Budget Verification Process in Local Government Analysis - Findings and Resolution
The 2017/18 budget verification exercise involves reconciling various financial documents to ensure accuracy and compliance. Issues found during the process, such as missing line items and discrepancies, were addressed by adjusting where necessary. The reconciliation also included aligning previous years' figures with audited statements for accuracy. These efforts aim to maintain financial integrity and transparency within the municipality.
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2017/18 Budget Verification Process What we found and how we dealt with Chief Directorate: Local Government Budget Analysis Mandla Gilimani
What does the budget verification exercise involve? The reconciliation process involves ensuring that the following documents all contain the same information/numbers, in other words, the information in all documents must reconcile: ORGB mSCOA financial dataset Electronic A1 schedules submitted to NT Budget return forms submitted to LG database = = = No.1 is the legally adopted budget of the Council (hard and soft copy) NO CHANGES CAN BE EFFECTED AS IT IS THE LEGALLY APPROVED BUDGET OF THE MUNICIPALITY. If however there are errors in the adopted budget, these errors may only be corrected during the Adjustments Budget Process in January/February 2018. If the information in 1, 2 and 3 do not reconcile, THEN CHANGES CAN ONLY BE MADE TO 2 OR 3 are identified). In addition to the verification of the 2017/18 MTREF budget, all previous years figures should also be corrected to align with the audited financial statements of the municipality and any restatement of figures. (depending on where the errors
Summary of the returns reconciled in MP Mpu - malanga Description Number of Municipalities Number of returns to be submitted to the LG database Number of actual returns submitted Number of input forms received which reconcile as follows: Returns reconcile for the three year audit outcomes Returns reconcile for the adjustment budget 2016/17 financial year Returns reconcile for the MTREF Period Number of Municipalities where all table A1-A7, A9 reconcile Verifications done by Directors / spot checks % of returns received % of returns reconcile % of all tables (A1-A7; A9) reconciling 20 500 500 500 300 100 100 20 20 100 100 100
What we found during budget verification and how we dealt with The line item share of surplus/deficit of associate on table A4 This line item forms part of the total revenue on Table A2 but there is no line item in the return. We had to accept the difference The line item contributions recognised capital this line item does have a line item in the return but when the extract uploads it shifts it to contributed assets. City of Johannesburg had to put this line item as other revenue and we accepted the difference. In Table A2 the differences which are as a result of the internal audit department were incorporated under budget and treasury department. No information was populated under corporate services as it no longer exists in the new MSCOA version 6.1 We have too many different items in Table A9 for Capital Expenditure and Asset Register Summary we are only reconciling totals as a result
Number of municipalities verified that are affected by the discrepancies Submitted two A1 Schedules versions 6.1 and 2.8 Share of surplus/de ficit on associates Contributions recognised capital Table A9 Reconciliation to Only Totals Coroporate services Albert Luthuli Bushbuckridge City of Mbombela Dipaleseng Dr J.S. Moroka Ehlanzeni Emakhazeni Emalahleni (Mp) Gert Sibande Govan Mbeki Lekwa Mkhondo Msukaligwa Nkangala Nkomazi Pixley Ka Seme (MP) Steve Tshwete Thaba Chweu Thembisile Hani Victor Khanye City of Johannesburg George Total 1 3 7 22
MSCOA Data-strings submissions The ORGB data-strings were tested against 15 areas including the trial balance All data-strings submitted by MP municipalities passed this test The big question that we still need to test is whether these data-strings reconcile to the approved A1 Schedule by council If this is not the case the financial system information must be amended so it matches the approved budget information otherwise the results would be unauthorised expenditure
MSCOA Data-strings submissions Oper Proj: Cost of Free Basic Services and Revenue Cost of Free Services Default projects may NOT have Item Expenditur e and Assets except for current assets and Property Rebates can only have Item Revenue or certain Both Capital and Operating projects must be used Operation projects not valid against acquisiton Remunera tion of Councillor Bulk Default Costing and default Expenditur e not valid Default Costing and default Revenue not valid Small Capital projects can only have Item Assets purchase electricity Bulk Inventory consumed :Water not against Water Sum of Charges Charges and Recoverie s must balance Difference s not against Mayor and Council purchases water not against Water s Projection s M01 to and not and Tolerance s must be Demarcati on s or Item default items against Electricity Trial Default not Recoverie Demarc Financial Budget M12 PC PO additions Assets Balance valid s zero (PO00305 7 PO003058 PO003059 (PO not valid against IA002 level acquisiton only (PD not valid against IE IE002001 (IE002002 (IE007004 against IR not not not or against FX002001 001 or FX002002 against FX016001 002 or FX016002 against FX016001 002 or FX016002 (CO001 and CO002 must balance) Budget and Projection s must balance (Both PC and PO must be used) IA001010 or IA except IA001 OR IE018) (sum of all items - IE018 and IR004) (PC only against IA is valid) OR (IE008 not against FX004) (CO003 and IE018 not valid) (CO003 and IR004 not valid) (IE010053 must be zero) Descriptio n Location Level Selected: Province(s): MP Province : MPUMALANGA( MP) Albert Luthuli s or IA001004 is valid) (RX001 not valid) (CO001 + CO002) Code Year Value Value Lines Lines additions) 001) 002) 002) CAP Period MP301 M 2018 0 0 Y IBY1 6 147 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 IBY2 6 147 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 ORGB 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM01 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM02 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM03 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM04 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM05 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM06 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM07 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM08 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM09 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM10 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM11 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0 PM12 5 131 Y 0 0 0 0 0 0 0 0 0 0 0 Y 0 0 0
