1. Managing complexity through a “good” classification system CABRI 2005 Budget Reform Seminar Maputo
Presented by: Hennie Swanepoel Chief Director: Public Finance Statistics
National Treasury South Africa
30 November 2005

2. Why focus on classification reform?
Part of a good governance reform agenda
Ensuring improved service delivery through:
Availability of clear, relevant financial information for management purposes
Improved policy making & monitoring implementation
Enhanced executive oversight
Encouraging greater accountability by providing properly classified and standardised financial data
Economic analysis

3. Elements of a “good” classification system
Clarity and accessibility
Useful management information
Legislative compliance
Relevant economic aggregates
International compliance (GFS & IFAC )
Include all aspects of accountability cycle
Full coverage of all government accounts

4. Challenges Change management Inconsistent classifications
Complicates transacting
Inappropriate information included
Financial systems constraints
Different accounting conventions
Harmonization of terminology

5. Stakeholders Parliament / Legislatures Financial practitioners
Departments and entities / agencies
National Treasury
Central Bank (SA Reserve Bank)
Statistical agency (Statistics SA)
General public
Research institutions
International community

6. SA Case Study Manual GFS compilations Pilot GFS chart
Consultation process
Technical design
New economic reporting format and SCOA
1998
1999
Since October 2001
August 2003
01 April 2004
How?
Introduce new budget reporting format
Introduce new chart of accounts
Provide new financial statement formats

7. Structure of classification system
Five Segments:
Vote / Fund
Programme / Objective
Responsibility /
Cost - centre
Item
Project

8. Classification considerations

9. Classification considerations (contd.)

10. Managing change! Detailed training program – 6 000 trained
Detailed classification guides
Call centre to log classification questions
Classification committee to provide rules and classification support
Classification circulars to provide guidance
Website
Metadata software

11. Key Lessons Must be a top-down demand-driven process
Integrate budgeting and accounting systems
Include key stakeholders in design phase
Decide on guiding principles
Keep it simple! – balance between detail and aggregation
Not a quick process
Ensure comprehensive design phase – difficult to change once implemented
Some flexibility required for future demands
Include only what should be included

12. Managing complexity through a good classification system The End Questions?
Presented by: Hennie Swanepoel Chief Director: Public Finance Statistics
National Treasury South Africa
30 November 2005