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;
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
2
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
3
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), Bela Bela (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.
4
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
5
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.
6
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
7
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
8
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%);
9
TECHNICAL ADVISOR SUPPORT
• 8 provincial treasuries and 76 municipalities
MUNICIPALITIES
Eastern Cape (11)
Free State (15)
KwaZulu-Natal (12)
Limpopo (5)
Mpumalanga (11)
North West (10)
Northern Cape (6)
Western Cape (6)
PROVINCIAL TREASURIES
Alfred Nzo, Baviaans, Elundini, Emalahleni, Ikwezi, Joe Gqabi,
Kou-kamma, Maletswai, Nkonkobe, Sakhisizwe, Sundays River
Valley
Kopanong, Letsemeng, Maluti-a-Phofung, Masilonyana,
Metsimaholo, Mohokare, Moqhaka, Nala, Naledi, Ngwathe,
Nketoana, Phumelela, Setsoto, Tokologo, Tswelopele
Imbabazane, Jozini, Mkhambathini, Mpofana, Msunduzi, Nquthu,
Okhahlamba, Ugu, Umgungundlovu, uThungulu, Vulamehlo,
Zululand
Ba Phalaborwa, Bela-Bela, Elias Motsoaledi, Polokwane,
Sekhukhune
Albert Luthuli, Bushbuckridge, Dr JS Moroko, Emalahleni,
Mkhondo, Msukaligwa, Nkomazi, Pixley Ka Isaka Seme, Thaba
Chweu, Thembisile Hani, Umjindi
Mahikeng, Matlosana, Moretele, Tswaing, Ramotshere Moiloa, Dr
Ruth Mompati, Naledi, Moses Kotane,, Ventersdorp, Kgetleng Riv.
Kamiesberg, Kgatelopele, Renosterberg, Siyancuma,
Thembelihle, Umsobomvu
Central Karoo, Laingsburg, Oudtshoorn, Overberg, Prince
Albert, Saldanha Bay
Eastern Cape, Free State, Gauteng, KwaZulu Natal, Limpopo,
Mpumalanga, North West, Northern Cape
10
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
11
FMG- Expenditure
“R000”
Total Funding
Available
2011/12
2012/13
As at 30 December
2013/14
384 641
402 753
424 798
Transfers to date
384 641
402 753
424 798
Expenditure
Expenditure as of
total funds
362 935
387 354
206 178
94%
96%
49%
• 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.
12
FMG - 2013/14 Support Plans
13
FMG - FINANCIAL MANAGEMENT INTERNS
Interns – previous 3 years
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2010/
11
Series1 1300
Number
2011/
12
1588
2012/
13
1850
14
FMG – Chief Finance Officer - Dec 2013
15
FMG - BUDGETS
16
FMG - INTERNAL AUDIT UNITS &
AUDIT COMMITTES
17
FMG - SUBMISSION OF AFS FOR AUDIT
18
FMG - AUDIT ACTION PLANS
19
FMG – AUDIT FINDINGS
20
FMG- SPENDING AS AT 31 DECEMBER 2013
Province
2013/14
Total Number of Allocations
municipalities
(R' 000)
Total spent as at
31 December 2013
(R' 000)
% of funds
spent
Eastern Cape
45
70 100
34 840
50%
Free State
24
36 850
19 716
54%
Gauteng
12
19 350
7 715
40%
Kwa Zulu Natal
61
95 100
47 549
50%
Limpopo
30
45 800
23 936
52%
Mpumalanga
21
31 900
13 839
43%
Northern Cape
32
50 000
25 953
52%
North West
23
36 098
15 048
42%
Western Cape
30
39 600
17 582
44%
21
FMG - 4 YEAR SPENDING TREND
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
2009/10
2010/11
2011/12
2012/13
22
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
"R 000"
Total Funding
available
DoRA allocation
Tr ans fe r r e d to date
Expe nditur e
Expe nditur e as % of
total funds
2011/12
2012/13
As at 30 September
2013/14
39 000
39 000
39 000
4 594
109 943
75 460
75 460
67 658
126 763
98 500
40 100
18 278
12%
62%
14%
•
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.
24
ISDG - Municipalities & number of graduates
Number of Graduates
Provinces
Eastern Cape
Gauteng
Kwazulu Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
Total Number
Municipality Name
Buffalo City
Nelson Mandela Bay
Lunkhanji
King Sabata Dalindyebo
Aflred Nzo
Westonaria
Ethekwini
Ethekwini (Umngeni Water)
Umhlahuze
Ugu District
Polokwane (Lepelle Northren Water)
Gert Sibande
Govan Mbeki (Rand Water)
Sol Plaatjie
John Taolo Gaetsewe
Ditsobotla
George
City of Cape Town
of Graduates
Start date 2012/13 2013/14
2012/13
21
20
2012/13
31
44
2012/13
8
8
2012/13
0
19
2012/13
0
24
2011/12
12
12
2011/12
22
32
2011/12
44
44
2012/13
25
23
2012/13
0
0
2011/12
16
17
2013/14
0
0
2011/12
120
117
2012/13
20
11
2012/13
0
5
2012/13
23
23
2011/12
13
14
2013/14
0
0
355
413
ISDG - Graduates in various Professions
26
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.
27
ISDG – 2014/15 initiatives
• ISDG Guidelines have been developed and will be implemented in
financial year;
2014/15
• 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.
Conclusion
• 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.
30