FINANCE DIRECTORATE SHAREHOLDING MANAGEMENT DEPARTMENT
MUNICIPAL ENTITY QUARTERLY NEWSLETTER
As parent municipality to the municipal entities we aim to keep our municipal entity boards of directors
and staff abreast of all current news, legislation and policies directly affecting the municipal entities. This
will enable directors to be continuously informed as well as ensuring that we meet the legislative
requirement as parent municipality to ensure that both the municipality and the municipal entity comply
with the Municipal Systems Act, the Local Government: Municipal Finance Management Act,
Companies Act, Corporate Governance and any other applicable legislation as well as keeping the
entity informed of any relevant information.
2013/2014 Quarter 4: April 2014 – June 2014, ISSUE NO. 29
LOCAL GOVERNMENT LEGISLATION
MUNICIPAL FINANCE MANAGEMENT ACT
MUNICIPAL REGULATIONS ON FINANCIAL MISCONDUCT PROCEDURES AND CRIMINAL PROCEEDINGS:
The Minister of Finance has, in terms of sections 168 and 175, of the Local Government: Municipal Finance
Management Act, 2003 (Act No. 56 of 2003), and acting with the concurrence of the Minister of Cooperative
Governance and Traditional Affairs, has Issued regulations that deal with financial misconduct and regulates the
procedures that must be followed by municipalities and municipal entities.
The Regulations are available on the National Treasury website through the following link:
http://mfma.treasury.gov.za/RegulationsandGazettes/Documents/Promulgated%20Regs.pdf
MUNICIPAL REGULATIONS ON STANDARD CHART OF ACCOUNTS
The Minister of Finance has, in terms of sections 168 and 175, of the Local Government: Municipal Finance
Management Act, 2003 (Act No. 56 of 2003), and acting with the concurrence of the Minister of Cooperative
Governance and Traditional Affairs, has Issued regulations that deal with the introduction of a standard chart of
accounts for local government and all municipal entities.
The preamble of the Regulations states:
“Section 216 of the Constitution of the Republic of South Africa, 1996, provides that national legislation must prescribe
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. The
Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003), determines those measures for
the local sphere of government and enables the Minister of Finance to further prescribe by regulation such measures
in terms of section 168 thereof. The National Treasury is responsible for enforcing compliance with such measures, in
addition to those functions assigned to it in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999).
The National Treasury must compile national accounts incorporating all three spheres of government. Uniform
expenditure classifications have already been established and implemented for national and provincial government
departments. These Regulations propose segments and a classification framework for the standard chart of
accounts to be applied in local government in similar form to that implemented for national and provincial
government departments. In order to enable the National Treasury to provide consolidated local government
information for incorporation in national accounts, national policy and other purposes, it must obtain financial
information from individual municipalities. Currently, each municipality manages and reports on its financial affairs in
2013/2014 Quarter 4: April 2014 – June 2014, ISSUE NO. 29
accordance with its own organisational structure and unique chart of accounts. The result is a disjuncture amongst
municipalities and municipal entities and between municipalities and the other spheres of government as to how
they classify revenue and expenditure and consequently report thereon. This compromises transparency, reliability
and accuracy throughout the planning and reporting process and impedes the ability of national government to
integrate information and to formulate coherent policies in response to the objectives of local government.
Therefore it is necessary for the Minister of Finance to specify national norms and standards for the recording and
collection of local government budget, financial and non-financial information which will include in some instances
the specification of information required for national policy coordination and reporting. This will result in an improved
understanding of the role of local government in the broader national policy framework and linkage to other
government functions.
The Municipal Budget and Reporting Regulations, 2009, provide for the formalisation of norms and standards in order
to improve the credibility, sustainability, transparency, accuracy and reliability of municipal budgets. The prescribed
budget formats provide the framework for the identification of the categories of municipal financial and nonfinancial information required in developing municipal budgets. A key objective of the proposed Regulations is to
enable the alignment of budget information with information captured in the course of the implementation of the
budget.
Additional key objectives, which also illustrate the potential benefits, include(a) improved data quality and credibility;
(b) the achievement of a greater level of standardisation;
(c) the development of uniform data sets critical for 'whole-of-government' reporting;
(d) the standardisation and alignment of the 'local government accountability cycle' by the regulation of not only
the budget and in-year reporting formats but also the annual report and annual financial statement formats;
(e) the creation of the opportunity to standardise key business processes with the consequential introduction of
further consistency in the management of municipal finances;
(f) improved transparency, accountability and governance through uniform recording of transactions at posting
account level detail;
(g) enabling deeper data analysis and sector comparisons to improve financial performance; and
(h) the standardisation of the account classification to facilitate mobility in financial skills within local government
and between local government and other spheres as well as the private sector and to enhance the ability of local
government to attract and retain skilled personnel.
These Regulations apply to all municipalities and municipal entities and indicate its applicability and relevance to
each specific municipal environment while accommodating organisational uniqueness and structural differences.
These Regulations also proposes the specification of minimum business process requirements for municipalities and
municipal entities as well as the implementation of processes within an integrated transaction processing
environment."
These Regulations are available at
http://mfma.treasury.gov.za/RegulationsandGazettes/MunicipalRegulationsOnAStandardChartOfAccou
ntsFinal/Documents/01.%20Municipal%20Regulations%20on%20Standard%20Chart%20of%20Accounts%20
Gazette%20No%2037577.pdf
Please contact Louise Muller (021 400 3940) or Richard Wootton
(021 400 2701) if you have any queries in respect of this newsletter.
Although every effort is made to check the accuracy and quality of the
information supplied, The City cannot be held responsible for any errors
that may arise.
Copyright: City of Cape Town 2013. All rights r eserved. No part of this newsletter
may be reproduced or transmitted in any form without written permission from the
City of Cape Town, Finance Directorate, Shareholding Management Department.
GENERAL LEGISLATION
PROTECTION OF PERSONAL INFORMATION ACT
As reported in Newsletter 27, the POPI Act has been promulgated but the commencement date has yet to be
determined. The POPI Act has far reaching implications for any organization and the effects of the Act need to be
closely studied.
The Institute of Directors has produced a “Quick Guide to POPI for Directors”.
The guide is available at:
http://c.ymcdn.com/sites/www.iodsa.co.za/resource/collection/DD8B591E-3D00-48D5-B2E9663FEDCFF131/2014_QUICK_GUIDE_TO_PoPI_FOR_DIRECTORS.pdf
Institute of Directors SA sets wheels in motion for update of King III
“A task team convened by the King Committee on Corporate Governance has recommended that the King Report
on Governance for South Africa 2009 (King III) be updated. The task team came to the conclusion that whilst the
basic content and philosophies of King III would remain in place, there was room for the Report to be enhanced to
assist with accessibility and implementation, particularly for smaller entities and non-profits.
The Institute of Directors in Southern Africa (IoDSA) is the custodian of the King reports and the holder of their
copyrights. The King reports have achieved international recognition and have helped place South Africa in the
vanguard of progressive corporate governance.
Ansie Ramalho, Chief Executive of the IoDSA, who lead the task team says that a number of factors influenced the
task team’s ultimate recommendation for an update of King III. "While listed companies are applying King III, we note
that non-profit organisations, private companies and entities in the public sector have experienced challenges in
adapting King III to their particular circumstances. The enhancement will aim to make South Africa’s authoritative
guide on corporate governance more accessible to all types of entities and sectors,” she says.”
GENERAL
APPOINTMENT OF NEW CEO: CAPE TOWN INTERNATIONAL CONVENTION CENTRE
CTICC has announced the appointment of Julie-May Ellingson as its new CEO. Ms Ellingson, holds a Master’s Degree
in Town & Regional Planning from the University of KwaZulu-Natal and a Bachelor of Development Administration
Degree majoring in economics, and is the current of CEO of the Durban International Convention Centre. Julie-May
Ellingson will take up her position from 1 September 2014.
THANK TO RASHID TOEFY – OUTGOING CTICC CEO
The Shareholding Management Department of the City of Cape Town would like to thank Rashid for his tireless and
enthusiastic contribution to the success of the CTICC over the last seven years, particularly in respect of his
unwavering commitment to the expansion project. We wish him well in the future. Rashid, may all your future plans
be “hairy and audacious” – and successful!
Please contact Louise Muller (021 400 3940) or Richard Wootton
(021 400 2701) if you have any queries in respect of this newsletter.
Although every effort is made to check the accuracy and quality of the
information supplied, The City cannot be held responsible for any errors
that may arise.
Copyright: City of Cape Town 2013. All rights r eserved. No part of this newsletter
may be reproduced or transmitted in any form without written permission from the
City of Cape Town, Finance Directorate, Shareholding Management Department.