Financial Management Grant

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9 Νοε 2013 (πριν από 3 χρόνια και 11 μήνες)

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Financial Management Grant

Select Committee on Finance

National Treasury

TV Pillay

2

FMG


The purpose of the FMG is to promote and
support municipal financial management
reforms and assist municipalities with the
implementation of the MFMA


2001 : pilot programme targeted at selected
municipalities




Cat A (Jhb/Tshwane), B (Msunduzi/Sol Plaatje),


Cat C (OR Tambo, Amatole)


2003 : phased implementation of the MFMA


2004 : countrywide support for reforms



2005 : Grant extended to 194 municipalities


2006 and medium term to all municipalities

3



Background to the MFMA



MFM reform commenced in 1998


Testing with pilot municipalities commenced in
2000


MFMA took effect 1 July 2004, with some sections
delayed or exempted for lower capacity
municipalities


Financial and technical assistance provided via
FMG & MFMTAP


Prime responsibility for financial management rests
with EACH municipality

4

FMG

Aims


Catalyst for MFMA implementation


Strengthening of municipal financial
management capacity


Broaden skills base for financial
management


5

FMG

Conditions


Appointment of an appropriately skilled municipal
manager and CFO


Appointment of at least two interns for purposes
of building future financial management capacity


Council Resolution committing council to reforms


Submission of primary bank account details


Development of an action plan for implementation


Monthly reporting on performance

6

FMG

Focus of reforms


Build awareness and undertake training on MFMA
reforms


Create and implement credible multi
-
year budgets


Linking plans and Budgets


Improve consultation with communities


In
-
year reports to council and external parties


Prepare quality and timely AFS and Annual Reports


Improve processes, procedures and quality of
financial information


Prepare and present SDBIP’s

7

Distribution of Finance Management Grant per Category of Municipality 2000/01 to 2008/09
National Financial Years (R'000)
Category
2001/02
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Total
A
15 000
15 500
21 500
21 000
20 000
20 000
3 500
3 500
4500
123 000
B
27 500
28 500
66 000
138 330
85 000
81 000
117500
117500
117000
782 630
C
7 500
16 000
23 500
51 500
33 000
31 500
24250
24250
28500
237 200
TOTAL
50 000
60 000
111 000
210 830
138 000
132 500
145 250
145 250
150 000
1 142 830
Municipalities
20
31
39
149
195
194
283
283
283
-
Source: Division of Revenue Acts 2000 to 2006
Medium-term estimates
FMG Allocations

8

Restructuring Grant



Aim


Support large municipalities with restructuring

Conditions


Municipality develop own restructuring plans


Contractual obligations on plans


Adopt resolution committing to implementing
plans


Show progress in quarterly reports

9

Restructuring Grant


Some indicators


Institutional


Staffing and skills levels


Structured meetings and frequency


Alternative service delivery mechanism


Service centre


Economic Development


Innovative programmes


Job creation activities


Financial


Credit ratings


Debt ratios


Revenue collection ratios


Infrastructure spending levels

10

Municipalities

Allocations
prior to 2004

R’m

Allocation
2005/06

R’m

Amounts
withheld

2005/06


R’m

Allocation
2006/07

R’m

Allocation
2007/08

R’m

Total since
inception

R’m

Nelson Mandela


50

20

55

50

108

Cacadu

48








48

Buffalo City


35


35



103

Mangaung


10

10





120

Mathebeng

15








15

City of Jo'burg

550

25






575

City of Tshwane


65


75

100

155

Emfuleni


35

35

35



60

eThekwini


65


75

100

155

Msunduzi

134








134

uMhlathuze

20








20

Polokwane

10








10

Sol Plaatje

20








20

City of Cape Town


65

30

75

100

125













Total

797

350


95

350

350

1,
942


Restructuring Grant Allocations

11

Conclusion

Municipal Capacity Categorisation per Province
Province
Number
High
Medium
Low
Eastern Cape
45
6
16
23
Free State
25
5
10
10
Gauteng
14
6
7
1
Kwazulu-Natal
61
9
16
36
Limpopo
30
3
8
19
Mpumalanga
21
6
6
9
Northern Cape
32
1
18
13
North West
25
6
8
11
Western Cape
30
8
18
4
Total
283
50
107
126
Source: Local Government Database
12


MFMA
-

Priorities



1.
Preparing an implementation plan

2.
Allocate responsibilities to AO=MM

3.
Establish senior management team

4.
Bank account and cash controls

5.
Meeting financial commitments

6.
Budgets

7.
Supply Chain Management policy

13


MFMA
-

Priorities (cont.)


8.
Entities, PPPs, long term contracts and
borrowing reforms

9.
Past financial statements

10.
Present financial statements and annual
report

11.
Tender committees, boards, forbidden loans

12.
Compliance with Division of Revenue Act

14

Internship Programme


Commenced in 2004
-

unemployed
graduates in Public Finance, Economics,
Accounting and Auditing from disadvantaged
communities


Programme supported by municipalities, with
international and local mentors guided by NT


490 interns currently employed in
municipalities


Over 60 appointed permanently in
municipalities, state and private institutions


15

FMG Internship progress

EC
FS
GP
KZN
LIM
MP
NW
NC
WC
TOTAL
Interns 31 October 2004
43



26



25



49



25



24



24



22



49



287



New recruitment 2005
44



34



16



45



33



26



21



23



30



272



Subtotal
87



60



41



94



58



50



45



45



79



559



Interns leaving 2005
2



5



9



4



3



11



4



3



24



65



Interns 31 October 2005
85



55



32



90



55



39



41



42



55



494



Table 7.4 Recruitment and Movement of Interns 2004 to 2005 by Province
Source: Local Government Database
16

Achievements




All 6 Cat “A”, 40 cat “B”, and 15 Cat “C”
municipalities now produce multi
-
year budgets


Most high capacity municipalities are producing
in
-
year reports on financial and non financial
performance


All municipalities have developed
implementation plans


New loan arrangements undertaken by large
municipalities


Internal processes drastically improved


All municipalities have community consultation
meetings on budget preparation

17

Capacity

Building


2002/03


hands
-
on technical assistance provided to
33 municipalities via international advisors


2004
-

roving advisors appointed in 5 provinces (FS,
Limp, NW, Mpum, EC)


2004
-

workshops on phase
-
in of MFMA undertaken
countrywide with over 2500 attendees


2005
-

SAQA accredited qualification approved :
NQF level 5 and 6


2005


work plan part support for PC


2005
-

technical sessions on budget reforms, in
-
year
reporting, supply chain management undertaken
with over 2100 attendees

18

Capacity

Building


medium term


2006 and beyond


new councillor training programme commenced
with guides and booklets issued to all (copies in
pack)


MFMIP workshops for mentorship and service
providers on workplace programmes and
development of training material


Conference with 1200 delegates (trainers and
officials): Comprehensive approach to MFM
Capacity Building


Further capacitation of Provincial Treasury staff


Provincial legislature improved oversight over
MFMA implementation


Multimedia self testing training programme


19

MFMA Credit Rating

Table 7.2 Credit Ratings of Metropolitan Municipalities
Metro
Long-term
Short-term
Ethekwini(Durban)
zaAA
zaA1+
Ekurhuleni(East Rand)
zaAA-
zaA1+
Cape Town
zaA+
zaA1
Tshwane(Pretoria)
zaA+
zaA1
Johannesburg
zaA
zaA1
Nelson Mandela(Port Elizabeth)
zaA
zaA1
George
zaA-
zaA2
CA-Ratings reports January and March 2006 - others.
Sources: Global Credit Rating Co report October 2005 - Ethekwini.
Ratings are based on SA national scales. The highest rating is zaAAA. Ratings
scale down from zaAAA to zaA
-
. Within each of the levels a "+" or "
-
" sign
indicates relative strength. An A indicates the relative strong and capacity to
repay liabilities. Example: eThekwini has the best long
-
term rating.


20


Progress in implementation for 2005/06
Budgets


Survey of 35 municipalities with NT Advisors


23 tabled on time (1 April 2005)


11 tabled one week late


1 outstanding


35 to approve before 30 June 2005

21

Budgets Tabled and Adopted on Time - 2005/06
47
16
79
41
58
57
20
44
70
96
92
100
97
100
100
100
97
100
0
20
40
60
80
100
Eastern Cape
Free State
Gauteng
Kwazulu-Natal
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
%
Tabled On Time
Adopted On Time
22

Budget Reforms




Refer pack for detailed information on selected 22
municipalities



Progress in 2006/07 budgets


Spread across the country (Cat A, B and C)


Tabling within timelines

February (9), March (12), April (1)



Multi year format (22)



IDP/Budget alignment
-

capital (20) and operations (17)


Service Delivery & Budget Implementation plan (10)


Tabled budget on website (5)


Other reforms


Internal audit unit established (22)


Audit committees established (22)


Supply Chain Management Policy adopted (22)

23



National Treasury Support



Implementation guidelines and manuals


Pocket version of MFMA alignment with MSA


Technical circulars, emails, F A Q


Training seminars and workshops (budgets,
internal audit, mentors, GRAP, DVD set)


Validation Board to review materials established


PPP desk established


Website and MFMA help
-
line established


Regular meetings with provincial officials instituted


24

25

Eastern Cape
Free State
Gauteng
Kwazulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
Audited Financial Statements submitted to Auditor-General
2001/02, 2002/03, 2003/04
no data
2
0
0
0
1
2
0
0
1
01/02,
2
0
0
1
2
1
0
0
0
01/02, 02/03
5
0
3
4
3
3
1
2
0
01/02, 02/03, 03/04
36
25
12
56
26
14
30
23
29
Eastern Cape
Free State
Gauteng
Kwazulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
26

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
2004/2005 Annual Financial Statements Submitted to Auditor-General
Submitted by 31/12/2005
Outstanding at 31/12/2005
27

MFMA Urgent Priorities Score
0
10
20
30
40
50
60
70
80
90
100
Preparing An Implementation Plan
Allocating Appropriate Responsibilities Under The Mfma To The Accounting Officer
Establishing A Top (Senior) Management Team
Implementing Appropriate Controls Over Municipal Bank Accounts And Cash Management
Meeting Of Financial Commitments
Reporting Revenue And Expenditure
Revising Policies For Supply Chain Mangement
Implementing Reforms In Relation To Municipal Entities, Public-Private Partnerships, Long-Term Contracts And Municipal
Borrowings
Completing Past Financial Statements And Advising National Treasury - (For 2002/03 Financial Year And Before)
Completing 2003/04 Financial Statements And Tabling Annual Report
Complying With Provisions For Tender Committees, Boards Of Municipal Entities And In Relation To Forbidden Activities
Complying Fully With The Division Of Revenue Act
Low [60/127 Respondents]
Medium [66/107 Respondents]
High [37/50 Respondents]
28

Conclusion

Figure 7.1
MFMA Implementation Plans received as at 30 April 2006
98
100
100
89
100
100
100
100
100
82
84
86
88
90
92
94
96
98
100
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
North West
Northern Cape
Westen Cape
%
29



Primary bank account details



Municipalities were requested to submit
their original primary bank account details
to the National Treasury


Initial request till 100% submission = 4 ½
months


34 submissions with errors, including non
-
compliant account names, etc

30

Original Primary Bank Account Details Submitted to NT
as at 13 April 2006
0%
20%
40%
60%
80%
100%
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
North West
Northern Cape
Western Cape
Compliant
Non-compliant
Errors
31




Regulations



Investments (1 April 2005)


Public Private Partnerships (1 April 2005)


Supply Chain Management (1 July 2005)


Budgets (schedule, format, resolution)


Prescribed limits and frameworks in
progress


Competency levels


General matters

32



Other support initiatives



Disposal of assets


Entities guide and regulations


Councillor guide and training with SALGA


Cash Management


Borrowing guide and regulations


Internal Audit guide


New format Grap Statements


Asset Management guide


Establishment of MFRS

33


Provincial Support for MFMA



PT to progressively assume MFMA delegation


PT finalising support structures and strategies


National MFMA Working Group established


Regular meetings (SALGA, dplg, PT, PLG)


Address resource and staff requirements


Multi year allocations in Provincial budgets for all
programmes to municipalities


Alignment of Provincial and Municipal plans


Further support and co
-
operative governance with
other departments

34



Thank You