1. Can we all move forward if the Pilots are still Piloting?
CIGFARO/ IMFO WC SEMINAR JUNE 2017

2. Content Background - mSCOA Regulations
National Treasury Implementation Strategy
Initial Pilot Process: Overstrand Municipality
Factors impacting on mSCOA Implementation Process
Risks
Reality Check
Consequence Management
Strategy / Contingency Plans
Conclusion

3. Background - mSCOA Regulations
Local government has an important role to play in strengthening the link between the citizens and government’s overall priorities and spending plans:
The National Development Plan (NDP) sets out an integrated strategy for accelerating growth, eliminating poverty and reducing inequality by 2030;
Local Government is required to incorporate the objectives of the NDP in its budgets;
The goal should be to enhance service delivery aimed at improving the quality of life for all citizens.

4. Background - mSCOA Regulations
Budget & Reporting Regulations:
The Municipal Budget and Reporting Regulations were published by the Minister of Finance, with the concurrence of the Minister of Provincial and Local Government in Government Gazette dated 17 April 2009 and took effect on 1 July 2009.
Reforn Achievements prior to mSCOA:
Consolidated MTREF budget information for all municipalities
Quarterly Section 71 reports
State of Municipal Finances report – annually
Over- and under expenditure report to Parliament
Local Government Budgets and Expenditure Review
Report on the Tabling of budgets to Parliament

5. Background - mSCOA Regulations
MUNICIPAL REGULATIONS ON A STANDARD CHART OF ACCOUNTS
[SCOA for MUNICIPALITIES] - Project Summary Document

6. Background - mSCOA Regulations
Next logical step -
Development and implementation of a mSCOA for Local Government:
Improve credibility and reliability of financial data
General business processes and applications

7. Background - mSCOA Regulations
Preamble
Chapter 1: Interpretation, Object and Application
Chapter 2: SCOA for Municipalities and Municipal Entities
Chapter 3: Minimum Business Process and System Requirements
Chapter 4: Technical Committee for SCOA
Chapter 5: Implementation of Standard Chart of Accounts
Chapter 6: General
SCHEDULE: Segments of SCOA For Municipalities and Municipal Entities

8. National Treasury Implementation Strategy

9. National Treasury Implementation Strategy

10. Pilot Process: Overstrand Municipality
Overstrand mSCOA Roadmap
The mSCOA implementation has taken place from July 2014 with Overstrand being fully compliant when Phase 4 ends in June The project has been split into 5 Phases in order to enable a smoother implementation that is the least disruptive.
In collaboration with Bytes Universal Systems, Overstrand has taken a three-phased approach to the system development and piloting processes. Two further phases have been adopted in order to implement the mSCOA regulations by 01 July 2017.

11. Pilot Process: Overstrand Municipality
Overstrand mSCOA Roadmap
Phase 1 – Budgeting Module
Phase 2 – Transactional Posting Levels
Phase 3 – Reporting Modules
Phase 4 – mSCOA Piloting Implementation
Phase 5 – Full mSCOA Operational Compliance
It was anticipated that the most difficult components, i.e. those requiring detailed business process changes or system transactions, will be implemented during Phase 4 as it will take longer to configure or design.

12. Pilot Process: Overstrand Municipality mSCOA Governance Steering Committee
MUNICIPAL MANAGER
DIRECTOR: COMMUNITY SERVICES
DIRECTOR MANAGEMENT SERVICES
DIRECTOR: PROTECTION AND SECURITY SERVICES
DIRECTOR: FINANCE (PROJECT SPONSOR)
DIRECTOR: INFRASTRUCTURE AND PLANNING
DIRECTOR: LOCAL ECONOMIC DEVELOPMENT
CHIEF AUDIT EXECUTIVE

13. Pilot Process: Overstrand Municipality mSCOA Working Group
DIRECTOR: FINANCE (PROJECT SPONSOR)
SENIOR MANAGER: SUPPLY CHAIN MANAGEMENT
SENIOR MANAGER: REVENUE
SENIOR MANAGER: EXPENDITURE AND ASSETS
DEPUTY DIRECTOR: FINANCE (SCOA CHAMPION)
SENIOR MANAGER: FINANCIAL SERVICES
MANAGER: FINANCIAL ACCOUNTING
MANAGER: BUDGET OFFICE
SENIOR MANAGER: SYSTEMS DEVELOPMENT
SENIOR BUSINESS ANALYST
SYSTEMS ADMINISTRATOR: SAMRAS

14. Pilot Process: Overstrand Municipality

15. Pilot Process: Overstrand Municipality High Level Scope - Project Plan

16. Pilot Process: Overstrand Municipality Pilot Implementation 1 July 2015: Budget Workshops Change Management Information Sharing (Big Bang Event) on June 2015

17. Pilot Process: Overstrand Municipality Pilot Implementation 1 July 2015:

18. Pilot Process: Overstrand Municipality Ongoing mSCOA Implementation after 1 July 2015:

19. Pilot Process: Overstrand Municipality Ongoing mSCOA Implementation after 1 July 2015:

20. Factors impacting on Pilot Implementation Process
1. Advertising and Award - Transversal tender RT25 in 2016;
2. Release of Circular 80 – March 2016;
3. Release of mSCOA Circular 5 – July 2016 – requesting Local Government to conduct an extensive ICT Due Diligence Exercise assessing System / Applications minimum functionality;
4. Release of Addendum to Circular 80 – October 2016;
5. Subsequent Versions of the Chart, Final Lock-down of Version November 2016;
6. mSCOA A1 Budget Schedules outstanding - December 2016;
7. MFMA Circular 86 – Changes to Schedule A1 – March 2017

21. Factors impacting on Pilot Implementation Process

22. Factors impacting on Pilot Implementation Process

23. Factors impacting on Pilot Implementation Process

24. Factors impacting on Pilot Implementation Process

25. Risks Major Risks - WC Government (mSCOA Project Management)

26. Risks (i):

27. Risks (ii):

28. Risks Risks (iii):

29. Reality Check:
IDP/Budget Process – Overstrand Municipality

30. Reality Check: NT - 9 March 2017

31. Reality Check: MFMA Circular 86 (NT - 9 March 2017)

32. Reality Check: MFMA Circular 86 (PT - 17 March 2017)

33. Reality Check: MFMA Circular 86 (PT - 17 March 2017)

34. Reality Check: (PT - 17 March 2017)

35. Consequence Management / Accountability?
Failure of Service Rendering to Communities?
Monthly Billing / Municipal Accounts?
Payment Boycotts - Cash flows?
Incorrect Payments (Creditors / Payroll)?
Municipal Stores - Stock Levels?
Procurement - Orders?
Non-Compliance to MFMA?
SCOA Regulations / Budget and Reporting Regulations;
Submission of Annual Financial Statements;
Data Corruption / Material Misstatements / Audit Outcomes

36. Strategies / Contingency Plans
Proactive strategies (Preparation and accountability)
- Execution of a Project Implementation Plan OR
Reactive Strategies (Activities in response to an event)
- Measures to contain consequences
A COMBINATION OF BOTH

37. Strategies / Contingency Plans
Proactive strategies (Preparation and accountability)
Project Implementation Plan (i):
Keep proper record of all testing done as well as the outcome of any changes required during the process;
Continuous communication between all stakeholders involved in order to keep everybody informed about the problems / solutions encountered;
Important to establish dialogue between service provider and any third party vendor;
Do not interpret communication between service provider and third party vendors, rather facilitate direct communication;

38. Strategies / Contingency Plans
Proactive strategies (Preparation and accountability)
Project Implementation Plan (ii):
Preferable to have a hotline to vendor for users as far as possible, while testing is done in order to assist with response time and understanding of practical environment;
Ensure that ALL staff (financial and technical) are well versed with the requirements and workings of mSCOA to minimize incorrect input data and to ensure that budget is done correctly;
Format and content of Management Information reports MUST be resolved upfront;
Issues to be logged and tracked from initiation to closure in order to monitor progress in the weekly SCOA steering committee meetings;

39. Contingency Plans

40. Contingency Plans (Example)

41. Conclusion
The perceived readiness of municipalities to implement mSCOA, should be regarded as one of the most serious challenges facing Local Government in decades;
Local Government can be severely affected in terms of these issues as highlighted;
Urgent consultation with Local Government regarded as prudent.

42. With Acknowledgement to - Overstrand Finance Directorate Staff, for working together tirelessly and inspired as a team towards mSCOA compliance. National Treasury & Provincial Treasury, for statistics and other information included in this presentation. Thank You