m SCOA LOCAL GOVERNMENT ACCOUNTING CYCLE OVERSIGHT ROLE

m. SCOA: LOCAL GOVERNMENT ACCOUNTING CYCLE: OVERSIGHT ROLE OF COUNCILLORS Presented by Johann Mettler IMFO Board Member & Municipal Manager of Drakenstein Municipality 6 October 2015 "A Place of Excellence" 1

Contents 1. What is m. SCOA? 2. m. SCOA Circular 1 3. m. SCOA Circular 2 4. Lessons learnt by m. SCOA pilot and non-pilot municipalities 5. Oversight role of councillors "A Place of Excellence" 2

1. What is m. SCOA? • m. SCOA is a Municipal Standard Chart of Accounts • m. SCOA is a multi-dimensional recording and reporting system across seven segments ü Function or sub-function (GFS votes structure) ü Item (asset, liability, revenue, expenditure, etcetera) ü Funding source (rates, services charges, grants, loans, etcetera) ü Project (capital, operating, repair & maintenance, programme, etcetera) ü Costing (activity based recoveries, internal billing & departmental charges) ü Regional indicator (jurisdictional area, town, suburb, ward, etcetera) ü Municipal Standard Classification (own cost centres votes "A Place of Excellence" structure) 3

2. m. SCOA Circular 1 • • What m. SCOA is. Benefits of m. SCOA. Who must implement m. SCOA (all municipalities) How to implement m. SCOA ü Piloting municipalities (19 local, 2 district and 8 metropolitan municipalities over 2015/2016 and 2016/2017 financial years) ü Non-piloting municipalities (remaining municipalities as from the 2017/2018 financial year) ü Submission of m. SCOA Project Plan to the Treasuries and to the Municipal Council ü Funding the implementation of m. SCOA (Software systems developmental costs to be borne by service providers. Equitable share, MSIG and FMG may be used for implementation purposes) • How to get familiar with"A Place m. SCOA (visit NT website) of Excellence" 4

3. m. SCOA Circular 2 • m. SCOA reading material • m. SCOA training / skills programme • Structuring the municipality’s m. SCOA Project Plan ü Piloting and non-piloting municipalities ü Submission of m. SCOA Project Plan to NT & PT & Council • m. SCOA project work streams ü Technical (m. SCOA runs on SQL database and a municipality’s financial system needs to be compatible) ü Pilot and vendor management (ICT compatibility requirements, implementation risks, etcetera) ü LG database development and reporting (NT develop LG database. Municipality’s financial system reports must integrate with NT’s LG database) ü Transition and change management (Well informed administration to avoid change resistance) ü Training (Understanding m. SCOA. Implementing m. SCOA Regulations) "A Place of Excellence" 5

4. Lessons Learnt • Need to table m. SCOA Regulations at Council • Need to table m. SCOA Project Plan at Council • Need to have m. SCOA Project Implementation and ITC Risk Register in place (no or late billing will lead to no payments and cash flow problems, no orders through SCM system will lead to no service delivery, noncompatible m. SCOA payroll system will lead to payment of salaries out of time, etcetera) • Current financial systems SCOA but not m. SCOA compliant. Although system vendors are developing their financial systems m. SCOA compliant, it still needs to be implemented. • Need to appoint in-house m. SCOA champion otherwise will lead to a lack of direction • Need to appoint m. SCOA Steering Committee and Project Management Team • Need to establish m. SCOA Project Management Office • Deal with resistance to change (change management) • Need to engage with provincial m. SCOA forums otherwise will lead to a lack of common understanding "A Place of Excellence" 6

5. Oversight Role of Councillors • Council must take note of the promulgated m. SCOA Regulations and of the m. SCOA • • • Project Implementation Plan and avail sufficient resources for the implementation of the project Executive Mayor must provide political guidance over the fiscal and financial affairs, budget process and priorities of the municipality (m. SCOA is a serious budget reform issue) Executive Mayor must monitor and oversee the Municipal Manager and Chief Financial Officer in exercising their responsibilities in terms of the MFMA (MFMA legislation directs the m. SCOA Regulations) Executive Mayor needs to oversee the implementation of the m. SCOA Project Implementation Plan and the related Risks Register. Executive Mayor needs to oversee and ensure that the current financial system becomes m. SCOA compliant, that an in-house m. SCOA Champion is appointed by the Municipal Manager, that the m. SCOA Steering Committee and Project Management Team is in place, that a m. SCOA Project Management Office has been established by the Municipal Manager. In the case of an Executive Mayoral Committee the MMC of Finance should assist the Executive Mayor in fulfilling his / her oversight role. of Excellence" 7 a When ever there is any reference "A to. Place an Executive Mayor the same will apply to

QUESTIONS "A Place of Excellence" 8