SCOA V4 Re-Implementation Roadshows: Objectives, Achievements, and Strategies

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This presentation outlines the SCOA V4 re-implementation introduction presented by the SCOA Technical Committee for National Treasury in February-March 2013. It delves into the objectives set by the committee, how they were achieved, the development timeline, and a segment summary. Key aspects covered include the rationale for change, addressing user needs, improving accuracy in allocations, eliminating inconsistencies, and enhancing system processing times through various strategies.

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SCOA V4 RE-IMPLEMENTATION INTRODUCTION NATIONAL AND PROVINCIAL ROADSHOWS Presenter: SCOA Technical Committee | National Treasury | February - March 2013

Overview Objectives set out by the SCOA Technical Committee (i.e. why the change); How these objectives were achieved; Development timeline; Summary of the segments; 2 2

Why the change? There were a number of user needs that had to be addressed: improving the accuracy of allocations across the SCOA segments 1 thereby eliminating the inconsistent economic classification of transactions; eliminating the duplication of projects in the project segment; 2 improving system processing times; 3 rationalising the Item segment; 4 3 3

How are these objectives achieved? 1 Improving the accuracy of allocations across the SCOA segments thereby eliminating the inconsistent economic classification of transactions: creation of category links in BAS (i.e. filtering of account views); limiting the availability of accounts in BAS to specific departments; To build the category links all break down allowed accounts had to be removed; 4 4

How are these objectives achieved (cont.)? 2 Eliminating the duplication of projects in the project segment : allow flexibility in creation of projects especially where one project has a number of sub-projects cutting across different economic classifications; To do this all lower levels (e.g. infrastructure & non-infrastructure) had to be removed; an eighth segment was created to carry the detail on infrastructure and the economic classification indicator Infrastructure Segment; 5 5

How are these objectives achieved (cont.)? 3 Improving system processing times : deletion of inactive entities (suppliers) and user IDs; implementation of new databases for departments; updating of departmental parameters and registers; cleanup of old debt/suspense accounts; To do this requires BAS reimplementation; 6 6

How are these objectives achieved (cont.)? 4 Rationalising the item list: deletion of unused items (including leger items); regrouping of similar items; renaming of items; aligning to changes in accounting policy and reporting requirements (e.g. finance leases and inventory); creation of items requested by sector departments (e.g. R&D items, grouping of health facilities, DOD assets); 7 7

Development timeline Research and design of proposals by the SCOA Technical Committee (until end July 2012); SCOA Workshop with key stakeholders hosted by NT to discuss proposals in August 2012; Presented inventory / consumable proposals at Asset Management Workshop hosted by NT in September 2012; Final draft SCOA presented at BAS user forum in November 2012; Awareness sessions with National and Provincial Departments in February 2013; Go live 1 April 2013; 8 8

Development timeline Research and design of proposals by the SCOA Technical Committee (until end July 2012); SCOA Workshop with key stakeholders hosted by NT to discuss proposals in August 2012; Presented inventory / consumable proposals at Asset Management Workshop hosted by NT in September 2012; Final draft SCOA presented at BAS user forum in November 2012; Awareness sessions with National and Provincial Departments in February 2013; Go live 1 April 2013; 9 9

Development timeline (Cont.) Available documentation Project summary report with supporting annexures; SCOA in excel with item definitions, illustration of category links, and limitations placed on accounts (i.e. departmental access); Updated classification circulars inventory & consumables, leases; Worked examples; 10 10

Standard Chart of Accounts Infrastructure segment The purpose of infrastructure segment is to identify whether or not a spending item relates to infrastructure and to show the type of infrastructure it relates to. Item segment The purpose of this segment is to record receipt and payment transactions as well as transactions in assets and liabilities. The purpose of this segment is to identify asset classes to which a transaction is allocated when the purpose relates to an asset or the use of an asset. Asset segment Project segment The purpose of this segment is to identify whether or not a payment is part of a project. Fund segment The purpose of this segment is to identify the source of funding from which payments are effected, and the nature of receipts. The purpose of this segment is to identify the programme/activity against which any given transaction should be recorded. The segment reflects a department s programme and sub-programme structure in as much detail as is required both for reporting and management purposes. Objective segment The purpose of this segment is to identify the cost centre of any given transaction. As the location of cost centres varies across departments, depending on their organisational structure, this segment is not standardised and the departments maintains the segment. Responsibility segment Regional Identifier segment The purpose of this segment is to identify which region benefits from government spending. 11 11

Order of capturing The economic classification 12 12

Questions? 13 13

SCOA V4 RE-IMPLEMENTATION NATIONAL AND PROVINCIAL INFORMATION SESSIONS Presenter: SCOA Technical Committee | National Treasury | February - March 2013

Segment Discussion Highlights of the changes to the different segments 15 15

NEW INFRASTRUCTURE SEGMENT 16 16

Infrastructure Segment Main segment for identifying the economic classification Centrally controlled and standardised for all departments and aligned to the economic classification Improved recording of Own Account and Outsourced transactions one to one link New category for lease transactions Category links into the system now centrally controlled Refer to Annexure C for detailed structure 17 17

Infrastructure segment Distinguish between expenditure vs. non-expenditure Expenditure is divided into Infrastructure and Non-Infrastructure Infrastructure Economic classification same as the old Projects Infrastructure : Existing Infrastructure; Maintenance and repairs (Current) Upgrades and Additions (Capital) Refurbishment and Rehabilitation (Capital) New Infrastructure (Capital) Infrastructure Transfer (Current/Capital) Introduced Payments for financial assets for Concessional loans relating to Infrastructure Created a Lease category for Finance or Operating leases Refer to Annexure C for detailed structure 18 18

Infrastructure segment Non-Infrastructure Includes expenditure categories previously under Projects non- infrastructure and Stand-alone Non-Infrastructure current Non-infrastructure / stand-alone current Maintenance and repairs current Non-infrastructure capital Non-Infrastructure / stand-alone capital Non-Infra: Upgrades and Additions Non-Infra: Refurbishment and Rehabilitation Non-Infra: Transfers Non-Infra: Payments for Financial Assets Non-Infra: Internal Charges Non-Infra: Cara Expenditure Non-Infra: Leases 19 19

Infrastructure segment Non Expenditure This category is to be used for non expenditure transactions General Account Receipts Assets and Liabilities NB. Changed the term Revenue to Receipts 20 20

Category links in the system Built using the Infrastructure an the Item segment in the system The purpose of the infrastructure category type is to provide the link between the posting level items in the Infrastructure segment and those in the Item segment of the chart. The infrastructure category type in the financial system ensures that the correct items in the Item segment is linked to the correct posting level projects in the Infrastructure segment, so ensuring correct classification and the elimination of inconsistencies. This link is pre-set in the systems environment, and when a infrastructure category type is identified a set of posting level items are provided in the Item segment that is linked to such category. Refer to Annexure D for detailed structure 21 21

Old category links 22 22

ITEM SEGMENT 23 23

Item segment Compensation of Employees: New item to be created to under salaries & wages for learnership/internship Goods and Services The changes range from the shifting of items between non-posting levels, the removal of unused items, the renaming or redefining of items to the creation of additional items. Refer to Annexure B for detailed structure 24 24

Item segment Prefix OWN to replace PRJ for own account transactions Outsourced A project is outsourced when the department appoints a third party to execute the activity in its entirety; then the total value of the amount payable to that outside contractor must be recorded as Outsourced. Own Account A project is accounted for as Own account when the Department purchases all the necessary inputs and uses its own resources (e.g. staff and equipment) to plan, implement, and execute the activity. Inputs into the project may include the appointment of professional services such as engineers, architects, project managers, etc. as well as smaller portions of the project that is outsourced, for example the construction of a laboratory outsourced to a private company forming part of a bigger school building project being implemented by the department from own account. 25 25

Item segment Audit Costs The item AUDIT COST EXT: REGULARITY has been added at level 5 under the item AUDIT COST: EXTERNAL. This item has been created to monitor the total cost related to regulatory audits. Old Segment Detail No Old Item Lowest Level New Segment Detail No New Item Lowest Level AUDIT COST:EXTERNAL AUDIT FEES:EXT CURRENT YEAR 3340 3533 4456 4457 3534 4458 4459 3535 4460 4461 AUDIT COST:EXTERNAL AUDIT COST EXT:REGULARITY 344 1084 2702 3620 3621 2703 3622 AUDIT FEES:EXT CURRENT YEAR PRJ AUDIT FEES:EXT CURRENT YEAR AUDIT FEES:EXT DISBURSEMENTS AUDIT FEES:EXT DISBURSEMENTS PRJ AUDIT FEES:EXT DISBURSEMENTS AUDIT FEES:EXT PREVIOUS YEAR AUDIT FEES:EXT PREVIOUS YEAR PRJ AUDIT FEES:EXT PREVIOUS YEAR AUDIT FEES:EXT CURRENT YEAR AUDIT FEES:EXT CURRENT YEAR OWN:AUDIT FEES:EXT CURRENT YEAR AUDIT FEES:EXT DISBURSEMENTS AUDIT FEES:EXT DISBURSEMENTS OWN:AUDIT FEES:EXT DISBURSEMENTS 3623 AUDIT FEES:EXT PREVIOUS YEAR AUDIT FEES:EXT PREVIOUS YEAR OWN:AUDIT FEES:EXT PREVIOUS YEAR 2704 3624 3625 26 26

Goods and Services External Computer Services The item EXT COMP SER: SYSTEM DEVELOP was exclusively for National Treasury for payments related to systems development and is now open for use by all departments. Consultant and professional service New items were added for science and technologies activities expenditure. New items were added for outsourced maintenance and repairs to be restricted to departments undertaking infrastructure project (i.e. DPW, Health, Transport). 27 27

Item segment CONS/PROF:BUSINESS&ADVISORY SERV C/P:BUS&ADV SER:FIN MANAGEMENT OUTS:C/P:BUS&ADV SER:FIN MANGMNT C/P:BUS&ADV SER:PRJ MANAGEMENT OUTS:C/P:BUS&ADV SER:PRJ MANGMNT C/P:BUS&ADV SER:RESEARCH&ADVISOR OUTS:C/P:BUS&ADV SER:RESE&ADVISR C/P:BUS&ADV SER:VALUER OUTS:C/P:BUS&ADV SER:VALUER CONS/PROF:INFRASTRUCTRE&PLANNING CONS/PROF:ENGINEERING CONS/PROF:ENGIN CIVIL OUTS:CONS/PROF:ENGIN CIVIL CONS/PROF:ENGIN ELECTRICAL OUTS:CONS/PROF:ENGIN ELECTRICAL CONS/PROF:ENGIN MECHANICAL OUTS:CONS/PROF:ENGIN MECHANICAL CONS/PROF:ENGIN STRUCTURAL OUTS:CONS/PROF:ENGIN STRUCTURAL C/P:INFR&PLN SER:ARCHITECTURAL OUTS:C/P:INFR&PLN SER:ARCHITCTRL C/P:INF&PLN SER:LND&QTY SURVEYOR OUT:C/P:INF&PLN SER:LND&QTY SURV C/P:INFR&PLN SER:TOWN PLANNER OUTS:C/P:INFR&PLN SER:TWN PLANNR 28 28

Goods and Services Contractors:Mnt&Rep,Imp Oth Infr Ass Item has been expanded to provide for one on one link relating to maintenance, upgrades or refurbishments with the infrastructure segment (Own Account / Outsourced). Old New Segment Detail No 1037 2578 2579 1038 2592 1039 2553 Segment Detail No 3643 4667 4668 Old Item Lowest Level New Item Lowest Level CONTR:MNT&REP,IMPRV OTH INFR ASS OUTS CONTRCTRS:MNT&REP O/INF AS PROJ CONTRCTRS:M&T,IMP OT INF A CONTR:MNT&REP OTH INFR ASS OUTS CONTRCTRS:MNT&REP O/INF AS OWN: CONTRCTRS:MNT&REP OT INF A CONTR:UPG&ADD OTH INFR ASS OWN CONTRCTRS:UPG&ADD OT INF A CONTR:REF&REH OTH INFR ASS OWN CONTRCTRS:REFB&REHB OT INF A 29 29

Goods and Services Fleet Services The items relating to the management and operation of fleet have been grouped together under FLEET SERVICES (F/SER). This will ensure that the full cost related to the management of the departmental fleet is recorded together. Old New Segment Detail No 988 2469 3498 3499 2469 3498 3499 Segment Detail No 3334 3899 5146 5147 3906 5158 5159 3328 3813 5011 5012 3336 3957 5208 5209 Old Item Lowest Level New Item Lowest Level TRAVEL AND SUBSISTENCE T&S DOM WITHOUT OP:GG VHCL T&S DOM WITHOUT OP:GG VHCL PRJ T&S DOM WITHOUT OP:GG VHCL T&S DOM WITH OP:GG VHICL T&S DOM WITH OP:GG VHICL PRJ T&S DOM WITH OP:GG VHICL INVENTORY OTHER CONSUMABLES INV OTH CONS:LICENCE PLATES INV OTH CONS:LICENCE PLATES PRJ INV OTH CONS:LICENCE PLATES OPERATING PAYMENTS O/P:CAR VALET & WASHING SERV O/P:CAR VALET & WASHING SERV PRJ O/P:CAR VALET & WASHING SERV FLEET SERVICES F/SER: KILOMETERS F/SER: KILOMETERS OWN: F/SER: KILOMETERS F/SER: KILOMETERS F/SER: KILOMETERS OWN: F/SER: KILOMETERS F/SER: LICENCE PLATES F/SERS:LICENCE PLATES OWN:F/SERS:LICENCE PLATES 2473 3490 3491 F/SER:CAR VALET & WASHING SERV F/SER:CAR VALET & WASHING SERV OWN:F/SER:CAR VALT & WASHNG SERV 2481 3474 3475 30 30

Goods and Services Property Payments: Contract maintenance, improvements Item has been expanded to provide for one on one link relating to maintenance, upgrades or refurbishments with the infrastructure segment (Own Account / Outsourced). Old New Segment Detail No 1028 1028 2551 4236 1029 2552 1030 Segment Detail No 3872 5106 5107 Old Item Lowest Level New Item Lowest Level P/P:CONTRCTD MAINT, IMPROVE PROP OUTS P/P:CONTRACTD MAINT PRJ P/P:CONTRCTD MNT, IMPROVE CONTR:MNT&REP NON INFR ASS OUTS CONTRCTRS:MNT&REP N-INF ASS OWN: CONTRCTRS:MNT&REP N-INF ASS CONTR:UPG&ADD NON INFR ASS OWN CONTRCTRS:UPG&ADD N-INF A CONTR:REF&REH NON INFR ASS OWN:CONTRCTRS:REFB&REHB N-INF A 31 31

Goods and Services Travel and Subsistence The naming WITH/WITHOUT OPERATOR under TRAVEL AND SUBSISTENCE has been removed, thus there is now one item for each classification. T&S DOM WITHOUT OP: KM ALL (OWN TR) subsistence. Old New Segment Detail No 2173 3405 3997 3998 3406 3999 4000 3407 4001 4002 Segment Detail No 3895 3896 5140 5141 3897 5142 5143 3898 5144 5145 3899 5146 5147 Old Item Lowest Level New Item Lowest Level T&S:DOM:TRANPORT W/OUT OPERATOR T&S DOM WITHOUT OP:CAR RENTAL T&S DOM WITHOUT OP:CAR RENT PRJ T&S DOM WITHOUT OP:CAR RENT T&S DOM WITHOUT OP:KM ALL(OWN TR T&S DOM WITHOUT OP:KM AL(O-T PRJ T&S DOM WITHOUT OP:KM AL(O-T T&S DOM WITHOUT OP: KM ALL(SMS>) T&S DOM WITHOUT OP:KM/A(SMS> PRJ T&S DOM WITHOUT OP:KM/A(SMS> T&S DOM WITHOUT OP:GG VHCL T&S DOM WITHOUT OP:GG VHCL PRJ T&S DOM WITHOUT OP:GG VHCL T&S:DOM:TRANSPORT T&S DOM:CAR RENTAL T&S DOM :CAR RENT OWN:T&S DOM:CAR RENT T&S DOM WITHOUT OP:KM ALL(OWN TR T&S DOM WITHOUT OP:KM AL(O-T OWN T&S DOM WITHOUT OP:KM AL(O-T T&S DOM:KM ALLOWANCE SMS T&S DOM:KM ALLOWANCE SMS OWN:T&S DOM:KM ALLOWANCE SMS 32 32

Interest Lease transactions Operating lease item still under goods and services; Finance lease items created per category of asset under purchase / construction of capital assets; Interest on Finance lease not recorded separately Classification of lease transaction to be explained in detail in the Lease Circular. 33 33

Payments for Financial Assets The categories for PAY FIN ASS:WATER TRAD ACC, TRADING ENTITY:DEPRECIATION and TRAD ENT:LOSS ON SALE OF CAP ASS were removed as these were originally created for recording accruals transactions for trading entities, however, these items have not been used in the recent past. Similar items under Revenue were also removed. 34 34

Transfers and Subsidies The creation of an item for payment towards bursaries related to research and development BURSARIES (R&D) was created on request from the Department of Science and Technology. It was created to cater for postgraduate students (all masters and PhDs excluding coursework degrees) and organised lifelong training for scientists and engineers or the equivalent for those intending to exercise an STA s 35 35

Payments or Construction of Capital Assets Changes to the Capital assets category include: The item SMA Parachutes and Aircraft Launch/Landing/Ground Handling Equipment has been moved from SMA to Machinery and Equipment. The item Normal Aircraft has been changed to Military Aircraft An item for SPECIALISED MILITARY TRAILERS has been created, which includes trailers specifically designed for the military. An item for MILITARY COMMUNICATION EQUIPMENT has been created, which caters for specialised communication equipment for military use. 36 36

ASSET SEGMENT 37 37

Asset Segment Asset Segment Changes: Previously duplicated assets removed i.e. Clinic & Community Health Centre Lease assets has been removed, transactions can be identified in the Item and Infrastructure segment. NB. Department to use Tangible Capital Asset to create posting level for lease assets. It is important for the posting level to unique from the normal capital asset. Example when creating a posting level: TANGIBLE CAPITAL ASSETS BUILD & OTHER FIXED STRUCTURES NON-RESIDENTIAL BUILDINGS OFFICE BUILDINGS LEASE:40 CHURCH SQUARE 40 CHURCH SQUARE Laboratories and Mortuaries moved from Non-residential to Health assets Prefabricated and Portable Buildings duplicated Health: Prefabricated and Portable Buildings School: Prefabricated and Portable Buildings 38 38

PROJECT SEGMENT 39 39

Project Segment Project Segment Changes: Infrastructure reporting moved to the Infrastructure segment Project Segment changed to only identify Projects within the Department Economic Classification removed from the Project Segment New project category for Scientific and Technological Activities Departments to provide for lower level details (Breakdown allowed) 40 40