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SESSION 1 INTRODUCTION TO THE ECONOMIC REPROTING FORMAT (ERF) AND SCOA

SESSION 1 INTRODUCTION TO THE ECONOMIC REPROTING FORMAT (ERF) AND SCOA PRESENTED BY: NATIONAL TREASURY. WHAT IS ERF AND SCOA?. Economic Reporting Format (ERF) New budget reporting format As prescribed in the guidelines (Blue Book) Introduced this new budget format in 2004

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SESSION 1 INTRODUCTION TO THE ECONOMIC REPROTING FORMAT (ERF) AND SCOA

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  1. SESSION 1 INTRODUCTION TO THE ECONOMIC REPROTING FORMAT (ERF) AND SCOA PRESENTED BY: NATIONAL TREASURY

  2. WHAT IS ERF AND SCOA? • Economic Reporting Format (ERF) • New budget reporting format • As prescribed in the guidelines (Blue Book) • Introduced this new budget format in 2004 • Replaced old Standard Item Classification • In line with international best practice • Standard Chart of Accounts • New structure of government accounts • Setup of the general ledger of government • Translates the budget format to financial systems structure

  3. WHY A NEW ERF? • Old formats outdated • Standard items – Inappropriate management info • Items like Stores and livestock and general items like Administrative Expenditure • Not enough detail on use of resources • Part of Public Sector Budget Reform • Part of a process to modernize accounts • Process that started in 1999 with the PFMA • Providing detail on outputs produced • Improve accountability in the public sector • More detail provided on spending activities • Better information for day-to-day management • Standardization ensure comparability

  4. WHY A NEW ERF? • Better quality information to legislatures • Reinforce legislature’s oversight role • Single classification standard • Used throughout the government sector • Compliance to international reporting standards • Government Financial Statistics (GFS) classification • International Federation of Accountants (IFAC) standards – IPSAS • Special Data Dissemination Standard (SDDS)

  5. DESIGN PRINCIPLES • In line with Constitution • Treasury to prescribe classification • It is clear, user friendly and accessible • Terminology easy to understand • Standardised with clear definitions provided • Data accessible through MISystems • It is transparent and promotes accountability • Provides details on items purchased • Easier to calculate relevant economic variables • for e.g. GDP, Governments contribution to capital formation • GFS tables can be extracted easily • Ensuring international reporting compliance

  6. WHAT IS THE SCOA? • Standardised Chart of Accounts • New structure of general ledger accounts of government • Effectively a list of receipts, payments and balance sheet items • Accounts correspond to ERF requirements • Budget format mirrored in the financial system by SCOA • SCOA provides detailed breakdown of categories in the budget format

  7. WHAT IS THE SCOA? • Implemented within the financial systems • Mainly developed within the BAS environment • Mappings to LOGIS and PERSAL to assist in capturing transactions • Mappings to other systems like FMS2, Walker, etc. • Controlled by National Treasury • 6 of the 7 segments standardised • Managed by NT via SCOA Committee • Departments control the lower levels

  8. FINANCIAL SYSTEMS FOR ERF AND SCOA

  9. DESIGN PRINCIPLES • Good governance and financial practice • Aligned to legislative requirements • Provides managers with management information • Complies with economic and accounting standards (GFS,GRAP,ASB,IPSAS) • Satisfies reporting requirements of stakeholders • IYM reporting, Infrastructure, AFS, etc • Ensure that data is available for any type of reporting • Allows for cash and accrual accounting • Complies with current cash accounting requirements • Paves the way for a move to accrual accounting in the future

  10. WHO USES SCOA? • Budget office officials • Internal in departments • Also national and provincial treasury officials • Accounting officers • Provided with a view of what is happening to departmental budget • Accounting clerks • Economic Analysts • Statisticians

  11. MACRO-LEVEL BENEFITS • Improved quality of information • Already dramatic improvement after 2004 • Hoping to see further improvements after 2008 • Increased efficiency in extracting information • Structures allow for standardised reports in BAS • Automated IYM, IRM, etc. • Positive public perception • Comparable financial information • Across departments, provinces, etc • Standardised financial information

  12. MICRO-LEVEL BENEFITS • Less duplication of accounts • User-friendly system • Easier to audit • Better management information • Focus on expenditure management • Standardised process of transacting • Job satisfaction and transfer of skills

  13. 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

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