CIGFARO SENIMAR 23 MAY 2019

mSCOA challenges from a municipal perspective Inadequate ICT infrastructure to support and enable mSCOA implementation Inadequate budget to purchase all modules of the financial system which impacted on the municipality’s ability to achieve the seamless integration of sub-systems to mSCOA Municipalities still utilising their legacy systems, despite purchasing a new financial system and paying service and licencing fees to a new system provider. This is wasteful expenditure and some of the legacy systems are not even in existence anymore and therefore not meeting the mSCOA requirements Some municipalities are not doing their part (e.g. data cleansing, testing version changes, capturing transactions, etc.) which causes delays and impacts on system implementation Further change management is required as mSCOA has not been fully embraced as yet and is still seen as a finance reform and not a business reform Non-payment of vendors by municipalities, resulting in support services (i.e. not access to the actual financial system) being suspended by the vendor until payment has been received Concerning is the number of municipalities that change financial systems with significant cost implications without the necessary due diligence.

mSCOA challenges from a system vendors perspective All municipal system development relating to mSCOA should have been concluded before 01 July 2017 and municipalities should have been able to transact live and report on mSCOA version 6.1 from 01 July 2017. However, some vendors underestimated the cost and time required to complete their system development and implement annual version changes and did not provide adequate training and support to municipalities. Some vendors have overlooked the requirement of the CSD and CIDMS in the SCM and asset modules. NT has been criticised for not managing the system vendors, but municipalities enter into SLAs with system vendors to which NT is not party to. Therefore, municipalities should implement proper contract management. Importantly, municipal councilors must play an active role in mSCOA implementation to ensure that budgets and S71 reports (Schedule A, B and C) are prepared i.t.o. mSCOA and directly in the financial system and that tighter control are exercised over contractual obligations by service providers.

Priorities going forward 1. 2019/20 MTREF Budget Submission of TABB and PRTA data strings – should have been submitted immediately after the budget has been tabled Importantly, tabled budget data strings should have been analysed by using the item segment and/or Wizard tools to ensure correct segment use. Once the budget has been adopted, the municipality will have to transact and report against the data string on their system and this will be the information that will be analysed and published in terms of the S71 reports that are tabled in Parliament and Legislatures. Once adopted, the alignment between the adopted budget data strings (ORGB) and adopted budget must be verified. However, once the budget has been adopted by Council, changes can only be made to the data strings. Therefore, the importance of ensuring that the data strings are correct prior to adopting the budget is CRUCIAL.

Priorities going forward (cont…) Municipalities should prepare their 2019/20 budget directly in the core financial system using the budget module Some municipalities have expressed concern (no doubt the ones that are not budgeting directly in the system) that they cannot work live on the system for demonstration purposes as this may mess up their data on the system. Since system vendors make backups of the database, these municipalities should request their respective vendors to hook them up with a previous backup copy for demonstration purposes. Alternatively, municipalities can use the user test functionality (sand box environment) to do a dummy budget and produce the dummy schedules. Those municipalities that are not budgeting directly in system for whatever reason (including those who are still using their legacy systems instead of the system they purchased) should submit an action plan as part of the budget engagement to indicate by when they will be budgeting, transacting and reporting directly on the core financial system – these plans must be reviewed at least on a quarterly basis by the PTs (for delegated municipalities) and NT (LGBA) (for non-delegated municipalities) to  track progress.   

Priorities going forward (cont…) Municipalities should apply balance sheet budgeting when completing budget tables A6, 7 and 8 Municipalities need to submit the monthly data strings immediately after the closure of the month under review Provincial Treasury will then use the segment/ wizard tool to assess the data strings. Feedback will then be provided to municipalities on the results of the tool

Status of data strings submission Successful submission 1st stage error 2nd stage error Non-submission Total AUDA 2018 13 3 2 5 23 M07 17 4 M08 M09 15 6 M10 11 1 9 TABB 16 PRTA

Thank You