EPAM3714 EPAM3714: Public Financial
Management
DR MG MANGWANYA
CLASS TIMES
• WEDNESDAY: 1200HRS-1400HRS
• THURSDAY: 1500HRS-1700HRS
PUBLIC FINANCE MANAGEMENT ACT, 1999 (ACT 29
OF 1999) (AS AMENDED BY ACT NO. 29 OF 1999)
• Promotes the objective of good financial management in order to maximise service delivery
through the effective and efficient use of the limited resources.
• Regulates the management of finances in national and provincial government.
• It sets out the procedures for efficient and effective management of all revenue, expenditure,
assets and liabilities.
• It establishes the duties and responsibilities of government officials in charge of finances.
• The Act aims to secure transparency, accountability and sound financial management in
government and public institutions.
PFMA CONT…
• The Act clarifies the laws in relation to the National and Provincial Treasuries, the National and
Provincial Revenue Funds, and the National Budgets.
• It also governs the management of finances in departments, public entities (like ESKOM and
TELKOM), Parliament and the provincial legislatures, and constitutional institutions (like the
Human Rights Commission, the Commission on Gender Equality and the Independent Broadcasting
Authority).
• • Energy: Eskom, CEF, NECSA;
• • Transport: Transnet, ACSA, SAA, SAX, ATNS etc;
• • Telecoms: SABC, SAPO, Broadband Infraco, Sentech
• • Defence: Denel, Armscor
• • Development Finance Institutions: DBSA, IDC, LandBank, IDT, NEF, NHFC, and Provincial DFIs.
• • Water: TCTA, Rand Water, Umgeni Water, etc.
• • Other: Safcol, Alexkor, Mintek, PIC, Sasria etc.
KEY OBJECTIVES OF THE ACT :
1. Modernise the system of financial management in the public sector;
2. Enable public sector managers to manage, but at the same time be held more
accountable;
3. Ensure the timely provision of quality information; and
4. Eliminate the waste and corruption in the use of public assets.
5. Secures accountability and sound management of revenue, expenditure, assets and
liabilities of the institutions to which it applies
6. Achieve uniformity in how the Government departments manage their finances
PUBLIC FINANCE MANAGEMENT ACT
• Background and approach
• Gives effect to section 216(1) of the Constitution which requires
national legislation to establish a national treasury and prescribes
measures to ensure transparency and expenditure control in each
sphere of government, by introducing:
• generally recognised accounting practice;
• uniform expenditure classifications; and
• uniform treasury norms and standards.
PUBLIC FINANCE MANAGEMENT ACT
• The Act also gives effect to other sections in Chapter 13 of the
Constitution. These sections are:
• Section 213 that limits exclusions and withdrawals from the National
Revenue Fund through an Act of Parliament;
• Section 215 which notes that budgets and the budgetary process
"must promote transparency, accountability and the effective financial
management of the economy, debt and the public sector" and for
national legislation to "prescribe" budget formats for all the spheres of
government;
.
PUBLIC FINANCE MANAGEMENT ACT
OVERVIEW OF THE KEY STAKEHOLDERS
• Accounting Officer – HOD
• Executive Authority – Cabinet Member or MEC
• National Treasury – Minister and department responsible for financial and fiscal matters
TREASURY REGULATIONS
Public Finance Management Act Section 76
Extensions of Public Finance Management Act
Best practice management principles
Management and detailed procedures
Every time the Auditor-General releases a report on the state of organization and their compliance with proper financial controls, a
term such as “fruitless and wasteful expenditure” is bandied about.
Fruitless and wasteful expenditure
Expenditure which was made in vain and would have been avoided had reasonable care been exercised.
A transaction, event or condition which was undertaken without value or substance and which did not yield any desired results or
outcome.
Irregular expenditure
Irregular expenditure is expenditure other than unauthorized expenditure, incurred in contravention of or that is not in accordance
with a requirement of any applicable legislation.
It also includes expenditure in contravention of, or that is not in accordance with, a requirement of the supply chain management
policy, or any applicable by-laws.
Unauthorized expenditure
Expenditure that was incurred for a purpose for which it was not budgeted for; or expenditure that exceed the amount that was
budgeted
Is expenditure that is misdirected, or overspending
When it has occurred the legislator passes legislation to authorize it after the fact; or the responsible officer, may be the accounting
officer or the political head should reimburse the state
CLASS ACTIVITY
1. A government department spends R5 million on an international conference for officials. They book
business-class flights and 5-star hotels. However, the department already had a local training program
covering the same topics for free.
2. The Department of Education allocates R50 million to build a new school. However, after two years,
only one classroom is built, and the contractor vanishes with the money.
3. During COVID-19, a municipality receives R20 million to provide food parcels for struggling families.
However, an audit shows only R5 million was used, and the rest is unaccounted for.
4. A provincial premier’s office spends R2 million on a lavish birthday party using public funds, claiming it
was for a “stakeholder engagement event.
PUBLIC FINANCE MANAGEMENT ACT, 1999 (ACT 29 OF 1999) (AS AMENDED BY ACT NO. 29
OF 1999)
Promotes the objective of good financial management in order to maximise service
delivery through the effective and efficient use of the limited resources.
Regulates the management of finances in national and provincial government.
The Act clarifies the laws in relation to the National and Provincial Treasuries, the National
and Provincial Revenue Funds, and the National Budgets.
It also governs the management of finances in departments, public entities, Parliament
and the provincial legislatures, and constitutional institutions
KEY OBJECTIVES OF THE ACT
Key Objectives
Modernise the system of financial management in the public sector; Background and approach
Enable public sector managers to manage, but at the same time be held more Gives effect to section 216(1) of the Constitution which requires national legislation to
accountable; establish a national treasury and prescribes measures to ensure transparency and
Ensure the timely provision of quality information; and expenditure control in each
Key Policy Issues National Treasury
This Act assumes that the political head of a department (Cabinet Minister or a provincial Comprised of the Minister together with the national department responsible for financial
MEC) is responsible for policy matters and outcomes and fiscal matters
seeking Parliamentary (or provincial legislature) approval and adoption of the Must, through national legislation, determine uniform treasury norms and standards.
department's budget vote. Expected to monitor and enforce these norms.
Director General responsible for outputs and implementation of that budget and Provincial Treasuries-
accountable to Parliament Preparing and managing provincial budgets, and enforcing uniform treasury norms and
standards as prescribed by the National Treasury
Accounting Officers
Confers specific responsibilities on accounting officers:
Operation of basic financial management systems, including internal controls in
departments and any entities they control;
Ensure that departments do not overspend their budgets;
Report on a monthly and annual basis, including the submission of annual financial
statements two months after the end of a financial year; and
Publish annual reports in a prescribed format which will introduce performance reporting.
