“Toning” of the SCOA

1. “Toning” of the SCOA Provincial and National Roadshows February & March 2008 Presented by: SCOA Committee National Treasury

2. Aim of the project • To improve the ability to extract meaningful data for monitoring Government expenditure • How? • Adjustments to BAS to modify specific areas in the Standard Chart of Accounts (SCOA)

3. SCOA review focus areas • Improved reporting on infrastructure expenditure • Alignment of programme structures between budget documentation and BAS • Recording of the economic classification in an appropriate segment in the chart • Classification and categorisation of Goods & Services item structure • Improvement of the functional classification • Monitoring Science and Technology Activities

4. Infrastructure spending • Substantial increase in infrastructure budgets • Reporting on Infrastructure spending difficult • Must be in a position to extract IRM data from BAS • SCOA Project segment data is not standardised • Agreed proposal • Standardise structure in the BAS project segment • New segment to be implemented on 1 April 2008 • Provincial treasuries’ to assist during implementation

5. Alignment of programme structures • Budget programme structures misaligned to the structures in the financial system • Duplication of programmes on the system • Programme structures from previous financial years active - can be posted against • Unable to use functionality in IYM model to upload actual spending data directly

6. 27 Active Programmes on BAS4 Programmes in BudgetNumerous duplications

7. Alignment of programme structures • From 1 April 2008NT will lock the highest levels of objective in BAS • Complete alignment with programme structures in the budget will be ensured Process followed: • Dec 2007 – Programme structures to BAS team to create database • Jan 2008 – Structures loaded on BAS • Feb 2008 – Departments create substructures & PERSAL codes • End Feb 2008 – Structures verified with appropriation bills and budget documentation and signed-off by provincial treasuries

8. Good & Services item classification • Detailed analysis of existing Goods & Services items indicates a review is required • 80% of spending occurs on 10 high level items • Inventory & Consultants largest spending items, with limited sub level details available • Meaningful data for policy analysis requires detail • Streamlining of SCOA item list commenced via CFO forums

9. Recording economic classification • Misconception that SCOA Item list correspond to Economic Reporting Format (ERF) • ERF recorded across different segments of BAS • Classification conflicts exist within the structure, i.e. Objective vs. Item • Item list often only source of data for completing reports and budget submissions • Economic classification creates duplication in objective

10. Functional classification • Govt expenditure measured according to internationally recognised functional categories • Functional classification a subset of BAS objective structure • To improve quality of classification, redundant activities must be cleared from objective segment • Functions will be assigned to the lowest level of each objective at the beginning of each financial year by National Treasury

11. Monitoring Science & Technology • Cabinet approved S&T framework requires annual expenditure plan • NT to provide platform for data capture within budget process and financial system • Most S&T spending via projects, therefore the intention to identify these projects during budget • Monitor project implementation through indicators in BAS

12. Benefits • Improved data flow and data quality • Annual Financial Statements, IYM, Infrastructure Reporting, etc. • Clean up of the system • Redundant items and objectives, Suspense accounts, BAS User review, Suppliers database • Improved economic classification • Improved systems performance • Recording of own account transactions

13. Impact • Current database not affected • No impact on 2007/08 financials • BAS re-implementation required • Two new segments added • Six of seven segments standardised • Departments must provide lower level details

14. Change management • Training • Road shows and training in Jan - March, including Auditors • Review of SCOA definitions and training manuals and process • Updated classification guides and circulars • Call centre and classification committee to provide rules and classification support • Assistance with systems changes

15. Assistance with systems changes • BAS, LOGIS, PERSAL systems interface updated centrally • Debt accounts converted • including debt type and regional parameters • Entities converted, suppliers and PERSAL • Suspense and control accounts converted • All systems parameters to be converted • Only departmental parameters to be captured by departments, in accordance with a detailed BAS implementation checklist (website:BAS.pwv.gov.za)

16. BAS Systems Controller • Create sub structures in Objective and the Responsibility structure • Link personnel to BAS • New function 6/10/23 (BAS Notice 265) will assist in making this an easy process • Create user ID’s • Create sub structures for Project, Asset and Region • Provide for interface with sub systems not controlled by National Treasury • Activate relevant accounts • Process can start once database is distributed • First week in February • Monitored by Systems Team

17. Summary • Implementation date – 1 April 2008 • BAS re-implementation required • process can start early February • Numerous conversions done by systems team • Impact mainly on departmental BAS Systems Controller • Systems road shows January • Further 1 day workshops in March, 3 day SCOA training from May • Task Team looking at comments and proposals • Project updates will be communicated via the TCF, CFO Forums and the BAS User Forum

18. Questions

19. Segment DiscussionHighlights of the changes to the different segments

20. Systems Structure (BAS)

21. Fund Segment • What source of funding will be used for the transaction? • Main sources: • Voted funds • Earmarked allocations • Conditional Grants • Inter Departmental Services • New balance sheet accounts to keep track of inter departmental service and advances

22. Objective Segment • Against which programme / activity should the transaction be recorded? • Programme budget of department • Centrally locked Objective Structure aligned to budget document • Departments to capture lower levels • Departments to link personnel • Need to verify sub-programme details • Trading Entities • Departments to create sub structures

23. Responsibility Segment • Identify cost centres • To which cost centre should the transaction be allocated? • Link to organisational structure • Not standardised – Treasuries can structure at own discretion

24. Item Segment • What is the item that is being bought? • Review based on history data • Changes • More detail on Consultants and Inventory • Remove duplication of asset categories and minor assets • Removed all unused items • Restructured the levels to provide better summaries

25. Asset Category Segment • Does the transaction relate to an asset and if so, which category of asset? • Provide for details of assets • Eliminates duplication in Item Segment • Allows for capturing of own account transactions • Alignment with the Asset Management Guide

26. Project Segment • Does the transaction relate to a specific project, and if so what type of project? • Economic classification • Project vs. Stand alone • Projects – Infrastructure, Infrastructure transfers, non-infrastructure • Identify maintenance, upgrade, refurbishment and new

27. Regional Segment • In which region does the service get delivered? • GIS of Government Spending • Look at service delivery perspective • Broken down by Municipality • Provide for general spending not related to a specific Municipality • Provide for general categories at provincial and district level

28. Questions