Can we all move forward if the Pilots are still Piloting?
CIGFARO/ IMFO WC SEMINAR - 6 JUNE 2017
Content
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Background - mSCOA Regulations
National Treasury Implementation Strategy
Initial Pilot Process: Overstrand Municipality
Factors impacting on mSCOA Implementation Process
Risks
Reality Check
Consequence Management
Strategy / Contingency Plans
Conclusion
Background - mSCOA Regulations
Local government has an important role to play in
strengthening the link between the citizens and
government’s overall priorities and spending plans:
 The National Development Plan (NDP) sets out an
integrated strategy for accelerating growth, eliminating
poverty and reducing inequality by 2030;
 Local Government is required to incorporate the objectives
of the NDP in its budgets;
 The goal should be to enhance service delivery aimed at
improving the quality of life for all citizens.
Background - mSCOA Regulations
Budget & Reporting Regulations:
The Municipal Budget and Reporting Regulations were
published by the Minister of Finance, with the concurrence of
the Minister of Provincial and Local Government in
Government Gazette 32141 dated 17 April 2009 and took effect
on 1 July 2009.
Reforn Achievements prior to mSCOA:
 Consolidated MTREF budget information for all municipalities
 Quarterly Section 71 reports
 State of Municipal Finances report – annually
 Over- and under expenditure report to Parliament
 Local Government Budgets and Expenditure Review
 Report on the Tabling of budgets to Parliament
Background - mSCOA Regulations
MUNICIPAL REGULATIONS ON A STANDARD CHART OF ACCOUNTS
[SCOA for MUNICIPALITIES] - Project Summary Document
Background - mSCOA Regulations
Next logical step -
Development and implementation of a mSCOA for Local
Government:
 Improve credibility and reliability of financial data
 General business processes and applications
Background - mSCOA Regulations
SCOA Regulation –
Preamble
Chapter 1: Interpretation, Object and Application
Chapter 2: SCOA for Municipalities and Municipal Entities
Chapter 3: Minimum Business Process and System Requirements
Chapter 4: Technical Committee for SCOA
Chapter 5: Implementation of Standard Chart of Accounts
Chapter 6: General
SCHEDULE: Segments of SCOA For Municipalities and
Municipal Entities
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National Treasury Implementation Strategy
National Treasury Implementation Strategy
Pilot Process: Overstrand Municipality
Overstrand mSCOA Roadmap
 The mSCOA implementation has taken place from July 2014
with Overstrand being fully compliant when Phase 4 ends
in June 2017. The project has been split into 5 Phases in
order to enable a smoother implementation that is the
least disruptive.
 In collaboration with Bytes Universal Systems, Overstrand
has taken a three-phased approach to the system
development and piloting processes. Two further phases
have been adopted in order to implement the mSCOA
regulations by 01 July 2017.
Pilot Process: Overstrand Municipality
Overstrand mSCOA Roadmap
 Phase 1 – Budgeting Module
 Phase 2 – Transactional Posting Levels
 Phase 3 – Reporting Modules
 Phase 4 – mSCOA Piloting Implementation
 Phase 5 – Full mSCOA Operational Compliance
It was anticipated that the most difficult components, i.e. those
requiring detailed business process changes or system
transactions, will be implemented during Phase 4 as it will take
longer to configure or design.
Pilot Process: Overstrand Municipality
mSCOA Governance Steering Committee
mSCOA
GOVERNANCE
STEERING
COMMITTEE
MUNICIPAL
MANAGER
DIRECTOR:
COMMUNITY
SERVICES
DIRECTOR
MANAGEMENT
SERVICES
DIRECTOR:
PROTECTION
AND
SECURITY
SERVICES
DIRECTOR:
FINANCE
(PROJECT
SPONSOR)
DIRECTOR:
INFRASTRUC
TURE AND
PLANNING
DIRECTOR:
LOCAL
ECONOMIC
DEVELOPME
NT
CHIEF AUDIT
EXECUTIVE
Pilot Process: Overstrand Municipality
mSCOA Working Group
mSCOA WORKING
GROUP
DIRECTOR:
FINANCE
(PROJECT
SPONSOR)
SENIOR
MANAGER:
SUPPLY
CHAIN
MANAGEM
ENT
SENIOR
MANAGER:
REVENUE
SENIOR
MANAGER:
EXPENDIT
URE AND
ASSETS
DEPUTY
DIRECTOR:
FINANCE
(SCOA
CHAMPION
)
SENIOR
MANAGER:
FINANCIAL
SERVICES
SENIOR
MANAGER:
SYSTEMS
DEVELOPM
ENT
MANAGER:
FINANCIAL
ACCOUNTING
MANAGER:
BUDGET
OFFICE
SENIOR
BUSINESS
ANALYST
SYSTEMS
ADMINISTR
ATOR:
SAMRAS
Pilot Process: Overstrand Municipality
Pilot Process: Overstrand Municipality
High Level Scope - Project Plan
Pilot Process: Overstrand Municipality
Pilot Implementation 1 July 2015:
Budget Workshops
Change Management
Information Sharing (Big Bang Event) on June 2015
Pilot Process: Overstrand Municipality
Pilot Implementation 1 July 2015:
Pilot Process: Overstrand Municipality
Ongoing mSCOA Implementation after 1 July 2015:
Pilot Process: Overstrand Municipality
Ongoing mSCOA Implementation after 1 July 2015:
Factors impacting on Pilot Implementation Process
1. Advertising and Award - Transversal tender RT25 in 2016;
2. Release of Circular 80 – March 2016;
3. Release of mSCOA Circular 5 – July 2016 – requesting Local
Government to conduct an extensive ICT Due Diligence
Exercise assessing System / Applications minimum
functionality;
4. Release of Addendum to Circular 80 – October 2016;
5. Subsequent Versions of the Chart, Final Lock-down of
Version 6.1 - November 2016;
6. mSCOA A1 Budget Schedules outstanding - December 2016;
7. MFMA Circular 86 – Changes to Schedule A1 – March 2017
Factors impacting on Pilot Implementation Process
Factors impacting on Pilot Implementation Process
Factors impacting on Pilot Implementation Process
Factors impacting on Pilot Implementation Process
Risks
Major Risks - WC Government (mSCOA Project Management)
Risks (i):
Risks (ii):
Risks
Risks (iii):
Reality Check:
IDP/Budget Process – Overstrand Municipality
Reality Check:
NT - 9 March 2017
Reality Check:
MFMA Circular 86 (NT - 9 March 2017)
Reality Check:
MFMA Circular 86 (PT - 17 March 2017)
Reality Check:
MFMA Circular 86 (PT - 17 March 2017)
Reality Check:
(PT - 17 March 2017)
Consequence Management / Accountability?
 Failure of Service Rendering to Communities?
 Monthly Billing / Municipal Accounts?
 Payment Boycotts - Cash flows?
 Incorrect Payments (Creditors / Payroll)?
 Municipal Stores - Stock Levels?
 Procurement - Orders?
 Non-Compliance to MFMA?
SCOA Regulations / Budget and Reporting Regulations;
Submission of Annual Financial Statements;
Data Corruption / Material Misstatements / Audit Outcomes
Strategies / Contingency Plans
 Proactive strategies (Preparation and accountability)
- Execution of a Project Implementation Plan
OR
 Reactive Strategies (Activities in response to an event)
- Measures to contain consequences
OR
A COMBINATION OF BOTH
Strategies / Contingency Plans
Proactive strategies (Preparation and accountability)
Project Implementation Plan (i):
 Keep proper record of all testing done as well as the outcome
of any changes required during the process;
 Continuous communication between all stakeholders
involved in order to keep everybody informed about the
problems / solutions encountered;
 Important to establish dialogue between service provider and
any third party vendor;
 Do not interpret communication between service provider
and third party vendors, rather facilitate direct
communication;
Strategies / Contingency Plans
Proactive strategies (Preparation and accountability)
Project Implementation Plan (ii):
 Preferable to have a hotline to vendor for users as far as
possible, while testing is done in order to assist with response
time and understanding of practical environment;
 Ensure that ALL staff (financial and technical) are well versed
with the requirements and workings of mSCOA to minimize
incorrect input data and to ensure that budget is done
correctly;
 Format and content of Management Information reports
MUST be resolved upfront;
 Issues to be logged and tracked from initiation to closure in
order to monitor progress in the weekly SCOA steering
committee meetings;
Contingency Plans
Contingency Plans (Example)
Conclusion
 The perceived readiness of municipalities to implement
mSCOA, should be regarded as one of the most serious
challenges facing Local Government in decades;
 Local Government can be severely affected in terms of
these issues as highlighted;
 Urgent consultation with Local Government regarded as
prudent.
With Acknowledgement to Overstrand Finance Directorate Staff, for working together
tirelessly and inspired as a team towards mSCOA compliance.
National Treasury & Provincial Treasury, for statistics and
other information included in this presentation.
Thank You