HUNGARY: SAS-based solution for the Local Government Monitoring System


In its strategy, the State Audit Office of Hungary (hereinafter referred to as “SAO”) set the objective of evaluating the financial-economic status of local governments and revealing their risks. This was justified by the significant use of public funds by the local government subsystem of the public finances, the diversity of tasks performed by municipalities and the significant impact of the indicators of the local government subsystem on public finances as a whole.

The first report of LGMS (Local Government Monitoring System) prepared on the basis of the risk monitoring system was published on 20 April 2018 by the SAO. Based on the evaluation of the data of the annual, interim budget and balance sheet reports of the local governments in the central information system of the Hungarian State Treasury, the methodology indicates the areas where adverse economic flows or economic events have occurred, that justify immediate or other (medium-term) measures. Indicators are assigned to determine the risky areas and their underlying factors of local government financial management, which may be low, medium or high risk value.

The LGMS model uses a total of 50 calculated values derived from the balance sheet data, income statement and 72 other risk indicators per year for risk assessment. These are determined individually for the 3197 municipalities, their institutions and their aggregated level, for a group of local governments defined according to the programme. The calculation and evaluation of such indicators was initially supported by Excel spreadsheets. However, managing such a large database was difficult, required long runtime, and every year the model had to be rebuilt, which required considerable time (2-3 weeks per year). Therefore, in 2020, the SAO launched a project to create an LGMS 2017-2018 database with SAS Enterprise Guide (SAS EG) software, aiming to make the annual data processing more efficient. 

SAS EG supports several input file formats, of which an xlsx file was loaded the project. The project had three main tasks: on the one hand, the calculation of the indicators, then the evaluation of the indicators according to the model, and finally the production of output reports supporting the assessment of the auditors. The project prepared a total of 243 parameterized indicators for the two years given. Due to the static data processing logic of the SAS, the structure of the flexible summary could be carried out by setting up several levels of complex, a total of 187 operations. The SAS case when functions were suitable to evaluate the indicators. By completing the processes, the output reports containing the indicators and their evaluation were set in the SAS. SAS EG does not save the completed reports, so they can be run at any time. Running is fast, and if set to “stored processes”, users can run them individually at any time. The output results of the project showed values identical to the previous Excel results (used for confirmation), therefore the SAS EG was suitable for data processing.  

The data processing applied in the project provided a more efficient solution in several respects than the previous tool. It took 5 weeks to set up the SAS EG processes, but the project achieved further results in addition to processing the data of the given two years. The SAS EG settings have provided great adaptability to manage the data of recent years. The processes for an additional year do not need to be rebuilt, only the input data can be changed. (Of course, any change in the data structure must be managed.) With the extensive master data setting, the system is able to evaluate both individual indicators and the indicators of a given group of local governments when running the processes. In addition, the project has created an extensive database covering the all local governments, which provides possibility for further data provision, even outside of the LGMS. The SAS EG output reports also included built-in analysis tools, within which the SAS Querie Builder function supports the supervision of outstanding items and the average, median calculation. The output report can be made in Excel, word, or in pdf format. The SAS EG also provides the opportunity to create a pdf template that may not be modified, which can be annexed to the State Audit Office report.

As a result of the evaluation of the project, it was decided that the 2019 addendum of the LGMS database should be made the SAS EG way, thus the Excel solution got replaced by the new software.