SESSION 11 ITEM SEGMENT PRESENTED BY: NATIONAL TREASURY

1. SESSION 11 ITEM SEGMENT PRESENTED BY: NATIONAL TREASURY

2. CONTENTS • Receipts • Transfers and subsidies • Payments for capital assets • Transactions in assets in liabilities

3. RECEIPTS • Removal of asset classes for: • Sales of goods <R5000 • Sales of capital assets • Rental of capital assets • Duplication of detail asset categories have been removed from the item to the asset segment • Adding accounts for interest earned on Exchequer Account – NT • Only for the use of NT to monitor specific interest received on the Exchequer Account • Adding E-NATIS transaction fees • Addition to administrative fees: licences or permits: road and transport licences as requested by transport cluster • Additions to the penalties category • Late payments on motor vehicle licenses added • Relocation of labour union fees • Labour union fees reclassified into the category fines as a posting level item

4. TRANSFERS AND SUBSIDIES • Unused items removed • Relocation of names of provinces and municipalities to Regional Segment • Municipal names moved to Regional Segment • Done for equitable share, conditional grants, vehicle licenses and rates and taxes • Removal of items for RSCL • RSCL discontinued • No longer budget for RSCL • NT should be contacted if there is backdated payments for activation of items • National and Provincial entities split in the chart as per PFMA

5. TRANSFERS AND SUBSIDIES • Provincial public entity pre-descriptor removed • E.g. Free State and Kwa-Zulu Natal Tender Board • Details to be selected in the regional segment • Enhancement of the transfers to households category • Provide for : injury on duty, post retirement benefits to households, severance packages and social benefits to local recruited staff and household social security payments (including social assistance grants) • Inclusion of post-retirement benefits to the households category • Previously classified as compensation of employees: social contributions • Reclassified as transfers to households in line with international classification standards

6. AUDIENCE QUESTION • What is a transfer and when will it be recorded in the financial system of a government department? • Transfers and subsidies include all unrequited payments made by the government unit. A payment is unrequited provided that the government unit does not receive anything of similar value directly in return for the transfer to the other party. Examples of transfers will be social security benefits paid to households, fines, penalties, compulsory fees and compensation for injuries or damages paid to another unit.

7. AUDIENCE QUESTION • How would a department allocate amounts payable to insurance companies for insurance premiums taken on assets in terms of Treasury Regulation 12.1.2? • In terms of international classification standards non-life insurance premiums are recorded as transfers and not as payments for goods and services because the party who will be making the payment will not be sure if they will receive any benefits for the payment and it may also not bear any relation to the premium that was paid. In the standard chart of accounts the payment will be recorded under transfers to private enterprises other transfers, non-life insurance premiums TR 12.1.2 BAS segment code 1976

8. PAYMENTS FOR CAPITAL ASSETS • Detailed immovable asset classes moved to Asset Segment • Item segment only consist of the one item for ‘buildings and other fixed structures’ • Monitoring of infrastructure is a priority of government • Will be monitored as a combination of item, asset and project segments when reports are drawn • Movable asset classes remain • Separate identification of assets purchased subsequent to an immovable asset • E.g. Items purchased into own account capital construction project e.g. building • Stand alone purchase of a movable asset • Alignment of classes with asset management guide • Do not replace asset management guide • PURCAPASS can now be better aligned and verified with asset registers of departments • Asset classes on stand alone vs. projects and own account construction • Amendment provide for recording • More details on assets will be discussed as part of the asset segment presentation

9. ASSETS, LIABILITIES AND NET ASSETS • This category Records all: • Balance sheet transactions and cater for financial assets and financial liabilities of national and provincial departments • Assets, current and non-current • Includes for e.g. bank accounts, prepayments and advances and receivable accounts and are usually debtor related accounts • Liabilities, current and non current • Includes for e.g. payables, salary control and conversion accounts and are usually creditor related accounts • Net assets • Includes for e.g. capitalisation reserve accounts, accumulated funds, operational funds for open and closing of financial year transactions

10. ASSETS, LIABILITIES AND NET ASSETS • Changes: • Relocation of short term investments • Short term investments previously with commercial banks and CPD accounts were reclassified from ‘investments other than shares’ to cash and ‘cash and cash equivalents’ • Relocation of claims recoverable codes • Prepayments and advances were moved to the receivables category • Regrouping and relocation of disallowance codes • Disallowance codes were grouped together as recoverable expenditure under the category receivables

11. For any additional questions or issues for clarification, please contact the National Treasury SCOA Technical Committee at: • Call centre: (012) 315 5311 • E-mail: scoa@treasury.gov.za • Website: http://scoa.treasury.gov.za