A multi-dimensional classification framework providing the method and format for recording and classifying financial transaction information in the general ledger forming part of the books of account containing a standard list of all available accounts.
Objective of mSCOA: To provide for a national standard for the uniform recording and classification of municipal budget and financial information at a transactional level by prescribing a standard chart of accounts for municipalities and municipal entities.
mSCOA is made up of seven unique segments with their respective definitions, namely:
“Does the transaction relate to a specific project and if so, what type of project”;
“Against which function or sub-function should the transaction be recorded?”
Municipal Standard Classification:
“Against which organizational vote or sub-vote should the transaction be recorded?”
“What is the type and nature of the income or expenditure?”
“Against which source of funding is the payment allocated and against which source is revenue received?”
“Which geographical area is deriving the benefit from the transaction?”
“Provides for the redistribution of primary costs between functions?”
1. Who are we
We have a team of the National Treasury & IMFO accredited facilitators. The list of preferred service providers can be verified on the National Treasury and IMFO website regarding mSCOA.
We received extensive training that was provided by National Treasury and IMFO, and was successful on completion. Our credentials may be cross checked with Both National Treasury or IMFO.
2. Purpose of this document
National Treasury through its mandates enshrined in the Constitution, Municipal Finance Management Act, Municipal Budgeting & Reporting Regulations and Municipal Standard Chart of Accounts Regulation came up with Municipal Standardized Classification and reporting framework for all municipalities and municipal entities. To this end non-accredited training was provided to piloting municipalities, as different version of the program were finalized. The final classification version of mSCOA was released and all municipalities are required to budget, record transaction and report in the prescribed formats.
National Treasury will issue a circular that will provide guidance to municipalities and municipal entities on training, however municipalities are required to identify officials that should be trained and submit the list to National Treasury and IMFO. NT/IMFO will avail the names of preferred service providers/accredited trainers to the municipality of which a municipality will have to pick a name and notify them. IMFO will administer the training.
For the initial roll out, the municipality does not have to pay anything to the service provider, IMFO/NT will pay for the services, and however it will be at the discretion of the municipality if there is a need for further support during the implementation phase. As it shall be seen the training shall be for 5 days only. 3 days would be for Finance officials while 2 days would be for non-finance people.
Am forwarding my name to be your preferred accredited trainer as well as support the municipality in the implementation of the mSCOA transformational program.
3. Regulations, Legislative mandate and mSCOA implications
All municipalities must implement SCOA
- Effective 1 July 2017
- local government accountability cycle‘
- Recording and classification of municipal budget and financial information at a transaction level
- 7 Segments
- Record all financial transactions and data in the applicable segment.
May not contain data which is mapped or extrapolated
It should be noted that National Treasury communicated through a circular to all municipalities the effects of failure to comply with the above date. Chief amongst the consequences a municipality will face is the cessation of all government funding in the form of grants, either Equitable share or MIG.
4. Why engaging me as your preferred service provider
National Treasury through its formal channels of communications directed all the municipalities and municipal entities to stop engaging non-accredited trainers as it will result in fruitful and wasteful expenditure. The program is earmarked to be rolled out by only National Treasury, IMFO, LGSeta and PSeta short listed preferred trainers. The reason being in case a municipality needs assistance in the implementation because am an accredited trainer with the above Organizations, a municipality will be able to claim back the fees that will be paid for my services, the same way it claims accredited training expenditure from LGSeta during its financial year end.
5. Way forward
It is my wish to have a proper meeting with your municipality and discuss these and other issues that I might not have said here and determine a way forward.
As a basis before or after communication with National Treasury I would suggest the following issues that mSCOA implementation team should look at:
The responsibilities of the mSCOA Project Implementation Team would be as follows:
- Prepare a mSCOA Project Implementation Plan including the required activities, allocated responsibilities for execution of the plan, assigned deliverables and acceptance criteria, and set timeframes for these deliverables, for submission to the mSCOA Steering Committee for consideration and approval;
- Prepare and maintain a mSCOA Project Risk Register detailing the identified project risks, evaluating these and allocating responsibility including mitigating measures, monitoring of the risk and reporting progress within set timeframes, for submission to the mSCOA Steering Committee for consideration and monitoring;
- Prepare and maintain a mSCOA Project Issue Log detailing the issues which have been encountered, together with the measures which were employed to address the issues and the results and cost thereof;
- To develop a resource plan for the mSCOA implementation project for submission to the mSCOA Steering Committee for consideration and approval;
- Regular reporting of the progress, risk register and issue log to the mSCOA Steering Committee for consideration and key decision making;
- Ensure organisational awareness of mSCOA by means of internal workshops, information sharing and feedback across the municipality, the various internal committees and the municipal council;
- Ensure that mSCOA is adopted as a permanent standing item on the senior management meeting (MANCO) agenda for Tracking Progress and Noting Institutional Risk;
- Oversee regular mSCOA risk assessments, development and updates of a mSCOA risk register, and monitor the implementation of mitigating action plans;
- Table a mSCOA progress report, including the updated risk register with the municipal council on a quarterly basis;
- Ensure the municipality’s current chart is compared on an account by account level to the Municipal Regulations on a Standard Chart of Accounts (Regulations on mSCOA) (all 7 segments). Any anomalies must be documented and a copy provided to the relevant provincial treasury;
- Ensure the Function Segment of the Regulations on mSCOA classification framework is matched to the current vote and cost centre structures operational in the municipality. Identify and document any anomalies and provide a copy to the relevant provincial treasury;
- Consider the impact of the Regulations on mSCOA on business processes and develop a business process implementation plan to address change, with specific regard to, among others:
Impact on municipal Functions (Vote Structure, Internal Operational Work Flows, Costing Methodology, etc.)
Impact on Operational and Capital Projects (Setting up Project based Budgeting).
- To execute the approved project implementation plan, including but not limited to:
Assign responsibilities to the Project Implementation Team to execute the plan and deliver all the deliverables documented in the plan;
Ensure that mSCOA responsibilities are included in the Performance Agreements, Performance Evaluation Templates and other applicable documentation for all team members and other officials as identified by the Project Team,
Identify and assign officials responsible and accountable for each of the identified risks, who will mitigate these risks and regularly report on progress;
Monitor and report on progress in terms of each of the deliverables and mSCOA Segments and related project activities, within the implementation team and to the mSCOA Steering Committee; and
Assist with any risk evaluations, internal or external audit reviews of the mSCOA project.
Ensure that the Project Manager/ municipality maintain ongoing communications with National and Provincial Treasury during the implementation of the project.