DEPARTMENT OF BUDGET & MANAGEMENT

Conducting PFM Assessments:

USING THE LGU PUBLIC

FINANCIAL MANAGEMENT
ASSESSMENT TOOL (PFMAT)
Orientation on the Local Government Units
Public Financial Management Assessment
Tool (PFMAT)
Presented by the DBM Regional Office IV-A

OUTLINE OF PRESENTATION

1.

The PFMAT

2.

Value of the PFMAT

3.

Operative Principles of the PFMAT

4.

Critical Dimensions of an Open and

Orderly PFM System

5.

Conducting an LGU PFM Assessment

6.

Using the Results of the PFMAT

BASIC
CONCEPTS

WHAT IS THE PFMAT?

A self-assessment instrument
designed to assist LGUs in:
o evaluating their PFM
performance;
o formulating strategies to build
on strengths and to address
weaknesses;

VALUE OF THE PFMAT

Benchmark performance
against other LGUs

Determine extent to which

reforms are generating
improved performance

Continuously
identify new best
practices

Facilitate accreditation for future

donor support

OPERATIVE PRINCIPLES OF THE

PFMAT
The PFMAT identifies the data sources and the
responsible LGU Department or Unit for the
Financial Information.
Critical
Dimensions

Main
Responsi
ble Unit

Indicators
Actual Local
Revenue
Collections as
compared to
Estimated
Revenues in the
Budget

Sub-Indicators

Sources of
Information

Treasurers Statements
of Receipts &
Expenditures (SRE);
Treasury
Appropriation
Ordinances covering
Annual & Supplemental
Budgets
Credibility of
the Budget
Total Allotments
Statement of
Released vs. Total
Actual expenditure
Allotments, Obligations
Appropriations
as compared to
& Balances vs
Budget
approved budget
Appropriation
Total Obligations vs.
by allotment class
Ordinances covering
Total Allotments
Annual & Supplemental
Released
Budgets
Credibility of the Budget- The indicators measure whether the budget is realistic and is
implemented as intended

OPERATIVE PRINCIPLES OF THE

PFMAT
The PFMAT establishes baseline data for
benchmarking.

OPERATIVE PRINCIPLES OF THE

PFMAT
The PFMAT uses indicators that utilize only
quantitative data.
Critical Dimension 1: Policy-Based Budgeting
Indicator No. 2: Orderliness of activities and participation in
the annual budget process
Sub-Indicator 1. Adherence to a fixed budget calendar
Instruction: Complete the data table below, then use it as basis for
determining the appropriate score that corresponds to the minimum
requirement that your LGU has satisfied.. Please encircle the chosen score.
Score
4
3
2
1
0

Minimum requirements
The existing annual budget calendar is strictly observed and adhered
to.
The existing annual budget calendar is observed but there are delays
in 1 3 steps, excluding Step 7.
The existing annual budget calendar is observed but there are delays in
4-5 steps, excluding Step 7.
The existing annual budget calendar is observed but there are delays in
more than 5 steps, excluding Step 7.
The existing annual budget calendar is totally not observed and
adhered to.

OPERATIVE PRINCIPLES OF THE

PFMAT
Data Table: Instruction- On the following data table, write down the actual
timelines, based on the immediately preceding years data, when each of the
processes was undertaken by the LGU. Compare the standard calendar with the
actual dates and note the reason for delay.
Actual
Step

Budget Process

AIP Preparation

Issuance of Budget Call

3
4
5

7
8

Submission to LCE of [certified 3-year]

detailed statement of income and
expenditures
Preparation and submission of Budget
Proposals
Conduct of technical budget hearings on
budget proposals submitted by Department
Heads
Consolidation of Budget Proposals into the
Local Expenditure Program (LEP) and
preparation of the Budget of Expenditures and
Sources of Financing (BESF)
Preparation of the Budget Message and
Submission of Executive Budget to the
Sanggunian
Enactment of the Appropriation Ordinance
Authorizing the Annual Budget of the ensuing
fiscal year by the Local Sanggunian
Submission of the Annual or Supplemental

Fixed Budget Calendar

January 1 to June 15
June 16 to June 30 or 1st week of
July
On or before the 5th day of July
July 1-15
July 16 to August 31

September 16 to 30

Not later than October 16

October 17 onwards
Within three (3) days from the

Period
Complete
d

Remarks
(Reasons for
Delay)

OPERATIVE PRINCIPLES OF THE

PFMAT

The PFMAT as a self-administered

tool.

CRITICAL DIMENSIONS OF A GOOD PFM

SYSTEM

Policy-Based
Budgeting

Comprehensivenes
s & Transparency
Internal &
External
Audit

Credibility of
the Budget

Citizens
Participation
Predictability &
Control in
Budget
Execution
Accounting,
Recording &
Reporting

CRITICAL DIMENSIONS OF A GOOD PFM

SYSTEM
CRITICAL
DIMENSION

DESCRIPTION

Policy-Based
Budgeting

The indicators measure whether the budget is

prepared with due regard to government policy.

Credibility of the
Budget

The indicators measure whether the budget is

realistic and is implemented as intended.

Predictability &
Control in
Budget
Execution

The indicators measure whether the budget is

implemented in an orderly and predictable manner
and whether there are arrangements for the exercise
of control and supervision in the use of public funds.

The indicators measure whether the budget and fiscal

risk oversight are comprehensive and whether fiscal
Comprehensiven and budget information is accessible to the public.
ess &
They also measure the completeness of budget
Transparency
information based on the list of documentary
requirements prescribed in the Budget Operations
Manual.

CRITICAL DIMENSIONS OF A GOOD PFM

SYSTEM
CRITICAL
DIMENSION

DESCRIPTION

Accounting,
Recording &
Reporting

The indicators measure whether adequate

records and information are produced,
maintained, and disseminated for purposes of
decision-making, control, management, and
reporting on operations.

Internal & External

Audit

The indicators examine the arrangements for

scrutiny of public finances and follow-up by the
local chief executive and/or the legislative
council.

The indicators measure the extent by which the

LGU encourages concerned citizens organized as
CSOs pursue their legitimate and collective
interests by monitoring effectiveness of
Citizens Participation
Programs, Projects and Activities (PPAs), thus
becoming partners of the LGU in the formulation,

PFMAT FRAMEWORK
Critical
Dimension

Indicators

1. Multi-year
1. Policyperspective in
based
fiscal planning,
Budgeting
expenditure and
budgeting

Sub-Indicators
Linkages between Provincial
Development and Physical
Framework Plan
(PDPFP)/Comprehensive
Development Plan (CDP) and Local
Development Investment Program
(LDIP)
Linkages between Local
Development Investment Program
(LDIP) and Annual Investment
Program (AIP)
Linkages between AIP and
Appropriation Ordinance
authorizing annual/supplemental
budgets
Linkage between PFM

PFMAT FRAMEWORK

Critical
Dimension

Indicators

Sub-Indicators
Existence of and adherence
to fixed budget calendar

2. Orderliness of
activities and
1. Policy-based
participation in the
Budgeting
annual budget
process

Timely enactment of the

Appropriation Ordinance
authorizing the Annual
Budget
Timely submission of the
Appropriation Ordinance
authorizing the annual /
supplemental budget to the
appropriate reviewing
authority

PFMAT FRAMEWORK

Critical Dimension

Indicators

3. Comprehensiveness
and completeness of
information included in
2.
budget documentation
Comprehensive
ness and
Transparency
4. Public access to key
information

Sub-Indicators

PFMAT FRAMEWORK

Critical
Dimension

Indicators

Sub-Indicators

5. Actual Local
Revenue Collections
compared to
Estimated Revenues
in the Budget
Total Allotments
Released compared to
3. Credibility
Total Approved
of the
Appropriations
Budget
6. Actual expenditure
Total Actual Obligations
compared to approved
compared to Total
budget by allotment
Allotments Released
class
Total Actual

PFMAT FRAMEWORK

Critical
Dimension

Indicators

Sub-Indicators

7. Real Property
Tax
Accomplishment
Rate

4.
Predictability
and Control in
Budget
Execution

8. Effectiveness
of tax
enhancement
measures
9. Predictability in
the availability
of cash for
commitment of

Computerized database system

linkages
Effectiveness of implementing tax
collection strategies
Effectiveness of administrative and
civil remedies on tax payment
Planning and monitoring of tax
mapping
Cash availability to support
budgeted program, projects and
liabilities
Preparation and updating of cash

PFMAT FRAMEWORK

Critical
Dimension

Indicators

Sub-Indicators

Use of public bidding for the

procurement of goods (excluding
common-use supplies and
equipment), civil works and
consulting services in accordance
4. Predictabil 10. Value for
with R.A. No. 9184 and its IRR
ity and
money
Procurement of Common-Use
Control in
controls of Supplies and Equipment from DBM
Budget
procureme
Procurement Service
Execution
nt
Effectiveness of Procurement
Publication of procurement results
Timeliness and compliance of
delivery with the schedule of
requirements and/or approved

PFMAT FRAMEWORK

Critical
Dimension

Indicators

Sub-Indicators

11. Effectiveness of
payroll controls
4. Predictability
and Control in 12. Effectiveness of
Budget
internal controls for
Execution
non-salary
expenditures

5.

13. Timeliness and

regularity of
accounts
reconciliation

Regularity of bank reconciliation

Regularity of reconciliation and
clearance of
temporary/suspense accounts
and cash advances
Timeliness and completeness of
the monitoring (accountability)
reports

Accounting,
Recording and 14. Quality and
Reporting
timeliness of
regular financial
reports and annual
Timeliness and completeness of
financial

PFMAT FRAMEWORK

Critical
Dimension

6.

7.

Indicators

Internal and
15. Effectiveness of
External Audit
internal audit

Citizens
Participation

17. System of Civil

Society Organizations
(CSOs) accreditation by
the local Sanggunian
18. Degree of citizens
participation in the
budget cycle

Sub-Indicators
Coverage and quality of
the internal audit function
Frequency and distribution
of internal audit reports
Extent of management
response to internal audit
findings
Extent of COA
disallowances

PROCEDURES

CONDUCTING A PFM ASSESSMENT

Getting
started..
LCE formally organizes the PFM Team thru
issuance of Executive Order
o Department Heads of:
Treasury
Budget
Accounting
Planning & Development
GSO / BAC
LCE designates PFM Team Leader

CONDUCTING A PFM ASSESSMENT

Getting
started..
PFM Team should:
o Discuss PFMAT to establish a
common understanding;
o Orient the LCE & Local
Sanggunian on the PFMAT to
obtain buy-in

CONDUCTING A PFM ASSESSMENT

Using the
PFMAT..
Distribute pertinent portions of the
PFMAT to responsible Office /
Department
Responsible Office fills out the
PFMAT based on data listed in the
tool
o Fill out data tables first as basis
for determining applicable score
Scores are summarized per Office
and per critical dimension

CONDUCTING A PFM ASSESSMENT

Scoring ..
M1 :
Used for indicators which do not have subindicators;
Uses a four-point scale, with 0 as lowest
and 4 as highest score;
Each indicator describes the minimum
requirement which should be met in order to
obtain a particular score;

CONDUCTING A PFM ASSESSMENT

4

Score:_____

Critical Dimension 3: Credibility of the Budget

Indicator No. 5: Actual Local Revenue Collections as compared to Estimated Revenues in the
budget
Instruction: Complete the data table below. The last 3 columns indicate the actual collections as % of
estimated revenues. The last 3 columns, Row 8 are the bases for scoring. Encircle the appropriate score
that
corresponds
to the
minimum requirement that your LGU has satisfied.
Score
Minimum
requirements
The total actual local revenues per year in all the last three years did not fall below 95% of
estimated revenues
The total actual local revenues per year in all the last three years did not fall below 90% of
3
estimated revenues
The total actual local revenues per year in all the last three years did not fall below 85% of
2
estimated revenues
total -actual
local
per year
allestimated
the last revenues(Source:
three years didlast
not3 fall
ofBudgets).
estimated
Data1Table:The
Instruction
From the
last revenues
3 years budgets,
fill-inin
the
year80%
Annual
From
revenues
the year-end Statements of Receipts & Expenditures, fill-in the actual local revenue collections (Source: last 3 year Statement of
Actual
as % of
Receipts & Expenditures).
The total actual local revenues
per year in any
fell below 80%
of estimated
Year 1
Yearof
2 the last three years
Year 3
Row0#
Estimated Receipts
revenues
Income
4

Type
1
2
3
4
5
6
7
8

RPTs
Tax on business
Other Taxes
Permits & Licenses
Service Income
Business Income
Other General
Income
Totals

Estimated
Revenues
(a)

Actual
Collections
(b)

Estimated
Revenues
(c)

Actual
Collections
(d)

Estimated
Revenues
(e)

Actual
Collections
(f)

Y1
(b/a)

95%

Y2
(d/c)

96%

Y3
(f/e)

97%

CONDUCTING A PFM ASSESSMENT

Scoring ..
M2 :
Used for indicators with sub-indicators;
Uses a four-point scale, with 0 as lowest
and 4 as highest score;
Over-all score for the indicator is
determined by computing the average
score of all sub-indicators;

CONDUCTING A PFM ASSESSMENT

Score: Sub-indicator 1:

4
_______

Critical Dimension 1: Policy-Based Budgeting

Sub-indicator 2:
_______
3
Indicator No. 1: Multi-year perspective in fiscal planning,
4
Sub-indicator 3:
_______
expenditure and budgeting
11
Sub-indicators total score: _______

Sub-indicator 1: Multi-year fiscal forecasts and sectoral

Overall Score
3.67
allocations.
(Divide sub-indicator total by 3)
Instruction: Complete the data table below, then use it as basis for
determining the appropriate score that corresponds to the minimum
requirement
that your
LGU has satisfied. Please encircle the chosen
Score
Minimum
requirements
An LDIP is prepared based on the Provincial Development and Physical Framework Plan (PDPFP) or
score.
4
3
2
1

Comprehensive Development Plan (CDP) and reviewed / updated as the case may be. (Yes to all questions)
An LDIP is prepared based on the Provincial Development and Physical Framework Plan (PDPFP) or
Comprehensive Development Plan (CDP) but is not reviewed / updated as may be needed. (Yes to questions 1
& 3)
An LDIP is prepared and reviewed / updated as may be needed but the same is NOT based on the Provincial
Development and Physical Framework Plan (PDPFP) or Comprehensive Development Plan (CDP). (Yes to
questions 1 & 2)
An LDIP is prepared but is NOT based on the Provincial Development and Physical Framework Plan (PDPFP) or
Comprehensive Development Plan (CDP) and is not reviewed / updated as may be needed. (Yes to question 1)
Table:
Instruction - Answer the following questions with Yes or No. Indicate the evidences supporting
An LDIP is not prepared at all. (No to question 1)

Data
0
the answers.
Questions

1.
Do you have a duly approved LDIP?
If answer to Question 1 is yes:
1. Do you review / update the LDIP as the case may be?
2.Is it based on the Provincial Development and Physical Framework Plan
(PDPFP) or Comprehensive Development Plan (CDP)?

Answers
(Yes/No)
Yes
Yes
Yes

Evidence

CONDUCTING A PFM ASSESSMENT

Scoring ..
After determining the score per performance
indicator, summarize and analyze the scores
using:
Summary Table 3

presented by responsible
department

Summary Table 4

summary of scores by critical

dimension

Summary Table 5

Summary Analysis of Scores

CONDUCTING A PFM ASSESSMENT

Table 3. Summary Table by Responsible
Department
Responsible Unit

1.

PPDO

2.

Budget

3.

Treasury

4.

GSO /
Engineering

5.

Accounting

Totals

Indicator
1. Multi-year perspective in fiscal planning, expenditure and budgeting
17. System of Civil Society Organization (CSO) accreditation by the local
Sanggunian
Sub-total
2. Orderliness of activities and participation in the annual budget process
3. Comprehensiveness and completeness of information included in budget
documentation
6. Actual expenditure as compared to approved budget by allotment class
18.Degree of citizens participation in the budget cycle
Sub-total
5. Actual revenue collections vs estimated revenues in the budget
7. Real Property Tax Accomplishment Rate
8. Effectiveness of tax enhancement measures
9. Predictability in the availability of cash for commitment of expenditures
Sub-total
10. Value for money controls of procurement
4. Public access to key information
11. Effectiveness of payroll controls
12. Effectiveness of internal controls for non-salary expenditures
13. Timeliness and regularity of accounts reconciliation
14. Quality and timeliness of regular financial reports and annual financial
statements
15. Effectiveness of internal audit
16. Follow up on external audit
Sub-total

Averag
Score
e
Score*

CONDUCTING A PFM ASSESSMENT

Table 4. Summary Table by Critical
Dimension
Critical Dimension

Indicator

1. Multi-year perspective in fiscal planning, expenditure and

budgeting
1. Policy-based
2. Orderliness of activities and participation in the annual
Budgeting
budget process
Sub-total
3. Comprehensiveness and completeness of information
2.
included in budget documentation
Comprehensiveness
4. Public access to key information
and Transparency
Sub-total
5. Actual local revenue collections vs estimated revenues in
the budget
3.
Credibility of the
6. Actual expenditure compared to approved budget by
Budget
allotment class
Sub-total
7. Real Property Tax Accomplishment Rate
8. Effectiveness of tax enhancement measures
9. Predictability in the availability of cash for commitment of
4.
Predictability and
expenditures
Control in Budget
10. Value for money controls of procurement
11. Effectiveness of payroll controls
Execution
12. Effectiveness of internal controls for non-salary
expenditures
Sub-total
13. Timeliness and regularity of accounts reconciliation

Scor
e

Averag
e
Score*

CONDUCTING A PFM ASSESSMENT

Table 5. Summary Analysis of
Scores

AVERAGE
SCORE
3.6 4.0

2.6 3.5

1.6 2.5

DESCRIPTION

.01 1.5

Elements of the PFM System are complete and operational.

LGU fully complies with statutory requirements related to all critical dimensions of an
open and orderly PFM system.
LGU needs to sustain current PFM performance.
Elements of the PFM System are complete and operational.
LGU substantially complies with statutory requirements related to all critical
dimensions of an open and orderly PFM system.
LGU needs to formulate measures to improve key PFM elements with low scores.
Basic elements of the PFM System are in place and operational.
LGU substantially complies with statutory requirements related to most critical
dimensions of an open and orderly PFM system.
LGU needs to formulate measures to establish and operationalize all elements of an
open and orderly PFM system.
Basic elements of the PFM System are in place but are not entirely operational.
LGU complies with some statutory requirements related to some critical dimensions of
an open and orderly PFM system.
LGU needs to formulate catch-up measures to establish and operationalize basic
elements of an open and orderly PFM system.
Basic elements of the PFM System are not in place.
LGU does not comply at all with statutory requirements related to the ritical dimensions
of an open and orderly PFM system.
LGU needs to formulate measures to establish and initially operationalize basic
elements of an open and orderly PFM system.

USING THE RESULTS OF THE PFMAT

Summarize and explain the results of

the PFMAT in the PFM Assessment
Report

The PFM-AR is a concise document containing

the ff:

1. Executive Summary
2. Introduction
3. Background Information
4. Assessment of the LGUs PFM Systems
5. Recommendations

USING THE RESULTS OF THE PFMAT

Analyze the results of the PFMAT

further
Focus on dimensions / key elements
with low scores
Develop strategies to address
identified weaknesses
o Critical problem solving techniques
such as Logical Framework Analysis

USING THE RESULTS OF THE PFMAT

LFA results to a program / project logical

framework for PFM improvement:

USING THE RESULTS OF THE PFMAT

Value of the PFM Improvement

Logframe ..

Facilitates the preparation of the PFMIP

Provides the framework for DBM RO
monitoring

USING THE RESULTS OF THE PFMAT

Recommendations under the PFM-AR

are detailed in the PFM Improvement
Plan

USING THE RESULTS OF THE PFMAT

The PFMIP identifies:

1. The critical dimension needing
improvement
2. The strategies for improving the
dimension
3. The specific programs /
projects/activities to carry out the
strategy
4. Performance indicators (to measure
progress of improvement measures)
5. Baseline information

USING THE RESULTS OF THE PFMAT

Reminders ..
PFMIP should be submitted to the
Sanggunian / LCE for approval
LCE / Sanggunian to issue necessary
policy support to help PFMIP
implementation
PFMIP should be integrated in the
LDIP/AIP if funding is required

USING THE RESULTS OF THE PFMAT

LGU:__________________________________________________
REGION:_______________________________________________

Prepared by:
_____________________________
PFM Team

Approved by:
____________________________
LCE

DEPARTMENT OF BUDGET & MANAGEMENT

THANK YOU

Orientation on the Local Government Units

Public Financial Management Assessment
Tool (PFMAT)

DEPARTMENT OF BUDGET & MANAGEMENT

Next Steps
Schedules:

Exportation of Results
(dbmcalabarzon@dbm.gov.ph) NLT 4
July 2016
PFMAR/PFMIP NLT 25 July 2016

DEPARTMENT OF BUDGET & MANAGEMENT

Institutionalization of LGU-PFM
Status

of Reporting:

For allocation in the FY 2017 LGSF; and

For release in the FY 2016 LGSF