1. Legislative Framework and Institutional Arrangements
Nols du Plessis
PFMA Implementation Unit
National Treasury
21 June 2007

2. Content
Principles supporting Public Finance Management Act (PFMA) and Municipal Finance Management Act (MFMA)
Institutional Arrangements
Financial Management Model

3. Principles supporting
PFMA & MFMA

4. Why a new approach with Implementation of PFMA & MFMA?
Satisfy constitutional obligations
Transparency and expenditure control (s216)
Maximise service delivery
Limited resources vs ‘unlimited’ demands

5. Approach before Implementation of PFMA & MFMA
Financial administration : rule-bound
Accounting Officer’s passive
Focus on inputs
Need to transform the public services

6. PFMA and MFMA as part of the solution
Modernising financial management
Enabling managers to manage
Make managers accountable
Clearer definition of roles
Minister/Major responsible for outcomes
Accounting Officer responsible for outputs
Greater transparency & accountability
Improved information & reporting
Result -
Improved value for money & service delivery

7. Desired Outcomes : Long Term
Sound financial management systems and processes
Transparent budgeting process
Effective management of revenue, expenditure, assets and liabilities
Unqualified financial statements, prepared on the accrual basis

8. Institutional Arrangements

9. National & Provincial Treasuries
Prescribe uniform treasury norms and standards
Enforce the PFMA and MFMA and any prescribed norms & standards
Monitor and assess implementation of PFMA & MFMA
May assist institutions in building capacity
May investigate any system of financial management
Must intervene by taking appropriate steps to address a serious breach of PFMA & MFMA

10. Executive Authorities
Oversees strategic planning and approve budget submissions
Consider monthly reports & quarterly reports
Reporting to Cabinet/Executive Council
Tabling of annual report & audit opinion
Oversight over public entities
Written explanations of failure to table
Directives with financial implications

11. Accounting Officers
Responsible for effective, efficient, economical and transparent use of resources
Maintaining efficient, effective & transparent systems of financial management and internal control
Effective system of internal audit under control of an audit committee
Appropriate procurement and provisioning system
Strategic planning and budgeting
Exercise proper budgetary control
Submission of various reports

12. Financial Management Model

13. PERFORMANCE ASSESSMENT
FINANCIAL MANAGEMENT MODEL
LEGISLATURE/
COMMUNITY
INTERNAL
CONTROL
Policies & Priorities
STRATEGIC PLANS
Outcomes/Outputs
PERFORMANCE
REQUIREMENTS
Medium Term
Budget Process
Statement of Service
Delivery
DELEGATIONS
SERVICE DELIVERY
IMPROVEMENT
PROGRAMME
(Standards)
EXECUTIVE AUTHORITY
(Outcomes)
IN-YEAR
MANAGEMENT
AND REPORTING
(Financial & non-
financial)
Performance Agreement
ACCOUNTING OFFICER
(Outputs)
BUDGET
(Outputs)
FINANCIAL
STATEMENTS/
ANNUAL REPORT
Performance Agreement
SENIOR MANAGERS
REVIEW AND
ASSESSMENT
PERFORMANCE ASSESSMENT
OF STAFF
ASB
- GRAP
- GAAP
INTEGRATED FINANCIAL MANAGEMENT SYSTEM
- Compilation of medium term budgets and costing of outputs
- Accounting system (accrual)
- Creditor, Debtor, Stock and Asset Systems
- Human Resource Management System
- Management information system (Financial and non-financial)

14. DISCUSSION