Measurement guidance

Dimension 20.1 assesses the extent to which a central ministry, i.e., the Ministry of Finance (MOF) or a body with similar responsibilities, coordinates revenue administration activities and collects, accounts for, and reports timely information on collected revenue.

Dimension 20.2 assesses the promptness of transfers to the Treasury or other designated agencies of revenue collected. The Treasury is expected to identify whether itself or any other legally designated recipient is the appropriate focus of this indicator. It is essential to ensure that funds are available as soon as possible to support cash management and, ultimately, spending. This may involve either a system that obliges payments to be made directly into accounts controlled by the Treasury (possibly managed by a bank). Alternatively, where the responsible agency maintains its own collection accounts, by frequent and full transfers from those accounts to Treasury controlled accounts. (Time periods mentioned do not include delays in the banking system.) Transfers of revenue collections to the Treasury should be effective and should ensure that any revenue float is minimized. Ideally, every revenue amount should be transferred to the Treasury, but other agencies could be legally designated to receive earmarked revenues directly from the collecting entity, for example, extrabudgetary units. Transfers to such designated agencies will be assessed in the same way as transfers to the Treasury.

Dimension 20.3 assesses the extent to which aggregate amounts related to assessments/charges, collections, arrears and transfers to (and receipts by) the Treasury or designated other agencies take place regularly and are reconciled in a timely manner. This will ensure that the collection and transfer system functions as intended and that the level of arrears and revenue float are monitored and minimized. It is important that any difference between amounts assessed or levied by responsible entities and amounts received by the Treasury or other designated agencies can be explained. (N.B. this does not assume or imply an accrual based accounting system: the data and reports used for assessing this indicator are based on cash accounting.) The responsible entity should normally keep records in its accounting system on aggregate amounts levied and on transfers to the Treasury. The responsible entity should also keep records reflecting amounts levied and paid by each payer, but this may be done in other data systems. The responsible entity should be able to aggregate such information, so that it can report how much of amounts levied is (a) not yet due, (b) in arrears (the difference between what is due and what has been paid in) and (c) collected by the responsible entity but not yet transferred to the Treasury. For revenues from extractive industries, the Extractive Industries Transparency Initiative has developed standards for the disclosure and reconciliation of what companies pay and what governments receive4 .