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Module 4: Governance Structures and their responsibilities under the
MFMA
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1. Introduction
The local government system is faced with enormous challenges in its pursuit to live up to its increasingly complex and widening role in service delivery
Municipalities are increasingly challenged by ineffective municipal governance structures.
Poor financial management is one of the major concerns Lack of ethical leadership is increasing polluting the local
government environment Lack of consequences for non adherence or lack of
accountability
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2. Accountability and Oversight
What is accountability?‘accountability is an obligation to answer to someone with authority for the execution of one’s assigned responsibilities’
What is oversight?‘oversight is the means by which accountable persons are called to account’
Elements of oversightA principal and An Agent
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3. MFMA and Accountability
Object of Act2. The object of this Act is to secure sound and sustainable management of the fiscal and financial affairs of municipalities and municipal entities by establishing norms and standards and other requirements for—(a) ensuring transparency, accountability and appropriate lines of responsibility in the fiscal and financial affairs of municipalities and municipal entities;
Level of accountability substantiated & best illustrated in section 79(3)(e) of MFMA.
4. MFMA and protecting the public purse
• Protecting the public purse requires the right– Policies– Processes– People – Practices
• MFMA regulates the first three of these aspects– The greatest challenge in local government is implementation
translating policy into practice through the processes implemented by people
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5. Importance of Oversight
To detect and prevent abuse, arbitrary behavior or illegal and unconstitutional conduct on the part of the government and public agencies.
To hold the government to account in respect of how the tax payers money is used.
To ensure that policies announced by government and authorised by Parliament are actually delivered.
To improve the transparency of government operations and enhance public trust in the government, which is itself a condition of effective policy delivery.
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6. Oversight process
Is about enforcing the implementation of agreed policy It is exercised through out the year Legislative Frameworks also allows the Provincial Executive
to dissolve council if it fails to fulfill its oversight role In simple terms, it is about
– Identify problems– Provide remedies (timeously reacting to situations to mitigate risks
and taking the necessary corrective actions to address non-performance)
– create an environment that is conducive to good financial management and service delivery
– strengthen the accountability and responsibility of management
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7. Principals and agents – role-players in protecting the public purseWithin the municipality:• Citizens
– voters, ratepayers, community groups, political parties
• Customers– households, businesses, institutions
• Councilors• Municipal council
– Committees of council– MPAC
• Auditor-General• Mayor
– Mayor’s executive committee• Municipal manager –
accounting officer– Chief financial officer– S57 managers– Other municipal officials
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External to municipalities• Provincial executive
– Dept of local government– Provincial treasury
• National executive– Dept of Co-operative Governance– National Treasury– Water, transport, housing– NERSA
• Provincial legislatures• Parliament
• SALGA
8. Role players legislative mandates
All responsibilities are spelt out in legislation• Mayors – ss.52-59 of the MFMA• Accounting Officers – ss.60-76 of the MFMA• Other officials – ss.77-79 of the MFMA• CFO, Budget and Treasury Office – ss.80-83 of the MFMA • Oversight – MFMA section 129• Councils – Constitution and LG legislation• Councilors – Code of Conduct in the Structures Act
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9. Financial Governance
Promote transparency, accountability and oversight Effective management of Revenue, Expenditure, Asset mgt. and
Liabilities Proper budgeting and planning Ensuring a procurement process that is:
• Fair;• Equitable;• Transparent;• Competitive; and • Cost effective.
Meeting the service delivery imperatives
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10. Financial Governance Framework in LG
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11. Accountability Framework in LG
12. Accountability relationships
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Council
Auditor-General Executive
Independent, objective information
Transparency
Audit
Aud
it Re
port
ing
Con
stitu
tiona
lly e
mpo
wer
sConferred Responsibility
Accountability reporting
Political
Operational
Policy Direction and Oversight
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13. The accountability cycle
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• Organisational structure aligned to services
• Sound municipal policies, processes and procedures
• Performance information
IDP
Budget
SDBIP
In-year reporting
A n n u a l
f in a n c ia l
s ta te m e n ts
Annual financial
statements
Annual report
Five-year strategy
Three-year budget
Annual implementation plan
Implementation monitoring
Accountability reporting
Oversight report
Oversight report
Thank You
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