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Presented by National Treasury: Chief Directorate Local Government Budget Analysis – 20 June 2017

MSCOA Performance management Inculcating ethical culture through governance processes for sustainable service Audit & risk indaba. Presented by National Treasury: Chief Directorate Local Government Budget Analysis – 20 June 2017. AGENDA – Master Class 3. mSCOA - High-level overview

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Presented by National Treasury: Chief Directorate Local Government Budget Analysis – 20 June 2017

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  1. MSCOA Performance management Inculcating ethical culture through governance processes for sustainable service Audit & risk indaba Presented by National Treasury: Chief Directorate Local Government Budget Analysis – 20 June 2017

  2. AGENDA – Master Class 3 • mSCOA - High-level overview • mSCOA and Performance Management • Discussion - the way forward

  3. Municipal SCOA

  4. 4 The seven (7) mSCOA Segments: an Overview Municipal Standard Classification: Against which organisational vote or sub-vote (in the municipality’s unique organisational structure) should the transaction be recorded? Non-mandatory Project: Does the transaction relate to a specific project, and if so, what type of project? Capital/ Operational/ Default Ensures that all projects in the IDP are aligned to the budget. Function: Against which function or sub-functions should the transaction be recorded? Enforces the Constitution, IMF, GFS classification, and Municipal Structures Act. Item: What is the nature of the transaction to be recorded?: Revenue/ Expenditure/ Gains and losses/ Liabilities/ Net Assets. Enables the traditional financial reporting and reconciliations. (The Segment that most practitioners are traditionally familiar with.) Costing: Brings in management accounting/ tariff modelling. What is the impact of an item on services (secondary costing)? Allows a municipality to redistribute primary cost between functions. Fund: What source will fund the transaction and from which source is the revenue received? LG is on the accrual system. Aligns Revenue and Expenditure to in essence reflect cash flow. Region: Which geographical area is deriving the benefit from the transaction? Administrative or Head office/ Wards/ Whole of Area – Country/Province/ Whole of the Metro/District/Municipality

  5. Managing performance in a Municipal SCOA environment

  6. 6 mSCOA enabling Performance Management Project: mSCOA through the Project Segment directly links the municipality’s long term planning with National-/ Provincial-/ and District Planning/ priorities in its IDP. This segment links individuals to projects and financial information. Function: Allows performance management and benchmarking across the dashboard of functions of for example Mayor/ Municipal Manager/ CFO/ Functions for services (Water/ Electricity, etc.). Municipal Standard Classification: Enable municipal in-house performance trends against historic muni specific performance in use with the other segments. Non-mandatory Item: Traditionally familiar also for financial performance purposes. mSCOA to improve what is known: standardisation together with the Function Segment enables benchmarking provincially/ nationally/ internationally. Costing: Enable, together with function to benchmark municipal tariffs and working towards cost reflective tariffs across the province and nationally/ internationally. Fund: Will improve national, provincial and district oversight of performance, particularly performance on grant performance in conjunction with Item, Region and Project. Region: To improve performance management in areas of and enable community consultation, political oversight and ward committees. Region in joint use with Function will improve oversight at service level in a financial context.

  7. WHAT DOES THIS MEAN FOR WHERE WE ARE NOW? Discussion Groups

  8. The IDP and mSCOA • Already in 2000, the Municipal Systems Act (MSA) envisaged that every municipality must have: • Long term strategic and spatial development plans (20 years plus); • That are regularly reviewed and aligned in the context of National and Provincial and District development priorities. The IDP in essence is the five (5) year slice of the above, the existing council is focussing on in its 5 year implementation horizon. mSCOA enables and enforces this embrace and/ or link….

  9. The IDP and mSCOA Link the IDP to the mSCOA Project Segment by inserting the: IDP KPA number, Service delivery Objective, IDP KPI (Objective) and project number as a prefix to the project name as part of the “breakdown allowed”. For example:

  10. mSCOA seamless integration

  11. mSCOA – seamless integration Who? What? Lllllllll lllllllll How much R? Who benefit? When? Planning to Perform

  12. mSCOA – What does this mean for where we are now? Planning & Performance Management Let’s share experience/ ideas We plan to perform: Deliverables, achievements, timelines, risks, roles, responsibilities + how will be monitored • Currently, how do planning (IDP) and performance management work together? • Were they part of mSCOA implementation? • IT cater for their needs as part of the system implementation? ? Integrated planning and performance management

  13. mSCOA – What remains to be done in the municipality?Planning & Performance Management • Do you know your real current status? • Prepare a plan to address shortcomings (also considering today’s shared experience). • Obtain buy-in/ approval. • Implement. What remains to be done in your municipality to ensure: Integrated planning and performance management Take home…

  14. mSCOA seamless integration

  15. mSCOA – What does this mean for where we are now? Performance Reporting IDP 2012/13 • Target: to build 4 (four) clinics for R5 million. AFS and Annual Report: • 2 (two) clinics for R5,5 million. • Achievements 2012/13 • Xxxxxxx • Built 2 clinics • Xxxxxxx • Xxxxxx ? Achievement

  16. mSCOA – What does this mean for where we are now? Performance Reporting Integrated performance reporting: Throughout the accountability cyclereporting progress/ achievements against our initial planning (targets) • Are you able to set the IDP up in your system? • Are you able to break the IDP down into all the municipality’s projects on the system? • Does the system (for the above) allow/ include non-financial information: Project plan, deliverables, responsible person(s), due dates, risk register, performance information, etc? ? Let’s share experience/ ideas

  17. mSCOA – What remains to be done in the municipality?Performance Reporting • Do you know your current process/ policies/ status affecting performance reporting? • Where should you start to get to seamless integration in performance reporting across the cycle? What remains to be done in your municipality to ensure: Performance reporting integrates across the accountability cycle Take home…

  18. 1 mSCOA seamless integration Service Delivery Service Delivery

  19. mSCOA – What does this mean for where we are now? PM integrating with Service Delivery We plan to perform Financial + non-financial information in performance management and delivery of services – service delivery enabling vs transaction enabling Integrate performance management with service delivery: • How does it work currently? • What information does the municipality need to perform on its projects? Project plans, impact studies, area town plan, district/ province plan, contract, contract management, contractor + for what, how monitor/evaluate contract performance, etc. • Planned for seamless integration and formed part mSCOA implementation? • IT cater for these needs as part of the system implementation? Let’s share experience/ ideas ?

  20. mSCOA – What remains to be done in the municipality?PM integrating with Service Delivery What remains to be done in your municipality to ensure: Service delivery integrates with performance management? • How does it work at present? • Where to start to get to seamless integration? Where to start…?

  21. 1 mSCOA seamless integration Service Delivery Service Delivery Individual Performance

  22. Performance Monitoring + Evaluation Individual Performance • Lowest level performance agreements cascade to? • Align with current policies/ processes/ collective bargaining agreements and legislation? • Performance setting, monitoring and evaluation broadened across mSCOA Segment horizon? • What audit evidence is required currently to support individual performance evaluation? • Does the current IT system provide this (integrate)? ? Let’s share experience/ ideas

  23. mSCOA – What remains to be done in the municipality?Integrating individual performance (set/ monitor/ report/ evaluate) What remains to be done in your municipality to ensure: Individual performance Management integrates? • How does it work at present? • Where to start to get to seamless integration? Where to start…?

  24. mSCOA – What does this mean for where we are now? Concluding - benefits mSCOA requires capturing of transactional detail: • allowing deeper interrogation of information, trail of trends, trends across wider area/ aspects. • Example: Municipal Running Costs – Can use as a measurement to compare similar municipalities on areas such as their capacity and/ or efficiency, etc. mSCOA fully embedded and embraced: • large amounts of time can be diverted from report compilation and compliance activities rather towards value-adds such as interrogating and interpreting reports • Reports must be generated automatically (integrated systems) – thereby improving and opening time to monitor and oversee service delivery (performance).

  25. Questions

  26. Thank you for the opportunity to discuss mSCOA with you

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