DRAFT OF 1 NOVEMBER 2002
CHAPTER 12
GENERAL TREASURY MATTERS

Procurement and asset disposal policy

105A.
(1) A municipality must adopt and implement a policy on the procurement of goods and services for the municipality and the disposal of assets no longer needed by the municipality, subject to subsection (2) and any other treasury norms and standards that may be prescribed.

(2) The policy referred to in subsection (1)

(a) must be fair, equitable, transparent, competitive and cost- effective;

(b) must be consistent with


(i) this Act; and

(ii) the Preferential Procurement Policy Act, 2001 (Act No. 5 of 2001; and

(c) may not unfairly discriminate against, or unfairly favour, specific contractors on any basis, including on the basis where they are located or are doing business;

(d) must provide for a process for the approval of tenders through a tender committee system, including criteria for


(i) the establishment, composition and procedures of tender committees;

(ii) the selection of members of such committees;

(iii) tender procedures; and

(iv) the approval of tender committee recommendations;

(e) must ensure that tender committee meetings are open to the public;

(f) may determine the conditions and procedures for the approval of tenders otherwise than through a tender committee system;

(g) may allow for the approval of tenders by a municipal committee or official on behalf of the council, but only if the tender is below the value referred to in subsection (34);

(h) may provide for


(i) an open and transparent pre-qualification process; and

(ii) a competitive bidding process in which only pre-qualified persons may participate;

(i) must provide criteria for the evaluation of bids to identify the bid that represents the best value for money;

(j) a process for negotiating the final terms of the agreement;

(k) must provide for a procedure to settle disputes arising during the tender processes; and

(l) must provide for the invalidation of recommendations or decisions that were made, taken or in any way influenced by


(i) a councillor in contravention of item 5 or 6 of the Code of Conduct for Councillors set out in Schedule 1 to the Municipal Systems Act; or

(ii) a municipal official in contravention of item 4 or 5 of the Code of Conduct for Municipal Staff Members set out in Schedule 2 to that Act.

(3) No councillor of any municipality may be a member of a municipal tender

committee.

(4) Only the municipal council may approve tenders above a prescribed value,

but may only select and approve a tender from those recommended through the

municipality’s tender process.

Audit committees

107. (1) A municipality and a municipal entity must have an audit committee.

(2) An audit committee is an independent advisory body which must

(a) advise the political structures, the political office-bearers, the accounting officer and the management staff of the municipality, or the governing body, the accounting authority and the management staff of the municipal entity, on matters relating to

(i) internal financial control and internal audits;

(ii) risk management;

(iii) accounting policies;

(iv) the adequacy, reliability and accuracy of financial reporting and information;

(v) performance management;

(vi) effective governance;

(vii) compliance with this Act and any other applicable legislation;

(viii) performance evaluation; and

(ix) any other issues referred to it by the municipality or municipal entity
;

(b) review the annual financial statements to provide the council of the municipality or, in the case of a municipal entity, the council of the controlling municipality, with an authoritative and credible view of the financial position of the municipality or municipal entity, its efficiency and effectiveness and its overall level of compliance with this Act and any other applicable legislation;

(c) respond to the council on any issues raised by the Auditor-General in the audit report;

(d) carry out such investigations into the financial affairs of the municipality or municipal entity as the council may request; and

(e) perform such other functions as may be prescribed
.

(3) In performing its functions an audit committee

(a) has access to the financial records and other relevant information of the municipality or municipal entity; and

(b) must liaise with


(i) the internal audit unit of the municipality or municipal entity; and

(ii) the person designated by the Auditor-General to audit the financial statements of the municipality or municipal entity.

(4) An audit committee must—

(a) consist of at least three persons with appropriate experience of whom the majority may not be in the employ of the municipality or municipal [public] entity, as the case may be; and

(b) meet as often as is required to perform its functions, but at least twice a year.

(5) The members of an audit committee must be appointed by the council of

the municipality or, in the case of a municipal entity, by the council of the controlling

municipality. One of the members who is not in the employ of the municipality or

municipal entity must be appointed as the chairperson of the committee.

[(2)] (6) A single audit committee may be [appointed] established for—

(a) a district municipality and the local municipalities within that district municipality; and

(b) a municipality and municipal entities under its sole ownership control.

Councillors’ remuneration

107A. (1) A municipality may remunerate its political office-bearers and members of its political structures, but only


(a) within the framework of the Public Office-bearers Act,……., setting the upper limits of the salaries, allowances and benefits for those political office-bearers and members; and

(b) in accordance with section 219 (4) of the Constitution.

(2) Any remuneration paid or given in cash or in kind to a person as a political office-bearer or as a member of a political structure of a municipality otherwise than in accordance with subsection (1), including any bonus, loan, advance or other benefit, is an irregular expenditure, and the municipality

(a) must, and has the right to, recover that remuneration from the political office-bearer or member; and

(b) may not write-off any expenditure incurred by the municipality in paying or giving that remuneration.

(3) The MEC for local government must report to the provincial legislature


(a) any transgressions of subsection (1); and

(b) any non-compliance with sections 17 (3) (h) (i) and 66 (2) (e) (i)

Official website

107B.
(1) Each municipality must


(a) establish its own website; and

(b) place on that website information regarding the business and affairs of the municipality as may be required or prescribed in terms of this Act.

(2) If a municipality for good reason cannot comply with subsection (1) (a), it may display the information referred to in subsection (1) (b) on a website determined or sponsored by the National Treasury.

Treasury regulations [instructions] and guidelines

106. (1) The National Treasury may make regulations [or issue instructions] or guidelines applicable to municipalities and municipal entities, regarding—

(a) any matter that may be prescribed [for municipalities or municipal entities] in terms of this Act;

(b) financial management and internal control;

(c) a framework for regulating the exercise of municipal fiscal and tariff fixing

powers;

(d) a framework for a municipal procurement [and provisioning] and asset disposal system which is fair, equitable, transparent, competitive and cost- effective;

(e) a framework for public private partnership agreements;

(f) the establishment by a municipality of, and control over –

(i) municipal entities; and

(ii) business units contemplated in section 76 (a) (ii) of the Municipal Systems Act;

(g) [the transfer of assets from a municipality to a municipal entity under its sole or joint ownership control or from such entity to a municipality] the safe-guarding of the financial affairs of municipalities or municipal entities when assets, liabilities or staff are transferred from or to a municipality or a municipal entity for the purpose of providing municipal services;

(h) the alienation, letting or disposal of assets by a municipality;

[(i) audit committees, their appointment and their functioning;]

(j) internal audit components and their functioning;

[(k) a costing framework for municipal activities;]

(l) the information to be disclosed when a municipality or municipal entity issues or incurs debt and the manner in which such information must be disclosed, including by way of a prospectus or other document;

[(m) the compulsory disclosure of material facts and duty to make reasonable enquiry by councillors, officials of municipalities or municipal entities, lenders, brokers, underwriters and other persons when a municipality or municipal entity incurs debt;]

[(n) the prospectus or documents required for issuing or trading in municipal debt instruments;]

(o) the circumstances under which further or specific disclosures are required after money has been borrowed by a municipality or [public] municipal entity;

[(p) specific facts to be disclosed upon the occurrence of events material to decisions of prospective lenders and investors;]

(q) the circumstances under which documentation or information pertaining to municipal debt must be lodged or registered;

(r) the establishment of a registry for the registration of documentation and information pertaining to municipal borrowing;

[(s) the administration of financial emergencies;]

[(t) the assignment of additional duties and powers to the Emergency Authority;]

[(u) the suspension, dismissal or discharge of financial recovery specialists;]

(v) the settlement of claims against a municipality following an order of court in terms of section 103;

(vA) the information that must be placed on a municipality’s official website;

[(w) the administration of this Act;] and

(x) any other matter that may facilitate the [application] enforcement and administration of this Act.

[(2) The National Treasury may by regulation determine that a contravention of, or failure to comply with, a specific regulation in terms of subsection (1) is an offence and that a person convicted of such an offence is liable to a fine or to imprisonment for a period not exceeding one year.]

(3) A regulation [instruction] or guideline in terms of this section may—

(a) differentiate between different—

(i) kinds of municipalities, which may, for the purposes of this section, be defined either in relation to categories, [or] types or budgetary size of municipalities or in any other manner;

(ii) categories of municipal entities;

(iii) categories of [municipal managers] accounting officers;

(iv) categories of accounting authorities; or

(v) categories of officials; or

(b) be limited in its application to a particular—

(i) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, [or] type or budgetary size of municipality or in any other manner;

(ii) category of municipal entities;

(iii) category of [municipal managers] accounting officers;

(iv) category of accounting authorities; or

(v) category of officials.

[Publishing of draft treasury regulations for public comment] Consultative

processes before promulgation of regulations


108.
(1) [Draft] Before regulations in terms of section [104] 106 are promulgated, the National Treasury must –

(a) consult organised local government on the substance of those regulations; and

(b) [be published for public comment] publish the draft regulations in the Government Gazette [before their enactment] for public comment.

(2) Regulations made in terms of section 106 must be submitted to Parliament

at least 30 days before their promulgation.

Departures from treasury regulations [instruction] or conditions

109. (1) The National Treasury may on good grounds approve a departure from a treasury regulation [or instruction] or from any condition imposed in terms of this Act.

(2) Non-compliance with a regulation made in terms of section 106, or with a condition imposed by the National Treasury in terms of this Act, may on good grounds shown be condoned by the Treasury.