The State Audit Office of Georgia (SAOG) prepared an article for the periodical journal – “EUROSAI Innovations” with the title – “Promoting medium-term fiscal sustainability”.
The focus of the article is on the role of the SAOG as an independent external public audit institution in monitoring the fiscal transparency in the wake of the ongoing reforms in the public financial management system of the country. Moreover, considering the framework set out by the International Standard on Assurance Engagements applicable to the examination of prospective financial information, the SAOG’s Opinion on the Draft Law of the State Budget assesses whether:
- Macroeconomic and other relevant material assumptions provide a reasonable basis for the budgetary aggregates envisaged by the Draft Law on the State Budget;
- The financial information envisaged by the Draft Law on the State Budget is properly prepared on the basis of the assumptions and can be assessed as reasonable and based on the relevant legislative requirements; among them, considering the fiscal limits laid down in the Economic Freedom Act of 2011; and
- The financial information presented by the Draft Law on the State Budget is properly presented in accordance with the existing financial reporting framework and all material assumptions are adequately disclosed within the relevant enclosed materials.
The abovementioned framework enables the SAOG to encourage the government to place further emphasis on the reasonableness of the medium-term economic outlook used as a basis for the proposed draft budget. This acts as a cornerstone for a sound fiscal framework and accurate budgetary estimates for the upcoming year. Secondly, assessing the reasonableness of the budgetary estimates, in particular the revenue projections, and monitoring the compliance of the proposed draft budget with the existing fiscal rules, enables SAOG to point to possible fiscal risks that the proposed draft budget may entail. Finally, looking at the presentation of the budget draft as well as supplemental information, there is a possibility of promoting better practices for the disclosures and transparent fiscal reporting. This ensures that the Parliament and the public have an accurate and realistic picture of the proposed draft budget for the year ahead in the light of the medium-term fiscal framework.
The topic of the article was chosen taking into account the international debate, as a result of the 2008 financial and economic crisis, on the role of the supreme audit institutions in the promotion of medium-term fiscal sustainability.
