The future of Accounting in the spectrum of government Presenter: Michael Sass | Accuntant-General: National Treasury | 13 July 2015

1 “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot do so well, for themselves in their individual capacities” – US president Abraham Lincoln Role of Government How do we demonstrate performance? Regular reporting on the financial performance, position and cash flows of an entity that is free from material error and bias Is this enough?

1 The horizon for local government Improving reporting and compliance with laws and regulations; Enhancing the use of the financial statements; Reporting on matters outside the general purpose financial statements; Integrated reporting;

1 Improving reporting and compliance with laws and regulations Strengthening internal controls – approved and functioning Standard Operating Procedures, within monitoring of compliance; Retention of source documentation; Training of staff on standards, legislation, circulars, SOPs etc.; Communication of reporting requirements with line functions; Consideration of materiality in applying the Standards of GRAP; Participation in feedback to standard setter and the relevant treasury; Interim reporting – discussion of potential accounting / reporting issues timely; Simplification GRAP disclosures;

1 Improving reporting and compliance with laws and regulations (Cont.) Using the internal audit and audit committees more effectively; Non-compliance (including irregular expenditure) dealt with timeously; Similarly, transgressions relating to unauthorised, fruitless and wasteful expenditure addressed; Implementation of the mSCOA within IT systems; Supporting lower capacity municipalities (technical assistance, finance function etc.);

1 Enhancing the use of the financial statements Introduction of management commentary; No specific standard of GRAP but it is a practice in the private sector; IPSASB has issued a Recommended Practice Guide (RPG 2) on Financial Statement Discussion and Analysis; –Would a pronouncement be beneficial for local government? Ratio analysis – circular published by NT: Limiting the differences between budget and financial compilation and reporting (project within the NT);

1 Reporting on matters outside the GPFS and integrated reporting IPSASB has issued a Recommended Practice Guide (RPG 1) on Reporting on the long-term sustainability of an entity’s finances; –Would a pronouncement be beneficial for local government? Enhancing the information on performance against pre-determined objectives; –Is further guidance on this required? Integrated reporting – SA is participating with International Integrated Reporting Council on piloting of the IR framework in the public sector;