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Public Finance Management Act (PFMA) - Coggle Diagram
Public Finance Management Act
(
PFMA
)
Section 50
:
Fiduciary duties of accounting authorities
The
AA
may
not act
in a way that is:
Use his/her
position for gain
.
Inconsistent
with the
responsibilities of the AA
A member of the
AA
must:
W
ithdrawal from proceedings.
Disclose any
conflict of interest
; and
The
AA
should:
3.)
Disclose
all
material facts
which may influence the decision or actions of the executive authority.
4.)
P
revent any prejudice
that
can influence the financial interest
of the state.
2.)
Act with
fidelity, honesty, integrit
y and act in
best interests
of the entity.
1.)
Act with
duty of utmost care
to
ensure reasonable protection
of the assets and records of the public entity.
Interest in contract can be linked to all of the above…thus
look our for an interest in contract in the test.
NB!!
The act states
a list of duties
(
fiduciary
and
general responsibilities
) that don’t all flow or link with one another.
BUT if ONE is not adhered to then there is non-compliance
, and financial misconduct.
AA
Is the
Accounting Authority
Section 51:
General responsibilities of accounting authorities
The
Accounting Authority
should ensure:
S
afeguarding
and
maintenance of assets
by ensuring the following are in place:
Fixed asset register
Reconciliations on a regular basis
Access controls to the assets
Consider controls for intangible assets as well.
M
anagement of liabilities
by settling all liabilities when they are due.
They
manage the working capital efficiently
(Current assets – liabilities).
C
omplying with tax/ levies/ duty/ pension/ audit commitments in terms of legislation
(Income Tax/ VAT/ UIF).
The AA should
prevent irregular or fruitless
and
wasteful expenditure
and losses through criminal activity.
The AA should
collect all money due
. Ensure there is an effective system to record revenue. Have a debtor management system and keep write-offs to a minimum.
The entity
complies with the PFMA
and other legislation such as the:
Own legislation applicable to the entity- E.g. SABS - Standards Act.
Income Tax Act
That they
evaluate all major capital projects
. This includes the
evaluation of infrastructure asset
s and
IT systems
.
R
eport the inability to comply with any of the above to the Minister, National Treasury and the Auditor General
(AG).
The
system of internal audit
should be under the
control of the audit committee
(thus an audit committee should be established). The audit committee should
ensure the following
:
The
Internal Audit
should be
independent of activities audited
;
Audit Committee should
report directly to the Accounting Authority
;
No limitation
on its access to information
.
The purpose, authority and responsibility is defined in an
internal audit charter
;
Risk Management
Risk management strategy including a
fraud prevention plan
should be implemented to manage these risks.
The
AA
must ensure that a
risk assessment is conducted regularly
to identify
emerging risks
.
The
strategy
should be
communicated to all employees
.
Accounting authorities have to ensure that there is
effective, efficient
and
transparent system of financial
and
operational risk management
and internal controls.
Should there be
control weaknesses
there is the
potential for non-compliance
with the
PFMA
.
Procurement
The AA should
ensure that the procurement
and provisioning system should be
fair, transparent, equitable, competitive
and
cost-effective
. They should:
Have Supply Chain Management
that is
:
Consistent with PPP (
Public private partnership
) Framework Act & BBBEE Act.
Fair, equitable, transparent, cost effective and competitive;
Implement a
supply chain management framework
- Treasury Regulation 16A
Section 52: Annual budget and corporate plan
Corporate Plan must include the following: (TR 29)
Key performance measures and outcomes
A risk management plan
Strategies and business initiatives
A materiality/ significant framework
Strategic objectives and outcomes agreed with the executive authority (EA)
A financial plan addressing:
cash flow projections;
capital expenditure programmes; and
asset and liability management;
dividend policies.
projections of revenue, expenditure and borrowings;
Section 83:
Definition of Financial Misconduct
Section 83 of the PFMA states that the following amounts to financial misconduct by accounting authorities and officials of public entities.
If a delegated official (section 56) commits an act of financial misconduct if that official willfully or negligently fails to exercise that power or perform that duty
If the Accounting Authority is a board or other body consisting of members, every member is individually and severally liable for any financial misconduct of the Accounting Authority
Financial misconduct is a ground for dismissal or suspension of, or other sanction against, a member or person referred to in subsection (2) or (3) despite other legislation
The Accounting Authority for a public entity willfully or negligently
Or makes or permits an irregular expenditure or a fruitless and wasteful expenditure
fails to comply with a requirement of section 50, 51, 52, 53, 54 or 55;
Treasury regulation 33
(
Process for when there's financial misconduct
)
If an employee is alleged to have committed financial misconduct, the Accounting Authority of the public entity must ensure that:
That a disciplinary hearing is held
The investigation is instituted within 30 days from the date of discovery
An Investigation is conducted
If an Accounting Authority or any of it's members is alleged to have committed financial misconduct, the relevant executive authority must:
Ensure that appropriate disciplinary proceedings are initiated immediately
Initiate an investigation into the matter and if the allegations are comfirmed, must
The relevant treasury may, after consultation with the executive authority must:
Issue any reasonable requirement regarding the way in which the investigation should be performed
direct that a person other than an employee of the public entity conducts the investigation;
The Accounting Authority must advise the Auditor-General and the relevant executive authority and treasury of any criminal charges it has laid against any person in terms of section 86 of the Act
The executive authority or relevant treasury may direct a public entity to lay charges of criminal financial misconduct against any person should an accounting authority fail to take appropriate action.
The accounting authority must, on a annual basis, submit to the executive authority, the relevant treasury and Auditor-General a schedule of:
The names and ranks of employees involved, and
The sanctions and any further actions taken against these employees.
The outcome of any disciplinary hearings and/or criminal charges
Section 56 of the PFMA
:
What is a delegated official
Board still responsible.
Accounting Authority (Board) delegates to employees through the
Delegation of Authorit
y (DOA) Framework
In writing- any powers of the PFMA
Any duties;
Subject to limitations and conditions.
Delegation may be done to a person
who holds an employment contract
and has
specific roles and responsibilities.
Section 57 of the PFMA
:
Responsibilities of delegated officials
System of
financial management
and
internal controls
should
be implemented
and carried out.
Effective, efficient, economical and transparent
use of resources.
Effective and
appropriate steps to prevent irregular or fruitless
and wasteful expenditure.
Comply with the
provisions of the PFMA
and
Delegation of Authority
(DOA, section 56).
M
anagement of assets and liabilities
.
Section 86
:
Offences and Penalties
*If an accounting authority or officer is guilty of an offence they will be liable for a fine or to imprisonment not exceeding 5 years