SOL PLAATJE MUNICIPALITY

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Transcription:

SOL PLAATJE MUNICIPALITY Irregular Expenditure Policy For adoption with the tabled Budget: 2015/16 MTREF Date: 27 May 2015 Council Resolution: C99/05/15

Table of Contents 1. POLICY OBJECTIVE... 2 2. DEFINITION... 2 3. LEGISLATIVE FRAMEWORK... 2 4. SCOPE OF APPLICATION... 2 5. DISCOVERY OF IRREGULAR EXPENDITURE... 3 6. IRREGULAR EXPENDITURE REGISTER... 3 7. DEALING WITH IRREGULAR EXPENDITURE... 4 8. DETERMINATION OF RELEVANT AUTHORITY... 4 9. DISCLOSURE OF IRREGULAR EXPENDITURE IN THE ANNUAL FINANCIAL STATEMENTS... 5 10. ACCOUNTING FOR IRREGULAR EXPENDITURE... 5 11. APPROVAL... 6 SOL PLAATJE MUNICIPALITY Page 1

1. POLICY OBJECTIVE The objective of this Policy is to provide a regulatory framework on the procedures to be followed when dealing with irregular expenditure, the disclosure of irregular expenditure in the Annual Financial Statements (AFS) and accounting for irregular expenditure in the records of the municipality. 2. DEFINITION Irregular expenditure is defined in section 1 of the Municipal Finance Management Act (MFMA 56 of 2003), as expenditure, other than unauthorized expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation including: (a) this Act; or (b) Municipal Systems Act (c) Public Office Bearers Act (d) Supply Chain Management Regulations, Policy or any by-law For the purpose of this policy, irregular expenditure includes any expenditure incurred in contravention of the policies and finance directives of the department. 3. LEGISLATIVE FRAMEWORK This policy is informed and based on the following prescripts: Section 32 of Municipal Finance Management Act, Act 56 of 2003 Supply Chain Management Regulations Supply Chain Management Policy National Treasury Practice Note 4 of 2008/2009. Treasury Regulations as they apply to the municipality 4. SCOPE OF APPLICATION SOL PLAATJE MUNICIPALITY Page 2

This policy is applicable to Sol Plaatje Municipality and all its officials. POLICY 5. DISCOVERY OF IRREGULAR EXPENDITURE 5.1 When an official of the municipality discovers possible irregular expenditure, that official must within 48 hours after discovery report such expenditure to his or her Senior Manager who in turn must report the matter to the Chief Financial Officer. 5.2 Possible irregular expenditure discovered by an official in the financial management Directorate must immediately be reported to the Manager responsible for Expenditure. Such expenditure must be reported to the Chief Financial Officer on a monthly basis. 5.3 The Office of the Chief Financial Officer must investigate any possible irregular expenditure and report such expenditure in writing to the Accounting Officer. 5.4 The Chief Financial Officer shall assign an official with appropriate experience to investigate cases of possible irregular expenditure. 5.5 The investigation official will have the powers to obtain written explanations from all parties involved in order for him/her to make an informed recommendation to the Chief Financial Officer. 5.6 All investigations regarding irregular expenditure must be finalized within 30 days of the assignment thereof. 5.7 Irregular expenditure discovered by the Auditor General must be reported to the Accounting Officer by the Chief Financial Officer. 5.8 Irregular expenditure must be included in the In-Year Monitoring Report and Compliance Certificate submitted to the Accounting Officer 6. IRREGULAR EXPENDITURE REGISTER 5.9 The Expenditure division must maintain an Irregular Expenditure Register and record all cases of irregular expenditure incurred. 5.10 This register must be kept up to date to track all irregular expenditure and for purpose of internal and external audit. SOL PLAATJE MUNICIPALITY Page 3

7. DEALING WITH IRREGULAR EXPENDITURE 5.11 In terms of MFMA section 32 the Accounting Officer must take effective and appropriate disciplinary steps against any municipal official who incurs irregular expenditure. As per Treasury Regulations 9.1.3 the following must be taken into consideration when determining the appropriate disciplinary steps: 5.11.1 the circumstances of the transgression; 5.11.2 the extent of the expenditure involved; and 5.11.3 the nature and seriousness of the transgression. 5.12 The official investigating the irregular expenditure must forward a full report, with recommendations, to the Chief Financial Officer for consideration. 5.13 The Chief Financial Officer must evaluate all reports in terms of the applicable legislation and forward his/her recommendations to the Accounting Officer. 5.14 In the event that the relevant authority is not the Accounting Officer, the recommendation of the Accounting Officer must be forwarded to the relevant authority. 5.15 If liability for the irregular expenditure can be attributed to an official, a debt account must be created if such an official is liable in law. 5.16 Immediate steps must thereafter be taken to recover the amount from the official concerned. 8. DETERMINATION OF RELEVANT AUTHORITY 5.17 As per Practice Note 4 of 2008 the relevant authority for condonement of irregular expenditure is the person or institution whose approval would have been required prior to entering into that transaction or incurring such expenditure or the institution responsible for the relevant legislation. 5.18 The following are categories of irregular expenditure that can be condoned by the relevant/applicable authority: Categories of irregular expenditure Irregular expenditure incurred as a result of noncompliance with a Supply Chain Management where prior written approval was required from the Accounting Officer Irregular expenditure incurred as a result of noncompliance with Supply Chain Management Policy which required cognizance of Council For example, the Department, procured goods or services by means of price quotations where the Relevant authority Council Council SOL PLAATJE MUNICIPALITY Page 4

value of the purchase exceeded the threshold values determined by the Supply Chain Management Policy Irregular expenditure incurred as a result of the department procuring goods or services by means other than through competitive bids and where reasons for deviating from inviting competitive bids have not been recorded and approved by the accounting officer. (Supply Chain Management Policy) Irregular expenditure incurred as a result of nocompliance with a requirement of the institution s delegations of authority issued in terms of the MFMA. Irregular expenditure incurred as a result of noncompliance with a provision contained in any applicable legislation. Accounting Officer Accounting Officer Accounting Officer Notwithstanding the above condonement, the Accounting Officer must report to the South African Police Service all cases of alleged irregular expenditure that constitutes a criminal offence or theft and fraud has occurred in the municipality The Council of a municipality must take all reasonable steps to ensure that all cases referred to above are reported to the South African Police Service if the charge is against the Accounting Officer the Accounting Officer fails to comply with the above requirement The Minister acting with the concurrence of the Cabinet member responsible for local government may regulate the application of this section by regulation in terms of section 168. 9. DISCLOSURE OF IRREGULAR EXPENDITURE IN THE ANNUAL FINANCIAL STATEMENTS 5.19 All irregular expenditure must be disclosed as a note to the Annual Financial Statements of the Municipality. 5.20 The Municipality will use the format of the above note as prescribed by preparation guide for the compilation of Financial Statements issued by the Office of the Accountant-General. 10. ACCOUNTING FOR IRREGULAR EXPENDITURE SOL PLAATJE MUNICIPALITY Page 5

5.21 Irregular expenditure that was incurred and identified during the current financial and which was condoned before year end and/or before finalization of the financial statements must also be recorded appropriately in the irregular expenditure register. 5.22 Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end must be recorded in the irregular expenditure register. 5.23 Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned. 5.24 Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the relevant authority must be recorded appropriately in the irregular expenditure register. 5.25 If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant program/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register 11. APPROVAL 11.1 The Irregular Expenditure Policy has been endorsed by management. 11.2 Approved by: Council SOL PLAATJE MUNICIPALITY Page 6