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TRANSCRIPT
CIGFARO Women In Public Sector Seminar
Governance Structures and How they Relate to/With mSCOA
Date: 01 March 2018
CONTENTo Recap on mSCOA?
o mSCOA Implementation in Local
Government
o mSCOA Segments
o mSCOA Budgeting Process
mSCOA PRESENTATION OVERVIEW
mSCOA Project
ProvidesStructure of
Govt Accounts
Affect all Departments
within the Municipality
Standard Financial
Classification Framework
Budgets and Reports (using 7 mSCOA
Segments)
Go-Live Date
1 July 2017
Business Transformati
on Project
What is mSCOA?
mSCOA Implementation:
mSCOA a Business Reform Project
mSCOA is not a finance reform project it involves
everyone in the municipality
• mSCOA is an organizational transformation project that has a
fundamental impact on all operations of the municipality in the areas of:
Planning - Linking of Projects to IDP, MTREF and SDBIP
Business Processes – Business processes must be supported in the
financial management system which is mSCOA aligned. The link
between systems, standard operating procedures (SOPs) and internal
controls is very crucial with the business processes.
Financial Management & Reporting – will the system successfully be
able to run the transactions using seven (7) mSCOA segments and
able to produce the relevant reports
mSCOA Implementation
mSCOA Implementation:
mSCOA Implementation Responsibility
The responsibility for implementation of mSCOA
project rest with the Management of the municipality
and not the systems service provider.
National Treasury / Provincial Treasury
Successful Implementation of mSCOA Project at the Municipality
Service Provider: mSCOA Implementation Team
SP: mSCOA SpecialistsSP: System Expert Support
SP Project Management Office
Municipal mSCOA Project Implementation Team
Municipal Project ExpertsmSCOA Workstream Leads
Municipal mSCOA Project Governance Structure
mSCOA Implementation
mSCOA PSC
mSCOA Project Manager
Municipal mSCOA Project
Implementation Team
mSCOA Project
Implementation Plan
CCG Systems Project
Implementation Leads
Enable Environment for Successful
mSCOA Implementation
mSCOA Implementation
Team
Establish & Implement Work Stream Charters
Establish & Implement Business
Processes Implementation Plan
mSCOA Change
Management & Transition Team
Establish & Implement Change
Management & Transition Plan
Municipal mSCOA Change
Management Team
mSCOA Implementation:
Change Management
Change Management is the key to smooth and successful
implementation of mSCOA project
o Creating awareness for change
o Ensure positive participation by all municipal officials
o Acquiring of knowledge and skill on mSCOA
o Application of knowledge and skills acquired from training
o Sustaining mSCOA as Business-As-Usual (BAU) Process
o Awareness campaigns
o Buy-in
o Training
o Practice
o Embedment
Change Management: Factors that Brings Successful Change
o Information to be shared with employees wrt the
necessity of change within the organization and the
expected result thereof
o Actions and directions to be taken by leadership to
realize the desired change
o Addresses the knowledge and skills gap of employees
realized during change process
o Communication plan
o Operational plan
o Training plan
Change Management Strategy
o Leadership engaging with employees for direction
and support during change process.
o Captures approaches to proactively and reactively
respond to threats of resistance when it occurs
during change. (e.g. What kind of resistance are
we likely to experience? Where is the resistance
likely to come from? Etc.)
o Coaching plan
o Resistance management plan
•
Change Management Strategy
Four (4) Phases of Change Management
mSCOA Implementation:
mSCOA Work Streams & Business Processes
mSCOA work streams are the foundation and provide structure iro
the implementation of mSCOA project
Corporate Governance Municipal
Budgeting
Financial Accounting
Costing & Reporting
Project Accounting
Cash Manageme
nt
Procurement Cycle
Grant Manageme
nt
Assets Life Cycle
Management
Real Estate & Resource Manageme
nt
HR & Payroll
Customer Care, Credit
Control
Valuation Roll
Management
Land Use Manageme
nt
Revenue Cycle
mSCOAImplementation
Governance Structure IT
Infrastructure &
Networks
Conversion of Current Votes to mSCOA
Segments
Planning
Data Cleansing
Document Manageme
nt
HR&
Payroll
Core System &
Subsystems
Real Estate, Land Use &
Grant Manageme
nt
Business Processes
Work Streams
•Recommended as the 1st workstream to be activated as it starts the municipal accountability cycle iro:
• Strategic Planning (IDP)• Budget (MTREF)• Operational Plans (SDBIP)• In-Year Monitoring• Review of IDP and budget policies
Planning
mSCOA Workstreams
AnnualFinancialStatements
IDP
Budget
SDBIP
In-year reporting
Annual report
Five-year strategy
Three-year budget
Annual implementation plan
• Organisational structure aligned to basic services• Sound municipal policies, processes and procedures • Standard chart of accounts for municipalities
Implementation monitoring
Accountability reporting
Oversight report
Accuracy of information depends on:
Municipal Planning & Accountability Cycle
• PSC should consist of MM & HODs• Provide a strategic direction to the project• Project ownership, sponsorship & oversight• Ensure that the entire organization
understands mSCOA regulations and activate project implementation plans
• Reporting and consulting with internal & external stakeholders
• Ensure that the deadline of 1 July 2017 is met
• Convene PSC meetings at least once a month
Project Governance Structure
mSCOA Workstreams
• mSCOA regulations dictates that there should be a centralized entry point for transactions and web enabled environment
• Strong network to run the latest technologies used by the Municipality
• WS responsible for assessment of IT infrastructure
• Upgrading of IT infrastructure and networks
• Compile and/or updating of the IT policy• Monitor IT policies, manage user access
controls and IT infratructure
IT Infrastructure & Networks
mSCOA Workstreams
• Physical verification of current line items with those provided for by National Treasury using mSCOA Version 6.1 segments
Conversion of Current Votes to
mSCOA Segments
mSCOA Workstreams
• Municipality must fully comply with and maintain HR & Payroll Elements (e.g. Org Structure, Job Description, Job Evaluation, Leave Management, Wage Agreements, etc.)
• This work stream contains data that has valuable information for budgeting & long term financial modelling of the municipality
• Compile and/or update the all HR & Payroll policies and the monitoring thereof
• All policies must be updated and data cleansing completed prior to the implementation of HR & Payroll module
HR & Payroll
mSCOA Workstreams
• Data must be valid, accurate and complete prior to being migrated to the mSCOA database
• Data in Supplier Database, HR Records, Valuation Roll, Assets Data, Debtors Data, Property Zoning, Clearing of Suspense Accounts
• Work in this work stream is of a continuous in nature
• Municipality must have standard operating procedures that deals with continuous data cleansing in all its departments.
Data Cleansing
mSCOA Workstreams
• Responsible for the ICT Due Dillingence exercise
• Core System & Sub-Systems must allow for the capturing and collection of data using 7 mSCOA segments
• PSC need to scrutinize the technology and processes as the mSCOA database from payroll, billing, inventory, supply chain & assets are locked down in this work stream
• Implementation of recommendations from the ICT Due Diligence should be implemented in the current financial year
Core Systems & Sub-Systems
mSCOA Workstreams
• Ensures that spatial and urban policy usage are considered using the Spatial Planning & Land Use Management Act (SPLUMA)
• Grant Reporting & Management of grant related projects are core to this work stream
• Ensure that all tariffs types are identified• All properties must be aligned to Regional
Segments and are legally identifiable• Policies are developed and/or revised and
data cleansing is executed
Real Estate, Land Management &
Grant Management
mSCOA Workstreams
• Involves the centralization of all documents in the Municipality using the document management system
• Involves clustering of electronic information to a work area or workflow
• Source a suitable document management system
• Compile and/or update policies pertaining document management
Document Management
mSCOA Workstreams
• The municipality should appoint personnel who are
knowledgeable on the subject matter to lead and implement
mSCOA work streams.
• A charter must be developed for each mSCOA work stream
and the responsibilities contained in the charter must be
incorporated in the work plans/performance agreements of
the persons responsible for its implementation
mSCOA Workstreams
mSCOA Implementation:
mSCOA Segments
Municipality must use ALL seven (7) mSCOA segments
to create an account
Example: Procurement of Chemicals
Account: Water / Materials & Supplies / Water Management/ Operational
Revenue / Default / Whole of Municipality / Technical Services
BudgetingTransactingReporting
Project
Item
Function
FundingRegional Indentifier
Costing
MSC
mSCOA Segments
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
Project segmentAll expenses need to be allocated to an appropriate project depending on the nature and objective of the expenditure.
There are 3 main categories for projects being:
• Capital• Operational • Default
The Project Segments
At the highest level, capital projects distinguish between infrastructure and non-infrastructure projects.
Both infrastructure and non-infrastructure projects cater for new and existing capital assets.
Existing assets could either be renewed or upgraded.
Capital Projects
The Project Segment Overview
UPGRADINGThe replacement of an
asset or addition/replacement of
an asset component, which materially improves
the original service potential of the asset
RENEWALRenewal implies that the
asset is restored to its original condition,
enhancing the capacity and value of an existing asset that has become inoperative due to the
deterioration of the asset
VS
The Project Segment Overview
Operational projects refers to current and short-term projects for which the cost is “immediately recognised as an expense and funded from the municipality’s operational budget”.At the highest-level, a distinction is made between
• Maintenance• Municipal running costs• Typical work streams• Infrastructure and • Non infrastructure projects
Operational
The Project Segment Overview
PreventativeInterval:
Maintenance carried out at regular
intervals
Conditional: Maintenance carried out based on certain conditional criteria
CorrectivePlanned:
Maintenance that was budgeted and
planned for
Emergency: Unplanned
expenditure to restore the function
of an asset
Maintenance Projects
The Project Segment Overview
The default classification is used to classify transactions
that are not related to expenditure (with the exception
of current assets). Default projects include:
• revenue
• current assets (excluding capitalised expenditure)
• gains and losses
• liabilities and
• net assets
Default
The Project Segment Overview
Item Segment
Classifying municipal budgets and daily transactions is currently done using an “item”, which directly relates to the item segment in mSCOA.
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
The Item Segment
• Item Assets
• Item Liabilities
• Item Revenue
• Item Expenditure
• Item Gains and Losses
• Item Net Assets
Item
The Item Segment Overview
Function segment
The “Function Segment” relates to the objective of the spend and not who spent the money.
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
The Function Segment
Core Functions
These are functions performed by local government and constitutionally assigned to local government in terms of sections 156 (1) of the Constitution, Part B of Schedule 4 and Part B of Schedule 5.
Function
Core Non-core
Non-core Functions
Functions performed by local government that are constitutionally assigned to provincial government in terms of section 156(4) of the Constitution. Local Government are compensated for delivering these functions on behalf of provincial government and typically receive a management fee from the provincial department.
The Function Segment Overview
Funding segmentThe funding segment was introduced to reflect the source of funding for both revenue and expenditure and facilitates cash flow.
It is important that municipalities budget for the accurate spending of their revenue and other funding as well as accurately identify the source of their revenue.
The Funding Segment
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
The subcategories of “Capital Fund” are
• Revenue• Transfers and Subsidies• Borrowing
CAPI
TAL
FUN
DIN
G
The Function Segment Overview
The subcategories of “Operational Fund” are
• Transfer from Operational Revenue• Transfers and Subsidies• Borrowing• Cash Backed Reserves
OPE
RATI
ON
AL F
UN
DIN
G
The Function Segment Overview
This sub-category relates to any transaction that
does not have a specific funding implication, such
as the accounting for depreciation, impairments
etc.DEFA
ULT
The Function Segment Overview
Regional Identifier Segment
The purpose of the region segment is
to identify which geographical area the
funds are coming from and which
geographical area the funds are being
spent in.
Which region is benefiting from the expenditure?
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
The Regional Identifier Segment
Costing segment
The costing segment is used for secondary transactions, for the reallocation of expenditure between functions.
The three costing methods• Activity Based Costing• Internal Billing• Departmental Charges
Budgeting TransactingReporting
Project
Function
Municipal Standard
Classification
ItemFund
Regional
Costing
The Costing Segment
Charges are debited to the receiving
department or the department that is getting the benefit of the expenditure (e.g. Audit Fees)
Recoveries are
credited to the
sending
department that
carried the full
primary cost before
allocating or costing
out the expense
All primary
transactions are
allocated to default
The Costing Segment Overview
Departmental
Allocation of overheads from a cost pool used by multiple functions. (e.g. IT Services)
The Costing Segment Overview
Internal Billing
This refers to departmental use of internal services such as electricity, water, waste water management and waste management.
The Costing Segment Overview
Activity Based
Actual allocation of resources (usage or benefit method) used by various departments.
The Costing Segment Overview
Primary Transaction
A direct cost (primary transactions) is one that can be specifically
related to a particular service, function or activity based on actual
consumption.
Secondary Transaction
Indirect costs (secondary transactions) are those which are not
directly attributable to the output and are often referred to as
overheads.
The Costing Segment Overview
mSCOA Implementation:
mSCOA Training
No Training Intervention
1 mSCOA & Budgets
2 Performance Management
3 Basic Accounting
4 Audit & Risk
5 MPRA
6 Reporting & Comparatives
7 Mass Appraisal Techniques
8 Supply Chain Management
9 GIS Property Management
10 Revenue Management
11 Assets Management
CIGFARO mSCOA Training
mSCOA Budgeting Process
Municipal Systems Act, 2000
Adoption of IDPs
25. (1) Each municipal council must, within a prescribed period after the start of its
elected term, adopt a single, inclusive and strategic plan for the development of the
municipality which:
(a) links, integrates and co-ordinates plans and takes into account proposals for the
development of the municipality;
(b) aligns the resources and capacity of the municipality with the implementation of the
plan;
(c) forms the policy framework and general basis on which annual budgets must be
based;”
,
Legislative framework that enable financial management
MFMA, 2003
Budget preparation process
21. (1) The mayor of a municipality must –
(a) co-ordinate the processes for preparing the annual budget and for reviewing the
municipality’s integrated development plan and budget-related policies to ensure that
the tabled budget and any revisions of the integrated development plan and budget-
related policies are mutually consistent and credible;”
Legislative framework that enable financial management
Municipal Regulations on a Standard Chart of Accounts, 2014
2. The object of these Regulations is to provide for a national standard for the uniform
recording and classification of municipal budget and financial information at a
transaction level by prescribing a standard chart of accounts for municipalities and
municipal entities which-
(a) are aligned to the budget formats and accounting standards prescribed for
municipalities and municipal entities and with the standard charts of accounts for
national and provincial government; and
(b) enable uniform information sets recorded in terms of national norms and
standards across the whole of government for the purposes of national policy
coordination and reporting, benchmarking and performance measurement in the
local government sphere.”
Legislative framework that enable financial management
Capital & Operational
Projects
Unpack the IDP
Review Medium Term
Budget (Typical
Workstream Projects)
Identify Projects in Trial Balance
(MRC & Maintenance
Projects)
Identifying Projects
Project No/Period/Ref No
Key Performance Area
Service Delivery Objective
Key Performance Indicator
Project Description/NamemSCOA Project
Segment
mSCOA Item Segment
mSCOA Function
mSCOA Funding Segment
mSCOA Regional Identifier
mSCOA Costing Segment
mSCOA MSC Segment
mSCOA Planning &
Budgeting Tool
IDP
mSCOA Segments
Medium Term Budget
Project Total Cost
Budget Year
1
Budget Year
2
Budget Year
3
58
CONCLUSION• TOGETHER WE CAN DO IT FOR OUR BEAUTIFUL COUNTRY…
Ms. Nozipho NkomoSenior Manager|CCG Systems Tel: 031 576 0440|Cell: 061 401 0541|Fax: 011 805 3966 21 Beacon Rock, 21 Lighthouse Road, UmhlangaEmail: |[email protected] |Website: www.ccgs.co.za