DEPARTMENT OF HEALTH PROVINCIAL ADMINISTRATION: WESTERN CAPE REGULATIONS GOVERNING THE FINANCIAL PRESCRIPTS OF HEALTH FACILITY BOARDS

PROVINCIAL NOTICE./2004.. 2004 DEPARTMENT OF HEALTH PROVINCIAL ADMINISTRATION: WESTERN CAPE REGULATIONS GOVERNING THE FINANCIAL PRESCRIPTS OF HEALTH FACILITY BOARDS WESTERN CAPE HEALTH FACILITY BOARDS ACT, 2001 (NO. 7 OF 2001) The Provincial Minister of Health in the province of the Western Cape has, in terms of section 25 of the Western Cape Health Facility Boards Act, 2001, made the regulations set out in the Schedule to this notice SCHEDULE

SCHEDULE REGULATIONS GOVERNING THE FINANCIAL PRESCRIPTS OF HEALTH FACILITY BOARDS CONTENTS REGULATION 1. General definitions, application and date of commencement 1.1 General definitions 1.2 Application 1.3 Date of commencement 2. Finance committee 2.1 General 3. Audit reports and related matters 3.1 General 4. Financial misconduct 4.1 Financial misconduct by Boards or members 4.2 Financial misconduct by employees of Boards or officials of the Department 4.3 Applicable legal regime for disciplinary proceedings 4.4 Financial misconduct procedures for employees or members of a Board 4.5 Criminal proceedings 4.6 Reporting of disciplinary proceedings 5. Budgeting and related matters 5.1 Annual budget 6 Revenue management 6.1 General 7 Expenditure management 7.1 Responsibility of the Chairperson 7.2 Approval of expenditure 7.3 Payments and vouchers 7.4 Orders and order forms 1

7.5 Personnel costs 7.6 Advances and claims in respect of subsistence and other relevant incidental expenses 8 Unauthorised, irregular, fruitless and wasteful expenditure 8.1 General 9 Asset management 9.1 Responsibility for asset management 9.2 Recording of assets 9.3 Marking of Board property 9.4 Handing-over 9.5 Unauthorised use and transactions 9.6 Disposal and letting of assets 9.7 Assets bequeathed or donated to the Board 10 Management of debtors 10.1 Application 10.2 Responsibility for the management of debtors 10.3 Recovery of debts by instalments 10.4 Writing off of debts owing to the Board 10.5 Interest payable on debts to the Board 11 Management of losses and claims 11.1 General 11.2 Claims against the Board through acts or omissions 11.3 Claims by the Board against other persons 11.4 Claims by members, officials or employees against the Board 11.5 Losses or damages through criminal acts or omissions 11.6 Losses and damages through vis major and other unavoidable causes 11.7 Recovery of losses and damages 11.8 Writing-off of losses or damage 12 Loans, guarantees, leases and other commitments 12.1 General 12.2 Lease transactions 13 Money and property held in trust 13.1 General 13.2 Responsibility for trust money and property 13.3 Money must be kept in a trust account 13.4 Investment of trust money 13.5 Asset register 14 Banking and cash management 14.1 General 14.2 Current account and responsible persons 2

14.3 Private money, private bank accounts and cashing private cheques 14.4 Receipts 14.5 Direct deposits into bank account of Board 14.6 Depositing of Board moneys 14.7 Cash withdrawals from and deposits at a bank 14.8 Checking of moneys and face-value instruments 14.9 Use of safes 14.10 Cheques 14.11 Paid cheques received from the bank and reconciliation statements 14.12 Re-issue of cheques 14.13 Petty cash 14.14 Electronic payments and transfers 15 Basic accounting records and related issues 15.1 Use of clearing and suspense accounts 15.2 Availability of financial information 15.3 Changes to financial systems 15.4 Maintenance of certain basic accounting records 15.5 Written notification of duties 15.6 Method of dealing with costs, penalties, fines, exchange transactions, legal costs and recoveries 15.7 Accrual accounts 15.8 Recovery, disallowance and adjustment of payments 15.9 Examination of records 15.10 Erasers and use of ink 15.11 Safe custody 16 Annual financial statements 16.1 General 17 Gifts, donations and sponsorships 17.1 Granting of gifts, donations and sponsorships by the Board 17.2 Acceptance of gifts, bequests, donations and sponsorships to the Board 17.3 Identity of donors and sponsors 17.4 Raising of funds 17.5 Affiliated bodies linked to health facilities 18 Investment of funds 18.1 General 18.2 Certificate of investment compliance 19 Trusts 19.1 General 20 Travelling and other allowances 3

20.1 Transport expenses 20.2 Travelling and subsistence expenses 21 General financial matters 21.1 Stamps, face-value and other forms having a potential value 21.2 Securities to the Board 21.3 Postal and delivered articles 21.4 Shares 21.5 Legal advice regarding contract implications 4

1. GENERAL DEFINITIONS, APPLICATION AND DATE OF COMMENCEMENT 1.1 GENERAL DEFINITIONS 1.1.1 In these Health Facility Board 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 a trust means a trust as defined in the Trust Property Control Act, 1988 (Act No. 57 of 1988); Act means the Western Cape Health Facility Act, 2001 (Act No. 7 of 2001); contingent liabilities means existing liabilities that arose from past events and involves uncertainty as to the possibility of gain (asset) or loss (liability) to the Board and will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events that are outside the control of the Board; employee means an employee of the Board appointed on a contract basis as contemplated in section 10(h) of the Act; financial year means the period 1 April to 31 March of the following year; head of a health facility means the official in charge of the health facility, including an academic institution for which the Health Facility Board has been established; 5

official means a person in the employ of the Department providing secretarial, administrative and financial accounting support as contemplated in section 15 of the Act; old Board means a Hospital Board appointed in terms of the Hospitals Ordinance, 1946 (Ordinance 18 of 1946); operating lease means a contract where the lessor retains the risks and obligations incident to ownership and payments by the lessee are recorded as rental expenses; regional director means the director of the regional office of the Department other than the academic institutions in whose area the Health Facility Board has been established; reserved funds means funds set aside in the books of the Health Facility Board for specific purposes as agreed to by the Board; the Administration means the Provincial Administration of the Province of Western Cape; treasury means the Provincial Treasury; voucher means a document comprising requisitions, orders, delivery notes, invoices or payment forms and in the case of revenue, receipts. 6

1.2 APPLICATION 1.2.1 These Health Facility Board Regulations only apply to Health Facility Boards and Hospital Boards not yet replaced. 1.3 DATE OF COMMENCEMENT 1.3.1 These Health Facility Board Regulations come into operation on.. 2. FINANCE COMMITTEE 2.1 GENERAL 2.1.1 A Board may elect a specialist committee as envisaged in section 20 of the Act at its first or subsequent meeting to function as a finance committee. 2.1.2 The finance committee must consist of at least four members of the Board one of whom must be the chairperson as he/she is the accounting officer of the Board. The Deputy Chairperson must also be a member of the Finance Committee. 2.1.3 A quorum for a meeting of the finance committee is at least one half of the members. 2.1.4 The mandate of the finance committee should include making recommendations to the Board about procurement of services to best advantage, obtaining of most advantageous interest on investment of funds, receiving applications for funding and grants, the approving or rejecting of such applications. The Finance Committee must also scrutinise all financial transactions of the Board and advise the Board of its findings as well as render advice to the Board on financial matters pertaining to its activities. 7

2.1.5 The chairperson of the Board as accounting officer must however approve all recommendations submitted by the Finance Committee of the Board. In the absence of the Chairperson the Deputy Chairperson must perform this function. All recommendations approved by the Deputy Chairperson must be brought to the attention of the Chairperson as soon as reasonably possible. 2.1.6 Two members of the finance committee, one who must be the Chairperson of the Board and the other an ordinary member of the Board, must be appointed by the Board to sign cheques. Two deputies who must also be members of the Finance Committee of the Board must be assigned by the Board to assist during the absence of the Chairperson and the other ordinary member. All cheques signed during the absence of the Chairperson must be submitted to him/her as soon as he/she is available for scrutiny. The Board must minute the names of the above members accordingly. 2.1.7 No official or employee of the Board is allowed to sign or countersign cheques of the Board except where it is so authorised in exceptional circumstances by the Chairperson. In the latter instance one of the two signatories must be a Board member. 2.1.8 In the event of a Board deciding not to appoint a finance Committee then 2 members of the Board, one who must be the Chairperson of the Board must be appointed by the Board to sign cheques. 3. AUDIT REPORTS AND RELATED MATTERS 3.1 GENERAL 3.1.1 The annual financial statements of a Board must be audited annually by the Auditor-General or his nominated firm or person and at the expense of the Board. In the event that a party other than the Auditor General audits a Boards 8

financial statements then such party must be registered as either an Accountant or Auditor with the Public Accounts and Auditors Board 3.1.2 A Board may be subjected to an investigation or an ad hoc audit, if deemed necessary by the Minister or Head of Department, by officials of the Department or the Administration. 3.1.3 It is the board s duty to ensure that the necessary information and documents are submitted to the persons that are required to carry out any investigation or audit in terms of Regulation 3.1.2 3.1.4 The audit report on the annual financial statements, as well as any other report s received in terms of the above regulations must be tabled at the first meeting of the Board following the date of receipt thereof. The Board s comments, inclusive of any corrective action that may have to be taken, must be minuted and forwarded together with the applicable report, within the allotted time to the Head of the Department via the Regional Director s office or the office of the Head of the academic institution. 4. FINANCIAL MISCONDUCT 4.1 FINANCIAL MISCONDUCT BY BOARDS OR MEMBERS 4.1.1 A Board or a member of a Board commits an act of financial misconduct if the Board or member concerned wilfully or negligently (a) fails to comply with the requirements of these regulations, or (b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure. 9

4.2 FINANCIAL MISCONDUCT BY EMPLOYEES OF BOARDS OR OFFICIALS OF THE DEPARTMENT 4.2.1 An employee of a Board or an official of the Department to whom a power or duty is assigned in terms of these regulations commits an act of financial misconduct if that employee or official wilfully or negligently fails to exercise that power or perform that duty. In financial misconduct matters involving officials, the Chairperson must inform the Head of the facility concerned immediately who must follow the departmental disciplinary process if the allegations are substantiated. 4.2.2 Financial misconduct is a ground for dismissal or suspension of an employee of the Board. 4.3 APPLICABLE LEGAL REGIME FOR DISCIPLINARY PROCEEDINGS 4.3.1 A charge of financial misconduct against a member, employee or official referred to in regulation 4.1 and 4.2, must be investigated, heard and disposed of in terms of the statutory or other conditions of appointment or employment applicable to that member, employee or official and any prescripts contained in regulations 4.4. 4.4 FINANCIAL MISCONDUCT PROCEDURES 4.4.1 If an employee or member of a Board is alleged to have committed financial misconduct, the chairperson of the Board must ensure that an investigation is conducted into the matter and if sufficient grounds exist, must ensure that a disciplinary hearing is instituted. 10

4.4.2 The chairperson must ensure that such an investigation is instituted within 30 days from the date of discovery of the alleged financial misconduct. 4.4.3 If a chairperson is alleged to have committed financial misconduct, the Minister, as soon as he/she becomes aware of the alleged misconduct, must ensure that the Head of Department initiates an investigation into the matter and if the allegations are confirmed, holds a disciplinary hearing in accordance with the prescripts applicable. 4.4.4 The Head of Department may (a) direct that an official other than an official of the Department conducts the investigation; or (b) issue any reasonable requirement regarding the way in which the investigation should be performed. 4.5 CRIMINAL PROCEEDINGS 4.5.1 The chairperson must advise the Minister, the Head of Department and the Auditor-General of any criminal charges it has laid against any employee, official or member. 4.5.2 The Head of Department must advise the Minister and the Auditor-General of any criminal charges it has laid against any chairperson. 4.5.3 The Minister may direct a Board to lay criminal charges against any employee, official or member should a chairperson fail to take appropriate action. 11

4.6 REPORTING OF DISCIPLINARY PROCEEDINGS 4.6.1 The chairperson or the appointed investigating officer must, as soon as the disciplinary proceedings are completed, report to the Board, the Minister and the Head of Department on the outcome, including (a) the name, rank and position of the employee, official or member against whom the proceedings were instituted; (b) the charges, indicating the financial misconduct the employee, official or member is alleged to have committed; (c) the findings; (d) any sanction imposed on the employee, official or member; and (e) any further action to be taken against the employee, official or member, including criminal charges or civil proceedings. 12

4.6.2 The head of the health facility or regional director must inform the Minister, the Treasury and the Head of Department, the Department of Public Service and Administration and the Public Service Commission of the outcome of any criminal proceedings instituted against any official for financial misconduct in terms of these regulations. 4.6.3 The Head of Department must inform the Minister of the outcome of any criminal proceedings instituted against any chairperson for financial misconduct in terms of these regulations. 4.6.4 The chairperson must, on an annual basis, submit to the Department and Auditor-General a schedule of (a) the outcome of any disciplinary proceedings and/or criminal charges; (b) the names, ranks and positions of employees, officials or members involved; and (c) the sanctions and any further actions taken against these employees, officials or members. 4.6.5 The schedule mentioned in regulation 4.6.4 must be accompanied by a report which refers to any changes made to the Board s systems of financial and risk management as a result of any investigation. 13

5. BUDGETING AND RELATED MATTERS 5.1 ANNUAL BUDGET 5.1.1 The chairperson of the Board must table annually an operational budget for a financial year at an ordinary meeting before the start of that financial year, or in exceptional circumstances, on a date as soon as possible after the start of that financial year as the Minister may determine. 5.1.2 An annual budget must be in accordance with a format as may be prescribed, and must at least contain:- (a) Estimates of all revenue expected to be raised during the financial year to which the budget relates; (b) Estimates of current expenditure for that financial year (e.g. commitments brought forward, salaries, honorariums, bank fees and operational costs). (c) Estimates of capital expenditure (e.g. office equipment) for that financial year and the projected financial implications of that expenditure for future financial years; (d) Proposals for financing any anticipated deficit for that financial year; (e) The projected- (i) revenue for the previous financial year; (ii) expenditure for the previous financial year; and (f) any other information as may be prescribed. 14

5.1.3 If an annual operational budget is not approved before the start of the financial year to which it relates, funds to be withdrawn may not exceed the appropriation of the previous financial year until the budget is approved. 5.1.4 All expenditure should be recommended by the finance committee and approved by the Board and if not approved such expenditure will be deemed unauthorised until approved by the Board. 6. REVENUE MANAGEMENT 6.1 GENERAL 6.1.1 The chairperson must ensure that revenue is managed efficiently and effectively by instituting a tariff register that provides for the identification, collection, safeguarding, recording and reconciliation of information about revenue. 6.1.2 The tariff register must contain the following information: (i) (ii) (iii) (iv) Description of service. Date last amended. Current tariff per unit. Explanation of how the tariff was derived. 6.1.3 All tariffs must be reviewed at least annually by the Board and the following aspects must, where applicable, be taken into consideration during the determination/revision of the tariffs: types of products and/or services provided; direct and indirect costs incurred to provide the products and/or services; 15

exemptions and discounts; free products and/or services, and any aspects of material influence. 7. EXPENDITURE MANAGEMENT 7.1 RESPONSIBILITY OF THE CHAIRPERSON 7.1.1 The chairperson of a Board must ensure that internal procedures and internal control measures are in place for payment approval and processing. 7.2 APPROVAL OF EXPENDITURE 7.2.1 Boards are not subject to the prescripts of the Western Cape Provincial Tender Board Law, 1994 (No. 8 of 1994) in acquiring goods and services. As public funds are involved and to promote transparency and accountability, it is deemed desirable, where possible that similar procedures are followed as that of provincial facilities in obtaining goods and services and to promote accepted procurement principles. 7.2.2 A member or employee of a Board or an official may not spend or commit Board money except with the recommendation of the Finance Committee. In exceptional circumstances the chairperson of the Board may give authorisation for purchases. Such purchases must be presented for authorisation at the following Board meeting. 7.2.3 A Board may also where permissible, procure goods and services from existing provincial and national tenders should they so desire. 16

7.3 PAYMENTS AND VOUCHERS 7.3.1 Suitable arrangements must be made to ensure that all claims payable are received within a reasonable period to prevent claims being submitted long after services have been rendered. Every effort must be made to ensure that any permissible discounts are taken advantage of. 7.3.2 Monthly accounts and statements of outstanding balances rendered by suppliers to a Board must be verified with the records of the Board. Any discrepancies must immediately be taken up in writing with the supplier concerned. 7.3.3 Vouchers must be compiled for all payments. 7.3.4 Certificates in support of vouchers must be given by employees, officials or members who have actual knowledge of the goods supplied and the services rendered. 7.3.5 An employee, official or member furnishing an inaccurate certificate resulting in an irregular payment or overpayment may be liable for any loss or damage suffered. 7.3.6 The following must be certified in respect of the various services and claims: (a) Goods supplied that the supplies were in fact required for an approved service, were on receipt correct and in good condition, that the rates are in accordance with the relative quotation, contract or an agreement and that they are fair and reasonable and that the supplier is entitled to payment. 17

(b) Services rendered that the services rendered were necessary and were satisfactorily carried out, and that the rates are in accordance with the relative tariff, contract or agreement, or otherwise are fair and reasonable and that the supplier is entitled to payment. 7.3.7 Prior to a payment being made, the person verifying the voucher for payment must ensure that the documents in support of the voucher is in order. If for any reason a document is found to be defective, or if there are reasonable grounds for doubting its accuracy, the document must be returned to the employee or official who issued it, who must amend the mistake and initial the correction. It remains the duty of members who examine them to institute the necessary enquiry if in their opinion a certificate is inconsistent with the facts. 7.3.8 The person verifying the voucher for payment must thereafter certify it accordingly and make sure that the following requirements have been complied with before proceeding with the payment, viz. That the claim is (a) a proper charge against Board moneys and has not already been paid; (b) in accordance with a law, regulation, tariff or agreement or that it is fair and reasonable; (c) covered by competent authority; (d) correct in respect of the period covered by the claim; (e) correct with regard to computations; (f) supported, where applicable, by the necessary documents or an explanation of the absence thereof; and 18

(g) in general order. 7.3.9 A progress or part payment must not be made unless it is supported by a certificate indicating that the amount of the payment requested is fully covered by or equal to stores or equipment already so delivered or for the services already so rendered. 7.3.10 An initial or progress payment in terms of a contract or written agreement must not be considered an advance but must be brought into account against the appropriate service and a voucher for such payment must (a) show the total amount payable in terms of the contract or agreement; (b) show the total amount of all previous payments under the contract or agreement; (c) show the total payments to date, including the payment being made by the voucher; (d) show the balance due; and (e) be supported by a certificate from a duly authorised person that the supplier is entitled to the payment in terms of the contract or agreement. 7.3.11 Where the services of consultants are contracted to perform work on behalf of the Board, a certificate that a progress payment has become due under the contract must first be obtained from such consultants before a payment can be effected. 19

7.3.12 A final payment upon the completion of a contract must be supported by a certificate from a duly authorised person of the Board that the terms of the contract have been properly complied with in every respect. 7.3.13 Payments may only be made to persons to whom they are due or to their duly authorised representatives. Person s responsible for making the actual payment must satisfy themselves that the representatives concerned are duly authorised by means of a power of attorney or other proper authority to receive such payments. 7.3.14 Where an error or overcharge is made in an invoice or claim, or where such invoice or claim contains an item which is not acceptable as a charge against Board moneys, and the payment voucher differs from the account submitted, the correct amount due must be paid and the supplier or claimant notified accordingly. 7.3.15 Where requisitions, invoices or statements are the supporting documents to a payment voucher, sufficient detail must be given on the voucher to ensure that the expenditure can be identified should the requisitions, invoices or statements become detached or removed. 7.4 ORDERS AND ORDER FORMS 7.4.1 Orders for the purchase of goods and requisitions for the supply of services must only be made on consecutively numbered order forms printed in duplicate approved by the Board, and which bear the name of the Board. Such forms constitute an essential part of any vouchers submitted in support of payment. 7.4.2 When supplies or services are urgently required and are ordered by facsimile or telephone, the order form number must be given to the supplier. The order 20

form must then be forwarded to the supplier as soon as possible after the order has been placed. 7.4.3 Where the issue of an order form for the supply of goods or services has been overlooked and the omission is only discovered later, the order form must nevertheless be completed to avoid double payments. In such cases the supplier s copy, after having been suitably endorsed, must be placed in the order book under the date on which the goods were purchased and a suitable endorsement made on the order book copy. 7.4.4 The payment copy of the order form must be retained in the issuing office until the invoice with the necessary certifications are received, whereafter the payment voucher must be submitted for payment. 7.4.5 To prevent double payments in cases where the payment copy of an order form has been mislaid, the following procedure must be followed: (a) The details appearing on the book copy of the order form must be dispatched by the issuing office to the recipient of the goods or service for certification that the goods have been received and are as ordered, or that the service has been satisfactorily carried out. (b) When the certified order form is received back in the issuing office, the book copy of the order form must in addition to the requirements of regulation 7.4.6 be endorsed as follows: Original payment copy mislaid not previously paid. (c) Thereafter a photostat copy or a duplicate of the book copy must be used to serve as the payment copy and, as proof that the order has been executed, the certified form must be attached and submitted together with the invoice for payment. 21

7.4.6 Order form books must be examined at regular intervals to ensure that all accounts have been received and forwarded for payment. The number of the cheque or the payment number, or the date on which the account is passed for payment, or the date the account is finally disposed of or paid must be endorsed on all office copies of order forms issued. 7.5 PERSONNEL COSTS 7.5.1 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. 7.5.2 The chairperson must ensure that the personnel cost of all appointees, as well as promotion, salary increases, bonuses and merit awards can be met within the budgetary allocation of the Board. 7.5.3 For all employees, the chairperson 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. 7.5.4 Where remuneration is deposited into the banking account of an employee and a deposit is recalled or must be recalled for some reason, the following procedure must be followed in accounting for the moneys payable for recall: (a) Should the beneficiary request that the deposit be recalled in his/her interest, the costs for recall are payable by him/her; (b) Should a person in the employ of the Board be responsible for an erroneous deposit that needs to be recalled, the recovery of the costs for such recall must be recovered from that person. 22

(c) In cases where the recall is done in the interest of the Board, the costs for recall in that particular instance must be dealt with as a debit against the Board s account from which the person s salary is paid. 7.5.5 Payroll reports, certifying that the persons listed thereon are in fact entitled to receive the salaries or wages as indicated, must be filed in chronological order and be available for audit and inspection purposes. 7.6 ADVANCES AND CLAIMS IN RESPECT OF SUBSISTENCE AND OTHER RELEVANT INCIDENTAL EXPENSES 7.6.1 Where justified by circumstances advances may be granted by the Board in respect of subsistence and other relevant expenses to members, employees or officials. 7.6.2 A claim in respect of subsistence and other relevant expenses must be submitted immediately after the member, employee or official s return to his/her office. Advances must be offset against claims for subsistence and other expenses and in the event of a claim being less than the advance, the difference must immediately be repaid by the person concerned. 7.6.3 Suitable records must be maintained to avoid the double payment of claims or portions thereof. 7.6.4 Notwithstanding the fact that the Western Cape Provincial Treasury Instruction 8.3.6.7 indicates that persons in the employ of the Provincial Government who serve as members of Boards, committees or as advisors of Boards, must be paid subsistence and other expenses in terms of the Public Service Act, 1994 (as amended), which must be accounted for against the 23

votes of their departments, the Act stipulates that these costs must be borne by the Health Facility Board. 8. UNAUTHORISED, IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE 8.1 GENERAL 8.1.1 The chairperson of a Board 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. 8.1.2 When an employee or member of a Board or an official discovers unauthorised, irregular or fruitless and wasteful expenditure, that employee, official or member must immediately report such expenditure to the chairperson. Such expenditure must also be reported in the minutes of the next ordinary meeting of the Board. 8.1.3 Unauthorised, irregular or fruitless and wasteful expenditure when reported must be considered by the Board on whether the expense should be justified or not. If the expenditure can be justified the Board can authorise the expenditure. 8.1.4 When a chairperson determines the appropriateness of disciplinary steps against the employee, official or member responsible for the financial misconduct, the chairperson must take into account (a) (b) (c) the circumstances of the transgression; the extent of the expenditure involved; and the nature and seriousness of the transgression. 24

8.1.5 Losses or damages resulting from unauthorised, irregular or fruitless and wasteful expenditure must be recovered from the responsible official or employee or member of the Board. 8.1.6 The recovery of losses or damages resulting from unauthorised, irregular or fruitless and wasteful expenditure must be dealt with in accordance with regulation 11. 8.1.7 The amount of the unauthorised, irregular, fruitless and wasteful expenditure must be disclosed as a note to the annual financial statements of the Board. 9. ASSET MANAGEMENT 9.1 RESPONSIBILITY FOR ASSET MANAGEMENT 9.1.1 The chairperson of a Board must take full responsibility and ensure that proper control systems exist for assets and that preventative mechanisms are in place to eliminate theft, losses, wastage and misuse. 9.1.2 The chairperson must ensure that processes (whether manual or electronic) and procedures are in place for the effective, efficient, economical and transparent use of the Board s assets. 9.2 RECORDING OF ASSETS 9.2.1 A register of all assets under a Board s control, including information deemed necessary in respect of an asset or a category of assets, must be readily available for audit and inspection purposes. 25

9.3 MARKING OF BOARD PROPERTY 9.3.1 All equipment which is capable of being marked and which has not already been suitably marked, must be clearly marked to indicate ownership by the particular Board. 9.3.2 Upon disposal the Board s mark on equipment must be cancelled with a cross ( X ) to show that ownership has ceased. 9.4 HANDING-OVER 9.4.1 Where a change in persons in direct control of equipment takes place, a handing-over certificate must be completed and a copy retained for record and audit purposes. 9.4.2 If for any reason the person from whom the equipment is being taken over is not available, an impartial person must be nominated, in writing, to assist the person taking over with the verification of the equipment and the certification of any discrepancies. 9.4.3 In case of failure to comply with the requirements of a handing-over certificate, the person taking over may be held liable for any shortages, unless it can be established that the shortage existed prior to the person taking over. 9.5 UNAUTHORISED USE AND TRANSACTIONS 9.5.1 During the requisitioning, consideration, acceptance or allocation of quotations or any offer, no person employed by the Board or any person who acts on behalf of the Board may exercise or use his/her discretion, official powers or position in such a manner as to obtain for himself/herself or for any other person or legal person an unlawful or unauthorised advantage or an advantage 26

that serves to unlawfully prejudice the interests of the Board or any other person or legal person. 9.5.2 Equipment must only be kept in accommodation designated by the chairperson. 9.5.3 Equipment must only be used for official purposes. 9.6 DISPOSAL AND LETTING OF ASSETS 9.6.1 Disposal and letting of assets must be at market-related value or by quotation or auction, whichever is most advantageous to the Board. 9.7 ASSETS BEQUEATHED OR DONATED TO THE BOARD 9.7.1 All assets bequeathed or donated to a Board must on receipt be taken up in the asset register and such bequest and its terms and conditions must be minuted. 10. MANAGEMENT OF DEBTORS 10.1 APPLICATION 10.1.1 This regulation applies to all debts accruing to a Board and includes any amount owing to or receivable by the Board. 10.2 RESPONSIBILITY FOR THE MANAGEMENT OF DEBTORS 27

10.2.1 The chairperson of a Board must take effective and appropriate steps to timeously collect all money due 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 an attorney, where economical, to consider a legal demand and possible legal proceedings in a court of law could be done via the Branch: Legal Services of the Provincial Government. 10.3 RECOVERY OF DEBTS BY INSTALMENTS 10.3.1 Debts owing to the Board may, at the discretion of the chairperson, be recovered in instalments unless otherwise determined by agreement. 10.4 WRITING OFF OF DEBTS OWING TO THE BOARD 10.4.1 A chairperson may only write off a debt owed to a Board 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) (ii) (iii) recovery of the debt would be uneconomical; recovery would cause undue hardship to the debtor or his or her dependants; or it would be to the advantage of the Board to effect a settlement of its claim or to waive the claim. 28

(iv) and the write-off is approved by the Board and is accordingly minuted. 10.4.2 All debts written off must be disclosed in the annual financial statements, indicating the policy in terms of which the debts were written off. 10.5 INTEREST PAYABLE ON DEBTS TO THE BOARD 10.5.1 Interest may be charged on debts to the Board at the interest rate decided upon by the Board provided it does not exceed the interest charged by the Department. 11. MANAGEMENT OF LOSSES AND CLAIMS 11.1 GENERAL 11.1.1 Subject to the provisions of this regulation, the Board will bear its own damages and accident risks and be responsible for all claims and losses of property where these arise from Board activities by a member, official or employee who is liable in law and who is or was employed by a Board. However the Board may acquire the necessary insurance on properties and liabilities. 11.2 CLAIMS AGAINST THE BOARD THROUGH ACTS OR OMISSIONS 11.2.1 A Board must accept liability for any loss or damage suffered by a third party which arose from an act or omission of a member, official or employee, and does not recover compensation from such member, official or employee, provided the member, official or employee shall forfeit this cover if he or she, with regard to the act or omission, is liable in law and 29

(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 membership or employment; (d) acted recklessly or intentionally; (e) without prior consultation with the Board, made an admission that was detrimental to the Board; 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. 11.2.2 If in doubt, the chairperson may approach the Branch Legal Services of the Administration on whether an attorney must be consulted on questions of law on the implementation of regulation 11.2.1. 11.2.3 Except when a Board has accepted liability in terms of regulation 11.2.1, an amount paid by the Board for losses, damages or claims arising from an act or omission of a member, official or employee must be recovered from the member, official or employee concerned. 11.2.4 An attorney may only obligate the funds of a Board with the prior written approval of the chairperson. 30

11.3 CLAIMS BY THE BOARD AGAINST OTHER PERSONS 11.3.1 If the Board suffers a loss or damage and the other person denies liability, the chairperson may request the assistance of the Branch: Legal Services of the Administration before referring the matter to an attorney for legal action, including the recovery of the value of the loss or damage. 11.4 CLAIMS BY MEMBERS, OFFICIALS OR EMPLOYEES AGAINST THE BOARD 11.4.1 If a member, official or employee sustains a loss or damage in the execution of official duties and is not compensated, the Board may make good the loss or damage provided that the member, official or employee can prove such loss or damage. 11.5 LOSSES OR DAMAGES THROUGH CRIMINAL ACTS OR OMISSIONS 11.5.1 When it appears that the Board has suffered losses or damages through criminal acts or possible criminal acts or omissions, the matter must be reported, in writing, to the Head of the Department and the South African Police Service. Whether or not the member, official or employee is still a member or in the employ of the Board or the health facility, the chairperson must attempt to recover the value of the loss or damage from the member, official or employee responsible. 11.5.2 The Board 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. 31

11.5.3 When movable assets are written off, this must be noted in the asset register and minuted. 11.6 LOSSES AND DAMAGES THROUGH VIS MAJOR AND OTHER UN- AVOIDABLE CAUSES 11.6.1 The Board may write off losses and damages that result from vis major and other unavoidable causes. 11.7 RECOVERY OF LOSSES AND DAMAGES 11.7.1 Losses or damages suffered by a Board because of an act or omission by a member, official or employee must be recovered from such a member, official or employee if that member, official or employee is liable in law. 11.7.2 The chairperson must determine the amount of the loss or damage and, in writing, request that member, official or employee to pay the amount within 30 days or in reasonable instalments. If the member, official or employee fails to comply with the request, the matter must be handed to an attorney for the recovery of the loss or damage. The Board may request the assistance of the Branch: Legal Services before such hand-over. 11.7.3 A claim against a member or person must be waived if the provisions of regulation 11.2.1(a) to (f) are not applicable. 11.7.4 If in doubt, the chairperson must consult an attorney on questions of law in the implementation of regulation 11.7.1 and 11.7.3. 32

11.8 WRITING-OFF OF LOSSES OR DAMAGE 11.8.1 When considering writing off any loss or damage the Board must take full cognisance of all facts regarding the matter and their decision must be fully minuted. 12. LOANS, GUARANTEES, LEASES AND OTHER COMMITMENTS 12.1 GENERAL 12.1.1 The Board may not issue a guarantee, security or indemnity that may bind the Board, except with the prior approval of all members of the Board, provided such guarantee, security or indemnity does not exceed 50 % of the Board s total assets. 12.1.2 The chairperson of a Board must ensure that no member, official or employee of the Board or any other person borrows money on behalf of that Board, or issues an unauthorised guarantee, security or indemnity. The chairperson must ensure that appropriate misconduct or criminal proceedings are instituted against any person responsible for transgressions with regard to borrowings, guarantees, securities or indemnities. 12.1.3 Should the chairperson be responsible for transgressions with regard to borrowings, guarantees, securities or indemnities, the Minister must initiate appropriate misconduct or criminal proceedings against the chairperson as soon as he/she becomes aware of the transgression. 12.1.4 The chairperson must report on all known contingent liabilities of the Board in its annual report. 33

12.1.5 A Board may not borrow funds and may not run overdrafts. 12.2 LEASE TRANSACTIONS 12.2.1 For the purpose of this regulation, an operating lease is regarded as a contract that gives the lessee (the renter) the right to the use of property, plant or equipment for a fixed period of time with a fixed schedule of payments to the lessor (the owner). 12.2.2 The Chairperson of a Board may, for the purpose of conducting the Board s business, enter into lease transactions provided that such transactions are limited to operating leases. 12.2.3 The chairperson may under no circumstances enter into finance leases. For the purpose of this regulation, a lease is considered to be a finance lease if: (a) (b) (c) (d) (e) (f) the lease transfers ownership of the asset to the lessee by the end of the lease period; the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable, so that at the inception of the lease it is reasonably certain that the option will be exercised; the lease term is for the economic life of the asset even if the title is not transferred; at the inception of the lease, the present value of the minimum lease payments amount to at least 90 % of the fair value of the leased asset; the leased asset is of a specialised nature such that only the institution can use the asset without major modifications being made; the lessor s losses associated with cancellation of the lease by the lessee is borne by the lessee; or 34

(g) the leased asset cannot be easily replaced by another asset. 13. MONEY AND PROPERTY HELD IN TRUST 13.1 GENERAL 13.1.1 Regulation 14 is not applicable to the management of trust money in terms of this regulation. 13.2 RESPONSIBILITY FOR TRUST MONEY AND PROPERTY 13.2.1 For purposes of this regulation, trust money or property (bequeathed to a Board) is money or property to be administered by a Board as executor, tutor or curator in terms of the provisions of the Administration of Estates Act, 1965 (Act No. 66 of 1965). 13.2.2 The Board, through the chairperson 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. 13.2.3 The Board 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 of the Board. 13.3 MONEY MUST BE KEPT IN A TRUST ACCOUNT 13.3.1 The Board must, for each separate portion of trust money (a) open and maintain a separate bank account, called a trust account; 35

(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. 13.4 INVESTMENT OF TRUST MONEY 13.4.1 The Board 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 Treasury; (b) in public securities issued by the government; or (c) in other securities approved by Treasury. 13.4.2 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. 13.5 ASSET REGISTER 13.5.1 A separate asset register must be kept for all property held in trust. 36

14. BANKING AND CASH MANAGEMENT 14.1 GENERAL 14.1.1 The chairperson is responsible for establishing systems, procedures, processes and training and awareness programmes to ensure efficient and effective banking and cash management. 14.1.2 For purposes of this regulation, sound cash management includes (a) collecting revenue when it is due and banking it promptly; (b) making payments, no earlier than necessary, with due regard for efficient, effective and economical delivery and the 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; (e) pursuing debtors with appropriate sensitivity and rigour to ensure that amounts receivable by the Board are collected and banked promptly; (f) accurately forecasting the Board s cash flow requirements to optimise it s cash management responsibilities. (g) timing the in and outflow of cash; 37

(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 under-utilised assets; (j) performing bank reconciliation s on a regular basis to detect any unauthorised entries; (k) ensuring that dishonoured warrant vouchers and cheques are followedup immediately; and (l) the separation of duties to minimise the incidence of fraud. 14.2 CURRENT ACCOUNT AND RESPONSIBLE PERSONS 14.2.1 The Board must have a single current account (cheque account) at a commercial bank approved by the Head of the Department in which all funds must be deposited immediately upon receipt The Board may approve that a transmission account be opened at the approved bank for the receipt of donations in respect of reserved funds. This account must be cleared on a monthly basis by transferring the funds to the current account. The approval by the Board for such an account must be fully minuted.. 14.2.2 The chairperson of the Board must assign in writing the duties of persons responsible for the collection, receipt and banking of Board moneys and such persons are responsible for the safe custody of all such moneys under their control. 38

14.2.3 If a person entrusted with the receipt, payment or collection of Board moneys is relieved of his/her duties, either temporarily or permanently, his/her receipts and payments and cash books, or in the case of computerised systems the corresponding control accounts, must be checked and balanced and the correctness of the balances and cash on hand certified by the signatures of the person being relieved, the person taking over and the supervisor. If the person being relieved is for any reason not able to so certify, a third person must, where possible, be called upon to certify the correctness of the balance by appending his/her signature. 14.2.4 When a person is relieved as contemplated by regulation 14.2.3, a list must be compiled of the contents of any safe or deposit box within a safe handed over and this list must be certified by the persons referred to in that regulation. 14.3 PRIVATE MONEY, PRIVATE BANK ACCOUNTS AND CASHING PRIVATE CHEQUES 14.3.1 Private money may not be deposited into the Board s bank account nor may Board money be paid into a private bank account. 14.3.2 The safekeeping of private money or personal possessions in a Board s safe or strongroom is prohibited. 14.3.3 A Board s money may not be used to cash private cheques. 14.4 RECEIPTS 14.4.1 Every Board must have at it s disposal a receipt book which must provide for the following: (i) (ii) Receipts must be in duplicate. Receipts must be numbered consecutively. 39

(iii) (iv) (v) (vi) (vii) (viii) (ix) The name of the payee. The purpose for which payment is made. The amount paid in words and figures. Type of remittance received (cheque, cash or other). Date of receipt. Signature of recipient. Each receipt must be imprinted with the name of the Board. 14.4.2 Moneys received must be brought into account by the immediate issuing of an official receipt. 14.4.3 The original of the receipt is to be handed to the payee. 14.4.4 The copy of the receipt is the book copy and should stay in the receipt book. 14.4.5 No receipt may be issued for a post-dated cheque before the date of the cheque. 14.4.6 Cheques, bankers drafts, money orders, postal orders and other negotiable instruments of payment received by a person on behalf of and made out to the Board, must immediately on receipt thereof be crossed by adding the words not transferable between two parallel transverse lines. 14.4.7 Alterations must not be made to the name of the payee, the amount in words and the amount in figures in the official receipt, while no erasures of any kind must be permitted. Any receipt, which has been incorrectly filled in, must be cancelled and dealt with in the manner outlined in regulation 14.4.9. 14.4.8 All receipts must be completed in permanent black ink or with a non erasable black ball point pen. 40