Implementation of the Public Finance Management Act

Meeting report

FINANCE SELECT COMMITTEE
24 MAY 2000
IMPLEMENTATION OF THE PUBLIC FINANCE MANAGEMENT ACT

Documents handed out:
Overview of the Public Finance Management Act and Treasury Regulations
Implementation of the Public Finance Management Act
Public Financial Management Act

Acting chairperson: Mr Makoela (ANC)

Mr Ismael Mommoniat and Mr Jayce Nair represented the National Treasury

Mr Ismael gave an overview of the Public Finance Management Act and Treasury Regulations (see Overview document). He stated that:
- The Act and regulations have been made as broad as possible
- The regulations have been modified into simpler and more relevant terms
- The department's approach in drafting the Act was to focus on what is absolutely legally necessary
- The approach taken is that the accounting officers must take full responsibility for transactions authorised by them so as to maintain accountability at all levels

He then went on to discuss certain segments of the implementation process (see Implementation document):
- STRATEGIC PLANNING
- REVENUE AND EXPENDITURE MANAGEMENT
Proper control mechanisms are to be implemented with regard to transfer payments
The Office of the Auditor-General must also deal with addressing the problem of unauthorised expenditure and this burden must not only fall on the shoulders of the National Treasury
- BANKING AND CASH MANAGEMENT FRAMEWORKS
This framework which is somewhat unclear at this stage will be improved during the course of the year
New regulations have been put in place for functioning and formation of public-private partnerships
- PUBLIC ENTITIES

Discussion
Mr Dale (DP) wanted to know which model was used in formulating these regulations

Mr Mommoniat said that they were highly influenced by the Financial Management Act of Australia since this was most compatible with South Africa's situation

Ms Joan Fubbs (ANC) stated that it was not clear where the authority for departments to report to legislatures came from, and asked how the legislature fits into the structure of audit committees

Mr Mommoniat replied that the audit committees should be independent of the National Treasury but should liaise with the Chief Accounting Officers of the provincial legislatures. He went on to give an example where the National Department of Welfare is currently contracted to Deloitte and Touché, and the company will assign their own Chief Accounting Officers to the department's audit committees

Dr Conroy (NNP) asked how the department is going to judge competence and what are the yardsticks for measuring competence with regards to implementation process

The department replied by saying that budget reform is focused on getting particular outputs and is set on prioritising departments - with special attention given to the large departments like education and health

Ms Botha ( ANC) asked whether the white paper on procurement has been finalised and will it in any way impact on the regulations

The department stated the Minister has given his word that the white paper on procurement will be finalised within the next three months

Mr Marais (ANC) noted that the Municipal Systems Bill had made provision for the PFMA and asked how many other bills are to be affected by the PFMA

Mr Mommoniat replied by saying that a constitutional amendment is to be introduced that will ensure that no other piece of legislation can override the PFMA, since this would lead to inconsistency at the various levels of parliament. He however stated that the Local Government version of the PFMA will be published within the next three months

Mr Durr (DP) raised the issue that the maintenance of state assets is a critical area which if not looked into, would devalue the monetary value of state assets

Mr Mommoniat said that the task of the maintenance of state assets will be vested in the Chief Accounting Officer where they will be accountable not only for the monetary expenditure, but also for the state and condition of government assets.