1.1 False According to National Treasury (2000: 157), financial management is not an end in itself. SBS pg.2
1.5 False: According to Pauw et al. (2015:130) the factors that ensure sound accountability is as follow:
There must be a transparent and mutually agreed upon objectives.
One should be accountable for what one controls.
There must be agreed process of giving account for the use of power
There must be adequate separation of powers.
2.1 The separation of powers of authorities
The existence of several levels of government necessitating orderly inter- governmental fiscal relations
The existence of public entities that are controlled only indirectly by the government.
2.2 Executive, judicial and legislative branches.
2.3 It makes laws that must be followed by everyone including itself.
2.4 The process of making laws is slow and cumbersome.
2.5 It can and does revise the actions of the other two branches.
2.6 A court must be approached. It can do nothing on its own initiative.
2.7 In their ability to act immediately because they have bureaucracies at their command.
2.8 Treasuries at various levels.
3.1 Financial and Fiscal Commission Act (99 of 1997)
Gives effect to the constitutional requirements (Sections 220, 221, and 222 of the Constitution) with regard to the establishment of a Financial and Fiscal Commission (FFC) and related matters.
3.2 Public Finance Management Act (1 of 1999 as amended)
Regulates financial management in the national government and provincial goverments.
Ensures that all revenue, expenditure, assets and liabilities of government are managed efficiently and effectively
Provides for the responsibilities of persons entrusted with financial management
3.3 Municipal Finance Management Act (56 of 2003)
Approaches budgeting and financial management more strategically.
3.4 The Public Audit Act (25 of 2004)
Gives effect to the provisions of the Constitution for the establishment and assignment of functions to an Auditor-General
Provides for the auditing of institutions in the public sector
3.5 Annual Division of Revenue Act (2 of 2013)
The share of each sphere of government of the revenue raised nationally for the relevant financial year.
Each provinces equitable share of the provincial share of that revenue.
3.6 Property Rates Act (6 of 2004)
Excludes certain properties from rating in the national interest
Makes provision for municipalities to implement a transparent fair system of exemptions, reductions and rebates through their rating policies
Makes provision for fair and equitable methods for the valuation of properties
3.7 Intergovernmental Fiscal Relations Act (91 of 1997)
Promotes cooperation between the national, provincial and local spheres of government on fiscal, budgetary and financial matters.
Prescribes a process for the determination of equitable sharing and allocation of revenue raised nationally.
3.8 Preferential Procurement Policy Framework Act (5 of 2000)
Addresses inequalities in public sector procurement
3.9 South African Revenue Service Act (34 of 1997)
Makes provision for the efficient and effective administration of revenue collecting system of the Republic of South Africa.
4.1 The cabinet member who is accountable to Parliament for that department.
4.2 A year ending 31 March
4.3 The cabinet member who is accountable to Parliament for that department
4.4 A national government business enterprise
4.5 Determine by regulation or instruction
4.6 All money received by the national government must be paid into the National Revenue Fund
4.7 An AO may, within certain limitations, utilise a saving in the amount appropriated under a main division within a vote towards the defrayment of excess expenditure under another main division within the same vote.
Regional Segment: The regional segment relates to identifying the different regions/municipalities/wards that will be beneficiary of service delivery or recipient of goods.
Fund Segment: The funding segment deals with identifying the source from which funding will be allocated and the source that the receipt will be allocated to.
Objective Segment: Deals with identifying the programme/activity against which the transaction should be recorded.
Responsibility Segment: Identifies which cost centre who takes responsibility for any transaction.
Item Segment: Identifies payments and receipt transactions, thus identifying what government are paying for.
Asset management: Deals with identifying the asset or the use of an asset/the class of asset and which transaction relates to.
Project Segment: Project segments purpose is to identify whether a payment relates to a specific project if so what type of project.
Infrastructure Classification: Aims to identify whether a spending item/transaction relates to infrastructure and to indicate the type of infrastructure it relates too.
This is the beginning of the supply chain.
Determine the manner in which the market will be approached
Evaluate bids in accordance with published criteria
The actual transaction has been concluded and the logistics are being addressed.
Maintain a database of redundant material
Determine whether the supply chain practices are consistent with governments broader policy focus.
Each municipality should have a bank account through which their revenue is managed. As part of this management system, a municipality must open and maintain one bank account in its name. All revenue received must be paid into this bank account or accounts and money can be withdrawn from this account(s) with the necessary regulations. It should be noted that no municipality is allowed to open a bank account abroad is this is in contravention with the prescripts of Act and a municipality is also not allowed to open a bank account with an institution that is not registered in terms of the Bank Act 1990 or otherwise in the name of the municipality.
When opening a bank account a municipality need to consider the fact that it is only allowed to have one primary bank account into which all revenue can be paid. Thus in the event that a municipality opens more than one bank account one of those bank accounts needs to identified and reported as the primary bank account for all municipal revenue to be paid into. The accounting officer of a municipality is responsible to ensure that all details pertaining to the bank account (name the bank, type of account and account number) is reported and submitted in writing to National Treasury, the relevant provincial treasury and the Auditor-General. In the event that the municipality wants to change their primary bank account, the accounting officer can only do so after the accounting officer has informed national treasury and the Auditor General in writing at least 30 days before effecting the change. Even in the event that the municipality wants to open a new primary bank account it needs to be reported/submitted to the provincial treasury and the Auditor General within 90 days of opening the account with the details of the bank account. In the beginning of each financial year, they need to declare each bank where the municipality holds a bank account and the details of the account.
This primary bank account is open for the purpose of the municipality to receive their allocated money from national government (transferred through national Treasury) as well as other sources that assist the municipality in delivering services to their communities. This bank account is also used for funds allocated to municipal entities that assist the municipality in their service delivery activities. This bank account must also be used for all investment income and dividends. Municipal entities/external mechanisms need to ensure that all income generated on behalf of the municipality needs to be paid into this bank account. Thus all monies as prescribed need to be paid into this primary bank account. It is the responsibility of the municipality to ensure that all measures are taken to ensure that these monies are paid into the primary bank account. No organ of state can transfer funds to a municipality except through their primary bank account; this includes monies that need to be paid to municipal entities.
Money can be withdrawn from a municipal primary bank account under very strict conditions. Only a designated person can withdraw money from the primary municipal banking account. The accounting officer or any other senior official acting on written authority of the accounting officer can make the authorisation for withdrawal. Thus, authorisation for withdrawal of the bank account needs to come from the senior financial official of the municipality. The accounting officer can only authorise withdrawal from the municipal bank account to any other chief financial officer.
Money can only be withdrawn under the certain circumstances/conditions from a municipal primary bank account. One instance is to cover expenditures as highlighted in the approved budget of the municipality. Another is to cover expenditures for the requirements of the municipality until the municipal council approves the budget. However, in such instances the municipality needs to seek the approval of the MEC for Finance in the province. The cost for such approvals can only be for the current and capital expenditure that were assigned in the approved budget in the previous financial year. In addition to this these cost at any stage cannot exceed eight percent of the amount that was assigned for this purpose during the previous financial year and the amount may not exceed the amount that is available.
The funds that can be withdrawn may cover the cost of unforeseeable and unavoidable expenditure of the municipality; however, such expenditure may not exceed a prescribed percentage of the approved annual budget, must be reported to mayor of the town/district at next council meeting and must be taken in an adjustment budget in accordance with any prescribed framework.
The money from a relief, charitable, trust or any other fund account opened in the name of the municipality can be with be withdrawn without appropriation of an approved budget, providing the purpose is in line with reason for the established fund and it is authorised by the accounting officer in accordance with the municipal council.
Money can also be withdrawn from a municipal account to be paid to a person or organ of state, the funds received by the municipality on behalf of that person or organ of state. These funds include money that was collected, based on an agreement and any insurance or other payments received by the municipality for that person or organ of state.
The CO can withdraw funds from a municipal primary bank account if funds was paid into the account incorrectly, thus the withdrawal will be for the purpose of a refund. Money can also be withdrawn to refund guarantees, sureties and security deposits. In addition to this, funds can be withdrawn for cash management and investment purposes or any prescribe purposes.
Money can also be withdrawn to cover increased expenditure for multiyear programmes. Funds for such programmes can exceed the amount appropriated to the programme provided that it does not exceed 20percent of that specific years appropriation for the programme. The increase needs to be funded within the following years appropriation for the programme, prior approval need to be obtained from the mayor for the increase. In addition to this, the mayor needs to certify that the actual revenue for the financial year is expected to exceed budgeted revenue and that sufficient fund will be available for the increase without incurring further borrowing beyond the annual budget limit.
The accounting officer needs to table a consolidated report of all withdrawals within a quarter within 30 days after the end of each quarter. A copy of this report needs to be submitted to the relevant provincial treasury and the Auditor General.
According to Pauw et al (306:2005), the condition of motive to partake in fraudulent activities is encouraged by the existence of weak consequences. Thus when we refer to weak consequences as instances where officials believe that they would not be caught when acting in an unethical manner, this thinking gives them the motive to transgress. Therefore, governments need to explore ways in which appropriate sanctions can be given that would fit the crime. To combat this behaviour by officials government can take steps to remedy the weak consequences for officials unethical behaviour.
Governments lack the means to discover unethical behaviour. Thus, government should implement systems that are able to identify transgressions/misconducts quick and effectively. Once the means are available, officials (supervisors/managers) should have the will power to follow through with an investigation that will identify the guilty person.
Lack of sanctioning is another motive for perpetrator to partake transgressions/misconduct. The lack in a comprehensive range of disciplinary processes and laws that can be invoked when required. Thus governments should disciplinary processes and laws in place to remedy this shortcoming. This would ensure an official that transgress could go through a disciplinary process that could result in progressive or detrimental consequences (i.e dismissal) for his/hers actions.
Governments lack of taking action against the wrongdoing by officials. This occurs when the necessary disciplinary processes and sanctions are not fully applied thus allowing the guilty person to escape intended consequences. As remedial step government needs to ensure that, they take action against wrongdoing.
Officials often blame their low salaries as motive to partake in fraudulent activities/wrong doing. However, this argument is unacceptable without qualification, because members of the middle and upper class also partake in fraudulent activities (white-collar crimes).
Pauw, J., Van der Linde, G.J.A., Fourie, D., Visser, C.B. 2015. Managing public money, 3rd ed. Cape Town. Pearson Holdings Southern Africa.
Rautenbach, JJ. 2016. Public Sector Financial Management. Krugersdorp: Southern Business School. (Study guide PFB105).South Africa. 1999. Public Finance Management Act. No.1 of 1999 (as amended by Act 29 of 1999).
South Africa. 2004. Local Government Municipal Finance Management Act. No.56 of 2003 (as amended by Municipal Fiscal Powers and Functions Act 12 of 2007). Africa. 2015. National Treasury. The Standard Charts of Accounts and Systems. Accounting Manual for Departments.
South Africa. National Treasury. 2018. Vote 15 Higher Education and Training: Estimates of National expenditure. [Accessed 07/04/2019].