REDEFINING FINANCE DATE: 03 DECEMBER 2013 CMA as a

Transcript:REDEFINING FINANCE DATE: 03 DECEMBER 2013 CMA as a:
REDEFINING FINANCE DATE: 03 DECEMBER 2013 CMA as a Viable Business The Finance Team considered the follow issues regarding the establishment of the CMA’s The Financial Sustainability of the CMA The Regulatory Compliance with Accounting Standards The Internal Control & Segregation of Duties The capacity required for the management of Revenue Collection & SCM Processes The need for effective & efficient Budget and Expenditure processes An integrated approach to Financial Reporting The importance of reliable ERP Systems OBJECTIVE OF TASK TEAM To provide what financial support and financial arrangement are required for the viability and sustainability for CMAs. This task team will look into holistic viability of CMAs To guide the development and implementation of the internal controls and financial management systems CMA viability is dependent upon, but not equivalent to, the charging for water resources management costs. It is important to distinguish the concept of user charges and total income required to support water resource management In public finance theory: distinction in tariffs and user charges, both of which relate to (i) voluntary use, (ii) benefit received by the user, (iii) the cost of providing a service. Financial Theory of User Charges Funding for CMAs will be from WRM charges and the fiscus Charges should be related to the cost of management for the direct benefit of users Costs to ensure water resource management in the public interest should be borne by the fiscus The concept of self-sufficient CMAs runs against international experience and public finance theory and will require fiscal support The pricing strategy prevents cross-subsidisation and shortfalls in affordability should be supported by the fiscus Principles for CMA funding The recovery of relevant costs from water users is critical to promote local “ownership” of the CMA Charges should be collected from all water users that receive a benefit or require CMA management Affordability to all users must be considered CMAs have a mandate to regulate water resources in the public interest and to achieve government’s political, social and environmental objectives (in ways that may not directly benefit water users), so this mandate should be financially supported The costs associated with establishing or developing a new public entity should be supported by the fiscus, while DWA must transfer funding for the CMA before revenue collection is delegated Principles for CMA funding Phase 1 Target Date end December Separation of Main & WTE Current WTE Regional Capacity Business Operating