Key Function 3: Establishing regulatory policy

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 The GAO’s Overview of the Strategy, Execution, and Evaluation Budgeting Process report examines how well the National Oceanic and Atmospheric Administration (NOAA) has implemented the Strategy Execution and Evaluation (SEE) budget development process. It also describes the seven steps of the SEE process, including suggested practices for budget submission and planning (GAO, 2013a).  In its 2007 budget, the federal government of Canada committed to publishing a comprehensive and intergenerational report on Canada’s fiscal sustainability. As this report remains unpublished, Canada’s Office of the Auditor General (OAG) has repeatedly encouraged the government to make projections public in line with the practice of many OECD countries. In a 2011/2012 audit, the OAG looked at how long-term fiscal sustainability analyses are prepared and reported in order to determine whether spending and tax measures had been taken into account by the Department of Finance when considering new policies. The audit concluded that the Department of Finance had analysed and informed the Minister of Finance about the long-term fiscal impact of budget measures and that the long-term projections were sound, noting that these analyses were yet to be published (OAG, 2012).  In 2014, Brazil’s TCU issued a compliance and monitoring report, Follow-up: Revenue forecast evaluation of the federal budget bill 2015, to assess the estimates of revenue contained in the Budget Bill of the Union for 2015. This report showed that projected revenue estimates did not match the market expectations (TCU, 2014).

Useful reference for materials for SAIs in relation to international standards and principles include the OECD’s Recommendation of the Council on Budgetary Governance (OECD, 2015d) and the ANAO’s Developing and Managing Internal Budgets Guide (ANAO, 2008), which discusses good internal budget practices and how to embed them into overarching organisational planning and management and monitor performance over time.

Alignment between the budget and medium-term strategies (Table 2.2, key element B)

There has been an increased focus in recent years on the multi-annual dimensions of budgeting. Medium-term expenditure frameworks (MTEFs), or fiscal frameworks, strengthen the ability of the government to plan and enforce a sustainable fiscal path. Almost all OECD countries report having a medium-term expenditure framework in place, with half having enshrined the MTEF in law. MTEFs improve the quality and certainty of multi-annual fiscal planning by combining prescriptive yearly ceilings with descriptive forward estimates.

If properly designed, an MTEF should require stakeholders to consider the mediumterm perspective of budgeting and budgetary policies, rather than adopt an exclusively year-by-year approach. MTEFs are increasingly relevant in a context where many policies require an extended time horizon and savings options often involve more than one year to reap their full benefits. Prior to the advent of medium-term frameworks, such savings options were often not considered as the time horizon only extended to the next budget year.

SUPREME AUDIT INSTITUTIONS AND GOOD GOVERNANCE: OVERSIGHT, INSIGHT AND FORESIGHT © OECD 2016