget estimates.

While many of the fundamental issues in the 2003 CFAA regarding FPAC consideration of the

Auditor General’s reports remain of concern, important steps have been taken to open public

sessions and to clear some of the backlog of reports. In terms of PI-28, Legislative scrutiny of

external audit reports, the score remains low (Annex A), but significant improvement now

appears achievable in the next few years if the reforms are expedited and sustained.

As outlined above, reforms both in terms of FPAC discussion of Auditor General’s reports and

improvements in the quality of budget information are having impact on the quality of National

Assembly oversight and giving the public better access to PFM information. These steps are

encouraging, and demonstrate what can be achieved with well-directed efforts. The magnitude of

the remaining task remains large however, and addressing this will require a sustained

commitment from the Government and development partners. Such a program would be an

essential adjunct to the proposed program to develop the capacity and authority of the Auditor

General.

Recommendations. The Government should improve the legal and institutional framework for

the National Assembly. It should establish the National Assembly Service by an Act of

Parliament, including provision of support services to facilitate the work of the Parliament. A

major capacity-building program should be initiated to support the National Assembly and the

National Assembly Service to enhance their effectiveness and efficiency. This program should

include provision of study tours and logistical support. An Act to further strengthen the

independence of the Auditor General is also needed.

Improvement of public access to budget information will be an important element of the

capacity-building program. Part of this work would relate to further technical analysis and

enhancement by DOSFEA to bring budget information more fully in line with international

standards. Allied to this technical improvement, all sittings of the National Assembly and its key


PFM-related committees should be open to the public, budget and accounts data should be

published on the Government website, and there should be a continuing campaign to raise public

awareness of the availability of and rights to PFM information.


SECTION 7. PROPOSED REFORM ACTION PLAN

The review in this CFAA 2009 has established that many of the CFAA 2003 recommendations

have not been fully implemented. The challenge of limited capacity and absence of a robust

monitoring arrangement to ensure that the 2003-recommended action plan was implemented

have been major factors contributing to the lack of progress. It will be important to build on any

successful progress and to address the fundamental factors impeding further progress. In this

regard, the proposed action plan for CFAA 2009 carries over the outstanding activities of CFAA

2003 that have not been implemented but are still relevant based on the current situation.

The proposed PFM reform action plan is aligned with the Pillar I of the Government’s PRSP that

includes all aspects relating to economic management, including macroeconomic stability, public

finance management, public debt management, divestiture, and civil service reforms.

The action plan requires full support of all stakeholders and should coordinate all ongoing PFM-

oriented reforms in a comprehensive and monitorable framework. Some measures can be

implemented in a relatively short timeframe; most will probably require sustained support over

many years. First, it is critical that the overall strategy of reform should be clearly understood

and, second, that the Government provides strong, committed, and continuing leadership for the

reform program. The leadership role goes beyond taking ownership of the process, which has

substantially improved since the 2003 CFAA.

Reform strategy: There are a number of elements to be balanced in the action plan to address the

identified weaknesses and reduce PFM fiduciary risk. The following critical institutional

weaknesses identified in the CFAA 2009 should be tackled immediately with a clear long-term

commitment:

Ineffective internal audit function;

Weak capacity, independence, and authority of external audit; and

Weak legislative and public oversight.

Wider civil service reforms are needed to support and sustain the PFM improvements that

have been registered thus far. If these relative issues are not tackled, technical improvements

in PFM systems are unlikely to be sustained.

Consolidation of successful reforms: The gains made in Central Government management in

terms of introduction of an IFMIS and modern chart of accounts must be translated as soon as

possible into more effective policy-linked planning and control. And performance in these areas

should be rigorously monitored.

Long-term institutional reform: The PFM successes in Central Government cannot be

immediately transferred to other elements of general government (local government) or the

public sector (public enterprises) because of capacity constraints and of the need for deeper

policy development on reform of public enterprises. Only initial steps have been taken in each


area; and in each, there is a need to map out a long-term strategy and corresponding long-term

action plan for these components.

Timeframe and prioritization: The action plan must consider the ability of the Government to

implement the reforms. For this reason, the action plan is divided between short-term (1-2 years)

and medium-term (3-5 years) actionable items. As well, reform activities are prioritized and

sequenced such that the critical issues are addressed in order to build a platform for future

reforms. Quick wins can be achieved by addressing the critical issues first, build confidence, and

capture the attention of all stakeholders to support the reform agenda.

Oversight: A PFM reform oversight steering committee under the chairmanship of the

Permanent Secretary for DOSFEA and reporting to the Secretary for DOSFEA should be set up

to provide oversight for the recommended reform activities of CFAA 2009. The CFAA 2003

lacked sufficient mechanism for monitoring and oversight of its recommendations. Development

partners supporting the reforms should be co-opted in the committee. The oversight committee

should have support of sub-committees with direct responsibility for implementing the thematic

areas of the reform. The sub-committee could meet monthly under the leadership of a PFM

Reform Coordinator who should be appointed or recruited. Quarterly implementation reports will

then be submitted for review by the steering committee at quarterly meetings. The PFM Reform

Coordinator will produce an annual report, and the Secretary for DOSFEA will present it at a

public PFM Forum. (Annex D suggests terms of reference for the proposed steering committee).


ANNEX A. PEFA PFM Performance Measurement Framework

Summary of PEFA - PFM Performance Scores

A. PFM-OUT-TURNS: Credibility of the budget Scores

PI-1 Aggregate expenditure out-turn compared to original approved budget B

PI-2 Composition of expenditure out-turn compared to original approved budget C

PI-3 Aggregate revenue out-turn compared to original approved budget B

PI-4 Stock and monitoring of expenditure payment arrears NS

B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency

PI-5 Classification of the budget B

PI-6 Comprehensiveness of information included in budget documentation B

PI-7 Extent of unreported government operations D+

PI-8 Transparency of inter-governmental fiscal relations D

PI-9 Oversight of aggregate fiscal risk from other public sector entities. D+

PI-10 Public access to key fiscal information D

C. BUDGET CYCLE

C(i) Policy-Based Budgeting

PI-11 Orderliness and participation in the annual budget process B

PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting D+

C(ii) Predictability and Control in Budget Execution

PI-13 Transparency of taxpayer obligations and liabilities C

PI-14 Effectiveness of measures for taxpayer registration and tax assessment C

PI-15 Effectiveness in collection of tax payments NS

PI-16 Predictability in the availability of funds for commitment of expenditures C

PI-17 Recording and management of cash balances, debt and guarantees B

PI-18 Effectiveness of payroll controls C+

PI-19 Competition, value for money and controls in procurement NS

PI-20 Effectiveness of internal controls for non-salary expenditure C+

PI-21 Effectiveness of internal audit D

C(iii) Accounting, Recording and Reporting

PI-22 Timeliness and regularity of accounts reconciliation C

PI-23 Availability of information on resources received by service delivery units D

PI-24 Quality and timeliness of in-year budget reports B+

PI-25 Quality and timeliness of annual financial statements D+

C(iv) External Scrutiny and Audit

PI-26 Scope, nature and follow-up of external audit D+

PI-27 Legislative scrutiny of the annual budget law C+

PI-28 Legislative scrutiny of external audit reports D+

D. DONOR PRACTICES

D-1 Predictability of Direct Budget Support NS

D-2 Financial information provided by donors for budgeting and reporting on project and program aid NS

D-3 Proportion of aid that is managed by use of national procedures NS

NS = Not Scored


Description of Legal Framework for PFM

1. The overriding legal framework for the management of public funds is the Constitution of the

Republic of The Gambia 1997; chapter IX of the 1997 Constitution deals with finance and sections 158

to 160 provides for the existence of the Auditor General and the National Audit Office.

2. The Finance and Audit Act, 1964 has been revised and the Budget Management and

Accountability (BMAA) Act, 2004 is now in place to provide for the control and management of public

monies, for the powers and duties of the Legislature and Executive branch in the preparation,

presentation, approval, execution, and reporting of Government budget and for matters connected

therewith. At the local level, the Local Government Act, 2002 is supported by the Local Government

(Finance and Audit) Act, 2002.

3. The BMAA Act, 2004 provides for the establishment of the Directorate of the National Treasury

(DNT) to replace the Accountant General's Department. The DNT head is required to perform his or her

duties under the direct supervision of the Permanent Secretary in accordance with the Financial

Instructions. The Financial Instructions (1989 Edition) has been replaced with a revised Financial

Instruction dated 2004. An Accounting Procedures Manual was issued in October 2006 to provide

detailed guidance for the business processes to be performed in using the EPICOR package that is used

for the Integrated Financial Management Information System (IFMIS).

4. The Public Procurement Act inspired from the UNCITRAL Model Law was prepared in 2001 with

technical assistance from the International Trade Center. The Law adopted by Parliament became effective

July 2003 and established the Gambia Public Procurement Authority, which replaces the centralized

Tender Board (Major and Minor Tender Boards). A key feature of the Act is that it puts in place

mechanisms for the decentralization of procurement activities to Government entities. Implementing

regulations and standard bidding documents were also prepared and issued during 2002-2003.

5. Gambia Revenue Authority Act, 2004 provides for the establishment of the Gambia Revenue

Authority to administer, assess, and collect revenue, to provide for the efficient and effective

administration of the revenue collecting system, and for matters connected therewith.

6. The Income and Sales Act, 2004 revises and consolidates the laws relating to income tax and

sales tax and for matters connected therewith. This Act repealed The Income Tax and National Sales Tax

Act.

Income Tax (rates for informal sector) Regulations, 2007 provides that the Commissioner

General shall determine whether a business size is small, medium, or large for the purposes of the

rate of tax payable based on the turnover of the business. The regulation has a schedule of the

annual rate of tax for the informal sector.

Income Tax (Taxpayer Identification Number) Regulations, 2007 enjoins the Commissioner

General to issue Taxpayer Identification Number (TIN) if satisfied with the documentary

evidence that are required to be provided under the Regulation by (a)an individual (resident and

non-resident)(b)a company (c)a partnership, society and trust, and (d) body of persons.

Description of Institutional Framework for PFM

7. The Department of State for Finance and Economic Affairs (DOSFEA) according to the 1997

Constitution and the BMAA Act, 2004 is primarily responsible for the control and management of public

monies in a transparent and accountable manner.

8. To carry out this function effectively DOSFEA has established the following organizational units.


Directorate of National Treasury

Budget Office

Economic Management and Policy Unit

Debt Management Directorate

Internal Audit Department/Division – This exists in name only.

9. The National Planning Commission works closely with DOFSEA to ensure smooth

implementation of the Governments Poverty Reduction Strategy.

10. Gambia operates a centralized PFM system, except for the IFMIS, that allows Departments to

enter their transactions remotely to the DNT-maintained centralized database.

11. The Central Bank of Gambia maintains the Treasury Main Account for the Government as well

as other departmental bank accounts. Bank accounts are also held at some commercial banks.

12. Key to improving policy formulation and monitoring and evaluation of budget implementation is

availability of timely, reliable and accurate data. In this regard, Government has established the Gambia

Bureau of Statistic as a semi-autonomous organization replacing the former Central Statistic Department.

The Statistic Act was revised in 2005 and new organizational structures have been put in place to ensure

that the institution operates more efficiently and effectively.

13. The National Planning Commission, Gambia Public Procurement Authority, and the Gambia

Revenue Authority are other key PFM institutions that together with DOSFEA and the line departments

ensure the smooth running of the PFM system.

14. To ensure oversight the National Audit Office has a constitutional mandate to audit all public

funds. The Auditor General is appointed by the President after consultation with the Public Service

Commission and is required by the Constitution to submit his audit report to the National Assembly

within six months of the end of the immediately preceding financial year. The Finance and Public

Accounts Committee (FPAC) of the National Assembly on receipt of the Auditor General’s report holds

public hearings in which public officials are called to provide explanations for the various audit queries

raised in the report. Recommendations and sanctions are then made for implementation by the Executive

branch.

15. The Local Government Act, 2002 established the local governments with their responsibilities to

perform key service delivery functions. At the moment this is not being done because capacity to perform

these services is yet to be built at the local councils. The Central Government still maintains regional-

level departments.

Integrated Assessment of PFM Systems

16. The following section describes an integrated assessment of the critical dimensions of

performance of an open and orderly PFM system:

Credibility of the budget. The budget is realistic and is implemented as intended.

Comprehensiveness and transparency. The budget and the fiscal risk oversight are

comprehensive and fiscal and budget information is accessible to the public.

Policy-based budgeting. The budget is prepared with due regard to government policy.

Predictability and control in budget execution. The budget is implemented in an orderly and

predictable manner, and there are arrangements for the exercise of control and stewardship in the

use of public funds.


Accounting, recording and reporting. Adequate records and information are produced,

maintained, and disseminated to meet decision making control, management, and reporting

purposes.

External scrutiny and audit. Arrangements for scrutiny of public finances and follow up by

Executive branch are operating.

Budget credibility

PI-1. Aggregate expenditure out-turn compared to original approved budget

17. The budget is the main tool that is used to translate government’s policy into practice. Therefore,

it is important for the Executive to be able to execute the budget as passed by the Legislature all other

things been equal. This requires budget discipline by keeping planned expenditure within the

Government’s ability to raise revenue or debt that is not prohibitively expensive.

18. Poor performance in 2005 and 2006 can be attributed to the shortfalls in collection of domestic

revenue. In 2007, domestic revenue was marginally exceeded but this is overshadowed by the aggregate

over-expenditure of 7 Percent.

Table A1. Comparison of Original Budgeted and Actual Expenditures, 2005-2007

2005 2006 2007

Budgeted primary expenditure (billion Dalasi) 1,689 1,855 2,392

Actual primary expenditure (billion Dalasi) 1,375 1,940 2,575

Difference between actual & budgeted primary expenditure

(billion Dalasi) (314) 85 183

Difference as percentage of budgeted primary expenditure (18.6)% 4.5% 7.7%

PI-2. Composition of expenditure out-turn compared to original approved budget

19. In addition to respecting the budget aggregates, it is equally important for the composition of the

budget either at administrative or functional level to be respected to allow the policy intent of the budget

to be met.

20. The deviations in aggregate spending as reflected in PI-1 are further manifested at the

administration level with expenditure composition exceeding overall deviation in primary expenditure by

more than 5 percent in 2005, 2006, and 2007. Annex C further shows that key service delivery ministries

such as Education, Health and Social Welfare, Works, and Justice have spent less than budgeted as

opposed to Finance and Economic Affairs, Office of the President, Interior and Religious Affairs.

However, Education and Health and Social Welfare have continued over the period to be ranked amongst

the top five spending ministries.

21. Miscellaneous budget mainly comprises payment for arrears and guarantees with some amounts

for local travelling expenses and contingency other charges. The budget for miscellaneous expenses has

increased from 6 percent in 2005 to 22 percent in 2007 and represents the highest budget for 2006 and

2007. This increase was due mainly to the comprehensive compilation of all domestic arrears, which were

agreed upon with creditors to be paid over three years starting in 2006. Commitments resulting from


hosting the African Union Summit in 2006 also caused some increase in miscellaneous expenditure. Such

high allocation of resources to miscellaneous expenses crowds out allocation to service delivery

expenditure.

PI-3 Aggregate revenue out-turn compared to original approved budget.

22. To ensure fiscal discipline it is important to accurately forecast domestic revenue to guide the

allocation of funds for budget execution. The indicator shows that the Government is reasonably able to

forecast and collect domestic revenue with collections only short by 3.6 percent and 5.2 percent in 2005

and 2006, respectively. Collection exceeded forecast by 10.2 percent in 2007.

Table A2. Comparison of Original Budgeted and Actual Domestic Revenue Receipts, 2005-2007

2005 2006 2007*

Budgeted receipts (GMD millions) 2,817.15 3,164.20 3,342.70

Actual receipts (GMD millions) 2,717.10 2,998.10 3,682.21

Difference between actual and budgeted receipts (GMD millions) (100.05) (166.10) 339.51

Difference as percentage of budgeted receipts (3.6)% (5.2%) 10.2%

Source: Published budget estimates and actual collection reported in Directorate of National Treasury final accounts. *Draft as at end Dec 2007

23. The sum of GMD 4,202,200 is projected for 2008, representing 24.35 percent of nominal GDP.

PI-4. Stock and monitoring of expenditure payment arrears

24. A high level of arrears can indicate a number of different problems such as inadequate

commitment controls, cash rationing, inadequate budgeting for contracts, under-budgeting of specific

items, and lack of information.

25. The miscellaneous vote in the budget estimate is mainly made up of payment for arrears and

guarantees. The 2006 and 2007 financial statements show details of payment of arrears of GMD236,326

and GMD548,537, respectively, but the 2005 financial statements does not disclose this information. The

stock of expenditure payment arrears at the start of the year is not shown in the budget (See PI-6) to allow

calculation of arrears paid as a percentage of actual total expenditure for the corresponding fiscal year and

to assess changes in the stock of expenditure payment arrears.

26. Prior to the implementation of IFMIS in 2007, outstanding commitments were not disclosed in

the annual financial statements. The 2008 financial statement has a Statement of Outstanding

Commitments totaling GMD48.327million as submitted by Vote Controllers, from the various

departments of state (ministries) as reflected in the Table below. The statement provides information on

the outstanding commitments at the end of the financial year, which the Government has entered into for

the supply of goods and services for each vote summarized and analyzed in terms of functions of

government, and between operating and capital commitments.

27. There is no clear policy on the number of days required to pay suppliers invoices making it

difficult to age outstanding payments. Salary payments are up to date.


28. Arrears to suppliers as December 2006 was GMD 336,000 but corresponding figures for 2005 are

not available as shown in the Table A3 extracted from Report on the Gambian National Debt Strategy and

New Financing Analysis Workshop, February, 2007.

Table A3. December 2005 December 2006

Amount

(GMD‘000)

% Amount

(GMD‘000)

%

A. Marketable Instrument

91-Day Treasury bill 617.25 14 365.19 8

182-Day Treasury bill 961.25 22 906.35 19

364-Day Treasury bill 2,809.14 64 3,376.21 73

SUB-TOTAL 4,387.64 4,647.75

B. Non-Marketable

Government bonds 250 250

Treasury notes 535 535

Central Bank loan 606 75

Suppliers arrears - 336

SUB-TOTAL 1,391 1,196

GRAND TOTAL 5,778.64 5,843.75

Sources: Central Bank of The Gambia and DOSFEA 2007


Indicator Score Brief explanation of status as at the reporting period

A. Credibility of the Budget

PI-1. Aggregate expenditure

out-turn compared to

original approved budget

B

Based on domestically-financed primary discretionary expenditure

(i.e. excluding debt service charges and donor funded project

expenditure) deviations between original budget and outturns were:

2007: 7.7% 2006: 4.5% 2005: (18.6)%

Actual expenditure deviated from budget by more than 10% in no more than one out of the 3 years

PI-2. Composition of

expenditure out-turn

compared to original

approved budget

C

Deviations between original budget and outturns were:

2007: 5.0% 2006: 19.0% 2005: 5.1 %

Variance in expenditure composition exceeded overall deviation in

primary expenditure by more than 10% only in 2006 out of the last

three years.

PI-3. Aggregate revenue out-

turn compared to original

approved budget

B

Actual revenue collections as a % of budgeted domestic revenue

obtained from Ministry of Finance fiscal tables were:

2007: 110.2% 2006: 94.8% 2005: 96.4 %

PI-4. Stock and monitoring

of expenditure payment

arrears

NS

Data not available for dimension (i) to score this indicator.

(i) Stock of expenditure

payment arrears (as a

percentage of actual total

expenditure for the

corresponding fiscal year) and

a recent change in the stock

NS Government has been paying off large amounts of arrears over the

last few years but full details of the payments were not made

available to the team to do the necessary calculation and assess

changes in debt stock.

IFMIS became operational in 2007, and outstanding commitments

are now disclosed in the annual financial statements.

(ii) Availability of data for

monitoring the stock of

expenditure payment arrears

C List of outstanding commitments are now available in IFMIS since

2007. However, the list does not show aged balances to categorize

them into arrears.

Data on the stock of arrears is generated on an ad hoc basis as was

done as part of the 2007 Gambian National Debt Strategy and New

Financing Analysis Workshop

29. The indicators demonstrate some level of fiscal indiscipline. The effect is that the credibility of

the budget is undermined since budget execution does not fully reflect its policy intent. Furthermore,

ministries, departments, and agencies will lose trust that DOSFEA will make the necessary budgetary

provisions to implement planned programs and the public will in turn also lose confidence that public

services will be rendered efficiently.

Comprehensiveness and transparency

PI-5. Classification of the budget

30. The classification system (chart of accounts) must be robust to allow the tracking of spending on

the following dimensions: administrative unit, economic, functional and program. Such chart of accounts


will enable The Gambia to report expenditure in GFS format and align and track poverty-reducing

expenditure in the poverty reduction strategy.

31. The chart of accounts is made up of 30 alphanumeric characters divided into four segments as

follows.

Source: Accounting Procedures Manual dated 23/10/2006

32. The 2006 budget estimates were completely mapped to the new chart of accounts, and the 2007

budget estimates were produced using the new chart of accounts for IFMIS. Reporting by functions of

Government is currently achieved through mapping tables. An overview of the functions of government

at sub-functional level is provided in the budget estimates. The Directorate of National Treasury has


produced draft formats for preparing financial statements that will include Classification of Functions of

Government (COFOG) reports at sub-functional level. The level of detail for functional analysis in the

budget is derived from the responsibility segment through mapping tables with the following sub-

functional analysis:

General

General public services

Defense

Public order and safety

Social Education

Health

Social security and welfare

Housing and community amenities

Recreational, cultural , and religious affairs Economic

Fuel and energy

Agriculture, forestry, fishing, and hunting

Mining and mineral resources, and manufacturing

Transportation and communication

Other economic affairs Other

Debt interest


PI-5. Classification of the budget

B

The classification system is robust to prepare budgets by

administrative unit, economic, functional and program. The

Accounting Procedures Manual provides a detailed

description of the chart of accounts and is widely

understood by various users.

However, the MTEF segment of the chart of accounts is

not utilized and there is room for improvement in ensuring

that budget execution reports are classified at sub-

functional level.

PI-6. Comprehensiveness of information included in budget documentation

33. It is important for especially the Legislature and other users to have the full picture of the budget.

The underlying assumptions for the budget should also be disclosed for better understanding of the

estimates. Table A4 shows the elements that are contained in the budget.

Table A4. Elements of the Budget

Available

Macro-economic assumptions, including at least estimates of aggregate growth, inflation and exchange rate.

The macro-economic assumptions that underpin the preparation of the estimates are

not explained in the budget. However, the Budget Speech talks about the expected

growth rate in the real sector and monetary developments in exchange and interest

Yes


Table A4. Elements of the Budget

Available

rates. The impact of these on the budget estimates is not clearly explained.

Fiscal deficit, defined according to GFS or other internationally recognized standard.

Financing of the fiscal deficit is categorized in a table in the budget estimates.

Gross Surplus /Deficit (-)

Financing

Domestic borrowing, domestic amortization, foreign amortization,

payment of arrears, exceptional financing

Memorandum

GLF Expenditure + Foreign Amortization

Debt Service

Domestic Borrowing + Net Surplus/Deficit

Yes

Deficit financing, describing anticipated composition.

The composition of how the deficit will be financed is described in the budget.

Yes

Debt stock, including details at least for the beginning of the current year. No

Financial assets, including details at least for the beginning of the current year.

Details of financial assets are not included in the budget.

No

Prior year’s budget outturn, presented in the same format as the budget proposal.

Provisional actual figures are presented for the prior year (2006)

Yes

Current year’s budget (either the revised budget or the estimated outturn), presented in the same format as the budget proposal.

Current year’s budget is included but without outturns to assess execution of the

budget.

Yes (revised budget)

Summarized budget data for both revenue and expenditure according to the main heads of the classifications used (refer to PI-5), including data for the current and previous year.

Partly

Explanation of budget implications of new policy initiatives, with estimates of the budgetary impact of all major revenue policy changes and/or some major changes to expenditure programs.

No

34. For the budget and fiscal reports to be comprehensive it must cover all aspects of financial

statements (revenue, expenditure, assets, and liabilities) for the various budgetary entities. The GBMAA

Act, 2004 allows some entities to retain internally generated revenue, but these are not included as part of

the budget estimates making it incomprehensive.


35. Some amount of information is available in the budget estimates for expected disbursements from

development partners. This is far from comprehensive; and even for those that are captured in the budget,

actual expenses are not included in out-turn reports.

PI-7. Extent of unreported government operations

36. Extra-budgetary funds and sources of external financing should be integrated into the budget and

financial statement in order to provide a complete picture of public funds. Current transfers account for

15.5 percent (GMD 522,044) of recurrent expenditure (GMD 3,367,719). Fifty-two percent (GMD

273,496) of the transfers are to public authorities. Use of extra-budgetary funds can result in loss of

aggregate expenditure control since they are outside the control of DOSFEA. Less transparency may also

lead to inefficiency or misuse of funds.

37. The GBMAA Act, 2004 (2) provides that “Notwithstanding the provisions of subsection (1), an

Act of the National Assembly may provide: (a) for the payment of particular revenue or other money into

some other fund, which for the purpose of this Act is called extra-budgetary fund, established for a

specific purpose; and (b) for the retention of revenue or other money by the budget agency that received it

for the purpose of defraying expenses of that budget agency, which for the purpose of this Act is called

‘departmental self-raised revenue’”.

38. Vote Controllers that are authorized to operate special bank accounts are required to submit

statements of revenue and expenditure to the Directorate of National Treasury within five days of the end

of each month [GBMAA Act, 2004 (40)]. However, this is not done by most of the Departments; lack of

reports makes it even more difficult to ascertain the value of such unreported transactions.

39. The budget estimates provide an overview of how expenditure will be funded by showing grant

and loans expected from bi-laterals and multi-laterals development partners and the portion funded by the

Government. For 2008, The Gambia Government expected to receive an amount of GMD 1,444,520 for

development projects in the form of grants and loans to support a total budget of GMD 5,873,114. The

provisional figures for 2006 in the budget estimate are not categorized by the economic classification

because of lack of reports as stated above.

40. Donor funds are managed through special bank accounts operated by the project implementation

unit and approved by the Directorate of National Treasury. With the new chart of accounts, it is possible

for donors to submit returns to the Directorate of National Treasury so that the transactions can be

captured and reported in fiscal reports. However, this is not been done. The effect is that government

programs are under-reported thus undermining government accountability for the use of these funds.

41. The Ministry of Finance and Economic Affairs (previously the DOSFEA) has set up a Project

Management and Aid Coordination Unit to improve coordination, monitoring, and comprehensive

reporting of aid flows in the country. In consultation with all stakeholders, including the civil society

organizations, the unit prepared the first Aid Coordination Report in 2009.


PI-6. Comprehensiveness of

information included in

budget documentation

B

Five out of the nine elements are included in the 2008 budget

estimates.


PI-8. Transparency of intergovernmental fiscal relations

42. There are three forms of central subvention to local governments (a) general grant; (b) grant-in-

aid; and (c) equalization grant. The criteria for making these horizontal transfers to the seven councils are

not clear. The Finance and Audit Act however provides that 60 percent of council’s revenue shall be

devoted to development activities and 40 percent to recurrent activities. Transfers from the Central

Government are mainly to cover administration expenses. Functional devolution is yet to take place to

make this indicator relevant.

43. According to the Finance and Audit Act, the preparation and approval of the budget must be done

by September each year incorporating comments of the Secretary of State for Local Governments and

Lands. This timeline is to ensure that the budgetary needs of the councils are factored in the Central

Government budget. With delays in the preparation of council budgets, the Central Government uses its

best judgment to estimate the budgetary needs of the councils. The effect of this is that reliable

information on allocations is not available to the councils at the start of the year.

44. Despite the fact that Financial Instructions for the GBMAA Act, 2004 apply to councils; current

practice is still based on the old Financial Memorandum for Municipal & Area Councils published in

1985. Financial reporting is limited to the production of a trial balance only. A full set of financial

statements including the production of a balance sheet and income statement are not produced by any of

the councils. This makes it impossible for fiscal reports for the councils to be consolidated and analyzed

according to Central Government reporting format.


PI-7. Extent of unreported

government operations

D+

(i) Level of unreported extra-

budgetary expenditure

C

Transfers to public authorities disclosed in the budget are

8% of total recurrent expenditure (GMD 273,496 out of

GMD 3,367,719). However lack of returns from the public

enterprises makes it difficult to ascertain the full value of

extra-budgetary funds.

With strict cash management measures put in place in

recent years and rationalization of bank accounts;

Institutional and Governance Reviews are gradually being

integrated in fiscal reports.

Reporting on donor funds, and more generally on extra-

budgetary operations, remains unsatisfactory.

(ii) Income/expenditure

information on donor-funded

projects

D Grants and loans expected from donors are included in the

budget estimates but actual expenditure during the year is

not included in outturn reports – GMD 1,444,520 out of

GMD 5,873,114 (i.e., 25%).


PI-9. Oversight of aggregate fiscal risk from other public sector entities

45. Public enterprises and the councils could create debt for the Central Government if their financial

position is not closely monitored. In this regard, the Financial Instructions for the GBMAA Act apply to

(a) all departments and constitutional institutions; (b) the Gambian Revenue Authority; and (c) all

subvented agencies.

46. The DOSFEA is represented on the board of all public enterprises and exercise oversight by

reviewing the annual budgets and audited financial statements. However, a consolidated overview of

public enterprise operations and possible aggregate risk to Central Government is not undertaken.

47. The Finance and Public Accounts Committee recently reviewed the annual audited accounts of

public enterprises in joint open sessions with the Public Enterprises Committee of the National Assembly.

The revitalization of the Committees in the National Assembly has created public interest in

accountability by various public officials.


PI-8. Transparency of

intergovernmental relations

D

(i) Transparency and objectivity

in the horizontal allocation

among subnational

governments.

D Apart from the high-level requirement that 60% of council’s

revenue shall be devoted to development activities and 40% to

recurrent activities, transfers to the councils are not based on a

transparent rule based allocation formula.

(ii) Timeliness of reliable

information to subnational

governments on their allocations

D Transfers from the Central Government are mainly to cover

administration expenses and functional devolution is yet to take

place. Information on the expected transfers is not reliable in

determining the budgets for the councils.

(iii) Extent of consolidation of

fiscal data for general

government according to

sectoral categories

D No local government data is included in the national budget.

Sectoral breakdown is not done. Most of sectoral spending is

still under national ministries, departments, and agencies.

Councils still use the 1985 Financial Memorandum for

Municipal & Area Councils. The classification system and

report format are different from that of the central government.



PI-9. Oversight of aggregate

fiscal risk from other public

sector entities

D

(i) Extent of monitoring public

enterprises

D

Apart from recent discussion of audit reports by the FPAC and

Public Enterprise Committee of National Assembly, little

progress has been made on establishing basic reporting and

accountability mechanisms since the 2003 CFAA

(ii) Extent of Central

Government monitoring of

subnational governments’ fiscal

position. D

Limited progress has been made by Directorate of Local

Governance to establish effective mechanisms of local

government reporting and accountability. Unavailability of

annual financial statement limits the scope to monitor the local

government fiscal positions annually.

PI-10. Public Access to key fiscal information

48. Without transparency, there can be no accountability. For this reason, it is essential for

Government to make key fiscal information available to the public in a timely manner. Elements of

information made available by The Gambia Government to the public include:

Elements Available (i) Annual budget documentation. The public can obtain a complete set of

documents through appropriate means when the documents are

submitted to the Legislature.

Partially

(ii) In-year budget execution reports. The reports are routinely made

available to the public through appropriate means within one month of

their completion.

No

(iii) Year-end financial statements. The statements are made available to the

public through appropriate means within six months of completed audit.

No

(iv) External audit reports. All reports on Central Government consolidated

operations are made available to the public through appropriate means

within six months of completed audit.

No

(v) Contract awards. Award of all contracts with value above approximately

US$100,000 equivalent are published at least quarterly through

appropriate means.

No

(vi) Resources available to primary service units. Information is publicized

through appropriate means at least annually, or available upon request,

for primary service units with national coverage in at least two sectors

(such as elementary schools or primary health clinics).

No

49. Although the annual budget estimate is printed by the Government Printer, it is not easily

obtainable in the Government Bookshop nor is it posted on the DOSFEA website. The DOSFEA has a

website (http://www.dosfea.gm/) but is not being effectively used to promote transparency and

accountability by uploading key fiscal reports and policy papers.

50. In-year budget outturn reports are made available to the departments on a regular basis but such

reports are not made public. Year-end financial statements have not been published for over 10 years.

There was a huge backlog of preparation of annual accounts but the Directorate of National Treasury has

http://www.dosfea.gm/


now submitted accounts to the Auditor General’s Office up to 2006. These accounts are not made public

until they are audited and the FPAC issues its report.

51. The FPAC has reviewed accounts up to 1999 but is yet to issue its report. The 2000-2004

accounts have been audited and await comments from the Executive before finalization and submission to

the National Assembly.

52. Contract opportunities are made open in the national press, but awards are not published. Public

Expenditure Tracking Surveys (PETS) are not performed annually.

Policy-based Budgeting

PI-11. Orderliness and participation in the annual budget process

53. Article 152 of the Constitution provides for Annual Estimates and Appropriations. Article 152 (1)

enjoins the President to cause the Secretary of State responsible for finance to prepare and lay before the

National Assembly, at least 30 days before the end of the financial year, estimates of the revenue and

expenditure of The Gambia for the following financial year.

54. The estimates shall include estimates that under the Constitution are to be submitted directly to

the President for presentation by the President to the National Assembly. These estimates include those of

the National Assembly, the Judicature, National Audit Office, and the Independent Electoral Commission.

The Chief Justice and any other authority that is entitled to draw up its own estimates for direct

presentation by the President to the National Assembly shall provide the President with such estimates at

least 90 days before the end of the previous financial year. The National Assembly is required to give

consideration to and approve the estimates within 14 days of the estimates being laid before it. The

National Assembly shall, within 7 days of the introduction of the Appropriation Bill, give consideration to

and pass the Bill.

55. Budget call circulars are issued around June each year. Departments have 3 weeks to prepare for

consultative workshops to ensure participation in the formulation process. About 3 months is given for

the preparation of the budget before bi-lateral discussions are held with DOSFEA to review the budget for

consistency with national policies in the PRSP. The National Planning Commission plays a critical role in

reviewing the budget during the bilateral discussions.

56. All Departments of State are required to form a Budget Task Force headed by the Secretary of

State and comprising Heads of departments (units) and stakeholders. The Budget Office is concerned

about the quality and completeness of estimates received, thus doubting the existence or capability of the

task force in certain sectors. The Budget Committee at DOSFEA only discusses a consolidated budget

coming from the Permanent Secretary. Both recurrent and development budgets are integrated.

57. Ceilings for other charges, development, and personnel emoluments are issued with the budget

call circular. At this stage the Cabinet is not formally involved in approving the ceilings. The Cabinet is

involved in the process at the point when the budget is ready for submission to the National Assembly.

However, each Secretary of State would have been involved in the preparation of his/her own budget. A


PI-10. Public access to key

fiscal information

D The budget estimates are printed by the Government Printer but

are not readily available to the public.


holistic review of the ceilings by Cabinet would ensure that national policies are properly articulated in

the budget and reflect Government’s priorities in the allocation of ceilings.

58. Revenue-generating departments are required to develop their revenue budgets using GDP

growth, inflation figures, projected sales, strength of the work force, and other key variables. The macro-

economic targets by the Gambian authorities in formulating the budget were for the next 3 years at a GDP

growth rate of 4.5 percent, an average inflation level of 5.0 percent, and a fiscal deficit averaging 3.1

percent of GDP for the same time period. Sectoral ceilings were set with the above key macroeconomic

variables in mind and based on the prevailing economic conditions of the country.

59. In developing estimates for personnel emoluments, departments are required to discuss their

staffing needs with the Personnel Management Office. Employment of new staff that creates new posts is

not allowed, although existing vacant positions can be filled. New Details of Establishment and Nominal

Rolls are sent to the Department of State for Finance and Personnel Management Office.

60. Clear guidance is given to the Departments on how to prepare the estimates. The IFMIS pilot

departments use the ‘Active Planner’ module to enter their estimates, and those that are not yet online are

provided with templates that are entered at the Data Center in the Budget Office. Estimates for all

departments are then consolidated to form the overall budget estimates.

61. All Permanent Secretaries and Heads of departments were urged to adhere to the 2008 budget

preparation guidelines and the timely submission of their proposals as indicated in the timetable below.

Timetable for 2008 Budget Preparation

Activity Date

Release of call circular June 6, 2007

National Consultative Workshop

on Participatory Budgeting June 26, 2007

Deadline for submission of details of

establishment and nominal rolls to DOSFEA

and Personnel Management Office August 14, 2007

Observed

Bilateral Consultations Begins August 18, 2007

Bilateral Consultations To be released

62. The GBMAA Act, 2004, 22 (1) requires the Secretary of State in accordance with section 152 of

the Constitution to prepare and lay before the National Assembly the Appropriation Bill documents, at

least 30 days before the end of the financial year. For the past 3 years, this requirement has been met with

the budget passed by the National Assembly before the start of the new financial year:

FY2008, DOSFEA submitted on Nov. 20, 2007 and National Assembly passed on Dec. 24, 2007.

FY2007, DOSFEA submitted on Nov.17, 2006 and National Assembly passed on Dec. 27, 2006.

FY2006, DOSFEA submitted on Nov. 25, 2005 and National Assembly passed on Dec. 20, 2005.


PI-12. Multi-year perspective in fiscal planning, expenditure policy and budgeting

63. Section 152 (4) of the Constitution of The Gambia states that “In addition to presenting the

estimates for the following financial year, the President may cause to be prepared and presented to the

National Assembly (a) fiscal and monetary programs and plans for economic and social development

covering periods exceeding one year, and (b) estimates of revenue and expenditure in respect of such

programs and plans”. Following this directive with its annual budget under preparation, the Government

has completed its second Poverty Reduction Strategy Paper with its 5 pillars.

I. Improving the enabling policy environment to promote growth and poverty reduction.

II. Enhancing the capacity and output of productive sectors — agriculture, fisheries, industry, trade,

tourism and infrastructure — with emphasis on productive capacities of the poor and vulnerable

populations.

III. Improve coverage of the basic social services and social protection needs of the poor and

vulnerable.

IV. Enhance governance systems and build the capacity of local communities and civil society

organizations to play an active role in economic growth and poverty reduction.

V. Mainstreaming cross-cutting issues — gender, youths, population, HIV/AIDS, nutrition, and

environment — into the development process.

64. The sectoral ceilings are divided into two categories: (a) poverty programs and (b) discretionary

spending. Sectors are at liberty to re-allocate resources from discretionary spending to poverty programs

but not vice versa. The reason for this being the fact that spending for poverty reduction purposes is

classified as priority. The poverty programs that are planned to implement the PRSP initiatives are costed

and included in the budget estimates.


C(i) Policy-Based Budgeting

PI-11. Orderliness and

participation in the annual

budget process

B

(i) Existence of and adherence

to a fixed budget calendar B Budget call circular is issued around June each year.

Departments have about 2 months to prepare budgets before

bilateral consultations start. However, capacity constraints

undermine the quality and completeness of the budgets

produced.

(ii) Guidance on the preparation

of budget submissions C Ceilings and clear instructions are given to the departments but

the Cabinet as a whole only approves after departments have

completed the budget.

(iii) Timely budget approval by

the Legislature

A

For 2006, 2007, and 2008 the budget has been passed by the

National Assembly before the start of the new financial year, as

stipulated in Section 22 (1) of the BMAA Act, 2004.


65. Pillar I includes all aspects relating to economic management, including macroeconomic stability,

public finance management, public debt management, divestiture, and civil service reforms.

66. The implementation strategy for the second PRSP will be through sector-wide approaches

(SWAps) and the medium-term expenditure framework (MTEF) with strong focus on attaining targets of

the Millennium Development Goals. As noted in the PRSP, detailed sector plans will need to be

developed, and consistency with the PRSP must be ensured. To do this, capacity will first have to be

developed in DOSFEA on macro-economic analysis and forecasting. This also requires accurate statistics

for the various fiscal and monetary variables. Key sector data will need to be collected and analyzed.

67. The Gambia Bureau of Statistics has developed a strategic plan for 2008-2011; pillar two of the

plan aims at “improving economic statistics for a better monitoring of programs implementation towards

a sustainable economic growth”. Within this pillar the objective of producing key economic indicators as

well as other statistics through surveys will contribute immensely in the preparation of meaningful

medium-term strategies from which activities can be mapped out with costs to prepare medium-term

expenditure budgets.

68. A move toward implementing medium-term expenditure budgets should be a gradual process

starting with sensitization and capacity development across all sectors but more specifically within the

National Planning Commission and DOSFEA. A properly sequenced activity plan for the introduction of

medium-term expenditure budgets, targeting budget planners for the various sectors, will be needed.

69. The budget preparation process has evolved over the years with integration of the development

and recurrent budgets. Estimates for donor-funded projects with details of the project and the donor

agency are now included in the budget estimates with a summary overview of the funding broken down

by Gambia local fund and grant and loans from listed development partners. This has improved the

transparency of the funding source of the budget.

70. The Government conducted a debt sustainability analysis in 2007 for external and domestic

debt.14

Staff of IMF in August 2008 issued the report, Update on Joint IMF/IDA Debt Sustainability

Analysis.15

Tables A5 and A6 from the 2008 budget estimates show that debt payments for FY2008

accounts for 21.06 percent of total expenditure compared to 26.39 percent in 2007 and 34.21 percent in

2006; this represents a reduction of 13.56 percent from 2006. Borrowing from the banking system has

stopped since FY2007 though strict cash controls a situation made possible with IFMIS as the main tool.

The budget over the 2006, 2007, and 2008 on average is about 75 percent funded by the Gambia Local

Fund.

Table A5. Budget Estimates

2006 % 2007 % 2008 %

Recurrent 1,684,066 37.60 2,095,976 38.58 2,409,561 41.03

Development 1,262,828 28.19 1,902,772 35.02 2,226,558 37.91

Debt 1,532,598 34.21 1,433,909 26.39 1,236,995 21.06

Totals 4,479,491 100.00 5,432,657 100.00 5,873,114 100.00

14 Report on the Gambian National Debt Strategy and new financing analysis workshop organized by WAIFEM & DRI, February

12–22, 2007

15 The last DSA was presented to the Fund Executive Board on December 19, 2007 (IMF Country Report No. 08/109,

Appendix I) and to the World Bank Executive Board on December 20, 2007 (Enhanced HIPC Completion Point Document

and MDRI, Report No. 41413-GM).


Table A6. Overview of Debt Service

GMD (thousand) %

2006 2007 2008

Provisional Approved Estimate

4 Debt interest 965,127 846,350 767,494 62.05

40 Domestic interest 721,872 615,000 545,000 71.01

4001 Short-term T-bills and other

government

677,727 615,000 545,000 100.00

4003 Loans from banking system 44,145 0 0 0

41 Foreign interest 243,255 231,350 222,494 28.99

4101 Foreign governments 78,246 81,303 66,620 29.94

4102 Multilateral organizations 165,010 150,047 155,874 70.06

9 Amortization 965,921 587,559 469,501 37.95

90 Domestic amortization 541,429 0 0 0

9004 Loans from banking system 541,429 0 0 0

91 Foreign amortization 424,492 587,559 469,501 100

9101 Foreign governments 138,857 201,366 152,358 32.45

9102 Multilateral organizations 285,635 386,193


PI-12. Multi-year perspective

in fiscal planning,

expenditure policy, and

budgeting

D+

(i) Multi-year fiscal forecasts

and functional allocations

D

The Government prepares an annual budget despite its

constitutional requirement in Section 152 (4). Functional

analysis is available in the budget estimates but in the absence

of sector strategies for all budgeting entities allocation is

based more on administrative basis.

(ii) Scope and frequency of

debt sustainability analysis C Debt sustainability analysis for external and domestic debt

was undertaken in 2000 and updated in 2007.

(iii) Existence of costed sector

strategies

C

Statements of sector strategies for key Departments of Health

and Agriculture were prepared for PRSP II but not fully

costed.

Aggregate fiscal forecasts do not exist to ensure consistency.

(iv) Linkages between

investment budgets and

forward expenditure estimates C Efforts have been made to integrate the development and

recurrent budget. The absence of MTEF budgets makes it

difficult to plan properly the recurrent cost implications for

major investments.


Predictability and control in budget execution

PI-13. Transparency of taxpayer obligations and liabilities

71. The Gambia Revenue Authority (GRA) Act, 2004, established the Gambia Revenue Authority

that only started full operations in 2007 as it was going through its setup stages. Part 1, Article 149 of the

Constitution makes imposition and approval of waiver or variation of tax the exclusive preserve of the

National Assembly. Tax exemptions have been curtailed.

72. Tax rates and procedures are clearly displayed at collection points. The Income Tax (Rates for

Informal Sector) Regulations, 2007 has broadened the tax base. The Regulations provides a schedule of

the annual tax rates and the payable date. The GRA Commissioner General is responsible for determining

the size (small, medium, or large) for the purpose of the rate of tax payable.

Tax appeals mechanism

73. The Income and Sales Tax Act, 2004, section 229 establishes the Tax Tribunal to hear appeal

cases by taxpayers. Decisions of the Tax Tribunal can be appealed in a High Court that can make a final

decision on the matter or remit the case to the Tribunal for reconsideration.

74. The Chief Justice appoints the President of the Tax Tribunal from the High Court, and the

Secretary of State for Finance appoints the other members with consent of the Cabinet. Procedure

guidelines for the Tribunal are being drafted, but at the time of the CFAA mission the President and

members had not been appointed.


PI-13. Transparency of

taxpayer obligations and

liabilities

C

(i) Clarity and

comprehensiveness of tax

liabilities

B The tax laws and regulations are clear about tax liabilities.

Discretions and tax exemptions have been curtailed.

(ii) Taxpayer access to

information on tax liabilities

and administrative procedures

C Taxpayers have access to some information on tax liabilities

and administrative procedures. The GRA is in the process of

actually putting most of the procedures into action.

(iii) Existence and functioning

of a tax appeals mechanism D The Income Tax and Sales Act makes provision for the Tax

Tribunal but the Board has not been appointed.

PI-14. Effectiveness of measures for taxpayer registration and tax assessment

75. The Income Tax (Taxpayer Identification Number) Regulation 3 of 2007 brought into effect the

Taxpayer’s Identification Number.

76. Extensive campaigns were done to educate the public about the Identification Number. The GRA

requires the following documentation before processing an application for assigning the Taxpayer

Identification Number: national ID card, passport, birth certificate, and business registration certificate. In

the case of a partnership or trust, the identification number for each partner or trustee is required.


77. Banks and the Vehicle License Authority are now requiring taxpayer identification number before

allowing individuals to open bank accounts and register vehicles.

78. The GAMTAXNET computer system is being developed for a comprehensive GRA database of

all potential taxpayers. The taxpayer identification number for all government workers is gradually being

captured in the payroll system. The ASYCUDA 2.7 application is being used by the Customs

Department. The improved tax administration arising out of this reform initiative has contributed to

average domestic tax revenue of 21 percent of GDP since 2004.

79. The Internal Audit Unit in GRA is not yet fully functional to assess the controls over the

registration system and compliance in declaring obligations. A self-assessment system is being piloted

with the first set of returns due at the end of March 2008 after extensive sensitization of the public.


PI-14. Effectiveness of

measures for taxpayer

registration and tax

assessment

C

(i) Controls in taxpayer

registration system B The requirements for assigning taxpayer identification number

are linked to other government registrations systems, such as

national ID card and business registration, and also the banking

system.

(ii) Effectiveness of penalties

for noncompliance with

registration and declaration

obligations

C Penalties for noncompliance and declaration of obligations exist

in the various tax laws and regulations, but the administrative

arrangements for implementation are not yet in place.

(iii) Planning and monitoring of

tax audit and fraud investigation

programs

D The Internal Audit Unit in GRA is only now being set up.

PI-15. Effectiveness in collection of tax payment

80. Taxes and other sources of revenue are collected in cash. The Gambia Revenue Authority has

transit accounts in Trust Bank Ltd. in the 4 regions of the country and the balances on these accounts are

transferred to the Central Bank of Gambia every Tuesday and Thursday.

81. Burang immigration collection point receives cash directly from the public; the cash could be

held for weeks before taking it to Sorma immigration post where the cash could again be held for a month

before payment to a sub-treasury for subsequent payment to the Central Bank.

82. The current situation poses a serious risk by holding cash in mostly unsecured environments.

Also, Government could be borrowing when in fact it has a lot of idle cash sitting outside the banking

system. The collection process can be improved by involving commercial banks in the collection process.

In all locations where commercial banks exist, tax collectors should be requested to pay all collections

into holding bank accounts on the same or next day after collections. On a weekly basis, the commercials

will in turn transfer the balance on the holding account to the Central Bank, and the commercial banks

will be paid transfer charges that will be less than the cost of any borrowings.

83. The sub-treasuries will submit returns of all collections to the National Treasury, which will be

matched with credit advice from the Central Bank to pass the relevant accounting entries.


84. The GRA Research Unit has been tasked to identify suitable tax districts.


PI-15. Effectiveness in

collection of tax payments

NS

(i) Collection ratio for gross tax

arrears, being percentage of tax

arrears at the beginning of a

fiscal year, which was collected

during that fiscal year

NS Information on tax arrears is not complete and therefore

difficult to calculate collection ratio.

(ii) Effectiveness of transfer of

tax collections to the Treasury

by the revenue administration

B GRA has regional bank accounts in Trust Bank Ltd., which

transfers balance in those transit accounts every Tuesday and

Thursday to the Central Bank of Gambia.

(iii) Frequency of complete

accounts reconciliation between

tax assessments, collections,

arrears records and receipts by

the Treasury

C

PI-16. Predictability in the availability of funds for commitment of expenditures

85. Departments are required to submit annual cash plans based on their approved budgets. The cash

plans are updated monthly and used by DOSFEA to make monthly cash allotments into sub-cash books.

Commitment is controlled by availability of cash allocation rather than budget.

86. The GRA is not involved in the monthly cash allocation process. It expressed the need for its

involvement to ensure that allocations are not only made based on current cash positions, but that

forecasts for collections should also be considered.

87. Local purchase orders are printed from the system for supply of goods and services. Suppliers

have been sensitized that payment can only be made for deliveries against local purchase orders printed

from the system. This is a reliable process since the system has inbuilt controls to check for availability of

cash from the requisition stage. Once a local purchase order is assigned to a request, cash is ‘tied’ for that

transaction and does not form part of the cash that is reclaimed if unutilized at the end of the month.

88. Detailed budget execution reports showing available, budget, cash balance, and outstanding

commitments to assist departments to monitor and plan budget execution are made available to the

various departments. Cash allotments unutilized by departments at the end of each month are withdrawn

and form part of the consolidated cash position used to make allocations based on current cash plans.

89. Votes for purchase of equipment and furniture are centralized at DOSFEA. Votes for individual

departments are not ring-fenced, and there are instances in which departments are unable to purchase

items such as computers or repair vehicles because the vote has been exhausted by the time they make a

request. Accountability for expenses incurred under this vote is blurred since the vouchers and payments

are authorized by DOSFEA, but another department used the asset.

90. Budget allocations are made but the main control mechanism for commitment is cash allocations.

Cash allocations are adjusted frequently based on the overall cash balance in the Treasury Main Account.

Ministries, departments, and agencies are not involved in the decision making process of cash allocations

beyond the submission of their monthly cash plans.



PI-16 Predictability in the

availability of funds for

commitment of expenditures

C

(i) Extent to which cash flows

are forecast and monitored C Cash flow forecasts are prepared annually but the updates are

simplistic. There is insufficient evidence of linkage of the cash

plans with procurement plans.

(ii) Reliability and horizon of

periodic in-year information to

ministries, departments, and

agencies on ceilings for

expenditure and commitment

C Departments are given cash allocations on a monthly basis. Un-

utilized cash is withdrawn and forms part of the total cash

available for subsequent allocations. The main control for fiscal

discipline in budget executions is based on availability of cash

allocation rather than budget.

(iii) Frequency and transparency

of adjustments to budget

allocations, which are decided

above the level of management

of ministries, departments, and

agencies

C Budget allocations are based on the approved budget and cash

plans. There are significant in-year adjustments to the cash

allocations by DOSFEA without dialogue with the departments.

The criteria for the adjustments are not quite clear even though

most of the Directors in DOSFEA are involved in the decision

making process.

PI-17. Recording and management of cash balances, debt, and guarantees

91. Debt data recording and management is spread between the DOSFEA and Central Bank of The

Gambia using CS-DRM 2000+ System. However, private debt, debt contracted by local governments and

public enterprises and grants are not recorded for a comprehensive assessment and analysis of debt

burden and formulation of aid strategy.16

92. The Gambia is at high risk of debt distress based on external debt burden indicators (Box A1). A

priority fiscal policy has been the reduction of debt service and the stock of public debt in order to expand

the fiscal space for PRSP-related expenditures. The country received substantial debt relief through HIPC

completion point achieved in December 2007. As a result interest payment declined from a peak of 47

percent of recurrent expenditure in 2005 to 24 percent in 2008.

Box A1. Conclusion of Update on Joint IMF/IDA Debt Sustainability Analysis

The Gambia’s debt situation has improved since the last debt sustainability analysis due to an improvement in the

overall fiscal balance in 2007 and a decline in new borrowing. But given continuing risks, it will be important for

the authorities’ to finalize and implement the planned national debt strategy as soon as possible.

IMF/IDA staff recommendation is that new borrowing be on highly concessional terms and that the authorities

exercise restraint in contracting new loans. The major risks to debt sustainability include lower than expected

economic and/or export growth, higher than expected new borrowing, or a deterioration in fiscal performance.

93. All departmental bank accounts are maintained at the Central Bank of The Gambia. The GRA

maintains transit revenue bank accounts in the regions at Trust Bank Limited that transfers proceeds in the

16 Report on the Gambian National Debt Strategy and New Financing Analysis Workshop, February 2007.


accounts twice weekly. Some non-tax revenues are held at collecting points and sub-treasuries sometimes

for more than a month before remitting to the Central Bank. Bank reconciliation is automated and done

daily by the Directorate of National Treasury. The accounting system can consolidate cash balances held

at the Central Bank. The consolidated balance will not show the true cash position of the government

since there will be idle cash held at some sub-treasuries.

94. Section 155 of the Constitution of the Gambia, 1997, provides for the contracting of loans.

Financing of the deficit is clearly explained in the budget as required by GBMAA Act, 2004 36 (1). The

proceeds of any borrowing are credited to the consolidated fund from which all government payments are

made.


PI-17. Recording and

management of cash balances,

debt and guarantees

B

(i) Quality of debt data

recording and reporting

C DOSFEA and Central Bank of The Gambia maintains data of

debt at Central Government, but it is incomplete since debt by

public enterprises and local councils is not included.

GBMAA, 2004, 39 (1) requires DOSFEA to maintain debt

records.

(ii) Extent of consolidation of

the government’s cash balances

B Cash balances held at Central Bank and the regions are

consolidated twice a week. Extra-budgetary funds in public

enterprises do not form part of the consolidation process.

(iii) System for contracting

loans and issuance of

guarantees.

B The budget estimates sets the limits for borrowings as required

by GBMAA Act, 2004 36 (1).

Loans and issuance of guarantees are under the control of

DOSFEA guided by the limits set in the budget estimates

(Section 155 of the Constitution of The Gambia).

PI-18. Effectiveness of payroll controls

95. The payroll consists of three man categories: (a) civil servants; (b) uniformed officers

(Departments of State); and (c) sub-vented agencies. A Civil Service Reform Study carried out by the

World Bank and AfDB showed that the sectoral spread of the payroll is on the following order: general

administration, 9 percent; uniform services, 31 percent; economic services, 6 percent; and social services,

54 percent. Salaries, wages, and other personnel expenditure account for 27.55 percent of recurrent and

development expenditure for 2008 and 4.55 percent and 5.38 percent of GDP for 2007 and 2008,

respectively. It is therefore important to have effective payroll controls in place.

96. Pay and benefits are spread across 12 grades for specified positions. There is a fixed grade for

employees on special arrangements. There are instances in the payroll where the positions for some

employees are not stated; these “unknown” positions account for about 10 percent of the payroll. This

means that the correct grade cannot be ascertained. A decision went into effect March 2008 to suspend the

pay of all employees without approved positions in the system. About 50 percent of the staff photographs

have been captured in the system and follow-up is being made with Departments of State to capture the

rest. This will make identification of employees in the system easier.


97. Each employee is assigned a unique Personal Identification Number, but these are not consistent

in the system since the numbers used in the legacy system were transferred to the Human Integrated

Technology System. With the establishment of the Gambia Revenue Authority, all employees are being

assigned Taxpayer Identification Number (TIN). Seventy-five percent of the taxpayer identification

numbers have been captured on the system and follow-up of missing numbers is being undertaken. The

DOSFEA decided to implement a “No TIN No Pay” strategy at the end of March 2008. There are plans to

later use the Taxpayer Identification Number as the key identifier in the system for all employees.

98. As part of the implementation of IFMIS, the Government has installed the Human Integrated

Technology System. The modules purchased include the following.

Payroll

Payroll history

Change of status

Leave administration

Misconduct

MS Office Integration

General ledger integration

Benefits management

Email alerting

99. Once the IFMIS is stabilized, it will be useful to extend the Human Integrated Technology

System to the Personnel Management Office to take advantage of functionalities in the following modules

to improve on human resources management:

Attendance sheet

Time keeping management

Medical management

Training administration

Career path and succession planning

Appraisal management

Recruitment management

100. Changes to the system are controlled by use of various input forms with provision for

authorization by the submitting department and the Directorate of National Treasury as follows:

Employee standing data form for new employees

Permanent earnings/deductions

Period earnings

Cost center changes

Employee left service

Bank account details for salary transfer

Employee pay point changes


101. After entry clerks input changes in the system, a proof list is printed for checking by a supervisor

to confirm that the changes in the system reflect what is authorized in the change forms. The supervisor

and the principal accountant are the designated officials with access privilege to ‘update payroll with

profile data’. The payroll calculation is then run by the supervisor who prints a series of control reports to

further check for consistency and accuracy.

102. The signature list used by employees to sign for their net pay only shows employee ID number,

position/job, and the net pay with provision for the employee’s signature. Other pay details such as

allowances, tax, and other deductions are not shown in the signature list. It is important for the signature

list to show these details so that the employee can check before signing for his/her pay. Pay-slips can be

generated from the system, but this is not regularly done. The pay-slip also does not show cumulative

figures.

103. During budget preparation, human resource planning is done to establish the number employees

for each position in the various departments. The details of establishment are listed in the budget estimate

by showing the number of approved positions for the various units in the departments. However, the

numbers can be exceeded since the payroll system does not restrict entry above the budgeted numbers.

Exception reports can be produced from the system for further enquiry.

104. Amendments to the payroll are often delayed by two to three months mainly due to delays by the

departments in completing and submitting the amendment forms to the Payroll Unit in the Directorate of

National Treasury. The Payroll Unit should receive all amendment forms by the fifth day of every month.

Amendment forms received late are processed the following month with retroactive adjustments. Late

forms for deletions are however acted upon. The payroll is run by the twentieth day of every month to

ensure that employees are paid on or before the end of the month.

105. Payroll audit is conducted annually. The Personnel Management Office conducted payroll audit

in 2007 only for Gambia Public Transport Corporation, Gambia Ports Authority, and two local councils.

The report is being finalized but the main findings included employees paid at wrong grades and cost

centers and cases of employees that have retired or left the service but their names remain on the payroll.

Before the implementation of the Human Integrated Technology System, the Personnel Management

Office received payroll printouts from the Directorate of National Treasury for analytic review and

assessment of vacant posts; these reports are now infrequent.

106. The authorities are taken steps to capture the human resource details of all employees in the

system. This will ensure that changes in personnel details are immediately reflected in the payroll. The

authority to change personnel details will be retained by Personnel Management Office.


PI-18. Effectiveness of payroll

controls

C+

(i) Degree of integration and

reconciliation between

personnel records and payroll

data.

C The Human Resource Information System maintained by

Personnel Management Office is incomplete. However, the

Directorate of National Treasury periodically submits the

complete payroll master files to Personnel Management Office

for review. Steps are being taken to capture human resource

details in IFMIS so that all personnel and pay records will be on

a common database



(ii) Timeliness of changes to

personnel records and the

payroll

B Up to 2-3-months delay occurs in effecting changes to

personnel records and the payroll for a minority of employees

due to late submission of amendment forms. When received

retroactive adjustments are made for the affected employees but

this is not widespread.

(iii) Internal controls of changes

to personnel records and the

payroll.

C There is segregation of duties in the payroll unit. Clerks input

changes based on authorized forms from the Departments of

State and Supervisor in the payroll unit checks before the profile

data is updated. All changes in the system create detailed audit

trails. Payroll procedures are clearly articulated in the payroll

manual.

Personnel details are not yet fully captured in the system and

put under the control of the Personnel Management Office.

(iv) Existence of payroll audits

to identify control weaknesses

and/or ghost workers.

C Within the past 3 years only partial payroll audits were

undertaken by conducting unannounced head counts by some

Departments of State.

PI-19. Competition, value for money and controls in procurement17

Indicator Score Brief explanation

PI-19. Competition, value for

money and controls in

procurement

(i) Use of open competition for

award of contracts that exceed the

nationally established monetary

threshold for small purchases

(ii) Justification for use of less

competitive procurement methods

(iii) Existence and operation of a

procurement complaints

mechanism

PI-20. Effectiveness of internal controls for non-salary expenditure

107. It is the responsibility of DOSFEA to establish effective internal controls to ensure that only

genuine payments are made in line with the approved budget and existing rules and regulations. It is also

important to ensure that payment obligations remain within the limits of projected cash availability,

thereby avoiding creation of expenditure arrears.

17

The Country Procurement Issues Paper (CPIP) prepared in 2005. The government was in the process of

initializing the implementation of an action plan based on CPIP findings. It was therefore considered premature to

assess procurement indicator dimensions while the government was busy implementing CPIP recommendations.


108. There are two main types of voucher processing for non-salary expenditure: the IFMIS pilot sites

and the non-online sites. Processing for non-online sites is as follows:

Department of State prepares a request for purchase on a prescribed form that matches the IFMIS

input screen. The request form is completed by cost centre and authorized by the Vote Controller.

The request form is used to obtain quotations from potential vendors. The Department of State

evaluates the quotations according to the existing procurement regulations and guidelines. After

the award is made to the selected vendor, a request for purchase order is sent to the Directorate of

National Treasury after authorization by the budget holder, head of accounts, and Vote

Controller.

The requests are received in the receiving unit of the Directorate of National Treasury where the

signatures of the Vote Controller permitted to authorize payment vouchers and other accounting

documents are checked, as per section 2.7.4.3 of the Accounting Procedures Manual dealing with

‘Authorizing Staff’. The Data Center in the Directorate of National Treasury enters the purchase

order request in the IFMIS. The entry checks not only for approved budget availability but for

sufficient cash budget. Cash availability is calculated as cash allocation less expenses to date and

less outstanding commitments and obligations. If cash budget is not available, the request will be

rejected. The supervisor in the Data Center checks the entry in the system and, if correct,

approves the request and a system numbered purchase order is printed and sent to the Department

of State for signature of the authorizing Vote Controller. The purchase order creates a

commitment in the systems that will ring-fence funds for that particular purchase.

The vendor then delivers supplies based on the purchase order. On receipt of the goods, the

Department of State prepares a goods received note based on the vendor’s delivery note. A

payment voucher that matches the payment voucher screen of the IFMIS is then prepared and

authorized by the designated officials and forwarded to the Directorate of National Treasury for

payment.

The Data Center captures details on the purchase voucher that will be checked by the supervisor

before printing a system-generated voucher to be attached to the documents received from the

Department of State.

The set of documents are passed on to the Accounting Unit where a supervisor also independently

checks the accuracy of vouchers for correct coding and adequacy of supporting documents; if all

is found satisfactory, the supervisor approves check printing.

There are 4 authorized signatories to the Treasury Main Account — the Director the Directorate

of National Treasury and 3 principal accountant — and any 2 can sign. There is no delineation in

amounts; this means that any 2 of the principal accountants can sign a check of any amount

without the knowledge of the Director the Directorate of National Treasury. This is possible

because at the moment there is no compensating control of ensuring that a list of all payments is

sent to the Director at the end of the day.

109. Vendors are aware of the new system and warned not to accept any purchase order that is not

generated from the IFMIS. The commitment system has improved confidence in the government payment

system, which in the past could only receive supplies upon effecting the payment usually by check.

110. For pilot sites, since they are connected directly to the central database by wireless radio links,

requests are made directly and the process does not proceed if funds are not available. All approvals takes

place in the system at the pilot site that then sends a listing of all approved payments to the Directorate of

National Treasury for check printing since a centralized payment system is in place. The signed checks

are then dispatched to the Department of State for collection by the vendor. Transactions for sites not yet

connected are processed centrally at the data centre in the Directorate of National Treasury.


111. The process could be made more efficient by using the Taxpayer Identification Numbers as

vendor codes for suppliers and bank account details to make payments directly into the vendors’ bank

accounts with remittance advice sent to the Department of State for collection by the vendor. The IFMIS

system has functionality for electronic file transfer that will be implemented after vendors are made

familiar with the process.

112. The Accounting Procedures Manual provides detailed business process descriptions for the

various transactions and also month/year end procedures. It also lists the required data capture forms and

explains the purposes. The types of reports (notification, listings and flash reports) to be produced by

Vote Controllers are clearly spelled out. Familiarization and training workshops are held regularly, and

key control procedures are displayed conspicuously in the National Treasury.

113. While the internal controls in the business process are widely understood, awareness of the

provisions in the GBMAA Act, 2004, and the Financial Instructions is limited mainly to staff in the

Directorate of National Treasury. However, the Directorate rejects few vouchers. Efforts are needed to

disseminate and train public officers on the provisions of the Act and Financial Instructions. The training

should be used as an opportunity to highlight issues that need amending based on initial experience in the

implementation of IFMIS.

PI-21. Effectiveness of internal audit

114. The Institute of Internal Auditors defines internal auditing as an independent, objective assurance

and consulting activity designed to add value and improve an organization’s operations. It helps an

organization to accomplish its objective by bringing a systematic, disciplined approach to evaluate and



internal controls for non-

salary expenditure

C+

(i) Effectiveness of expenditure

commitment controls. B IFMIS ensures that payment cannot be made without adequate

‘cash’ budget.

The expenditure controls in place effectively limit commitments

to actual cash availability and approved budget allocations

except for external debt payment, which in any case is managed

by the Central Bank of The Gambia.

Outstanding commitments at the year-end are carried over and

provided for in the next budget for payment. Payment terms are

not yet fully developed to ascertain actual expenditure arrears.

IFMIS is not yet fully rolled-out, but transactions for sites not

yet connected are processed centrally in the Directorate of

National Treasury.

(ii) Comprehensiveness,

relevance and understanding of

other internal control rules/

procedures.

C The Accounting Procedures Manual provides detailed business

process descriptions for the various transactions and other basic

internal controls. Although the controls are widely understood,

there is no functioning internal audit department to provide

assurance that the controls are working as intended.

(iii) Degree of compliance with

rules for processing and

recording transactions.

C Only a limited number of vouchers are rejected for payment

because of noncompliance with procedures. With the absence of

a functioning internal audit department, internal audit reports or

surveys are not available to ascertain compliance, and this poses

serious concerns that significant controls could be breached.


improve the effectiveness of risk management, control, and governance processes. As an independent

function reporting to an organization’s top management, internal audit is able to assess the internal control

systems implemented by the organization and contribute to ongoing effectiveness. Internal audit often

plays a significant monitoring role. In order to preserve its independence of judgment, COSO cautions

that internal audit should not take any direct responsibility in designing, establishing, or maintaining

controls it is supposed to evaluate. It may only advise on potential improvement to be made.

115. Public sector internal audit in The Gambia is not sufficiently elaborated in the GBMAA Act.

2004. Apart from Article 160 (1) of the Constitution, which assigns the pre-audit function to the Auditor

General, only section 4(1d) specifically enjoins the DOSFEA to carry out budget execution and internal

auditing.

116. The Internal Audit Unit has an establishment of 5 staff members (i.e., 1 principal internal auditor,

2 senior auditors, and 2 accounts trainees), all of whom completed high school as the highest level of

education. Apparently none of them is a professionally qualified accountant nor possesses certification of

the Institute of Internal Auditors. The current budget estimate has provision for 22 personnel for the Unit.

There is no audit charter or manuals in place that lay down the Unit’s functional responsibilities. Such a

charter would provide institutional structure for the internal audit function for government departments.

The DOSFEA can use section 4 2(a)(b) to prescribe appropriate standards for internal auditing by

adopting the International Standards for the Professional Practice of Internal Auditing.

117. Prior to the implementation of IFMIS, the Internal Audit Unit was mainly involved in pre-

checking of payment vouchers for budget availability before endorsing the payment. Checking for

availability of funds is an in-built functionality of IFMIS, thus rendering the former role of the Internal

Audit Unit redundant. The Unit now concentrates on inspection of revenue by checking that collections

are banked intact on a regular basis. This falls far short of the updated roles and responsibilities expected

of such a unit.

118. When the Internal Audit Unit is restructured in the short to medium term, it will need to change

its approach and re-focus on modern risk-based auditing by adopting the COSO18

Enterprise Risk

Management framework. The Unit will provide reasonable assurance regarding the achievement of

objectives of government departments in the following categories:

Conformity to the government’s poverty reduction strategy and more specifically the Department

of State strategy,

Effectiveness and efficiency of operations,

Reliability of financial reporting,

Compliance with applicable laws and regulations.

18

Committee of Sponsoring Organizations of the Treadway Commission is a U.S. private-sector initiative, formed

in 1985. Its major objective is to identify the factors that cause fraudulent financial reporting and to make

recommendations to reduce its incidence. COSO has established a common definition of internal controls, standards,

and criteria by which companies and organizations can assess their control systems

http://en.wikipedia.org/wiki/U.S.

http://en.wikipedia.org/wiki/1985




internal audit D

(i) Coverage and quality of the

internal audit function D In the past, the internal audit staff performed pre-audit of all

government payments. Since the implementation of IFMIS in

2007, the work of this Unit is now limited to revenue inspection

with no internal audit focused on systems monitoring. The Unit

is not staffed with professional auditors and internal audit

standards are not in use.

(ii) Frequency and distribution

of reports D Reports are not regularly produced even on the inspection of

revenue. The principal internal auditor is supposed to report to

the Permanent Secretary DOSFEA but instead reports to

Director of the Directorate of National Treasury.

(iii) Extent of management

response to internal audit

findings

D In the absence of internal audit reports there can be no follow-up

on findings.

Accounting, Recording and Reporting

PI-22. Timeliness and regularity of accounts reconciliation

119. For financial information to be reliable, recorded information must be regularly verified through

timely reconciliation to ascertain the authenticity and accuracy of recorded information.

120. The Directorate of National Treasury maintains 4 types of bank accounts in the Gambia Central

Bank:

Consolidated Revenue Fund Bank Account – each Department of State has an account to deposit

revenue collected. The individual Department’s revenue bank account is transferred to the

Treasury Main Account every other day.

Treasury Main Account from which all payments out of the consolidated fund are made.

Special Deposit Account holds special deposits such as court deposits.

Special Project Accounts for donor-funded projects.

121. Bank reconciliation was done by the Accounting Unit in the Directorate of National Treasury,

which has 8 staff supervised by a principal accountant who authorizes checks before printing. The

responsibility of this principal accountant to authorize checks and also be responsible for the supervision

and review of bank reconciliation reports goes against the key internal control principle of segregation of

duties. As part of the new Directorate of National Treasury organizational structure, the reconciliation and

payment processing responsibilities are separated with payments handled by the Treasury Unit of

Directorate of National Treasury.

122. The National Audit Office and Gambia Revenue Authority, as autonomous government agencies,

have separate bank accounts and are responsible for printing and signing their own checks. Cashbooks are

maintained in the IFMIS for these bank accounts, but the agencies are responsible for reconciling their

own bank accounts.

123. The Gambia Central Bank provides details of all transactions going through the government bank

accounts on a daily basis in electronic format to the Directorate of National Treasury. The transactions are


imported into the IFMIS for automated bank reconciliation. The system of automated bank reconciliation

has greatly improved the timeliness and accuracy of bank reconciliation. The EPICOR software had

technical problems that caused the bank reconciliation reports not to balance.

124. The Government of The Gambia has rationalized the structure of its bank accounts, which are

now being reconciled almost on real-time basis. Unresolved differences accumulated over the years (up to

the end of 2006) for the old Treasury Main Account and the various below-the-line accounts (before

rationalization) are being compiled to seek the necessary approval from the Auditor General to write-off

the differences. Investigation and resolution of outstanding items are being actively pursued by a full-time

staff of the Directorate of National Treasury. There are indications that this has been resolved but it is

important going forward to verify that the bank reconciliation functionality is performing as intended to

ensure the quality of reports produced from IFMIS.

125. Travel advances and operational imprests when issued should be accounted for before a

subsequent one can be authorized. The accounting system has been configured so that a request for new

advance or imprest on a budget line that has an outstanding balance cannot be processed.

126. Staff interest-free loans/advances based on a single month’s basic salary are given as an advance

to be repaid, mostly over a period of 6 months. A ledger tracks payment directly through the payroll

system inputs, with reports showing outstanding loans for each employee and in total. An end date is

stipulated that automatically stops repayment when the loan is fully recovered.

127. Significant numbers of transactions are recorded within ‘below the line’ (suspense account)

balances as shown in Table A7. This undermines the completeness of financial reports especially when

they are not cleared in compiling the annual financial statements. In principle, all transactions should be

identified as either revenue, expenditure, or financing to allow a clear picture of the overall fiscal

position.

Table A7. Below-the-Line Balances for FY2004-06

FY2004 FY2005 FY2006

Below-the-line balances 90,979,868.17 176,471,176.21 244,779,170.47

Project and clearance accounts 35,982,013.76 77,907,603.36 51,380,331.60

Deposit accounts -13,572,176.51 8,431,585.45 73,295,564.30

Advance accounts 20,074,334.55 24,567,550.08 27,461,545.71

Personal accounts 18,884,815.28 17,140,745.29 17,560,756.28

Remittance accounts 29,610,881.09 48,423,692.03 75,080,972.58

128. Although significant systemic improvements have been put in place, further work was required to

ensure that the system functionality is fully utilized. Through sustained effort by the authorities, the

IFMIS implementation achieved final acceptance on February 1, 2009, and all outstanding functionalities, deliverables, and incidents had been delivered and resolved. A post Quality Assurance Review of the implementation will assist the Government to document the good practice adopted for this implementation in order to share experiences with other countries.


PI-22. Timeliness and

regularity of accounts

reconciliation

C


PI-23. Availability of information on resources received by service delivery units

129. Although there is a second tier of government, local councils are not yet given the responsibility

for direct service delivery. Central Government Departments maintain presence in the various regions to

undertake service delivery.

130. The location segment of the chart of accounts could, but does not at the moment, capture

expenditure to enable analysis of spending by regions or districts because the budget is not classified by

regions or districts. The sub-sub-entity characters in the accountability and responsibility segment that

could be used to identify service delivery facilities such as schools and public health centers are not yet

operational. Such analysis would be useful in carrying out a Public Expenditure Tracking Survey.

Generally, the Survey looks beyond financial reports by actually tracing expenditure to the point of use as

service delivery centers such as schools and hospitals. In this regard as well as improving location based

financial data through the IFMIS, it is important to establish linkages between Education Management

Information Systems and Health Management Information Systems to cross-check services with financial

transactions.

131. No comprehensive data collection and analysis has been done to track expenditure to actual

delivery of resources to service delivery centers within the past 3 years. Considerable and long-term

efforts would be required to disaggregate the budget and produce financial reports at the service delivery

and geographical location levels.

PI-24. Quality and timeliness of in-year budget reports

132. Timely and accurate financial reports are important for DOSFEA to monitor the overall budget

performance and if necessary to identify new actions to get the budget back on track. Line ministries

equally need to monitor their budgets to ensure that the affairs for which they are accountable are

adequately resourced.

133. Since the implementation of IFMIS centralized database, the DOSFEA now produces in-year

budget reports covering both revenue and expenditure on a monthly basis and on request for the line

Departments. The itemized commitment and expenditure report shows details of (a) the annual approved

budget, (b) allocation to date, (c) expenditure for the month, (d) expenditure to date, (e) outstanding

(i) Regularity of bank

reconciliations C Bank reconciliation is done on a daily basis for Treasury-

managed bank accounts based on electronic data received from

the Central Bank, but the bank reconciliation reports show that

unexplained differences since end 2007 remain unresolved for

over 8 weeks after the year-end.

(ii) Regularity of

reconciliation and clearance

of suspense accounts and

advances

C Reconciliation of suspense accounts takes place frequently, but

not all items are cleared. Significant balances of over GMD 20

million on advances have been brought forward in FY06 (GMD

27.5 million), FY05 (GMD 24.6 million), and FY04 (GMD 20.1

million).


PI-23. Availability of

information on resources

received by service delivery

units

D No comprehensive data collection on resources to service

delivery units in any major sector has been collected and

processed within the last 3 years.


commitments, and (f) available balance. The report provides cost center sub-totals for the Departments.

Actual revenue collected is also compared against the revenue estimates.

134. Departments that are not yet connected online to the IFMIS still maintain Vote Charge Books.

These Departments reconcile the IFMIS-generated reports with the Vote Charge Books and call the

attention to any discrepancies to the attention of the Directorate of National Treasury for correction.


PI-24. Quality and

timeliness of in-year

budget reports

B+

(i) Scope of reports in

terms of coverage and

compatibility with budget

estimates

B In-year budget performance reports cover both revenue and

expenditure. The commitment and expenditure report allows

direct comparison to the original budget according to the chart

of accounts at both commitment and payment stages.

(ii) Timeliness of the issue

of reports A The reports are prepared and issued on a monthly basis and

also available on request.

(iii) Quality of information B There are some concerns on the accuracy of the reports

because of unexplained differences in bank reconciliation

reports, but they do not compromise the usefulness of the

reports.

PI-25. Quality and timeliness of annual financial statements

135. Availability of timely and comprehensive financial statements that are prepared in accordance

with acceptable accounting standards contribute to transparency and accountability in the use of public

funds.

136. The Directorate of National Treasury operates a centralized payment system and is responsible

for the production of consolidated annual accounts. Departments are only responsible to submit accounts

for retained departmental revenues.

137. With the assistance and intervention of key development partners, notably the World Bank and

DfID, in providing expatriate technical support to both the Directorate of the National Treasury and the

National Audit Office, the Government has prepared the Annual Statements of Public Accounts covering

the period 1992 to 2008. The Accounts covering the period 1992 to 1999 have been prepared, audited,

and they have been subjected to FPAC scrutiny and review.

138. Accounts for the periods 2000-2004 have also been prepared and audited. The draft/tentative

Audit Report issued with a disclaimer because most of the weaknesses had not been remedied —such as

noncompliance with financial regulations, and lack of supporting records and documentation due to poor

recordkeeping and accounting in the 1992-1999 accounts —was submitted to the Treasury by the Auditor

General in January 2008 for Treasury’s review and comments. The 2000-2004 audit reports were

submitted to the National Assembly in January 2009.

139. The National Audit Office is still awaiting comments from the Treasury on the 2000 to 2004

report. Subject to receiving feedback from the Treasury and convincing arguments to the contrary, the

Auditor General’s Disclaimer Opinion on these accounts will prevail.


140. The 2005 and 2006 accounts have also been prepared and submitted to the Auditor General in

August and September 2007, respectively. The 2007 accounts were independently prepared by the

Directorate of National Treasury and submitted to the National Audit Office on August 29, 2008 (i.e.,

eight months after the year-end, which is a great achievement). Government has now eliminated the

backlog in the preparation of the accounts.

141. The National Audit Office is auditing the 2005-06 financial statements in parallel with the audit

of the 2007 financial statements. The National Audit Office targeted March 2009 for completion of the

2005-06 audits, but this will depend on how quickly the Government can respond to National Audit

Office’s audit queries on the accounts. If this is successfully cleared, the audit report for the 2007

financial statements should be issued in September 2009.

142. The DfID is also providing technical support for review of the controls and reporting capabilities

of IFMIS to assess how much reliance can be placed on the IFMIS reports.

Table A8. Timeline of Preparation, Audit, and Review of Public Accounts and Financial Statement

Financial year

Date submitted by

Treasury to

Auditor General

Date Audit Report issued by

Auditor General Date FPAC report issued

July 1992-

December 1999

March 2003

September 2005

December 2006

2000-2004

Feb 2007

January 2008 -

Draft report submitted and

awaiting Government comments.

Not issued

2005

Aug 2007

Not yet submitted

Not issued

2006

Sep 2007

Not yet submitted

Not issued

2007

August 2008

Not yet submitted

2008 March 2009

143. The statutory deadlines for the preparation and audit of the 2007 accounts are March 31 and June

30, 2008, respectively. Subsection 41 (3) of the GBMAA Act enjoins DOSFEA, after reconciling its own

accounts with the transactions of the Treasury Main Account, to consolidate and submit to the Auditor

General the annual statement of Government accounts, not later than 3 months after the end of the

financial year.

144. The Government does not have a national accounting reporting standard. The GBMAA Act, 2004

(42) requires information on at least the following to be disclosed:

Details of revenues and expenditures according to the appropriation structure. [NOT MET]

Balance sheet showing the assets and liabilities of the Consolidated Fund, with qualifying

information on the significance of the figures shown. [NOT MET; figures available but no

commentary provided.]


Summary of statement of receipts into and payments from the Consolidated Fund, showing

revenues, other receipts, expenditures, and financing of the Consolidated Fund for the financial

year. [MET]

Summary of outstanding public debt, both external and domestic, at the end of the financial year,

shown in terms of debt instruments and debt holders. [NOT MET]

Statement of amounts guaranteed by the Government at the end of the financial year with respect

to loans and other contingent liabilities. [MET]

Summary of outstanding loans issued by the Government at the end of the financial year. [NOT

MET]

Summary statement of revenue arrears to be collected by each budget agency. [NOT MET]

Summary statement of expenditures re-allocated during the financial year from unallocated

expenditures heading. [MET, list of virements shown]

Summary statement of investments made from the Consolidated Fund. [NOT MET]

Summary statement of unpaid commitments outstanding for the supply of goods and services for

each vote at the end of the financial year. [NOT MET, but improvement since 2007]

Summary statement of stores and other assets at the end of the financial year. [NOT MET]

145. The annual financial statements for FY2005 and 2006 basically show balance sheet for financial

assets and a table of revenue and financing statements supported by detailed schedules for departmental

expense items for the approved and revised budget, expenses, and variances. With the introduction of

IFMIS, significant improvements in the format of budget performance reports and annual financial

statements were made and designed in the system. The 2007 annual financial statements follow IPSAS

24, Presentation of Budget Information in Financial Statements. The accuracy and timeliness of the

annual financial statements has also improved as a result of adopting a practice of preparing daily bank

reconciliations.



PI-25. Quality and timeliness

of annual financial statements D+

(i) Completeness of the

financial statements C Accounts were not prepared annually. Bank account

balances are not complete as there are substantial

transactions recorded below the line with suspense

accounts not cleared at year-end.

Auditor General issued a disclaimer because of such

factors as noncompliance with financial regulations,

lack of supporting records and documentation, and poor

recordkeeping and accounting.

(ii) Timeliness of submission of

the financial statements B There is noncompliance with statutory reporting dates.

Annual statements are generally not submitted for

external audit within 15 months of the end of the fiscal

year.

1991-1999 accounts were submitted in Mar 2003.

2000-2004 accounts were submitted in Feb 2007.

2005 accounts were submitted Aug 2007.

2006 accounts were submitted Sep 2007.

2007 accounts were submitted Aug 2008.

2008 accounts were submitted Mar 2009.*

* a marked improvement in timeliness.

(iii) Accounting standards used

D GBMAA Act recommends use of international

standards. Financial statements up to 2006 are not

prepared according to IAS, and the format is not

consistent over time. The 2007 financial statements

represented progress toward compliance with IPSAS.

External Scrutiny and Audit

PI-26. Scope, nature and follow-up of external audit

146. To promote transparency and accountability, high-quality audit reports, which include financial

audits and some aspects of performance audit covering all public funds, should be made available to the

public in a timely manner. It is important for the external auditor to be independent so that audit reports

will be free from bias.

147. In addition to exercising such other functions as may be conferred by an act of the National

Assembly, Article 160 (1) of the Constitution outlines the functions of the Auditor General to include

both pre- and post-compliance audit; and specifies the requirements to audit and report on the public

accounts of The Gambia at least once in every year, and the Authorities, the Courts, the National

Assembly, and all public enterprises within 6 months of the end of the immediately preceding financial

year to which each of the accounts relates. With limited capacity in the National Audit Office, audit of

most public enterprises are out-sourced to private audit firms.

148. After the Auditor General’s annual report on the accounts has been discussed in the National

Assembly, the Auditor General is required to cause the same to be published for public information.

Where there is any undue delay in the discussion of any such accounts or reports in the National


Assembly, Article 160 (e) permits the Auditor General to publish his or her report in advance of such

discussion.

149. Some progress is being made on clearing the backlog of Auditor General’s reports not yet

submitted to the FPAC of the National Assembly. The Report of the Auditor General on the audited

accounts of The Government of the Gambia for the period July 1992 to December 1999 was submitted to

the National Assembly in September 2005. A clear emphasis was given by the FPAC on the need for a

number of systemic issues to be addressed.

150. The audit report raises two issues: (a) Technical accounting queries in the management letter are

not always fully acted upon by the Directorate of National Treasury in a timely manner; and (b) other

issues raised concern the repetition of unresolved problems. These issues, such as the recovery of

amounts 19

owed to the Government by public officers, are referred to the FPAC, which then forwards to

the Executive branch for a public response to any pertinent queries. Recommendations are then made to

the Executive for action. Non-completion of audited accounts over the past 10 years means that

accountability for such issues has not been established. As a consequence, many of the same issues are

repeated each year in the audit reports.20

151. Audit of the accounts for 2000-2004 are nearing completion by the National Audit Office. The

National Audit Office has issued its draft/tentative report to the Executive (DOSFEA). The National

Audit Office is awaiting comments from the Executive for finalization and transmission to the National

Assembly. Meanwhile, the National Audit Office noted that the shortcomings in the previous reports are

still recurring. The National Audit Office emphasized that it is critical for the Directorate of National

Treasury to improve on the accounts for 2005 and 2006. This would help to obtain accurate figures for

IFMIS. The IFMIS has helped to improve timeliness of bank reconciliation at the Treasury and placed the

Treasury in a better position to complete the annual statement of public accounts in a timely manner as

required by law.

19

Travel Allowances and Imprest issued to public officers for official purposes that remain outstanding is an

example. 20

Issues on treasury accounts by the Auditor General noted in the 2003 CFAA include limited internal controls and internal

audit, non compliance with financial legislation, regulations and instructions, non-responsiveness of Government agencies to

audit queries, theft of funds, failure to collect revenue, missing revenue, lack of supporting documentation, failure to obtain

competitive tenders, poor record keeping and accounting, failure to recover salary and imprest advances, failure to maintain

inventories and inventory records, and lack of capacity or inadequate capacity.


PI-27. Legislative scrutiny of the annual budget law

152. No money can be withdrawn from the Consolidated Fund except if authorized by an Act passed

by the National Assembly.

153. The budget documents submitted to the National Assembly do not contain detailed explanation of

the fiscal policies and the medium-term fiscal framework, except for summary statements in the Budget

Speech. For this reason, scrutiny of the budget mainly covers the revenue and expenditure estimates for

Government programs.

154. The procedure for scrutiny of the budget by the National Assembly begins with it being presented

to the Secretary for DOSFEA then passed to the FPAC. In order for FPAC to perform its function

effectively, section 28 of the GBMAA Act, 2004, empowers the National Assembly to appoint technical

staff to assist in gathering information, and conduct research and analysis of issues pertinent to its

deliberations and resolutions on the budget. The National Assembly is constrained due to lack of skilled

staff to provide the FPAC with technical support, and therefore uses simple traditional procedures to

scrutinize the budget estimates by calling Vote Controllers to defend their respective budgets.

155. According to section 152 (1A) of the Constitution of The Gambia, the National Assembly is

required, within 14 days of the estimates being laid before it, to give consideration to and approve the

estimates. The estimates should be laid at least one month before the end of the preceding financial year.

Once laid, the National Assembly is required within 7 days of the introduction of the Appropriation Bill

to give consideration to and pass the Bill according to section 152 (3A) of the Constitution of The

Gambia.

156. To meet these tight deadlines, Instruction number 75 of the Financial Instructions to implement

the GBMAA Act, 2004, requires the Secretary for DOSFEA to ensure that the budget estimates are

submitted to the President not later than 60 days before the end of the current financial year, including a

consolidation of such estimates to be submitted directly to the President by the Chief Justice or any other

authority, provided under the Constitution.

157. In effect if the Executive lays the budget estimates according to the maximum time allowed

(November 30), the National Assembly has only 3 weeks to pass the budget as opposed to a minimum of


PI-26 Scope, nature and

follow-up of external audit D+

(i) Scope/nature of audit

performed

C Central government financial transactions are centralized. The financial

statements produced by the Directorate of National Treasury covers all

the Department of State and the audit by the Accountant General is

predominantly transaction level testing mainly concerning adherence to

the approved budget and compliance with the PFM Laws and

regulations,

Significant issues are identified and reported in the management letter.

Audit standards used are disclosed to a limited extent.

(ii) Timeliness of submission of

audit reports to Legislature

D 1992 to 1999 accounts submitted by Treasury in March 2003. Audit

report issued in September 2005.

2000-2004 accounts submitted in Feb 2007. Draft report submitted to

Treasury for review and comments in January 2008. Still working on

2005 and 2006 reports.

(iii) Evidence of follow-up on

audit recommendations D FPAC has reviewed 1992-1999 audit report and issued follow-up

recommendations in December 2006. The recommendations have not

been implemented.


2 months to allow proper scrutiny. The National Assembly has over the past 3 years taken up to 3-4

weeks to pass the budget (refer to PI-11).

158. The GBMAA Act, 2004, allows for supplementary budgets to be submitted to the National

Assembly, where there are changes in economic circumstances warranting such an action. The revised

and supplementary budgets are to be presented and documented in the same manner and format as the

original budget. The expenditure statements in the annual accounts show details of the approved budget,

the revised budget, the actual expenditure for the reporting year, and the variance. This disclosure

provides an opportunity for the National Assembly to ascertain whether the budget has been implemented

as passed.

159. As evidenced in PI-1 and PI-2, there are extensive instances of virement. In this respect, virement

schedules are attached to the financial statements. (Box A2).

Box A2. Virement Allowance in The BMAA Act, 2004

Subsection (4). Virements are allowed:

(a) among expenditure items of a budget agency up to a maximum of 75 percent of the appropriation of giving or

receiving expenditure items, at the request of the budget agency and the approval of the Secretary of State; and

(b) among budget agencies under the same supervising department, at the request of the supervising department and

the approval of the Secretary of State, provided that the amount being vired does not exceed 50 percent of the total

appropriations and the giving or receiving expenditure items of each budget agency.

Subsection 5. Where the amount to be vired exceeds the limits set under subsection (4), the approval of the Secretary

of State is required.

Subsection 6. No virement is permitted between personal emoluments and other charges.



PI-27 Legislative scrutiny of

the annual budget law C+

(i) Scope of the Legislature’s

scrutiny

C Fiscal policies and medium-term fiscal framework are not

detailed in the budget (see PI-6). Therefore, legislative scrutiny

mainly involves review of revenue and expenditure estimates.

The National Assembly is not involved early in the preparation

process and receives the budget after it has been finalized

between DOSFEA and the Departments.

(ii) Extent to which the

Legislature’s procedures are

well established and respected

B On presentation of the budget to the National Assembly, the

FPAC reviews the budget by calling Vote Controllers to

defend their estimates by using simple procedures without

technical/professional support.

(iii) Adequacy of time for the

Legislature to provide a

response to budget proposals

both the detailed estimates and,

where applicable, for proposals

on macro-fiscal aggregates

earlier in the budget preparation

cycle (time allowed in practice

for all stages combined)

C The budget is required by law to be submitted at least a month

before the year-end and in practice has been submitted over the

past 3 years 6 weeks before the year-end and passed 2 weeks

before the start of the financial year to which it relates (see PI-

11).

Proposals on macro-fiscal aggregates are not debated by the

Legislature early in the budget preparation cycle.

(iv) Rules for in-year

amendments to the budget

without ex ante approval by the

Legislature

B The GBMAA Act, 2004, stipulates the circumstances in which

a revised and supplementary budget can be submitted.

Virement is also allowed within specified limits and categories.

The Financial Instruction elaborates on the processes and

approvals required for amendments and virements.

Administrative reallocations take place across most budget

lines but are reported in the virement memorandum.

PI-28. Legislative scrutiny of external audit reports

160. The Legislature has a key oversight role over the Executive in executing the approved budget.

This role is performed through scrutiny of external audit reports and questioning of accounting officers.

161. Section 160 of the Constitution provides that within 6 months of the end of the immediately

preceding financial year, the Auditor General shall report on the annual statement of public accounts to

the National Assembly and draw attention to any irregularities in the accounts audited and to any other

matter which, in his or her opinion, ought to be brought to the notice of the National Assembly. The

FPAC may extend the time for submission of any audit report to the National Assembly.

162. The Auditor General’s report is first discussed in open sessions by the FPAC that then submits a

report to the National Assembly. It is only at this point that the Audit Report is generally made public.

The Auditor General submitted reports from 1992-1999 in September 2005 to begin tackling the backlog

of overdue audit reports. The FPAC commenced deliberations on these reports in October and November

2005. The FPAC reconvened in December 2006 to complete its deliberations and proceedings and write

its report for ratification and adoption by the National Assembly in December 2006. With the assistance

of some senior members of the Gambia Association of Accountants and others, the FPAC made

extremely useful, insightful, and professional observations and recommendations. The Auditor General’s


Reports raised 58 issues and queries. After its thorough review, the FPAC regrouped the issues into the

following thematic areas for policy guidance and necessary action.

Implications of the Auditor General’s Disclaimer.

Nonconformity/noncompliance of the Accountant General and Director of National Treasury with

the statutory reporting format and disclosure requirements.

Backlog of accounts resulting in loss/misplacement of accounting records, payments vouchers,

other source documents, and institutional memory.

Imbalance of over GMD 800 million accumulating from 1992 to 1999.

Determining a cut-off point and restating the beginning/opening balances to continue preparation

of accounts from that point forward.

Perennial, rampant, and widespread shortage of Revenue Collection Books (official receipts) at

the Directorate of National Treasury, sub-treasuries, and other revenue-collection departments

and centers.

Implications for IFMIS and the ‘National Emergency Fiscal Committee.’

Functions and Placement of Public Sector Internal Auditing.

Non-settlement of Bills by Government to quasi-government service providers.

163. The FPAC and the Public Enterprises Committee held joint committee sessions to review the

accounts of 49 government agencies in open public sessions for the first time in the Republic of The

Gambia. Past presidents of the Gambia Association of Accountants provided technical assistance to the

National Assembly to enable them to review the 49 agencies. The FPAC expressed desire to work more

closely with the media and relevant civil societies.

164. With the huge backlog of public accounts that have only recently being brought up to date, it is

difficult to assess the extent to which audit recommendations are implemented


PI-28 Legislative scrutiny of

external audit reports D+

(i) Timeliness of examination of

audit reports by the Legislature (for

reports received within the last 3

years)

D There was a huge backlog of accounts that have only recently

been brought up to date. The latest FPAC report was issued in

2006 for annual accounts for 1991-1999.

(ii) Extent of hearings on key

findings undertaken by the

Legislature

C Open public sessions were held for the first time in the Republic

of The Gambia. For its review of the 1991-1999 audit reports,

35 witnesses from a cross-section of the population were

invited.

(iii) Issuance of recommended

actions by the Legislature and

implementation by the Executive

C Recommendations were issued in the review of the 49 public

agency accounts. These accounts are so old that the relevance

and accountability from the concerned individuals are

questionable.

There has been no white paper on the FPAC recommendations.

Also, the recommendations have not been implemented.


ANNEX B. Fiduciary Risk Analysis

1. A fiduciary risk assessment aims to provide guidance on whether it is reasonable to

expect that the resources allocated will be used for the intended purpose and that the expenditure

will represent value for money. The CFAA and PEFA assessments provide data that can be

applied to making broad fiduciary risk assessments that help meet several demands. First, there is

a demand from the public for government transparency and accountability. Second, particularly

following the 2005 Paris Declaration on Aid Effectiveness, development partners are

increasingly aiming to work through government PFM systems. Third, the need for PFM reform

is increasingly seen as a key development need in its own right. A fiduciary risk assessment

helps identify priority areas for reform in country systems to meet these various demands.

2. This fiduciary risk summary considers 9 good practice principles and 18 benchmarks as a

basis for assessing relative fiduciary risk in The Gambia PFM system. These principles and

benchmarks are identical to those used in the 2003 CFAA.

Fiduciary Risk Summary

Good practice principles and

benchmarks (in CFAA 2003) Status as at December 2008

1. A clear set of rules governs the

budget process

1.1. A budget law specifying fiscal

management responsibilities is in

operation

1.2. Accounting policies and account

code classification are published

and applied

Weaknesses noted in the 2003 CFAA have been addressed, but

impact in terms of clearly linking expenditure to policy so far has

been limited. The GBMAA Act is in place and its requirements in

terms of budget preparation are being followed. A comprehensive

and robust classification is in place, broadly compliant with IMF

GFS standards and embodying a program classification. This

classification has improved fiscal reporting at the aggregate level

and has helped initiate an MTEF. However weakness in budget

formulation will persist unless capacity in program budgeting is

developed and this jeopardizes full establishment of MTEF.

2. The budget is comprehensive

2.1. All general government activities

are included in the budget

2.2. Extra-budgetary expenditure is

not material

Some steps have been taken to address problems of below-the-line

accounts, but little has been done to resolve problems of extra

budgetary funds and special accounts for donor funds, particularly

with regard to reporting. Local government spending is not included

in general government reports.

3. The budget is aligned with national

development strategy (supports pro-

poor strategy)

3.1. Budget allocations are broadly

aligned with any medium term

expenditure plans for the sector

or for the overall budget

The new chart of accounts facilitates linkage of expenditure to

objectives, outputs, and outcomes. Preliminary work is underway to

introduce MTEF and link expenditures to PRSP priorities, but

progress so far has been limited.

4. The budget is a reliable guide to

actual expenditure

4.1. Budget out-turn shows a high

level of consistency with the

budget

Regular overspending against original estimates indicates that

budget estimates are still unrealistic. Potential indebtedness of public

enterprises also poses a quasi-fiscal threat, which is not properly

taken into account at either the budget formulation or reporting

stage.

5. Expenditure within the year is

controlled

The introduction of the IFMIS has significantly improved the

possibility of applying effective controls and the timeliness of


Good practice principles and

benchmarks (in CFAA 2003) Status as at December 2008

5.1. In-year reporting of actual

expenditure is timely and reliable

5.2. Internal controls operate to

prevent fraud and error

5.3. Systems operating to control

virement, commitment, and

arrears

reporting in comparison to the situation in 2003. Computerization

also has the capacity to provide more reliable audit trails and opens

the system to application of computer-aided audit techniques.

Weakness in internal audit, as well as lack of capacity in external

audit, and lack of follow-up by the National Assembly will put these

gains at risk over the long term.

6. Government carries out

procurement in line with principles

of value for money and

transparency

6.1. Appropriate use of competitive

tendering rules

6.2. Decision making is recorded and

auditable

6.3. Effective action taken to identify

and eliminate corruption

The Country Procurement Issues Paper (CPIP) prepared in 2005

assessed the public procurement system and recommended that

Gambia Public Procurement Authority should not carry out both the

regulatory and operational control functions, procedures and

documentation should be further streamlined and simplified, and the

threshold for prior review should be reviewed and raised if

necessary. The Government revisited these recommendations and

now plans on preparing and implementing an action plan based on

the CPIP findings.

7. Reporting of expenditure is timely

and accurate

7.1. Reconciliation of fiscal and bank

records is carried out routinely

7.2. Audited accounts are submitted to

parliament within the statutory

period

The IFMIS has permitted a significant improvement in bank

reconciliation compared with the situation reported in 2003. It

should also allow more timely submission of accounts to the Auditor

General. Further action is required on clearance of below-the-line

accounts. Audited accounts continue to experience delays in

submission to parliament, but much of the previous backlog has now

been submitted to the FPAC.

8. There is effective independent

scrutiny of government expenditure

8.1. Government accounts are

independently audited

8.2. Government agencies are held to

account for mismanagement and

criticisms and recommendations

by the auditors are followed up.

The Auditor General’s Office lacks capacity, and its independence

and authority continue to need strengthening. Action has yet to be

taken on establishing an Audit Act. Despite reduction in the backlog

of audited accounts considered by the FPAC, little action on follow-

up to audit recommendations is evident.

9. The budget process is transparent

9.1. Information on fiscal activities is

available in the public domain

9.2. Information presented in a way

that facilitates policy analysis

and promotes accountability

The GFS-compliant chart of accounts and IFMIS has permitted

better and more comprehensive presentation of aggregate fiscal data

with the budget and financial statements. These improvements have

yet to be put fully into practice, and a great deal more needs to be

done to provide adequate budget information to parliament and the

public


ANNEX C. Calculation of Deviations by Budget Heads 2005-2007

Note: Data based on budget estimates from DOSFEA and Annual Financial Statements from Directorate of National Treasury.

Methodology uses PEFA analytical framework for performance indicators PI-1 and PI-2 (see www.pefa.org).

Deviations for 2007

Functional head Budget Actual Difference Absolute Percent

15 Miscellaneous 522,956 561,588 38,632 38,632 7.4%

20 DOS Education 288,943 285,976 -2,967 2,967 1.0%

12 DOS Finance & Economic Affairs 285,799 351,440 65,641 65,641 23.0%

21 DOS Health & Social Welfare 236,180 227,923 -8,257 8,257 3.5%

10 DOS Foreign Affairs 144,446 178,703 34,257 34,257 23.7%

08 DOS Interior & Religious Affairs 142,218 167,114 24,896 24,896 17.5%

01 Office Of The President 137,557 169,571 32,014 32,014 23.3%

07 DOS Defense 113,102 130,637 17,535 17,535 15.5%

18 DOS Works, Construction & Infrastructure 109,996 105,275 -4,721 4,721 4.3%

17 DOS Agriculture 86,193 99,886 13,693 13,693 15.9%

13 Pensions And Gratuities 72,979 59,975 -13,004 13,004 17.8%

27 DOS Tertiary & Higher Education 47,062 39,014 -8,048 8,048 17.1%

16 DOS Local Government & Lands 36,053 29,138 -6,915 6,915 19.2%

03 Judiciary 24,802 23,665 -1,137 1,137 4.6%

19 DOS Trade, Industry & Employment 22,975 24,345 1,370 1,370 6.0%

25 DOS Fisheries 22,483 34,015 11,532 11,532 51.3%

02 National Assembly 19,156 17,474 -1,682 1,682 8.8%

22 DOS Youth & Sports 16,790 19,013 2,223 2,223 13.2%

11 DOS Justice 13,361 7,721 -5,640 5,640 42.2%

23 DOS Water Resources, Forestry & Environment 10,284 9,365 -919 919 8.9%

Sum of other Departments of State 29,166 24,047 -5,119 5,119 17.6%

Total expenditure 2,382,501 2,565,885 183,384 183,384 7.7%

Composition variance 2,382,501 2,565,885 300,202 12.6%

http://www.pefa.org


Deviations for 2006


15 Miscellaneous 452,840 393,596 -59,244 59,244 13.1%

20 DOS Education 284,196 301,221 17,025 17,025 6.0%



08 DOS Interior & Religious Affairs 118,523 141,995 23,472 23,472 19.8%

12 DOS Finance & Economic Affairs 117,787 188,131 70,344 70,344 59.7%


17 DOS Agriculture 89,088 66,217 -22,871 22,871 25.7%

07 DOS Defense 78,171 93,140 14,969 14,969 19.1%


13 Pensions And Gratuities 47,385 47,221 -164 164 0.3%

19 DOS Trade, Industry & Employment 24,603 18,837 -5,766 5,766 23.4%


25 DOS Fisheries 17,240 14,418 -2,822 2,822 16.4%

03 Judiciary 15,513 13,482 -2,031 2,031 13.1%


22 DOS Youth & Sports 12,381 10,588 -1,793 1,793 14.5%

11 DOS Justice 9,901 6,850 -3,051 3,051 30.8% 24 DOS Communications, Information & Technology 9,342 9,077 -265 265 2.8%

09 DOS Tourism & Culture 9,151 8,478 -673 673 7.4%

sum of other Departments of State 19,045 34,980 15,935 15,935 83.7%

Total expenditure deviation 1,855,436 1,939,677 84,242 84,242 4.5%



Deviations for 2006


20 DOS Education 279,726 271,120 -8,605 8,605 3.1%

12 DOS Finance & Economic Affairs 234,760 171,295 -63,466 63,466 27.0%


08 DOS Interior & Religious Affairs 129,736 121,146 -8,590 8,590 6.6%


15 Miscellaneous 98,252 21,186 -77,066 77,066 78.4%



07 DOS Defense 84,054 86,029 1,975 1,975 2.3%

17 DOS Agriculture 82,682 57,910 -24,772 24,772 30.0%

13 Pensions And Gratuities 47,385 45,418 -1,967 1,967 4.2%

19 DOS Trade, Industry & Employment 25,517 21,998 -3,520 3,520 13.8%


22 DOS Youth & Sports 20,469 18,432 -2,037 2,037 10.0%

03 Judiciary 19,847 16,099 -3,748 3,748 18.9%

23 DOS Water Resources, Forestry & Environment 19,533 11,849 -7,684 7,684 39.3%


09 DOS Tourism & Culture 14,179 9,099 -5,080 5,080 35.8% 24 DOS Communications, Information & Technology 14,128 10,187 -3,941 3,941 27.9%

11 DOS Justice 11,855 7,879 -3,976 3,976 33.5%

Sum of other Departments of State 17,929 16,508 -1,421 1,421 7.9%

Total expenditure deviation 1,688,950 1,375,098 (313,852) 313,852 18.6%



ANNEX D. Terms of Reference for PFM Reform Oversight Steering Committee

and Sub-Committee

Government of The Gambia

Background

The successful implementation of the PFM reform agenda is critical for the Government to

achieve the objects of Pillar I of the PRSP with all aspects relating to economic management,

including macroeconomic stability, public finance management, public debt management,

divestiture, and civil service reforms.

The CFAA 2003 made several recommendations. Since its completion, most of the

recommendations are yet to be fully implemented. The PFM Reform Oversight Steering

Committee is needed to provide oversight for the implementation of the PFM action plan. A

coordinating office that will be staffed with officials whose duties are dedicated toward the

implementation of the reforms is necessary to ensure sustainable since change is continuous in

such a dynamic environment.

A Steering Committee will provide a forum for better coordination between development

partners and the Government. The comprehensive reform action plan also forms the basis for all

development partners to converge in support of the Government’s reform agenda.

Mandate

The mandate of the PFM Reform Oversight Steering Committee is to monitor and coordinate the

PFM reform program in the Government of The Gambia.

Membership

The PFM Reform Oversight Steering Committee will be chaired by the Permanent Secretary

DOSFEA who will regularly update the Secretary for DOSFEA on the status of implementing

the PFM reform action plan. The full membership of the Steering Committee will comprise the

following:

Chairperson, Finance and Public Accounts Committee (National Assembly)

Auditor General

Permanent Secretary, Personnel Management Office

Director of Budget

Director of Treasury

Director of Internal Audit

Commission General, National Planning Commission

Commissioner General, Gambia Revenue Authority (GRA)

Representatives from development partners

Representative from civil society

PFM Reform Coordinator and Secretary of Steering Committee

Vote Controllers of State Departments will be required to attend meetings as the need arises.


Duties of the PFM Reform Oversight Steering Committee

The duties of the Steering Committee are as follows:

Identify and prioritize actions needed to improve public financial management by

undertaking diagnostic studies;

Monitor the National Action Plan and targets and check that they are consistent,

practicable, and realistic and will strengthen the Government in achieving its

developmental goals;

Identify the institutions and individual officers who will report to the Steering Committee

on progress in their respective actions;

Analyze reasons for delays or shortfalls in performance and make recommendations to

the respective authorities for corrective actions;

Set up sub-committees (and/or recognize existing project steering committees) for more

detailed progress monitoring and reporting to the main PFM Reform Oversight Steering

Committee through the secretariat;

The Steering Committee will produce annual reports, copies of which will be made available to

civil society organizations and nongovernmental organizations active in transparency and

accountability to ensure that adequate voice is given to the electorate.

Meetings

The PFM Reform Oversight Steering Committee will meet on a quarterly basis. The PFM

Reform Coordinator will ensure that the Technical Advisory Sub-Committees meet monthly to

monitor progress of implementation.

The PFM Reform Coordinating Office

This is the Secretariat of the PFM Reform Oversight Steering Committee. The Reform

Coordinator will be secretary of the Secretariat with responsibility for leading and coordinating

the overall PFM reform agenda, and reviewing and updating the Action Plan by consolidating

reports from the various sub-committees for the attention of the PFM Steering Committee.

Sub-Committees

The recommended sub-committees will cover the following topics:

Change management and capacity building,

Planning and budgeting,

Procurement, budget execution and payroll,

Internal audit and records management

Accounting, Recording and Reporting

External Scrutiny and Audit


Donor practices

The sub-committees will provide technical advisory services to the PFM Steering Committee;

the members of the sub-committees will be drawn from the expertise of relevant Departments of

State. The activities of the sub-committees will be coordinated by focal staff from the Secretariat,

who will serve the role of secretary to the sub-committees. Roles and responsibilities of the sub-

committees include the following:

Actively implement the activities in the Action Plan,

Continuously review the business processes to identify areas for improvement;

Identify resources needed to implement the Action Plan;

Identify capacity-building needs;

Obtain and document verifiable evidence of meeting the indicators in the Action Plan;

Carry out any other activities that may be assigned by the PFM Steering Committee; and

Submit progress report to the PFM Reform Coordinating Office.


ANNEX E. The Gambia Government’s Self Assessed Progress on PFM Reforms

The Government’s Response on the Draft Report

The Gambia’s key development strategy is outlined in its second Poverty Reduction Strategy Program

(PRSP) 2007-2011. The PRSP is underpinned by analytical and strategic studies, including the Country

Financial Accountability Assessment (CFAA) of 2003. The Government of The Gambia has been

pursuing strategic changes in its public financial management (PFM) systems aimed at improving

efficiency, effectiveness, and quality of basic public goods and services with overall goal of poverty

reduction through steady growth and a stable micro-economic environment.

1. Revision of the Legend and Regulatory Framework With an objective of addressing shortcomings identified during the Public Expenditure Reviews, the

Government replaced the old Finance and Audit Act, 1964 (amended in 1991) with the Government

Budget Management and Accountability (GBMAA) Act, 2004. New Financial Instructions have been

issued to support the implementation of the GBMAA Act.

The structure of the public accounts has been revised to meet generally acceptable accounting practices.

With effect from 2007, the Government of The Gambia adopted the cash-based International Public

Sector Accounting Standards (IPSAS) in the preparation of its accounts. New accounting procedures

have also been developed to provide for the specific procedures and tasks required under the Act.

2. AID Coordination

The Ministry of Finance and Economic Affairs (MOFEA) has set up a Project Management and Aid

Coordination Unit to improve coordination, monitoring, and comprehensive reporting of aid flows in the

country. In consultation with all stakeholders including civil society organizations, the Unit prepared the

first Aid Coordination Report in 2009.

3. Planning and Budgeting

The transformation of the budget into a more policy-oriented tool continues to be a major objective under

the PFM reforms. In this regard, the Government is engaged in formulation a medium-term expenditure

framework (MTEF), which would link the PRSP priority outputs and outcomes with public expenditure

programs.

4. Debt Management

A priority fiscal policy has been the reduction of debt service and the stock of public debt in order to

expand the fiscal space for PRSP-related expenditures. The primary balance has been maintained as a

significant surplus and domestic borrowing constrained. The Gambia received substantial debt relief

through HIPC completion point achieved in December 2007. As a result, interest payment declined from

a peak of 47 percent of recurrent expenditure in 2005 to 24 percent in 2008. This has allowed the

Government to reverse the decline in civil service compensation by raising salaries by 20 percent in 2008,

with further increases envisaged in the future years. The MOFEA is now engaged in preparing a debt

management strategy.

5. Revenue Mobilization

For efficient revenue collection, the Government enacted the Gambia Revenue Authority (GRA) Act in

2004 and created The Gambia Revenue Authority. This brought together the Customs and Excise


Department and the Central Revenue Department into an independent and semi-autonomous body under

the MOFEA. The Income and Sales Tax Act was revised in 2004 to enhance the revenue collection

efforts. Furthermore, the two automated tax collecting systems, GAMTAX net (for domestic taxes) and

ASTCUDA 2.7 (for Customs taxes) have been upgraded to improve tax administration and management.

The introduction of the taxpayer identification numbers and tax self-assessments by firms are some of the

tax initiatives introduced. The improved tax administration arising out of this reform initiative has

contributed to average domestic tax revenue of 21 percent of GDP since 2004, one of the highest in the

West African Region.

6. Public Procurement

A new Procurement Act was also enacted in 2001 and puts in place mechanisms for the decentralization

of procurement activities of Government entities. The Government has set up the Gambia Public

Procurement Authority, which replaces the centralized Tender Board, (Major and Minor Tender Boards).

7. Decentralization

In order to increase the efficiency to effectiveness of the local government reforms and the

decentralization program, the Local Government Act, 2002 and the Local Finance and Audit Act, 2004

were enacted. The Finance and Audit Act, 2004 provides that:

Central Government will have to pay for the functions carried out by the councils on behalf of

government.

Local councils have the right to share a certain amount of resources mobilized by the Central

Government from within the geographical jurisdiction of councils.

Councils have legal sanctions to mobilize resources on their own to finance their own initiatives.

The Act requires the Central Government to provide 25 percent of local councils’ development

budgets and also general, conditional, and equalization grants. The operationalization of the

decentralization framework and program remains in respect of human resources, institutional

processes, and logistics.

8. Private Sector

To increase private sector development and reduce the fiscal burden of government as a result of its

involvement in commercial activities, the Gambia Divestiture Agency was set up to help plan and to

facilitate the divestiture of government assets. Some government holdings of private sector shares have

been fully or partially sold. The privatization of state-owned (public) enterprises has been slow, although

recent divestiture studies have been made in the area of housing and social security, transport, and

telecommunication with a view of enhancing private sector development.

9. National Statistics

Key to the effective implementation of any reform is the availability of timely, reliable, and accurate data.

In this regard, Government has established the Gambia Bureau of Statistics as a semi-autonomous

organization replacing the former Central Statistic Department. The Statistics Act was revised in 2005,

and new organizational structures have been put in place to ensure that the institution operates more

efficiently and effectively. This reform is expected to result in the durability of timely and reliable

statistical data that will significantly improve policy planning and formulation together with effective and

efficient resource allocations.


10. Expenditure Control and Automation of the Budgeting/ Accounting Systems

All payments for appropriated and statutory expenditures are subject to expenditure controls.

Departments are issued cash allocations on a monthly basis. The total cash released is contingent upon the

availability of domestic resources in the Consolidated Revenue Fund.

As a major reform, the Government has established an Integrated Financial Management Information

System (IFMIS), which began operations in January 2007 and covers the entire Central Government,

including embassies and sub-treasuries. New chart of accounts has been developed on the basis of

International Accounting Standards and the IMF Government Finance Statistics (GFS). The new chart of

accounts facilitates comprehensive reporting of financial transactions in terms of PRSP initiatives, debt

services, and economic and functional classifications of the budget.

The IFMIS implementation has spurred an intensive capacity-building program in accounting and

computer-technology training. The University of The Gambia, with government support, has introduced

a 4-year Bachelor of Accountancy degree program with 17 out of 30 students enrolled from Government

agencies. About 40 graduates have received computer-technology training in Taiwan, the Republic of

China.

11. Oversight

Other PFM reforms include the setting up of an anti-corruption unit in 2005 under the Office of the

President following recommendations of the Commission of Enquiry regarding management of state

funds of public servants. Also there are institutional reforms for both Internal Audit Office and the

National Audit Office. The focus is on improving capacity and legislative reforms to make the National

Audit Office more independent in terms of its budget approval and appointment of the Auditor General.

12. Public Service Reforms

Closely linked to the PFM reforms are the public service reforms to improve the quality and delivery of

the civil service. A comprehensive civil service reform is being undertaken with the technical assistance

from UNDP. To ensure the availability of timely and accurate human resource information, the

Government is putting in place a Human Resource Information System that will be integrated with IFMIS

payroll and pension module. This will improve in the management of the government payroll and

pension transfer.

13. Budget Planning and Monitoring

The IFMIS has helped to prepare more realistic budgets. Significant developments include:

Overview of the complete budget that summarizes the IMF fiscal tables;

Expenditure budget funding overview that summarizes the sources of financing debt service,

recurrent and development budgets;

Economic overview that summarizes by category terms;

Preparation of departmental expenditure classified by PRSP policy programs and sub-programs

and poverty interventions.

14. Budget Execution and Monitoring


Although the analysis and monitoring of data improved since 2006, central control of departmental/

ministerial expenditure still remains an issue. The IFMIS project since 2007 has significantly improved

fiscal discipline. The strategic allocation of available funds is established firmly as the responsibility of

the spending departments.

15. Accounting and Reporting

With regard to the timeliness and reliability of accounting and reporting, the backlog of accounts was a

major issue at the time of the CFAA 2003. The following initiatives were taken to clear the backlog:

1991-1999 accounts produced in 2003 with the assistance of the IMF,

2000-2004 accounts produced in 2007 by the Directorate of National Treasury,

2005-2006 accounts produced in 2008 with the assistance of DfID.

With IFMIS implementation, the 2007 and 2008 accounts have been prepared in accordance with the

cash-based IPSAS and the provisions of the GBMAA Act, 2004 and its associated regulations.

The 2008 government accounts were submitted to the Auditor General on the March 27, 2009, thereby

meeting the statutory timeline.

2009 country financial accountability assessmentdocuments.worldbank.org/curated/en/...oumou g....

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