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

Understanding and Using this Act

Guide for Accounting Officers

Annexure E: Glossary

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Accounting officer

The head of a department or the chief executive officer of a constitutional institution

 

Accrual accounting

A system of accounting in which items are brought to account as they are earned or incurred and not as money is received or paid

 

Benchmarking

A process of systematically measuring and comparing the products, services and processes of an organisation, internally and against other relevant organisations, and adopting the best practices

 

Budget

A systematic indication of the resources needed by and allocated to each organisational unit for carrying out its part of the strategic plan

 

Budgeting

The process of expressing, in numerical terms, a set of planned activities for a coming period

 

Cash flow statement

A financial statement that shows, for a financial period, the sources of cash inflows and how the cash was used, distinguishing between operating, investing or financing activities

 

Change management

The process of aligning an organisation’s people and culture with changes in organisational strategy, structure, systems and processes

 

Department

A national or provincial government department, or a constitutional institution

 

Effectiveness

The extent to which policy objectives, operational goals and other intended effects are achieved

 

Executive authority

In relation to a national department, the Cabinet member who is accountable to Parliament for that department
In relation to a provincial department, the MEC who is accountable to the provincial legislature for that department

 

Financial management

In the public sector, financial management focuses on transparency, prioritisation of scarce resources and value for money, i.e. providing the best possible services with the available resources.

 

Financial statements

Such statements consist of at least:

A balance sheet
An income statement
A cash flow statement
Any other statements that may be prescribed
Any notes to these statements

 

Financial year

The period 1 April to 31 March

 

Fruitless and wasteful expenditure

Expenditure that was made in vain and that could have been avoided had reasonable care been exercised

 

Generally recognised accounting practice

Accounting practice complying in material aspects with standards issued by the Accounting Standards Board

 

Irregular expenditure

Expenditure, other than unauthorised expenditure, incurred in contravention of or not in accordance with a requirement of any applicable legislation, including:

The PFMA
The State Tender Board Act of 1968 or any regulations in terms of that Act
Provincial legislation on procurement procedures

 

Key performance indicator

Key measures of performance for an organisation or business unit within an organisation; indicators of the critical success factors for the organisation

 

Main division within a vote

One of the main segments into which a vote is divided and which:

Specifies the total amount that is appropriated for the items under hat segment
Is approved by Parliament or a provincial legislature as part of the vote

 

MEC for finance

The Member of the Executive Council of a province who is responsible or finance in the province

 

Minister

The Minister of Finance

 

National Treasury

Consists of:

The Minister of Finance, who is the head of the national Treasury
The national department formed by the merger of the Departments f Finance and State Expenditure

 

Operational plan

The first year of the multi-year strategic plan, setting out specific actions to enable the organisation to achieve its overall strategic plan targets

 

Outcomes

The impact of government activity on society

 

Outputs

The products and services directly produced by an agency and delivered to external users

 

Provincial treasury

Consists of:

The MEC for finance in the province, who is the head of the provincial treasury
The provincial department responsible for financial matters in the province

 

Risk management

The systematic application of management policies, procedures and practices to the tasks of identifying, analysing, assessing, treating and monitoring risk. This includes quantifying and assessing actual and potential risks and their associated losses, and developing management strategies to either assume control or eliminate these risks and losses.

 

Service delivery indicator

A quantification related to a specific function, included in a department’s service delivery improvement programme and used to monitor performance

 

Stakeholder

Any person or group who has an interest in or is affected, even unwittingly, by a particular issue

 

Targets

Quantified performance levels or changes in the level of performance o be attained at a specific future date

 

Treasury

The national Treasury or a provincial treasury, as may be appropriate n the circumstances

 

Unauthorised expenditure

Either of the following:

Overspending of a vote or of a main division within a vote
Expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in accordance with the purpose of the main division

 

Vote

One of the main segments into which an appropriation Act is divided and which:

Specifies the total amount that is to be appropriated, usually per department, in an appropriation Act
Is separately approved by Parliament or a provincial legislature before it approves the relevant draft appropriation Act