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PUBLIC FINANCIAL MANAGEMENT REFORMS ...

PUBLIC FINANCIAL MANAGEMENT REFORMS
What really works?
A South African Perspective

Sithembiso F Nomvalo
Accountant-General - South Africa
National Treasury
1 – 3 December 2008

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  • National Treasury

Tue 0900  Nomvalo Tue 0900 Nomvalo Presentation Transcript

  • PUBLIC FINANCIAL MANAGEMENT REFORMS What really works? A South African Perspective Sithembiso F Nomvalo Accountant-General - South Africa National Treasury 1 – 3 December 2008 ICGFM Conference Washington D.C
  • Contents
    • Old financial management regime
    • Structure of SA government
    • Reforms at a glance
    • What makes it work?
    • Challenges
    • Conclusion
  • Old Regime
    • Exchequer Acts – no uniformity in FM
    • Rule based – treasury instructions
    • Three houses of parliament
    • No strategic plans
    • No governance structures
    • Annual reports done very late
  • Structure of the SA Government
  • Legislative Framework
    • Chapter 13 of the Constitution especially Sec 216(1)
    • PFMA
      • Focus on performance, outputs & responsibilities
      • Flexibility with accountability & transparency
      • Efficiency, Effectiveness & Economy
      • Clarity of role s
    • Let managers manage
    • and hold them accountable
  • Accountability Framework 2. AGREEMENT - OUTCOMES 6. MANAGERIAL ACCOUNTABILITY 3. PERFORMANCE CONTRACT - OUTPUTS 1. ACCOUNTABILITY for OUTCOMES LEGISLATURE A O Line managers MINISTER 4. DELEGATION - OUTPUTS 5. STATUTORY ACCOUNTABILITY - OUTPUTS
  • Governance & Control Framework in SA Watchdog for the citizens Cabinet Member or Provincial MEC accountable to Legislature Has ultimate responsibility for the execution of policies, plans and objectives of the entity Provides advice to AO on enterprise RM Reviews and provides assurance over internal control, risk management and governance processes Management activity must include internal control & risk management
  • Reforms at a glance
  • Planning, budgeting and reporting cycle
  • Relationship between Strategic Plans & Annual Performance Plans
  • Developing Strategic Plans Medium Term Strategic Framework Top-down Linkages MTEF Five-year Strategic & Performance Plan Local Government IDPs Local Government IDPs Local Government IDPs Bottom-up Linkages National Spatial Development Perspective Provincial Growth & Development Strategy Sectoral Strategies President’s ‘State of the Nation’ address
  • Updating Strategic Plans MTEF Medium Term Strategic Framework National Spatial Development Perspective Provincial Growth & Development Strategy Sectoral Strategies Local Government IDPs Local Government IDPs Local Government IDPs Top-down Linkages Bottom-up Linkages Current Planning and Budgeting Cycle Next Year’s Part A of the Annual Performance Plan President’s ‘State of the Nation’ address
  • Activities and Timeframes National Treasury develops Medium Term Fiscal Framework National Budget Process Setting the Fiscal Framework and Revenue Sharing Provincial Budget Process Executive Committees set provincial priorities Departments develop Strategic Plans and initial MTEF estimates Medium Term Policy Priorities set by MinComBud FFC makes division of revenue recommendations National Treasury refines fiscal framework and makes division of revenue proposal Budget Council and Forum consider division of revenue proposals Medium Term Policy Priorities presented to Cabinet Draft provincial MTEFs presented to Executive Committees and MinMEC’s Cabinet sets Medium Term Policy Priorities and makes indicative allocations Departments adjust Strategic Plans and MTEF’s and submit to National Treasury Sectoral teams (10X10’s) review policies and work out budget implications for concurrent functions March April May June July August Prioritisation Preparation & review of MTEF submissions Review of fiscal framework & DoR Medium Term Strategic Framework and President’s State of the Nation Address Budget Council considers Medium Term Fiscal Framework February Sectoral teams (10X10’s) review policies and spending pressures on concurrent functions Departments develop Strategic Plans and initial MTEF estimates National Treasury issues Budget Guidelines
  • Departments adjust Strategic Plans and MTEF’s MTEC reviews Departments’ MTEF’s MinComBud reviews the MTEC recommendations Budget Council and Forum make final division of revenue proposals Extended Cabinet finalises macro and fiscal framework and division of revenue Division of Revenue Workshop on macro and fiscal framework MTBPS tabled in Parliament Departments finalise annual budgets and MTEF’s Departments finalise annual budgets and MTEF’s Cabinet approves final national budget and MTEF Executive Committees approves provincial budgets and MTEF’s National Treasury finalises annual fiscal framework MinComBud makes pre-final MTEF allocations Executive Committees make pre-final allocations Publication of Division of Revenue Bill Make final adjustments and prepare national budget documentation Make final adjustments and prepare provincial budget documentation Minister of Finance tables Division of Revenue Bill and national budget in Parliament MEC’s for Finance table provincial budgets in legislatures August September October December November February January MTEF recommendations Final decisions Preparation of budget documents Technical Committee on Finance reviews division of revenue proposals Provincial MTEC reviews Departments’ MTEF’s Provincial MTEC reviews Departments’ MTEF’s Activities and Timeframes National Budget Process Setting the Fiscal Framework and Revenue Sharing Provincial Budget Process Review of fiscal framework & DoR
  • Key Role Players
    • Parliament & Legislature
    • Treasury
    • Executive Authorities
    • Accounting Officers, Accounting Authorities
    • Auditor General
    • Accounting Standards Board (ASB)
    • Less restrictive than previous Treasury
    • Instructions and Financial Regulations
    • Focus on principle rather than detail
    • More autonomy to accounting officers
    • in financial decision making
    • Enable accounting officers to manage
    • better
    PFMA environment
  • Accounting Standards Board
    • Establishment in 2002, started work 2003
    • Sets standards of GRAP
    • Prepare & publish directives and guidelines
    • Recommend effective date of implementation of GRAP standards
  • Financial Statements consists of ..
    • Statement of financial performance
    • Statement of financial position
    • Statement of changes in Net Assets
    • Cash flow statement
    • Notes to the annual financial statements
    • Disclosure notes and annexures
    Value realised only in an accrual environment Accrual information
  • Annual reporting 31 March 31 May Complete reporting template Submit AFS to AG & relevant treasury 31 August External audit Submit annual report & AFS to relevant treasury & EO 31 July Audit report to AO 31 September Table in Parliament/ Legislature
  • Consolidations 31 March 31 June Submit consolidation to AG 30 September Submit audited consolidation to treasury 31 October Table consolidation in Parliament/Legislature 31 May Consolidation of reporting templates 31 July
  • Why it works?
    • Legal framework underpins the reforms
    • Legislation clarifies the roles and responsibilities
    • Process relied on broad consultation
    • Compulsory to report progress on implementation
    • Clearly defined reporting timeframes enabling effective oversight
    • Sufficient political will
  • Challenges
    • Cash Accounting in departments
    • Relevance & understandability of annual reports
    • Sufficient buy-in
    • Skills availability
    • Information systems
    • Reporting deadlines
    • Strengthening governance & oversight
  • Way forward
    • Secure sufficient buy-in
    • Focus on capacity building
    • Transition to a more comprehensive accounting basis
    • Explore possibility of government wide reporting
    • Strengthening governance & oversight
    • Although the South African Government has made great strides in transforming financial management, there are still considerable challenges to be overcome.
    Conclusion
  • Thank you