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30 November 200 5

Managing complexity through a “good” classification system CABRI 2005 Budget Reform Seminar Maputo. 30 November 200 5. Presented by: Hennie Swanepoel Chief Director: Public Finance Statistics National Treasury South Africa. Why focus on classification reform?.

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30 November 200 5

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  1. Managing complexity through a “good” classification systemCABRI2005 Budget Reform SeminarMaputo 30 November2005 Presented by: Hennie SwanepoelChief Director: Public Finance Statistics National Treasury South Africa

  2. Why focus on classification reform? • Part of a good governance reform agenda • Ensuring improved service delivery through: • Availability of clear, relevant financial information for management purposes • Improved policy making & monitoring implementation • Enhanced executive oversight • Encouraging greater accountability by providing properly classified and standardised financial data • Economic analysis

  3. Elements of a “good” classification system • Clarity and accessibility • Useful management information • Legislative compliance • Relevant economic aggregates • International compliance (GFS & IFAC) • Include all aspects of accountability cycle • Full coverage of all government accounts

  4. Challenges • Change management • Inconsistent classifications • Complicates transacting • Inappropriate information included • Financial systems constraints • Different accounting conventions • Harmonization of terminology

  5. Stakeholders • Parliament / Legislatures • Financial practitioners • Departments and entities / agencies • National Treasury • Central Bank (SA Reserve Bank) • Statistical agency (Statistics SA) • General public • Research institutions • International community

  6. SA Case Study • Manual GFS compilations • Pilot GFS chart • Consultation process • Technical design • New economic reporting format and SCOA 1998 1999 Since October 2001 August 2003 01 April 2004 • How? • Introduce new budget reporting format • Introduce new chart of accounts • Provide new financial statement formats

  7. Structure of classification system Five Segments: • Vote / Fund • Programme / Objective • Responsibility / Cost - centre • Item • Project

  8. Classification considerations

  9. Classification considerations (contd.)

  10. Managing change! • Detailed training program – 6 000 trained • Detailed classification guides • Call centre to log classification questions • Classification committee to provide rules and classification support • Classification circulars to provide guidance • Website • Metadata software

  11. Key Lessons • Must be a top-down demand-driven process • Integrate budgeting and accounting systems • Include key stakeholders in design phase • Decide on guiding principles • Keep it simple! – balance between detail and aggregation • Not a quick process • Ensure comprehensive design phase – difficult to change once implemented • Some flexibility required for future demands • Include only what should be included

  12. Managing complexity through a good classification systemThe EndQuestions? 30 November2005 Presented by: Hennie SwanepoelChief Director: Public Finance Statistics National Treasury South Africa

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