NATIONAL COUNCIL OF PROVINCES
QUESTION FOR WRITTEN REPLY
QUESTION NUMBER 205
DATE OF PUBLICATION: 28 MAY 2010
Mr Z Mlenzana (COPE-EC) to ask the Minister of Finance
Whether the Government will further tighten the provisions of the Public
Finance Management Act, Act 1 of 1999 and Municipal Finance Management Act,
Act 56 of 2003, to avoid similar lootings that occurred at the Companies
and Intellectual Property Registration Office; if not, why not, if so, (a)
how and (b) when will this happen?
CW276E
REPLY:
The National Treasury is of the view that there are sufficient provisions
in both the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999)
and the Municipal Finance Management Act (MFMA), 2003 (Act 56 of 2003) to
prevent the abuse of public funds. The challenge is to ensure that
Accounting Officers implement the Acts fully and have the appropriate fraud
prevention plans and internal controls in place to prevent such abuses.
The PFMA regulates financial management in government departments and
public entities and aims to ensure that public funds are used efficiently
and effectively. In meeting this objective the PFMA provides for the
responsibilities of persons entrusted with financial management.
In terms of section 51 of the PFMA, the Accounting authority of a public
entity is responsible for, amongst others:
⪠Effective, efficient and transparent systems of financial and risk
management. These risk management strategies must include a fraud
prevention plan.
⪠Effective and appropriate steps to prevent irregular expenditure,
fruitless and wasteful expenditure, losses resulting from criminal
conduct and expenditure not complying with the operational policies of
the public entity.
⪠Management and safeguarding of the assets and for the management of
the revenue, expenditure and liabilities of the public entity.
Sections 81 - 86 of the PFMA also make provisions for sanctions against non-
compliance. Persons who are found responsible for non-compliance are liable
to a charge of financial misconduct which may lead to a dismissal or
suspension.
The MFMA, through chapter 15, has similar provisions to the PFMA and deals
with financial misconduct, disciplinary and criminal proceedings as they
apply to municipal officials and councilors, municipal entities and members
of boards of municipal entities. Â The provisions also cover offences and
penalties. It provides for processes and procedures to be followed in the
event that allegations of misuse of public funds arise. It also contains
enforcement provisions that seek to sanction officials who are found guilty
of financial misconduct.
The National Treasury is of the view that incidences of fraud in public
institutions are not due to deficiencies in legislation but rather
deliberate non-compliance with the provisions of the legislation, lack of
enforcement by implementing departments as well as a lack of adequate
supervision by control structures.