Financial Oversight Reporting System for Municipalities by National Treasury

Submissions to the LGDRS 10 November 2016 Presented by National Treasury: Elsab Rossouw 1 1

CURRENT FINANCIAL STATISTICS REPORTING LGDRS is used by NT:LGBA for the financial oversight of all municipalities PTs: for the financial oversight of provincial delegated municipalities External stakeholders: StatsSA, SARB, DPME, DoCG, SALGA, MISA, AG and SARS Universities and researchers Other sectoral departments It is fully mobile and accessible through secure internet. Security profiles restrict access to all data. Portals developed: (GIS) BI portal based on publications API portal with lowest level published data accessible Citizen portal educational and based on municipality (launched in October 2016) 2 2

Collection method 3 3

Current collection and processing method 4 4

New collection method for submissions 5 5

Submission of Data Files 6 6

Data processing phases 7 7

LG Data and Document Upload Portal Batch Data Files Upload Requirements Mandatory input values for data file uploads: Attach the data file. Only pipe delimited text files(.txt) may be uploaded, Select the Period Description <from the drop down list> Select the Financial Year <Ditto> Tick the applicable File Format (GUID or Long code) SAVE 8 8

Expected content of batch submissions The format of the data extraction file transaction records,(data strings): Before the mSCOA data files can be moved from the LG Upload portal to the reporting tables, the data has to meet the following requirements: The data extraction file must be pipe delimited (|) No headings or column headings are allowed The 6 segments, i.e. Project, Function, Item, Fund, Costing and Region may be either in the form of the GUID or the Long code The detail line(row) must comprise of the following elements/data fields and must be in the following sequence: i. Demarcation code (This leading code identifies the transacting municipality) ii. Financial Year (The year, in which the financial period ends, for example, 2016/17 will be 2017) iii. Transaction Category(Type of transaction provide for the distinction of financial transactions within periods in a particular financial year) 9 9

Expected content of batch submissions iv. Project segment (GUID or long code) v. Function segment (GUID or long code) vi. Item segment (GUID or long code) vii. Fund segment (GUID or long code) viii. Costing segment (GUID or long code) ix. Region segment (GUID or long code) x. Amount (Amount provides the monetary value of the transaction. Due to the closing balance requirements on control accounts, the amount should be informed by the net movement and will only balance to zero as per general ledger if closing balances are omitted. No cents are allowed in the amounts field, amounts should be rounded Credit amounts must have a preceding - sign). 10 10

Monitoring submissions by municipalities 11 11

Reports available on LGDRS 12 12

Automated mSCOA tables 13 13

mSCOA Structure Maintenance The mSCOA tables were initially developed and maintained in Microsoft Excel These tables were moved from Excel to a SQL database and audit trails will be kept The current mSCOA version is Version 5.5 and has been replaced by version 6.1 after successful technical testing by the vendors. WORK IN PROGRESS The automated mSCOA structure maintenance has a sequential 3 phase approach ACTIVE VERSION ARCHIVED VERSION 14 14

mSCOA Structure Maintenance PHASE 1 mSCOA Work in Progress (WIP) PHASE 2 Archived ver. 5 Archived ver. 5.1 Archived ver. 5.2 Archived ver. 5.3 Archived ver. 5.4 take 1 Archived ver. 5.4 take 2 Archived ver. 5.4 take 3 Archived ver. 5.4 take 4 Current mSCOA version PHASE 3 Archived versions 15 15

Validating the submissions At the municipality: BEFORE any financial dataset is submitted by the MM, the following checks MUST be done: The financial reporting period MUST be closed The financial system must provide management reports and MBRR schedule extracts on the reporting period I would prefer that a formal signed copy of the schedule be stored at the municipality for audit purposes Only then can the button be pressed to submit the financial dataset 16 16

Validating the submissions In the LGDRS: The format of the financial dataset will be validated first Check municipal code / year / period All segments represented No duplicates Correct version of framework for the financial year used Then the content will be checked. If all are OK it will be accepted into the mSCOA Reporting database. 17 17

Producing publications For all publications the LGDRS will be the source The current reporting database will remain in place and will remain functional until the mSCOA reporting is of good enough quality to become the main source of information Therefore the Appendix B returns must still be submitted until the vendors are able to prepare mSCOA submissions that pass the validation tests The switch over will be done FOR ALL at the beginning of a financial year WHEN ALL ARE ON THE SAME LEVEL The MBRR schedules will be used as the benchmark: Compare A1/C schedule based on Appendix B returns To A1 / C Schedule based on mSCOA database To Signed schedule at municipality 18 18

2016 MTBPS - LAUNCHES OPEN LOCAL GOVERNMENT FINANCIAL DATA PORTAL MUNICIPAL MONEY 2016 GOVERNMENT MUNICIPALMONEY MTBPS - FINANCIAL LAUNCHES OPEN LOCAL DATA PORTAL 19

Latest statistics of the use of Municipal Money 6,988 users The average user session duration was 3:31 minutes 5,326 users were from RSA - 52% of which are located in Gauteng and 31% in the Western Cape The top 10 municipal profile pages viewed, in order: CPT, JHB, TSH, Hessequa, MAN, Nama Khoi, Cederberg, Sunday s River, Oudtshoorn and ETH Also, the Intro video had 55 views prior to launch, but is now up to 541 views. That s 51 views this past week. 20 20

Municipal links www.municipalmoney.gov.za municipaldata.treasury.gov.za 21 21

Phase II of Municipal Money Enhancements have already been requested: Better comparatives on tariffs and household bills (SA13a+b, SA14) Tracking of capital projects of municipalities (SA36) Ward based data (Project and Region segments) The Project Steering Committee will meet at the end of this month to discuss new focus areas based on feedback from citizens 22 22

Changes to the schedules and Section 71 reporting 23 23

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Table Reference A1 Reporting Phase Phase 1 Discussion Paper/Position Paper N/a Description of Table Comments Budget Summary [1]Budgeted Financial Performance (Revenue and Expenditure by Function) [2]Budgeted Financial Performance (Revenue and Expenditure by Function including Sub-function detail) Budgeted Financial Performance (revenue and expenditure by standard classification [Vote]) N/a Included detail Fund Classification in Table A2 Phase 1 N/a Reference to change to Municipal Standard Classification . A2A Phase 1 N/a Reference to change to Municipal Standard Classification . A3 Phase 1 N/a Line item not to be used: Property Rates Penalties and Collection Charges Description to be changed: Fines, Penalties and Forfeits Budgeted Financial Performance (Revenue and Expenditure) A4 Phase 1 N/a 24 24

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Layout to be revised for: Property Rates Service Charges Electricity Revenue Service Charges Water Revenue Sanitation Charges Sanitation Revenue Supporting detail to Budgeted Financial Performance SA1 Phase 1 N/a SA2 Phase 1 Consolidated Matrix Financial Performance Budget (Revenue Source/Expenditure Type and Department) Line item for Property Rates Penalties and Collection Charges not to be used Line items for to be changed: Call deposits < 90 days SA2 Phase 1 Supporting detail to Budgeted Financial Position Discussion Paper 2: Employee Related Cost SA3 Phase 1 Other current investments > 90 days 25 25

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Reconciliation of IDP Strategic Objectives and Budget (Revenue) Reconciliation of IDP Strategic Objectives and Budget (Operating Expenditure) Reconciliation of IDP Strategic Objectives and Budget (Capital Expenditure) Measurable Performance Objectives (By Municipal Standard Classification) Performance Indicators and Benchmarks Social, Economic and Demographic Statistics and Assumptions Funding Measurement Property Rates Summary SA4 Phase 1 N/a N/a SA5 Phase 1 N/a N/a SA6 Phase 1 N/a N/a SA7 Phase 1 N/a N/a SA8 Phase 1 Formula to be revised N/a SA9 Phase 1 N/a N/a SA10 SA11 Phase 1 Phase 1 N/a N/a N/a N/a 26 26

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Agricultural Properties Other Charges Multiple Purpose Special Rating Areas Small Holdings Multiple Purpose Property Rates by Category (Current Year) SA12a Phase 1 N/a Property Rates by Category (Budget Year) Service Tariffs by Category Household Bills Investment Particulars by Type Investment Particulars by Maturity SA12b Phase 1 See above N/a SA13 SA14 SA15 SA16 Phase 1 Phase 1 Phase 1 Phase 1 N/a N/a N/a N/a Change description for: Long-Term Loans (annuity/reducing balance) to Annuity and Bullet Loans N/a N/a N/a N/a SA17 Borrowing Phase 1 N/a 27 27

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES SA18 Transfers and Grants Receipts Expenditure on Transfers and Grant Programme Reconciliation of Transfers, Grants Receipts and Expenditure Transfers and Grants made by the Municipality Summary of Councillor and Staff Benefits [Limited to Staff Benefits] Salaries, Allowances and Benefits (political office bearers/councillors/senior manager Summary of Personnel Numbers Consolidated Budget Monthly Revenue and Expenditure Phase 1 N/a N/a SA19 Phase 1 N/a N/a SA20 Phase 1 N/a N/a SA21 Phase 1 N/a N/a SA22 Phase 1 N/a N/a SA23 Phase 1 N/a N/a SA24 Phase 1 N/a N/a SA25 Phase 1 See Changes to A4 N/a 28 28

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Consolidated Budget Monthly Revenue and Expenditure by Municipal Standard Classification Consolidated Budget Monthly Revenue and Expenditure by Function Budgeted Monthly Capital Expenditure (municipal vote) Budgeted Monthly Capital Expenditure (Function) Budgeted Monthly Cash Flow Aggregated Entity Budget List of External Mechanisms Contract having Future Budgetary Implications Change heading to refer to Municipal Standard Classification SA26 Phase 1 N/a Replace with revised function structure SA27 Phase 1 N/a SA28 Phase 1 N/a N/a Replace with revised function structure See Changes to A4 See Changes to A4 See Changes to A4 SA29 Phase 1 N/a SA30 SA31 SA32 Phase 1 Phase 1 Phase 1 N/a N/a N/a SA33 Phase 1 See Changes to A4 N/a 29 29

mSCOA - PROPOSAL FOR THE REVISION OF THE BUDGET REPORTING TABLES Capital Expenditure on New Assets by Asset Class Capital Expenditure on the Renewal of Existing Assets by Asset Class Repairs and Maintenance Expenditure by Asset Class Depreciation by Asset Class Upgrading of Existing Assets Future Financial Implications of the Capital Budget (by Municipal Standard Classification) Detailed Capital Budget Projects delayed from previous financial years SA34a Phase 1 Revised N/a SA34b Phase 1 See Changes to A4 N/a SA34c Phase 1 See Changes to A4 N/a SA34d SA34e Phase 1 Phase 1 See Changes to A4 See Changes to A4 N/a N/a SA35 Phase 1 N/a N/a SA36 Phase 1 N/a N/a SA37 Phase 1 N/a N/a 30 30

What about the SDBIP? 31 31

Local Government Accountability Cycle The IDP determines the strategy, objectives and service delivery targets for the municipality mSCOA, creates the environment to enable the execution of the accountability cycle, from IDP to Annual Report mSCOA , if well implemented and managed, after future phases have been completed, will provide direct evidence in dashboard format, of the achievement of IDP strategy, objectives and service delivery targets in the municipality Greatly limits greatly unauthorised expenditure. 5 Year Strategy IDP Spatial transformation plan & process BEPP 3 Year Budget Budget Annual Plan to Implement SDBIP Monitoring & Council Oversight IYR Oversight AFS Annual Report Standard Chart of Accounts Improved Service Delivery 32 32

Format of the SDBIP Quarterly reporting schedule Poor response Entry point at the municipality Not aligned to municipal SDBIP Some provinces have given a framework 33 33

Impact GDS Integrated Outcomes IDPs Functional Outcomes Municipal Outputs Municipal Activities and Processes SDBIP Municipal Inputs 34 34

Prototype framework of the SDBIP CSP Reporting indicator workgroup Top-down approach Prototype of framework to be discussed with cities beginning December Approved prototype will be part of the reporting pack released in January 35 35

The way forward Assist municipalities to register to use the LG upload portal Assist to ensure all contact detail on the LGDRS is up to date Motivate municipalities to start using the LG upload portal for: Submission of documents Submission of financial batch files Note that until NT decides that the mSCOA batch submissions are of a good enough quality for publication purposes and that we have FULL coverage from all municipalities, you MUST continue to report also in the old prescribed return forms as well. 36 36

The way forward REMEMBER that the MBRR reporting requirements for the different schedules is still required. VERIFICATION will be done by the municipality using these formats!! Ensure that reporting on a financial year is concluded in the same version. Validation of submissions will be linked to the version prescribe to that financial year. Nominate a provincial representative to take part in the mSCOA Reporting Reference Group. 37 37

THANK YOU