Public Finance Management Act, 1999 (Act No. 1 of 1999)

Regulations

Treasury Regulations for Departments, Constitutional Institutions and Public Entities

Part 5 : Asset and liability management

13. Loans, guarantees, leases and other commitments
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13.1General [Section 66 of the PFMA]

 

13.1.1The executive authority of a provincial department may not issue a guarantee, security or indemnity that may bind the provincial revenue fund, except with the prior written approval of the MEC for finance in the province.

 

13.1.2The accounting officer of a department must ensure that no official in that department or any other person borrows money on behalf of that department or issues an unauthorized guarantee, security or indemnity. The accounting officer must ensure that appropriate misconduct or criminal proceedings are instituted against any person responsible for transgressions with regard to borrowings, guarantees, securities or indemnities.

 

13.1.3Should the accounting officer be responsible for transgressions with regard to borrowings, guarantees, securities or indemnities, the relevant treasury must, as soon as it becomes aware of the transgression, initiate appropriate misconduct or criminal proceedings against the accounting officer.

 

13.1.4The accounting officer must report on all known contingent liabilities of the department in its annual report.

 

13.1.5This regulation does not preclude the use of credit cards, fleet management cards or other credit facilities repayable within 30 days from the date of statement.

 

13.2Lease transactions

 

13.2.1For the purpose of this regulation, a lease is an agreement whereby the lessor conveys to the lessee in return for a payment or a series of payments the right to use an asset for an agreed period of time.

 

13.2.2A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.

 

13.2.3An operating lease is a lease other than a finance lease.

 

13.2.4The accounting officer of an institution may, for the purposes of conducting the institution’s business, enter into lease transactions without any limitations provided that such transactions are limited to operating lease transactions.

 

13.2.5With the exception of agreements concluded in terms of Treasury Regulation 16, the accounting officer of an institution my not enter into finance lease transactions.