1. CIGFARO Women In Public Sector Seminar
Governance Structures and How they Relate to/With mSCOA
Date: 01 March 2018

2. mSCOA PRESENTATION OVERVIEW
CONTENT
Recap on mSCOA?
mSCOA Implementation in Local Government
mSCOA Segments
mSCOA Budgeting Process

3. What is mSCOA? Business Transformation Project
mSCOA Project
Provides
Structure of Govt Accounts
Affect all Departments within the Municipality
Standard Financial Classification Framework
Budgets and Reports
(using 7 mSCOA Segments)
Go-Live
Date
1 July 2017
Business Transformation Project

4. mSCOA Implementation: mSCOA a Business Reform Project
mSCOA is not a finance reform project it involves everyone in the municipality

5. mSCOA Implementation
mSCOA is an organizational transformation project that has a fundamental impact on all operations of the municipality in the areas of:
Planning - Linking of Projects to IDP, MTREF and SDBIP
Business Processes – Business processes must be supported in the financial management system which is mSCOA aligned. The link between systems, standard operating procedures (SOPs) and internal controls is very crucial with the business processes.
Financial Management & Reporting – will the system successfully be able to run the transactions using seven (7) mSCOA segments and able to produce the relevant reports

6. mSCOA Implementation: mSCOA Implementation Responsibility
The responsibility for implementation of mSCOA project rest with the Management of the municipality and not the systems service provider.

7. mSCOA Implementation National Treasury / Provincial Treasury
Successful Implementation of mSCOA Project at the Municipality
Service Provider:
mSCOA Implementation Team
Municipal mSCOA Project Implementation Team
SP: mSCOA Specialists
SP: System Expert Support
Municipal Project Experts
mSCOA Workstream Leads
SP Project Management Office
Municipal mSCOA Project Governance Structure

8. Municipal mSCOA Project Implementation Team
PSC
Project Manager
Municipal mSCOA Project Implementation Team
Project Implementation Plan
CCG Systems
Project Implementation Leads
Enable Environment for Successful mSCOA Implementation
Implementation Team
Establish & Implement Work Stream Charters
Establish & Implement Business Processes Implementation Plan
Change Management & Transition Team
Establish & Implement Change Management & Transition Plan
Municipal mSCOA
Change Management Team

9. mSCOA Implementation:
Change Management
Change Management is the key to smooth and successful implementation of mSCOA project

10. Change Management: Factors that Brings Successful Change
Creating awareness for change
Ensure positive participation by all municipal officials
Acquiring of knowledge and skill on mSCOA
Application of knowledge and skills acquired from training
Sustaining mSCOA as Business-As-Usual (BAU) Process
Awareness campaigns
Buy-in
Training
Practice
Embedment

11. Change Management Strategy
Information to be shared with employees wrt the necessity of change within the organization and the expected result thereof
Actions and directions to be taken by leadership to realize the desired change
Addresses the knowledge and skills gap of employees realized during change process
Communication plan
Operational plan
Training plan

12. Change Management Strategy
Coaching plan
Resistance management plan
Leadership engaging with employees for direction and support during change process.
Captures approaches to proactively and reactively respond to threats of resistance when it occurs during change. (e.g. What kind of resistance are we likely to experience? Where is the resistance likely to come from? Etc.)

13. Four (4) Phases of Change Management

14. mSCOA Implementation: mSCOA Work Streams & Business Processes
mSCOA work streams are the foundation and provide structure iro the implementation of mSCOA project

15. mSCOA Implementation Business Processes Work Streams
Corporate Governance
Municipal Budgeting
Financial Accounting
Costing & Reporting
Project Accounting
Cash Management
Procurement Cycle
Grant Management
Assets Life Cycle Management
Real Estate & Resource Management
HR &
Payroll
Customer Care, Credit Control
Valuation Roll Management
Land Use Management
Revenue Cycle
mSCOA
Implementation
Governance Structure
IT Infrastructure &
Networks
Conversion of Current Votes to mSCOA Segments
Planning
Data
Cleansing
Document Management HR
&
Payroll
Core System & Subsystems
Real Estate, Land Use & Grant Management
Business Processes
Work Streams

16. mSCOA Workstreams
Recommended as the 1st workstream to be activated as it starts the municipal accountability cycle iro:
Strategic Planning (IDP)
Budget (MTREF)
Operational Plans (SDBIP)
In-Year Monitoring
Review of IDP and budget policies
Planning

17. Municipal Planning & Accountability Cycle

18. Project Governance Structure
mSCOA Workstreams
PSC should consist of MM & HODs
Provide a strategic direction to the project
Project ownership, sponsorship & oversight
Ensure that the entire organization understands mSCOA regulations and activate project implementation plans
Reporting and consulting with internal & external stakeholders
Ensure that the deadline of 1 July 2017 is met
Convene PSC meetings at least once a month
Project Governance Structure

19. IT Infrastructure & Networks
mSCOA Workstreams
mSCOA regulations dictates that there should be a centralized entry point for transactions and web enabled environment
Strong network to run the latest technologies used by the Municipality
WS responsible for assessment of IT infrastructure
Upgrading of IT infrastructure and networks
Compile and/or updating of the IT policy
Monitor IT policies, manage user access controls and IT infratructure
IT Infrastructure & Networks

20. Conversion of Current Votes to mSCOA Segments
mSCOA Workstreams
Physical verification of current line items with those provided for by National Treasury using mSCOA Version 6.1 segments
Conversion of Current Votes to mSCOA Segments

21. mSCOA Workstreams HR & Payroll
Municipality must fully comply with and maintain HR & Payroll Elements (e.g. Org Structure, Job Description, Job Evaluation, Leave Management, Wage Agreements, etc.)
This work stream contains data that has valuable information for budgeting & long term financial modelling of the municipality
Compile and/or update the all HR & Payroll policies and the monitoring thereof
All policies must be updated and data cleansing completed prior to the implementation of HR & Payroll module
HR & Payroll

22. mSCOA Workstreams Data Cleansing
Data must be valid, accurate and complete prior to being migrated to the mSCOA database
Data in Supplier Database, HR Records, Valuation Roll, Assets Data, Debtors Data, Property Zoning, Clearing of Suspense Accounts
Work in this work stream is of a continuous in nature
Municipality must have standard operating procedures that deals with continuous data cleansing in all its departments.
Data Cleansing

23. Core Systems & Sub-Systems
mSCOA Workstreams
Responsible for the ICT Due Dillingence exercise
Core System & Sub-Systems must allow for the capturing and collection of data using 7 mSCOA segments
PSC need to scrutinize the technology and processes as the mSCOA database from payroll, billing, inventory, supply chain & assets are locked down in this work stream
Implementation of recommendations from the ICT Due Diligence should be implemented in the current financial year
Core Systems & Sub-Systems

24. Real Estate, Land Management & Grant Management
mSCOA Workstreams
Ensures that spatial and urban policy usage are considered using the Spatial Planning & Land Use Management Act (SPLUMA)
Grant Reporting & Management of grant related projects are core to this work stream
Ensure that all tariffs types are identified
All properties must be aligned to Regional Segments and are legally identifiable
Policies are developed and/or revised and data cleansing is executed
Real Estate, Land Management & Grant Management

25. mSCOA Workstreams
Involves the centralization of all documents in the Municipality using the document management system
Involves clustering of electronic information to a work area or workflow
Source a suitable document management system
Compile and/or update policies pertaining document management
Document Management

26. mSCOA Workstreams
The municipality should appoint personnel who are knowledgeable on the subject matter to lead and implement mSCOA work streams.
A charter must be developed for each mSCOA work stream and the responsibilities contained in the charter must be incorporated in the work plans/performance agreements of the persons responsible for its implementation

27. mSCOA Implementation: Example: Procurement of Chemicals
mSCOA Segments
Municipality must use ALL seven (7) mSCOA segments
to create an account
Example: Procurement of Chemicals
Account: Water / Materials & Supplies / Water Management/ Operational Revenue / Default / Whole of Municipality / Technical Services

28. mSCOA Segments Budgeting Transacting Reporting Project Item Function
Funding
Regional Indentifier
Costing
MSC

29. Budgeting Transacting Municipal Standard Classification
The Project Segments
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Project segment
All expenses need to be allocated to an appropriate project depending on the nature and objective of the expenditure.
 There are 3 main categories for projects being:
Capital
Operational
Default

30. The Project Segment Overview
At the highest level, capital projects distinguish between infrastructure and non-infrastructure projects.
Both infrastructure and non-infrastructure projects cater for new and existing capital assets.
Existing assets could either be renewed or upgraded.
Capital Projects

31. The Project Segment Overview
RENEWAL
Renewal implies that the asset is restored to its original condition, enhancing the capacity and value of an existing asset that has become inoperative due to the deterioration of the asset
UPGRADING
The replacement of an asset or addition/replacement of an asset component, which materially improves the original service potential of the asset VS

32. The Project Segment Overview
Operational projects refers to current and short- term projects for which the cost is “immediately recognised as an expense and funded from the municipality’s operational budget”.
At the highest-level, a distinction is made between
Maintenance
Municipal running costs
Typical work streams
Infrastructure and
Non infrastructure projects
Operational

33. The Project Segment Overview
Maintenance Projects
Preventative
Interval: Maintenance carried out at regular intervals
Conditional: Maintenance carried out based on certain conditional criteria
Corrective
Planned: Maintenance that was budgeted and planned for
Emergency: Unplanned expenditure to restore the function of an asset

34. The Project Segment Overview
The default classification is used to classify transactions that are not related to expenditure (with the exception of current assets). Default projects include:
revenue
current assets (excluding capitalised expenditure)
gains and losses
liabilities and
net assets
Default

35. Budgeting Transacting Municipal Standard Classification
The Item Segment
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Item Segment Classifying municipal budgets and daily transactions is currently done using an “item”, which directly relates to the item segment in mSCOA.

36. The Item Segment Overview
Item Assets
Item Liabilities
Item Revenue
Item Expenditure
Item Gains and Losses
Item Net Assets
Item

37. Budgeting Transacting Municipal Standard Classification
The Function Segment
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Function segment The “Function Segment” relates to the objective of the spend and not who spent the money.

38. The Function Segment Overview
Core
Functions
These are functions performed by local government and constitutionally assigned to local government in terms of sections 156 (1) of the Constitution, Part B of Schedule 4 and Part B of Schedule 5.
Non-core Functions
Functions performed by local government that are constitutionally assigned to provincial government in terms of section 156(4) of the Constitution. Local Government are compensated for delivering these functions on behalf of provincial government and typically receive a management fee from the provincial department.
Function
Core
Non-core

39. Budgeting Transacting Municipal Standard Classification
The Funding Segment
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Funding segment
The funding segment was introduced to reflect the source of funding for both revenue and expenditure and facilitates cash flow.
It is important that municipalities budget for the accurate spending of their revenue and other funding as well as accurately identify the source of their revenue.

40. The Function Segment Overview
CAPITAL FUNDING
The subcategories of “Capital Fund” are
Revenue
Transfers and Subsidies
Borrowing

41. The Function Segment Overview
OPERATIONAL FUNDING
The subcategories of “Operational Fund” are
Transfer from Operational Revenue
Transfers and Subsidies
Borrowing
Cash Backed Reserves

42. The Function Segment Overview
DEFAULT
This sub-category relates to any transaction that does not have a specific funding implication, such as the accounting for depreciation, impairments etc.

43. The Regional Identifier Segment
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Regional Identifier Segment The purpose of the region segment is to identify which geographical area the funds are coming from and which geographical area the funds are being spent in. Which region is benefiting from the expenditure?

44. Budgeting Transacting Municipal Standard Classification
The Costing Segment
Budgeting Transacting
Reporting
Project
Function
Municipal Standard Classification
Item
Fund
Regional
Costing
Costing segment The costing segment is used for secondary transactions, for the reallocation of expenditure between functions. The three costing methods • Activity Based Costing • Internal Billing • Departmental Charges

45. The Costing Segment Overview
Recoveries are credited to the sending department that carried the full primary cost before allocating or costing out the expense
Charges are debited to the receiving department or the department that is getting the benefit of the expenditure
(e.g. Audit Fees)
All primary transactions are allocated to default

46. The Costing Segment Overview
Departmental
Allocation of overheads from a cost pool used by multiple functions.
(e.g. IT Services)

47. The Costing Segment Overview
Internal Billing
This refers to departmental use of internal services such as electricity, water, waste water management and waste management.

48. The Costing Segment Overview
Activity Based
Actual allocation of resources (usage or benefit method) used by various departments.

49. The Costing Segment Overview
Primary Transaction
A direct cost (primary transactions) is one that can be specifically related to a particular service, function or activity based on actual consumption.
Secondary Transaction
Indirect costs (secondary transactions) are those which are not directly attributable to the output and are often referred to as overheads.

50. mSCOA Implementation:
mSCOA Training

51. Training Intervention
CIGFARO mSCOA Training No
Training Intervention 1
mSCOA & Budgets 2
Performance Management 3
Basic Accounting 4
Audit & Risk 5
MPRA 6
Reporting & Comparatives 7
Mass Appraisal Techniques 8
Supply Chain Management 9
GIS Property Management 10
Revenue Management 11
Assets Management

52. mSCOA Budgeting Process

53. Legislative framework that enable financial management
Municipal Systems Act, 2000
Adoption of IDPs
25. (1) Each municipal council must, within a prescribed period after the start of its elected term, adopt a single, inclusive and strategic plan for the development of the municipality which:
links, integrates and co-ordinates plans and takes into account proposals for the development of the municipality;
aligns the resources and capacity of the municipality with the implementation of the plan;
forms the policy framework and general basis on which annual budgets must be based;” ,

54. Legislative framework that enable financial management
MFMA, 2003
Budget preparation process
21. (1) The mayor of a municipality must –
(a) co-ordinate the processes for preparing the annual budget and for reviewing the municipality’s integrated development plan and budget-related policies to ensure that the tabled budget and any revisions of the integrated development plan and budget-related policies are mutually consistent and credible;”

55. Legislative framework that enable financial management
Municipal Regulations on a Standard Chart of Accounts, 2014
2. The object of these Regulations is to provide for a national standard for the uniform recording and classification of municipal budget and financial information at a transaction level by prescribing a standard chart of accounts for municipalities and municipal entities which-
are aligned to the budget formats and accounting standards prescribed for municipalities and municipal entities and with the standard charts of accounts for national and provincial government; and
(b) enable uniform information sets recorded in terms of national norms and standards across the whole of government for the purposes of national policy coordination and reporting, benchmarking and performance measurement in the local government sphere.”

56. Identifying Projects Unpack the IDP Capital & Operational Projects
Review Medium Term Budget
(Typical Workstream Projects)
Identify Projects in Trial Balance (MRC & Maintenance Projects)

57. IDP mSCOA Segments Medium Term Budget mSCOA Planning & Budgeting Tool
Project No/Period/
Ref No
Key Performance Area
Service Delivery Objective
Key Performance Indicator
Project Description/Name
mSCOA Project Segment
mSCOA Item Segment
mSCOA Function
mSCOA Funding Segment
mSCOA Regional Identifier
mSCOA Costing Segment
mSCOA MSC Segment
IDP
mSCOA Segments
Medium Term Budget
mSCOA Planning & Budgeting Tool
Project Total Cost
Budget Year 1 2 3

58. CONCLUSION
TOGETHER WE CAN DO IT FOR OUR
BEAUTIFUL COUNTRY…

59. Ms. Nozipho Nkomo Senior Manager|CCG Systems
Tel: |Cell: |Fax:  
21 Beacon Rock, 21 Lighthouse Road, Umhlanga