By V Misser

INTRODUCTIONINTRODUCTION

•financial record management;financial record management;

•monitoring and evaluating monitoring and evaluating spending trends;spending trends;

•financial management financial management systems;systems;

•financial risk management;financial risk management;

•the compilation of budgets; the compilation of budgets; andand

•managing virements. managing virements.

The key objectives of the Act The key objectives of the Act may be summarized as being may be summarized as being

to:to:•Modernize the system of financial Modernize the system of financial

management in the public sector; management in the public sector;

•Enable public sector managers to Enable public sector managers to manage, but at the same time be manage, but at the same time be held more accountable; held more accountable;

•Ensure the timely provision of quality Ensure the timely provision of quality information; and information; and

•Eliminate the waste and corruption in Eliminate the waste and corruption in the use of public assets.the use of public assets.

FINANCIAL POLICIES AND FINANCIAL POLICIES AND REGULATORY REGULATORY

COMPLIANCES: THE BASIS COMPLIANCES: THE BASIS FOR BETTER FINANCIAL FOR BETTER FINANCIAL

MANAGEMENTMANAGEMENT

FINANCIAL FINANCIAL ACCOUNTABILITYACCOUNTABILITY

This requires national This requires national legislation to "establish a legislation to "establish a national treasury and national treasury and prescribes measures to ensure prescribes measures to ensure transparency and expenditure transparency and expenditure control in each sphere of control in each sphere of government, by introducing:government, by introducing:

• generally recognized accounting generally recognized accounting practice; practice;

• uniform expenditure classifications; and uniform expenditure classifications; and

• uniform treasury norms and standards.uniform treasury norms and standards.

UNDERSTANDING THE UNDERSTANDING THE DYNAMICS OF FINANCIAL DYNAMICS OF FINANCIAL

MANAGEMENTMANAGEMENT

Financial management Financial management includes: includes:

•financial planning and financial planning and budgeting; budgeting;

•financial accounting;financial accounting;

•financial analysis;financial analysis;

•financial decision-making; and financial decision-making; and

•action.action.

Financial Planning Is About:Financial Planning Is About:

• Making sure that the organisation can Making sure that the organisation can survive;survive;

• making sure the money is being spent in the making sure the money is being spent in the most efficient and effective way (value for most efficient and effective way (value for money);money);

• making sure that the money is being spent to making sure that the money is being spent to fulfil the objectives of the organisation; and fulfil the objectives of the organisation; and

• being able to plan for the future of the being able to plan for the future of the organisation in a realistic way.organisation in a realistic way.

UNDERSTANDING UNDERSTANDING FINANCIAL MANAGEMENTFINANCIAL MANAGEMENT

Process Description

Financial Planning Budgeting Setting targets for

monitoring and evaluation

Assessing the current resources position, linking resources to operational plans and determining a budget

Drawing up a budget which will guide how money is spent in order to achieve the goals set. Setting targets for revenue and expenditure Setting targets for efficiency and equity.

Resource allocation Allocating resources across sections or divisions within an organization

In-year managementOperating, monitoring,

safeguarding

Ensuring that funds are spend according to financial plan and according to norms and standards set by Treasury or Government Regulations and Prescripts.

Making sure that there are good internal measures and monitoring that these are applied.

Evaluation:Reviewing and reporting

Linking expenditure to service outputs and analyzing with respect to equity, efficiency and sustainability.

Drawing up an annual report Identifying key strategic issues for next annual Strategic/Business Plan

THE FINANCIAL THE FINANCIAL MANAGEMENT MANAGEMENT

CYCLECYCLE

THE FINANCIAL THE FINANCIAL MANAGEMENT CYCLEMANAGEMENT CYCLE

Planning and Budgeting

Recourse

Allocation

In-year management:

Operating,

monitoring,

Evaluation and reporting

•Where funds are spent Where funds are spent (Responsibility area)(Responsibility area)

•Why funds are spend Why funds are spend (programme)(programme)

•What the money is being What the money is being spend on (The objective) spend on (The objective)

•What item the money is What item the money is being spend onbeing spend on..

BUDGETINGBUDGETING

Financial management Financial management includesincludes

•financial planning and budgeting, financial planning and budgeting,

•financial accounting financial accounting

•financial analysis,financial analysis,

•financial decision-making and financial decision-making and actionaction

•Who is Who is responsibleresponsible for the for the process?process?

•Who will Who will draft draft the budget?the budget?

•Who will be Who will be consultedconsulted in in drawing up the budget?drawing up the budget?

•WhenWhen should the budget should the budget process start?process start?

•Who will Who will approve approve the budget?the budget?

•HowHow will the budget will the budget be be monitoredmonitored and controlled? and controlled?

THE PLANNING AND THE PLANNING AND BUDGET CYCLEBUDGET CYCLE

2: Identifying resource needs what resources (exactly) are needed to carry out the plans? What will this cost?

3: Implementation

of plans, and monitoring the implementation

1: Planning and setting objectives

What will be done, by whom

and when?

Budgets are useful for the Budgets are useful for the following reasons:following reasons:

• It forces management to plan thereby It forces management to plan thereby reducing the number of opportunities reducing the number of opportunities for “off the cuff” decision.for “off the cuff” decision.

• If the budget process is effective, If the budget process is effective, staff may feel motivated to work hard staff may feel motivated to work hard to achieve both strategic and to achieve both strategic and operational objectives.operational objectives.

• It allows managers to control It allows managers to control business activities by comparing business activities by comparing actual outcome to the budget.actual outcome to the budget.

• It provides a basis by which It provides a basis by which performance can be measured.performance can be measured.

CHALLENGES CHALLENGES THAT WE FACE THAT WE FACE IN EXECUTING IN EXECUTING

OUROUR TASKSTASKS

CONCLUSIONCONCLUSION

BIBLIOGRAPHBIBLIOGRAPHYY

Thank YouThank You