RESPONSE TO COMMENTS ON THE DRAFT FMP BILL

RESPONSE TO COMMENTS ON THE DRAFT FMP BILL

08 May 2006

Comments to the draft FMP Bill published in the Government Gazette, 28 October 2005 were received from:

Mr Z A Dingani, Secretary to Parliament
Mr N du Plessis, National Treasury

The following tables set out the drafting team’s response to the comments and indicates whether the Bill has been changed in response to the comments, and the nature of these changes.

Table 1 Issues raised by the Parliamentary Services

Comments on Bill	Response and changes to the Bill
Long Title and Preamble The structure of this part of the draft Bill is inconsistent with the usual structure of legislation of this nature. Whereas the preamble precedes the long title and the arrangements of sections, the usual structure is that the long title is followed by the arrangement of sections and then, if at all, the preamble. Such structure appears more logical than the one followed in the draft Bill. The preamble is also not a necessary accessory to the Bill as it merely reiterates what is already contained in the long title and the objects clause. Traditionally, preambles are found in noteworthy legislation, for example, the Constitution.	There has been a practice to include preambles in legislation required by the Constitution. Within Parliament’s discretion to include Preamble. A specific reference section 215 of Constitution could be included to make the link tighter.
As the Bill makes provision for norms and standards applicable to provincial legislatures in Schedule 1, the long title should include a specific reference to this. Therefore we propose that the following phrase be inserted in the long title before the last phrase: "to provide norms and standards for provincial legislatures".	Agreed: "to provide financial management norms and standards for provincial legislatures";
Chapter 1: Interpretation and Objects Sub-clauses 1(1) and 1(2) are repetitive. We propose that 1(2) be deleted, which will also obviate the need to number clause 1.	Could be deleted – as it is a rule of interpretation.
The draft Bill provides a definition for "official", which refers to "employee of Parliament". In terms of parliamentary policies, "employee" means a person employed to a permanent position, for a fixed term or as a consultant on the fixed establishment of Parliament. In order to avoid confusion, we propose that the draft Bill replaces the definition of "official" with the definition for "employee", with the same wording as indicated above. This change should be reflected throughout the Bill.	No objection as there should be consistency. Comment - very unusual in labour law to describe consultants as employees - what is fixed establishment? Are their other categories of consultants who could perform functions under Act? Could "temporary employees
The definition of "prescribe" in clause 1 should refer to section 64 (not 63).	Agreed – technical
The definition for "standards of generally recognised accounting practice" is different from the definition in the Public Finance Management Act, 1999 (PFMA). It is further inconsistent with section 89(1)(a) of the PFMA, which provides that the Accounting Standards Board must set standards of generally recognised accounting practice as required by section 216(1)(a) of the Constitution. We propose that the definition should be replaced with: "standards of generally recognised accounting practice" means an accounting practice complying in material respects with the standards issued in terms of Chapter 11 of the Public Finance Management Act by the Accounting Standards Board pursuant to section 216(1)(a) of the Constitution.	The definition in the PFMA is inaccurate. The standards are set by the ASB in terms of section 89(1) of the PFMA, but the Minister of Finance prescribes the standards by way of regulations in terms of s.90(1)(b) of the PFMA as head of the national treasury as required by section 216(1)(a) of the Constitution.
We note that there is no definition for "this Act" as is the case with the PFMA and the Local Government: Municipal Finance Management Act, 2003 (MFMA). Therefore we propose that the following definition be inserted at the appropriate place: "this Act" includes regulations and instructions in terms of section 64. This seems advisable for the purpose of, amongst others, clauses 9(1)(a), 10(3)(b) and 65(1)(a) and (b).	Is it appropriate for instructions to be included? (are instructions under this Act of same status as Treasury instructions under PFMA).
In the definition for "unauthorised expenditure", paragraph (c) would seem to be inconsistent with paragraph (b). Following the definition in the MFMA, we propose that paragraph (c) should be redrafted as follows: (c) any expenditure of money appropriated or approved for a specific purpose, otherwise than for that specific purpose; or	Suggest (b) and (c) are consolidated as follows: "any expenditure of money for a purpose other than that for which those funds were appropriated or approved, subject to section 19"
In the definition of "vote" the reference should be to section 27(1) of the PFMA (not section 28(1)).	Agreed - : reference to s27 as a whole.
Clause 2 provides for the objects of the Act. In light of our proposals below that the Bill should not provide roles for specific committees, we propose that the phrase "through joint committees of Parliament" at 2(1)(d) be deleted.	Clause 2(1)(d) was inserted by the Committee – to consider
Clause 2(2), although related to the object in 2(1)(f), is a peremptory provision that does not belong in the objects clause. We propose that clause 2(2) be placed elsewhere in the Bill. In this regard we are of the view that 2(1)(f) should in any case only relate to provincial legislatures as the legislation provides in detail for the financial management of Parliament and, as such, should be placed together with 2(2) elsewhere in the Bill.	Agreed - separate clause to deal with issue of norms and standards for provinces.
Chapter 2: Executive Authority and Administration of Act Clause 3(1) is a repetition of the definition and as such it is tautologous and should be deleted. We propose that clause 3(1) sets out the common law position of the Executive Authority as follows: "The control of the expenditure and the appropriation of money for Parliament is vested in the Executive Authority."	Repetition allows for reading without cross- reference to definition. We do not agree that the appropriation of money for Parliament is vested in the Executive Authority and that this is the common law position. It is the National Assembly that appropriates funds.
Clause 3(3), read with Schedule 2, provides a separate code of ethics for the Executive Authority. We are of the view that should our comments below on Schedule 2 be accepted, this clause should be deleted.	Decision to be taken by the Committee
Clause 4(1) contains a repetition of the definition for Accounting Officer. We propose that the clause be rephrased as follows: "This Act is administered under the control of the Executive Authority by the Accounting Officer."	Repetition allows for reading without cross- reference to definition.
As a consequence to our comments on the definition of "employee" we propose that the word "officers" in clause 5(e) and "official" in clause 5(g) be replaced with "employees" and "employee", respectively.	See above
Clause 5(g) provides that the Accounting Officer must ensure that, amongst others, criminal proceedings are instituted in certain circumstances. In terms of section 179 of the Constitution, the prosecuting authority has the power to institute criminal proceedings on behalf of the state. In order to avoid any confusion, we propose that clause (g) be drafted as follows: "disciplinary action is instituted or, when appropriate, criminal proceedings are initiated against any employee who has allegedly committed an act of financial misconduct or an offence in terms of Chapter 10."	Agreed
As a consequence to our comments on the definition of "employee" we propose that the word "official" in clauses 7(b), 8(1), 8(4)(d), 8(5), 9(1), 9(1)(a) and 9(1)(c) be replaced with "employee"; and in 10(1) with "employees".	Agreed
Clause 7, which provides for an Acting Accounting Officer, is restrictive in the sense that it does not allow the Executive Authority a discretion to designate a person other than the Deputy Secretary, to perform the duties of the Accounting Officer, while the Executive Authority still remains accountable for the implementation of the legislation. Where it allows another person to be designated, it is subject to conditions. It should furthermore refer to an Acting Accounting Officer in the clause, and not just in the heading, in order to be consistent with the definition of Accounting Officer. We therefore propose the following wording: 7.(1) If the post of Accounting Officer is vacant, or if the Accounting Officer is unable to perform the functions of the post, those functions must be performed by – (a) the Deputy Secretary to Parliament, or (b) another employee designated in writing by the Executive Authority. (2)The Deputy Secretary or the designated employee, as the case may be, will be acting as Accounting Officer."	Committee to consider
Clause 8(2) is vague on who must develop the system of delegation due to the use of the passive tense. One can presume from the wording that it is the Accounting Officer that must develop such system. To clarify this, we propose the following wording: 8(2) The Accounting Officer must develop the system of delegation in consultation with the Executive Authority and must - …	Agreed - should ss (1) and (2) be switched around?
In clause 8(5) the reference should be to subsection (1), not subsection (2).	Agreed
Chapter 3: Planning and Budgeting We are of the view that the concept described by the term "performance plan", would be better described by the term business plan. This change should be reflected throughout the Bill, at clauses 11(a) and (b), the heading of clause 13, and clauses 13(1) and (2).	The National Treasury uses the term "annual performance plans" to refer to departments’ current year’s implementation and service delivery plans. We recommend retaining this terminology.
Since there is no sub-clause (2) in clause 11, the number (1) should be removed. Furthermore, sub-clauses 11(a) and (b) are disjoined and we propose to include an and after the semi-colon at the end of (1). The omission of in in the second line of (a) is a typographical error that should be corrected.	Agreed
The Executive Authority is accountable to Parliament for sound financial management of Parliament. It seems logical that the Executive Authority approves the strategic plans, annual business plan and budget. Furthermore, should Parliament decide to establish a joint committee for such a purpose, the flexibility offered by the standing rules and based on section 45 of the Constitution is preferred to the peremptory provisions of legislation. Therefore we are of the view that the reference to "for submission to a joint committee of Parliament" at the end of clause 11(b) should be removed.	Decision to be taken by the Committee
Clause 12(1) refers to the date of a general election. In terms of the Constitution, it is appropriate to refer to this date as the election of the National Assembly.	Agreed
The omission of a in the second line of clause 13(1) is a typographical error that should be corrected. In sub-clause 13(2), the expression "the following financial year" should presumably read the financial year concerned or that financial year. In other words the financial year referred to in sub-clause (1).	Not clear that this resolves the difficulty as is it is not a plan for the current financial year.
Clause 14 provides that the Accounting Officer must prepare a draft budget for Parliament and present it to the Executive Authority at least 10 months prior to the start of the financial year. Due to the short period in which to prepare such a draft budget, we are of the view that it makes more sense to submit the draft budget six months prior to the start of the financial year. From a purely practical perspective such period is more realistic.	The reason for it being ten months is that by six months Parliament needs to have finalised its deliberations so that its budget can feed into the national budget process, which starts in earnest in August – committee to decide.
Clause 14(2)(g) provides that Parliament’s budget must be in accordance with the format prescribed under section 27(3) of the PFMA. However, section 27(3) must be read with section 76, which authorises the National Treasury to make regulations. It would therefore be more correct to phrase clause 14(2)(g) as follows: be in accordance with the format prescribed under section 76 read with section 27(3) of the Public Finance Management Act	Agreed Not strictly necessary because cross-reference is contained in definition of "prescribed".
Clause 15 is inconsistent with the decisions of Parliament in regard to its budget process. As the Constitution authorises Parliament to control its internal arrangements, proceedings and procedures (sections 57(1) and 70(1)), we submit that the Bill should allow Parliament to determine its internal procedures. We therefore propose that clause 15 be redrafted as follows 15. The Executive Authority must: in consultation with the Minister of Finance, determine a process for submitting Parliament’s budget to the National Treasury; consult with the Minister of Finance before the draft budget is submitted to the National Treasury; submit the draft budget to the National Treasury by a date agreed to with the Minister of Finance; and represent Parliament in any discussions with the Minister of Finance on any aspect of Parliament’s budget."	The proposal is to delete 15(1), (3) and (4) of the gazetted Bill. As the Bill is enacted by Parliament, Parliament is determining its internal procedures by means of the Bill. The committee should in the light of this submission consider whether it is overly prescriptive to include sub-sections (1), (3) and (4) in the Bill. Consideration should also be given to changing the order of the sections, so that those pertaining to the joint committee are placed together, and the section pertaining to submission to National Treasury at the end. Cross-reference in (3) should be to (1) and not (3)(a)?
Given the definition of "financial year" in clause 1, the words to which it relates should be inserted after the word "year" where it appears the first time.	Not clear what is meant.
Clause 19(4) should refer to section 64 instead of section 63.	Agreed
Clause 20(3) provides that the Executive Authority must submit information on the roll-over of unspent funds to the National Treasury "on or before the last working day of April". As the audit would not be completed at this stage, this requirement is unrealistic. We propose that the phrase be replaced with the following: without delay.	Not agreed to. The audit is not needed to identify the roll-over of unspent funds. However, process should be checked with National Treasury. Terminology such as "without delay" should be avoided as it is too subjective.
Chapter 4: Cash Management and Investment As a consequence to our comments on the definition of "employee" we propose that the word "official" in clause 25(1) be replaced with "employee".	Agreed
Chapter 5: Financial Management Clauses 28(2)(a), 29(2)(c) and 31(2)(b) refers to Parliament maintaining "a management, accounting and information system". The difference in meaning between a management system and accounting system that accounts for Parliament’s assets and liabilities is not evident and could create confusion. Therefore we propose that "management" be deleted and these clauses refer only to an accounting and information system.	Agreed
Consistent with the clause 1, the words standards of should be inserted before the word "generally" in clause 28(2)(b).	Agreed
Clause 31(2)(f) provides that all financial accounts of Parliament are closed "at the end of each month" and reconciled with its records. The meaning of the underlined phrase is clearly more restrictive than monthly, which seems to be the intention of the clause. We therefore proposed that the phrase be replaced with monthly.	Should be checked with National Treasury.
Clause 32 deals with support for political parties as envisaged in section 57(2)(c) of the Constitution. Section 57(2)(c) requires that the rules and orders of the National Assembly must provide for financial and administrative assistance to each party represented in the Assembly, in proportion to its representation, to enable the party and its leader to perform their functions in the Assembly effectively. The implication is that the Assembly must be in control of this expenditure. Clause 32(1) provides that support for political parties may be used only in accordance with a "policy adopted by Parliament". No distinction is made between the authority of the Assembly and that of the Council. As the Constitution is silent on the latter issue, support for political parties in the Council can be determined in accordance with policy only. We propose that financial support for parties in the Assembly and the Council be provided for separately in sub-clauses (a) and (b), as follows: 32(1) Allocations for support for political parties represented in the Assembly may be used only in accordance with the rules and orders adopted by the Assembly as envisaged in section 57(2)(c) of the Constitution. Allocations for support for political parties represented in the Council may be used only in accordance with a policy or rules and orders adopted by the Council.	See new proposal (page 14)
Further to our comments above, it will probably be necessary to define Assembly, Council and Constitution in clause 1.	Terminology not unclear Needs to be reviewed as part of the party funding process.
Clause 32(2) provides a role for the caucus of a political party. We are of the view that this is an internal matter that should not be regulated by legislation. Therefore we propose the following wording for the clause: Thirty days prior to the beginning of each financial year, each political party that received financial support must submit to the Accounting Officer an expenditure plan that conforms with the rules and order, or policy, contemplated by sub-section (1).	Needs to be reviewed as part of the party funding process – see proposal – consideration should be given as to whether it is desirable to ‘legalise’ caucuses in legislation.
There is a typographical error in the first line of clause 33(3) that should be corrected. We propose that the word "the" be deleted.	Agreed
We are of the view that the provision in clause 33(6) dealing with penalties for late submission of financial statements is a matter that might be inconsistent with the provision of section 57(2)(c) of the Constitution insofar as it applies to parties in the Assembly forfeiting funds. Furthermore, we are of the view that the issue of enforcing compliance with audit requirements is a matter of policy that should be left for Parliament to decide. We propose that the clause be redrafted as follows: 33(6) A party must submit the financial statements to the Accounting Officer within two months after the end of a financial year. 33(7) Should a party not submit the financial statements to the Accounting Officer within two months after the end of a financial year, the rules and orders or policy contemplated in subsection (1) may authorise the Accounting Officer to withhold all or part of the funds until the financial statements are submitted.	Needs to be reviewed as part of the party funding process.
Chapter 6: Supply Chain Management We are of the view that the heading of clause 40, which deals essentially with the implementation of policy, should be Implementation of policy instead of referring to "system".	Agreed
Clause 41 deals with unsolicited offers. However, the clause is not clear in regard to role of the Executive Authority to prescribe policy instead of procedures. The Accounting Officer is responsible for prescribing procedures for implementing policy. Furthermore, it would be the Accounting Officer who considers offers in terms of the policy prescribed by the Executive Authority. Clause 41(2) should therefore refer to the Accounting Officer and not to Parliament. We propose that the clause be redrafted as follows: 41. (1) The Executive Authority may prescribe policy for considering offers to supply goods or services that are unsolicited or are made otherwise than in accordance with Parliament’s prescribed procurement processes. (2) The Accounting Officer - (a) is not obliged to consider any offer contemplated in subsection (1); may consider an offer contemplated in sub-section (1) only in accordance with the prescribed procedure.	Agreed
The wording of clause 42 creates the impression that the Accounting Officer must notify the Auditor-General and the Executive Authority if a contract is concluded not in accordance with the supply chain management policy. Such issue belongs in the sphere of misconduct. We are of the view that the purpose of the clause is to provide for the situation where the Accounting Officer concludes a contract, other than the one recommended, in terms of the supply chain management policy, which allows for the Accounting Officer to make the final decision with who to contract. We propose that, in order to clarify that the authority to conclude a contract lies with the Accounting Officer and that the supply chain management policy must provide this, clause 42 should be redrafted as follows: 42. (1) The Accounting Officer must notify the Auditor-General and the Executive Authority in writing if a contract is concluded in respect of a tender, quotation, or other bid other than the one recommended.	Reference to SCM in Act will clarify meaning of section and therefore we do not believe it should be removed. It is envisaged that the Policy will have different kinds of procurement procedures designed to achieve particular outcomes. If a contract is concluded with a supplier who would not have been recommended in terms of the supply chain management policy this must be reported.
Chapter 7: Audit Committee and Internal Audit Unit The typographical error in the heading of clause 47 must be corrected.	Agreed – Technical
The requirement in clause 47(2)(b) that the audit committee must meet at least four times a year is not practical as a minimum requirement. We propose that the requirement be that the committee must meet at least three times a year.	Committee to consider
The spelling error of public in line three of clause 49 (1) must be corrected.	Agreed – technical
Clause 49(2) creates the impression that the internal audit unit, which is part of the parliamentary service, is accountable to the audit committee, which is not part of the parliamentary service. In our view the correct position is that the internal audit unit is accountable to the Accounting Officer. Therefore we propose the following wording of clause 49(2): The unit must prepare, after consultation with the audit committee, and for the approval of the Accounting Officer-	The lines of reporting set out in the clause are consistent with the Treasury Regulations 3.2.7. Internal auditing should operate independently of the Accounting Officer. It reports to the audit committee and the accounting officer on its activities. However, what it decides to do is guided by the audit committee.
Chapter 8: Reporting and Auditing Clause 51 should be amended as a consequence of our comments relating to annual business plan instead of performance plan.	No change. Term used by Treasury is "annual performance plan".
In clause 52(1)(a) the reference should be to section 50, instead of 43.	Agreed – technical
Consequential to our comments on clause 15, we propose that clause 53 be redrafted as follows: The Executive Authority must table the monthly, quarterly and mid-year reports in Parliament within five working days of receiving the reports.	Committee to consider
In clause 54(3) the reference should be to paragraph (c), instead of (b). Furthermore, the consequential amendment of annual business plan instead of performance plan must be effected at clause 54(3).	Agreed – technical
We note that clause 56 does not provide for the submission of the Auditor-General’s audit report to the Treasury as in the case with departments in terms of section 40(1)(d) of the PFMA. This issue needs further consideration by all stakeholders.	This clause does not deal with audit reports. It is consistent with section 40(1)(c) of the PFMA.
In clause 57(1)(a) the reference should be to section 56, instead of section 48.	Agreed – technical
Clause 59(3) provides that the audited financial statements of Parliament must be referred to the Standing Committee on Public Accounts. However, in determining its internal procedures, Parliament has created alternative systems to consider and oversee its audited financial statements; namely, the Parliamentary Oversight Authority, the Budget Forum and the Joint Budget Committee. We therefore propose that clause 59(3) be deleted.	Decision to be taken by the Committee. Our view is that the clause is consistent with good governance.
As a consequence to our comments on clauses 15 and 59(3), we propose that clause 59(4) be deleted.	Decision to be taken by the Committee
Clauses 61(1)(b)(iii) and 61(2)(iii) refers to "other person responsible". As a consequence to our comments on the definition of "employee" we propose that the word be replaced with employee.	Agreed - technical
Chapter 9: Regulations and Instructions Clause 64(3) provides for the coming into effect of regulations made by the Executive Authority. The draft Bill requires the prior approval of these by Parliament. Although it is not uncommon to require the prior approval by Parliament of regulations made by a Minister of a department in the executive branch of government, we are of the opinion that the relationship between Parliament and the Executive Authority consisting of the Speaker and the Chairperson, is distinct form the one between a Minister in the executive branch and Parliament. The distinction lies in the fact that the Executive Authority of Parliament is elected by Parliament as its spokespersons and are at all times subject to the authority of Parliament. In contrast, the relationship between a Minister in the executive branch and Parliament is characterised by the constitutional requirements relating to oversight and accountability. Therefore we are of the opinion that it is not necessary to require that the regulations made by the Executive Authority in terms of section 64(1) be approved by Parliament. Furthermore, the requirement that the Accounting Officer must publish the regulations is an internal matter that is regulated by the instructions from the Executive Authority to the Accounting Officer. We are of the view that the Bill can achieve the required objective by being more prescriptive in regard to where the regulations must be published and that these will become operative after such publishing: We propose that clause 64(4) be deleted and that clause 64(3) be redrafted as follows: Regulations issued by the Executive Authority in terms of sub-section (1) come into effect after publication in the appropriate parliamentary paper.	A distinction must be drawn between the role of ‘Speakers’ and the role of ‘Executive Authority’. In both capacities they are always subject to the authority of Parliament. But whereas the ‘Speaker’ role is primarily representative, political and ceremonial, the Executive Authority role is managerial, financial and administrative. We therefore submit that it is appropriate to require Parliamentary approval for regulations, as promotes transparent governance of the institution. Appropriate form of publication should be considered as regulations will impact on people outside Parliament – ie: procurement policies.
Chapter 10: Financial Misconduct As a consequence to our comments on the definition of "employee" we propose that the word "officials" in the heading of clause 66 and the word "official" in clauses 66(1), (1)(c) and 2(a) be replaced with employee.	Agreed
Clause 68 refers to offences in terms of section 60. This typographical error should be corrected by changing the reference to section 67.	Agreed - technical
Chapter 11: Miscellaneous As a consequence to our comments on clause 15, we propose that clause 69 be deleted.	Decision to be taken by the Committee
Given the purpose of clause 56(b); namely, that annual financial statements must be submitted to the National Treasury for inclusion in the consolidated financial statements, the deletion of section 8(i)(a)(vi) of the PFMA in clause 71 is not clear. Clause 56(b) of the Bill and section 8(1)(a)(vi) of the PFMA seem compatible.	Agreed
Clause 72 is incorrect in its reference to the date the Act takes effect. Furthermore, to allow Parliament to adjust to the new regulatory framework, we propose that the Bill authorises incremental implementation of the legislation. Clause 72 should thus be worded as follows: 72(1) This Act is called the Financial Management of Parliament Act, 2006, and comes into operation on a date determined by the President by proclamation in the Government Gazette. (2) Different dates may be so fixed in respect of different provisions of the Act.	Agree that change is needed. Consideration should be given to whether Bill could contain a phased table for implementation.
Schedule 1: Norms and standards for provincial legislatures Similar to our comment on the definition of "standards of generally recognised accounting practice" item (h) should be changed to be consistent with section 89(1)(a) of the PFMA, which provides that the Accounting Standards Board must set standards of generally recognised accounting practice as required by section 216(1)(a) of the Constitution. We propose that the item should be: require the legislature to comply with the accounting standards issued in terms of Chapter 11 of the Public Finance Management Act by the Accounting Standards Board pursuant to section 216(1)(a) of the Constitution	The standards are set by the ASB in terms of section 89(1) of the PFMA, but the Minister of Finance prescribes the standards by way of regulations in terms of s.90(1)(b) of the PFMA as head of the national treasury as required by section 216(1)(a) of the Constitution. Current wording is consistent with the Constitution.
Schedule 2 : Code of Ethics for members of the Executive Authority The draft code does not propose substantial changes to the present situation pertaining to the Executive Authority as set out in the Constitution, the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act, 2004 and the standing rules of Parliament. To state that the Executive Authority should act in good faith and meet their legal obligations is stating the obvious. We further disagree with the proposal that it might be appropriate for an agency outside Parliament to consider complaints against the Executive Authority. We therefore propose that the code is unnecessary and should be omitted.	Decision to be taken by the Committee - it must be considered whether Executive Authority has additional powers and therefore a separate code of conduct similar to that for Ministers would be appropriate. No draft code was prepared and there is no proposal that an external body should be used.
Schedule 3: Matters that must be covered in Parliament’s supply chain management policy The heading refers to "supply change management" and, as indicated elsewhere in the Schedule, should be supply chain management.	Agreed – technical
The last three lower case roman numbers are incorrect and should be "r", "s" and "t".	Agreed – technical

Table 2 Issues raised by the National Treasury

Comments on Bill		Response and changes to the Bill
ADDITIONS It is recommended that the Bill should provide for transfer payments to constitutional institutions on the vote of Parliament. These institutions are accountable to the National Assembly, and must report on their activities and the performance of their functions to the Assembly. In the event of separate financial management legislation for Parliament, the legislation should also regulate the financial management of these institutions.		We support this suggestion, but to implement it at this stage would delay the Bill significantly, as it would require the drafting of a lengthy chapter dealing with budget processes, oversight etc. It would also involve consulting the relevant institutions.
In terms of section 64(1)&(2) of the Bill, the executive authority may make regulations or issue instructions not inconsistent with the Bill. Regulations and instructions may prescribe that the prior approval of the executive authority must be obtained. Provisions should be included in the Bill to allow for approval by the executive authority of departures from regulations and condonation of non compliance with regulations on good grounds.		Agree with proposal.
A similar provision as contained in section 40(4)(a) (cash flow projections) of the PFMA should also be included in the Bill. Information in this regard should also be made available to National Treasury for cash flow management purposes.		This is provided for in clause 27.
Definitions Paragraph (b) of the definition for overspending should allow for virement as authorised by section 19 of the Bill. The definition of unauthorized expenditure needs to be reconsidered. It includes expenditure from donor funding. Section 18 of the Bill only provide for authorization by Parliament as a charge against the National Revenue Fund (Appropriations). Donor Funding should be dealt with in accordance with the Reconstruction and Development Programme Fund Act, 1998 (Act no. 79 of 1998). "In material respects" should be deleted in the definition of standards for generally recognized accounting practice.		This is achieved by inclusion of words ‘subject to section 19’ Need to look into this. May delete the reference to donor funding. Agreed
Sec 16:	Any revision of an appropriation must be made by a national adjustments budget subject to the criteria (purposes) for which the Minister of Finance may provide for funds in an adjustments budget.	Parliament should be bound by the criteria set out in section 30 of the PFMA. This is the intention of the current clause 16. Consideration should be given to repeating section 15(2) in relation to adjustments budgets.
Sec 17:	Current provision in section 29 of the PFMA is applicable and should not be repeated in the Bill.	Agree that clause 17 to be deleted.
Sec 19(3):	Current provision in the PFMA is impractical. Savings on (a) - (c) should be used subject to approval by the executive authority.	To consider
Sec 20 and 21:	These provisions should be deleted as Parliament is currently not required to surrender surplus voted funds. Savings cannot realize from a direct charge against the National Revenue Fund. Only actual expenditure can be withdrawn from the National Revenue Fund as a direct charge.	Suggested redraft to ensure that the current situation regarding unspent appropriated funds is fixed in legislation, and secondly to require that Parliament needs to approve the use of such unspent funds going forward. Treatment of unspent funds Parliament is not required to return to the National Revenue Fund funds appropriated for, but not spent in, a particular financial year. Funds appropriated for, but not spent in, a particular financial year must be regarded as funds derived from Parliament’s own revenue sources, and the approval of their use in subsequent financial years must be in accordance with section 16(1)(b). Funds derived from Parliament’s own revenue sources that are approved for a particular financial year, but not spent in that year, must be approved for use in subsequent financial years in accordance with section 16(1)(b).
Sec 26(1)(b):	The reference to "indemnity" should be deleted. Clauses related to indemnities (limitation of liabilities) and warranties are very often standard clauses in contracts relating to the acquisition of office equipment such as photocopy machines and computer hardware. In the main, these clauses are generally aimed at protecting both contracting parties against claims for damages.	Agreed
Sec 26(3)(b):	Should be limited to operational lease agreements. In terms of the standards for generally recognized accounting practice finance leases is classified as a form of borrowing.	Agreed
Sec 36(3):	This provision must be reworded. A similar provision in the PFMA has practical implication due to interpretation by executive authorities. It is often used as an opportunity to overspend on appropriations. If the Executive Authority wants to proceed, prescribed processes such as section 16 (use of funds in emergency situations) or section 30(2)(b) (unforeseeable and unavoidable expenditure) of the PFMA should be followed.	Changes required – precise wording to be agreed.
Sec 52:	The report (31 October) that assesses the performance of Parliament’s administration during the first half of the financial year and recommendations whether an adjustments budget may be necessary should be aligned with the process to finalise the adjustments budget. Recommendations regarding an adjustments budget should take into account the purposes for which the Minister of Finance may table an adjustments budget (section 30 of the PFMA).	Need to discuss if clause 16(2) is adequate.
Sec 55(2):	The requirement to disclose particulars of the remuneration of officials of Parliament whether financial or in kind, in a note to the financial statements might be impractical. The PFMA and MFMA requires the disclosure of information for chief executive’s, chief financial officer and senior managers.	Agreed – insert "Accounting officer and senior managers’
Sec 55(2)(d):	The notes to the annual financial statements must include particulars of all unauthorized expenditure (not only material).	Agreed -need to discuss how to reword section.
Sec 57(3):	The wording of this sub-section should be reconsidered. Financial Statements are submitted and signed by the accounting officer. The Auditor-General should not be allowed to amend the financial statements.	delete "other than Auditor-General" in sub-section (3).
Sec 59:	The annual report, which include the audited financial statements and audit report, must be referred to both the Committee on Public Accounts and the Joint Committee. Information included in the annual report, other than the financial statements and audit report should also be available for the Committee on Public Accounts.	Agreed
Sec 64:	Approval of regulations issued by the Executive Authority by Parliament might be impractical. Draft regulations must be published for public comment in the National Government Gazette before their enactment.	Committee to discuss. Publication would allow for greater transparency and is supported.
Sec 66 & 67:	These provisions should also include the responsibilities of officials contained in section 9 of the Bill.	Agreed
Schedule 1:	The norms & standards for legislation by a provincial legislature to regulate its financial management are not sufficient to ensure uniformity. e.g.: must provide for accounting officer and responsibilities of the accounting officer arrangements regarding revenue, expenditure, assets and liabilities internal control and risk management arrangements (internal audit and audit committee) submission of annual reports; etc.	Need to discuss these – are norms and standards intended to ensure uniformity.

Replace clauses 32 and 33 with the following

Support for political parties

32 (1) Parliament must make regulations concerning the allocation and use of any funds whatsoever provided by Parliament to political parties or to members of Parliament.

(2) The regulations made in terms of section (1) must –

(a) regulate the allocation of funds;

(b) specify the purposes for which funds may be used;

(d) stipulate the responsibility of the party to account for allocated funds;

(e) establish a procedure according to which parties account for the use of funds;

(f) require parties to submit audited financial statements to the Accounting Officer annually;

(g) require audited statements to be tabled in the Assembly and NCOP and to be accessible to the public;

(h) provide for the recovery of funds spent irregularly; and

(i) establish a dispute resolution procedure.

(3) Regulations made under subsection (2) may authorise the Accounting Officer to withhold funds allocated to a party or a member of Parliament until the Accounting Officer receives –

adequate information concerning the ability of the party or member to manage and account for the funds;
any outstanding audit reports for the use of parliamentary funds by the party or member; or
any other information reasonably necessary to confirm that the party or member is entitled to the funds.

(4) Each party represented in the Assembly must be provided with financial and administrative assistance in proportion to its representation to enable it and its leader to perform their functions in Parliament effectively.

Drafting Note:

The Constitution requires parties represented in the National Assembly to receive funds for certain functions. However, nothing stops Parliament giving funds to NCOP members or giving funds to parties outside the constitutional parameters. This provision is intended to cover ANY funds given to political parties. It also repeats the constitutional requirement that parties in the National Assembly must get funds.
The current policy covers National Assembly members only.

Additional issues –

Clause 5: a general statement that the AO is responsible for seeing that the Act is properly administered/implemented?

Clause 8: should there be a reference to section 238 of the Constitution.