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

Understanding and Using this Act

Normative Measures For Financial Management

Phase 1 : Perfecting The Basics

1. Introduction
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Purpose

 

The purpose of this document is to establish a framework for the development of acceptable normative measures for financial management. These normative measures, which should be regarded as a management tool to perfect the basics, are aimed at :

•providing a benchmark to accounting officers to assist them with the continuous evaluation of the quality of financial management within their departments and to report meaningfully thereon in their annual reports;
•contributing towards the improvement of financial management within Government departments;
•enabling the relevant treasuries to report bi-annually to Cabinet and the Executive Councils on specific aspects of financial management within a specific department or for national and provincial departments as a whole; and
•enabling the Auditor-General to improve his reports to legislatures on financial management in national and provincial departments.

 

Scope

 

The framework focuses on financial management within national and provincial departments and more specifically on the successful implementation of the Public Finance Management Act (PFMA), 1999, and its related Treasury Regulations. The focus is therefore not on service delivery standards (outputs and outcomes) of specific programmes within national and provincial departments. These issues and more advanced norms and standards for financial management in the public sector as a whole will be addressed in Phase II of the Normative Measures for Financial Management.

 

Coverage

 

The framework covers requirements as set out in the Public Finance Management Act, (PFMA), 1999, annual Division of Revenue Act (DORA), National Treasury Regulations, 2002, Public Service Regulations, 2001, principles contained in the King Report on Corporate Governance for South Africa, 2002 as well as principles contained in various guideline documents issued by the National Treasury.

 

Implementation

 

(1)Accounting officers should use the Framework to establish to what extent his or her department is functioning towards required and predetermined standards. Chief Financial Officers must design supplementary measurement standards to support the normative measures to be evaluated by the accounting officer. These supplementary standards would obviously differ per department and level of application.

 

(2)The relevant treasuries will utilise the Framework to conduct bi-annually surveys within departments for purposes of reporting to Cabinet, Executive Councils and Standing Committees of Public Accounts (SCOPA's). These reports will cover progress with PFMA implementation as well as improvement of financial management in general.

 

(3)The Office of the Auditor-General will utilise the Framework as basis to evaluate the level of financial management in individual departments and report thereon in the General Report of the Auditor-General after year-end. Information submitted to the relevant treasuries during a financial year for purposes of the bi-annual surveys will therefore be subject to auditing.