AFReCTUT RESEARCH CONSORTIUM

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AFReC-TUT RESEARCHCONSORTIUM

• Understanding the impact of the PFMA A long term
  research agenda

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Research areas

• Integrating planning and budgeting
• Towards performance budgeting
• In-year management
• Non-financial information
• Asset valuation
• Risk management
• Financial performance

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INTEGRATING PLANNING BUDGETING A PFMA
PERSPECTIVE

• Presented by
• Tania Ajam

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Introduction

• PFMA says what should be done, not how to do it
• Advantages and disadvantages
• Everybody agrees that plans should be integrated
  with budgets
• Yet this link is seldom very rigorous.
• Why?
• Conceptual issues
• Practical implementation issues

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Implementation issues

• Systems
• Financial and non-financial data, levels of
  aggregation, timeframes of process, control and
  compliance vs planning and management focus,
  budget structure, stratplans not smart, rules
  to force planning and budgeting to converge (eg.
  Ex ante budget constraints)
• Structures
• Silos, programme vs organisational design
  tension, change management
• Processes
• External enforcement of pace and sequence of
  budget process but not planning, horizons
• Leadership - Political and managerial incentives
• Information
• Culture budgeting as a technical vs social
  process (eg of MBO)

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TOWARDS PERFORMANCE BUDGETING IN SA Building
on PFMA Foundations
Presented by James Nkoana Pumla Bokoda

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Introduction

• What is performance budgeting
• Why performance budgeting?

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Implementation phases

• Programme budgeting
• Output-based budgeting
• Outcome based budgeting

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International Good Practice

• Case Studies
• - Australia
• - Singapore

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South African Experience

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Before the PFMA implementation
Source SA Budget Review, 1995
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After the PFMA implementation
SourceNational Treasury Estimates of National
Expenditure, 2002
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After the PFMA implementation
Source National Treasury Estimates of National
Expenditure, 2002
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Conclusion

• Progress-in integrating policies with budget
  through programmes and subprogramme
• Need to move beyond Programme budgeting
• Greater technical capacity building is
  required-especially in relation to costing
• Integrated management information system required
  to manage financial and non-financial data
• Success of PB will depend on willingness from
  government officials, executives and legislatures
  to use performance information

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INTEGRATED IN-YEARMANAGEMENT

• A synthesis of seemingly unrelated issues

Presented by Donald Maphiri
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Problem statement

• In-year management reports difficult to get out
  on time (especially quarterly reports)
• Where these get out on time, they are not linked
  to financial reports
• Propose system for facilitating production of
  integrated in-year management reports

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Key issues

• Fundamental questions for IYM
• Transforming operational plans into living
  documents
• Integrating dynamic operational plans with
  flexible budget profiles

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Observations - essentials

• Non-financial performance measurement framework
• In-year management analysis and control
  frameworks
• Leadership and management control

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MONITORING OF NON-FINANCIAL INFORMATIONA PFMA
Perspective
Presented by Henlo van Nieuwenhuyzen
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Background

• Principles of Good Governance
• Management of Performance
• Delivery of Results
• Enhanced Focus on Performance Auditing by AG

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International Good Practice

• Chile
• Government-Wide Monitoring System
• Role of Champions
• Organisational Structure
• Argentina
• Government-Wide Monitoring System
• Role of Champions
• Involvement of Stakeholders

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Implementation Issues

• Legislative Framework
• Departmental Structure
• Departmental Processes Systems
• Departmental Leadership Culture

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VALUATION OF PUBLIC ASSETS Are we getting it
right?

• Presented by
• Ghalieb Dawood Juan Bester

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Background

• Move from cash based accounting to accrual
  accounting
• No record of assets
• Asset Registers valuing assets
• Valuation methods
• Underlying assumptions
• Categories of Public Sector Assets

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International Best Practice

• United Kingdom
• Fixed assets Nett replacement Cost
• Infrastructure Community H.C
• Specialized DRC
• Australia
• No specific valuation method recommended
• New Zeeland
• DRC method used but infrastructure not depr.
• Sweden
• DRC method used, artificial market for PS assets
  created

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SA legislative context

• Prior to PFMA
• Acquisition vs maintenance, fixed asset registers
• PFMA reforms
• Acquisition due diligence and equity vs fair
  value
• Disposal replacement costs at market rates
• PFMA regulations
• Disposal management implications
• MFMA and local government reforms
• Fair value
• Property Rates Act implications

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RISK MANAGEMENT IN THE SOUTH AFRICAN PUBLIC
SERVICETOWARDS NPM MODEL

• Presented by
• Batandwa Siswana

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Problem statement

• Public sector reforms
• Narrow approach
• Capacity
• PFMA compliance mind
• Organisational Culture
• Managerial and Political leadership

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Rationale

• Context NPM model
• Shift from narrow to broader perspective
• Introduce integrated approach
• International perspectiveAU/NZ, Canada OECD
  countries in general
• Organisational dynamics

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Integrated Canadian model
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Concluding points

• Public sector reformsstructurally and
  operationally
• NPM impact on financial management, strategic
  planning, risk management
• Integrated RM to support P/Sector reforms
• Organizational culture and systems (Resistance)
• a shift from financial to non-financial-RM
• PFMA, integrated RM approach context ?