Tel: +27(0) 12 754 9711 info@scb-consulting.co.za

 

MUNICIPAL STANDARD CHARTS OF ACCOUNTS (MSCOA)

MSCOA SUPPORT: COMPLIANCE ASSESSMENT

HIGH-LEVEL MSCOA ASSESSMENT FOR FINANCE DIVISION: We can assist with a high-level mSCOA assessments as well as practical support with compiling a high level mSCOA project plan or budget compilation plan, including conducting high level capacity and current state assessments.

In addition, there are 15 core business processes are impacted to various degrees by each of the 7 segments.  Some of the questions to ask in terms of progress and compliance include the following:

1 Do you have an MSCOA Project Steering Committee and a Project Management team that has been properly constituted and is operating effectively and efficiently?

2 Do you have an MSCOA implementation plan that will achieve implementation success? Is it being executed, monitored and managed on an ongoing basis?

3 Have you considered how business processes need to change in your municipality because of MSCOA and have you drafted a set of standard operating procedures for each of the 15 business processes that need to be implemented?

4 Have you ensured that training takes place for all 15 business processes?

5 Have you identified and appointed a champion for all 15 business processes?

6 Have you compiled an MSCOA specific risk register and are you addressing risks involved with the implementation project?

7 What are you doing to ensure that sound Project Governance occurs?

8 What are you doing to ensure that business transformation, change management and skills development takes place?

9 Are you on track with the preparation of an MSCOA compliant Asset Register and Budget?

We can provide assessment support which involve the evaluation and a gap-analysis on the mSCOA requirements and changes applicable to the finance division and it GRAP AFS reporting.

MSCOA ARTICLE: IMPACT ON CFO & FINANCE DIVISION

With all municipalities and their respective municipal entities having to implement the Municipal Standard Chart of Accounts (mSCOA) as new classification framework for unified local government transactional information by 1 July 2017, there are still many practical implementation challenges facing local government in the time remaining. Although mSCOA is a multi-dimensional chart which affects all business processes and the IT infrastructure (such as systems, programmes, data), the CFO and the finance team will have various processess and registers to align for mSCOA Compliance.

E.g. in addition to the Matching Integrated Development Plan (IDP) & Project, Function & Region segments (which was due November 2016) and the mSCOA Conversion Budget (due March 2017), the finance divisions of municipalities also need to consider and adjust processes and registers to allow for the municipality to successfully transact in accordance with mSCOA from 1 July 2017. Some of the focus areas for the finance division, amongst others, include: .

GRAP reclassify to mSCOA AFS Impact on other processes
  • GRAP AFS Opening balances;
  • Asset registers & asset management;
  • Suspense accounts latest mSCOA Chart & adjustments
  • Impact on Accounting policies.
  • Supply Chain
  • Inventory & Stores
  • Internal allocation of costs.

MSCOA SUPPORT: BUDGET ALIGNMENT

With all municipalities and their respective municipal entities having to implement the Municipal Standard Chart of Accounts (mSCOA) as new classification framework for unified local government transactional information by 1 July 2017, there are still many practical implementation challenges facing local government in the time remaining. Due to mSCOA being a multi-dimensional chart which affects all business processes and the IT infrastructure (such as systems, programmes, data), the implementation of any mSCOA project is complex, requiring a comprehensive and clear project plan, diverse key skills & structures, steering committees & project management to ensure all milestones are achieved.

One of these key processes is the mSCOA Conversion Budget process, which is due by March 2017. Non-compliance with an mSCOA budget may result in administrative and compliance issues as well as subsequent actions (virements / condonements / irregular expenditure disclosures).

mSCOA compliant budget:

  • Alignment of old COA and mSCOA short codes to be implemented
  • Set-Up of Municipal Projects as per IDP within mSCOA Budget Compilation Tool
  • Review of MSCOA compliance within Draft MTREF Budgets as compiled by Municipal Departments
  • Compilation of Budgeted Financial Position and Budgeted Cash Flow Statements
  • Review Tariff Setting of Municipality
  • Populate National Treasury Budget Returns

SCB Consulting can also provide support on the following:.

  • HIGH-LEVEL MSCOA ASSESSMENT FOR FINANCE DIVISION: We can assist with a high-level mSCOA assessments as well as practical support with compiling a high level mSCOA project plan or budget compilation plan, including conducting high level capacity and current state assessments. This will involve the evaluation and a gap-analysis on the mSCOA requirements and changes applicable to the finance division and it GRAP AFS reporting.

 

  • IN HOUSE CAPACITY BUILDING WORKSHOP: In addition to our in-house mSCOA capacity building support, we can provide delegates with an understanding of mSCOA, the segments, the business processes and governance structures for implementation.

mSCOA capacity building support: 1 day course

We have developed an mSCOA Implementation manual. This was designed to assist municipal official to practically think through key foundational aspects that needs to be in place for mSCOA (e.g. project governance and change management) together with applicable examples and templates. The manual addresses:

  • Overview & Structures Includes mSCOA overview and key structures such as project steering committee, project management team & project governance
  • Systems & Capacity This focusses on business transformation, change management, skills development & information technology needed.
  • Practical impact on 15 business processes It deals with how MSCOA will affect the 15 business processes. For each business processes, a description of the process, accounting ramifications, impact of each of the segments and examples are provided
  • Compendium of mSCOA guidance We have also summarised and synthesised the guidance provided by National Treasury through the MSCOA circulars, Project Summary Documents, Transversal Tender RT- 25 as well as MFMA Circular 80.

We have developed a 1 day course to assist CFOs and their finance teams on the key issues impacting the finance division following the requirements of mSCOA. The course provides for a history and an overview of the importance of MSCOA as well as the various topics the CFO and finance teams will need to ensure are addressed for successful implementation. For inhouse training support, please contact us.