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Presentation at IMFO Public Sector Finance Seminar Presentation at IMFO Public Sector Finance Seminar

Presentation at IMFO Public Sector Finance Seminar - PowerPoint Presentation

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Presentation at IMFO Public Sector Finance Seminar - PPT Presentation

Presented by National Treasury Chief Directorate Local Government Budget Analysis Ajay Daya mSCOA Progress with pilot municipalities impact on nonpiloting municipalities and training framework ID: 366196

municipalities mscoa piloting training mscoa municipalities training piloting national 2015 treasury system pilot accredited migration segments strategy day project

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Slide1

Presentation at IMFO Public Sector Finance Seminar

Presented by National Treasury: Chief Directorate Local Government Budget

Analysis – Ajay Daya

mSCOA – Progress with pilot municipalities, impact on non-piloting municipalities and training frameworkSlide2

mSCOAWhat is this?Municipal Standards to Scare of Chartered AccountantsMunicipal Standard Chart of AccountsSlide3

mSCOA

Roadmap…

The road already travelled and the way forward: RecapSlide4

4

Remaining metro’s to implement (pilot)

mSCOA

and project initiation for the non-piloting municipalities

Piloting commencement with 9 pilot municipalities (local and districts) and 4 Metro’s (City of Cape Town,

Ekuruleni

,

Mangaung

and Buffalo City) – Phased over 2015/16 and 2016/17)

2015

Vendors were briefed as to development of

mSCOA

and initial evaluations of system functionality

.

Regulation issued and commissioning of

mSCOA

Project Phase 4: Change man

ageme

nt and piloting including identification of pilots

Kick off engagements with municipalities, vendors and other stakeholders

2014

2011

2010

2016

E

nsuring that piloting municipalities and system functionality is aligned to the compliance requirements of the Regulation will create an enabling environment for the roll out to non-piloting municipalities

278 municipalities fully mSCOA compliant

2017

mSCOA

Project Phases:

The journey to the checkered flag…Slide5

What does this mean for piloting, system vendors and non-piloting municipalitiesSlide6

Jul

Work Stream 1: Piloting

Pilot sites: NT Testing

Pilot testing criteria to include:

Level of budget incorporation of all segments;

Third party system integration;

Transactional data across all segments;

Report extraction (statutory reports i.e. MBRR and IYM); and

Data extraction methodology.

The formulation of the migration strategy will include the following activities:

Engagements with each vendor in work shopping migration strategy (NT, PT’s and Vendor)

Finalisation

of migration strategy

Scheduling user group sessions to workshop migration strategy

Migration strategy will include, among others:

Roles, responsibilities, governance, timeframes, activities, cost implications,.

July 1, 2015

October 1, 2015

December 15, 2015

Aug

Oct

Sep

Dec

Nov

The following municipalities

undertook piloting

:

Senque

;Sol PlaatjeElias MotsoalediVictor Khanye

Nkangala

Merafong

;Tlokwe;Setsotho

uMgungundlovuRichmond uMhlatuze

DrakensteinOverstrandBergrivierHessequa CamedebooCity of Cape Town;EkhurhuleniMangaungBuffalo CityGreater Giyane Pilot testing criteriaFormulation of migration strategy for non-piloting municipalities

NT to formulate and communicate final findings of assessment of system functionality in support of

mSCOA classification framework – Close of the first quarter of the 2015/16 FYSlide7

Financial applications and progress in hosting the classification framework – System functionalitySlide8

8

Accountability Cycle as it is currently executed.Slide9

9Slide10

General Approaches Taken10

The objectives of the regulations is achieved

The IDP is fully aligned and budgeted for depending on availability of funding. Tariffs are consequently reflective of costs.

The whole institution participated in the reform.

The whole accounting environment changed.

The cost implication and associated risks are massive but seems mitigated with UAT (user acceptance testing). The transactional environment is new and change control would be required intensively

Movement towards full compliance

Capital, maintenance and certain campaigns are driven from projects and the systems therefore has functionality. The budgets seems to be credible as it is funded and tariffs considered costing form non commercial departments.

Virement’ s probable

The budget due to various interpretations and the impact that the segments string has if budgeted from a Item perspective may have missed implication such as funding links. This will create an inability for comparative reporting across all segments and they will need to adjust for the next budget to full projects creating additional effort in time and cost of implementation.

The end users and system look and feel remained stable.

End users in the transactional environment will not be affected except for the volume of new votes.

Minimum compliance.

The approach while risk adverse creates the highest and acknowledged virement probability. Budgets therefore might be viewed as unreliable and consequently impact adversely on the audit outcomes. Depending on the level and quantum of required segments they probably will fail measurement or benchmarking against the other approaches.

Short Code

Hybrid

Accounting Cycle

Pros

ConsSlide11

What key decision needs to be take by all municipalities11Slide12

mSCOA

MisconceptionsSlide13

Common misconceptions…and miscommunication by stakeholdersGRAP versus mSCOA classification framework…mSCOA

not GRAP compliant is a total misconceptionMateriality and the fact that mSCOA is prescriptive in this regard…each municipality is responsible for the determination and application of their own accounting policiesAnnual financial statements and the application of function versus nature…Function Segment covers disclosure of function

and item covers disclosure of nature mSCOA has been designed to the requirements of a specific stakeholder i.e. metropolitan municipalities…mSCOA has been designed for all municipalities and the grid structure across the Segments provides for this differentiationThe Project Segment is limited to Capital Projects…The Project Segment is the departure point for both operational and capital appropriations and directly informs the transactional environmentNot all stakeholders are part and parcel of this Regulation i.e. OAG, AGSA, ASB etc…All stakeholders and decision makers are on boardThere is accredited training on mSCOA…there is no accredited training and no service provider has the right to provide such training Slide14

What next for non-piloting municipalitiesBefore jumping into the merits/demerits of mSCOA, understand the classification.The officials need to understand mSCOA and not consultants, and more importantly not system vendors – Officials must take a lead roleInteract with the Provincial Treasuries in respect to what detailed plans need to be formulated in order to plan mSCOA compliance.

Determine the impact mSCOA is going to have on the business processes of the municipalitiesFormulate a risk register, so that appropriate contingencies can me put in place.Classify the COA to mSCOAPartake in training as provided by National TreasuryEnsure you track versions of the chart

Currently v 5.3, v5.4 by end July and V6 by end October14Slide15

Training initiatives to date One day information sessions in all provinces – November to December 20142 day non accredited training – 9 Sessions from April to May 20152 additional one day information

sessions for other stakeholders to be held in July 20153 day training programme for the IGR directorate in the National Treasury to be held in July 2015Slide16

2 day – non accredited training - attendance

The table below represents that statistics relating to the attendance at the 2 day non-accredited training session.Slide17

What next for non-accredited?Due to the significant positive feedback, National Treasury will be embarking on a process of rolling out the non-accredited training programme to 42 district municipalities. It is envisaged that the rollout will commence at the later part of July and extend for a period of 8 to 10 weeks.The programme will be 3 days, as it will be addressing mainly the non-pilot sites and thus most of the participants will have little or no knowledge of mSCOA.

This will in all likelihood be funded by the National Treasury.17Slide18

What next on the training initiative?The next step is to develop unit standards and the related training programmes.Slide19

What is Plan B?Develop the learning programmes in accordance with QCTO requirementsPackage the programme into 2 main categoriesFinancial practitioners

Non financial managersRun the programme as non registered until QCTO process has been finalised by LGSETASlide20

How will plan B roll out? 20

Slide21

Now we have non-registered Material – What Next ?21

National TreasurymSCOA to all municipal officials – get it done

LGSETA

Unit Standards?

QCTO?

Qualifications?

Where

do we fit mSCOA?

We need a refereeSlide22

National Treasury – Accreditation/MaterialNational Treasury will establish a mechanism to accredit mSCOA facilitators (individuals)Accreditation with LGSETA or via any MOU with another SETA does not translate to automatic accreditationEmphasis on individual accreditation and not organisation

Ownership of material will be that of the National Treasury as well as version control.Facilitators will be able to print via a license issued by the National Treasury No deviations will be allowed in this regard22Slide23

What are the time lines?23Slide24

Questions24