DIPLOMA IN PUBLIC ACCOUNTABILITY 2020 Public Accountability 1

DIPLOMA IN PUBLIC ACCOUNTABILITY (2020) Public Accountability 1 (US 119334) Facilitator: Werner Burger

Unit Standard 119334 Discuss the selected regulatory framework governing the public sector management and administrative environment

Outcomes US 119334: • • • OUTCOME 1: Demonstrate an understanding of and interpret the South African constitution in relation to public sector financial management OUTCOME 2: Identify and apply the regulations governing Division of Revenue OUTCOME 3: Demonstrate knowledge of and apply the South African legal system within the public sector financial management and administration context OUTCOME 4: Apply legislative regulations and legal principles to contracts OUTCOME 5: Manage the implementation of the Municipal Finance Management Act in a municipality The learner must demonstrate an understanding of: • • • Local Government: Municipal Finance Management Act Public Finance Management Act Division of Revenue Act A comprehensive understanding of legislation, rules and statutory requirements applicable to the public sector A comprehensive understanding of all legal documents and records A comprehensive understanding of different types of contracts that apply to public financial management and administration Terms and conditions of general employment contracts A good understanding of the South African legal system A good understanding of the Constitution of the Republic of South Africa.

ORIENTATION (1) Important Dates Contact Session: • 12 March 2020 Telematic Session: • 5 May 2020

ORIENTATION (2) Important Dates Exams: • 13 March 2020 • 11 May 2020 – Concession Assignment: • 29 May 2020 • 6 July 2020 – Concession

ORIENTATION (3) All the necessary information …… Assessment Plan Learner Guides Pre-recording session Contact and telematics sessions Website – additional material Facilitator Programme Coordinators

US 119334 – Assessment Plan: Class Test Individual open book assessment. Test theory and application thereof. Questions will have reference to municipalities and/or specific reference to entities where of relevance for the particular course as per Chapter 10 of the MFMA. An interpretation and application of selected activities and questions which address the outcomes is expected.

US 119334 – Assessment Plan: Assignment • Assignment (Length: +- 1000 words). Critically evaluate the compliance of your municipality with the MFMA using the annual report and audit reports as source documents. Consider what actions the municipality should be taking to amend or correct noncompliance. If in your opinion your municipality constitutes a best practice and it has limited noncompliance, explain what other municipalities should be doing to improve their non- compliance.

UNIT 1 South Africa’s Constitution and the public sector financial management

The components of South African law

Sources Law: 1 2 3 4

The Constitution of the Republic of South Africa The Bill of Rights The Chapters and the Sections…….

The Constitution • Section 40(1) - Three spheres of government • Section 41 - Principles of co-operative government and intergovernmental relations • Section 153 - Developmental duties of municipalities • Section 155(6) - Provincial government must provide for the monitoring and support of municipalities • Section 188 - Auditor-General must audit and report on the accounts, financial statements and financial management of …… • Section 216 - National legislation must establish a National Treasury …… GRAP, classifications, norms and standards • Pg 12+

Regulatory mechanisms relating to public sector financial management Constitution: • Intergovernmental Fiscal Relations Act, 1997: • Local Government: Municipal Finance Management Act, 2003: ― secure sound and sustainable management of the financial affairs of municipalities. . . ― establish treasury norms and standards …… • Division of Revenue Act (annual) • Borrowing Powers of Provincial Government Act, 1996 Pg. 16+

Public Finance Management Act, 1999 Purpose: • Regulate financial management in the national government and provincial governments • Ensure that all revenue, expenditure, assets and liabilities of these governments are managed efficiently and effectively • Provide for the responsibilities of persons entrusted with financial management in these governments

Intergovernmental Fiscal Relations Act Pg. 22

Skills for public sector officials • • Strategic leadership and management Strategic financial management Operational financial management Financial performance and reporting Legislation, policy and implementation Stakeholders relations Risk and change management, etc.

Regulatory underlying intergovernmental relations and corporate governance • Constitution of the Republic of South Africa, 1996 • Local Government: Municipal Finance Management Act, 2003 • Local Government: Municipal Systems Act, 2000 • Intergovernmental Relations Framework Act, 2005

Intergovernmental Relations Framework Act, 2005 Objective: • Provide a framework for intergovernmental relations within the principles of co-operative government set out in Chapter 3 of the Constitution • Provide a framework for the national government, provincial governments and local authorities • Facilitate co-ordination in the implementation of policy and legislation including: coherent government, effective provision of services, monitoring, implementation of policy and legislation and realisation of national policies. Pg. 28

Specific regulations, reports and policy • White Paper on Local Government, 1998 • King Reports on corporate Governance (1994, 2002, 2009 and 2016) • National Development Plan • Provincial Growth and Development Strategy • Integrated Development Plan

King Reports on Corporate Governance • 1994 – King I “ … integrated approach to the good governance in the interests of a wide range of stakeholders …” • 2002 – King II “ … a move to the triple bottom line, embracing the economic, environmental and social aspects …” • 2009 – King III “ … core philosophy revolving around leadership, sustainability and corporate citizenship …” • 2016 – King IV “ … promote corporate governance as integral to running an organisation (governing body) and delivering governance outcomes such as ethical culture, good performance, effective control and legitimacy …”

ACTIVITY/CLASS DISCUSSION PAGE 42 CASE STUDY 1

• Unit 2: UNIT 2 The regulations governing division of revenue Pg. 46

Overview Constitution of the Republic of South Africa: ― Section 216 ― Division of Revenue Act (annual) Grants: ― Local Government Equitable Share (LGES) ― Municipal Infrastructure (MIG) ― Capacity Building Grant (CBG) • Intergovernmental Fiscal Relations Act, 1997 • Intergovernmental Relations Framework Act, 2005 • Division of Revenue Act (enacted annually) Pg. 48

Transfers as set out in the annual Division of Revenue Act • Local Government Equitable Share (LGES) • Municipal Infrastructure Grant (MIG) • Capacity building grant (CBG)

Legislation used to manage finance in local government • Constitution of the Republic of South Africa • LG: Municipal Finance Management Act, 2003: ― Financial misconduct • LG: Municipal Structures Act, 1998 • LG: Municipal Systems Act, 2000 • Municipal Property Rates Act, 2004 • Intergovernmental Fiscal Relations Act, 1997 • Intergovernmental Relations Framework Act, 2005 • Division of Revenue Act (enacted annually) Pg. 52+

MFMA regulations Municipal Investment Regulations Municipal Supply Chain Management Regulations Municipal Regulations on Debt disclosure Municipal Budget and Reporting Regulations Municipal Regulations on minimum competency levels • Municipal Asset Transfer Regulations • Municipal Finance Misconduct Regulations • Municipal Regulations on Standard Chart of Accounts • • •

MFMA regulations • • Municipal Investment Regulations Municipal Supply Chain Management Regulations Municipal Regulations on Debt disclosure Municipal Budget and Reporting Regulations Municipal Regulations on minimum competency levels Municipal Asset Transfer Regulations Draft Municipal Finance Misconduct Regulations Draft Municipal Regulations on Standard Chart of Accounts

Guidelines to resolve financial-related disputes Process – Page 59 Documents

ACTIVITY/CLASS DISCUSSION PAGE 63 Case Study 1

• Unit 3: UNIT 3 South African legal system within the public sector financial management and administration

The Sources of South African Law

South African legal system – particular structures and systems • Systems of government (spheres): v National government v Provincial government v Local government • Structures of government Pg. 70+

Provincial government

Pg. 73

South African legal system – context of public sector legislation • “South African legal system” - refers to a variety of legal sources, which directly or indirectly influence the administration of the public sector • “Public sector” - refers broadly to public administration of the three spheres of government and organs of the state

South African legal system – context of public sector legislation (2) • Constitution of the Republic of South Africa • Legislation and common law: ― Promotion of Administrative Justice Act, 2000 ― Promotion of Access to Information Act, 2000 ― Promotion of Equality and Prevention of Unfair Discrimination Act, 2000 • Government Policy: Batho Pele • Regulations and Codes of Conduct Pg. 75

Batho Pele • • Consultation Service standards Access Courtesy Information Openness and transparency Redress Value for money Pg. 79

ACTIVITY/CLASS DISCUSSION PAGE 84 Case Study 1

• Unit 4: UNIT 4 Legislative regulations and legal principles as applied to contracts Pg. 87

Essential elements of a valid contract • • • Consensus Contractual capacity Lawfulness or legality Formalities Certainty and possibility of performance Pg. 89

Forms of breach of contract • • • Mora Debitoris Mora Creditoris Repudiation Rendering performance impossible Positive mal-performance Pg. 100

Remedies available to the aggrieved party in the case of breach of contract • • • Specific performance Cancellation Damages Penalty clause Interdict Exceptio non adimpleti contractus Pg. 102

Employment contract • • Agreement between two parties Contractual capacity Judicially and physically possible Formalities Contract – Basic Conditions of Employment Act, 1997 Consensus Control Pg. 104

Employment contract - consensus • Consensus - work to be done and remuneration • Factors which tend to indicate the existence of an employment contract - person alleging to be an employee: • is obliged to render services personally and may not delegate this obligation • has to keep fixed hours and is paid a regular wage or salary • is entitled to benefits such as pension fund or medical aid scheme • is subject to a degree of control by the employer

Employment – legislative framework • • • Constitution of the Republic of South Africa Employment Equity Act, 1998 Basic Conditions of Employment Act, 1997 Labour Relations Act, 1995 Skills Development Act, 1998 Occupational Health and Safety Act, 1993

Documents and contracts - experts

Delictual liability - contracts • Ramane local municipality … contract management • Vicarious liability

ACTIVITY/CLASS DISCUSSION PAGE 113

Unit 5: • UNIT 5 The implementation of the Local Government: Municipal Financial Management Act, 2003 in a municipality

The MFMA within a broader milieu • Political implications • Social and economic implications • Legal implications – liability extends to: v Municipal Managers v Councillors v Municipal officials v Mayors v Directors of municipal entities

Functions and responsibilities • • Municipal Council Mayor Municipal Manager Chief Financial Officer Other officials of Municipality Councillors and Ward Committees Local community

Financial management processes to ensure sustainable management of municipality's development objectives. Revenue adequacy and certainty Effective and efficient resource use Accountability, transparency and good governance Accounting and financial reporting procedures Budget strategic focus Services provided at levels Clear and focused integrated development plan Strategies for supply chain management Officials should ensure financial resources administered responsibly • Code of Conduct … • • •

Project Management Principles • • • Scope and initiation management Time management Cost management Quality management Communication management Delivery process

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