SCOPA 23 September 2003

1. National Treasury PROGRESS REPORT ON PFMA IMPLEMENTATION SCOPA 23 September 2003

2. PFMA IMPLEMENTATION NATIONAL TREASURY • Accreditation of training courses • Roll-out of large-scale training programme • Systems master plan - Jan 2004 • ASB fully operational • Supply Chain Management Framework

3. PFMA IMPLEMENTATION DEPARTMENTS AND CONSTITUTIONAL INSTITUTIONS • Previous reports based on compliance • Normative measures for Financial Management • Measure compliance and qualitative improvements • Progress by departments/institutions presented graphically

4. National Treasury GRAPHIC PRESENTATION OF SURVEY RESULTS DEPARTMENTS

5. MANAGEMENT ARRANGEMENTS OFFICE OF THE CFO Appointment of CFO 91 Appointment: Financial Accountant 77 Appointment: Management Accountant 49 Appointment: Supply Chain Practitioner 54 Alignment of Finance Component to support CFO 34 Vacancies - Finance Component 13 0 20 40 60 80 100

6. MANAGEMENT ARRANGEMENTS (CONT.) INTERNAL CONTROL (INC. POLICIES/PROCEDURES) Documented financial policies/procedures 63 Consistency of policies/procedures with 80 Treasury Regulations Annual revision of policies/procedures 71 Favourability of Internal Audit findings - 51 Control mechanisms Favourability of Internal Audit findings - 60 Organisation of functions 0 20 40 60 80 100

7. MANAGEMENT ARRANGEMENTS (CONT.) RISK MANAGEMENT 100 Risk Assessment conducted 83 Risk Assessment performed annually Documented Fraud Prevention Plan as part of 83 risk strategy Regular feedback on strategies implemented 74 to mitigate risks 0 20 40 60 80 100

8. MANAGEMENT ARRANGEMENTS (CONT.) INTERNAL AUDIT System of Internal Audit (IA) 100 Head of Internal Audit appointed 89 Audit Charter approved by Audit Committee 94 Rolling 3 year strategic Internal Audit Plan (IAP) 91 IA Unit reports quarterly to the Audit Committee 63 IAP addresses risk areas 63 IA Unit report directly to Accounting Officer 57 0 20 40 60 80 100

9. MANAGEMENT ARRANGEMENTS (CONT.) EFFECTIVENESS OF AUDIT COMMITTEES Meets at least twice per annum 97 Meets with external auditors at least 94 annually Reports on effectiveness of internal audit 86 Reports on risk areas to be covered in 60 internal and external audit Reports on compliance with legal and 66 regulatory provisions 0 20 40 60 80 100

10. MANAGEMENT ARRANGEMENTS (CONT.) NATIONAL PUBLIC ENTITIES (SCH 2/3A/3B) Submission: Strategic Plans & estimates of 67 rev & exp (3A) Submission: Quarterly performance reports 58 (3A) Submission of Corporate Plans & est i.r.o rev, 69 exp & borrowings (2 & 3B) Conclusion of shareholders compacts (2 & 3B 54 Submission: Quarterly reports on performance 54 (2 & 3B) 0 20 40 60 80 100

11. REVENUE, EXPENDITURE, ASSET AND LIABILITY MANAGEMENT (REAL) MANAGEMENT REVENUE AND EXPENDITURE Regular cash deposits 100 Compliance with Sec 38(1)(j) before 100 transferring funds Actual expenditure in accordance with 42 cash flow projection Variance of deviation in excess of cash 7 flow projection 0 20 40 60 80 100

12. REVENUE, EXPENDITURE, ASSET AND LIABILITY MANAGEMENT (REAL) MANAGEMENT (CONT) ASSET AND LIABILITY MANAGEMENT Establishment of Asset Register 89 Classification of different assets 77 Clear identification of persons responsible for 66 assets Integration with purchasing and payment 63 system Documented debt write off policy 54 Bad debts in relation to debtors 7 0 20 40 60 80 100

13. ACCOUNTING AND REPORTING ACCOUNTING Control measures to ensure authentic 100 supporting documentation Monthly recon of suspense/clearing 83 accounts Postings to suspense/clearing accounts 62 approved by CFO Uncleared amounts reported to accounting 31 officer Accounting officer certifies month end 46 closures 0 20 40 60 80 100

14. ACCOUNTING AND REPORTING (CONT) REPORTING - PUBLIC ENTITIES Tabling:Annual Report and Fin Statements - 29 Legislature within 6 months from year end Tabling of explanations if not tabled within 6 65 months Rev/Exp - Quarterly reporting (3A) within 30 days 67 from end of quarter PFMA and Treasury Reg compliance - Quarterly 29 reporting: 30 days from end of quarter 0 20 40 60 80 100

15. ACCOUNTING AND REPORTING (CONT) REPORTING- DEPARTMENTS Submission of financial statements to 94 Treasury by 31 May 2002 Annual reports tabled in legislature before 30 Sept 2002 66 Tabling of explanations if not tabled by 100 30 Sept 2002 Annual Report/Fin Statements -consistent 83 with Treasury Guidelines Monthly reports on actual/projected rev&exp 97 0 20 40 60 80 100

16. National Treasury GRAPHIC PRESENTATION OF SURVEY RESULTS CONSTITUTIONAL INSTITUTIONS

17. MANAGEMENT ARRANGEMENTS OFFICE OF THE CFO Appointment of competent CFO 75 Appointment of Financial Accountant 100 Appointment of Supply Chain Practitioner 50 38 Appointment of Management Account Alignment of Finance Component to support the CFO 13 3 Percentage of vacancies in the Finance Component 0 20 40 60 80 100

18. MANAGEMENT ARRANGEMENTS (CONT) RISK MANAGEMENT Risk Assessment conducted/Annual Risk 88 Assessment Regular feedback on strategies implemented to 88 mitigate risks Documented Fraud Prevention Plan as part of 63 risk strategy 0 20 40 60 80 100

19. MANAGEMENT ARRANGEMENTS (CONT) DELEGATIONS OF AUTHORITY AND INTERNAL CONTROL Delegations i.t.o the PFMA 75 and Treasury Regulations Documentation of financial 50 policies and procedures Consistency of policies and 25 procedures with TR's Annual revision of policies and procedures 25 0 20 40 60 80 100

20. MANAGEMENT ARRANGEMENTS (CONT) INTERNAL AUDIT System of Internal Audit (IA) reporting directly to 100 AO Audit Charter approved 88 by Audit Committee Rolling 3 year strategic 63 Internal Audit Plan IAP addresses risk 75 areas IA Unit reports quarterly 50 to the Audit Committee 0 20 40 60 80 100

21. MANAGEMENT ARRANGEMENTS (CONT) EFFECTIVENESS OF AUDIT COMMITTEES Meets at least twice per annum 88 Meets with external auditors at least annually 88 Reports: Effectiveness of internal 50 audit/compliance with legal prov Reports on risk areas to be covered in internal 50 and external audit 0 20 40 60 80 100

22. STRATEGIC PLANNING Strategic plan (SP) tabled timeously in 63 legislature SP compliant with 100 Treasury Regulations 63 SP annually revised Documented procedure to monitor performance 25 against SP 0 20 40 60 80 100

23. REVENUE, EXPENDITURE, ASSET AND LIABILITY (REAL) MANAGEMENT REVENUE AND EXPENDITURE MANAGEMENT Regular cash deposits 100 Actual expenditure in accordance with 63 cash flow projection Variance of deviation in excess of cash 3 flow projection 0 20 40 60 80 100

24. REVENUE, EXPENDITURE, ASSET AND LIABILITY (REAL) MANAGEMENT (CONT) ASSET AND LIABILITY MANAGEMENT 100 Establishment of Asset Register 50 Classification of assets 50 Persons responsible for assets Integration with purchasing and payment 38 system 0 20 40 60 80 100

25. ACCOUNTING AND REPORTING ACCOUNTING Control measures: ensure authentic supporting 100 documents Monthly recon of suspense/clearing accounts 50 Postings to suspense/clearing accounts 50 approved by CFO AO certificate of compliance w.r.t month end 25 closures Uncleared amounts reported to AO 25 Daily bank reconciliations 0 0 20 40 60 80 100

26. ACCOUNTING AND REPORTING (CONT) REPORTING - CONSTITUTIONAL INSTITUTIONS Submission: fin. statements to National 50 Treasury by 31 May 2002 Annual report & fin statements tabled in 63 legislature by 30 Sept 2002 Tabling of Sec 65 explanations if not 0 tabled by 30 Sept 2002 0 20 40 60 80 100

27. INTERVENTIONS TO ADDRESS ISSUES OF CONCERN • Financial Management Improvement Programme • Accounting policies, practices, procedures and guidelines related to REAL. • Revised Internal Audit Framework and booklets on various areas of internal control. • Quality assurance reviews on internal units.

28. RECOMMENDATIONS NOTE • Progress with Implementation of the PFMA • Interventions to assist departments with PFMA implementation • Next progress report towards end of 2003/04 financial year.

29. National Treasury THANK YOU