mSCOA Version 5.4 and changes to the classification framework Presented by National Treasury: Chief Directorate Local Government Budget Analysis | 22 June 2015

Costing Segment Split between “recoveries and charges” Yes Add Change Posting Level and Breakdown Principle/ Application Definition Account Split between “recoveries and charges” Yes Add

Function Segment Change Posting Level and Breakdown Principle/ Application Definition Account Change “applicability” Non-core – Community and Social Services for: Libraries and Archives Museums and Art Galleries Yes District Municipalities Add Consider changing: Waste Management – Street Cleansing Public Safety – Cleansing [Research needed]

Funding Segment Accounts changed for Equitable Share: Basic Services Posting Level and Breakdown Principle/ Application Definition Account Accounts changed for Equitable Share: Basic Services Institutional Component Community Services Revenue Adjustment Correction and Stabilisation Factor Yes Add Research/Information needed: Posting Level District Municipality and Provincial Government DORA – Capital versus Operational

Item Segment – Liabilities Change Posting Level and Breakdown Principle/ Application Definition Account Current Transfers and Subsidies –unspecified” Breakdown Yes Added Defined Benefit Obligations Pending: VAT Accounts Expand? Current and Non-current Borrowing: "non-annuity loans” Deleted Other Current Financial Liabilities: Concessionary Loans Provision and Impairment: Litigation Trading Services “Bonus” Description

Item Segment – Current Assets Change Posting Level and Breakdown Principle/ Application Definition Account Current Portion of Non-current Receivables/Non-current Receivables: Staff Loans/Recoveries Description Receivables from Non-exchange: Monthly Billing changed to include: “interest”. Added Trade and Other Receivables from Exchange Transactions: Trading and Customer Service Debtors Intercompany/Parent Subsidiary Transactions – Impairment Deposits Transfers and Subsidies - Unspecified

Item Segment – Non-current Assets Change Posting Level and Breakdown Principle/ Application Definition Account Investments: Listed/Unlisted Bonds and Securities Description Receivables from Non-exchange: Monthly Billing changed to include: “interest”. Added Trade and Other Receivables from Exchange Transactions: Trading and Customer Service Debtors Intercompany/Parent Subsidiary Transactions – Impairment Deposits Transfers and Subsidies - Unspecified

Item Segment – Expenditure Change Posting Level and Breakdown Principle/ Application Definition Account Bulk Purchase: Green Electricity and Renewable Description Outside Services: Accounting and Auditing Transport Services Added Consultants and Professional Services: Accounting and Auditing Contractors Maintenance and Unspecified Assets Electrical Yes Depreciation and Amortisation: Infrastructure Electricity

Item Segment – Expenditure (Continue) Change Posting Level and Breakdown Principle/ Application Definition Account Inventory: Consumables Agricultural Added/Deleted Operational Cost: Cash Discount/Insurance Claims/Office Decorations Indigent Relief/Hire Charges Statutory Payments other than Income Taxes Changed Added Description Transfers and Subsidies: Unspecified

Item Segment – Project Buildings changed to include “other structures” Posting Level and Breakdown Principle/ Application Definition Account Buildings changed to include “other structures” Description Operating Cost Changed

Item Segment – Revenue (Continue) Change Posting Level and Breakdown Principle/ Application Definition Account Fines, Penalties and Forfeits: Fines – Pound Fees Changed Licences or Permits: Activities on Public Roads Drivers Licence Application and Duplicate Licence Learner Licence Application Deleted/ Combined Transfers and Subsidies: Unspecified Added

General Reconsider posting and breakdown Application Changes have been incorporated until 11 June 2015 FAQ lock down 3 July 2015 for influencing Version 5.4 Version 5.4 to be released by 24 July 2015

MSCOA : Position Paper Status Report

Discussion Paper/Position Paper No Legal Status Part of the “Project Documents” Not replacing NT guidelines, circulars, practice notes or implementation guidelines Consolidate information for various source Checklist for compliance to the Standards of GRAP Recording revision of reporting Linking mSCOA Posting Level accounts FAQ to date not concluded addressed Internal acceptance prior to consultation with stakeholders End result may result in revision of NT documents or incorporation in circulars Consolidate information for various sources/opinions/views Defining terminology relating to the subject matter Document the position taken by National Treasury on subject matter

Discussion Paper and Status Subject Matter Status Timeline for Completion Employee Related Cost Approval by Technical Work Group September 2015 Provisions, Contingent Liabilities and Liabilities To be drafted Inventory Transfers and Subsidies Exchange versus non-exchange and related matters Fixed and Intangible Assets Reserves and Funds Any matters not listed Reports October 2015

Position Paper and Status Subject Matter Status Timeline for Completion Short Codes and Mapping Finalised ICF 22 June 2015 Reporting including: General Ledger Detail Materiality and Reporting Comparatives and Restatements Correction of Prior Periods Municipal Entities Month and Year-end Closure Partially Drafted Additional sections to Technical Work Group August 2015 NERSA October 2015 DWA including Water Balance Reporting VAT Cost of Free Basic Services and Revenue Cost of Free Basic Services Research taking place