Financial Management of Parliament Bill [B 74

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Financial Management of Parliament Bill B
742008 28 October 2008
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Background
Background

• PFMA promulgated in 1999.
• Applies to Parliament and provincial legislatures
  to the extent indicated s. 3(1)(d).
• Applicable provisions must be read so that any
  controlling and supervisory functions of
  National Treasury are performed by the Speaker
  and Chairperson, acting jointly, or, in the case
  of a provincial legislature, the Speaker of such
  legislature s. 3(2).
• In addition, regulatory framework applicable to
  Parliament includes, Exchequer Act 66 of 1975 (s.
  7, 14, 33, 34), incorporated by reference in
  section 33 of the Powers and Privileges of
  Parliament Act 91 of 1963, which is kept in
  operation by section 31 of the Powers, Privileges
  and Immunities of Parliament and Provincial
  Legislatures Act 4 of 2004.
• In 2000 the Secretary to Parliament advises the
  Presiding Officers that such regulatory framework
  requires a review either with a separate Act or
  as amendment to the PFMA.
• Mandate is given to Portfolio Committee on
  Finance to draft a separate Bill.
• Local Government Municipal Finance Management
  Act 56 of 2003 promulgated in 2003.
• Finalisation of draft Bill stood over for 3rd
  Parliament.
• Draft Bill published in Government Gazette No.
  28166, 28 October 2005.
• Portfolio Committee assisted in its consideration
  by Prof C Murray, Mr C Barberton and Mr P
  Benjamin up to 2 August 2006.
• Portfolio Committee reported to Assembly on 18
  September 2008 introduction.
• Bill passed by Assembly and referred to Council
  on 26 September 2008.

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Principles of Bill

• Constitutional status of Parliament
• Separation of powers see Ex parte Chairperson
  of the Constitutional Assembly In re
  Certification of the Constitution of the RSA,
  1996 1996 (4) SA 744 (CC) at par 106
• Houses control their own internal arrangements,
  proceedings and procedures including control of
  finances - see sections 57 and 70 / provinces
  section 116
• PFMA recognises this position see s. 3(2) and
  similar to position under section 31 of Powers
  and Privileges of Parliament Act, 1963 and
• Legal opinion confirms this position and advises
  that section 216 of the Constitution must be read
  to mean that the treasury control in the case of
  Parliament and provincial legislatures is subject
  to the authority over finances.
• Compliance with the constitutional values of
  transparency, accountability, and effective
  financial management with reference to uniform
  expenditure classifications and uniform treasury
  norms and standards see section 215
• Format of budget - clause 16 (see especially
  clause 16(2)(h) referring to maintaining
  consistency with other organs of state)
• Format of financial statements clause 56(1)
  and
• Uniformity with reference to audit committee and
  internal auditr unit (clauses 47(5) and 50(1)).

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Chapter 1 Interpretation and Objects

• Definitions
• Objects of Act
• Transparency, accountability, sound management
• Consultative relationship with NT
• Oversight
• Norms and standards for provincial legislatures
  clause 3 and Schedule 1

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Chapter 2 Oversight, Executive Authority and
Administration of Act

• Joint committee (similar function as SCOPA, but
  only with reference to Parliaments audited
  financial statements SCOPA would not
  automatically be appropriate as it reports only
  to Assembly)
• Executive Authority Speaker and Chairperson
  acting jointly
• Secretary to Parliament is Accounting Officer
• Accountable to Executive Authority
• Subject to oversight by joint committee
• General financial management functions
• Written performance agreement
• Acting accounting officer appointed by Executive
  Authority
• System of delegation
• Fiduciary duties clause 12

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Chapter 3 Planning and Budgeting

• Accounting Officer prepares
• Strategic plan
• Annual performance plan
• Annual budget
• Executive Authority tables for referral to joint
  committee
• Expenditure before annual budget is passed
• Unauthorised expenditure
• Virement Executive Authority may make
  regulations
• Unspent funds position is same as section 13 of
  PFMA i.e. unspent funds not returned to National
  Revenue Fund

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Chapter 4 Cash management and investment

• In accordance with policy that Executive
  Authority must prescribe
• Accounting Officer must establish systems and
  procedures
• Bank accounts
• Restrictions on borrowing
• Requisitioning of funds

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Chapter 5 Financial management

• Asset and liability management
• Revenue management
• Debtor management policy for write-off and
  interest
• Expenditure management creditors
• Method of payment
• Within 30 days of receiving invoice
• Accounts closed monthly and reconciled
• Regulations by Executive Authority for support to
  Members and political parties.
• Transfers
• Executive directives with financial implications

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Chapter 6 Supply chain management

• Executive Authority prescribes policy
  Accounting Officer implements
• Consideration of unsolicited offers only in terms
  of policy.
• Tenders not recommended
• Members barred from serving on tender committees
• Prohibition on contracts definition of person
  in the employ of the state borrowed from MFMA
  regulations
• Schedule 3 peremptory

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Chapter 7 Audit committee and internal audit

• Audit Committee appointed by Executive Authority
• Audit charter
• Accounting Officer must establish and internal
  audit unit which must report quarterly on its
  performance against the audit plan

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Chapter 8 Reporting and auditing

• Monthly, quarterly, and mid-year
• Annual report
• Based on performance plan
• Annual financial statements
• Auditor-Generals report
• Audit Committees report
• Tabled and referred to joint committee

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Other

• Chapter 9 Regulations and instructions
• Chapter 10 Financial misconduct and Offences
• Chapter 11 Miscellaneous (Good faith provision,
  Repeal of legislation, Short title and
  Commencement also transitional arrangements in
  Schedule 4)

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Applicability to provincial legislatures

• Clause 3 read with Schedule 1
• Peremptory norms and standards
• Wording used is wide in respect of executive
  authority and accounting officer

14
Code of Ethics for Executive Authority

• Additional to Code of Conduct for Assembly and
  Permanent Council Members
• Does not apply to provincial legislatures

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Classification of Bill

• Memorandum Bill must be dealt with in accordance
  with the procedure established in section 76(1)
  of the Constitution as it provides for
  legislation envisaged by Chapter 13 of the
  Constitution and includes provisions affecting
  the financial interests of the provincial sphere
  of government (see section 76(4)(b) of the
  Constitution).
• The PFM Bill was split when Parliament considered
  it, because in 1999 s. 76 (4) provided that -
• A Bill must be dealt with in accordance with the
  procedure established by subsection (1) if it
  provides for legislation envisaged in Chapter
  13, and which affects the financial interests of
  the provincial sphere of government.
• Section 76(4)(b) of the Constitution was amended
  in 2003 by the addition of the words includes
  any provision to avoid the need to split such
  bills
• A Bill must be dealt with in accordance with the
  procedure established by subsection (1) if it
  provides for legislation envisaged in Chapter
  13, and which includes any provision affecting
  the financial interests of the provincial sphere
  of government. Para. (b) substituted by s. 1 of
  Act No. 3 of 2003.
• Because Bill gives effect to section 216 of the
  Constitution, which is part of Chapter 13, and
  because it includes provisions that affect the
  financial interests of provincial sphere of
  government, namely, provincial legislatures, the
  whole Bill must be considered in accordance with
  the procedure establish by section 76(1).

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Consultation

• Memorandum Bill published for public comment in
  GG No 28166 on 28 October 2005.
• Auditor-General, National Treasury, Parliamentary
  Service.
• Amendment to PFMA Minister of Finance consulted
  on clauses 23, 25 and 72 as required by the
  PFMA see s. 4 and 13(3).