What Is The Core Objective Of The Reform To Municipal Financial Management?

What is the difference between PFMA and MFMA?

For Local Government, this includes the Municipal Finance Management Act (MFMA), whereas for other Public Sector entities, the Public Finance Management Act (PFMA) as well as the regulations issued in terms of the Acts and other relevant legislation..

What does mSCOA stand for?

municipal Standard Chart of AccountsNational Treasury rolls out training on municipal Standard Chart of Accounts (mSCOA)

What is an example of irregular expenditure?

For example, a department, trading entity, constitutional institution or public entity that incurred expenditure related to a public private partnership without obtaining the prior written approval of the relevant treasury, as required by Treasury Regulation 16.4.

What does PFMA mean?

Public Finance Management Actfruitless and wasteful expenditure, as defined in section 1 of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) and the application of procedures related thereto. DEFINITION.

What is the purpose of the MFMA?

The MFMA aims to modernise budget and financial management practices by placing local government on a financially sustainable footing and supports cooperative government between the spheres of government. This will maximise the capacity of municipalities to deliver services to its residents, users and customers.

What is Unauthorised expenditure?

Unauthorised expenditure refers to expenditure that municipalities incurred without provision having been made for it in the budget approved by the council or which does not meet the conditions of a grant.

Why do you think it is important for municipalities to have proper financial systems?

Effective financial management can help municipalities to transform their local areas into a better place to live and work. … One of a councilor’s greatest responsibilities is approving and regularly monitoring a municipality’s budget that provides money to implement the visions.

What is the definition of public financial management?

Public financial management (PFM) is critical to basic economic governance and essential in establishing the performance, legitimacy and accountability of functional states. Public financial management has to do with the effective administration of funds collected and spent by governments.

What is current expenditure?

Current expenditures refer to short-term spending that is fully expensed in the fiscal period in which it is incurred. … Examples of this type of expenditure include wages, salaries, raw material costs, and administrative expenses.

How does the local government get money?

Local government revenue comes from property, sales, and other taxes; charges and fees; and transfers from federal and state governments. Taxes accounted for 42 percent of local general revenue in 2017. … Revenue from property, sales, and other taxes totaled $707 billion, or 42 percent of general revenue.

What is wasteful and fruitless expenditure?

Fruitless and wasteful expenditure refers to expenditure that was made in vain and could have been avoided had reasonable care been taken. Such expenditure includes interest, the payment of inflated prices, and the cost of litigation that could have been avoided.

What are the 6 principles of finance?

There are six basic principles of finance, these are:Principles of risk and return.Time value of money.Cash flow principle.Profitability and liquidity.Principles of diversity.Hedging principle.

What are the 3 types of budgets?

Synopsis. Depending on the feasibility of these estimates, Budgets are of three types — balanced budget, surplus budget and deficit budget.

What are the three types of financial management?

The three types of financial management decisions are capital budgeting, capital structure, and working capital management.

How local authorities get their financial availability?

It is financed largely by State grants with the balance being funded from development levies and borrowings and own internal resources and property sales. In the case of some projects (e.g. local authority offices) they may be funded entirely by local authority own resources and borrowing.