1. mSCOA and GRAP – Accounting Update: IMFO – July 2016 Reporting Pack and mSCOA V5.5 Technical Release

2. What is considered to be included in reporting?
Content:
REPORTING
Background
The Problem Statement
What is considered to be included in reporting?
Proposed design Principles
Phase 1: Current Reporting Formats linked to mSCOA
Phase 2: Revised/Updated/New Reporting Formats
VERSION 5.5 FOR TECHNICAL REVIEW
Changes made Version 5.4 take 5 to Version 5
Where are we?
Position Papers

3. BACKGROUND
Key Design Principles in Setting-up mSCOA Classification Framework:
Central source of data for local government information to be used by different users, e.g. provincial treasuries, National Treasury, sector departments, STATSA, SARB, NERSA.
Improvement of Data Quality and Integrity – uniform classification framework with definitions to assist in the understanding of the classification of similar transactions throughout local government.
Initiative supported by a modernised system application to facilitate the adoption and implementation of the mSCOA Classification Framework.
Reporting relates to internal and external information requirements for local government in the context of the municipality or municipal entity.
Internal to the municipality:
management’s needs for information from the systems application for day-to-running
vary depending on the size and complexity of the municipality/municipal entity
excluded from the Position Paper
External – wider user group (See Annexure A to the Position Paper for a Comprehensive list):
Municipal Budget and Reporting Regulations
In-year reporting
Reporting of audit outcomes

4. BACKGROUND (CONTINUE)
Financial and Non-financial Information
Reporting in the context of mSCOA confined to financial information and do NOT address non-financial information.
Once the financial information stabilised further consideration will be given to non-financial information in improving the collection and reporting on these important indicators.
The design framework inherent to mSCOA considered the reporting outcomes and envisage improvements to be made to existing reports.
mSCOA tables for release subsequent to the technical review is an important land mark in the project development life cycle.
Locking down the chart, path the way for finalising the review, revision and update of the set of reports for Local Government.
The data imports will contain sufficient information to extract these reports.
By no means the accountability responsibility placed on the local government governance structures will be removed.

5. THE PROBLEM STATEMENT Problem 1
Requests raised through the training initiatives, practioners, consultants, professional bodies, etc on the revision of the existing reporting sets to compliment the mSCOA Classification Framework.
Need?
In progress, consultation already commenced. Discussion Paper released for comments.

6. THE PROBLEM STATEMENT (CONTINUE)
Rational and varying opinions expressed does not necessary align to current thinking at National Treasury.
Uncertainty?
Continuous consultation and engagement with stakeholders and practioners.

7. THE PROBLEM STATEMENT (CONTINUE)
More detailed mSCOA information require update of historical information.
Most critical aspect in this dimension of the project life cycle – take-on balances and restatement of comparatives.
Retention of a complete Audit Trail to substantiate the unbundling, regrouping and restatements.
How?
Position Paper: Comparatives, Historical Information and Restatement

8. THE PROBLEM STATEMENT (CONTINUE)
Regulation of Annual Financial Statements necessary?
Need?
Far less than initially anticipated considering that budgeted and actual financial information from reporting entities will be uploaded to the LGDRS providing for seamless alignment between budget and actual information for statistical reporting by National Treasury.
Management discretion and judgment underpinned in the Standard of GRAP is not compromised as the management and governance structure of the reporting entity has full discretion on presentation and disclosure made in the annual financial statements.

9. WHAT IS CONSIDERED TO BE INCLUDED IN REPORTING?
Schedule
Description of Report
Frequency A
Municipal Annual Budget and MTREF Supporting Tables
1 July
SDBIP
Service Delivery and Budget Implementation Plan
Tabled and Adopted Budget
Returns
OSB: Statement of Financial Performance
CA: Budgeted Capital Acquisition
CFB: Budgeted Cash Flow
GSR: Grants and Subsidies Received
GSG: Grants and Subsidies Given
SP: Strategic Plan with links to Budget
AM: Asset Management
BS: Budgeted Balance Sheet
Monthly
Schedule D
Budget schedule for municipal entities
To parent municipality for consolidation
To National Treasury
Municipal Entity Annual Budget and MTREF Supporting Tables

10. WHAT IS CONSIDERED TO BE INCLUDED IN REPORTING? (Continue)
Schedule
Description of Report
Frequency B
Municipal Adjustment Budget and Supporting Tables
10 working days after approving the adjusted budget
Municipal Entity
To Parent Municipality
For Consolidated Budget
To National Treasury
Adjusted Budget Return
OSR – Statement of Financial Performance Revised
CAR – Capital Acquisition Revised Budget
CFR – Cash Flow Revised Budget
BSR – Balance Sheet Revised Budget
AMR – Asset Management Revised E
Budget Schedule Municipal Entity
Municipal Adjustment Budget and Supporting Tables – Municipal Entities C
Municipal In-year Reporting and Supporting Tables
Monthly Section 71 Reports

11. WHAT IS CONSIDERED TO BE INCLUDED IN REPORTING? (Continue)
Schedule
Description of Report
Frequency F
Municipal Entity
To Parent Municipality
For Consolidated Budget
To National Treasury
Municipal Adjustment Budget and Supporting Tables
10 working days after approving the adjusted budget
Monthly Reporting
AC: Age Analysis of Creditors
AD: Cash Flow Accruals
CFA: Cash Flow Actuals
CAA: Capital Acquisition Actuals
OSA: Statement of Financial Performance Actuals
BSAC: Balance Sheet Actuals (this is a snapshot of municipal finances at the end of the month)
RME: Repairs and Maintenance Operating Actual (this is a new return similar to the grant returns used and concentrates on any operating expenditure incurred for repairs and maintenance during the month of reporting

12. WHAT IS CONSIDERED TO BE INCLUDED IN REPORTING? (Continue)
Schedule
Description of Report
Frequency
Monthly Reporting
Grants:
FMG – Finance Management
DRG – Drought Relief
MDRG – Municipal Drought Relief
EEDG – Energy Efficiency and Demand Site Management
INED – Integrated National Electrification Program
MIG – Municipal Infrastructure
MSIG – Municipal Systems Improvement
NDG – Neighbourhood Development Partnership
PTIG – Public Transport Infrastructure and Systems
RTSG – Rural Transport Service and Infrastructure
WSOG – Water Service Operating Subsidy
ISDG – Infrastructure Skills Development
PWPG – Expanded Public Works Programme Integrated
Monthly

13. WHAT IS CONSIDERED TO BE INCLUDED IN REPORTING? (Continue)
Schedule
Description of Report
Frequency
Reporting on Audited Figures
OSAA – Statement of Financial Performance
CAAA – Capital Acquisition
CFAA – Cash Flow Audited
BSA – Balance Sheet Audited
ACA – Aging Creditor Figures
AMA – Asset Management Audited
From 1 December onwards
Reporting on Restated Audited Figures
ADA – Aging Debtor Figures
Restated figures during preparation of next year’s AFS (Period 15)

14. Proposed Design Principles – Phase 1
Minimal changes in terminology, layout and presentation in existing reports
Technical Work Group to give consent on the alignment, potential inconsistencies and “best fits” that could apply. Proposed to be included in the Project Summary Document for completeness.
Challenges in achieving seamless alignment in reporting (planning – budgeting – in-year reporting and annual financial statements) in the accountability cycle during this transitional phase. ULTIMATE GOAL
mSCOA alignment to existing reports based on reporting links to be available in the final release for 2017/18 budgeting with report extraction from the LGDRS.
Illustrated financial statements (potential revision) – seamless alignment between budgeted information – in-year – monthly and annual reporting.
Accountability responsibility of governance structure to be maintained.
LGDRS is as statistical system using commonality as base
Existing reporting formats need to be available from the system application (preferable) used by the municipality

15. Proposed Design Principles – Phase 1 (Continue)
System application need to drive month and year-end procedures.
If these procedures did not complete data may not be submitted to the LGDRS
Transitional arrangement – provide for resubmissions
Complete Annual Financial Statements / Budget Reporting may not necessary be directly extracted from the system application. End GOAL
SARS Returns
First workshop held based on Version 5.4 take 1 in January 2016 – indicators added.
Second workshop envisage for 3rd week in August 2016 – update of indicators final version.
Input draft for the VAT 419 Guide Revision released by SARS.
PSD to be drafted to explain the VAT Indicators.
Minimum requirements for VAT reports to substantiate returns with layout

16. Proposed Design Principles – Phase 1 (Continue)
NERSA Regulatory Reporting Returns
PPE and Intangible Assets aligned to CIDMS. (Consent by NERSA)
Service Charges revised.
Discussion Paper presented to NERSA on various other changes.
Design to commence on these reports on a consultation basis with NERSA.
Require a revised regulation from NERSA.
DWS Reporting Requirements
PPE and Intangible Assets aligned to CIDMS. (Consent by the Department)

17. Proposed Design Principles – Phase 1 (Continue)
Exception:
During the testing of the envisage reporting position, the pilot municipalities will be subjected to dual reporting.
Recommended to pilot municipalities and early adopters to focus on correct classification of transactions than envisage and design of future reporting.
Users external to national and provincial Treasuries:
SARB, STASTA, COCTA, SARS, AGSA, NERSA, DWS, etc
Registered users with limited access to reports.
Municipalities are NOT relieved from submitting reporting information to these stakeholders.

18. Proposed Design Principles – Phase 1 (Continue)
Period:
1 July 2015 / 2016 – pilot site testing
1 July 2017 – all municipalities

19. Proposed Design Principles – Phase 2
Revision of reports defined early to give credit to the extensive detail added in mSCOA.
Analytical reports to be signed for oversight responsibilities.
The cumulative effect of the monthly reporting upload with the three additional periods; 1) final year-end period, 2) pre-audit and 3) audit and restated figures – effectively becomes the official information hosted in the LGDRS.
If needed changes to be effect coinciding with the release of the budget circular for 2017/18 of changes to the mSCOA Tables required from finalising the reporting formats.
AFS prepared as usual by reporting entities.
LGDRS:
Accountability ito governance structures remain
Oversight and stakeholder information
Seamless alignment between budget – in-year reporting – AFS
Enable to extract AFS but will not extract for reporting entities

20. Proposed Design Principles – Phase 2 (Continue)
AFS prepared by management is a distinctive process for general use in the municipalities annual report.
Achieving of AFS compliant to the Standards of GRAP.
Retaining comparable, similar detail and comprehensive yet flexible information in the LGDRS.
Customised reporting abilities providing for AFS with notes, budget reporting and in-year reporting.
Other Stakeholder reporting to be concluded and reporting requirements communicated.

21. Proposed Design Principles – Phase 2 (Continue)
Summary of this Phase:
Consultation, comments and more request for comments
Reporting formats concluded.
Process for retaining accountability measures by governance structures concluded.
Other reporting formats finalised.
Any changes required in mSCOA Tables made to coincide with the Budget Circular for 2017/18.
Proposed Date:
1 July 2019

22. SUMMARY OF CHANGES MSCOA: Version 5.5

23. Costing Segment
Change
Posting Level and Breakdown
Principle/ Application
Definition
Account
If Breakdown is not required principle changed to “N/a” for consistency throughout mSCOA. Detail is discussed in Design Principles within the PSD
Yes
Various
Definitions improved mostly within “Recoveries”.
Changes to PSD:
Design Principles following update of comments received – applicable to all sections of the PSD.
Comments received to update and clarify content of the PSD (ASB/Invictus/Guest)
Not done yet – 30 June 2016.

24. Function Segment VAT Indicators added/changed. All Posting Level
Posting Level and Breakdown
Principle/ Application
Definition
Account
VAT Indicators added/changed.
All Posting Level
If Breakdown is not required principle changed to “N/a” for consistency throughout mSCOA. Detail is discussed in Design Principles within the PSD
Yes
Various
Definitions Revised/Updated for:
Libraries and Archives
Museums and Art Galleries
Markets
Recreational Facilities (added Swimming Pools)
Sub-sub-functions removed for Swimming Pools – see above
Deleted

25. Function Segment
Change
Posting Level and Breakdown
Principle/ Application
Definition
Account
Removed breakdown required as information is not standardised and this not relevant for LG DB purposes.
Level 5 changed to be the posting level
Breakdown optional
All
Removed Sub-functions duplication in Public Safety for “Police Forces, Traffic and Street Parking”. [Included in Roads]
Deleted
Sub-functions added for Health (Norms and Standards Gazetted by the Minister of Health – Core for District Municipalities) for:
Food Control
Health Surveillance of Premises
Surveillance and Prevention of Communicable Diseases, excluding Immunizations
Vector Control
Chemical Safety No
Yes
Added

26. Function Segment Changes to PSD:
Posting Level and Breakdown
Principle/ Application
Definition
Account
Changes to PSD:
Design Principles following update of comments received – applicable to all sections of the PSD.
Comments received to update and clarify content of the PSD (ASB and comments/clarification from Public Finance)
Late comment received on “Health Service” justifying consideration.
Not done yet – 30 June 2016.

27. Regional Segment Regional Indicators updated from: FAQ DB
Change
Posting Level and Breakdown
Principle/ Application
Definition
Account
Regional Indicators updated from:
FAQ DB
Information received following specific request to municipalities from s/FAQ DB 
Changes to PSD:
None
Outstanding:
Information received in FAQ DB and by s after 25 May 2016.

28. Funding Segment
Change
Comment
Revenue: Revised classification to provide for “all source of revenue” in accordance with the Revenue Segment.
Equitable Share
Removed detail and changed to a posting-level
Interest, Dividends and Rent on Land
Added Rent on Land to agree with the classification principle applied in the Revenue Segment
Added Dividends to the description
Interest categories changed to:
Current and Non-current Assets
Receivables
Changed from:
External Investments
Outstanding Debtors
Rent from Fixed Assets
Changed the description from “Rental of Facilities and Equipment.
Added:
Operational Revenue
Sales of Goods and Rendering of Services

29. Funding Segment (Continue)
Change
Comment
Transfers and Subsidies:
Reviewed all definitions and posting levels (including breakdown required)
Checked table to other segment for consistency/completeness
Updates from FAQ DP impacted on all classifications
District Municipalities
Changes made as per requests received
Provincial Government
Departmental Agencies and Accounts
Foreign Government and International Organisations
Households
Non-profit Institutions
Private Enterprise
Public Corporation
Higher Educational Institutions
Compared and made changes in alignment with SCOA Departments [SCOA COR April 2016]

30. Funding Segment (Continue)
Change
Comment
Borrowing
Reviewed all definitions and posting levels (including breakdown required)
Checked table to other segment for consistency/completeness
Updates from FAQ DB impacted on all classifications
Added further classification to align to LG DB Return Formats

31. Project Segment ASB: CIDMS:
Change
Impact
ASB:
Impacting on PSD more than mSCOA Tables
CIDMS:
Significant Impact on the Classification Structure and Level of Detail
Capital Projects: Infrastructure/Non-Infrastructure
Rehabilitation and Refurbishment replaced with Renewal
Definition: Expenditure on an existing asset that returns the service potential of the asset or expected useful life of the asset to that which it had originally.
Upgrade and Additions replaced with Upgrades
Definition: The replacement of an asset or addition/replacement of an asset component, which materially improves the original service potential of the asset.
Terminology changes to align CIDMS
Electrical Infrastructure
Solid Waste Infrastructure
Rail Infrastructure
Water Supply Infrastructure
Sanitation Infrastructure

32. Project Segment (Continue)
Change
Impact
Classification for “Roads, Pavements, Bridges and Storm Water removed and replaced
Roads Infrastructure
Storm Water Infrastructure
Airports removed
Refer to Community Assets
Level of detail
Add Level 4 Asset Group from CIDMS
Removed “Transfers”
No further distinction required.
Classifications added:
Coastal Infrastructure
Information and Communication Infrastructure
NON-INFRASTRUCTURE
Removed Buildings and Other Structures
Replaced with:
Community Assets
Other Assets

33. Project Segment (Continue)
Change
Impact
MAINTENANCE
Change as per the above discussion for CIDMS
Planned and Unplanned Maintenance replaced/expanded
Preventative Maintenance [Definition: Maintenance carried out at predetermined intervals, or corresponding to prescribed criteria, and intended to reduce the probability of failure or the performance degradation of an item. Preventative maintenance is planned or carried out on opportunity.]
Interval Based
Condition Based
Corrective Maintenance [Definition: Maintenance carried out after a failure has occurred and intended to restore an item to a state in which it can perform its required function. Corrective maintenance can be planned or unplanned.]
Planned
Emergency
Level of detail
Add Level 5 Asset Type from CIDMS

34. Project Segment (Continue)
Change
Impact
TYPICAL WORK STREAMS
Environmental
Added two further sub-projects at the request of municipalities:
Nurseries
Biodiversity and Climate Control
Health and Welfare
Added:
Municipal Health Service

35. Project Segment (Continue)
Change
Impact
FAQ DB:
In Progress: 11
Consultation in Progress: 1
Changes made except for Q5042 that need to be considered in updating the PSD.
PSD:
Major Changes
Not started.
Definitions, Posting Levels, Application and Breakdown Required
Significant changes made following the impact of the above discussion.

36. Item Segment: Liabilities
Change
Progress
ASB:
Considered except for changes to be made in PSD
CIDMS
Not applicable
FAQ DB:
In Progress:
Expenditure General – 4
Contracted Services – 4
Operational Expenditure – 9
Consultation in Progress:
Expenditure General – 8
Inventory – 1
Contribution Provision - 8
Considered except for matters to be addressed in the next version.
NERSA:
PSD:
Changes – comments received to be considered except for Depreciation and Impairment
Not started.
Transfers and Subsidies
Movement on Balances
Update completed
Completed subsequent to technical release of Version 5.5.

37. Item Segment: Liabilities
Change
Progress
Consumer Deposits
Added:
Way leave
Refuse
Financial Liabilities
Combined in Current and Non-current under single group.
Annuity and Bullet Loans
Changed description and definition.
Financial Institutions
Added in Current and Non-current Borrowings.
Provision and Impairment
Changed in Current and Non-current Borrowings “Leave Accrual to Leave”.
Change Landfill Sites to be Posting Level within Decommissioning, Restoration and Similar Liabilities and added a Posting Level for Unspecified.
Control, Interface and Clearing Accounts
More accounts added.

38. Item Segment: Liabilities
Change
Progress
Trade and Other Payables from Exchange Transactions
Added:
Goods/Invoices Received
Prepaid Electricity
Cash and Bank
Licensing and Regulation
Inventory Stores
Fair Value Adjustment
Transfers and Subsidies
Updates to accounts, definitions and posting levels for payables and unspent.
Major Changes: Unspent to be used also for receivables as these are essentially the same account. Classification depends on Credit or Debit Balance at the end of a reporting period. System Requirements to accommodate this principle.
Movement on Balances – Outstanding to be addressed in Budget Circular Release.
Defined Benefit Obligations
Movement analysis added

39. Item Segment: Assets ASB: CIDMS FAQ DB: In Progress:
Change
Progress
ASB:
Comments considered except those impacting on PSD.
CIDMS
Major Changes to Non-current Assets
FAQ DB:
In Progress:
Current Assets – 9
Property Rates – 1
Trade and Other Receivables – 3
Non-current Assets – 12
Fixed and Intangible Assets - 1
Consultation in Progress:
Current Assets – 1
Trade and Other Receivables – 2
Non-current Assets – 2
Fixed and Intangible Assets – 2
Changes made/queries closed.
PSD:
Changes – comments received.
Not started.
Transfers and Subsidies
See note included in Liabilities on Transfers and Subsidies Receivables

40. Item Segment: Assets Financial Assets
Change
Progress
Financial Assets
Grouped together.
Current Portion of Non-current Receivables
Accounts added:
Employee Benefits
Associates
Joint Ventures
Subsidiaries
Public Organisations
Operating Lease
Receivables Non-exchange Transactions
Property Rates categories compared to Revenue and updated.
Heritage Assets and Property, Plant and Equipment
Aligned to CIDMS Framework
Not all inputs received from ASB and Other Inputs outside of FAQ Considered. To be considered for Budget Circular Release o mSCOA Updates
Construction Work-in-progress
Borrowing Cost Added

41. Item Segment: Net Assets
Change
Progress
ASB:
Terminology Change: Non-controlling Interest
Definition Change: Revaluation Reserve
CIDMS
Not applicable
FAQ DB:
In Progress:
None
Consultation in Progress:
Reserves and Funds - 1
Change made/queries closed.
PSD:
Changes – comments received.
Not started.
Transfers and Subsidies
Movement on Balances
Exist in this table
OTHER CHANGES:
Added – Investment in Associate

42. Item Segment: Revenue ASB: CIDMS FAQ DB: In Progress:
Change
Progress
ASB:
Comments received after finalising the table
CIDMS
Rental of Facilities
FAQ DB:
In Progress:
Agency Services – 1
Exchange Revenue – 2
Contra Accounts – 2
Revenue – 4
Interest, Dividend and Rent on Land – 1
Fire Services – 1
Fines and Penalties - 1
Consultation in Progress:
Revenue – 3
Sale off Goods and Rendering of Services – 1
Service Charges – 1
Agency Services – 2
All queries completed.
PSD:
Changes – comments received.
Not started.
TRANSFERS AND SUBSIDIES
Completed
NERSA:
Changes to be made - improvement

43. Item Segment: Revenue Definitions changed for: Change Progress
Agency Services
Receivables Housing
Inspection Fees
Animal Housing
Facilities
Health Services
Penalties
Transfers and Subsidies

44. Item Segment: Expenditure
Change
Progress
ASB:
Comments on Expenditure related to PSD and changes already made.
CIDMS
Depreciation and Amortisation / Operating Leases changes to align to CIDMS Classification
FAQ DB:
In Progress:
Expenditure – 4
Contracted Services – 4
Operational - 9
Consultation in Progress:
Expenditure – 8
Inventory – 1
Contribution to Provisions – 8
Queries completed and updates made where necessary to mSCOA Table.
PSD:
Changes – comments received.
Not started.
Transfers and Subsidies
Completed
NERSA:
Not applicable

45. Item Segment: Gains and Losses
Change
Progress
ASB:
No comments
CIDMS
Impairment
Gains and Losses on Disposal
FAQ DB:
In Progress:
Gains and Losses - 4
Consultation in Progress:
Changes made/queries closed.
PSD:
Changes – comments received.
Not started.
Transfers and Subsidies
Not applicable
NERSA:

46. Anticipated changes to Inform Version 5.5
Regional indicators to be set-up as default based on the Demarcation Act
Transfers and Subsidies - Provincial Transfers and District Municipalities.
Transfers and Subsidies – latest version of Departmental SCOA
Posting levels for Agency Services
Address changes from reporting formats envisage for post mSCOA implementation (Discussion Papers)
Any matters that may be identified from Position Papers NB: Contra Accounts Problematic
ASB Comments/Concerns/Issues ~ Add Reference Table to GRAP Implementation Guide
Any matters identified as relevant from the FAQ DB requests. 
Alignment of mSCOA to CIDMS
VAT indicators – additions and changes to be updated
Borrowings further classification to be added to define by “type/institution”
Item Segment: Assets/Liabilities & Net Assets – movement analysis
Update of Reporting Links

47. STATUS OF FAQ DB AT TIME OF FINALISING VERSION 5.5

49. mSCOA maturing…………..