Question NW1587 to the Minister of Small Business Development

Reply:

a) What are the reasons for the overspending of 119.2% on claims projected for the second and fourth quarter but were paid in the third quarter of the financial year?

I have been advised that Departments are required in line with section 40 (4) of the PFMA Act No.1 of 1999 to provide National Treasury with a breakdown per month of the anticipated revenue and expenditure for the financial year, on the 28th of February, which is one month before the beginning of a financial year.

The National Treasury approved monthly cash flow projections are drawn down per month from April and kept in the departmental bank account referred to as the Pay Master General (PMG) account. Payments are processed once fully compliant documents are submitted to Finance.

The reason for the cashflow variance of 119.2% is the timing misalignment between actual cash disbursement and planned cash payout. Factors that contribute towards this misalignment are milestones in projects either being delayed or reached earlier than the cash flow. In instances of goods and services, it could also be due to early or late deliveries of orders.

Finance can only process transactions upon receipt of fully compliant supporting documents.

b) Why was it necessary to pay the claims in the third quarter of the financial year, when they were projected for the second and fourth quarters?

I have been advised that cash flow projections and plans are based on estimated values and dates. As part of cash flow management and compliance with Treasury Regulations 8.3.2, claims are processed within 30 days of receipt by Finance.

It should be noted that the utilisation of the available cash did not lead to overspending on the overall vote.