FINANCIAL ADMINISTRATION OF PARLIAMENT AND PROVINCIAL LEGISLATURES BILL, 2003
(Draft 11 November 2003)
BILL
To regulate in a uniform way the financial administration of Parliament and the provincial legislatures; to ensure that all revenue, expenditure, assets and liabilities of Parliament and the provincial legislatures are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in Parliament and the provincial legislatures; and to provide for matters connected therewith.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:—
11. Exemption
CHAPTER 3
BUDGETARY MATTERS
12. Annual appropriations
13. Budgetary process
14. Three year strategic and performance plans
15. Expenditure before annual budget is passed
16. Unauthorised expenditure
CHAPTER 4
ACCOUNTING OFFICERS AND OTHER OFFICIALS
Part 1: Accounting officers
18. Acting accounting officers
19. Fiduciary responsibilities of accounting officers
20. General financial management functions
21. Asset and liability management
22. Revenue management
23. Expenditure management
24. Expenditure on staff benefits
25. Budget preparation
26. Budget implementation
27. Impending shortfalls and overspending
28. Monthly budget statements
29. Mid-year budget and performance assessment
30. General reporting obligations
31. Virement between main divisions within vote
32. Protection of accounting officer
33. Delegation of powers and duties by accounting officers
Part 2: Chief financial officers
34. Chief financial officer
35. Functions of chief financial officer
36. Delegation of powers and duties by chief financial officers
Part 3: Other officials
37. Responsibilities of other officials
CHAPTER 5
SUPPLY CHAIN MANAGEMENT
39. Supply chain management policy
40. Unsolicited bids
41. Approval of tenders not recommended
42. Implementation of system
43. Contracts and contract management
44. Members of legislatures barred from serving on tender committees of legislatures
45. Interference
CHAPTER 6
INTERNAL AUDIT AND AUDIT COMMITTEES
47. Audit committees
CHAPTER 7
FINANCIAL REPORTING AND AUDITING
48. Preparation of annual reports
49. Preparation of financial statements
50. Disclosures concerning officials
51. Disclosures on investments and bank accounts
52. Other compulsory disclosures
53. Submission and auditing of annual financial statements
54. Submission of annual reports
55. Issues raised in audit reports
56. Consequences of non-compliance with certain provisions
CHAPTER 8
REGULATIONS AND INSTRUCTIONS
57. Regulations and instructions
58. Uniformity
59. Departures from regulations, instructions or conditions
CHAPTER 9
FINANCIAL MISCONDUCT
Part 1: Disciplinary proceedings
60. Financial misconduct by officials
Part 2: Criminal proceedings
62. Penalties
64. Repeal of legislation
65. Short title and commencement
1. (1) In this Act, unless the context indicates otherwise—
"accounting officer" means a person mentioned in section 17, and includes a person acting as the accounting officer;
"annual budget" –
(a) in relation to Parliament, means the national annual budget referred to in section 27 of the Public Finance Management Act, including any revisions in terms of an adjustments budget referred to in section 30 of that Act; and
(b) in relation to a provincial legislature, means a provincial annual budget referred to in section 27 of the Public Finance Management Act, including any revisions in terms of an adjustments budget referred to in section 31 of that Act;
"annual report", in relation to a legislature, means the annual report of a legislature referred to in section 48;
"approved budget" –
(a) in relation to Parliament, means Parliament’s vote on the national annual budget as approved by Parliament or revised in an adjustments budget by Parliament; or
(b) in relation to a provincial legislature, means the legislature’s vote on the provincial annual budget as approved by the legislature or revised in an adjustments budget by the legislature;
"Auditor-General" means the person appointed as Auditor-General in terms of section 193 of the Constitution, and includes a person –
(a) acting as Auditor-General;
(b) acting in terms of a delegation by the Auditor-General; or
(c) designated by the Auditor-General to exercise a power or perform a duty of the Auditor-General;
"budget year" means the financial year for which an annual budget is or is to approved;
"chief financial officer" means a person mentioned in section 34;
"current year" means the financial year which has already commenced, but not yet ended;
"delegation", in relation to a duty, includes an instruction or request to perform or to assist in performing the duty;
"executive authority"—
(a) in relation to Parliament, means the Speaker of the National Assembly and the Chairperson of the National Council of Provinces, acting jointly; and
(b) in relation to a provincial legislature, means –
(i) the Speaker of that provincial legislature; or
(ii) if the province has set up another structure by provincial legislation to perform the functions of the executive authority, that other structure;
"financial year" means a year ending 31 March;
"financial statements" means statements consisting of at least—
(a) a statement of financial position;
(b) a statement of financial performance;
(c) a cash-flow statement;
(d) any other statements that may be prescribed; and
(e) any notes to these statements;
"fruitless and wasteful expenditure" means expenditure that was made in vain and would have been avoided had reasonable care been exercised;
"irregular expenditure" means expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including—
(a) this Act; or
"legislature" means –
(a) Parliament; or
(b) a provincial legislature;
"main division" –
(a) in relation to Parliament’s vote, means one of the main segments into which Parliament's vote is divided and which specifies the total amount which is appropriated for the items under that segment;
(b) in relation to a provincial legislature’s vote, means one of the main segments into which the legislature's vote is divided and which specifies the total amount which is appropriated for the items under that segment;
"month" means one of the 12 months of a calendar year;
"official" means an employee of a legislature or any person seconded to a legislature;
(a) in relation to the vote of Parliament or a provincial legislature, means causing expenditure under the vote to exceed the amount appropriated for the vote; or
(c) in relation to a main division within the vote of Parliament or a provincial legislature, means causing expenditure under the main division to exceed the amount appropriated for that main division;
"prescribe" means prescribe by regulation or instruction in terms of section 57;
"Public Finance Management Act" means the Public Finance Management Act, 1999 (Act No. 1 of 1999;
"quarter" means any of the following periods in a financial year:
(a) 1 April to 30 June;
(b) 1 July to 30 September;
(c) 1 October to 31 December; or
(d) 1 January to 31 March;
"Rules Committee" –
(a) in relation to Parliament, means the Joint Rules Committee established in terms of the Joint Rules of Parliament; or
(b) in relation to a provincial legislature, means the Rules Committee established in terms of the Rules of the legislature;
"relevant treasury" –
(a) in relation to Parliament, means the National Treasury; or
(b) in relation to a provincial legislature, means the provincial treasury of the province concerned;
"Revenue Fund" –
(a) in relation to Parliament, means the National Revenue Fund; or
(b) in relation to a provincial legislature, means the Provincial Revenue Fund of the province concerned;
"standards of generally recognised accounting practice" means an accounting practice complying with standards applicable to legislatures and issued in terms of Chapter 11 of the Public Finance Management Act;
"unauthorised expenditure", in relation to a legislature, means any expenditure incurred by a legislature otherwise than in accordance with section 7, and includes—
(b) any expenditure from the legislature’s vote or a main division within the vote for a purpose unrelated to the vote or main division, subject to section 31; or
(c) any expenditure of money appropriated for a specific purpose, otherwise than for that specific purpose;
"vote"—
(a) in relation to Parliament, means Parliament’s vote on the national annual budget referred to in section 27 (1) of the Public Finance Management Act; or
(b) in relation to a provincial legislature, means the provincial legislature’s vote on the
provincial annual budget referred to in section 27 (2) of the Public Finance Management Act.
Object of this Act
2. The object of this Act is to secure sound and sustainable management of the financial affairs of Parliament and the provincial legislatures by establishing norms and standards and other requirements for –
(a) ensuring transparency, accountability and appropriate lines of responsibility in the financial affairs of Parliament and those legislatures;
(b) the management of their revenues, expenditures, assets and liabilities and the handling of their financial dealings;
(c) budgetary and financial planning processes and the co-ordination of those processes with the processes of the relevant executive organs of state;
(d) supply chain management; and
(e) other financial matters.
Application of this Act
3. This Act, to the extent indicated in the Act, applies to the administrations of Parliament and the provincial legislatures, including committees and political office-bearers authorised to take decisions having financial implications for Parliament or a provincial legislature.
(a) the legislature’s cash management must be conducted; and
(b) money not immediately required may be invested.
5. (1) The administration of a legislature must in accordance with the policy referred to in section 4 open and maintain one or more bank accounts in the name of the legislature, into which all money received by the legislature must promptly be paid.
(2) A legislature may not open a bank account –
(a) abroad;
(b) with an institution not registered as a bank in terms of the Banks Act, 1990 (Act No. 94 of 1990); or
(c) otherwise than in the name of the legislature.
(3) A bank account opened in terms of this section does not form part of a Revenue Fund.
(4) Money may be withdrawn from a legislature's bank account only in terms of section 7 (1).
Control of bank accounts
6.
(1) The accounting officer of a legislature —(a) must administer all the legislature’s bank accounts;
(c) must enforce compliance with sections 7.
(2) The accounting officer may delegate the duties referred to in subsection (1) (c) to the legislature’s chief financial officer only.
Withdrawals from bank accounts
(a) to defray expenditure appropriated in terms of the legislature’s approved budget or authorised for the legislature by way of a direct charge against the relevant Revenue Fund;
(b) to refund money incorrectly paid into a bank account;
(c) for cash management and investment purposes in accordance with the policy determined in terms of section 4; or
(d) for such other purposes as may be prescribed.
(2) Any authorisation in terms of subsection (1) to a senior financial official to withdraw money or to authorise the withdrawal of money from a bank account must be in accordance with a framework approved by the executive authority.
(3) The accounting officer of a legislature must within 30 days after the end of each quarter submit —
(a) a consolidated report of all withdrawals made during that quarter in terms of subsection (1) to the executive authority; and
(b) a copy of the report to the Auditor-General.
(a) within 90 days after the legislature has opened a new bank account, the name of the bank where the account has been opened, and the type and number of the account; and
(b) annually before the start of a financial year, the name of each bank where the legislature holds a bank account, and the type and number of each account.
(2) A bank where a legislature at the end of a financial year holds a bank account, or held a bank account at any time during a financial year, must—
(a) within 30 days after the end of that financial year notify the Auditor-General, in writing, of such bank account, including –
(i) the type and number of the account; and
(ii) the opening and closing balances of that bank account in that financial year; and
(b) promptly disclose information regarding the account when so requested by the Auditor-General.
(3) A bank, insurance company or other financial institution which at the end of a financial year holds, or at any time during a financial year held, an investment for a legislature must—
(a) within 30 days after the end of that financial year, notify the Auditor-General, in writing, of that investment, including the opening and closing balances of that investment in that financial year; and
(b) promptly disclose information regarding the investment when so requested by the Auditor-General.
Restrictions on borrowing, guarantees and other commitments
9. A legislature may not borrow money or issue a guarantee, indemnity or security, or enter into any other similar transaction that binds or may bind the legislature to any future financial commitment.
Consequences of unauthorised borrowing and other transactions
10. If a person borrows money or issues a guarantee, indemnity or security for or on behalf of a legislature or enters into any other similar transaction which purports to bind the legislature to any future financial commitment, neither the state nor the legislature is bound by the loan transaction or the guarantee, indemnity, security or other transaction.
Exemption
11. Sections 9 and 10 do not prevent a legislature from –
(a) issuing or being bound by guarantees for loans in terms of a housing or motor vehicle scheme administered by the legislature for staff members; or
(b) entering into any long term lease agreement to obtain the use of property or equipment.
Annual appropriations
12. (1) Money must in each financial year be appropriated for the administration of each legislature.
(2) Appropriations in terms of subsection (1) –
(a) must be included –
(i) in the case of Parliament, in the national annual budget referred to in section 27 (1) of the Public Finance Management Act; or
(ii) in the case of a provincial legislature, in the provincial annual budget referred to in section 27 (2) of that Act; or
(b) may be revised –
(i) in the case of Parliament, by a national adjustments budget referred to in section 30 of that Act; or
(ii) in the case of a provincial legislature, by a provincial adjustments budget referred to in section 31 of that Act.
Budgetary process
13. (1) The executive authority of a legislature is responsible for managing the legislature’s budget preparation process.
(2) At least four months before the start of a budget year the executive authority of a legislature must submit to the Rules Committee for approval –
(a) particulars of the legislature's proposed budgetary requirements for that year, specifying –
(i) the total amount required by the legislature under its vote; and
(ii) the total amount required for each main division within the legislature's vote and the purpose of each main division; and
(b) any explanations and other information substantiating the amounts proposed in terms of paragraph (a).
(3) At least three months before the start of a budget year the executive authority of a legislature must submit to the relevant treasury –
(a) particulars of the legislature's budgetary requirements for that year approved in terms of subsection (2), specifying –
(i) the total amount required by the legislature under its vote; and
(ii) the total amount required for each main division within the legislature's vote and the purpose of each main division;
(b) a statement specifying –
(i) for the budget year, realistically anticipated revenue from each revenue source;
(ii) for the two financial years following the budget year –
(aa) indicative revenue per revenue source; and
(bb) projected expenditure per main division within the legislature's vote;
(iii) for the current year –
(aa) estimated revenue per revenue source;
(bb) estimated expenditure per main division within the legislature's vote; and
(cc) any projected surpluses at the end of the year; and
(iv) for the financial year preceding the current year –
(aa) actual revenue per revenue source; and
(bb) actual expenditure per main division within its vote;
(c) an explanatory memorandum providing detailed information on the figures specified in terms of paragraphs (a) and (b); and
(d) any other budgetary information required by the relevant treasury to enable it to comply with legislation applicable to the preparation of the annual budget.
Note: The information mentioned in paragraphs (b), (c) and (d) above must be submitted to the relevant treasury for inclusion in the annual budget to be tabled in the legislature. This is standard information required for each departmental vote.
Three year strategic and performance plans
14. (1) The accounting officer of a legislature must –
(a) each year prepare in accordance with this section a strategic and performance plan for the legislature’s administration covering the budget year and the following two financial years; and
(b) promptly submit the plan to the executive authority.
(2) Within seven days after the annual budget has been tabled in the
legislature the executive authority must submit the strategic and performance plan to the
Rules Committee of the legislature.
(3) A strategic and performance plan for a legislature’s administration
must –
(a) indicate the priorities of the legislature’s administration for the financial
years to which it relates;
(b) provide measurable objectives for each main division within the legislature's vote;
(c) provide detailed information on all capital projects funded within each main division over the medium term, including the expected expenditure per financial year, the start and finishing dates and total cost of each project; and
(d) be in a format and comply with minimum standards as determined by the executive authority.
(4) Any decisions taken or recommendations made by the Rules Committee of a legislature on the legislature’s strategic and performance plan must be taken into consideration when the budgetary requirements for the financial year following the budget year are considered.
Expenditure before annual budget is passed
15. If an annual budget is not passed before the start of the budget year, funds may be withdrawn in accordance with section 29 of the Public Finance Management Act from the relevant Revenue Fund for the requirements of the legislature concerned during that budget year until the budget is passed.
Unauthorised expenditure
16. (1) Unauthorised expenditure incurred by the administration of a legislature does not become a charge against a Revenue Fund except if that legislature authorises the expenditure –
(a) by way of an appropriation in an appropriation Act; or
(b) as a direct charge against that Revenue Fund.
(2) If a legislature authorises unauthorised expenditure as a direct charge against the relevant Revenue Fund in terms of subsection (1) (b), but does not approve an additional amount covering the amount of the unauthorised expenditure, the unauthorised expenditure becomes a charge against the funds appropriated under that legislature’s vote in the next national or provincial annual budget.
(3) The executive authority of a legislature must report any unauthorised expenditure to the relevant treasury.
Note: As both paragraph (a) and (b) of subsection (1) would
require legislation referred to in section 77 or 120 of the Constitution (so called money Bills) which can only be introduced by the Minister of Finance/ MEC for finance, the relevant treasury would have to be informed if a legislature incurs unauthorised expenditure.
CHAPTER 4
ACCOUNTING OFFICERS AND OTHER OFFICIALS
Part 1: Accounting officers
Accounting officers
17. (1) Each legislature must have an accounting officer.
(2) (a) The Secretary to Parliament is the accounting officer of
Parliament.
(b) The Secretary to a provincial legislature is the
accounting officer of that legislature.
(3) An accounting officer of a legislature must exercise the functions and powers assigned to an accounting officer in terms of this Act.
(4) The employment contract of an accounting officer must be in writing and is subject to a separate performance agreement concluded annually as provided for in subsection (5).
(5) An annual performance agreement referred to in subsection (4) must –
(a) be concluded within a reasonable time after a person becomes an accounting officer, and thereafter within one month after the start of each financial year; and
(b) specify –
(i) performance standards linked to the objectives and targets of the legislature’s strategic and performance plan for the relevant financial year; and
(ii) the consequences of substandard performance.
Acting accounting officers
18. When an accounting officer is absent or otherwise unable to perform the functions of office, or during a vacancy, the functions of accounting officer must be performed by the official acting in the place of that accounting officer.
Fiduciary responsibilities of accounting officers
19. (1) The accounting officer of a legislature must—
(a) act with fidelity, honesty, integrity and in the best interests of the legislature in managing its financial affairs;
(b) disclose to the executive authority all material facts which are available to the accounting officer or reasonably discoverable, and which in any way might influence the decisions or actions of the executive authority; and
(c) seek, within the sphere of influence of the accounting officer, to prevent any prejudice to the financial interests of the legislature.
(2) An accounting officer may not—
(a) act in a way that is inconsistent with the duties assigned to accounting officers of legislatures in terms of this Act; or
(b) use the position or privileges of, or confidential information obtained as, accounting officer for personal gain or to improperly benefit another person.
General financial management functions
20. (1) The accounting officer of a legislature is responsible for managing the financial administration of the legislature, and must for this purpose take all reasonable steps to ensure —
(a) that the resources of the legislature are used effectively, efficiently and economically;
(b) that full and proper records of the financial affairs of the legislature are kept;
(c) that the legislature has and maintains effective, efficient and transparent
systems —
(i) of financial and risk management and internal control; and
(ii) of internal audit;
(d) that unauthorised, irregular and fruitless and wasteful expenditure and other losses are prevented; and
(e) that disciplinary or, when appropriate, criminal proceedings are instituted against any official of the legislature who has allegedly committed an act of financial misconduct or an offence in terms of Chapter 9.
(2) The accounting officer is responsible for and must account for all bank accounts of the legislature.
(a) the assets of the legislature, including the safeguarding and the maintenance of those assets; and
(b) the liabilities of the legislature.
(2) The accounting officer must for the purposes of subsection (1) take all reasonable steps to ensure –
(a) that the legislature has and maintains a management, accounting and information system that accounts for the assets and liabilities of the legislature;
(b) that the legislature’s assets and liabilities are valued in accordance with standards of generally recognised accounting practice; and
(c) that the legislature has and maintains a system of internal control of assets and liabilities, including an asset and liabilities register, as may be prescribed.
Revenue management
22. (1) The accounting officer of a legislature is responsible for the management of the revenue of the legislature.
(2) The accounting officer must for the purposes of subsection (1) take all reasonable steps to ensure –
(a) that the legislature has effective revenue collection systems;
(b) that all money received is promptly deposited in accordance with this Act into the legislature’s bank accounts;
Expenditure management
23. (1) The accounting officer of a legislature is responsible for the management of the expenditure of the legislature.
(2) The accounting officer must for the purpose of subsection (1) take all reasonable steps to ensure –
(a) that the legislature has and maintains an effective system of expenditure control, including procedures for the approval, authorisation, withdrawal and payment of funds;
(b) that the legislature has and maintains a management, accounting and information system which –
(i) recognises expenditure when it is incurred;
(ii) accounts for creditors of the legislature; and
(iii) accounts for payments made by the legislature;
(c) that the legislature has and maintains a system of internal control in respect of creditors and payments;
(d) that payments by the legislature are made –
(i) directly to the person to whom it is due unless agreed otherwise or for good reason; and
(ii) either electronically or by way of non-transferable cheques, provided that cash payments and payments by way of cash cheques may be made for exceptional reasons only, and only up to a limit determined by the executive authority;
(e) that all money owing by the legislature be paid within 30 days of receiving the relevant invoice or statement, unless agreed otherwise for categories of expenditure determined by the executive authority;
(f) that the legislature complies with its pension, medical aid, audit fees and other statutory commitments;
(g) that the legislature’s available working capital is managed effectively and economically;
(h) that the legislature’s supply chain management policy referred to in section 39 is implemented in a way that is fair, equitable, transparent, competitive and cost-effective; and
(i) that all financial accounts of the legislature are closed at the end of each month and reconciled with its records.
Expenditure on staff benefits
24. The accounting officer of a legislature must, in a format and for periods as may be determined by the executive authority, report to the executive authority on all expenditure incurred by the legislature on staff salaries, wages, allowances and benefits, and in a manner that discloses such expenditure per type of expenditure, namely –
(a) salaries and wages;
(b) contributions for pensions and medical aid;
(c) travel, motor car, accommodation, subsistence and other allowances;
(d) housing benefits and allowances;
(e) overtime payments;
(f) loans and advances; and
(g) any other type of benefit or allowance related to staff.
Budget preparation
25. The accounting officer of a legislature must –
(a) perform the budgetary preparation functions assigned to accounting officers in terms of Chapter 3;
(b) assist the executive authority in performing the budgetary preparation functions assigned to the executive authority in terms of Chapter 3; and
(c) provide the executive authority with the administrative support, resources and information necessary for the performance of those functions.
Budget implementation
26. The accounting officer of a legislature is responsible for implementing the legislature’s budget, including taking all reasonable steps to ensure –
(a) that the spending of funds is in accordance with the legislature’s approved budget; and
(b) that revenue and expenditure are properly monitored.
Impending shortfalls and overspending
27. The accounting officer of a legislature must –
(a) report in writing to the executive authority –
(i) any impending—
(aa) shortfalls in budgeted revenue; and
(bb) overspending of a main division within the legislature’s vote; and
(ii) any steps taken to prevent or rectify such shortfalls or overspending; and
(b) comply with any remedial measures imposed by the executive authority to prevent or rectify such shortfalls or overspending.
Monthly budget statements
28. (1) The accounting officer of a legislature must by no later than ten working days after the end of each month submit to the executive authority and the Auditor-General a statement, in a format determined by the executive authority, on the state of the legislature’s approved budget reflecting the following particulars for that month and for the financial year up to the end of that month:
(a) actual revenue, per revenue source;
(b) actual expenditure, per main division;
(c) actual capital expenditure, per main division;
(d) when necessary, an explanation of –
(i) any material variances from the legislature’s projected revenue by source, and from the legislature’s expenditure projections per main division;
(ii) any remedial or corrective steps taken or to be taken to ensure that projected revenue and expenditure remain within the legislature’s approved budget.
(2) The statement must include a projection of revenue and expenditure for the rest of the financial year, and any revisions from initial projections.
(3) The amounts reflected in the statement must in each case be compared with the corresponding amounts budgeted for in the legislature’s approved budget.
Mid-year budget and performance assessment
29. (1) The accounting officer of a legislature must before 30 September of each year –
(a) assess the performance of the legislature’s administration during the first half of the financial year, taking into account –
(i) the monthly statements referred to in section 28 for the first half of the financial year;
(iii) the past year’s annual report, and progress on resolving problems identified in the annual report; and
(b) submit a report on such assessment to –
(i) the executive authority of the legislature; and
(ii) the Auditor-General.
(2) The statement referred to in section 28 (1) for the sixth month of a financial year may be incorporated into the report referred to in subsection (1) (b) of this section.
(3) The accounting officer must, as part of the review –
(a) make recommendations as to whether an adjustments budget may be necessary; and
(b) recommend revised projections for revenue and expenditure to the extent that this may be necessary.
(4) If an adjustments budget is necessary, the executive authority must in
substantially the same manner as provided for in section 13 submit a request to the
relevant treasury for its amended budgetary requirements.
General reporting obligations
30. (1) The accounting officer of a legislature must immediately report particulars
of any unauthorised, irregular or fruitless and wasteful expenditure on discovery of such
expenditure to –
(a) the executive authority; and
(b) the Auditor-General.
(2) The accounting officer of a legislature must submit to the executive authority of that legislature and the Auditor-General such information, returns, documents, explanations and motivations as the executive authority or the Auditor-General may require.
Virement between main divisions within vote
31. (1) The accounting officer of a legislature may utilise a saving in the amount appropriated under a main division within the legislature’s vote towards the defrayment of excess expenditure under another main division within the vote, unless the executive authority of the legislature directs otherwise.
(2) The amount of a saving under a main division of the legislature’s vote that may be utilised in terms of subsection (1), may not exceed eight per cent of the amount appropriated under that main division.
(3) This section does not authorise the utilisation of a saving in—
(a) an amount specifically and exclusively appropriated for a purpose mentioned under a main division within the vote;
(b) an amount appropriated for transfer to another institution; and
(c) an amount appropriated for capital expenditure in order to defray current expenditure.
(4) A utilisation of a saving in terms of subsection (1) is a direct charge against the relevant Revenue Fund only if the relevant legislature through legislation envisaged in section 77 or 120 of the Constitution enacts such utilisation as a direct charge.
(5) The executive authority of a legislature may by regulation or instruction in terms of section 57 regulate the application of this section.
Protection of accounting officer
32. Any action taken by any structure or functionary of a legislature against the accounting officer of the legislature solely because of that accounting officer’s compliance with a provision of this Act, is an unfair labour practice for the purposes of the Labour Relations Act, 1995 (Act No. 66 of 1995).
Delegation of powers and duties by accounting officers
33. (1) The accounting officer of a legislature –
(a) must for the proper application of this Act in the administration of the legislature develop an appropriate system of delegation that will both maximise administrative and operational efficiency and provide adequate checks and balances in the financial administration of the legislature;
(b) may, in accordance with that system, delegate to an official of the legislature –
(i) any of the powers or duties assigned to the accounting officer in terms of this Act; or
(ii) any powers or duties reasonably necessary to assist the accounting officer in exercising a power or complying with a duty assigned to the accounting officer in terms of this Act; and
(c) must regularly review delegations issued in terms of paragraph (b) and, if necessary, amend or withdraw any of those delegations.
(2) A delegation to an official in terms of subsection (1)—
(a) is subject to any limitations and conditions the accounting officer or
executive authority may impose;
(b) may either be to a specific individual or to the holder of a specific post
in the administration of the legislature;
(c) may authorise that official to sub-delegate, in writing, the delegated
power or duty to another official of the legislature, or to the holder of a specific post in the administration of legislature; and
(d) does not divest the accounting officer of the responsibility concerning
the exercise of the delegated power or the performance of the delegated
duty.
(3) The accounting officer may confirm, vary or revoke any decision taken by an official in terms of a delegation under subsection (1), provided that no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
Part 2: Chief financial officers
Chief financial officer
34. Each legislature must have in its administration a chief financial officer.
Functions of chief financial officer
35. (1) The chief financial officer of a legislature must —
(a) advise the accounting officer on the exercise of powers and duties entrusted to the accounting officer in terms of this Act;
(b) assist the accounting officer in the administration of the legislature’s bank accounts and in the preparation and implementation of the legislature’s budget;
(c) advise officials in the exercise of any powers and duties delegated to them in terms of section 33; and
(d) perform such budgeting, accounting, analysis, financial reporting, cash management, debt management, supply chain management, financial management, review and other duties as may in terms of section 33 be delegated by the accounting officer to the chief financial officer.
(2) The chief financial officer of a legislature is accountable to the accounting officer for the performance of the duties referred to in subsection (1).
Delegation of powers and duties by chief financial officers
36. (1) The chief financial officer of a legislature may delegate any of the duties referred to in section 35 (1) (a), (c) and (d) with the concurrence of the accounting officer, to—
(a) any other official of the legislature; or
(b) any person contracted by the legislature to assist the chief financial officer in the performance the functions referred to in section 35 (1).
(2) If the chief financial officer delegates any duties in terms of subsection (1) to a person who is not an employee of the legislature, the chief financial officer must be satisfied that effective systems and procedures are in place to ensure control and accountability.
(3) A delegation in terms of subsection (1)—
(a) must be in writing;
(b) is subject to such limitations or conditions as the chief financial officer may impose; and
(c) does not divest that chief financial officer of the responsibility concerning the delegated duty.
(4) The chief financial officer may confirm, vary or revoke any decision taken in consequence of a delegation in terms of subsection (1), but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
Part 3: Other officials
Responsibilities of other officials
37. Each official of a legislature exercising financial management responsibilities must take all reasonable steps within that official’s area of responsibility to ensure —
(a) that the system of financial management and internal control established for the
legislature’s administration is carried out diligently;
(b) that the financial and other resources of the legislature are utilised effectively,
efficiently, economically and transparently;
(c) that any unauthorised expenditure, irregular expenditure, fruitless and wasteful expenditure and other losses are prevented, and, when such expenditure or losses occur, are reported to the accounting officer;
(d) that all revenue due to the legislature is collected;
(e) that the provisions of this Act, to the extent applicable to that official, including
any delegations in terms of section 32 or 35, are complied with; and
(f) that the assets and liabilities of the legislature are managed effectively, and that assets are safeguarded and maintained to the extent necessary.
CHAPTER 5
SUPPLY CHAIN MANAGEMENT
38. (1) This Chapter, subject to subsection (2), applies to –
(a) the procurement by a legislature of goods and services; and
(b) the disposal by a legislature of goods no longer needed;
(2) This Chapter, except where specifically provided otherwise, does not apply if a legislature contracts with an organ of state for –
(a) the provision of goods or services to the legislature;
(c) the procurement of goods and services under a contract secured by that organ of state, provided that the relevant supplier has agreed to such procurement.
39. (1) Each legislature must have and implement a supply chain management policy approved by its Rules Committee which gives effect to the provisions of this Chapter.
(2) The supply chain management policy of a legislature must be fair, equitable, transparent, competitive and cost effective and must cover at least the following:
(a) the range of supply chain management processes that legislatures may use, including tenders, quotations, auctions and other types of competitive bidding;
(b) when a legislature may or must use a particular type of process;
(c) procedures and mechanisms for each type of process;
(d) procedures and mechanisms for more flexible processes where the value of a contract is below an amount determined by the Rules Committee;
(e) open and transparent pre-qualification processes for tenders;
(f) competitive bidding processes in which only pre-qualified persons may participate;
(g) bid documentation, advertising of and invitations for contracts;
(h) procedures and mechanisms for –
(i) the opening, registering and recording of bids in the presence of interested persons;
(ii) the evaluation of bids to ensure best value for money;
(iii) negotiating the final terms of contracts; and
(iv) the approval of bids;
(i) screening processes and security clearances for prospective contractors on tenders above a prescribed value;
(j) compulsory disclosure of any conflicts of interests prospective contractors may have in specific tenders and the exclusion of such prospective contractors from those tenders;
(k) participation in the supply chain management system of persons who are not officials of the legislature, subject to section 44;
(l) the barring of persons from participating in supply chain management processes, including persons –
(i) who were convicted for fraud or corruption during the past five years;
(ii) who wilfully neglected, reneged on or failed to comply with a government contract during the past five years; or
(iii) whose tax matters are not cleared by South African Revenue Service;
(m) measures for –
(i) combating fraud, corruption, favouritism and unfair and irregular practices in supply chain management; and
(ii) promoting ethics of officials and other role players involved in supply chain management;
(n) the invalidation of recommendations or decisions that were unlawfully or improperly made, taken or influenced, including recommendations or decisions that were made, taken or in any way influenced by –
(i) members of the legislature; or
(ii) officials of the legislature;
(o) the procurement of goods and services by legislatures through contracts procured by other organs of state;
(p) contract management and dispute settling procedures; and
(q) the delegation of supply chain management powers and duties.
41. (1) If a tender other than the one recommended in the normal course of implementing the supply chain management policy of a legislature is approved, the accounting officer of the legislature must, in writing, notify the Auditor-General of the reasons for deviating from such recommendation.
(2) Subsection (1) does not apply if a different tender was approved in order to rectify an irregularity.
Implementation of system
42. (1) The accounting officer of a legislature must –
(a) implement the supply chain management policy of the legislature; and
(b) take all reasonable steps to ensure that proper mechanisms and separation of duties in the supply chain management system are in place to minimise the likelihood of fraud, corruption, favouritism and unfair and irregular practices.
(2) No person may impede the accounting officer in fulfilling this responsibility.
Contracts and contract management
43. (1) A contract procured through the supply chain management system of a
legislature must –
(a) be in writing;
(b) stipulate the terms and conditions of the contract, which must include provisions
providing for –
(i) the termination of the contract in the case of non- or under performance;
(ii) dispute resolution mechanisms to settle disputes between the parties;
(iii) a periodic review of the contract once every three years in the case of a contract for longer than three years; and
(iv) any other matters that may be prescribed.
(2) The accounting officer of a legislature must –
(a) take all reasonable steps to ensure that a contract procured through the supply chain management policy of the legislature is properly enforced;
(b) monitor on a monthly basis the performance of the contractor under the contract;
(c) establish capacity in the administration of the legislature –
(i) to assist the accounting officer in carrying out the duties set out in
paragraphs (a) and (b); and
(ii) to oversee the day-to-day management of the contract; and
(d) regularly report to the executive authority of the legislature on the management of the contract and the performance of the contractor.
(3) A contract procured through the supply chain management policy of the
legislature may be amended by the parties, but only after the reasons for the proposed amendment have been tabled in and approved by the Rules Committee.
45. No person may –
(a) interfere with the supply chain management system of a legislature; or
(b) amend or tamper with any tender or other bid after its submission.
(2) The internal audit unit of a legislature’s administration must –
(a) prepare a risk based audit plan and an internal audit program for each financial year;
(b) advise the accounting officer and report to the audit committee of a legislature’s administration on the implementation of the internal audit plan and matters relating to –
(i) internal audit;
(ii) internal controls;
(iii) accounting procedures and practices;
(iv) risk and risk management;
(v) performance management;
(vi) loss control; and
(vii) compliance with this Act and any other applicable legislation; and
(c) perform such other duties as may be assigned to it by the accounting officer.
(3) The internal audit unit referred to in subsection (2) may be outsourced if the legislature’s administration requires assistance to develop its internal capacity and the executive authority the legislature has determined that this is feasible or cost-effective.
47. (1) Each legislature’s administration must have an audit committee.
(2) An audit committee is an independent advisory body which must –
(a) advise the executive authority, the accounting officer and the staff of the legislature 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;
(b) review the legislature’s annual financial statements to provide the executive authority of the legislature with an authoritative and credible view of the financial position of the legislature, 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 legislature as the executive authority of the legislature 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 legislature; and
(b) must liaise with –
(i) the internal audit unit of the legislature; and
(ii) the person designated by the Auditor-General to audit the financial statements of the legislature.
(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 legislature; and
(b) meet as often as is required to perform its functions, but at least four times a year.
(5) The members of an audit committee must be appointed by the executive authority of the legislature. One of the members who is not in the employ of the legislature must be appointed as the chairperson of the committee. No member of a legislature may be a member of an audit committee.
48. (1) The accounting officer of a legislature must for each financial year prepare an annual report in accordance with this Chapter.
(a) to provide a record of the activities of the legislature’s administration during the financial year to which the report relates;
(b) to provide a report on performance of the legislature’s administration; and
(c) to promote accountability for decisions made during the year by the legislature’s administration.
(3) The annual report of a legislature’s administration must contain –
(a) the annual financial statements of the legislature for the relevant financial year as submitted to the Auditor-General for audit in terms of section 53 (1);
(c) an assessment by the accounting officer of the performance of the legislature during that financial year against the measurable objectives for and performance targets of the legislature contained in the legislature's strategic and performance plan;
(d) particulars of any corrective action taken or to be taken in response to issues raised in the audit report referred to in paragraph (b);
(e) any explanations that may be necessary to clarify issues in connection with the financial statements;
(f) any recommendations of the audit committee of the legislature; and
(g) any other information as may be prescribed.
49. (1) The accounting officer of a legislature must for each financial year prepare annual financial statements for that legislature which –
(a) fairly presents the state of affairs of the legislature, its performance against its approved budget, its management of revenue, expenditure, assets and liabilities, its business activities, its financial results, and its financial position as at the end of the financial year; and
(b) disclose the information required in terms of sections 50, 51 and 52.
(2) Annual financial statements must be prepared in accordance with generally recognised accounting practice.
Disclosures concerning officials
50. The notes to the annual financial statements of a legislature must include particulars of the salaries, allowances and benefits of officials of the legislature, whether financial or in kind.
Disclosures on investments and bank accounts
51. The notes to the annual financial statements of a legislature must disclose the following:
(a) in respect of each bank account held by the legislature during the relevant financial year –
(i) the name of the bank where the account is or was held, and the type of account; and
(ii) year opening and year end balances in each of these bank accounts; and
(b) a summary of all investments of the legislature as at the end of the financial year.
Other compulsory disclosures
52. (1) The notes to the annual financial statements of a legislature must disclose the following information:
(a) the total amounts paid in audit fees, pension and medical aid contributions, and whether any amounts are outstanding as at the end of the financial year;
(b) particulars of—
(i) any material losses and any material unauthorised, irregular or fruitless and wasteful expenditures that occurred during the financial year and whether these are recoverable;
(ii) any criminal or disciplinary steps taken as a result of such losses or such unauthorised, irregular or fruitless and wasteful expenditures; and
(iii) any material losses recovered or written off.
53. (1) The accounting officer of a legislature must prepare financial statements for each financial year and submit those financial statements within two months after the end of the financial year to the Auditor-General for auditing.
(2) The Auditor-General must –
(a) audit all financial statements submitted for auditing in terms of subsection (1); and
(b) submit an audit report on those statements to the executive authority of the relevant legislature within two months of receipt of the statements.
(3) If the Auditor-General is unable to complete an audit within two months of receiving the financial statements, the Auditor-General must promptly submit a report outlining the reasons for the delay to the executive authority of the relevant legislature. The executive authority must promptly table the report in the legislature.
(4) Once the Auditor-General has submitted an audit report to the executive authority of the relevant legislature in terms of subsection (2) (b), no person other than the Auditor-General may alter the audit report or the financial statements to which the audit report relates.
Submission of annual reports
54. (1) The accounting officer of a legislature must within five months of the end of the financial year to which the report relates submit the annual report of that legislature to the executive authority of the legislature.
(2) The executive authority of a legislature must within one month after the executive authority received the annual report, but in no event later than six months after the end of the financial year to which the annual report relates, table the annual report in the relevant legislature.
(3) The annual report of a legislature must be made public.
Issues raised in audit reports
(2) If the accounting officer of a legislature fails to address adequately any issues raised in the audit report, the executive authority of the legislature must within 60 days table a report on the omission in the legislature.
Consequences of non-compliance with certain provisions
56. (1) If the annual financial statements of a legislature are not submitted for auditing in accordance with section 53 (1) –
(a) the Auditor-General must promptly –
(i) report such failure to the relevant legislature; and
(ii) issue a special report on such failure which must be made public;
(b) the accounting officer of the legislature must promptly submit a written
explanation setting out the reasons for the failure to –
(i) the Auditor-General; and
(ii) the executive authority of the legislature; and
(c) the executive authority –
(i) must investigate the reasons for the failure;
(ii) must take appropriate steps to ensure that the financial statements are submitted for auditing; and
(iii) may order that disciplinary steps be taken against the accounting officer or other person responsible for the failure.
(2) If the annual report of a legislature’s administration is not tabled in the legislature in accordance with section 54 (2)—
(a) the Auditor-General must promptly –
(i) report such failure to the relevant legislature; and
(ii) issue a special report on such failure which must be made public; and
(b) the executive authority –
(i) must investigate the reasons for the failure and table a report on the failure in the relevant legislature;
(ii) must take appropriate steps to ensure that the annual report is tabled in the legislature; and
(iii) may order that disciplinary steps be taken against the accounting officer or other person responsible for the failure.
CHAPTER 8
regulations and instructions
Regulations and instructions
57. (1) The executive authority of a legislature may within a policy framework determined by the Rules Committee make regulations or issue instructions not inconsistent with this Act concerning—
(a) any matter that may be prescribed in terms of this Act;
(b) the handling of, and control over, the assets of the legislature;
(c) the improvement and maintenance of the assets of the legislature;
(d) the alienation, letting or other disposal of the assets of the legislature;
(e) an appropriate supply chain management system for the legislature
which is fair, equitable, transparent, competitive and cost-effective and complies
with Chapter 5;
(f) the financial management aspects of the provision of support services and facilities to –
(i) political parties represented in the legislature;
(ii) members of the legislature; and
(iii) officials of the legislature;
(g) the rendering of free services by the legislature’s administration;
(h) the determination of any scales of fees, other charges or rates relating to
services provided by the legislature’s administration;
(i) the writing off of losses of money or other assets of the legislature or
amounts owed to the legislature;
(j) liability for losses and damages, and procedures for recovery, including
the recovery of fruitless and wasteful, unauthorised and irregular
expenditure;
(k) the cancellation or variation of contracts to the detriment of the
legislature;
(l) the settlement of claims by or against the legislature;
(m) the waiver of claims by the legislature;
(n) the remission of money due to the legislature;
(o) gifts or donations to officials of the legislature;
(p) vouchers or other proofs of receipts or payments, which are defective or
have been lost or damaged; or
(q) any other matter concerning the financial administration of the legislature
that may facilitate the application of this Act.
(2) Regulations in terms of subsection (1) may prescribe matters for which the prior approval of the executive authority must be obtained.
(3) The executive authority of a legislature may delegate to a committee, political office-bearer or official of the legislature any power conferred by a regulation on the executive authority to grant approval for any act disallowed by the regulation without the approval of the executive authority.
Uniformity
58. The executive authorities of the legislatures must endeavour to achieve uniformity as far as may be possible among the various legislatures when prescribing regulations in terms of section 57 for their respective administrations.
Departures from regulations, instructions or conditions
59. The executive authority of a legislature may on good grounds approve a departure from a regulation made or an instruction issued in terms of section 57, or from any condition imposed in terms of this Act, and must promptly inform the Auditor-General in writing when it does so.
60. (1) The accounting officer of a legislature commits an act of financial misconduct if that accounting officer deliberately or negligently—
(a) contravenes a provision of this Act;
(b) fails to comply with a duty imposed by a provision of this Act on accounting officers;
(c) makes or permits, or instructs another official of the legislature to make, an unauthorised, irregular or fruitless and wasteful expenditure; or
(2) An official of a legislature to whom a power or duty was delegated in terms of section 33 or 36 or is assigned in terms of section 35, commits an act of financial misconduct if that official deliberately or negligently –
(a) fails to carry out the delegated or assigned duty;
(b) contravenes or fails to comply with a condition of the delegated power
or duty; or
(c) makes an unauthorised, irregular or fruitless and wasteful expenditure.
(b) deliberately misleads or withholds information from the Auditor-General on any bank accounts of the legislature or on money received or spent by the legislature; or
(2) An official of a legislature to whom a power or duty was delegated in terms of section 33 or , is guilty of an offence if that employee deliberately or in a grossly negligent way contravenes or fails to comply with a condition of the delegation.
(3) Any person is guilty of an offence if that person contravenes section 45 or 53 (4).
Penalties
62. A person is liable on conviction of an offence in terms of section 61 to imprisonment for a period not exceeding five years or to an appropriate fine determined in terms of applicable legislation.
63. (1) No executive authority, accounting officer, chief financial officer or any other official of a legislature exercising a power or performing a function in terms of this Act, is liable in respect of any loss or damage resulting from the exercise of that power or the performance of that function in good faith.
(2) Without limiting liability in terms of the common law or other legislation, a legislature may recover from an accounting officer, chief financial officer or other official of a legislature, any loss or damage suffered by it because of the deliberate or negligent unlawful actions of that accounting officer, chief financial officer or other staff member when performing a function of office.
Repeal of legislation
64. (1) Section …… of the Powers and Privileges of Parliament Act, (Act No. of ) is hereby repealed.
Short title and commencement
65. This Act is called the Financial Administration of Parliament and Provincial Legislatures Act, 2003, and takes effect on 1 April 2004.