1. Municipal Perspective on mSCOA and Audit challenges

2. Municipal Perspective on mSCOA
National Treasury’s duty is to ensure transparency and expenditure control in the three spheres of Government.

3. Municipal Perspective on mSCOA
mSCOA is part of National Treasury’s ongoing budget and reporting reforms.
mSCOA means that municipalities capture all their financial transactions against a predefined classification framework.
mSCOA was not only a financial reform, but an entire overhaul of municipal business processes.

4. Municipal Perspective on mSCOA
For mSCOA to be successful it must be integrated with all municipal accounting systems.
All municipalities capture and submit their financial transactions against a predefined classification framework, which result in the uniformity of information in terms of revenue, expenditure, assets and liabilities.
This standardised approach gives National Treasury the ability to determine the municipalities' performance at the click of a button.

5. Municipal Perspective on mSCOA
The seven segments forced proper planning, budgeting, supervisory and management checks throughout municipal operations.
The mSCOA Project Segment improve reporting on service delivery
The mSCOA Project Segment link the municipality’s annual deliverables in the IDP to the budget and SDBIP, thereby enabling better public consultation
The mSCOA Regional Segment assist in providing SDBIP information to Ward Councilors
The mSCOA Function Segment improve oversight over the overall performance of the municipality

6. Municipal Perspective on mSCOA
mSCOA benefits municipalities by:
Improving data quality and credibility
Improve reporting on service delivery
Deeper analysis of transactions
Standardised business processes
Analysis information on a very detailed level
Assist with performance management
Strengthens council oversight and decision making monitoring and oversight

7. Municipal Perspective on mSCOA
mSCOA challenges:
Long term standardisation of structures:
the use of different mSCOA versions that will involve software development
Seamless integrating:
high cost involved for development
Transferring of skills
Change management

8. Audit challenges:
The implementation of mSCOA did not change the legislated financial reporting framework – which is Standards of GRAP

9. Audit challenges in the 2017/2018 Financial year:
The comparison of the opening balances in the mSCOA TB versus the closing balances in the old TB .
The reclassification of classes of PPE from one class to another due to mSCOA, for e.g.: Reclassification of Buildings to Other Assets

10. Audit challenges in the 2017/2018 Financial year:
There was a lot of restatement and reclassification of comparatives.
The restatement of the prior year comparatives, to ensure comparability in terms of GRAP The prior year figures needed to be analysed in detail in order to do the restatement. Some of the areas affected were contracted services, repairs and maintenance, general expenses (which is now operational costs) and other income (which is now operation income).

11. Audit challenges for the 2018/2019 Financial year:
Implementation of GRAP standards remain a challenge
New Standards to be updated
Understanding of GRAP at middle management and below
Updating of Accounting Policies
Unauthorised, Irregular, Fruitless and Wasteful Expenditure to be accounted for as per Circular 68

12. Thank You