1. ASSOCIATED BENEFITS OF mSCOA IN THE ASSET LIFE CYCLE

2. Current challenges in the asset life cycle
TABLE OF CONTENTS
Asset life cycle
Current challenges in the asset life cycle
Associated benefits of mSCOA segments in the asset life cycle
Other benefits of mSCOA
Conclusion

3. ASSET LIFE CYCLE 1. Planning & Budgeting 2. Acquisition
3. Operation & Maintenance
4. Disposal or Re-use
1. Planning & Budgeting
Where an asset is purchased, constructed or otherwise created
Where requirements of a new asset are planned for & established. Resources are set aside
Initiated when economic life has diminished or the service provided by the asset disappears
Where asset is used for its intended purpose & maintained

4. Budget, implementation and reporting Accountability Reporting
ACCOUNTABILITY CYCLE & mSCOA
Standard Chart of Accounts
Improved Service Delivery
The integrated development plan (unlimited needs and wants) must directly inform the formulation of the budget (limited basket of resources). In a mSCOA perspective, this requires budget formulation (as per the MBRR) from a project level. Consequently the Project Segment is consider the departure point in formulating budgets across all seven segments.
IDP
5 Year Strategy
Budget
3 Year Budget
SDBIP
Annual Plan to Implement
IYR
Monitoring
AFS
Oversight
Annual Report
Budget, implementation and reporting
Budgets is consistent with IDP
Asset procurement plan consistent with 3 year budget.
Monitoring via SDBIP possible.
Ensure IYR balances to asset register and GL accounts.
AFS reporting will be consistent with sub ledger.
Classification exist for :
Planned, WIP, In use, Held for disposal and Disposed in the GL.
Perfect alignment to sub-system
Accountability Reporting
Incorporation of GRAP
Improved standardisation
Improved audit process across 278
Consistent comparability
Transparency
Improved Service
Improved planning ensures better funding allocation.
Improved funding leads to improved service delivery at an operational level

5. THE CURRENT CHALLENGES IN THE ASSET LIFECYCLE
No proper planning in the acquisition of assets leading to poor service delivery due to the use of outdated or no assets;
Most municipalities do not specify assets & liabilities in projects and are often called "special projects” or “Mayoral Projects” and not reflective to items that have been purchased
Funds allocated to Assets being expended in other activities e.g. operational cost;
Sources of funding for assets not always clear;
Ownership of assets in municipalities not clear;
Repairs & maintenance not adequately planned or accounted for;
Asset registers not properly maintained;

6. THE CURRENT CHALLENGES IN THE ASSET LIFECYCLE cont.…...
Incorrect classification of assets;
Usage of assets not linked to the core functions of municipalities.

7. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
PROJECT SEGMENT
Linked to the IDP and certainty is given in mSCOA that assets prioritised
Historically budgeting was done at the budget office, mSCOA brings together all departments e.g. engineers (project implementers),budget manager, accountants at planning phase for asset projects and repairs and maintenance etc.
Eliminates the mismatch between IDP, budgeting, in year reporting (S71 & 72) and annual financial statements
mSCOA links the Fixed Asset Register (FAR) to the Project segment and automatically aligns with the IDP and MTREF

8. TYPICAL APPLICATION OF mSCOA PROJECT SEGMENT
SCOA currently aligns the project segment and the fixed asset register at the asset sub-class level, and makes provision for additional breakdowns on both capital and maintenance expenditure.
Component level budgeting automatic aligns the IDP, MTREF, FAR and financial record
Adopted from

9. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
FUNDING SEGMENT
It is easy to identify the sources of funding for assets in mSCOA which is defined at the posting level of the funding segments
mSCOA facilitates the accumulation of information within the financial system to be able to report on how specific source of funding e.g. MIG has been spent by extracting this specific information from the fund segment
Funding segment aligns the expenditure on repairs and maintenance against the source of income e.g. transfers and subsidies, internal billing and other
Assist in the budgeting phase by clearly identifying funding sources at planning phase
The funding segment contains all sources of funds available to the municipality and enables the monitoring of funds (operational and capital against the source of fund utilised.

10. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
FUNCTION SEGMENT
The function segment standardises a vote structure against which a transaction is recorded across all municipalities creating uniformity
The function provided are based on MFMA circular 12 and consistent with S145 (1) and 145 (4) of the constitution which provides for core functions and non core functions respectively
A user department/function that is allocated the asset will report on the asset and increase accountability
The electricity function has been expanded to include all NERSA requirements which will improve compliance across all segments

11. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
REGIONAL SEGMENT
Whether services are being provided impartially, fairly, equitably and without bias, as required by the Constitution;
Whether progress is being made in addressing regional backlogs in social infrastructure and access to services;
Whether government spending by different departments and municipalities are including spending on assets is being properly sequenced and co-ordinated;
Whether actual spending by government is aligned to the relevant plans of the three spheres of government;
Assist councillors and mayors to account to the communities for resources allocated and actual spending of the municipality to communities and wards;
Provide specific ward information to councillors' to assist in decision-making.

12. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
ITEM SEGMENT
mSCOA enables a clear distinction of what is being bought or money received for in the item segment in four main categories being Revenue, Expenditure Assets, Liabilities and Net assets
Assets related expenditure in the asset life-cycle including depreciation, amortisation, impairment of assets can be monitored in the item segment
Item segment standardises all asset categories and improves uniformity

13. ASSOCIATED BENEFITS OF mSCOA IN SEGMENTS
COSTING SEGMENT
Provides classification of indirect secondary cost which are not normally attributable to output and in terms of assets the usage of assets is reflected in the municipal core functions .
The costing function can act as a powerful management tool in the planning phase of the assets life cycle if usage between the core functions can be determined.

14. OTHER BENEFITS OF mSCOA
Advantages of mSCOA
6. Reduce the cost of compliance & information gathering in the long-term
1. Access to municipal financial systems will enable Treasuries to verify municipal information in terms of credibility, reliability & accuracy amongst others
2. Bring consistency in terms of classification of municipal information at transactional level across all municipalities within the province and nationally
3. Alignment of reporting formats such as budget & financial reporting
4.Consistent use of terminology across all municipalities by defining all accounts and labels
5. The improved quality of data will lead to improved budgeting, financial reporting and result in better decision-making in local government

15. QUESTIONS
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