PowerPoint Presentation

Briefing to the Standing Committeeon Public Accounts (SCOPA)

DIRECTOR-GENERAL

NATIONAL TREASURY

1 JUNE 2005

Consolidated financial information (2004)

Unauthorised expenditure

Role of National Treasury with regard to financial managementsupport to departments

Listing of Public Entities in terms of the PFMA

Amendments to the PFMA

Training of finance staff in the public service

SAMDI – Financial Management Training Strategy

Contents of Presentation

Consolidated Financial Information

Section 8(3) of the PFMA provides for submission of consolidatedfinancial statements

Different bases of accounting within reporting entities makes consolidationprocess complex

Two sets of consolidated financial information presented for the 2003/04financial year

Resulted in various qualifications by the Auditor-General

Late submission of information to parliament

Various measures implemented to address the abovementioned issues

Unauthorised expenditure

Unauthorised expenditure (continued)

•Significant increase in 99/00

–Non-compliance with STB (R18,633 in Public Enterprises)

–Over expenditure on Personnel (R43,521 in Justice)

•Large increase over 2001/02 and 2002/03

–R41,768 in Public Works (budget less than contractualleasing obligation)

–R121,937 overspent on Census (Statistics SA)

–R227,008 in Public Works (budget less than contractualobligation)

•Some decrease in 2003/04, but still significant

–R40,292 for peace keeping operations not budgeted(Defence)

–Contractual obligations giving rise to interest payments (DTI– R14,186)

– R30,360 in Public Works (budget less than contractualobligation)

•Approve unauthorisedexpenditure and additionalfunds (NRF)

•Approve unauthorisedexpenditure but recorded asexpenditure against futureyears

•Not authorised and shouldproceed to furtherinvestigation and attempt torecover

Guided by

•Has the State received valuefor money

•Has any individualunlawfully gained

•Rulings of STB – anindividual has beennegligent

Unauthorised expenditure (continued)

Options:

Unauthorised expenditure (continued)

•Detail recommendations by National Treasury per individualcase

•Need to improve understanding of SCOPA’s requirements

–Format of recommendation

–Date of submission

Unauthorised expenditure (continued)

The way forward:

Financial Management Support to Departments

Section 6(2)(d) of the PFMA provides for the National Treasury to assistdepartments in building capacity for sound financial management

CFO forums (including sector specific) to address various financialmanagement related issues

Regular visits to departments to discuss issues raised by the Auditor-General

Preparation of frameworks (Internal Audit, Risk Management) and relatedtraining

Preparation of templates for compiling annual financial statements andextensive training

Participation in audit committees of departments

Internal audit conference for national, provincial and local government

Secondment of staff of the Office of the Accountant-General to ensure skillstransfer

Listing of Public Entities

Section 47 of the PFMA provides for:

-The listing of unlisted public entities by Minister of Finance

-The accounting authority of a public entity to notify the NationalTreasury if not listed

Registrar of Public Entities within National Treasury responsible foridentification of unlisted public entities

Updated list of public entities published in government gazette andNational Treasury’s website on an ongoing basis – latest 11 April 2005

Public entity review recently completed will improve processes forclassification and listing of public entities

Amendments to the Public Finance Management Act (PFMA)

Financial management reform process was still in its initial stages of developmentwhen PFMA was enacted

National Treasury embark on long process to identify all the issues andchallenges facing the PFMA

Number of amendments envisaged are numerous and largely related to:

-Governance review of public entities

-Alignment with MFMA

-Financial management provisions in DORA

-Provisions of PFMA included in Public Audit Act

-Strengthening of performance accountability

-The IMF’s report on South Africa’s Fiscal Transparency

Submission of amendments to parliament – October 2005

Training of Finance Staff in the Public Service

Formal academic programmes by tertiary education institutions

Providers catering for short-term training needs

Framework for Future Training in Governmental Financial Management

National Treasury’s Validation Board

Training of Finance Staff in the Public Service(continued)

PFMA related courses to CFO’s and other senior officials

Service Level Agreement with IPFA

Implementation of reforms and related training

Accounting officer’s responsibility to employ, train and retain competentstaff

SAMDI – Financial Management Training Strategy

Fulfill a more meaningful role with effect from 1 April 2005

Training strategy specifically developed for financial management

Emphasis on technical financial management training and financialmanagement training for non-financial managers

Ensure SAQA compliance of training material. Monitor and evaluatetraining programmes

Key focus areas for financial management training identified byNational Treasury

National Treasury will provide assistance to SAMDI on matters relatedto financial management training