Municipal Perspective on mSCOA and Audit Challenges
Explore the municipal perspective on mSCOA, a crucial part of National Treasury's budget and reporting reforms. Discover how mSCOA improves data quality, reporting, analysis, and oversight while facing challenges like integration issues.
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Presentation Transcript
Municipal Perspective on mSCOA and Audit challenges
Municipal Perspective on mSCOA National Treasury s duty is to ensure transparency and expenditure control in the three spheres of Government.
Municipal Perspective on mSCOA mSCOA is part of National Treasury s ongoing budget and reporting reforms. mSCOA means that municipalities capture all their financial transactions against a predefined classification framework. mSCOA was not only a financial reform, but an entire overhaul of municipal business processes.
Municipal Perspective on mSCOA For mSCOA to be successful it must be integrated with all municipal accounting systems. All municipalities capture and submit their financial transactions against a predefined classification framework, which result in the uniformity of information in terms of revenue, expenditure, assets and liabilities. This standardised approach gives National Treasury the ability to determine the municipalities' performance at the click of a button.
Municipal Perspective on mSCOA The seven segments forced proper planning, budgeting, supervisory and management checks throughout municipal operations. The mSCOA Project Segment improve reporting on service delivery The mSCOA Project Segment link the municipality s annual deliverables in the IDP to the budget and SDBIP, thereby enabling better public consultation The mSCOA Regional Segment assist in providing SDBIP information to Ward Councilors The mSCOA Function Segment improve oversight over the overall performance of the municipality
Municipal Perspective on mSCOA mSCOA benefits municipalities by: Improving data quality and credibility Improve reporting on service delivery Deeper analysis of transactions Standardised business processes Analysis information on a very detailed level Assist with performance management Strengthens council oversight and decision making monitoring and oversight
Municipal Perspective on mSCOA mSCOA challenges: Long term standardisation of structures: the use of different mSCOA versions that will involve software development Seamless integrating: high cost involved for development Transferring of skills Change management
Audit challenges: The implementation of mSCOA did not change the legislated financial reporting framework which is Standards of GRAP
Audit challenges in the 2017/2018 Financial year: The comparison of the opening balances in the mSCOA TB versus the closing balances in the old TB . The reclassification of classes of PPE from one class to another due to mSCOA, for e.g.: Reclassification of Buildings to Other Assets
Audit challenges in the 2017/2018 Financial year: There was a lot of restatement and reclassification of comparatives. The restatement of the prior year comparatives, to ensure comparability in terms of GRAP 1.51. The prior year figures needed to be analysed in detail in order to do the restatement. Some of the areas affected were contracted services, repairs and maintenance, general expenses (which is now operational costs) and other income (which is now operation income).
Audit challenges for the 2018/2019 Financial year: Implementation of GRAP standards remain a challenge New Standards to be updated Understanding of GRAP at middle management and below Updating of Accounting Policies Unauthorised, Irregular, Fruitless and Wasteful Expenditure to be accounted for as per Circular 68
