Overview of the Financial Management of Parliament Bill Presentation to the Portfolio Committee on Finance 9 May 2006

Two overarching principles: Parliament’s status as an independent branch of government Constitutional commitment to transparent, accountable and effective administration Draws on processes and budgetary practices developed by the National Treasury without compromising independence of Parliament Needs to link into the Budget Process

The Bill: Regulates the financial management of Parliament Provides norms and standards for provincial legislatures for the regulation of their finanicial management

Governance model Speaker and Chairperson jointly constitute the Executive Authority of Parliament The Executive Authority is responsible for the financial management of Parliament and is accountable to Parliament, represented by the ‘joint committee’ established in terms clause 15 and the Public Accounts Commitee.

Executive Authority Among other things – Concludes annual performance agreement with Accounting Officer Makes regulations and issues policy Represents Parliament in discussions with Minister of Finance on annual budget Reports to Parliament, represented by the ‘joint committee’ established in terms of clause 15, and to the Public Accounts Committee

Adminstration of the Act Secretary to Parliament is the accounting officer Adminsters the Act Accounts to the Executive Authority Annual performance agreement Power to delegate to other parliamentary officials Fiduciary responsiblities include acting in the best interests of Parliament

Roles of Accounting Officer Must ensure - Effective, economical and efficient use of resources Financial records are kept Effective systems of financial management Implementation of supply chain management policy Systems to manage staff performance Unauthorised expenditure avoided Disciplinary or criminal action taken when necessary

Strategic Plan and Budget Accounting officer must prepare annually Submits draft to Executive Authority 10 months before beginning of financial year Executive Authority - Submits plan to ‘joint committee’ 10 months before beginning of financial year Submits budget to ‘joint committee’ 1 month before it has to be submitted to National Treasury Consults with Minister of Finance Submits budget to National Treasury Represents Parliament in discussions with Minster of Finance

Accounting Officer - Reporting In - year reporting: Monthly and quarterly reports Mid-year budget and perfomance asessment End - year reporting: Financial statements – to Auditor General and National Treasury Annual report including audited financial statements to Executive Authority Executive Authority - tables annual report in Parliament annual report referred to ‘joint committee’ and to SCOPA

Annual Reporting and Auditing Accounting officer Financial statements – 2 months after year end Annual report 5 months after year end Audited financial statements after 2 months Auditor-General Executive Authority Tables independently if necessary Tables in 5 working days PARLIAMENT Referred to ‘joint committee’ ‘SCOPA’

Chapters on specific matters Ch1: Interpretation and objects Ch2: Executive authority and administration of Act Ch3: Planning and budgeting Ch4: Cash management and investment Ch5: Financial management Ch6: Supply chain management Ch7: Audit committee and internal audit unit Ch8: Reporting and auditing Ch9: Regulations and instructions Ch10: Financial Misconduct

Audit committee Independent, advisory body Appointed by Executive Authority Majority of members not in Parliament Advises Executive Authority and Accounting Officer Draws up charter to guide internal audit committee Approves the annual audit plan

Internal audit unit Established by Accounting Officer Is independent and has access to necessary financial informatoin Does internal audits according to - an annual plan approved by audit committee and standards set in terms of the PFMA Reports to both the audit committee and accounting officer

Financial misconduct Disciplinary proceedings for certain failures of Accounting Officer and other officials Criminal proceedings for deliberate or grossly negligent breach of certain provisions including – Expenditure or revenue management General financial management provisons Abuse of position Unauthorised expenditure False information to Executive Authority or Auditor-General

Next Steps Consider whether to extend Bill to: Provinces Constitutional Institutions (doing so would require extensive consultation) Consider new proposals regarding party funding Consider comments on Bill from: Parliament’s administration National Treasury Make the necessary amendments Finalise the Bill

The end