Browsing by Author "Moloto, Morufa"

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    Assessing the effectiveness of municipal standard chart of accounts implementation : a case study of two low-capacity North West Province municipalities
    (Stellenbosch : Stellenbosch University, 2024-12) Moloto, Morufa; Ajam, Tania; Stellenbosch University. Faculty of Economic and Management Sciences. School of Public Leadership
    This study assesses the effectiveness of the implementation of the municipal standard chart of accounts (mSCOA) in South African municipalities. Two category B municipalities in the North West province were used as case studies. The Municipal Finance Management Act 53 of 2003 (MFMA) places emphasis on enhancing the quality of information to improve the relevance of financial reporting by municipalities. The Constitution of the Republic of South Africa (1996) provides that national legislation must prescribe measures to ensure transparency and expenditure control in each sphere of government by introducing generally recognised accounting practice (GRAP), uniform expenditure classifications, and uniform treasury norms and standards. The most recent reform introduced is the mSCOA which came into effect on 1 July 2017. The reform requires that there be a uniform and standardised financial transaction classification framework. This means that mSCOA prescribes the method (the how) and format (the look) that municipalities and their entities should use to record and classify all expenditure (capital and operating), revenue, assets, liabilities, equity, policy outcomes and legislative reporting. Phenomenology is the research paradigm adopted in this study. A total of sixteen (16) participants were selected through purposive sampling to participate in the study. Data was collected through semi-structured interviews. Thematic analysis was used to analyse the data, using the inductive approach. The knowledge of the objectives of mSCOA by the participants was the limitation of the study. Participant responses are limited to the level of involvement in the project implementation. The study found that, despite the requirements of mSCOA, municipalities in the case study are not mSCOA compliant as not all business processes have been implemented due to challenges ranging from budgetary constraints to human capital capacity challenges. Furthermore, lack of capacity contributed to the system vendors not being able to implement the (7) seven minimum business processes. The increase in the amount of unauthorised expenditure for the municipalities in the study between 2019/20 and 2020/21 financial years suggests that municipal officials are not budgeting, transacting and reporting in alignment with mSCOA. Therefore, the controls built into the mSCOA system, which are aimed at preventing overspending on a vote, can be overridden. The constant version updates of the chart of accounts by National Treasury continue to put financial burdens on municipalities. The mSCOA implementation should be regarded as a continuous learning process to ensure that all stakeholders tasked with implementation are conversant with the objectives and requirements of a complaint mSCOA system. Also, the National Treasury should implement more effective change management as an integral part of any project.