Policy on Budget Management Status: Approved Custodian: Directorate: Finance and Administration Date approved: 2013-12-04 Decision No: SAQA 07102/13 Implementation date: 2013-12-05 Due for review: 2016.12-03 File Number: Policy on Budget Management 1
Table of Contents 1. PREAMBLE... 3 2. PURPOSE... 3 3. OWNERSHIP... 3 4. SCOPE OF PRACTICE... 3 5. PROCEDURE... 3 6. TYPE OF POLICY... 3 7. BUDGET OBJECTIVE... 3 8. PLANNING AND PREPARATION... 4 9. RESPONSIBILITIES... 5 10. APPROVAL... 5 11. EVALUATION OF PERFORMANCE... 6 Policy on Budget Management 2
1. PREAMBLE SAQA is required to comply with the requirements of the Public Finance Management Act (PFMA) and National Treasury Regulations insofar as the budgetary processes and submission thereof is concerned. 2. PURPOSE The purpose of this policy is to establish the responsibilities and procedures in respect of SAQA s annual operating, capital and revenue budgets. Budgetary control provides a formal framework for planning, which involves making sure that problems are anticipated and steps are taken to avoid or mitigate them. 3. OWNERSHIP The custodian of this policy is the Directorate: Finance and Administration. 4. SCOPE OF PRACTICE This policy applies to all staff members and Board committee members involved in the budgeting process and cycle and the authorisation thereof. 5. PROCEDURE The is to be read and implemented with this policy. 6. TYPE OF POLICY This policy is of a strategic nature. 7. BUDGET OBJECTIVE The main objectives of the budget are as follows: 7.1 To ensure that the budgetary process is in accordance with the Treasury; Policy on Budget Management minimum requirements as prescribed by the PFMA and National 3
7.2 To act as a control mechanism to monitor the scheduling and implementation of SAQA activities for each year; 7.3 To ensure that output of these planned activities are aligned to the business and strategic plans of SAQA; 7.4 To encourage and obtain the most cost-effective distribution of resources in a manner that will best assist SAQA in achieving its goals and objectives; 7.5 To decentralise budgetary responsibility and accountability, in so far as it is practicable to do so; and 7.6 To provide a management tool whereby operational performance can be evaluated. 8. PLANNING AND PREPARATION 8.1 The method to be followed for the preparation of budgets is a needsbased budget (NBB) which is prepared on zero-based principles. 8.2 The budget is prepared based on overall direction provided by the Board through their strategic planning process in the format approved by the Executive Authority. 8.3 The budget process involves the setting of macro level budgets over a three year period which is in line with the Medium Term Expenditure Framework (MTEF). 8.4 The budget for the next financial year must be prepared at the micro/detailed level. Policy on Budget Management 4
9. RESPONSIBILITIES 9.1 Each directorate or separate project is a budget centre and must be involved in the budgetary process. 9.2 The Director: Finance and Administration must ensure that the budgets of the various budget centres are co-ordinated to ensure that they are all complementary and in line with overall organisational objectives and policies. 10. APPROVAL 10.1 Budgets must be prepared and approved initially seven months prior to the commencement of the applicable financial year with a final approved submission due 4½ months prior to the commencement of the applicable financial year. 10.2 The approvals required are as follows: 10.2.1 Programme and activity assumptions including timeframes must first be agreed and approved by the Management Committee and then the Board; 10.2.2 The financial assumptions and the final budget must first be approved by the Chief Executive Officer and the Finance Committee respectively prior to submission of the final budget to the Board for approval. Policy on Budget Management 5
11. EVALUATION OF PERFORMANCE The budget represents a target against which the financial performance of Directorates can be assessed. Effective budget management will be a primary criterion for performance evaluation. Policy on Budget Management 6
Procedures for Budget Management Status: Approved Custodian: Directorate: Finance and Administration Date approved: 2013-12-04 Decision number: SAQA 07102/13 Implementation date: 2013-12-04 Due for review: 2016-12-03 File Number: 1
TABLE OF CONTENTS 1. PREAMBLE. 3 2. PURPOSE 3 3. CO-ORDINATION AND CONTROL..... 3 4. PROCEDURES.... 3 5. VIREMENTS (BUDGET TRANSFERS)... 6 6. PLANNED SEQUENCE OF ACTIVITIES IN PREPARING THE BUDGET... 6 7. REPORTING.... 7 2
1. PREAMBLE SAQA is required to comply with the requirements of the Public Finance Management Act (PFMA) and National Treasury Regulations insofar as the budgetary processes and submission thereof is concerned. 2. PURPOSE This document sets out the procedures to be followed to establish the annual budget and to monitor actual performance against that budget. 3. CO-ORDINATION AND CONTROL 3.1. Budgetary control integrates budgets for various Directorates within SAQA and each Directorate must individually recognise the overall objectives from their plans. 3.2. Each year the Director: Finance and Administration must require that the Director of each budget centre submits their programmes and activities assumptions. 3.3. To help in this task, the Director: Finance and Administration must provide each Directorate with a budget preparation guide and the required templates, which documents the roles and responsibilities of all Directorates within the budgetary process. 4. PROCEDURES 4.1. The two essential elements of the budget are: 4.1.1 The financial assumptions; and 4.1.2 The programmes and activities assumptions. The budget will be produced by applying the one set of assumptions to the other. 3
4.2. The financial assumptions will include the following: 4.2.1 The rate of inflation; 4.2.2 The rate of increase in remuneration; 4.2.3 The rate of increase in air fares; 4.2.4 The rate of increase in travel reimbursement rates; 4.2.5 The charges to be made to generate revenue; and 4.2.6 The revenue to be made available by Government and other funders. 4.3. The Director: Finance and Administration is responsible for submitting the proposed assumptions to the Chief Executive Officer and then to the Finance Committee for approval. 4.4. The process for establishing the programme and activity assumptions is as follows: 4.4.1 The Executive Office is responsible for submitting the detailed strategic goals and objectives and the Annual Performance Plan (APP) for the year to the Board for approval. These goals and objectives and APP must be in accordance with the rolling fiveyear Business Plan, which incorporates the Strategic Plan, previously approved by the Board; 4.4.2 Each Director is responsible for setting his/her strategic goals and objectives for the year, which will enable the goals and objectives 4
of the organisation, as a whole, to be achieved. These must be approved by the Chief Executive Officer. 4.4.3 Each Director is then responsible for defining the programmes and activities necessary to achieve the goals and objectives. This definition must include details of resources required. These details will include requirements for: 4.4.3.1 Number and level of staff; 4.4.3.2 Assets; 4.4.3.3 Meetings, giving details of numbers of persons, from where they come and their travel and subsistence requirements; 4.4.3.4 Support, e.g. telephones, printing and postage; and 4.4.3.5 Contractors and consultants. 4.5 The Director: Finance and Administration is responsible for applying the financial assumptions to the programmes and activities assumptions in order to produce the final budget figures. 4.6 The final budget must be a balanced budget where revenue equals expenditure. The Chief Executive Officer and Chief Financial Officer are responsible for agreeing to adjustments to Directorate budget proposals in order to achieve this situation, before the final proposed budget is submitted to the Finance Committee for approval. 4.7 Each Director must break down his/her finally approved budget into months, depending on the expected timing of income and expenditure flows. 5
5. VIREMENTS (BUDGET TRANSFERS) Refer to policies and procedures manual on Virements. 6. PLANNED SEQUENCE OF ACTIVITIES IN PREPARING THE BUDGET (The following are the latest dates and the activities may begin earlier) Timing Responsibility Activity Mid June Director: Finance and Administration To be ascertained from the Minister of Higher Education and Training and other funders the availability of funding. 4 th week June Management Committee Proposals regarding strategic goals and objectives to be finalised. 1 st week July Management Committee Proposals regarding programmes and activities to be finalised. 2 nd week July Director: Finance and Administration Proposals regarding financial assumptions to be finalised. 2 nd week July Director: Finance and Administration Budget forms and instructions to be issued to Directors. 3 rd week July All Directors Budget forms to be completed and returned to Director: Finance and Administration. 4 th week July Director: Finance First draft budget to be produced. and Administration 1st week August. Director: Finance and Administration First draft budget to be discussed with Chief Executive Officer and other Directors and revised if necessary. Mid August Board Final 1 st budget to be submitted for approval to the Finance Committee and then to the Board. 6
Before end August Mid November Board Board Final 1 st budget to be submitted to the Department. Final budget to be submitted to the Department for approval. 7. REPORTING 6.1 Monthly management committee meetings must be held to ensure that operational targets are met and issues resolved. 6.2 The Director or Deputy Director: Finance and Administration is responsible for discussing each quarter the income and expenditure with the Directors of each Directorate to obtain explanations for over/under expenditure against the budget. 6.3 The Director or Deputy Director: Finance and Administration is responsible for preparing monthly and quarterly management financial statements, comparing actual with budgeted income and expenditure and showing the resulting variances by cost centre.. 6.4 The Director: Finance and Administration must report quarterly on the variances, projections and explanations, to the Finance Committee. 6.5 The Director: Finance and Administration must report to the Board on a quarterly basis in the format required. 7