association of public accounts committees (apac) budget formulation process: the role of...
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Association of Public Accounts Committees (APAC)
BUDGET FORMULATION PROCESS: The Role of Legislatures/PAC’s
Hon JT BeukesAPAC Chairperson
SADCOPAC Conference 2013Arusha, Tanzania
3 September 2013
RSA Budget Formulation Process: Background
The preparation of the Budget in South Africa is vested with the Executive Legislative Authority, i.t.o the Constitution of RSA (1996), is vested in Parliament
and Provincial Legislatures Sections 44 and 104 confers these powers Section151 confers legislative and executive powers to municipalities
Sections 73 and 119 states that: Only a Cabinet member or a Deputy Minister, or a member of committee or
Executive member, introduce a Bill …; BUT only the Executive member responsible for national financial matters may introduce a money Bill in the Assembly or Legislature.
A Money Bill is defined as A Bill that appropriates money or imposes taxes, levies or duties and may not deal with any other matter except a subordinate matter incidental to the appropriation of money or the imposition of taxes, levies or duties
The Legislative Sector In the RSA Developed a Standardised Oversight Model which seeks to: To detect and prevent abuse, arbitrary behaviour or illegal and unconstitutional conduct
on the part of the government and public agencies the government to account in respect of how the taxpayers’ money is used ensure that policies announced by government and authorised by parliament and
provincial legislatures are actually delivered
Introduction Budgeting in the RSA is known as Performance-based budgeting
as the Budget seeks to: Ensure the realization of policy objectives or effectiveness of
government towards achieving good economic and socio-economic outcomes
Ensure VALUE - FOR – MONEY meaning; economic, efficiency and effective use of the Country’s financial resources by Public Services
Ensure service delivery performance – the quality, quantity and urgency thereof – and its overall contribution towards the achievement of predetermined outcomes
The Budget Process involves various stakeholders; amongst others: Institutions supporting Democracy in the RSA e.g. the Financial and
Fiscal Commission (FFC) - a Constitutional Mandated organisation assisting the Executive and supporting the Legislative Authority
Public involvement by way of suggestions (from Civil Society and the broader public) to the Minister responsible for Finance
Public Involvement through Legislatures by way of Public Hearings
Regulatory Framework Governing the Budget in the Republic of South Africa
The Constitution of the RSA 1996: Promotes transparency, accountability and the effective financial management of the
economy, debt and the public sector Budgets MUST contain:
estimates of revenue and expenditure, differentiating between capital and current expenditure; proposals for financing any anticipated deficit for the period to which they apply; and an indication of intentions regarding borrowing and other forms of public liability that will increase public debt during
the ensuing year The Division of Revenue Act
equitable division of revenue raised nationally among the national, provincial and local spheres of government
The Appropriations Act Appropriates revenue to Public Service (Departments: Executive and Legislatures)
The Public Finance Management Act Provides for the efficient and effective use of public finances in South Africa
Budget Formulation process1. Receipt of revised policy objectives/priorities2. Strategic planning by Executive – Five year forecast planning3. Approval of Strategic Plan by Executive4. Revision of Medium Term Expenditure Framework (MTEF) –
three year budget projections5. Approval of MTEF by Executive6. Receive confirmation of annual budget allocation from Treasury7. Finalisation of Annual Budget8. Approval of Annual Budget by Parliament, legislature, Council9. Monitoring of Expenditure by Parliament, legislature, Council
through In-Year Reports (Monthly and Quarterly Expenditure reports) as well as Annual Report and Annual Financial Statement
PUBLIC SECTOR FINANCE MANAGEMENT REFORM MODEL
1. PLANNING AND FORMULATION STAGES 2. OPERATIONAL AND CONTROL STAGES (CURRENT YEAR)
3. ACCOUNTABILITY AND OVERSIGHT STAGES
POLICY OBJECTIVES
STRATEGIC PLANNINGRISK ASSESSMENT
MTEF1 – 2 - 3
BUDGET(MONTHLY / ANNUAL)
-------------------------------EXPENDITURE
----------------------------INCOME STATEMENT
----------------------------BALANCE SHEET
BUDGET(MONTHLY / ANNUAL)
-------------------------------EXPENDITURE
----------------------------INCOME STATEMENT
----------------------------BALANCE SHEET
FINAL COSTING
planned
MEASUR-ABLE
OUTPUTSGFS/SDDSGAAP/GRAP(ACCRUAL)
GFS/SDDSGAAP/GRAP(ACCRUAL)
ACCOUNTS(MONTHLY / ANNUAL)
------------------------------EXPENDITURE
------------------------------INCOME STATEMENT
--------------------------------BALANCE SHEET
ACCOUNTS(MONTHLY / ANNUAL)
------------------------------EXPENDITURE
------------------------------INCOME STATEMENT
--------------------------------BALANCE SHEET
achieved
MEASUR-ABLE
OUTPUTS
PROCUREMENT SUPPLY CHAINS
STOCKS/INVENTORIES
WORKINGCAPITAL
PLANNED RESULTS(DOCUMENTED)
REPORTED RESULTS(DOCUMENTED)ANALYSIS/
ACTION
INITIAL COSTING
INTERNAL CONTROLSIncl. risk and corruption controls
PERSON NEL EXPENSES
Extensive Budget Co-ordination process
Timeframe Activity
Jan Cabinet Lekgotla issues broad fiscal and budget priorities of government and issues a revised MTSF
Apr National dept’s receive National Treasury guidelines regarding budget preparation Provincial dept’s receive Provincial Treasury guidelines re budget preparation
May FFC submits DoR recommendations, BC considers FFC recommendations and makes preliminary DoR decision, N and P/depts receive preliminary DoR decision
May MinComBud discusses Medium Term policy and priorities, Ministerial letters sent to dept’s re policy priorities, PEC’s and Councils plan priorities.
May National dept.’s begin compiling MTEF budget proposals using MT policies and priorities issued via ministerial letters, and ito strategic plans finalized in January.
May Prov dept.’s begin MTEF budget proposals using MT policies and priorities and initial DoR proposals and as per MEC meetings. Dept’s strategic plans are also applied.
July Cabinet lekgotla re dept priorities.
Budget Co-ordination processby National and Provincial governments
DECISION-MAKING AND COORDINATION ACTIONS Timeframe Activity
Aug Nat dept.’s submit MTEF budget proposals to N/T and MTEC., Prov dept’s submit MTEF budget proposals to P/T’s and MTEC.
Aug N/T reviews budget submissions, N/T prepares supporting documentation, N/dept.’s prepare supporting documentation.
Aug Workshop reviews DoR and macro economic and fiscal frameworks., MinComBud reviews effects of DoR, macro economic and fiscal framework re Govt. priorities. N/dept.’s respond to N/T queries and comment. P/T’s submit prelim MTEF’s to N/T for MTBPS
Sept Budget Com meeting.
Sept N/dept.’s submit requests for program changes – to N/T , N/T evaluates and finalises these N/dept.’s requests.
Sept - Oct MTEC evaluates effectiveness and equitabilities of Dept’s spending allocations and plans. Makes recommendations. P/ MTEC’s evaluates P/dept’s spending allocations and plans. Makes recommendations.
Oct BC’s final decision of horizontal DoR. Extended Cabinet considers M/E and Fiscal framework and DoR in terms of government priorities.MinComBud considers macro economic and fiscal frameworks and DoR. Also considers MTEC recommendations. Extended Cabinet meets to discuss revised Memo on M/E, fiscal framework and DoR .N/dept.’s submit 3 year corporate plans and budgets of Public Entities – to N/T. N/T studies recommendations from MTEC hearings. MinComBud considers MTEF allocations to N/dept.’s. Final adjustments to N and P budgets MinComBud considers draft MTBPS. Cabinet briefed on MTBPS. MTBPS presented to Parliament.
Process of Legislating in South AfricaMinister/Executive Member tabling the Budget (Bill) in
Parliament/Legislatures – budget referred to relevant Committee
Appropriations/Finance (Budget) Committees deliberate on Budget
Budget Public Hearings ConductedInputs processed and consideredBill debated and adopted by Parliament/Legislatures
Committees of Parliament/Legislatures Committees examines budget proposals against
policy prioritiesAppropriations Committee appropriates the
nationally raised revenueProvincial Finance/Budget Committees examines
Provincial Budget proposalsLocal Government participates in the budget
process Parliament/Legislatures appropriates the budget
amongst Provinces and/or Departments
PAC’s Role in the Budget ProcessPAC Conduct In-year and after-the-fact
oversight focusing on expenditure against planned activities and budgets
PAC’s works closely with the Auditor-General
PAC also works with other Functional Portfolio Committees
PAC makes recommendations on expenditure patterns which is authorized at the House
Monitoring Of Expenditure
South Africa Developed a Legislative Sector Oversight Models which seeks to:evaluate of the efficacy of public service
programmes and the appropriateness of financial resource allocations and management
PAC’s and Portfolio Committees receiving and reviewing quarterly financials and performance
THANK YOU