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afrec-TUT research consortium by gyvwpsjkko

VIEWS: 20 PAGES: 32

									AFReC-TUT RESEARCH
CONSORTIUM

Understanding the impact of the
PFMA: A long term research
agenda
           Research areas
1.   Integrating planning and budgeting
2.   Towards performance budgeting
3.   In-year management
4.   Non-financial information
5.   Asset valuation
6.   Risk management
7.   Financial performance
INTEGRATING PLANNING
& BUDGETING:
A PFMA PERSPECTIVE

       Presented by
      Tania Ajam
             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
                    PLANNING                BUDGETING
Dominant       Transformative and      Incremental in the
orientation    change oriented,        sense that budgets
               concerned with          seldom fluctuate
               taking decisions        drastically over time.
               today which will        Personnel, debt
               contribute to a         service costs,
               desired future state    entitlements and
               of affairs.             other statutory non-
                                       discretionary
                                       expenditures inhibit
                                       radical reprioritisation
                                       over the short term.
                                       Takes the status quo
                                       as a starting point
Orientation    Forward looking         Backward looking
Time frames    Long term, medium       Primarily short term
               and short term          with occasional
                                       medium term focus
Resource       Budget constraints      Budget constraints
constraints    often ignored, and      often the over-riding
               therefore unrealistic   emphasis
Main drivers   Political priorities    Fiscal pressures and
               and social needs        compliance
Risk profile   More risk tolerant,     Conservative and
               seeks opportunities     prudential
               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)
TOWARDS PERFORMANCE
BUDGETING IN SA :
Building on PFMA
Foundations
           Presented by
  James Nkoana & Pumla Bokoda
           Introduction

 What is performance budgeting

 Why performance budgeting?
    Implementation phases
 Programme budgeting
 Output-based budgeting
 Outcome based budgeting
 International Good Practice
 Case Studies
 - Australia
 - Singapore
South African Experience
Box 1
        Before the PFMA implementation
                                                                                                                                                      11--1
Vote 11                                                        Education
Begrotingspos 11                                               Onderwys                                                                   R4 330 395 000

AIM: To develop a national framework for the promotion of education and training
Accounting Officer: Director General: Education




                                                                                                   Transfers                            Total
Presentations according                                                                            Oordragte
to programmes                              Current                Capital
                                           Lopend                Kapitaal                   Current              Capital
                                                                                            Lopend               Kapitaal
Main divisions                          1995/96      1994/95   1995/96      1994/95   1995/96       1994/95    1995/96 1994/95      1995/96     1994/95

                                          R'000        R'000     R'000        R'000      R'000       R'000      R'000     R'000       R'000        R'000

1 Administration                          29 808      18 779      250          100      2000 000                                     230 058      18 879
2 Education and training systems
and
resources                                 7 567        6 538      100          98         270        7 370                            7 937       14 006
3 Education and training
programmes                                16 603       5 590      200          84      3 566 054   3 439 226    506 754   131 365   4 089 611    3 576 265

4 Auxillary and associated services       2 758         453       31           54                                              50     2 789               561

AMOUNT TO BE VOTED
                                          56 736      31 360      581          340     3 766 324 3 446 596      506 754 131 415 4330 395          3 609 711
                             Increase       25 376                   241                   319 728               375 339          720 684
                            Decrease

                                Source: SA Budget Review, 1995
After the PFMA implementation




Source:National Treasury Estimates of National Expenditure, 2002
  After the PFMA implementation




Source: National Treasury Estimates of National Expenditure, 2002
               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
INTEGRATED IN-YEAR
MANAGEMENT

A synthesis of seemingly
unrelated issues
            Presented by
         Donald Maphiri
        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
             Key issues
 Fundamental questions for IYM
 Transforming operational plans into
  living documents
 Integrating dynamic operational plans
  with flexible budget profiles
   Observations - essentials
 Non-financial performance
  measurement framework
 In-year management analysis and
  control frameworks
 Leadership and management control
MONITORING OF NON-
FINANCIAL INFORMATION:
A PFMA Perspective

          Presented by
   Henlo van Nieuwenhuyzen
             Background

   Principles of Good Governance
   Management of Performance
   Delivery of Results
   Enhanced Focus on Performance
    Auditing by AG
  International Good Practice
 Chile
  • Government-Wide Monitoring System
  • Role of Champions
  • Organisational Structure
 Argentina
  • Government-Wide Monitoring System
  • Role of Champions
  • Involvement of Stakeholders
       Implementation Issues

   Legislative Framework
   Departmental Structure
   Departmental Processes & Systems
   Departmental Leadership & Culture
VALUATION OF
PUBLIC ASSETS:
 Are we getting it right?

          Presented by:
  Ghalieb Dawood & Juan Bester
                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
    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
       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
RISK MANAGEMENT IN THE SOUTH
AFRICAN PUBLIC SERVICE:
TOWARDS NPM MODEL

         Presented by
      Batandwa Siswana
          Problem statement
   Public sector reforms
   Narrow approach
   Capacity
   PFMA „compliance mind‟
   Organisational Culture
   Managerial and Political leadership
             Rationale
 Context: NPM model
 Shift from narrow to broader
  perspective
 Introduce integrated approach
 International perspective:AU/NZ,
  Canada & OECD countries in general
 Organisational dynamics
Integrated: Canadian model
                                                               2.
                                                         Assessing key
                           1.                             Risk areas
                   Identifying issues
                    Setting context
                                                                                  3.
                                                                              Measuring
          9.                                                             (likelihood, impact)
     Monitoring
    Evaluating and
      Adjusting                          Practice integrated
                                         Risk management
                                         -From corporate strategy                        4.
                                          and plans to front-line                   Ranking risks
                                              operations …
        8.                                   … people and
                                                processes
  Implementing
   the Strategy

                                                                                5.
                                                                              Setting
                                                                          Desired Results
                         7.
                     Selecting a
                      Strategy                           6.
                                                     Developing
                                                      options


  Adapted from: TBS (2001) in Hill and Dinsdale (2001)
         Concluding points
 Public sector reforms:structurally 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 ?

								
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