Understanding the Classification Framework and implication on financial reform.

Understanding the Classification Framework and implication on financial reform

Who is Invictus▪We are firm managed and owned by Chartered

Accountant.▪We are level 1 – BBBEE ▪We are based in the KwaZulu-Natal, however we work

throughout the country.▪We are experts on Municipal, Provincial and National

Standard Chart of Accounts.▪We have designed all the training material on SCOA

and mSCOA for the National Treasury▪We are an accredited training service provider with

FASSET and PSETA

PROBLEM STATEMENT 1

▪REGULATIONS AND LEGISLATIVE MANDATES

• All municipalities must implement SCOA• Effective 1 July 2017• local government accountability cycle‘• Recording and classification of municipal budget and

financial information at a transaction level• 7 Segments• Record all financial transactions and data in the

applicable segment.• May not contain data which is mapped or extrapolated

TIME IS RUNNING OUT

DAYS HOURS

1 July 2017

632 12

PROBLEM STATEMENT 2

▪Excel based Chart – Not easy to navigate

1 2 3 4 5 6 7 8 9 10 11 12 13

N/a PC 000 000 000 000 000 000 000 000 000 000 000 000 0 No No N/a All Capital usually applies to expenditure of a "long

Capital

N/a PC 001 000 000 000 000 000 000 000 000 000 000 000 0 No No N/a All Projects are classif ied in this category if complying

Infrastructure

N/a PC 001 001 000 000 000 000 000 000 000 000 000 000 0 No Yes Add Project

All Land acquired not part of an infrastructure project.

Land

N/a PC 001 002 000 000 000 000 000 000 000 000 000 000 0 No No N/a All This category is disaggregated into

Existing

N/a PC 001 002 001 000 000 000 000 000 000 000 000 000 0 No No N/a All Rehabilitation and Refurbishment specif ic to

Rehabilitation and Refurbishment


All Capital expenditure on existing infrastructure

Airports

N/a PC 001 002 001 002 000 000 000 000 000 000 000 000 0 No No N/a NERSA Capital expenditure on existing infrastructure

Electricity


NERSA Capital expenditure on existing infrastructure

Automated/Prepaid Meters



Buildings, Fixtures and Improvements



Conventional Meters



Leasehold Improvements



Leased Property on Customer Premises



Other Installation on Customers Premises



Overhead Conductors and Devices



Poles, Tow ers and Fixtures



Storage Battery and Equipment



Street Lighting and Signal Systems



System Communication and Control



Transformer Station Equipment - Normally Primary above 132kv



Transformer Station Equipment - Normally Primary below 132kv

mSCOA VERSION 5.3 [Released April 2015]

SEGMENT: PROJECTSTANDARD CHART OF ACCOUNTS

113 4 5 6Principle Applicability 8 9 10

REPORTING STRUCTURE

127Pos

VAT

StatCount

Posting Level

(Yes/No)

Breakdow n Allowed (Yes/No)

Code Structure Definitions1 2

1 2 3 4 5 6 7 8 9 10 11 12 13N/a IA 000 000 000 000 000 000 000 000 000 000 000 000 0 No No N/

aAll As

seAssets

N/a IA 001 000 000 000 000 000 000 000 000 000 000 000 0 No No N/a

All Curre

Current Assets

N/a IA 001 001 000 000 000 000 000 000 000 000 000 000 0 No No N/a

All Cash

Cash and Cash Equivalents

N/a IA 001 001 001 000 000 000 000 000 000 000 000 000 0 No No N/a

All This

Cash at Bank

N/a IA 001 001 001 001 000 000 000 000 000 000 000 000 0 No Yes

Add

All This

Bank Account

N/a IA 001 001 001 002 000 000 000 000 000 000 000 000 0 No Yes

Add

All This

Savings Account

N/a IA 001 001 002 000 000 000 000 000 000 000 000 000 0 No No N/a

All Inves

Call Deposits and Investments

N/a IA 001 001 002 001 000 000 000 000 000 000 000 000 0 No Yes

Add

All This

Special Deposit for the Payment of Interest

N/a IA 001 001 002 002 000 000 000 000 000 000 000 000 0 No Yes

Add

All This

Special Deposit for the Payment of Dividend

N/a IA 001 001 002 003 000 000 000 000 000 000 000 000 0 No Yes

Add

All Short-

Demand and Time Loans, Banker's Acceptance

N/a IA 001 001 002 004 000 000 000 000 000 000 000 000 0 No Yes

Add

All Tran

National Government Investment Securities

N/a IA 001 001 002 005 000 000 000 000 000 000 000 000 0 No Yes

Add

All Tran

Marketable Securities

N/a IA 001 001 003 000 000 000 000 000 000 000 000 000 0 No No N/a

All Cash

Cash on Hand

N/a IA 001 001 003 001 000 000 000 000 000 000 000 000 0 Yes

Yes

Add

All Asse

Cashier Floats

N/a IA 001 001 003 002 000 000 000 000 000 000 000 000 0 Yes

Yes

Add

All Cash

Cash in Transit

8 9 11 12104Applic

DEFINI

1 2 5


SEGMENT: ITEM - ASSETSSTANDARD CHART OF ACCOUNTS REPORTING STRUCTURE

Posting Level

VAT Code Structure Count

Posting

Breakd

Princi

6 73

GFS 1 2 3 4 5 6 7 8 9 10 111 2 3 4 5 6 7 8 9 10 11 12

N/a

0000 FX 000 000 000 000 000 000 000 000 000 000 0 No No N/a N/a Function is the

Function

N/a

0000 FX 001 000 000 000 000 000 000 000 000 000 0 No No N/a N/a This group

Community and Social Services

N/a

0000FX

001 001 000 000 000 000 000 000 000 000 0 No No N/a N/a Core Functio

Core Function

Non-

0506FX

001 001 001 000 000 000 000 000 000 000 0 Yes Yes Add detail to the sub-

Local Municipality

Including old

Aged Care, Home Assistance and Transport Facilities

Non-

0507FX


Local Municipality

Facilities for

Animal Care and Diseases

Stan

0504FX


Local Municipality,

Includes all

Cemeteries, Funeral Parlours and Crematoriums

Non-

0505FX


Local Municipality

Child Care

Child Care Facilities

Stan

0503FX


Local Municipality

Exhibition halls

Community Halls and Facilities

Non-

0501FX


Local Municipality

Includes all

Libraries and Archives

Exe

0507FX


Local Municipality

Including

Literacy Programmes

Stan

0502FX


Local Municipality

Including

Museums and Art Galleries

Stan

0508FX


Local Municipality

This functio

Theatres

Stan

0508FX


Local Municipality

This functio

Zoo's

Principle Applicability REPORTING STRUCTURE - Version 5.2: COMMENTS UPDATEDDefinitions

STANDARD CHART OF ACCOUNTS

CODE STRUCTUREPostin

VAT In

Count

Posting Level (Yes/No)

Breakdown Allowed (Yes/No)


SEGMENT: FUNCTION

1 2 3 4 5 6 7 8 9 10 11 12 13N/a

F 000 000 000 000 000 000 000 000 000 000 000 000 0 No No N/a All Fund

N/a

F 001 000 000 000 000 000 000 000 000 000 000 000 0 No No N/a All Revenue

N/a

F 001 001 000 000 000 000 000 000 000 000 000 000 0 No No N/a All General Revenue

N/a

F 001 001 001 000 000 000 000 000 000 000 000 000 0 Yes No N/a All Disposal of Property, Plant and Equipment

N/a

F 001 001 002 000 000 000 000 000 000 000 000 000 0 No No N/a All Equitable Share

N/a

F 001 001 002 001 000 000 000 000 000 000 000 000 0 Yes No N/a All Administration

N/a

F 001 001 002 002 000 000 000 000 000 000 000 000 0 Yes No N/a All Basic Services

N/a

F 001 001 002 003 000 000 000 000 000 000 000 000 0 Yes No N/a All Community Services

N/a

F 001 001 003 000 000 000 000 000 000 000 000 000 0 Yes No N/a All Fines, Penalties and Forfeits

N/a

F 001 001 004 000 000 000 000 000 000 000 000 000 0 No No N/a All Interest and Dividends

N/a

F 001 001 004 001 000 000 000 000 000 000 000 000 0 No No N/a All Interest

N/a

F 001 001 004 001 001 000 000 000 000 000 000 000 0 Yes No N/a All External Investment

N/a

F 001 001 004 001 002 000 000 000 000 000 000 000 0 Yes No N/a All Outstanding Debtors

N/a

F 001 001 004 002 000 000 000 000 000 000 000 000 0 Yes No N/a All Dividends Received

N/a

F 001 001 005 000 000 000 000 000 000 000 000 000 0 Yes No N/a All Licences and Permits

N/a

F 001 001 006 000 000 000 000 000 000 000 000 000 0 Yes No N/a All Rental of Facilities and Equipment

SEGMENT: FUNDING

8 9

STANDARD CHART OF ACCOUNTS

Account Number

VAT St

Postin

REPORTING STRUCTURE

2 3 4

SCOA FOR MUNICS: VERSION 5.2 [Released November 2014]

1 10 11 12Count

Posting Level

(Yes/No)

Breakdown Allowed (Yes/No)

Principle Application 5 6 7

1 2 3 4 5 6 7 8 9 10 11 12 13

N/a RX000

000

000

000

000

000

000

000

000

000

000

000 0 No No N/a All O/s Regional

N/a RX001

000

000

000

000

000

000

000

000

000

000

000 0 Yes No N/a All

This classifi No Regional Identifier

N/a RX002

000

000

000

000

000

000

000

000

000

000

000 0 No No N/a All

This classifi Regional Identifier

N/a RX002

001

000

000

000

000

000

000

000

000

000

000 0 No No N/a All

Whole country National Functions

N/a002

001

001

000

000

000

000

000

000

000

000


Whole country Whole Country Domestic

N/a RX002

002

000

000

000

000

000

000

000

000

000

000 0 No No N/a All

Whole of the Provincial Functions

N/a RX002

002

001

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Eastern Cape

N/a RX002

002

002

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Free State

N/a RX002

002

003

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Gauteng

N/a RX002

002

004

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Kw azuluNatal

N/a RX002

002

005

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Limpopo

N/a RX002

002

006

000

000

000

000

000

000

000

000


Whole of the Whole of the Province: Mpumalanga


SEGMENT: REGIONAL STANDARD CHART OF ACCOUNTS

DefinitionsPosting

LevelVAT

Status

Account NumberCount

Posting Level

(Yes/No)

Breakdown

Allowed (Yes/No)

Principle Applicability

REPORTING STRUCTURE

121 2 3 4 5 6 7 8 9 10 11

1 2 3 4 5 6 7 8 9 10 11 12 13

N/a C 000

000

000

000

000

000

000

000

000

000

000

000

0 No No N/a N/a N/a Costing

N/a C 001 000 000 000 000 000 000 000 000 000 000 000 0 No No Provide detail to

Minimum This group of

Departmental Charges:

N/a C 001 001 000 000 000 000 000 000 000 000 000 000 0 Yes Yes Breakdow n

Minimum Accounting

Accounting


Minimum Asset managem

Asset Management


Minimum Audit fees

Audit Fees


CoC Charges relating

Audits, Investigation and Risks


Minimum Budgeting overhead

Budgets


Minimum Cleaning services

Cleaning Services


CoC Charges for the

Communication, Information and External Relations

N/a C 001 008 000 000 000 000 000 000 000 000 000 000 0 No No Provide detail to

Minimum Charges relating to

Communication



Information Technology System Application



Information Technology Data Ware



Information Technology Data Lines



Information Technology Radio: Maintenance


CoC Contributions /

Cross Subsidisation


CoC Charges of the

Democratic Process


CoC Charges (e.g.

Directorate



Employee Benefits


SEGMENT: COSTING

Applicability

Definitions

Post

VAT St

Count

Posting Level

(Yes/No)

Breakdown

Allowed

Code StructureSTANDARD CHART OF ACCOUNTS

Principle 121

REPORTING STRUCTURE

7 8 9 10 112 3 4 5 6

What is your way forward▪ Create a mSCOA project steering committee▪ Appoint an mSCOA project champion▪ Understand the municipal current business

processes▪Attend the non accredited training developed by

National Treasury – 44 sessions planned throughout the country from 13 October 2015

▪Match your current chart to mSCOA chart▫ Ask your current vendors▫ Look for alternative products

▪ Do not wait for version releases to start planning and understanding the chart.

▪ Look to your provincial treasuries for guidance

Understanding the Classification Framework and implication on financial reform.

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