Public Finance Management Act - Powerpoint Presentation

7/31/2019 Public Finance Management Act - Powerpoint Presentation

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Public Finance For Non Financial

Managers

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Postgrad Dipl Project management Adv Dipl Project management

Bcom Economics Moderator – SSETA, ETDPSETA Assessor – SSETA, ETDPSETA, LGSETA,

W&RSETA Corporate Trainer, Motivational Speaker

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Self Introduction Ice breaker

Learner expectations Ground rules

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Module 1 Understanding the PFMA Module 2 Administration Rules and

Regulations Module 3 Income and Expenditure

Statements Module 4 Planning and Preparing a Budget Module 5 Analysing the Balance Sheet

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Explain the principles, rules and regulationsof the PFMA

Describe the benefits of the PFMA Explain the planning and budget cycle Clarify the specific roles in financial

administration Explain the responsibility and accountability

of the PFMA

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a key element in a set of reforms to themanagement of government finances

promotes the objective of good financialmanagement in order to maximise servicedelivery through the effective and efficientuse of the limited resources

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Modernise the system of financialmanagement in the public sector;

Enable public sector managers to manage,but at the same time be held moreaccountable;

Ensure the timely provision of qualityinformation; and

Eliminate the waste and corruption in theuse of public assets

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Sound financial systems and processes,producing the necessary information to

managers Transparent budgeting processes Effective management of revenue,

expenditure, assets and liabilities Unqualified consolidated financial

statements, prepared on the accrual basis

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National Treasury Provincial Treasuries

Accounting Officers

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Chapter One - Interpretation, objective,application and amendment of the Act

(sections 1–4) Chapter Two - National Treasury and

National Revenue Fund (sections 5–16) Chapter Three - Provincial treasuries and

provincial revenue funds (sections 17–25) Chapter Four - National and provincial

budgets (sections 26–35)

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Chapter Five - Departments andconstitutional institutions (sections 36–45)

Chapter Six - Public entities (sections 46–62) Chapter Seven - Executive authorities

(sections 63–65) Chapter Eight - Loans, guarantees and

other commitments (sections 66–75) Chapter Nine - General Treasury matters

(sections 76–80)

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Chapter Ten - Financial misconduct(sections 81–86)

Chapter Eleven - Accounting StandardsBoard (sections 87–91) Chapter Twelve - Miscellaneous (sections

92–95)

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Clarifies/explains the accountability chain by definingthe division of responsibilities between accountingofficers and their Ministers or MECs.

Establishes clear lines of accountability Enables good management practices and enables the

various stakeholders to fulfil their responsibilities. Modernises financial management in the public sector Reduces fraud, corruption and waste Maximises the capacity of Government to deliver

services due to more efficient and effective use of public resources

Establishes broad frameworks of best practices thatmanagers can adopt or, where necessary, adapt.

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Let managers manage, but hold themaccountable

Introduce a broad view of financialmanagement including the management of revenue, expenditure, assets and liabilities

Focus on outputs that relate to policypriorities

Establish good systems for financial control

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Strong internal control which includes riskmanagement (focusing on areas of risk such

as drug supply) and fraud management Financial planning In-year (throughout the financial year)

management and monitoring Reporting and accountability

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adopted in 1998 as part of a wide package of budget reforms which included the

Intergovernmental Fiscal Relations Act of 1997 (IGFRA) a tool to encourage cooperation across

ministries and planning over a longer horizonthan the immediately upcoming fiscal year

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enhances stability by letting provinces andnational ministries know what resources willlikely be available to them

encourages investment by making taxation,interest rates, and government spending morepredictable

improves transparency and can generate publicdiscussion

The future predictions also provide a baseline forassessing the effectiveness of the past year.sprogrammes

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The strategic planning process will ensurecommonality of purpose between theaccounting officer and the executive authority in

the pursuit of government objectives andoutcomes the operational plan. It must provide a

sufficiently detailed quantification of outputsand resources, together with service deliveryindicators, for the legislature to understandexactly what it is ‘buying’ for the communitywhen it approves the budget

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Effectiveness: Have we done the rightthings?

Efficiency: Have we done them the rightway? Equity: How fairly do we distribute and

provide our services? Economy: Did we get good value for our

rand?

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Auditor General Provincial Treasuries

Councillor responsible for Financial Matters(CFO) Accounting Officer (AO) Other officials

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Implement the rules and regulationspertaining to the mission accounts

Maintain the income and expenditure recordsand registers

Complete the processing of financial claimsto DFA (department of Foreign Affairs)

prescripts Demonstrate knowledge of methods of

payment and exchange rate of currencies Prepare expenditure and receipt vouchers

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Management, monitoring and reporting Auditing

Effective internal controls Expenditure management and transfers Revenue management Timely financial statements Delegation of responsibilities

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Actual revenue and expenditure for thepreceding month;

Anticipated revenue and expenditure for the

current month; A projection of expected expenditure andrevenue collection for the remainder of thecurrent financial year; and

When necessary, an explanation of any materialvariances, and

a summary of the steps that are taken to ensurethat the projected expenditure and revenueremain within budget

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In terms of the PFMA, the accounting officer: “must take effective and appropriate steps to

collect all money due to the department” asper section 38(1)(c)(i); and “must settle all contractual obligations and

pay all money owing, includingintergovernmental claims, within theprescribed or agreed period” as per section38(1)(f).

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In terms of the Treasury Regulations, the accountingofficer must ensure that:

“all transactions of an institution are supported byauthentic and verifiable source documents, clearly

indicating the approved accounting allocation” as perparagraph 17.1.1;

“sources of the transactions are readily identifiable”as per paragraph 17.1.2(a);

“monthly reconciliations are performed to confirm thebalance of each account” as per paragraph 17.1.1(c);

“reports are provided to the Accounting Officer aboutuncleared items on a monthly basis” as per paragraph17.1.2(d).

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Transfer Payments and Conditional Grants(Allocations of money from one sphere of government to another,conditional on certain services being delivered or on compliance with

specified requirements)

Fiscal dumping (when Accounting officers transfer funds (to a

province, municipality, public entity or NGO) to cover-up for under-spending in their own departments)

Agency Payments (Sums paid by

one government department or agency to another for servicesrendered. These payments are not included in the budget of the recipient party.)

Transfers by provinces to municipalities (Same

as point 01)

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Explain the purposes of an income andexpenditure statement and give an indicationof what the PFMA requirements are

Identify sources of income and expenditure ina mission office

Explain sources of income and expenditure

with reference to an income and expenditurestatement Examine income and expenditure statements

and evaluate it in terms of PFMA principles

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Also called a Statement of Performance. It measures an entity’s performance over a

specified period.

Example: Year ended/ fiscal year ending on31 March 2012

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Revenue Expenditure

Surplus/deficit for the year

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Annual appropriations (including conditionalgrants and unconditional grants);

Statutory appropriations; Departmental revenue; and Aid assistance.

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Compensation of employees / EmployeeBenefits

Goods and services Interest and rent on land; Financial transactions in assets and liabilities; Expenditure for capital assets; Transfers and subsidies; and Local and foreign aid assistance.

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Click Do activity 03 exercise 08 in the workbook.

Interpret the income statement.

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http://localhost/var/www/apps/conversion/Documents/sample%20income%20statement.docx

http://localhost/var/www/apps/conversion/Documents/sample%20income%20statement.docx



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Estimate monthly income and expenditurefor own section

Compile a motivation for the draft estimates Monitor personnel expenditure to inform

future estimates Compile monthly expenditure reports

Develop skills in preparing a 1st /2nd budgetreport Render assistance in compiling the MTEF

(Medium-Term Expenditure Framework)

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You need to be able to: Estimate monthly income and expenditure

for own section Compile motivation for the draft estimates Monitor personnel expenditure to inform

future estimates

Compile monthly expenditure reports Develop skills in preparing a 1st /2nd budgetreports

Render assistance in compiling the MTEF

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Mega projects or programmes, estimated to cost morethan R300 million per year for a minimum of three years,or a total project cost of R900 million or more. All projectsthat extend beyond the MTEF period fall into this

category. These projects require a detailed feasibilitystudy and receive a rigorous CBC (capital budgetcommittee) review.

Large projects or programmes, estimated to costbetween R50 million and R300 million per year within a

given MTEF. These also require detailed information,preparation and a feasibility study, which are subject tothorough scrutiny by the CBC.

Small projects or programmes, estimated to cost lessthan R50 million per year.

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Monitoring of expenditure Effective recordkeeping

Holding staff accountable

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Explain the purpose of a balance sheet Explain the concept of an asset

classify the assets in a balance sheet in termsof fixed and current assets Explain the concept of a liability and classify the liabilities in a balance sheet in

terms of long term and current liabilities

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The balance sheet is referred to as theStatement of Financial Position

It illustrates an entity’s assets and liabilities

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a resource controlled by an entity Something of value that we own

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Fixed/non-current asset Current asset

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Unauthorised expenditure; Fruitless and wasteful expenditure;

Cash and cash equivalents; Other financial assets; Prepayments and advances; Short term Investments; Short term Loans; Aid assistance receivable; and Receivables

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Long term Loans Long term Investments

Tangible assets Software and other intangible assets Machinery and equipment

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Liabilities are future sacrifices of economicbenefits that an entity is presently obliged tomake to other entities as a result of pasttransactions or other past events

Something that you owe

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Long-term liabilities Current liabilities

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Voted funds to be surrendered to the revenuefund

Departmental revenue and direct exchequerreceipts to be surrendered to the revenuefund

Bank overdraft Aid assistance repayable Aid assistance unutilised

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All long term Payables Sample balance sheet (see manual)

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http://localhost/var/www/apps/conversion/Documents/balance%20sheet.docx

http://localhost/var/www/apps/conversion/Documents/balance%20sheet.docx



Khan Denis Teyim Cel: 0725549512 Email: [email protected] Facebook: DK Teyim Twitter: @myafricadaily Website: www.teyim.webs.com

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Public Finance Management Act - Powerpoint Presentation

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