Financial Management Grant - PowerPoint PPT Presentation

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Financial Management Grant

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Select Committee on Finance. National Treasury. TV Pillay. 2. FMG ... Training seminars and workshops (budgets, internal audit, mentors, GRAP, DVD set) ... – PowerPoint PPT presentation

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Title: Financial Management Grant


1
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 SDBIPs

7
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
Restructuring Grant Allocations
11
Conclusion
12
  • MFMA - Priorities
  • Preparing an implementation plan
  • Allocate responsibilities to AOMM
  • Establish senior management team
  • Bank account and cash controls
  • Meeting financial commitments
  • Budgets
  • Supply Chain Management policy

13
  • MFMA - Priorities (cont.)
  • Entities, PPPs, long term contracts and borrowing
    reforms
  • Past financial statements
  • Present financial statements and annual report
  • Tender committees, boards, forbidden loans
  • 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
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
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
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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
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25
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26
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27
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28
Conclusion
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
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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
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