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Select Committee on Appropriations 28 January 2014 TV Pillay: Office of the Accountant-General. INTRODUCTION. National Treasury administers the financial management regulatory framework and renders assistance;
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Select Committee on Appropriations28 January 2014TV Pillay: Office of the Accountant-General
INTRODUCTION • National Treasury administers the financial management regulatory framework and renders assistance; • Municipal Finance Management Act – Budgeting, Accounting, Reporting, Supply Chain and Internal audits, etc; • Assistance rendered as follows: • MFMA Implementation through coordination, research, help desk, training, regulations, guides and circulars; • Municipal Finance Recovery Services – support through development of financial recovery plans; • Technical Assistance – Support to improve financial management through placement of technical experts; • Conditional Grant – Administer, monitor and report on FMG; • Conditional Grant – Administer, monitor and report on ISDG
MFMA IMPLEMENTATION • Coordination Structure (Nat./Prov. Treasuries, DCoGs, SALGA, AG) • MFMA Regulations • Investment • Public Private Partnerships • Supply Chain Management • Asset Transfer and Disposal • Borrowing • Minimum Competencies • Budget Process and Management • MFMA Circulars - 71 issued • Unauthorised, Irregular, Fruitless and Wasteful Expenditure • Budgeting and Cost Containment Measures • Uniform Financial Ratios and Norms • System of Delegations • FMCMM
FINANCIAL RECOVERY PLANS AND OTHER MEASURES • Section 216 of the Constitution provide for National Treasury to stop transfer of funds to municipalities if they commit serious or persistent material breach; • Chapter 13 of MFMA enables assistance in developing a Financial Recovery Plan for municipalities. FRP may not be needed in all instances; • Procedure for stopping funds is also contained in section 38 of the MFMA; • NT previously intervened by communicating and delaying transfer to the following municipalities - Nala (FS), BelaBela (LP), Swellendam (WC), Kannaland (WC), Renosterberg, Joe Morolong, !Kai! Garib, Kgatelopele and Mier (NC)) • The intervention were due to persist failure to prepare AFS and submission to AG for audit; • Action plans have been put in place to assist the above-mentioned municipalities to address this matter.
MFRS – SUPPORT TO MUNICIPALITIES • Issued a Guide to support provinces to improve coordination and follow practical steps consistent with the legal framework; • Municipal Finance Recovery Services in NT offered direct support to Provinces and Municipalities upon request for assistance in development of financial recovery plan and technical assistance on financial management via MFIP; • Direct development support provided to the following: • Madibeng (NW) since August 2010, implementation in progress • Mahikeng (NW) since Dec 2010, implementation in progress • Msunduzi (KZN) since Nov 2011, implementation advanced stage • Naledi (FS) since Dec 2012, implementation in progress • Bushbuckridge (MP) since July 2013, implementation in progress
INTERVENTIONS AND RELATED CHALLENGES • Interventions are not always supported by structured plans, conditions, relevant support, monitoring and follow through; • Interventions are often ended earlier than appropriate as objectives may not have been achieved; • Conditions for lifting interventions were not in place, resulting in repeated interventions; • Before interventions terminated not all reasons for the intervention resolved; • Terms of reference with concise deliverables and timelines for Administrators; • Improved coordination efforts by provincial departments and at national can strengthen outcomes; • Improved monitoring and reporting can assist the Executive and Legislatures to gauge progress and take corrective measures.
TECHNICAL ADVISOR SUPPORT • MFMA Support Plans, confirmed with provinces, agreed with MM and Council • Institutional reforms promotes accountability and oversight, focusing on structure and processes • Technical reforms promotes transfer of skills and knowledge to municipal officials and focuses on systems, procedures and actions • Municipal steering committee, Mayor or Clr for Finance, MM and CFO monitors progress • Council makes it own executive decisions on reform progress, fully aware of the status of implementation • Allows decisions to be made in-house, rather than by an external party, so that individual organizational issues are taken into account on all matters • Monthly and weekly updates provided
TECHNICAL ADVISOR SUPPORT PRIORITY EMPHASIS ON BUILDING OF CAPACITY OF OFFICIALS • No programme designed to build the capacity of institutions will succeed without firstly, the necessary officials being appointed within an organization and secondly, necessary procedures and programmes designed to enhance the skills of those officials; • The Programme emphasizes the need for both, for full capacitation of the BTO and internal audit unit and compliance with FMG conditions, competency training and development of councillors and staff; • Details of progress to date; • 86% appointed a MM (46 appointed after MFIP commencement), • 71% appointed a CFO (39 appointed after MFIP commencement), • Advisors have undertaken reviews of BTOs in 90% and of IA in 84% of municipalities, • BTO capacitation – 23% of municipalities have made all appointments, • IA capacitation – 38% have made all appointments, • BTO staff duties aligned to MFMA reforms in 43% of municipalities, • IA outsourcing – 34% outsourced or utilizing shared services, • 81% appointed full complement of interns and 86% had appointed a mentor, • 83% have reviewed delegations
TECHNICAL ADVISOR SUPPORT TRAINING AND DEVELOPMENT INITIATIVES – MUNICIPAL OFFICIALS • Over 4534 training and development interventions provided across ten areas in financial management incl, budgeting, cash management and banking, financial reporting, assets and liabilities, revenue and expenditure, supply chain processes and procedures; • Over 3730 officials have registered for the formal Minimum Competency programmes nationally, at various service providers; • Most popular training areas for informal training were on budgeting (16%), revenue (16%), accounting / reporting (14%), supply chain (14%);
TECHNICAL ADVISOR SUPPORT • 8 provincial treasuries and 76 municipalities MUNICIPALITIES Eastern Cape (11)Alfred Nzo, Baviaans, Elundini, Emalahleni, Ikwezi, Joe Gqabi, Kou-kamma, Maletswai, Nkonkobe, Sakhisizwe, Sundays River Valley Free State (15)Kopanong, Letsemeng, Maluti-a-Phofung,Masilonyana, Metsimaholo, Mohokare, Moqhaka, Nala, Naledi, Ngwathe, Nketoana, Phumelela, Setsoto, Tokologo, Tswelopele KwaZulu-Natal (12)Imbabazane, Jozini, Mkhambathini, Mpofana, Msunduzi, Nquthu, Okhahlamba, Ugu, Umgungundlovu, uThungulu, Vulamehlo, Zululand Limpopo (5)Ba Phalaborwa, Bela-Bela, Elias Motsoaledi, Polokwane, Sekhukhune Mpumalanga (11)Albert Luthuli, Bushbuckridge, Dr JS Moroko, Emalahleni, Mkhondo, Msukaligwa, Nkomazi, Pixley Ka Isaka Seme, Thaba Chweu, ThembisileHani, Umjindi North West (10)Mahikeng, Matlosana, Moretele, Tswaing, RamotshereMoiloa, Dr Ruth Mompati, Naledi, Moses Kotane,, Ventersdorp, Kgetleng Riv. Northern Cape (6) Kamiesberg,Kgatelopele, Renosterberg, Siyancuma, Thembelihle, Umsobomvu Western Cape (6)Central Karoo, Laingsburg, Oudtshoorn, Overberg, Prince Albert, Saldanha Bay PROVINCIAL TREASURIESEastern Cape, Free State, Gauteng, KwaZulu Natal, Limpopo, Mpumalanga, North West, Northern Cape
FMG - CONDITIONS • Financial Management Grant conditions laid out in DoRA framework and addresses all aspects of financial management disciplines as per the MFMA; • Objectives of the Grant are as follows: • Improve capacity in FM in municipalities • Improve and sustain skills development including appointment of 5 graduate interns per municipality • Appropriately skilled financial officers consistent with competency regulations • Improvement with budget practices • Improvement in management of revenue, assets and liabilities • Improvement in SCM practices • Timely submission of AFS and improved audit outcomes • Improvement in Governance and Oversight
FMG- Expenditure • 2013 MTEF allocations :R424.7 million for 2013/14; R449.1 million for 2014/15 and R469.8 million for 2015/16. To date all funds have been transferred. • Actual expenditure to date amounts to R206.1 million or 49% of the total funding available for the 2013/14 financial year.
FMG - FINANCIAL MANAGEMENT INTERNS Interns – previous 3 years 14
FMG - INTERNAL AUDIT UNITS & AUDIT COMMITTES
Infrastructure Support Development Grant (ISDG) • The ISDG was introduced in 2011/12 financial year with an objective to increase the pool of built environment professionals within Local Government (i.e. engineering, town planning, architecture, quantity survey and geographic information systems). • The ISDG is a direct conditional grant to municipalities, a Schedule 5B grant in terms of the annual Division of Revenue Act (DoRA) (Act No 2 of 2013). • The ISDG programme was communicated to municipalities and water boards. Interested municipalities were invited to submit 3 year business plans to the National Treasury. National Treasury received proposals and after the review process, selection was made. • The critical factor in the business plans was for the hosts (municipalities and public entities) to demonstrate ability and capacity to implement the programme as per conditions of the framework in ensuring that recruited graduates could be trained as per the requirements of the relevant statutory bodies/councils supported by mentors.
ISDG - Expenditure • 2013 MTEF allocations: R98.5 million for 2013/14; R104.4 million for 2014/15 and; R129.2 million for 2015/16. To date an amount of R40.1 million has been transferred. The remaining R58.4 million will be transferred during January/February 2014 to participating municipalities. • Actual expenditure to date amounts to R18.3 million which is 14% of the total funding available for the 2013/14 financial year.
ISDG - Training Duration and Absorption • The training duration of graduates is determined by the relevant professional Statutory bodies/councils; • Example, Engineers require a minimum of 3 years working experience in order to qualify and be registered as a professional with Engineering Council of South Africa. • The first batch of graduates are expected to complete the programme in 2015. • upon successful completion of the programme, graduates can be absorbed in municipalities; • where a municipality cannot absorb graduates, they will be released to seek employment in other municipalities.
ISDG Guidelines have been developed and will be implemented in 2014/15 financial year; Initiate the ISDG Steering Committee to provide strategic support and direction; Focus on the impact of capacity for service delivery and infrastructure delivery; Appointing a service provider for the quality assurance of the Statutory Council training and support; Service Level Agreements between partnering entities and municipalities; Road shows and invitation to municipalities; Municipality must developed absorption strategy (in partnership with Water Boards and other partnering entities); One-on-one sessions with the graduates trainees in municipalities; Further roadshows to municipalities on the ISDG. ISDG – 2014/15 initiatives
Combination of technical assistance, conditional grants and training are having a positive impact on institutional development and capacity building interventions; Challenges of absorption and appointment of skilled officials still remain; Movement of trained officials from smaller to larger municipalities continue; Commitment by some municipalities to fully implement the reforms, need attention; Reliance on service providers and sustainability of support to be addressed; Long term approach needed to implement all financial management reforms. Conclusion
