Contents

1 Contents PART 1: General definitions, application, departures from treasury regulations, instructions or conditions, repeal of treasury instructions and date of commencement 2 1. General definitions, application, departures from treasury regulations, instructions or conditions, repeal of treasury regulations and date of commencement 3 General definitions .. 3 Application .. 4 Departures from Treasury Regulations, Instructions or 4 Date of commencement .. 4 Repeal of National Treasury Regulations .. 5 PART 2: Regulatory Framework for Financial Management 6 2. Regulatory framework for financial management 7 National Treasury norms and 7 Provincial Treasury norms and standards .. 7 Institutional norms and standards.

2 8 Hierarchy of regulatory frameworks .. 8 Consultation process in relation to issuing of 8 Administrative actions .. 8 PART 3: Institutional Arrangements 10 8 3. Institutional arrangements 11 Chief financial officer .. 11 Required competencies for the chief financial officer s component .. 12 Training of financial practitioners and other employees .. 12 Delegations of authority .. 13 Public entity oversight .. 14 PART 4: Corporate Governance 15 4. Internal control 16 System of internal control .. 16 Control environment .. 16 System of enterprise risk management .. 17 Enterprise risk management strategy.

3 17 Enterprise risk management committee .. 18 Control activities .. 18 Information and communication .. 19 Monitoring and review .. 19 Compliance monitoring capacity .. 20 Development of internal control schedules .. 20 5. Internal audit 22 Internal audit function .. 22 6. Audit committees 25 Establishment of audit committees 25 7. Financial misconduct 28 Investigation of alleged financial misconduct [Sections 85(1) (b), (c) and (d) of the PFMA] .. 28 Criminal proceedings [Section 41, 51(1) (f) and 86 of the Act] .. 29 Reporting [Section 85(1) (a) and (e) of the PFMA] .. 29 Disciplinary board [Section 85 (1) (d) of the PFMA] .. 31 8. Management of losses and claims 33 General.

4 33 Claims against institution through acts or omissions [Section 76(1) (h) of the PFMA] .. 33 Claims by institution against other persons .. 34 Claims by employees against institution .. 34 Losses or damages through criminal acts or omissions [Section 76 (1) (f) of the PFMA] .. 35 Losses and damages through vis major and other unavoidable causes [Section 76(1) (e) of the PFMA] .. 35 Losses or damages through acts committed or omitted by employees [Section 76(1) (b) and 76(4) (a) of the PFMA] .. 35 PART 5: Management Accounting 36 9. Planning 37 Definitions .. 37 Planning processes and plans .. 37 Strategic plans .. 38 Annual performance plans .. 41 Operational plans .. 44 Corporate plans.

5 44 Shareholder s compact .. 46 Performance agreements .. 46 Performance indicators and targets .. 46 10. Budgeting and related matters 48 Medium term expenditure framework .. 48 Annual estimates of revenue and expenditure .. 48 Annual adjustments estimates .. 49 Capturing of the budget on the financial management system .. 49 Cash flow projections .. 50 Virement .. 50 Surrender of voted surplus funds by departments and the retention of surplus funds by constitutional institutions and public entities .. 51 Roll-over of funds .. 52 Transfer of functions .. 53 11. Monitoring and reporting 54 Monthly revenue and expenditure reports .. 54 Quarterly performance reports .. 55 Quarterly revenue and expenditure reports by public entities.

6 56 Preparation of annual reports .. 56 PART 6: Financial Accounting 58 12. Revenue management 59 Efficient and effective system for revenue management .. 59 Cashier services .. 59 Private money and cashing of private cheques .. 60 Receipts not classified as revenue .. 60 Services rendered by the institution .. 60 Rendering of agency services .. 61 Acceptance of gifts, donations and sponsorships by the institution .. 61 Transfer of departmental revenue to the provincial revenue fund .. 62 13. Debt management 64 Efficient and effective system for debt management .. 64 Recovery of debts in instalments .. 64 Writing off of debts owing to the institution .. 65 Reporting on debt owing to the institution.

7 65 Interest payable on debts to the institution .. 65 Calculation of interest on debts owing to the institution .. 65 Remission as an act of grace or favour .. 66 14. Expenditure management 68 Efficient and effective system for expenditure management .. 68 Transaction checklists .. 69 Approval of commitments and expenditure .. 69 Warrant vouchers, cheques and electronic payments .. 70 Payments within the prescribed or agreed period .. 70 Inter-departmental and inter-governmental transactions .. 72 Petty cash .. 72 Compensation of employees .. 72 Certification of payroll reports .. 73 Employee transfers between departments .. 73 Transfers and subsidies (excluding Division of Revenue grants and other allocations to municipalities).

8 74 Division of Revenue grants .. 75 Other allocations to municipalities .. 75 Recovery, disallowance and adjustment of payments .. 75 Payments as an act of grace or favour .. 76 Granting of gifts, donations and sponsorships .. 76 Charging of expenditure against a particular vote or main division of a vote .. 77 Unauthorised, irregular, fruitless and wasteful expenditure .. 77 15. Banking and cash management 80 Banking arrangements .. 80 Reporting on bank accounts .. 81 Bank reconciliations .. 82 Cash management .. 82 Investment policy [Section 7(4) and 53(3) of the PFMA] .. 83 16. Asset and liability management 85 Loans, guarantees, leases and other commitments .. 85 Corporate credit cards.

9 85 Loans, guarantees, leases and other commitments .. 86 Guarantees for housing loans .. 86 Guarantees to secure financing for the purchase of motor vehicles .. 87 Performance or construction guarantees .. 87 Lease transactions .. 88 17. Accounting and related matters 90 Accounting framework .. 90 Clearing and suspense accounts .. 90 Availability of financial information .. 91 Changes to financial systems .. 92 18. Reporting 93 Monthly certificate and other returns .. 93 Planning for preparation of financial statements .. 95 Interim financial statements .. 95 Quarterly reporting on commitments and accruals .. 96 Annual financial statements .. 96 19. Electronic financial, logistical, human resource management and payroll systems 98 Effective and efficient utilisation of electronic systems.

10 98 Access control .. 98 Institutional system controller .. 99 Training of system users .. 100 Specific system requirements .. 100 PART 7: Supply Chain Management 103 20. Supply chain management system and other related matters 104 Definitions .. 104 Accounting officer or accounting authority supply chain management system .. 108 Core principles for an appropriate supply chain management system 109 Establishment of Supply chain management units .. 110 Establishment of Supply chain management bid committees .. 110 Bid specification committee .. 111 Bid evaluation committee .. 112 Bid adjudication committee.