1. Victor Khanye Dr JS Moroka Emakhazeni Emalahleni Steve Tshwete Thembisile IMFO 6 October 2015 AL Stander NKANGALA District Municipality

2. Nkangala District Municipality (DC31) The Nkangala District Municipality (DC31) is one of the three (3) District municipalities in Mpumalanga Province. The headquarters of Nkangala District Municipality is in Middelburg (Steve Tshwete Local Municipality). The District composes of six (6) local municipalities namely; Victor Khanye Local Municipality (MP 311), Emalahleni Local Municipality (MP 312), Steve Tshwete Local Municipality (MP 313), Emakhazeni Local Municipality (MP 314), Thembisile Hani Local Municipality (MP 315) and Dr J S Moroka Local Municipality (MP 316).

3. Nkangala District Municipality (DC31) The boundaries of the District covers a total area of approximately 16,892 square kilometres. The main economic drivers of the District Municipality are mining, power generation, steel manufacturing, agriculture and tourism. The municipality obtained unqualified audit opinions since 2002. NDM was selected as a pilot site for the implementation of mSCOA and adopted a strategy to align it with our planning and budget cycle.

4. PRESENTATION OUTLINE (video and graphic sourced from known/unknown sources on the internet) Life at a municipality DR Kotter: 8-steps for leading change Stages to change People Communication is key Setting the stage Making it happen Making it stick Challenges Advice to non-pilot municipalities Decide for yourself

5. Life at a municipality Previous year AFS Current year budget implementation Future MTREF

6. Real life at a municipality

7. Dr. Kotter: 8-Step Process for Leading Change We have to work hard to change an organization successfully. If we’re too impatient, and if we expect too many results too soon, our plans for change are more likely to fail. When we plan carefully and build the proper foundation, implementing change can be much easier, and we’ll improve the chances of success.

8. Stages of change Lack of knowledge Initial reaction Confusion Exit criteria: realise the change will affect the status quo Knowledge of change, lack of full impact Not sure how it will affect them Show resistance or uninformed optimism Exit criteria: describes change and the business rationale after active questioning Start to understand change, Bargain, displays anger, actively search information/shows denial actively judging how the change will affect the business Exit criteria: speaks positively about the change, participate actively in meetings to discuss the change Shows signs of buy-in, want to embrace the change, willing to “try- out”, see positive implications for business, commits time and energy, makes formal decision to change Exit criteria: attempts to implement the change Long term application of change, the change is treated as the norm Implementation is past point of no return, take ownership of change, high energy levels for the change Exit criteria: Initiate continuous improvement

9. PEOPLE LG serves the people of SA and this project should assist us in doing that better. People can make or break such a project Buy-in from top levels (Executive Mayor, councilors and MM) Involvement of a cross-functional team. The mSCOA project leaders must be committed, dedicated and performance driven people Don’t think that all people experience change the same

10. Communication is key!!!!! The mSCOA piloting has brought about change in: -municipal processes, -systems, -organizational structure and -job roles. This change has been an unsettling issue amongst departments and employees at all levels.

11. Setting the stage ActionRisksMitigation Motivation to change (buy in from all stakeholders), Resistance to change, saboteurs, uninterested bystanders Use every opportunity possible to motivate the benefits of mSCOA Be strategicInsufficient funds Low prioritisation of project Include project in IDP and Budget

12. Setting the stage ActionRisksMitigation Organisational reform, Own chart (understand it) Slow or non implementation, no guiding plan, non identification of all possible risks Used Dr Kotter model to implement the change, develop an implementation plan with clear actions, allocation of roles and responsibilities, risks and mitigation factors Involvement of a cross- functional team. Insufficient understanding of mSCOA regulations as an institutional reform and not merely a financial reform Arrange training sessions and request NT to arrange special training

13. Setting the stage ActionRisksMitigation Appointment of mSCOA project leaders Non commitment to drive process (it is not a one man show) Selection of a performance driven team that understands the current chart. Train and empower them to lead the change

14. Making it happen ActionRisksMitigation Ownership of the processNon implementation as it is seen as a NT reform Creating a vision and the motivation to change MOU with system vendor/s Unclear roles and responsibilities between muni and service provider MOU signed by both parties Study the regulations, Start ASAP, be prepared to get your hands dirty Non compliance to mSCOA regulations Arrange training for internal staff on the reform and on the system changes

15. Making it happen ActionRisksMitigation Assessment of system vendor capabilities Non compliance to mSCOA regulations Conduct regular project steering meetings with vendor and other pilot municipalities Empower internal stakeholders Incorrect application of mSCOA, non compliance to budget regulations Training sessions on mSCOA and system changes. mSCOA project leaders to assist with budget capturing Management of the change process Failure to implement change Keep audit trail Provide regular feedback Involve IA to audit change process

16. Making it happen ActionRisksMitigation Tabling of draft and adoption of final budget on mSCOA Non compliance to mSCOA and budget regulations Errors in budget capturing Training sessions on mSCOA and system changes. mSCOA project leaders to assist with budget capturing Going live and transacting in mSCOA System fall over, Down time in operations Capturing of old year transactions on old format, whilst transacting in new format Testing of transactions before going live Easy transformation back to the old system

17. Making it happen ActionRisksMitigation Third party integration (Payroll) Non compliance to mSCOA, Delay in salary payments Testing of integration before going live First month end and correct in year reporting (sec 71) System fall over, Down time in operations Testing of month end procedure before going live Preparation of quarterly reports Non compliance to budget regulations Fall back on manual excel model

18. Making it happen ActionRisksMitigation Preparation of AFSNon compliance with GRAP, change in classification affects PY comparatives, AG buy in in reform and understanding the challenges faced by municipalities Automated comparative TB that indicates classification changes, engagement with AG team

19. Making it stick ActionRisksMitigation Adaptable to changesChanges in the versions of mSCOA can be difficult to implement Adoption of GUID approach made this easier and quicker to respond, Keep the momentum,Resistance to change Drop in motivation levels Celebrate small wins, be prepared to redo things as we are a pilot site, knowledge sharing, Keep record of challenges and how you over came it, think multi dimensional

20. Making it stick ActionRisksMitigation Ensure successful implementation Failure to implementMonitor progress on a regular basis, adjust plan if needed, keep on assessing any risks that can influence your desired project outcome. Get post implementation feedback

21. Challenges Tight timeframes of mSCOA and other day to day activities Late appointment of mSCOA accountant Current mSCOA (version 5.3) does not fully cater for District Municipalities (Core and non-core still an issue, e.g. Social Services) Prior year adjustments in preparation of 2014/15 AFS Need of interim adjustment budget (not in accordance with MBRR)

22. Challenges The current MBRR budget and reporting schedules & upload files to NT LG database are not aligned to mSCOA. Draft budget was tabled & final budget approved on the old budget formats. Monthly upload submissions and schedules on old format. Alignment changes from old GFS to new mSCOA GFS Buy in of AG on reform – process to be followed for implementation and auditing of AFS

23. Challenges Ensuring that all stakeholders will be understanding the new mSCOA formats Absence of sufficient control accounts Detail of some items, e.g. Travel and subsistence vs absence of detail on items like loans, investments, etc. (hampers automisation of IYM reports and AFS disclosure) Machinery of state is SLOW

24. Advice to Non-Pilot Municipalities Start today, study the regulations, study the NT project document. Appoint a dedicated mSCOA project team Prepare a mSCOA implementation plan and identify all risks that might affect the success of the project Start to align the old chart to the new one Ensure that existing hardware will be able to accommodate mSCOA

25. Advice to Non-Pilot Municipalities Make provision in your IDP and budget for mSCOA implementation Monitor progress against the implementation plan, institute corrective actions and adjust the plan with unexpected issues. Ensure that you have backup plans or mitigation strategies for all identified risks. Most of all be a change agent (change is never easy but it empower you to move forward) – communication is key

26. Advice to Non-Pilot Municipalities Get buy in from all relevant stakeholders, including political buy in. This is not a financial/GL reform it is a business reform – all managers must be involved. The mSCOA changes the way we do business and the way we report on transactions.

27. Juggling is not new

28. Juggling is a learnt skill (even a zebra can do it)

29. Decide for yourself

30. PEOPLE mSCOA ROCKS We have decided to embrace the mSCOA fully As we will be adjusting our dance moves in mSCOA next financial year, others will only start the process

31. It was good to hear our people saying things like: “We are mSCOA champions and I can teach other municipalities” “mSCOA made us really to apply our minds preparing our budget” Enjoy the juggling LG are the most important sphere of government – we serve the people directly

32. 32 THANK YOU