1. mSCOA : Other governance structures
Audit and Risk Indaba
20 June 2017
PRESENTED BY:
WALTER MUWANDI

2. We will Cover :
mSCOAOverview & Why it is being Implemented Local Government
Recap of the Seven (7) mSCOA Segments
mSCOA Legal Framework
Project Governance Considerations Approach
Compliance to mSCOA Circulars
Governance Structures and How they Relate to/With mSCOA

3. WHAT IS mSCOA? AND WHY IN LOCAL GOVERNMENT
mSCOA stands for Municipal Standard Chart of Accounts
It is a standardised Municipal Standard Chart of Accounts introduced by National Treasury ( Regulation in April 2014)
The primary objective of mSCOA is to achieve an acceptable level of uniformity and quality from the collection of data from the IDP Process to Annual Report.
The data is then used to compile both budgets and financial statements.
Budgets and financial transactions are captured in the system using seven (7) segments codes
( Important Segments for non Finance ( Project, Regional,Function, Generally Not Previously Used)
Affects the Entire Municipality
Need to go Live on 1 July 2017
15 Business Processes Implemented by Various Workstreams( See Next Diagram)

4. mSCOA Implementation Business Processes Work Streams
Corporate Governance
Municipal Budgeting
Financial Accounting
Costing & Reporting
Project Accounting
Cash Management
Procurement Cycle
Grant Management
Assets Life Cycle Management
Real Estate & Resource Management
HR &
Payroll
Customer Care, Credit Control
Valuation Roll Management
Land Use Management
Revenue Cycle
mSCOA
Implementation
Governance Structure
IT Infrastructure &
Networks
Conversion of Current Votes to mSCOA Segments
Planning
Data
Cleansing
Document Management HR
&
Payroll
Core System & Subsystems
Real Estate, Land Use & Grant Management
Business Processes
Work Streams

5. Recaping mSCOA Segments

6. The 7 Segments (6+1) mSCOA Project Item Fund Costing MSC Function
Regional Identifier
MSC

7. The 7 Segments (6+1)

8. Recap of PROJECT SEGMENT
Question:
Does the transaction relate to a specific project and, if so, what type of project?
Types of projects:
1. Capital Projects (PC)
2. Operational Projects (PO)
3. Default Transactions (PD)

9. RECAPING THE PROJECT SEGMENT
Capital Projects
Infrastructure Projects
Non-Infrastructure Projects
Operational Projects
Municipal Running Projects
Typical Work Stream Projects
Maintenance Projects
Default Transactions
Balance Sheet Items, etc

10. RECAPING THE Item segment
Question:
What is the nature of the transaction to be recorded?
Item Categories:
Expenditure
Employee Related, Operational, Other, etc
Revenue
Exchange Revenue (e.g. Service Charges),
Non Exchange Revenue (e.g. Penalties), etc
Gains and Losses
Impairment loss, Foreign Exchange, etc
Assets
Current Assets & Non Current Assets
Liabilities
Current Liabilities & Non-Current Liabilities
Net Assets
Reserves, Accumulated Surplus, etc

11. RECAP function segment
Question?
Against which function or sub-function should the transaction be recorded?
Is it a Core Function (mandated) or Non-Core Function (non-mandated function)?
FUNCTION
COMMUNITY & SOCIAL SERVICES
HEALTH
HOUSING
ROAD TRANSPORT
SPORTS & RECREATION
ETC

12. UNDERSTANDING FUNDING SEGMENT
Question:
What source of funding will be used for the transaction and from which source is the revenue received?
FUNDING
CAPITAL
BORROWINGS
TRANSFERS FROM OPERATIONAL REVENUE
TRANSFERS & SUBSIDIES
NON-FUNDING TRANSACTIONS
OPERATIONAL
CASH BACKED RESERVES
REVENUE
TRASNFERS & SUBSIDIES

13. UNDERSTANDING Regional identifier segment
LOCAL GOVERNMENT BY PROVINCE
PROVINCE
DISTRICT
ADMIN OR HEAD OFFICE
MUNICIPALITIES
WARD
WHOLE OF MUNICIPALITY
REGIONS
WHOLE OF DISTRICT
Question:
Which geographical area is gaining the benefit from the transaction?

14. UNDERSTANDING COSTING segment
CHARGES
ACTIVITY BASED CHARGES
DEPT CHARGES
INTERNAL BILLING
DEFAULT
RECOVERIES
ACTIVITY BASED RECOVERIES
DEPT RECOVERIES
Question?
From which department(s) are we recovering/Charging the costs, and How
For Tariff Setting Purposes Only?

15. UNDERSTANDING MUNICIPAL STANDARD CLASSIFICATION (MSC) segment
MUNICIPAL ORG STRUCTURE
EXECUTIVE & COUNCIL
EXECUTIVE MAYOR
MUNICIPAL MANAGER
BUDGET & TREASURY OFFICE
CHIIEF FINANCIAL OFFICER
SUPPLY CHAIN MANAGEMENT
BUDGET MANAGEMENT
PLANNING & DEVELOPMENT
TECHNICAL SERVICES
CORPORATE SUPPORT
Question:
Against which Municipal Department should the transaction be recorded?

16. ALIGNMENT OF IDP, PROJECTS,BUDGET,SDBIP, MONTHLY,REPORTING,ANNUAL FINANCIAL SATEMENTS AND ANNUAL REPORT

17. The idea is not to discuss the accountability cycle in detail (that can take a day). The key message should be:
Municipalities operate in a legislative environment that requires a clear link from the IDP and budget through to the annual financial statements (AFS) and Annual Report.
The entire accountability cycle is depends on and is affected by the quality of information;
Municipal SCOA strengthens this by enabling and ENFORCING a link between the IDP and Budget, through the Project segment… Let’s see how in the next slide….

18. Through msCOA Regulation Systems MUST
Through msCOA Regulation Systems MUST!! be Integrated thereby enforcing the Municiplity Accountability Cycle.

19. mSCOA Project Governance
National Treasury / Provincial Treasury
Successful Implementation of mSCOA Project at the Municipal
System Vendor :
mSCOA Implementation Team
Municipal mSCOA Project Implementation Team
System Vendor: mSCOA Specialists
System Vendor: ERP Expert Support
Municipal Specialization Teams
mSCOA Stream Leads
CCG mSCOA Project Management Office
CCG mSCOA Project Management Office
Municipal mSCOA Project Governance Structure

20. mSCOA Implementation Roles
PSC
Project Manager
Municipal mSCOA Project Implementation Team
Project Implementation Plan
CCG Systems
Project Implementation Leads
Enable Environment for Successful mSCOA Implementation
Work Stream Leads
Establish & Implement Work Stream Charters
Establish & Implement Detailed Business Processes Implementation Plan
Change Management & Transition Leads
Establish & Implement Change Management & Transition Plan
Municipal mSCOA
Change Management Team
mSCOA Implementation Roles

21. mSCOA Implementation Business Processes Work Streams
Corporate Governance
Municipal Budgeting
Financial Accounting
Costing & Reporting
Project Accounting
Cash Management
Procurement Cycle
Grant Management
Assets Life Cycle Management
Real Estate & Resource Management
HR &
Payroll
Customer Care, Credit Control
Valuation Roll Management
Land Use Management
Revenue Cycle
mSCOA
Implementation
Governance Structure
IT Infrastructure &
Networks
Conversion of Current Votes to mSCOA Segments
Planning
Data
Cleansing
Document Management HR
&
Payroll
Core System & Subsystems
Real Estate, Land Use & Grant Management
Business Processes
Work Streams

22. 21 Jul 2015 Annexure A: ToR for PSC Annexure B: ToR for PIT
NT Circular 1
What is mSCOA?
Why mSCOA?
What are the benefits of mSCOA?
Who should implement mSCOA?
How to Implement mSCOA?
Funding of mSCOA Project
21 Jul 2015
Annexure A: ToR for PSC
Annexure B: ToR for PIT

23. mSCOA Awareness Campaigns
National Treasury mSCOA
Circular 1
Approval of mSCOA Project
Appointment of PSC
Appointment of Project Manager
Appointment of PIT
Submission of ToR for the PSC & PIT
Submission of the mSCOA Plan
mSCOA Awareness Campaigns

24. Annexure A: Project Plan Framework
NT Circular 2
mSCOA Reading Material
mSCOA Training & Skills Programme
Project Plan Framework
mSCOA NT Work Streams
2 Sept 2015
Annexure A: Project Plan Framework
Annexure B: Prov Treasuries Representatives
Annexure C: ICT Function Questionnaire
Annexure D: Tech Work Stream Progress

25. mSCOA Reading Material Project Plan Framework
mSCOA Circular 2 Topics
mSCOA Reading Material
Municipal Regulation on Standard Chart of Accounts (Government Gazette No 37577)
Project Summary Document (PSD) – Background on mSCOA since the inception
mSCOA Integrated Consultative Forum (ICF) documentation – Lesson Learnt from Pilot Projects
mSCOA Frequently Asked (FAQ) Question Database
NT mSCOA Work Streams
Technical
Pilot & Vendor
LG Database Development & Reporting
Change Management & Transition
Training
Project Plan Framework
Commissioning PSC and PIT
Set-up Project Governance Structure and PMO
Improve skills in Project Management & adopt a Methodology
Review current Chart of Accounts
Review IT Infrastructure & Network
Appoint Change Management Team
Document current business processes
Start data purification
Register PIT member on mSCOA FAQ database

26. Annexure A: FAQ Queries & Responses Annexure B: FAQ Database Responses
NT Circular 3
mSCOA Audit Value Chain
Frequently Asked Questions
mSCOA & Municipal Entities
mSCOA PM Support
mSCOA Training
2 Nov 2015
Annexure A: FAQ Queries & Responses
Annexure B: FAQ Database Responses
Annexure C: Example Project Sponsor Appointment

27. mSCOA Audit Value Chain
Internal Audit
Evaluate both IT and organizational aspects of mSCOA system conversion project
Independent assessment of project plan
Ensure good mSCOA project governance
Provide assurance to management and council
Evaluate and report on the adequacy and effectiveness of mSCOA project risk process
Audit Committee
Oversee and provide advice on risk management matters
Ensure that a comprehensive risk management framework is in place
Ensure that a sound and effective approach has been followed in developing a strategic risk management plan for the mSCOA project
Risk Management
Manage mSCOA project risks (as part of the normal risk management process)
External Audit Process
Audit process will not change
Data conversion will be a risk during system conversion or re-implementation
mSCOA should not have an impact on GRAP reporting requirements
mSCOA will not have impact on audit opinion unless audit trail is eliminated during the system conversion or system re-implementation.

28. mSCOA & Municipal Entities
Financial Systems
Must be fully aligned
Must accurately record the budget and financial data using the applicable mSCOA segments
Mapping is strictly prohibited (Mapping means a process where CoA of an entity is translated to the CoA of a parent municipality to enable consolidation of information into the accounting records of the latter).
Preparing for mSCOA Implementation
Detailed transactional integration is required
No translation tables may be used between different charts of entity and the core financial system
The standardized mSCOA charts must be embedded in both systems (of parent municipality and municipal entity)
Seamless Integration
No manual interaction is allowed
Financial systems must be integrated at a core level
Where different systems are used, integration of entity financial data to the municipality GL should be done via a web service/ interface / similar technology

29. mSCOA Project Management Support
Role of mSCOA Project Sponsor
A senior manager and chairperson of the PSC
Providing leadership of the project
Provide guidance to the Project Manager
Link between mSCOA project and stakeholders
Make key decision that may be beyond the authority of the PM
mSCOA Governance Structure
Ensure that the project is implemented correctly and is also aligned to the policies, processes, procedures, control systems, etc of the organization
Provide direction to the project
Provide ownership, sponsorship and oversight
Ensure efficiency & effectiveness of the PM functions
Consulting with internal & external stakeholders (i.e. for reporting purposes)
mSCOA Workstreams
A charter must be established for all 9 mSCOA work streams (refer Circ 3)
Governance structure
IT Infrastructure & network
Verification of current votes structure to mSCOA segments
Planning
Data Cleansing
HR & Payroll
Core Systems & sub-systems
Document Management
Real Estate, Land use & Grant Management

30. mSCOA Training for Municipal Officials
Non-Accredited Training
Nominate financial and non-financial officials to attend training
3 day non-accredited training funded by National Treasury
Training is offered by Provincial Treasuries
Accredited Training
System vendors are currently undergoing the accreditation process for offering the accredited training

31. 3 Mar 2016 Annexure A: mSCOA Info Example
NT Circular 4
Project Implementation Support
Provincial Treasury Support
mSCOA Readiness Assessment
(Posting Levels)
FAQ
3 Mar 2016
Annexure A: mSCOA Info Example
Annexure B: Self Assessment Tool (Municipality & PT – mSCOA Progress)
Annexure C1: Example: Risk Register
Annexure C2: Example of a Risk
Annexure C3: Risk Template
Annexure D: Example: Issue Log
Annexure E: Example: Code of Ethics
Annexure F: Example: Non-Disclosure Agreement
Annexure G: PT Project Plan Framework

32. Project Issue Management
Change Management
Awareness Programme
Buy-in
Training
Practice
Coaching
Embedment
Project Issue Management
How to handle project issues arising during project implementation
The use of issue logs
Project Risk Management
Manage mSCOA project risks (as part of the normal risk management process)
Data Purification
Data cleansing prior to migrating data to the mSCOA database
HR information
Asset data
Supplier database
Creditors data
Debtors data
Valuation roll
Zoning of properties
Clearing of suspense accounts
Etc
Nature & Ethics of mSCOA Project
mSCOA is a strategic project in nature
All officials responsible for the implementation of mSCOA project must sign the Code of Ethics and Non-Disclosure Agreement

33. 15 Jul 2016 Annexure A: Presentation Template: Project Management
NT Circular 5
Linking Projects to the IDP and Budget
Data Set Preparation
Training Support
(PM & CM)
ICT Due Diligence
Discussion on Regional ID Segment
15 Jul 2016
Annexure A: Presentation Template: Project Management
Annexure B: Presentation Template: Change Management
Annexure C: ICT Due Diligence

34. Linking Project to IDP and Budget
Municipal Planning and Budgeting Module
ICT Due Diligence
Evaluation of the municipal current financial systems against the 15 key business processes
To assess the cost of additional modules required to meet the mSCOA requirements
To determine whether to remain on/upgrade current financial system
Data Set Preparation
Each mSCOA work stream in the implementation team should focus on the preparation of data sets which will be migrated to the mSCOA platform

35. Appoint Vendor, Implement, Go Live
NT Circular 6
mSCOA Version 6
RT25 Transversal Tender
Appoint Vendor, Implement, Go Live
2 Aug 2016
Annexure A: Changes made in mSCOA v5.5
Annexure B: Process Forward: Integrated FM & Internal Control systems
Annexure C: Decision Tree for mSCOA Systems

36. CHANGE MANAGEMENT

37. PHASES OF CHANGE MANAGEMENT
mSCOA BAU
CoA
BAU

38. ROLE OF OTHER GOVERNANCE STRUCTURES
DISCUSSION :
ROLE OF OTHER GOVERNANCE STRUCTURES