1. STRATEGIC OBJECTIVE
To address the financial management challenges in the Department.
PURPOSE
To present the financial turnaround strategy that is being applied to address financialmanagement challenges

2. BACKGROUND
Concerns about financial management in DWAF after financial statements qualified for four years.
Improvements have been made but the turnaround strategy has not been presented in a coherent manner.
This presentation analyses the challenges and outlines the actions currently underway to address them .

3. 3. BACKGROUND
Government Financial management performed in accordance with Public Finance Management Act.
PFMA gave effect to Constitution and addressed financial reform processes initiated since 1994 with introduction of MTEF in 1996 .
MTEF is a multi-year (3 year) budgeting process
PFMA requires adoption of new accounting processes based on GAAP (accrual accounting).

4. Implementation of PFMA phased over a number of years to allow Departments to plan
National Treasury recommended seven steps for successful application of the Act:
1. In-year management, monitoring and reporting
2. Clear up audit queries
3. Establish effective internal controls
4. Improve expenditure management and transfers
5. Banking arrangements
6. Complete financial statements on time
7. Delegation of responsibilities

5. Problems leading AG to qualify DWAF included:
Failure to meet reporting requirements, e.g. accrual accounting
Inability to separate accounting transactions and budgets of the vote and trading accounts
Ineffective management of revenue and debt
Failure to recover loans from boards, municipalities and the Land Bank.
Inability to submit documentation timeously
Inability to clear previous audit queries on time

6. National Treasury (2000) main requirements for implementation of PFMA:
Political will to drive the process
Buy-in and unconditional support for implementation from top management
Capacity building in Departments
Sufficient resources

7. National Treasury:
“The successful implementation of the PFMA depends on strong, entrepreneurial managers. The reform of the financial management system requires empowered managers to take the initiative in revamping operations, reallocating resources and pointing their Departments in new directions. Without strong management, Departments may be in a similar position after the reform process, but may have incurred high transaction costs and pose greater risk to Government."