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PUBLIC FINANCE MANAGEMENT ACT

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SUBMISSION OF ANNUAL REPORTS. OVERSIGHT PROCESSES FOR ANNUAL REPORTS ... MENT (E.G. WEATHER, UNEMPLOY- MENT LEVELS, POVERTY, ETC.) 3 E's ARE INTERRELATED ... – PowerPoint PPT presentation

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Title: PUBLIC FINANCE MANAGEMENT ACT


1
PUBLIC FINANCE MANAGEMENT ACT AND LEGISLATIVE
OVERSIGHT OF ANNUAL REPORTS
NOLS DU PLESSIS NATIONAL TREASURY 17 AUGUST 2004
2
CONTENT PART ONE
  • PHILOSOPHY BEHIND THE PFMA
  • ACCOUNTABILITY FOR PERFORMANCE
  • PERFORMANCE MANAGEMENT
  • INFORMATION TECHNOLOGY SYSTEMS
  • OTHER SUPPORT STRUCTURES
  • PFMA FINANCIAL MANAGEMENT MODEL
  • SUCCESS FACTORS
  • LONG TERM VISION
  • RESPONSIBILITIES OF ROLEPLAYERS

3
CONTENT PART TWO
  • LEGISLATIVE OVERSIGHT OF ANNUAL
  • REPORTS
  • BACKGROUND
  • SUBMISSION OF ANNUAL REPORTS
  • OVERSIGHT PROCESSES FOR ANNUAL REPORTS
  • OVERSIGHT OF NON FINANCIAL SECTIONS OF ANNUAL
    REPORTS
  • TYPICAL CONTENT FOCUS AREAS AND QUESTIONS

4
PHILOSOPHY BEHIND THE PFMA
5
ACCOUNTABILITY FOR PERFORMANCE
6
BROADER APPROACH TO ACCOUNTABILITY
THE FUNDAMENTAL DEVELOPMENT IS THE ENHANCED
CONCEPT OF ACCOUNTABILITY TRADITIONALLY
ACCOUNTABLE FOR EXPENDITURE WHICH IS
ACCOUNT- ABILITY FOR THE USE OF
INPUTS ACCOUNTABILITY HAS BEEN BROADENED TO
INCLUDE AN ADDITIONAL DIMENSION - ACCOUNTABILITY
FOR PERFORMANCE
7
ACCOUNTABILITY FOR PERFORMANCE
MINISTER / MEC ACCOUNTABLE TO THE LEGISLATURE AND
COMMUNITY FOR OUTCOMES ADDRESSED IN A FORMALISED
WAY THROUGH APPROPRIATION PROCESS, ANNUAL
REPORTING AND STATEMENT OF SERVICE
DELIVERY PERFORMANCE AGREEMENT ENTERED INTO
BETWEEN THE EXECUTIVE AUTHORITY AND ACCOUNTING
OFFICER WHICH SETS OUT SPECIFIC ACTIVITIES AND
OUTPUTS PERFORMANCE AGREEMENTS BETWEEN
ACCOUNTING OFFICER AND MEMBERS OF THE SENIOR
MANAGEMENT SERVICE PERFORMANCE REVIEW AND
ASSESS- MENT OF STAFF
8
THE ACCOUNTABILITY CHAIN
LEGISLATURE/ COMMUNITY
ANNUAL REPORT APPROPRIATION STATEMENT OF SERVICE
DELIVERY
MINISTER/MEC (Outcomes)
STRATEGIC PLANS AND
SPECIFICATION OF PERFORMANCE REQUIREMENTS
Performance Agreement
ACCOUNTING OFFICER (Outputs)
Performance Agreement
DELEGATIONS
SENIOR MANAGERS
BUDGET
Performance Assessment
REPORTING
STAFF
REVIEW AND ASSESSMENT
9
PERFORMANCE MANAGEMENT
10
STRATEGIC PLANS
KEY INSTRUMENTS IN THE ACCOUNT- ABILITY AND
BUDGETING PROCESS MAKING GOVERNMENTS
OPERATIONS TRANSPARENT TO LEGISLATURE ESSENTIAL
INFORMATION FOR LEGISLATURE TO ASSESS AND
DEBATE PROGRAMMES AND FUNDING ENABLES
LEGISLATURE TO EVALUATE DEPARTMENTAL PERFORMANCE
11
STRATEGIC PLANS
  • STRATEGIC PLANNING WILL ASSIST
  • DEPARTMENTS IN
  • FORMALLY COMMUNICATING MISSION
  • AND VISION STATEMENTS
  • FOCUSSING MANAGEMENT AND STAFF
  • ON ACHIEVING OBJECTIVES THROUGH
  • VARIOUS PROGRAMMES
  • DEVELOPING SERVICE DELIVERY INDICA-
  • TORS FOR EACH STRATEGY AND PROGRAM-
  • MES TO MEASURE PERFORMANCE
  • ESTABLISH A BASIS FOR CONTINUOUS IM-
  • PROVEMENT TO MEET CLIENT'S NEEDS
  • FACILITATING SPECIFIC PLANNING

12
STRATEGIC PLANS
  • STRATEGIC PLANS CANNOT BE DEVELOPED
  • IN ISOLATION AND MUST BE LINKED TO AND
  • CONSISTENT WITH
  • SERVICE DELIVERY IMPROVEMENT
  • PROGRAMME
  • PERFORMANCE CONTRACT BETWEEN
  • MINISTER AND HOD
  • ESTIMATES OF EXPENDITURE
  • DEPARTMENTAL ANNUAL REPORTS

13
STRATEGIC PLANNING PROCESS
Examine mandate, functions and strategic policy
priorities
Evaluate past performance
Strategic planning for next three years
Objectives outputs still relevant? Have
service delivery targets been met?
Low degree of alignment
High degree of alignment
Amend strategic plan to improve service delivery
Review strategic plan in detail
Develop detailed operational plan
Develop revised strategic plan
Assess costs for reviewed strategic plan
14
MEDIUM TERM EXPENDITURE FRAMEWORK / BUDGET
THE MTEF DETAILS 3 YEAR ROLLING EXPENDITURE AND
REVENUE PLANS PREPARING DEPARTMENTAL MTEF
BUDGETS INVOLVES BOTTOM UP ESTIMATION OF
COST IMPLICATIONS OF STRATEGIC PLAN INCREMENTAL
/ ZERO-BASED COSTING PROVIDE FOR SUBMISSION OF
NEW OPTIONS
15
ESTIMATES OF NATIONAL EXPENDITURE
  • IN TERMS OF SEC 27(4) OF THE PFMA,
  • DEPARTMENTS MUST SUBMIT MEASURABLE
  • OBJECTIVES PER PROGRAMME
  • THE REVISED FORMATS OF THE ESTIMATES
  • OF NATIONAL EXPENDITURE REQUIRES THE
  • FOLLOWING INFORMATION
  • AIM OF THE VOTE
  • PROGRAMME AND SUB-PROGRAMME
  • SUMMARY OF EXPENDITURE TRENDS AND
  • MEDIUM TERM EXPENDITURE ESTIMATES
  • POLICY DEVELOPMENTS
  • OUTPUTS AND SERVICE DELIVERY
  • INDICATORS

16
IN-YEAR MANAGEMENT MONITORING AND REPORTING
THE PFMA EMPHASIS THE IMPORTANCE OF REGULAR
MONITORING AND REPORTING MANAGERS HAVE THE
FLEXIBILITY TO REPRIORITISE RESOURCES IN LINE
WITH CHANGES IN OPERATIONAL PLANS THE PFMA
ENABLES AN ACCOUNTING OFFICER TO SHIFT FUNDS
BETWEEN PROGRAMMES THE PFMA SPECIFIES REGULAR
MONTHLY AND QUARTERLY REPORTS FOR SUB- MISSION TO
THE EXECUTIVE AUTHORITY
17
MEASURING PERFORMANCE AND SERVICE DELIVERY
IN TERMS OF SEC 45 OF THE PFMA, AN OFFICIAL IN A
DEPARTMENT IS RESPONSIBLE FOR EFFECTIVE,
EFFICIENT, ECONOMICAL AND TRANSPARENT USE OF
FINANCIAL AND OTHER RESOURCES WITHIN THAT
OFFICIAL'S AREA OF RESPONSIBILITY PURSUIT OF
VALUE FOR MONEY ENTAILS MARRYING FINANCE AND
SERVICE DELIVERY ACCOUNTABILITY FOR THE
EFFICIENT AND EFFECTIVE USE OF RESOURCES DOES NOT
REMAIN THE PRESERVE OF FINANCE OFFICIALS
ALONE
18
ECONOMY
  • THE CHEAPEST POSSIBLE OPTION FOR
  • THE PRODUCTION OF A PARTICULAR
  • OUTPUT
  • CONCENTRATES ON INPUTS
  • QUESTIONS
  • - WAS THE SERVICE DELIVERED AS
  • BUDGETED?
  • - DID THE SERVICE DELIVERED COST
  • MORE THAN COMPARABLE SERVICES
  • ELSEWHERE?

19
EFFICIENCY
  • TRIES TO CAPTURE HOW PRODUCTIVELY
  • RESOURCES ARE TRANSLATED INTO
  • SERVICE DELIVERY
  • MEASURE BY RATIO OF OUTPUTINPUT
  • (INPUT/OUTPUT)
  • - R300 WORTH OF INPUTS TO CARRY
  • OUT 900 VACCINATIONS
  • - EFFICIENCY RATIO OF 3 VACCINA-
  • TIONS PER RAND OF INPUTS
  • MORE OUTPUT PER UNIT gt GREATER
  • EFFICIENCY
  • QUESTIONS
  • - DID WE PERFORM THE JOB WITHOUT
  • WASTING RESOURCES?
  • - DID WE DO THINGS RIGHT?

20
EFFECTIVENESS
  • CAPTURES THE DEGREE TO WHICH OBJECTIVES/DESIRED
    OUTCOMES ARE ACHIEVED
  • PROGRAMME/SUB-PROGRAMME LEVEL HAS THE OUTCOME
    BEEN ACHIEVED?
  • QUESTIONS
  • - DID THE JOB ACHIEVE THE DESIRED
  • RESULT?
  • - DID WE DO THE RIGHT THING?
  • LIMITATIONS
  • - OUTCOMES ARE DIFFICULT TO
  • QUANTIFY AND TRACK
  • - FAILURE TO ACHIEVE OUTCOMES MAY
  • BE DUE TO FACTORS BEYOND THE
  • CONTROL OF A PARTICULAR DEPART-
  • MENT (E.G. WEATHER, UNEMPLOY-
  • MENT LEVELS, POVERTY, ETC.)

21
FRAMEWORK FOR EVALUATING PERFORMANCE
  • 3 E's ARE INTERRELATED
  • - ECONOMY INPUTS
  • - EFFICIENCY INPUTS/OUTPUTS
  • - EFFECTIVENESS OUTPUTS/OUTCOMES
  • SHOULD NOT BE USED IN ISOLATION
  • ECONOMY CHEAPEST POSSIBLE SERVICE IS USELESS
    UNLESS IT ACHIEVES ITS GOALS
  • EFFICIENCY/EFFECTIVENESS IS OF LIMITED USE UNLESS
    COST OF ACHIEVEMENT IS KNOWN

22
MEASURING PERFORMANCE AND MONITORING SERVICE
DELIVERY PROGRESS
Economy refer to the cost of inputs
Efficiency relates inputs and outputs, that is
the cost per unit of output. Are outputs produced
at an affordable cost?
Performance measures for outputs - quantity -
quality - cost - timeliness
are used to produce ...
Input
Output
Effectiveness Extent to which outputs or
services of a programme are successful
in achieving its stated objective or outcome
that realise or achieve ...
Performance indicator Assesses whether
out- comes and priorities have been achieved
Outcomes
23
ANNUAL REPORTS
  • GOVT VOTED INTO POWER - CONTRACT
  • OF ACCOUNTABILITY IS ENTERED INTO
  • WITH CITIZENS
  • EXECUTIVE MUST INFORM THE CITIZENS
  • ON ACHIEVEMENTS AGAINST PRE-
  • DETERMINED CRITERIA
  • PRE-DETERMINED CRITERIA AS
  • REFLECTED IN STRATEGIC PLANS AND
  • BUDGET DOCUMENTATION
  • ACCOUNTABILITY PROCESS IS
  • COMPLETED WITH PUBLISHING OF THE
  • ANNUAL REPORT

24
IN-YEAR MANAGEMENT, MONITORING AND REPORTING
Executive Authority
Treasury
Accounting officer
Executive Authority
Auditor- General
Treasury
Operational plan
Treasury
Published (national)
Opinion
Rand
Published
Published in annual report
Outputs
Legislator
25
SUMMARY OF PERFORMANCE
3 years Key departmental objectives
(outcomes/outputs) Includes budget information
STRATEGIC PLAN
Environmental changes Expenditure outcomes and
new budget allocations Strategic
direction changes
ANNUAL REVIEW
YEAR 1
Detailed focus on first year of strategic
plan Includes output and service delivery
information
MEDIUM TERM BUDGET
Expenditure trends 3 year forward
estimates Strategic direction explained Previous
years outcome incorporated when deciding
resource allocation Staff have performance
agreements individual development plans Linked
to departmental key objectives (outcomes/outputs)
Indicate individual contribution
towards achieving departmental objectives Pr
ogress against budget implementing strategic
plan Highlights departmental performance (financia
l non-financial) against targets
INDIVIDUAL PERFORMANCE PLANS
Performance against budget and strategic plan Meet
ing reporting re- quirements - Treasury PS
Regu- lations
ANNUAL REPORTS
MONTHLY/ QUARTERLY REPORTS
26
INFORMATION TECHNOLOGY SYSTEMS
EXISTING SYSTEMS DESIGNED TO SUPPORT FINANCIAL
INFORMATION APPROPRIATE SYSTEMS TO LINK
FINANCIAL AND NON-FINANCIAL INFORMATION BUDGETIN
G BY OUTPUTS REQUIRES A PROPER COSTING
SYSTEM INTRODUCTION OF ACCRUAL ACCOUNTING IN
OTHER COUNTRIES FORCED THE ADOPTION OF NEW
SYSTEMS SUCCESSFUL IMPLEMENTATION OVER THE
LONGER TERM WILL DEPEND ON AN INTEGRATED
FINANCIAL MANAGEMENT SYSTEM
27
OTHER SUPPORT STRUCTURES
APPOINTMENT OF CFO FINANCIAL STAFF INTER
CONTROL ACCOUNTING STANDARDS
BOARD
28
PFMA FINANCIAL MANAGEMENT MODEL
LEGISLATURE/ COMMUNITY
INTERNAL CONTROL
STRATEGIC PLANS Outcomes/Outputs
PERFORMANCE REQUIREMENTS
Policies Priorities
Medium Term Budget Process
Statement of Service Delivery
DELEGATIONS
SERVICE DELIVERY IMPROVEMENT PROGRAMME (Outputs)
EXECUTIVE AUTHORITY (Outcomes)
IN-YEAR MANAGEMENT AND REPORTING (Financial
non- financial)
Performance Agreement
ACCOUNTING OFFICER (Outputs)
BUDGET (Outputs)
FINANCIAL STATEMENTS/ ANNUAL REPORT
Performance Agreement
SENIOR MANAGERS
REVIEW AND ASSESSMENT
PERFORMANCE ASSESSMENT OF STAFF
ASB - GRAP - GAAP
INTEGRATED FINANCIAL MANAGEMENT SYSTEM
- Compilation of medium term budgets and costing
of outputs - Accounting system (accrual) -
Creditor, Debtor, Stock and Asset Systems -
Human Resource Management System - Management
information system (Financial and non-financial)
29
SUCCESS FACTORS FOR PFMA IMPLEMENTATION
POLITICAL WILL AND SUPPORT BUY-IN AND SUPPORT
FROM TOP MANAGEMENT CAPACITY
BUILDING SUFFICIENT RESOURCES ( FUNDS AS WELL
AS PERSONNEL)
30
LONG TERM VISION
SOUND FINANCIAL MANAGEMENT SYSTEMS AND
PROCESSES TRANSPARENT BUDGETING
PROCESSES EFFECTIVE MANAGEMENT OF
REVENUE, EXPENDITURE, ASSETS AND
LIABILITIES UNQUALIFIED CONSOLIDATED
FINANCIAL STATEMENTS PREPARED ON THE ACCRUAL
BASIS
31
RESPONSIBILITIES OF VARIOUS ROLEPLAYERS
32
RESPONSIBILITIES OF VARIOUS ROLEPLAYERS
EXECUTIVE AUTHORITY - POLICY/OUTCOMES ACCOUNTIN
G OFFICERS - OUTPUTS ACCOUNTING OFFICERS
RESPONSIBILITIES OF PRIMARY STATUS MICRO-CONTRO
L BY TREASURY REPLACED BY MINIMUM NORMS AND
STANDARDS TREASURY MONITOR AND ENFORCE
IMPLEMENTATION
33
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
EXECUTIVE AUTHORITIES
STRATEGIC PLAN CONSIDER MONTHLY EXPENDITURE
REPORTS PROGRESS AGAINST STRATEGIC PLAN -
QUARTERLY TABLE ANNUAL REPORTS REPORT TO
PARLIAMENT ON DISCIPLINARY ACTIONS OVERSIGHT
OVER PUBLIC ENTITIES
34
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
ACCOUNTING OFFICERS
  • EFFECTIVE, EFFICIENT AND ECONOMICAL
  • USE OF RESOURCES. MORE SPECIFICALLY
  • EFFECTIVE SYSTEMS OF INTERNAL
  • CONTROL
  • EFFECTIVE PROCUREMENT AND
  • PROVISIONING SYSTEMS
  • PREVENTION OF UNAUTHORIZED,
  • IRREGULAR AND FRUITLESS AND WASTEFUL
  • EXPENDITURE

35
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
ACCOUNTING OFFICERS
  • MANAGEMENT OF ASSETS AND LIABILITIES
  • STEPS AGAINST OFFICIALS WHO FAIL TO
  • COMPLY WITH PFMA
  • PROPER BUDGETARY CONTROL
  • REPORTS (MONTHLY, QUARTERLY
  • AND ANNUALLY) TO EXECUTIVE AUTHORITY
  • AND TREASURY
  • NON-COMPLIANCE WITH PFMA - FINANCIAL
  • MISCONDUCT

36
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
NATIONAL TREASURY
  • FISCAL POLICY FRAMEWORK/MACRO-
  • ECONOMIC POLICY
  • INTERGOVERNMENTAL
  • FINANCIAL AND FISCAL RELATIONS
  • MANAGE BUDGET PROCESS
  • IMPLEMENTATION OF ANNUAL BUDGET
  • ANNUAL DIVISION OF REVENUE ACT
  • MONITOR PROVINCIAL BUDGETS

37
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
NATIONAL TREASURY
  • PROMOTE AND ENFORCE EFFECTIVE
  • MANAGEMENT OF RESOURCES
  • TO ACHIEVE THE ABOVEMENTIONED
  • TREASURY MUST
  • PRESCRIBE UNIFORM TREASURY NORMS
  • AND STANDARDS
  • ENFORCE THE PFMA AND PRESCRIBED
  • NORMS AND STANDARDS IN NATIONAL
  • DEPARTMENTS
  • MONITOR ASSESS IMPLEMENTATION IN
  • PROVINCES

38
RESPONSIBILITIES OF VARIOUS ROLE PLAYERS
(Continued)
NATIONAL TREASURY
  • ASSIST WITH CAPACITY BUILDING -
  • FINANCIAL MANAGEMENT
  • INVESTIGATE ANY SYSTEM OF FINANCIAL
  • MANAGEMENT
  • INTERVENE WHEN MATERIAL BREACH OF
  • PFMA

39
LEGISLATIVE OVERSIGHT OF ANNUAL REPORT
40
BACKGROUND
CONSTITUTION VESTS POWER OF OVERSIGHT OVER THE
EXECUTIVE WITH THE NATIONAL ASSEMBLY (SEC 55(2)
OF THE CONSTITUTION) EXECUTIVE AUTHORITIES MUST
PROVIDE PARLIAMENT WITH REGULAR REPORTS (SEC
92(3) OF THE CONSTITUTION) ANNUAL REPORTS ALLOW
PARLIAMENT TO EVALUATE PERFORMANCE AFTER YEAR END
41
SUBMISSION OF ANNUAL REPORTS
IN ACCORDANCE WITH SEC 65 OF THE PFMA ANNUAL
REPORTS MUST BE TABLED BY 30 SEPTEMBER WRITTEN
EXPLANATION MUST BE TABLED IF THE EXECUTIVE
AUTHORITY FAILS TO SUBMIT ANNUAL REPORT TIMEOUSLY
(SEC 65(2) OF THE PFMA) PARLIAMENT SHOULD
COMMUNICATE WITH EXECUTIVE AUTHORITIES THE LATE
TABLING OF ANNUAL REPORTS
42
OVERSIGHT PROCESSES FOR ANNUAL REPORTS
WHEN ANNUAL REPORTS ARE TABLED THE SPEAKER REFER
TO SCOPA / PORTFOLIO COMMITTEE OVERSIGHT
PREPARATION PROCESS OVERSIGHT HEARING
PHASE OVERSIGHT REPORT-WRITING PHASE FOLLOW
UP PHASE
43
OVERSIGHT OF NON-FINANCIAL SECTIONS OF ANNUAL
REPORTS
AIM OF OVERSEEING NON FINANCIAL
INFORMATION PREPARATIONS TO EXERCISE OVERSIGHT
OF ANNUAL REPORTS OVERSIGHT OF THE TECHNICAL
QUALITY OF ANNUAL REPORTS
44
OVERSIGHT OF THE NON-FINANCIAL SECTIONS OF
ANNUAL REPORTS
DEPARTMENTS STRATEGIC PLAN FOR THE YEAR TO WHICH
THE ANNUAL REPORT APPLIES INFORMATION ON THE
INTERNAL EXTERNAL CHALLENGES FACED BY THE
DEPARTMENT INFORMATION FROM CLIENTS NEED TO
BE FAMILIAR WITH THE PARTICULAR DEPARTMENT
45
TYPICAL CONTENT FOCUS AREAS AND QUESTIONS
ORGANISATIONAL CONCERNS AND OPTIONS EVALUATING
PERFORMANCE AGAINST OBJECTIVES AND PERFORMANCE
TARGETS DEVELOPING EFFECTIVE PARTNERSHIPS MAKI
NG BETTER USE OF NEW TECHNOLOGY HUMAN RESOURCE
DEVELOPMENTS
46
CONCLUSION
ANNUAL REPORTS ARE KEY INSTRUMENTS IN THE
ACCOUNTABILITY PROCESS PROPER EVALUATION OF
ANNUAL REPORTS SHOULD IMPROVE DELIVERY OF
SERVICES PROVIDE OPPORTUNITY TO GIVE INPUT INTO
THE CURRENT PLANNING AND BUDGET PROCESSES
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