July 2000

This ‘Best Practice Guide’ is the first in series of publications to assist Accounting Officers in dealing with the changes brought about by the Public Finance Management Act. One of the most important and immediate changes is the requirement to formalise in-year management, monitoring and reporting processes, as part of the broader improvements to the manner in which government finances are managed.

The PFMA promotes the need for in-year management of resources, and requires, with immediate effect, accounting officers to act as managers, and ensure effective in-year management mechanisms are in place. Accounting officers must monitor progress on the department’s operational plan (which includes the budget), and produce, consider and act on monthly and quarterly reports, which are to be submitted to the executive authority and the treasury. Systems and processes already exist for the monitoring and reporting monthly of budgetary performance, but accounting officers will have to scrutinise the (financial) information, including data on grants and transfers, before signing off on the reports required by the Act.

When considering in-year management, monitoring and reporting, it is easy to focus attention on the information systems that produce the reports, at the expense of the other elements in the process, particularly the starting point: the data that is the fundamental building block of the entire procedure, and also the need to make use of the output generated – the production of information is not an end in itself – managers must use it. This guide considers all aspects of the process in a user friendly manner, in order to encourage Accounting Officers to take their responsibilities seriously and improve the use of the resources entrusted to them.

The Guide is structured into four sections: an introduction which sets the context, PFMA requirements and some of the concepts involved, as well as an overview of the process. Section two considers the in-year reports themselves, including the mechanics of production (such as the necessary month-end procedures and the process of making projections), and this is followed by a consideration of the interpretation of the reports and instituting any remedial action which may be required (such as exercising virement). The final section considers the quality issues to be addressed in the coming years.

Maria Ramos

Director-General, National Treasury