Compliance Risk Assessment Framework in Sierra Leone: A Review of PFM Performance

Introduction

The Government of Sierra Leone (GoSL) has recently undergone a Public Financial Management (PFM) repeat assessment, aimed at evaluating the national PFM system. The assessment was conducted by external PEFA experts and GoSL technical teams, covering central government ministries and departments, subnational governments, extra-budgetary units, public enterprises, civil society organizations, and Parliament.

Assessment Findings

The performance of Sierra Leone’s PFM systems is mixed, with some areas showing improvement while others require further reform. The assessment found:

• Fiscal Discipline: Basic aggregate fiscal discipline score, with strong laws and regulations in place but weak executive action on Public Accounts Committee (PAC) and audit recommendations.
• Strategic Allocation of Resources:
  • Strong budget classification, transparency, and framework for horizontal resource allocation.
  • Unreliable expenditure budget forecasts and unpredictable resources hindered strategic resource allocation.
  • Weaknesses in public investment management frameworks and fixed asset management posed risks to strategic resource allocation.
• Efficient Service Delivery: Basic score, with:
  • Good budget classification and transparent budget documentation framework in place.
  • Unreliability of expenditure budgets, large composition variances, and significant, frequent, and non-transparent in-year budget reallocations negatively impacted efficient service delivery.
  • Cash rationing due to cash shortages had a negative impact on service delivery.

Areas for Improvement

The assessment highlighted several areas for improvement, including:

• Stronger Executive Action: Need for stronger executive action on audit recommendations.
• Improved Public Investment Management Frameworks: Enhance transparency and accountability in public investment management.
• Reliable Expenditure Budgets: Improve the reliability of expenditure budgets to support predictable resource allocation.
• Predictable Resource Allocation: Ensure predictable resource allocation to support efficient service delivery.
• Efficient Service Delivery: Implement measures to improve efficiency in service delivery.

Conclusion

While Sierra Leone’s PFM systems have made progress in some areas, there is still much work to be done to ensure effective and efficient use of public resources. The implementation of a compliance risk assessment framework is crucial to identifying and mitigating risks that may affect the integrity and effectiveness of the PFM system.