Freeman Nomvalo Accountant-General 29 August 2007

1. PROGRESS REPORT ON IMPLEMENTATION OF THE PUBLIC FINANCE MANAGEMENT ACT Freeman Nomvalo Accountant-General 29 August 2007 National Treasury

2. CONTENT • Introduction • Internal Audit & Audit Committees • Risk Management • Internal Controls • Asset Management • Supply Chain Management • Performance Information • Other PFMA related initiatives • Actual Expenditure for 2006/2007 • Conclusion

3. INTRODUCTION • Implementation of PFMA contributed towards enhancement of financial management and accountability • Ongoing PFMA monitoring processes and assessment of audit reports of Auditor-General • Certain disciplines of financial management still pose challenges

4. INTERNAL AUDIT FUNCTION • Survey conducted on the functioning of internal audit activities • Several vacancies still exist within internal audit units • Position of chief audit executive not at appropriate level • Hosted the third public sector internal audit indaba • External service provider appointed to conduct quality assurance reviews

5. RISK MANAGEMENT • Risk Management tool rolled out from August 2006 has been enhanced. • Risk Management training to various public sector officials • Risk Management forum established proves to be successful in generating interest • Hosted a risk management symposium for all three spheres of government

6. INTERNAL CONTROLS • Proper and effective internal controls are critical for management to meet PFMA requirements • Progress with finalisation of internal control framework slower than expected. • Outcomes of 2006/2007 audit process will be used to update the framework • Further enhancement of the capability model in accordance with the South African public sector environment

7. ASSET MANAGEMENT • Departmental asset management plans developed and implemented since 2005/2006 • Ongoing engagement with departments to address and resolve problems • High turnover of experienced and trained asset management personnel • Reconciliation between asset registers and financial reports remain a problem • Provide for additional reports and information on existing systems

8. SUPPLY CHAIN MANAGEMENT • Ongoing engagement with all organs of state regarding implementation of supply chain management reforms • All non-transversal contracts devolved to accounting officers • In process to align Preferential Procurement Policy Framework Act with the Broad-based Black Economic Empowerment Act • Progress with implementation of strategic sourcing

9. PERFORMANCE INFORMATION • Framework for managing performance information • Improved accountability and transparency through timely, accessible and accurate information • Facilitate easy auditing of performance information by auditors • Identify performance indicators for tracking service delivery against pre-determined indicators • Guides and training manuals to support implementation of framework

10. OTHER PFMA RELATED INITIATIVES • Integrated financial management system • Implementation of generally recognised accounting practice • Early warning report • Monthly management reports • Provincial budget preparation and implementation • Financial distribution and capital asset policies • Training outside public practice (TOPP) programme

11. ACTUAL EXPENDITURE FOR 2006/2007 FINANCIAL YEAR FROM NATIONAL REVENUE FUND 1) 1) Unaudited figures

12. ACTUAL EXPENDITURE FOR 2006/2007 FINANCIAL YEAR FROM NATIONAL REVENUE FUND

13. ACTUAL EXPENDITURE FOR 2006/2007 FINANCIAL YEAR FROM NATIONAL REVENUE FUND

14. ACTUAL EXPENDITURE FOR 2006/2007 FINANCIAL YEAR FROM NATIONAL REVENUE FUND

15. CONCLUSION • Initiatives are consistent with National Treasury’s responsibilities i.t.o. section 6(2)(d) of the PFMA • Committed to exercise its enforcement and oversight responsibilities • Accounting Officers / Authorities remain the main role-players to promote and ensure effective financial management within their institutions