Pillars of a comprehensive classification system Introduction of a New Chart of Accounts in the South African context CABRI and World Bank Institute Training Programme: Budget Management and Public Financial Accountability Presented by: Hennie Swanepoel Chief Director: Public Finance Statistics National Treasury, South Africa 21 June 2007

Why focus on classification reform? Part of a good governance reform agenda Ensuring improved service delivery through: Availability of clear, relevant financial information for management purposes Improved policy making & monitoring implementation Enhanced executive oversight Encouraging greater accountability by providing properly classified and standardised financial data Economic analysis

Elements of a “good” classification system Clarity and accessibility Useful management information Legislative compliance Relevant economic aggregates International compliance (GFS & IFAC ) Include all aspects of accountability cycle Full coverage of all government accounts

Challenges Change management Inconsistent classifications Complicates transacting Inappropriate information included Financial systems constraints Different accounting conventions Harmonization of terminology

Stakeholders Parliament / Legislatures Financial practitioners Departments and entities / agencies National Treasury Central Bank (SA Reserve Bank) Statistical agency (Statistics SA) General public Research institutions International community

SA Case Study Manual GFS compilations Pilot GFS chart Consultation process Technical design New economic reporting format and SCOA 1998 1999 Since October 2001 August 2003 01 April 2004 How? Introduce new budget reporting format Introduce new chart of accounts Provide new financial statement formats

Structure of classification system Five Segments: Vote / Fund Programme / Objective Responsibility / Cost - centre Item Project

Classification considerations

Classification considerations (contd.)

Managing change! Detailed training program – 6 000 trained Detailed classification guides Call centre to log classification questions Classification committee to provide rules and classification support Classification circulars to provide guidance Website Metadata software

Key Lessons Must be a top-down process – buy-in at all levels critically important Integrate budgeting and accounting systems Include key stakeholders in design phase Decide on guiding principles Keep it simple! – balance between detail and aggregation Not a quick process Ensure comprehensive design phase – difficult to change once implemented Some flexibility required for future demands Include only what should be included

Introduction of a New Chart of Accounts in the South African context The End Questions? CABRI and World Bank Institute Training Programme: Budget Management and Public Financial Accountability Presented by: Hennie Swanepoel Chief Director: Public Finance Statistics National Treasury, South Africa 21 June 2007