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PUBLIC FINANCE MANAGEMENT ACT
AMENDMENT OF TREASURY REGULATIONS IN TERMS OF SECTION 76
[Updated to 15 November 2013]
GoN R225, G. 27388 (c.i.o 15 March 2005),
GoN R146, G. 29644 (c.i.o 20 February 2007),
GoN R874, G. 37042 (c.i.o 15 November 2013).
The Minister of Finance has, in terms of Section 76 of the Public Finance Management Act, 1999 (Act 1 of 1999), amended the Treasury Regulations that were published in Government Gazette 23463 dated 25 May 2002 as set out in the Schedule.
Treasury Regulations for departments, trading entities, constitutional institutions and public entities
Issued in terms of the Public Finance Management Act, 1999
Republic of South Africa
TABLE OF CONTENTS
PART 1
Definitions, application and date of commencement
1.1 General definitions
1.3 Date of commencement
PART 2
Management arrangements
2.1 Chief financial officer
3.1 Audit committees
3.2 Internal controls and internal audit
4.1 Investigation of alleged financial misconduct
4.2 Criminal proceedings
PART 3
Planning and budgeting
5.1 Preparation of strategic plans
5.2 Submission and contents of strategic plans
5.3 Evaluation of performance
6.1 Annual budget circular
6.2 Formats of the annual budget
6.5 Transfer of functions
6.6 Additional funds through an adjustments budget
6.7 Definitions introduced by the new Economic Reporting Format
PART 4
Revenue and expenditure management
7.2 Responsibility for revenue management
7.3 Services rendered by the state
8.1 Responsibility of the accounting officer
8.2 Approval of expenditure
8.3 Compensation of employees
8.4 Transfers and subsidies (excluding Division of Revenue grants and other allocations to municipalities)
8.5 Division of Revenue grants
8.6 Other allocations to municipalities
8.7 Charging of expenditure against a particular vote or main division of a vote
8.8 Recovery, disallowance and adjustment of payments
PART 5
Asset and liability management
10.1 Responsibility for asset management
10.2 Assets accruing to the state by operation of any law
11.2 Responsibility for the management of debtors
11.3 Recovery of debts by instalments
11.4 Writing off of debts owing to the state
11.5 Interest payable on debts to the state
12.2 Claims against the state through acts or omissions
12.3 Claims by the state against other persons
12.4 Claims by officials against the state
12.5 Losses or damages through criminal acts or omissions
12.6 Losses and damages through vis major and other unavoidable causes
12.7 Losses or damages through acts committed or omitted by officials
13.2 Lease transactions
14.2 Responsibility for trust money and property
14.3 Trust money must be kept in a trust account
14.4 Investment of trust money
PART 6
Frameworks
15.1 Control of the national and provincial revenue funds
15.2 Bank account configuration
15.3 Deposits into the revenue funds
15.4 Responsibilities of the South African Revenue Service
15.5 Responsibilities of departments
15.6 Withdrawals from and investments in revenue funds
15.7 Requisitioning of funds by departments
15.8 Surrender of voted surplus funds
15.9 Accounting and reporting
15.10 Banking and cash management
15.11 Private money, private bank accounts and cashing private cheques
15.12 Warrant vouchers, cheques and electronic payments
16.2 Exclusive competency of accounting officers and accounting authorities
16.3 Project inception
16.4 Feasibility study - Treasury Approval I
16.5 Procurement - Treasury Approval IIA & IIB
16.6 Contracting public private partnership agreements - Treasury Approval III
16.7 Management of public private partnership agreements
16.8 Amendment and variation of public-private partnership agreements
16.9 Agreements binding on the state
16A. Supply Chain Management
16A.3 Supply chain management system
16A.4 Establishment of supply chain management units
16A.5 Training of supply chain management officials
16A.6 Procurement of goods and services
16A.7 Disposal and letting of state assets
16A.8 Compliance with ethical standards
16A.9 Avoiding abuse of supply chain management system
16A.10 National Industrial Participation Programme
16A.11 Reporting of supply chain management information
16A.12 Interim arrangements
PART 7
Accounting and reporting requirements
17.1 Use of clearing and suspense accounts
17.2 Availability of financial information
17.3 Changes to financial systems
18.1 Monthly reports
18.2 Annual financial statements
18.3 Contents of annual reports
18.4 Additional annual reporting requirements for departments controlling trading entities and public entities
PART 8
Miscellaneous
19.3 Policy and reporting framework
19.5 Capital requirements and user charges
19.6 Disposal of assets
19.7 Surrender of surplus funds
19.8 Monthly and annual reporting
19.9 Closure of a trading entity
20.2 Remuneration of members
20.3 Services rendered by members during private time
21.1 Granting of gifts, donations and sponsorships by the state
21.2 Acceptance of gifts, donations and sponsorships to the state
21.3 Gifts or donations of immovable property by or to the state
21.4 Identity of donors and sponsors
23.2 Persal deductions
23.3 Deduction codes
23.4 Contravention of regulations and penalties
PART 9
Public Entities
24.1 General definitions
26.1 Responsibilities over Schedule 3A and 3C public entities
27.1 Audit committees
27.2 Internal controls and internal audit
27.3 Chief financial officers
28.1 Financial statements
28.2 Annual reports
28.3 Materiality and Significance Framework
29.1 Corporate plans
29.2 Shareholder’s compact
29.3 Evaluation of performance
29.4 Annual budgets
30.1 Strategic plan
30.2 Evaluation of performance
31.1 Cash management
31.2 Banking framework
31.3 Investment policy
31.4 Disclosure of information
33.1 Investigation of alleged financial misconduct
33.2 Criminal proceedings
34.1 Repeal of regulations
Definitions, application and date of commencement
1.1 General definitions
In these Treasury Regulations, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Act, has the same meaning, and—
“Act” means the Public Finance Management Act (Act 1 of 1999), as amended;
“debt” means an amount owing to the state;
“division of revenue grants” mean allocations from the national government to provinces and local government as listed in the schedules to the annual Division of Revenue Act, including transfers in terms of that Act;
“executive authority” in relation to a constitutional institution consisting of a body of persons, means the chairperson of the constitutional institution, and in relation to a constitutional institution with a single office bearer, means the incumbent of that office;
“head official of the treasury” means the administrative head of the department responsible for financial and fiscal matters, which forms part of the relevant treasury;
“institution” means a department or a constitutional institution;
“official” means a person in the employ of a department or constitutional institution;
1.2 Application
1.2.1 These Treasury Regulations apply—
(a) to all departments, but only to the extent as indicated in regulations 1 to 24 and 26;
(b) to all constitutional institutions, but only to the extent as indicated in regulations 1 to 22;
(c) to all public entities listed in Schedule 2, but only to the extent as indicated in paragraph 6.1.2 and regulations 24, 25, 27 to 29 and 31 to 33;
(d) to all public entities listed in Schedules 3A and 3C, but only to the extent as indicated in paragraph 6.1.2, and regulations 16, 16A, 24 to 28 and 30 to 33;
(e) to all public entities listed in Schedules 3B and 3D, but only to the extent as indicated in paragraph 6.1.2 and regulations 16, 24, 25, 27 to 29 and 31 to 33; and
(f) to the South African Revenue Service as a Schedule 3A public entity but only to the extent as indicated in paragraphs 6.1.2, regulations 16, 16A, 24 to 28 and 30 to 33.
1.2.2 These Treasury regulations, read in context, also apply to the South African Revenue Service as a department, but only to the extent that it collects and administers state revenue and as indicated in regulations 6.1.2, 7.1, 7.2, 11.1, 11.2.1(a), 11.3, 11.4, 12.1.1, 12.2.1(a) to (d), 12.5.1, 12.6, 12.7.1 to 12.7.3, 15.4, 15.7, 15.10.2, 15.11, 17.2, and 22.1.
1.2.3 For purposes of regulation 1.2.2, the Treasury Regulations that do apply to the South African Revenue Service, apply as though it were a department with its Commissioner as its accounting officer.
1.3 Date of commencement
1.3.1 These Treasury Regulations take effect from 15 March 2005, unless otherwise indicated in the text.
Management arrangements
2.1 Chief financial officer
2.1.1 Unless directed otherwise by the relevant treasury, each institution must have a chief financial officer serving on the senior management team.
2.1.2 The chief financial officer is directly accountable to the accounting officer.
2.1.3 Without limiting the right of the accounting officer to assign specific responsibilities, the general responsibility of the chief financial officer is to assist the accounting officer in discharging the duties prescribed in Part 2 of Chapter 5 of the Act and the annual Division of Revenue Act. These duties relate to the effective financial management of the institution including the exercise of sound budgeting and budgetary control practices; the operation of internal controls and the timely production of financial reports.
3.1 Audit committees [Sections 76(4)(d) and 77 of the PFMA]
3.1.1 If considered feasible, the relevant treasury may direct that institutions share audit committees. If such a determination is made, the Auditor-General must be informed within 30 days of the determination.
3.1.2 In the case of a non-shared audit committee, the accounting officer of an institution must appoint audit committee members in consultation with the relevant executive authority.
3.1.3 In the case of a shared audit committee, the head of the relevant treasury must appoint audit committee members after consultation with the relevant executive authorities.
3.1.4 The chairperson of an audit committee must be independent, be knowledgeable of the status of the position, have the requisite business, financial and leadership skills and may not be a political office bearer.
3.1.5 Audit committees must be constituted so as to ensure their independence and their membership must be disclosed in the annual report of the institution.
3.1.6 Members of an audit committee who have been appointed from outside the public service pursuant to section 77(a)(i) of the Act must have appropriate experience, be appointed on contract and be remunerated in accordance with paragraph 20.2.2 of these Regulations. Should it be deemed necessary, such members may be remunerated taking into account tariffs determined by the South African Institute of Chartered Accountants in consultation with the Auditor-General as provided for in paragraph 20.2.3.
3.1.7 The relevant executive authority must concur with any premature termination of the services of a person serving on an audit committee.
3.1.8 An audit committee must operate in terms of a written terms of reference, which must deal adequately with its membership, authority and responsibilities. The terms of reference must be reviewed at least annually to ensure its relevance.
3.1.9 It must be disclosed in the institution’s annual report whether or not the audit committee has adopted a formal terms of reference and if so, whether the committee satisfied its responsibilities for the year, in compliance with its terms of reference.
3.1.10 The audit committee must, amongst others, review the following—
(a) the effectiveness of the internal control systems;
(b) the effectiveness of the internal audit function;
(c) the risk areas of the institution’s operations to be covered in the scope of internal and external audits;
(d) the adequacy, reliability and accuracy of the financial information provided to management and other users of such information;
(e) any accounting and auditing concerns identified as a result of internal and external audits;
(f) the institution’s compliance with legal and regulatory provisions; and
(g) the activities of the internal audit function, including its annual work programme, co-ordination with the external auditors, the reports of significant investigations and the responses of management to specific recommendations.
3.1.11 The audit committee must have explicit authority to investigate matters within its powers, as identified in the written terms of reference. The audit committee must be provided with the resources it needs to investigate such matters and shall have full access to information. The audit committee must safeguard all the information supplied to it within the ambit of the law.
3.1.12 An audit committee must report and make recommendations to the accounting officer, but the accounting officer retains responsibility for implementing such recommendations.
3.1.13 In addition to the above, an audit committee must, in the annual report of the institution, comment on—
(a) the effectiveness of internal control;
(b) the quality of in year management and monthly / quarterly reports submitted in terms of the Act and the Division of Revenue Act; and
(c) its evaluation of the annual financial statements.
3.1.14 Should a report to an audit committee, whether from the internal audit function or any other source, implicate the accounting officer in fraud, corruption or gross negligence, the chairperson of the audit committee must promptly report this to the relevant executive authority.
3.1.15 An audit committee may communicate any concerns it deems necessary to the executive authority, the relevant treasury and the Auditor-General.
3.1.16 The audit committee must meet at least annually with the Auditor-General to ensure that there are no unresolved issues of concern.
3.2 Internal controls and internal audit [Sections 38(1)(a)(i) and 76(4)(e) of the PFMA]
3.2.1 The accounting officer must ensure that a risk assessment is conducted regularly to identify emerging risks of the institution. A risk management strategy, which must include a fraud prevention plan, must be used to direct internal audit effort and priority, and to determine the skills required of managers and staff to improve controls and to manage these risks. The strategy must be clearly communicated to all officials to ensure that the risk management strategy is incorporated into the language and culture of the institution.
3.2.2 Each institution to which these Regulations apply must have an internal audit function.
3.2.3 If considered feasible, the relevant treasury may direct that institutions share internal audit functions. If such a determination is made, the Auditor-General must be informed within 30 days of the determination.
3.2.4 An internal audit function may be partly or wholly contracted to an external organisation with specialist audit expertise, provided that its selection is in accordance with the relevant government’s competitive tendering procedures.
3.2.5 The purpose, authority and responsibility of the internal audit function must, in consultation with the audit committee, be formally defined in an audit charter and be consistent with the Institute of Internal Auditors (“IIA”) definition of internal auditing.
3.2.6 Internal audit must be conducted in accordance with the standards set by the Institute of Internal Auditors.
3.2.7 An internal audit function must prepare, in consultation with and for approval by the audit committee—
(a) a rolling three year strategic internal audit plan based on its assessment of key areas of risk for the institution, having regard to its current operations, those proposed in its strategic plan and its risk management strategy;
(b) an annual internal audit plan for the first year of the rolling three year strategic internal audit plan;
(c) plans indicating the proposed scope of each audit in the annual internal audit plan; and
(d) a quarterly report to the audit committee detailing its performance against the annual internal audit plan, to allow effective monitoring and possible intervention.
3.2.8 An internal audit function must assess the operational procedure and monitoring mechanisms over all transfers made and received, including transfers in terms of the annual Division of Revenue Act.
3.2.9 An internal audit function must report directly to the accounting officer and shall report at all audit committee meetings. The function must be independent of activities that are audited, with no limitation on its access to information.
3.2.10 The internal audit function must co-ordinate with other internal and external providers of assurance to ensure proper coverage and to minimise duplication of effort.
3.2.11 The internal audit function must assist the accounting officer in maintaining efficient and effective controls by evaluating those controls to determine their effectiveness and efficiency, and by developing recommendations for enhancement or improvement. The controls subject to evaluation should encompass the following—
(a) the information systems environment;
(b) the reliability and integrity of financial and operational information;
(c) the effectiveness of operations;
(d) safeguarding of assets; and
(e) compliance with laws, regulations and controls.
3.2.12 The internal audit function must assist the accounting officer in achieving the objectives of the institution by evaluating and developing recommendations for the enhancement or improvement of the processes through which—
(a) objectives and values are established and communicated;
(b) the accomplishment of objectives is monitored;
(c) accountability is ensured; and
(d) corporate values are preserved.
4.1 Investigation of alleged financial misconduct [Sections 85(1)(b), (c) and (d) of the PFMA]
4.1.1 If an official is alleged to have committed financial misconduct, the accounting officer of the institution must ensure that an investigation is conducted into the matter and if confirmed, must ensure that a disciplinary hearing is held in accordance with the relevant prescripts and agreements applicable in the public service.
4.1.2 The accounting officer must ensure that such an investigation is instituted within 30 days from the date of discovery of the alleged financial misconduct.
4.1.3 If an accounting officer is alleged to have committed financial misconduct, the relevant treasury, as soon as it becomes aware of the alleged misconduct, must ensure that the relevant executive authority initiates an investigation into the matter and if the allegations are confirmed, holds a disciplinary hearing in accordance with the prescripts applicable and agreements applicable in the public service.
4.1.4 A relevant treasury may—
(a) direct that an official other than an employee of the institution conducts the investigation; or
(b) issue any reasonable requirement regarding the way in which the investigation should be performed.
4.2 Criminal proceedings [Section 86 of the PFMA]
4.2.1 The accounting officer must advise the executive authority, relevant treasury and the Auditor-General of any criminal charges it has laid against any person in terms of section 86 of the Act.
4.2.2 The relevant treasury may direct an institution to lay criminal charges against any person should an accounting officer fail to take appropriate action.
4.3 Reporting [Section 85(1)(a) and (e) of the PFMA]
4.3.1 The accounting officer of a department must, as soon as the disciplinary proceedings are completed, report to the executive authority, the Department of Public Service and Administration and the Public Service Commission on the outcome, including—
(a) the name and rank of the official against whom the proceedings were instituted;
(b) the charges, indicating the financial misconduct the official is alleged to have committed;
(d) any sanction imposed on the official; and
(e) any further action to be taken against the official, including criminal charges or civil proceedings.
4.3.2 The accounting officer of a constitutional institution must report the information required in terms of paragraph 4.3.1 (a) to (e) of these Regulations to Parliament.
4.3.3 The accounting officer of a department must inform the executive authority, the relevant treasury, the Department of Public Service and Administration and the Public Service Commission of the outcome of any criminal proceedings instituted against any person for financial misconduct in terms of section 86 of the Act, whilst the accounting officer of a constitutional institution must inform Parliament of such outcomes.
4.3.4 The accounting officer of an institution must, on an annual basis, submit to the provincial treasury (if applicable), the National Treasury and the Auditor-General a schedule of—
(a) the outcome of any disciplinary proceedings and / or criminal charges;
(b) the names and ranks of officials involved; and
(c) the sanctions and any further actions taken against these officials.
4.3.5 The schedule mentioned in paragraph 4.3.4 must be accompanied by a report which refers to any changes made to the institution’s systems of financial and risk management as a result of any investigation.
Planning and budgeting
5.1 Preparation of strategic plans
5.1.1 The accounting officer of an institution must prepare a strategic plan that is consistent with the period covered by the Medium Term Expenditure Framework for approval by the relevant executive authority.
5.2 Submission and contents of strategic plans
5.2.1 In order to facilitate the annual discussion of individual votes, accounting officers must provide Parliament or the relevant legislature with their respective institution’s medium term strategic plan, and where applicable, with its annual performance plan.
5.2.2 Parliament or the relevant legislature should receive the plans of departments at least 10 days prior to the discussion of the department’s budget vote.
5.2.3 The strategic plan must—
(a) cover a period of at least three years and be consistent with the institution’s published medium term expenditure estimates;
(b) include specific Constitutional and other legislative, functional and policy mandates that indicate the output deliverables for which the institution is responsible;
(c) include policy developments and legislative changes that influence programme spending plans over the MTEF period;
(d) include the measurable objectives, expected outcomes, programme outputs, indicators (measures) and targets of the institution’s programmes;
(e) include details of proposed acquisitions of fixed or movable capital assets, planned capital investments and rehabilitation and maintenance of physical assets;
(f) include details of proposed acquisitions of financial assets or capital transfers and’ plans for the management of financial assets and liabilities;
(g) include multi-year projections of income and projected receipts from the sale of assets;
(h) include details of the Service Delivery Improvement Programme;
(i) include details of proposed information technology acquisition or expansion in reference to an information technology plan;
(j) for departments, include the requirements of Chapter I, Part III B of the Public Service Regulations, 2001; and
(k) include details of specific plans that the executive authority, Parliament or the relevant provincial legislature may direct the institution to report on.
5.2.4 The strategic plan must form the basis for the annual reports of accounting officers as required by sections 40(1)(d) and (e) of the Act.
5.3 Evaluation of performance [Section 27(4) read with 36(5) of the PFMA]
5.3.1 The accounting officer of an institution must establish procedures for quarterly reporting to the executive authority to facilitate effective performance monitoring, evaluation and corrective action.
[Chapter 5 subs by GoN R146 in G. 29644.]
6.1 Annual budget circular
6.1.1 The accounting officer of a department must comply with any annual budget circulars issued by the relevant treasury. Budget circulars issued by provincial treasuries must be consistent with any budget circular issued by the National Treasury to provincial treasuries.
6.1.2 The accounting officer of a constitutional institution or the accounting authority of a public entity who receives transfers appropriated by vote must provide such information as may be required by the accounting officer responsible for the vote for the purposes of complying with a budget circular. A budget submission by such a constitutional institution or public entity must be made through the accounting officer of the department responsible for transfers to that constitutional institution or public entity.
6.1.3 An accounting officer of a budget vote must ensure that the budget submission for that vote includes appropriate supporting information in respect of constitutional institutions and public entities receiving transfers from that vote.
6.2 Formats of the annual budget [Section 27(3) of the PFMA]
6.2.1 The annual budget documentation, as presented to Parliament or a provincial legislature, must conform to the formats as determined by the National Treasury.
6.3 Virement [Sections 43 and 76(3) of the PFMA]
6.3.1 For purposes of section 43(1) of the Act—
(a) compensation of employees and transfers and subsidies to other institutions, excluding transfers and subsidies to other levels of government for purposes of paying levies and taxes imposed by legislation, may not be increased without approval of the relevant treasury;
(b) new transfers and subsidies to other institutions may not be introduced without the approval of the relevant treasury;
(c) allocations earmarked by the relevant treasury for a specific purpose (excluding compensation of employees) may not be used for other purposes, except with its approval, and
(d) virement of funds from compensation of employees to transfers and subsidies for the payment of severance / exit packages are excluded from the provisions of (a) and (b).
6.4 Rollovers [Sections 30(2)(g) and 31 (2)(g) of the PFMA]
6.4.1 Funds appropriated but not spent in a particular financial year may be rolled over to a subsequent year subject to approval of the relevant treasury. Such approval will be guided by the following limitations—
(a) Payments for capital assets: Unspent funds on payments for capital assets may only be rolled over to finalise projects or asset acquisitions still in progress.
(b) Transfers and subsidies: Savings on transfers and subsidies may not be rolled over for purposes other than originally voted for.
(c) Current payments: Savings on compensation of employees may not be rolled over. A maximum of five per cent of a department’s payments for goods and services may be rolled over.
6.4.2 Requests for rollovers must be submitted to the relevant treasury on or before the last working day of April, in a format determined by the National Treasury and must include—
(a) the purpose for which the funds were appropriated;
(b) the reasons why the funds were not spent;
(c) proposed changes to the use of the funds, if any; and;
(d) a disbursement schedule indicating the month(s) in which the expenditure is expected to be incurred.
6.4.3 Funds for a specific purpose may not be rolled over for more than one financial year, unless approved in advance by the relevant treasury.
6.5 Transfer of functions [Section 42 of the PFMA]
6.5.1 Where a function is to be transferred between votes during a financial year, the relevant treasury must be consulted in advance, to facilitate any request for the resulting transfer of funds voted for that function in terms of section 33 of the Act. In the absence of agreement between the affected departments on the amount of funds to be transferred, the relevant treasury will determine the funds to be shifted.
6.5.2 Should the Minister of Public Service and Administration or a Premier of a province make a determination regarding the transfer of a function between departments in terms of the Public Service Act, 1994, that determination must accompany a request for the transfer of funds as per paragraph 6.5.1. Should the Minister of Public Service and Administration or a Premier approve a function transfer after the finalisation of the adjustments estimates, it must be dealt with on a recoverable basis.
6.5.3 Before seeking formal approval from the Minister of Public Service and Administration or the Premier of a province for any transfer of functions to another sphere of government, the transferring accounting officer must first seek the approval of the relevant treasury or treasuries on any funding arrangements.
6.5.4 The transfer of functions to provinces and municipalities must be dealt with in terms of the annual Division of Revenue Act and the Local Government Municipal Finance Management Act (MFMA), 2003 (Act 56 of 2003).
6.6 Additional funds through an adjustments budget [Sections 30(2)(b) and 31 (2)(b) of the PFMA]
6.6.1 For purposes of an adjustments budget, the following will not be considered unforeseeable and unavoidable expenditure—
(a) expenditure that, although known when finalising the estimates of expenditure, could not be accommodated within allocations;
(b) tariff adjustments and price increases; and
(c) extensions of existing services and the creation of new services that are not unforeseeable and unavoidable.
6.6.2 The department requesting additional funds through an adjustments budget must submit a memorandum to the relevant treasury, the Cabinet / EXCO Secretariat and any treasury committee of the Cabinet / EXCO, on a date determined by the relevant treasury.
6.6.3 Where a national adjustments budget allocates funds to a province, the relevant provincial treasury must table an adjustments budget within 30 days of the tabling of the national adjustments budget, or within such longer period as the National Treasury may approve.
6.7 Definitions introduced by the new Economic Reporting Format
6.7.1 For purposes of ensuring alignment between the new Economic Reporting Format, the Public Finance Management Act, 1999 and the Treasury Regulations, the following terms must be used interchangeably—
(a) Personnel expenditure referred to in the Act is the same as compensation of employees in the new Economic Reporting Format;
(b) Transfer referred to in the Act is the same as transfers in the new Economic Reporting Format for entities of government, but excludes public entities listed in Schedules 2, 3B and 3D to the Act;
(c) Transfers referred to in the Act that are made to public entities listed in Schedules 2, 3B and 3D to the Act are the same as transfers and subsidies in the new Economic Reporting Format; and
(d) Capital expenditure referred to in the Act is the same as payments for capital assets in the new Economic Reporting Format.
Revenue and expenditure management
7.1 Application
7.1.1 This regulation applies to the identification, collection, recording and safeguarding of all revenue for which an institution is responsible.
7.2 Responsibility for revenue management
7.2.1 The accounting officer of an institution must manage revenue efficiently and effectively by developing and implementing appropriate processes that provide for the identification, collection, recording, reconciliation and safeguarding of information about revenue.
7.3 Services rendered by the state
7.3.1 The accounting officer of an institution must review, at least annually when finalising the budget, all fees, charges or the rates, scales or tariffs of fees and charges that are not or cannot be fixed by any law and that relate to revenue accruing to a revenue fund. The accounting officer must obtain approval from the relevant treasury for the proposed tariff structure.
7.3.2 Information on the tariff structure must be disclosed in the annual report, including information on exemptions, discounts, free services and any other aspect of material influence on the revenue yield.
8.1 Responsibility of the accounting officer [Section 76(4)(b) of the PFMA]
8.1.1 The accounting officer of an institution must ensure that internal procedures and internal control measures are in place for payment approval and processing. These internal controls should provide reasonable assurance that all expenditure is necessary, appropriate, paid promptly and is adequately recorded and reported.
8.2 Approval of expenditure [Section 38(1)(f) and 76(4)(b) of the PFMA]
8.2.1 An official of an institution may not spend or commit public money except with the approval (either in writing or by duly authorised electronic means) of the accounting officer or a properly delegated or authorised officer.
8.2.2 Before approving expenditure or incurring a commitment to spend, the delegated or authorised official must ensure compliance with any limitations or conditions attached to the delegation or authorisation.
8.2.3 Unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice or, in the case of civil claims, from the date of settlement or court judgement.
8.3 Compensation of employees [Section 76(4)(b) of the PFMA]
8.3.1 Activities relating to the authorisation of appointments, the authorisation of payments and the recording of those payments may not be performed by the same person.
8.3.2 The accounting officer of an institution must ensure that the costs related to compensation of employees, as well as promotion and salary increases, can be met within the budgetary allocation of the institution.
8.3.3 Unless otherwise determined by the National Treasury, personnel are divided into the following groups for the payment of salaries—
(a) Group A: Persons who must be paid on the 15th day of the month, or if it is not a working day, on the last working day preceding the 15th. These include—
(i) persons appointed permanently on the fixed establishment and employed in terms of the Public Service Act, 1994; and
(ii) persons appointed on contract in terms of section 8(1)(c) of the Public Service Act, 1994 and other similar legislation.
(b) Group B: This group represents personnel paid on the last working day of the month and includes temporary and part-time staff, and persons appointed on probation.
8.3.4 For all employees, the person in charge at the respective pay points must certify on the date of payment that all persons listed on the payroll report are entitled to payment. Employees paid by cheque must sign the payroll report when collecting their cheques.
8.3.5 Within 10 days of being certified, the payroll report must be returned to the chief financial officer. The accounting officer must ensure that all pay-point certificates have been received on a monthly basis.
8.4 Transfers and subsidies (excluding Division of Revenue grants and other allocations to municipalities) [Section 38(1)(j) of the PFMA]
8.4.1 An accounting officer must maintain appropriate measures to ensure that transfers and subsidies to entities are applied for their intended purposes. Such measures may include—
(a) regular reporting procedures;
(b) internal and external audit requirements and, where appropriate, submission of audited statements;
(c) regular monitoring procedures;
(d) scheduled or unscheduled inspection visits or reviews of performance; and
(e) any other control measures deemed necessary.
8.4.2 An accounting officer may withhold transfers and subsidies to an entity if he or she is satisfied that—
(a) conditions attached to the transfer and subsidy have not been complied with;
(b) financial assistance is no longer required;
(c) the agreed objectives have not been attained; and
(d) the transfer and subsidy does not provide value for money in relation to its purpose or objectives.
8.4.3 Treasury Regulations 8.4.1 and 8.4.2 do not apply to transfers and subsidies to other countries, international bodies, to other bodies in terms of economic and financial agreements and to levies and taxes imposed by other levels of government and which are classified as transfers and subsidies in the budgets of departments. Transfers and subsidies in respect of levies and taxes imposed by other levels and entities of government are governed by section 38(1)(e) of the Act.
8.4.4 Transfers and subsidies to other countries, international bodies, other bodies in terms of economic and financial agreements and transfers and subsidies to other levels and entities of government for purposes of paying levies and taxes imposed by legislation are exempt from the written assurance, as required by section 38(1)(j) of the Act.
8.5 Division of Revenue Grants [Section 38(1)(i) of the PFMA]
8.5.1 Accounting officers of departments transferring funds to other spheres of government in terms of the annual Division of Revenue Act must comply with the provisions of that Act.
8.6 Other allocations to municipalities
8.6.1 A provincial accounting officer transferring a grant from the provincial revenue fund to a municipality in accordance with an assignment in terms of section 156(4) of The Constitution, 1996 (Act 108 of 1996) or a delegation in terms of section 238 of The Constitution, 1996 other than an agency payment in terms of section 238 of The Constitution, 1996 must comply with the relevant provisions of the annual Division of Revenue Act, the Local Government Municipal Finance Management Act (MFMA), 2003 (Act 56 of 2003), sections 9 and 10 of the Municipal Systems Act, 2000 (Act 32 of 2000) and other relevant legislation.
8.7 Charging of expenditure against a particular vote or main division of a vote [Section 76(2)(b) of the PFMA]
8.7.1 Should a dispute arise over which vote or main division of a vote should be charged with any particular expenditure, the relevant treasury must settle the dispute and determine the vote or main division against which the expenditure must be charged.
8.8 Recovery, disallowance and adjustment of payments
8.8.1 Amounts charged to voted funds, which are recovered in the financial year in which payment was made, shall on or before the closing of books of that financial year, be allocated to the main division that was originally debited.
8.8.2 Such amounts which are recovered after the closing of books of a financial year shall be paid to the relevant revenue fund, provided that such amounts have not been allocated to a clearing or suspense account during the financial year in which payment was made.
9.1 General [Sections 38(1)(g) and 76(2)(e) of the PFMA]
9.1.1 The accounting officer of an institution must exercise all reasonable care to prevent and detect unauthorised, irregular, fruitless and wasteful expenditure, and must for this purpose implement effective, efficient and transparent processes of financial and risk management.
9.1.2 When an official of an institution discovers unauthorised, irregular or fruitless and wasteful expenditure, that official must immediately report such expenditure to the accounting officer. In the case of a department, such expenditure must also be reported in the monthly report, as required by section 40(4)(b) of the Act. Irregular expenditure incurred by a department in contravention of tender procedures must also be brought to the notice of the relevant tender board or procurement authority, whichever applicable.
9.1.3 When an accounting officer determines the appropriateness of disciplinary steps against an official in terms of section 38(1)(g) of the Act, the accounting officer must take into account—
(a) the circumstances of the transgression;
(b) the extent of the expenditure involved; and
(c) the nature and seriousness of the transgression.
9.1.4 The recovery of losses or damages resulting from unauthorised, irregular or fruitless and wasteful expenditure must be dealt with in accordance with regulation 12.
9.1.5 The amount of the unauthorised, irregular, fruitless and wasteful expenditure must be disclosed as a note to the annual financial statements of the institution.
Asset and liability management
10.1 Responsibility for asset management [Section 38(1)(d) of the PFMA]
10.1.1 The accounting officer of an institution must take full responsibility and ensure that proper control systems exist for assets and that—
(a) preventative mechanisms are in place to eliminate theft, losses, wastage and misuse; and
(b) stock levels are at an optimum and economical level.
10.1.2 The accounting officer must ensure that processes (whether manual or electronic) and procedures are in place for the effective, efficient, economical and transparent use of the institution’s assets.
10.2 Assets accruing to the state by operation of any law [Section 76(2)(i) of the PFMA]
10.2.1 Where any money, property or right accrues to the state by operation of law (bona vacantia), the relevant treasury may exercise all powers, authority and prerogatives, and fulfil any obligation on behalf of the state.
11.1 Application
11.1.1 This regulation applies to all debts accruing to an institution and includes any amount owing to or receivable by the institution, such as invoices for charges for goods or services, fees or fines outstanding.
11.2 Responsibility for the management of debtors [Section 38(1)(c)(i) and (d) of the PFMA]
11.2.1 The accounting officer of an institution must take effective and appropriate steps to timeously collect all money due to the institution including, as necessary—
(a) maintenance of proper accounts and records for all debtors, including amounts received in part payment; and
(b) referral of a matter to the State Attorney, where economical, to consider a legal demand and possible legal proceedings in a court of law.
11.3 Recovery of debts by instalments
11.3.1 Unless otherwise determined by law or agreement, debts owing to the state may, at the discretion of the accounting officer of the institution, be recovered in instalments.
11.4 Writing off of debts owing to the state [Sections 76(1)(e) and 76(4)(a) of the PFMA]
11.4.1 An accounting officer may only write off debts owed to the State if he or she is satisfied that—
(a) all reasonable steps have been taken to recover the debt and the debt is irrecoverable, or,
(b) he or she is convinced that—
(i) recovery of the debt would be uneconomical;
(ii) recovery would cause undue hardship to the debtor or his or her dependants; or
(iii) it would be to the advantage of the state to effect a settlement of its claim or to waive the claim.
11.4.2 An accounting officer must ensure that all debts written off are done in accordance with a write off policy determined by the accounting officer.
11.4.3 All debts written off must be disclosed in the annual financial statements, indicating the policy in terms of which the debt was written off.
11.5 Interest payable on debts to the state [Section 80 of the PFMA]
11.5.1 Interest must be charged on debts to the state at the interest rate determined by the Minister of Finance in terms of section 80 of the Act.
12.1 General
12.1.1 Subject to the provisions of this regulation, or any other legislation or agreement, the state will bear its own damages and accident risks and be responsible for all claims and losses of state property where these arise from state activities by an official who is liable in law and who is or was employed by an institution.
12.1.2 Notwithstanding paragraph 12.1.1, the accounting officer of an institution may (if deemed economical and based on a risk assessment) insure motor vehicles, including hired vehicles, or such other movable assets determined by the relevant treasury, but the insurance premium cost may not exceed R250 000 a year on that vote, unless otherwise approved by the relevant treasury.
12.2 Claims against the state through acts or omissions [Section 76(1)(h) of the PFMA]
12.2.1 An institution must accept liability for any loss or damage suffered by another person, which arose from an act or omission of an official as a claim against the state and does not recover compensation from an official, provided the official shall forfeit this cover if he or she, with regard to the act or omission, is liable in law and—
(a) intentionally exceeded his or her powers;
(b) made use of alcohol or drugs;
(c) did not act in the course and scope of his or her employment;
(d) acted recklessly or intentionally;
(e) without prior consultation with the State Attorney, made an admission that was detrimental to the state; or
(f) failed to comply with or ignored standing instructions, of which he or she was aware of or could reasonably have been aware of, which led to the loss, damage or reason for the claim, excluding damage arising from the use of a state vehicle; and
(g) in the case of a loss, damage or claim arising from the use of a state vehicle, the official—
(i) used the vehicle without authorisation;
(ii) did not possess a valid driver’s licence or other appropriate licence;
(iii) did not use the vehicle in the interest of the state;
(iv) allowed unauthorised persons to handle the vehicle; or
(v) deviated materially from the official journey or route without prior authorisation.
12.2.2 If in doubt, the accounting officer of the institution must consult the State Attorney on questions of law on the implementation of paragraph 12.2.1.
12.2.3 Where an official has forfeited his or her cover in terms of paragraph 12.2.1, the amount paid by the institution for the loss, damage or claim arising from an act or omission must be recovered from the official concerned.
12.2.4 The State Attorney may only obligate the funds of an institution with the prior written approval of the accounting officer.
12.3 Claims by the state against other persons
12.3.1 If the state suffers a loss or damage and the other person denies liability, the accounting officer must, if deemed economical, refer the matter to the State Attorney for legal action, including the recovery of the value of the loss or damage.
12.4 Claims by officials against the state
12.4.1 If an official sustains a loss or damage in the execution of official duties and is not compensated, the accounting officer may make good the loss or damage provided that the official can prove such loss or damage.
12.5 Losses or damages through criminal acts or omissions [Section 76(1)(f) of the PFMA]
12.5.1 When it appears that the state has suffered losses or damages through criminal acts or possible criminal acts or omissions, the matter must be reported, in writing, to the accounting officer and the South African Police Service. If liability can be determined, the accounting officer must recover the value of the loss or damage from the person responsible.
12.5.2 The accounting officer may write off losses or damages arising from criminal acts or omissions if, after a thorough investigation, it is found that the loss or damage is irrecoverable.
12.5.3 When movable assets are written off, this must be noted in the asset register.
12.6 Losses and damages through vis major and other unavoidable causes [Section 76(1)(e) of the PFMA]
12.6.1 The accounting officer may write off losses and damages that result from vis major and other unavoidable causes.
12.7 Losses or damages through acts committed or omitted by officials [Sections 76(1)(b) and 76(4)(a) of the PFMA]
12.7.1 Losses or damages suffered by an institution because of an act committed or omitted by an official, must be recovered from such an official if that official is liable in law.
12.7.2 The accounting officer must determine the amount of the loss or damage and, in writing, request that official to pay the amount within 30 days or in reasonable instalments. If the official fails to comply with the request, the matter must be handed to the State Attorney for the recovery of the loss or damage.
12.7.3 A claim against an official must be waived if the conditions in paragraph 12.2.1(a) to (g) are not applicable.
12.7.4 If in doubt, the accounting officer of the institution must consult the State Attorney on questions of law in the implementation of paragraphs 12.7.1 and 12.7.3.
13.1 General [Section 66 of the PFMA]
13.1.1 The executive authority of a provincial department may not issue a guarantee, security or indemnity that may bind the provincial revenue fund, except with the prior written approval of the MEC for finance in the province.
13.1.2 The accounting officer of a department must ensure that no official in that department or any other person borrows money on behalf of that department or issues an unauthorised guarantee, security or indemnity. The accounting officer must ensure that appropriate misconduct or criminal proceedings are instituted against any person responsible for transgressions with regard to borrowings, guarantees, securities or indemnities.
13.1.3 Should the accounting officer be responsible for transgressions with regard to borrowings, guarantees, securities or indemnities, the relevant treasury must, as soon as it becomes aware of the transgression, initiate appropriate misconduct or criminal proceedings against the accounting officer.
13.1.4 The accounting officer must report on all known contingent liabilities of the department in its annual report.
[Reg 13.1.5 rep by GoN R874 in G. 37042.]
13.2 Lease transactions
13.2.1 For the purpose of this regulation, a lease is an agreement whereby the lessor conveys to the lessee in return for a payment or a series of payments the right to use an asset for an agreed period of time.
13.2.2 A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.
13.2.3 An operating lease is a lease other than a finance lease.
13.2.4 The accounting officer of an institution may, for the purposes of conducting the institution’s business, enter into lease transactions without any limitations provided that such transactions are limited to operating lease transactions.
13.2.5 With the exception of agreements concluded in terms of Treasury Regulation 16, the accounting officer of an institution my not enter into finance lease transactions.
14.1 General
14.1.1 Regulation 15 is not applicable to the management of trust money.
14.2 Responsibility for trust money and property [Section 76(1)(c) of the PFMA].
14.2.1 For purposes of this regulation, trust money or property is money or property that does not belong to the State and that is held by an institution on behalf of other persons or entities in terms of a deed of trust or equivalent instrument that details the specific purposes for which it may be used.
14.2.2 The accounting officer, through the chief financial officer or a duly authorised agent, is responsible for the safekeeping and proper use of trust money and property, in accordance with the relevant deed of trust or equivalent instrument.
14.2.3 The institution, or its duly authorised agent, may charge a fee for the administration of a trust account at rates approved by the board of trustees or, in its absence, as agreed with the trustee. Such fees are payable from the trust account and are revenue accruing to the relevant revenue fund.
14.3 Trust money must be kept in a trust account
14.3.1 The accounting officer must, for each separate portion of trust money—
(a) open and maintain a separate bank account, called a trust account;
(b) assign to the trust account a name or title that clearly identifies the account;
(c) maintain separate accounting records for each trust account, of the transactions, including investment transactions, undertaken; and
(d) annually prepare separate annual financial statements that comply with generally accepted accounting practice.
14.4 Investment of trust money
14.4.1 The accounting officer may, provided that it does not conflict with the terms of the trust arrangement, invest any trust money on such terms and conditions as may be appropriate—
(a) on deposit with any bank within or outside South Africa as approved by the National Treasury;
(b) in public securities issued by the government; or
(c) in other securities approved by the National Treasury.
14.4.2 The proceeds of an investment, including interest and realised capital gains, and all money received from the realisation, sale or conversion of securities, must be treated as money of the trust on whose behalf the money was invested.
15.1 Control of the national and provincial revenue funds [Sections 11 and 21 of the PFMA]
15.1.1 Each treasury is responsible for the effective and efficient management of its revenue fund.
15.1.2 Each treasury must ensure that its revenue fund always has sufficient money for appropriated expenditure and direct charges to meet the progressive cash flow requirements.
15.1.3 Each revenue fund consists, at any point in time, of all cash balances of the fund, derived from the relevant treasury’s operating, investing and financing activities.
15.2 Bank account configuration [Sections 7 and 21 of the PFMA]
15.2.1 The bank account configuration for the National Revenue Fund comprises an Exchequer bank account, a Paymaster-General bank account with the South African Reserve Bank, the four tax and loan accounts with commercial banks, and any other bank account opened to facilitate the management of the National Revenue Fund. The National Treasury may open additional accounts on such terms and conditions as it may determine.
15.2.2 Each provincial revenue fund must have a bank account configuration that consists of at least an Exchequer bank account and a Paymaster-General bank account, opened with a commercial bank.
15.2.3 Each head of a provincial treasury must nominate one bank account, which is under the control of the provincial treasury and is part of the provincial revenue fund, as the accredited account into which all transfers from national departments must be deposited.
15.2.4 If the accounting for a department necessitates a separate bank account, the relevant treasury may approve one subaccount within the Paymaster-General account of the relevant revenue fund. Such subaccounts remain an integral part of the bank account configuration of the relevant revenue fund.
15.3 Deposits into the revenue funds [Sections 13 and 22 of the PFMA]
15.3.1 In terms of sections 11(3) and 21(2) of the Act, money is paid into a revenue fund by depositing it into a bank account in accordance with the configuration requirements prescribed above.
15.3.2 Money deposited into the Paymaster-General account must immediately be available to the relevant treasury for funding expenditure or investment according to its central cash management responsibilities.
15.4 Responsibilities of the South African Revenue Service [Section 12 of the PFMA]
15.4.1 The South African Revenue Service must supply the relevant treasury with an annual revenue projection no later than the tenth working day of March preceding the start of the financial year. It must also submit the actual collection for the preceding month and an updated monthly revenue projection for the remainder of the year, no later than the 15th working day of each month.
15.4.2 For purposes of section 12 of the Act, the South African Revenue Service must implement measures to ensure that all taxes, levies, duties, fees and other money due to and collected by it for a revenue fund are accounted for and deposited daily into the relevant fund. The relevant treasury must be informed daily of such revenue and its standard revenue classifications.
15.5 Responsibilities of departments [Sections 13 and 22 of the PFMA]
15.5.1 All revenue received by a department must be paid daily into its Paymaster-General account or, for amounts less than R500, as soon as practicable, but at least by the last working day of the month.
15.5.2 No provincial department may receive transfers from a national department or public entity directly; such funds must be deposited into the nominated banking account of the province as required by paragraph 15.2.3.
15.5.3 Money collected by a department, which is not classified as revenue, must be paid into the department’s Paymaster-General account and accounted for in its ledger. This includes money received for agency services provided to another department.
15.6 Withdrawals from and investments in revenue funds [Sections 7(4) and 24(3) of the PFMA]
15.6.1 Provincial treasuries may, in accordance with section 24 of the Act, temporarily invest surplus money in the provincial revenue fund in an account in South Africa, approved as part of the bank account configuration of the fund.
15.7 Requisitioning of funds by departments
15.7.1 When requesting the transfer of appropriated funds, accounting officers of national departments must submit such requisitions to the National Treasury, in accordance with approved cash flow estimates, at least four full working days before the end of the month preceding the month in which the funds are required. Provincial treasuries may determine their own time-scales in this regard.
15.7.2 Provincial treasuries will receive their grants from the National Revenue Fund in accordance with the payment schedule determined in terms of the annual Division of Revenue Act.
15.8 Surrender of voted surplus funds
15.8.1 At the end of each financial year, and after the books of account of a department have been closed, the accounting officer must surrender to the relevant treasury any unexpended voted money, for re-depositing into the Exchequer bank account of the relevant revenue fund.
15.9 Accounting and reporting
15.9.1 Each treasury must account daily for the cash movements of all bank accounts in the books of its revenue fund.
15.10 Banking and cash management
15.10.1 General [Sections 7 and 21 of the PFMA]
15.10.1.1 The accounting officer is responsible for establishing systems, procedures, processes and training and awareness programmes to ensure efficient and effective banking and cash management.
15.10.1.2 For purposes of this regulation, sound cash management includes—
(a) collecting revenue when it is due and banking it promptly;
(b) making payments, including transfers and subsidies to other levels of government and non-government entities, no earlier than necessary, with due regard for efficient, effective and economical programme delivery and the government’s normal terms for account payments;
(c) avoiding prepayments for goods or services (i.e. payments in advance of the receipt of the goods or services), unless required by the contractual arrangements with the supplier;
(d) accepting discounts to effect early payment only when the payment has been included in the monthly cash flow estimates provided to the relevant treasury;
(e) pursuing debtors with appropriate sensitivity and rigour to ensure that amounts receivable by the government are collected and banked promptly;
(f) accurately forecasting the institution’s cash flow requirements so that the National Treasury can optimise its central cash management responsibilities on behalf of the government;
(g) timing the in and outflow of cash;
(h) recognising the time value of money, i.e. economically, efficiently and effectively managing cash;
(i) taking any other action that avoids locking up money unnecessarily and inefficiently, such as managing inventories to the minimum level necessary for efficient and effective programme delivery, and selling surplus or underutilised assets;
(j) performing bank reconciliations on a daily basis to detect any unauthorised entries;
(k) ensuring that dishonoured warrant vouchers and cheques are followed up immediately; and
(l) the separation of duties to minimise the incidence of fraud.
15.10.2 Cashflow
15.10.2.1 The accounting officer must annually submit to the relevant treasury a breakdown of anticipated revenue and expenditure in the format determined by the National Treasury, no later than the last working day of February preceding the financial year to which it relates.
15.10.2.2 Provincial treasuries must submit to the National Treasury, by the 15th working day of March, projections of their expenditure, revenue and borrowings, in a format determined by the National Treasury.
15.10.2.3 Once such amounts have been approved, modified as necessary after consultation with the relevant treasury, the accounting officer may not draw from the revenue fund more than the amount approved for a month, without prior written approval from the relevant treasury.
15.10.2.4 Should the accounting officer need to adjust the approved projections, the proposed adjustments must be motivated to the relevant treasury for evaluation against the availability of funds in the Exchequer.
15.10.3 Banking arrangements [Section 7(2) of the PFMA]
15.10.3.1 Institutions may not open a bank account without the written approval of the relevant treasury. Only bank accounts approved after 1 April 2001 shall be considered as valid.
15.10.3.2 The National Treasury will negotiate with the approved clearing banks for appropriate banking services on a regular basis for national departments and constitutional institutions.
15.10.3.3 With effect from 15 November 2013, no department or constitutional institution may, subject to regulation 15.10.3.5, obtain a credit or debit card, whether in the name of the institution or any office-bearer or official of the department or constitutional institution.
[Reg 15.10.3.3 ins by GoN R874 in G. 37042.]
15.10.3.4 The accounting officer of a department or constitutional institution must, subject to regulation 15.10.3.5, cancel each credit or debit card issued before 1 December 2013 and valid on that date, with effect from—
(a) 1 December 2013; or
(b) if the terms for the credit or debit card require a longer period of notice, with effect from the earliest date in terms of those terms.
[Reg 15.10.3.4 ins by GoN R874 in G. 37042.]
15.10.3.5 A department or constitutional institution may retain or obtain—
(a) a credit or debit card lodged with a travel agency for purposes of payment for travel and accommodation related expenses;
(b) one credit or debit card in the name of the department or constitutional institution with approval authority by only one office-bearer or official of the department or constitutional institution for purposes of travel and accommodation related expenses, on-line transactions and petty cash; and
(c) fleet management, petrol and garage cards.
[Reg 15.10.3.5 ins by GoN R874 in G. 37042.]
15.10.3.6 The National Treasury may, subject to conditions, exempt a department or constitutional institution, or a category of departments or constitutional institutions, from regulation 15.10.3.3 or 15.10.3.4, if special circumstances justify it.
[Reg 15.10.3.6 ins by GoN R874 in G. 37042.]
15.11 Private money, private bank accounts and cashing private cheques
15.11.1 Private money may not be deposited into an official bank account, except in accordance with the provisions relating to money held in trust for other persons or bodies, nor may state money be paid into a private bank account.
15.11.2 The safekeeping of private money or personal possessions in a state safe or strong room is prohibited. However, an accounting officer or an official authorised by the accounting officer may approve arrangements for safeguarding personal effects reasonably held on official premises in the course of official duty (e.g. by providing lockable rooms for staff).
15.11.3 State money may not be used to cash private cheques.
15.12 Warrant vouchers, cheques and electronic payments [Section 76(2)(h) of the PFMA]
15.12.1 Accounting officers of departments must assign authority in writing to officials to approve warrant vouchers, cheques or electronic payments.
15.12.2 Only authorised officials may sign hand-drawn vouchers or cheques and must initial the counterfoils.
15.12.3 All payments in excess of R2 000 must be effected electronically unless otherwise approved by the relevant treasury. Payments may not be split to circumvent this regulation and any non- compliance with this regulation constitutes financial misconduct.
15.12.4 All warrant vouchers and cheques must be crossed “NOT NEGOTIABLE” and “NOT TRANSFERABLE” between parallel lines. The cancellation of crossings is not permitted.
15.12.5 When an issued warrant voucher or cheque is lost, stolen or damaged, an instruction to stop payment must immediately be issued to the responsible bank. Once confirmation has been received that the cheque was stopped, the transaction must be reversed and a new warrant voucher or cheque issued and accounted for.
15.12.6 All cashed warrant vouchers of national departments that have not been captured on the respective financial systems will be returned as unpaid.
16.1 Definitions
In this regulation, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Act, has the same meaning, and—
“affordability” means that the financial commitments to be incurred by an institution in terms of the PPP agreement can be met by funds—
(a) designated within the institution’s existing budget for the institutional function to which the agreement relates; and / or
(b) destined for the institution in accordance with the relevant treasury’s future budgetary projections for the institution;
“institution” means a department, a constitutional institution, a public entity listed, or required to be listed in Schedules 3 A, 3B, 3C and 3D to the Act, or any subsidiary of any such public entity.
“institutional function” means—
(a) a service, task, assignment or other function that an institution is entitled or obliged to perform—
(i) in the public interest; or
(ii) on behalf of the public service generally; or
(b) any part or component of or any service, task, assignment or other function performed or to be performed in support of such a service, task, assignment or other function;
“private party” means a party to a PPP agreement, other than—
(a) an institution to which the Act applies;
(b) a municipality or a municipal entity under the ownership control of one or more municipalities; or
(c) the accounting officer, accounting authority or other person or body acting on behalf of an institution, municipality or municipal entity referred to in paragraph (a) or (b);
“project officer” means a person identified by the accounting officer or accounting authority of an institution, who is capable of managing and is appropriately qualified to manage a PPP to which that institution is party from its inception to its expiry or termination;
“public private partnership” or “ppp” means a commercial transaction between an institution and a private party in terms of which the private party—
(a) performs an institutional function on behalf of the institution; and / or
(b) acquires the use of state property for its own commercial purposes; and
(c) assumes substantial financial, technical and operational risks in connection with the performance of the institutional function and / or use of state property; and
(d) receives a benefit for performing the institutional function or from utilising the state property, either by way of—
(i) consideration to be paid by the institution which derives from a revenue fund or, where the institution is a national government business enterprise or a provincial government business enterprise, from the revenues of such institution; or
(ii) charges or fees to be collected by the private party from users or customers of a service provided to them; or
(iii) a combination of such consideration and such charges or fees;
“preferred bidder” means the bidder, including any bidding consortium, to be appointed as preferred bidder in terms of regulation 16.5.4;
“PPP agreement” means a written contract recording the terms of a PPP concluded between an institution and a private party;
“relevant treasury” means the National Treasury unless delegated in terms of section 10(1)(b) of the Act;
“state property” includes all movable and immovable property belonging to the state as well as intellectual property rights vested in the state;
“transaction advisor” means a person or persons appointed in writing by an accounting officer or accounting authority of an institution, who has or have appropriate skills and experience to assist and advise the institution in connection with a PPP, including the preparation and conclusion of a PPP agreement; and
“value for money” means that the provision of the institutional function or the use of state property by a private party in terms of the PPP agreement results in a net benefit to the institution defined in terms of cost, price, quality, quantity, risk transfer or a combination thereof.
16.2 Exclusive competency of accounting officers and accounting authorities
16.2.1 Only the accounting officer or the accounting authority of an institution may enter into a PPP agreement on behalf of that institution.
16.3 Project inception
16.3.1 As soon as the institution identifies a project that may be concluded as a PPP, the accounting officer or accounting authority must in writing—
(a) register the PPP with the relevant treasury;
(b) inform the relevant treasury of the expertise within that institution to proceed with a PPP;
(c) appoint a project officer from within or outside the institution; and
(d) appoint a transaction advisor if the relevant treasury so requests.
16.4 Feasibility study – Treasury Approval: I
16.4.1 To determine whether the proposed PPP is in the best interests of an institution, the accounting officer or the accounting authority of that institution must undertake a feasibility study that—
(a) explains the strategic and operational benefits of the proposed PPP for the institution in terms of its strategic objectives and government policy;
(b) describes in specific terms—
(i) in the case of a PPP involving the performance of an institutional function, the nature of the institutional function concerned and the extent to which this institutional function, both legally and by nature, may be performed by a private party; and
(ii) in the case of a PPP involving the use of state property, a description of the state property concerned, the uses, if any, to which such state property has been subject prior to the registration of the proposed PPP and a description of the types of use that a private party may legally subject such state property to;
(c) in relation to a PPP pursuant to which an institution will incur any financial commitments, demonstrates the affordability of the PPP for the institution;
(d) sets out the proposed allocation of financial, technical and operational risks between the institution and the private party;
(e) demonstrates the anticipated value for money to be achieved by the PPP; and
(f) explains the capacity of the institution to procure, implement, manage, enforce, monitor and report on the PPP.
16.4.2 An institution may not proceed with the procurement phase of a PPP without prior written approval of the relevant treasury for the feasibility study.
16.4.3 The treasury approval referred to in regulation 16.4.2 shall be regarded as Treasury Approval: I.
16.4.4 If at any time after Treasury Approval: I has been granted in respect of the feasibility study of a PPP, but before the grant of Treasury Approval: III in respect of the PPP agreement recording that PPP, any assumptions in such feasibility study are materially revised, including any assumptions concerning affordability, value for money and substantial technical, operational and financial risk transfer, then the accounting officer or accounting authority of the institution must immediately—
(a) provide the relevant treasury with details of the intended revision, including a statement regarding the purpose and impact of the intended revision on the affordability, value for money and risk transfer evaluation contained in the feasibility study; and
(b) ensure that the relevant treasury is provided with a revised feasibility study after which the relevant treasury may grant a revised Treasury Approval: I.
16.5 Procurement – Treasury approvals IIA and IIB
16.5.1 Prior to the issuing of any procurement documentation for a PPP to any prospective bidders, the institution must obtain approval from the relevant treasury for the procurement documentation, including the draft PPP agreement.
16.5.2 The treasury approval referred to in regulation 16.5.1 shall be regarded as Treasury Approval: IIA.
16.5.3 The procurement procedure—
(a) must be in accordance with a system that is fair, equitable, transparent, competitive and cost-effective; and
(b) must include a preference for the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination in compliance with relevant legislation.
16.5.4 After the evaluation of the bids, but prior to appointing the preferred bidder, the institution must submit a report for approval by the relevant treasury, demonstrating how the criteria of affordability, value for money and substantial technical, operational and financial risk transfer were applied in the evaluation of the bids, demonstrating how these criteria were satisfied in the preferred bid and including any other information as required by the relevant treasury.
16.5.5 The treasury approval referred to in regulation 16.5.4 shall be regarded as Treasury Approval: IIB.
16.6 Contracting PPP agreements – Treasury Approval: III
16.6.1 After the procurement procedure has been concluded but before the accounting officer or accounting authority of an institution concludes a PPP agreement, that accounting officer or accounting authority must obtain approval from the relevant treasury—
(a) that the PPP agreement meets the requirements of affordability, value for money and substantial technical, operational and financial risk transfer as approved in terms of regulation 16.4.2 or as revised in terms of regulation 16.4.4;
(b) for a management plan that explains the capacity of the institution, and its proposed mechanisms and procedures, to effectively implement, manage, enforce, monitor and report on the PPP; and
(c) that a satisfactory due diligence including a legal due diligence has been completed in respect of the accounting officer or accounting authority and the proposed private party in relation to matters of their respective competence and capacity to enter into the PPP agreement.
16.6.2 The treasury approval referred to in regulation 16.6.1 shall be referred to as Treasury Approval: III.
16.7 Management of PPP agreements
16.7.1 The accounting officer or accounting authority of the institution that is party to a PPP agreement is responsible for ensuring that the PPP agreement is properly implemented, managed, enforced, monitored and reported on, and must maintain such mechanisms and procedures as approved in Treasury Approval: III for—
(a) measuring the outputs of the PPP agreement;
(b) monitoring the implementation of the PPP agreement and performances under the PPP agreement;
(c) liaising with the private party;
(d) resolving disputes and differences with the private party;
(e) generally overseeing the day-to-day management of the PPP agreement; and
(f) reporting on the PPP agreement in the institution’s annual report.
16.7.2 A PPP agreement involving the performance of an institutional function does not divest the accounting officer or accounting authority of the institution concerned of the responsibility for ensuring that such institutional function is effectively and efficiently performed in the public interest or on behalf of the public service.
16.7.3 A PPP agreement involving the use of state property by a private party does not divest the accounting officer or accounting authority of the institution concerned of the responsibility for ensuring that such state property is appropriately protected against forfeiture, theft, loss, wastage and misuse.
16.8 Amendment and variation of PPP agreements
16.8.1 The prior written approval of the relevant treasury is required for any material amendments to a PPP agreement including any material variations to the outputs therein, or any waivers contemplated or provided for in the PPP agreement.
16.8.2 The relevant treasury will approve a material amendment only if it is satisfied that the PPP agreement, if so amended, will continue to provide—
(a) value for money;
(b) affordability; and
(c) substantial technical, operational and financial risk transfer to the private party.
16.8.3 The accounting officer or accounting authority must substantially follow the procedure prescribed by regulations 16.4 and 16.6 for obtaining such treasury approval.
16.9 Agreements binding on the state
16.9.1 A PPP agreement or an agreement amending a PPP agreement, binds the state only if the agreement was entered into on behalf of an institution—
(a) by the accounting officer or accounting authority of that institution; and
(b) if all treasury approvals required in terms of this regulation 16 have been granted by the relevant treasury in respect of the PPP.
16.10 Exemptions
16.10.1 The relevant treasury may, subject to any terms and conditions that it considers appropriate and upon written application from an institution, exempt that institution whether in relation to a specific PPP or in general, from complying with any or all of the provisions of this regulation 16.
Supply Chain Management
16A1 Definitions
In this regulation, unless the context indicates otherwise, a word or expression to which a meaning has been assigned in the Act, has the same meaning, and—
“institution” means a department, constitutional institution or public entity listed in Schedule 3A and 3C of the Act; and
“official” means a person in the employ of a department, constitutional institution or public entity listed in Schedule 3A and 3C of the Act.
16A2 Application
16A2.1 This framework applies to all—
(b) constitutional institutions; and
(c) public entities listed in Schedules 3A and 3C to the Act.
16A3 Supply chain management system
16A3.1 The accounting officer or accounting authority of an institution to which these Regulations apply must develop and implement an effective and efficient supply chain management system in his or her institution for—
(a) the acquisition of goods and services; and
(b) the disposal and letting of state assets, including the disposal of goods no longer required.
16A3.2 A supply chain management system referred to in paragraph 16A.3.1 must—
(a) be fair, equitable, transparent, competitive and cost effective;
(b) be consistent with the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000);
(c) be consistent with the Broad Based Black Economic Empowerment Act, 2003 (Act 53 of 2003); and
(d) provide for at least the following—
(i) demand management;
(ii) acquisition management;
(iii) logistics management;
(iv) disposal management;
(v) risk management; and
(vi) regular assessment of supply chain performance.
16A4 Establishment of supply chain management units
16A4.1 The accounting officer or accounting authority must establish a separate supply chain management unit within the office of that institution’s chief financial officer, to implement the institution’s supply chain management system.
16A5 Training of supply chain management officials
16A5.1 The accounting officer or accounting authority must ensure that officials implementing the institution’s supply chain management system are trained and deployed in accordance with the requirements of the Framework for Minimum Training and Deployment issued by the National Treasury.
16A6 Procurement of goods and services
16A6.1 Procurement of goods and services, either by way of quotations or through a bidding process, must be within the threshold values as determined by the National Treasury.
16A6.2 A supply chain management system must, in the case of procurement through a bidding process, provide for—
(a) the adjudication of bids through a bid adjudication committee;
(b) the establishment, composition and functioning of bid specification, evaluation and adjudication committees;
(c) the selection of bid adjudication committee members;
(d) bidding procedures; and
(e) the approval of bid evaluation and / or adjudication committee recommendations.
16A6.3 The accounting officer or accounting authority must ensure that—
(a) bid documentation and the general conditions of a contract are in accordance with—
(i) the instructions of the National Treasury; or
(ii) the prescripts of the Construction Industry Development Board, in the case of a bid relating to the construction industry;
(b) bid documentation include evaluation and adjudication criteria, including the criteria prescribed in terms of the Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000) and the Broad Based Black Economic Empowerment Act, 2003 (Act 53 of 2003);
(c) bids are advertised in at least the Government Tender Bulletin for a minimum period of 21 days before closure, except in urgent cases when bids may be advertised for such shorter period as the accounting officer or accounting authority may determine;
(d) awards are published in the Government Tender Bulletin and other media by means of which the bids were advertised;
(e) contracts relating to information technology are prepared in accordance with the State Information Technology Act, 1998 (Act 88 of 1998), and any regulations made in terms of that Act;
(f) Treasury Regulation 16 is complied with when goods or services are procured through public private partnerships or as part of a public private partnership; and
(g) instructions issued by the National Treasury in respect of the appointment of consultants are complied with.
16A6.4 If in a specific case it is impractical to invite competitive bids, the accounting officer or accounting authority may procure the required goods or services by other means, provided that the reasons for deviating from inviting competitive bids must be recorded and approved by the accounting officer or accounting authority.
16.A6.5 The accounting officer or accounting authority may opt to participate in transversal term contracts facilitated by the relevant treasury. Should the accounting officer or accounting authority opt to participate in a transversal contract facilitated by the relevant treasury, the accounting officer or accounting authority may not solicit bids for the same or similar product or service during the tenure of the transversal term contract.
16A6.6 The accounting officer or accounting authority may, on behalf the department, constitutional institution or public entity, participate in any contract arranged by means of a competitive bidding process by any other organ of state, subject to the written approval of such organ of state and the relevant contractors.
16A7 Disposal and letting of state assets
16A7.1 Disposal of movable assets must be at market-related value or by way of price quotations, competitive bids or auction, whichever is most advantageous to the state, unless determined otherwise by the relevant treasury.
16A7.2 Notwithstanding the provisions of paragraph 16A7.1, accounting officers and accounting authorities may transfer movable assets free of charge to other departments, constitutional institutions or public entities by means of formal vouchers.
16A7.3 Any sale of immovable state property must be at market-related value, unless the relevant treasury approves otherwise.
16A7.4 The letting of immovable state property (excluding state housing for officials and political office bearers) must be at market- related tariffs, unless the relevant treasury approves otherwise. No state property may be let free of charge without the prior approval of the relevant treasury.
16A7.5 The accounting officer or accounting authority must review, at least annually when finalising the budget, all fees, charges, rates, tariffs or scales of fees or other charges relating to the letting of state property to ensure sound financial planning and management.
16A7.6 The accounting officer or accounting authority must, when disposing of firearms, obtain the approval of the National Conventional Arms Control Committee for any sale or donation of firearms to any person or institution within or outside the Republic.
16A7.7 The accounting officer or accounting authority must, when disposing of computer equipment, firstly approach any state institution involved in education and / or training to determine whether such an institution requires such equipment. In the event of the computer equipment being required by such a state institution, the accounting officer or accounting authority may transfer such equipment free of charge to the identified institution.
16A8 Compliance with ethical standards
16A8.1 All officials and other role players in a supply chain management system must comply with the highest ethical standards in order to promote—
(a) mutual trust and respect; and
(b) an environment where business can be conducted with integrity and in a fair and reasonable manner.
16A8.2 The National Treasury’s Code of Conduct for Supply Chain Management Practitioners must be adhered to by all officials and other role players involved in supply chain management.
16A8.3 A supply chain management official or other role player—
(a) must recognise and disclose any conflict of interest that may arise;
(b) must treat all suppliers and potential suppliers equitably;
(c) may not use their position for private gain or to improperly benefit another person;
(d) must ensure that they do not compromise the credibility or integrity of the supply chain management system through the acceptance of gifts or hospitality or any other act;
(e) must be scrupulous in their use of public property; and
(f) must assist accounting officers or accounting authorities in combating corruption and fraud in the supply chain management system.
16A8.4 If a supply chain management official or other role player, or any close family member, partner or associate of such official or other role player, has any private or business interest in any contract to be awarded, that official or other role player must—
(a) disclose that interest; and
(b) withdraw from participating in any manner whatsoever in the process relating to that contract.
16A8.5 An official in the supply chain management unit who becomes aware of a breach of or failure to comply with any aspect of the supply chain management system must immediately report the breach or failure to the accounting officer or accounting authority, in writing.
16A9 Avoiding abuse of supply chain management system
16A9.1 The accounting officer or accounting authority must—
(a) take all reasonable steps to prevent abuse of the supply chain management system;
(b) investigate any allegations against an official or other role player of corruption, improper conduct or failure to comply with the supply chain management system, and when justified—
(i) take steps against such official or other role player and inform the relevant treasury of such steps; and
(ii) report any conduct that may constitute an offence to the South African Police Service;
(c) check the National Treasury’s database prior to awarding any contract to ensure that no recommended bidder, nor any of its directors, are listed as companies or persons prohibited from doing business with the public sector;
(d) reject any bid from a supplier who fails to provide written proof from the South African Revenue Service that that supplier either has no outstanding tax obligations or has made arrangements to meet outstanding tax obligations;
(e) reject a proposal for the award of a contract if the recommended bidder has committed a corrupt or fraudulent act in competing for the particular contract; or
(f) cancel a contract awarded to a supplier of goods or services—
(i) if the supplier committed any corrupt or fraudulent act during the bidding process or the execution of that contract; or
(ii) if any official or other role player committed any corrupt or fraudulent act during the bidding process or the execution of that contract that benefited that supplier.
16A9.2 The accounting officer or accounting authority—
(a) may disregard the bid of any bidder if that bidder, or any of its directors—
(i) have abused the institution’s supply chain management system;
(ii) have committed fraud or any other improper conduct in relation to such system; or
(iii) have failed to perform on any previous contract; and
(b) must inform the relevant treasury of any action taken in terms of paragraph (a).
16A9.3 The National Treasury and each provincial treasury must establish a mechanism—
(a) to receive and consider complaints regarding alleged non-compliance with the prescribed minimum norms and standards; and
(b) to make recommendations for remedial actions to be taken if non-compliance of any norms and standards is established, including recommendations of criminal steps to be taken in the case of corruption, fraud or other criminal offences.
16A10 National Industrial Participation Program
16A10.1 An accounting officer or accounting authority must obtain clearance for a recommended bidder from the Department of Trade and Industry, in respect of contracts which are subject to the National Industrial Participation Program of that Department.
16A11 Reporting of supply chain management information
16A11.1 The accounting officer or accounting authority must submit to the relevant treasury such supply chain management information as that treasury may require.
16A11.2 A provincial treasury must submit to the National Treasury such supply chain management information as the National Treasury may require.
16A11.3 Information referred to in paragraphs 16A11.1 and 16A11.2 must be submitted to the relevant treasury in such format and at such intervals as that treasury may require.
16A12 Interim arrangements
16A12.1 If a department lacks the capacity to fully comply with these Regulations, that department may continue to make use of existing procurement processes through the relevant Tender Boards or other provincial procurement authorities (whichever applicable), subject to any instructions of the relevant treasury.
16A12.2 If a constitutional institution or public entity lacks the capacity to fully comply with these Regulations, that constitutional institution or public entity may, until 31 March 2005, continue to utilise their existing procurement procedures, provided that their existing procurement procedures are consistent with the contents of practice notes issued by the National Treasury.
Accounting and reporting requirements
17.1 Use of clearing and suspense accounts [Section 40(1)(a) of the PFMA]
17.1.1 All the transactions of an institution must be supported by authentic and verifiable source documents, clearly indicating the approved accounting allocation.
17.1.2 Should it be necessary, in exceptional cases, to account for revenue and expenditure transactions in a clearing or suspense account because the classification has not been resolved, the accounting officer must ensure that—
(a) the sources of the transactions are readily identifiable;
(b) amounts included in clearing or suspense accounts are cleared and correctly allocated to the relevant cost centres on a monthly basis;
(c) monthly reconciliations are performed to confirm the balance of each account; and
(d) reports are provided to the accounting officer about uncleared items on a monthly basis.
17.1.3 In each month’s section 40(4) report, the accounting officer must certify that the forecast / projection for the remainder of the financial year adequately makes provision for all amounts not yet cleared from clearing and suspense accounts.
17.2 Availability of financial information [Section 40(1)(a) of the PFMA]
17.2.1 Accounting officers of institutions must, subject to the provisions of the relevant national or provincial legislation, retain all financial information in its original form, as follows—
(a) information relating to one financial year- for one year after the audit report for the financial year in question has been tabled in Parliament or the provincial legislature; or
(b) information relating to more than one financial year- for one year after the date of the audit report for the last of the financial years to which the information relates.
17.2.2 After the expiry of the above retention periods, the information may, if required, be secured in an alternative form that ensures the integrity and reliability of the data and ensures that the information can be reproduced, if necessary, as permissible evidence in a court of law.
17.2.3 Irrespective of paragraph 17.2.1, the following standards apply to the retention of certain types of record: