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Water Sector Policy Database (WSPD)

Policy Detail Information
Policy Name: Local Government: Municipal Finance Management Act 56 of 2003

Open Policy Document Open Policy Document
This document has been opened: 696 times to date.
Date Of Release: 13 Feb 2004
Date Of Expected Review:
Date Last Updated: 15 Feb 2007
Policy Type: Existing legislation
Policy Level: National
Department: Department of Cooperative Governance and Traditional Affairs
Contact Name: Switchboard
Phone Number: 012 334 0600
Fax Number: 012 334 0603
Directorate: Policy & Legislation
Contact Name: Switchboard
Phone Number: (012) 334 0600
Fax Number: (012) 334 0603
Topics covered:
Legislations Impacting on WS/WR
Policy Precis:

To secure sound and sustainable management of the financial affairs of municipali- ties and other institutions in the local sphere of government; to establish treasury norms and standards for the local sphere of government; and to provide for matters connected therewith.

Section Summary

  Section Number Section Heading Section Description
01 INTERPRETATION, OBJECT, APPLICATION AND AMENDMENT OF ACT Definitions; Object of Act; Institutions to which Act applies; and Amendments to Act
02 SUPERVISION OVER LOCAL GOVERNMENT FINANCE MANAGEMENT General functions of National Treasury and provincial treasuries; Delegations by National Treasury
03 MUNICIPAL REVENUE Part 1 deals with municipal bank accounts: Opening of bank accounts; Primary bank accounts; Bank account details to be submitted to provincial treasuries and Auditor-General; Control of municipal bank accounts; Withdrawals from municipal bank accounts; Relief, charitable, trust or other funds. Part 2 deals with dash, investment and asset management: Cash management and investments; Disposal of capital assets.
04 MUNICIPAL BUDGETS Appropriation of funds for expenditure; Annual budgets; Contents of annual budgets and supporting documents; Funding of expenditure; Capital projects; Matters to be prescribed; Budget preparation process; Publication of annual budgets; Consultations on tabled budgets; Approval of annual budgets; Failure to approve budget before start of budget year; Consequences of failure to approve budget before start of budget year; Non-compliance with provisions of this Chapter; Municipal adjustments budgets; Unforeseen and unavoidable expenditure; Unspent funds; Shifting of funds between multi-year appropriations; Unauthorised, irregular or fruitless and wasteful expenditure; Contracts having future budgetary implications
05 CO-OPERATIVE GOVERNMENT Capacity building; Promotion of co-operative government by national and provincial institutions; National and provincial allocations to municipalities; Promotion of co-operative government by municipalities; Stopping of funds to municipalities; Stopping of equitable share allocations to municipalities; Stopping of other allocations to municipalities; Monitoring of prices and payments for bulk resources; Price increases of bulk resources for provision of municipal services; Applicability of tax and tariff capping on municipalities; Disputes between organs of state
06 DEBT Short-term debt; Long-term debt; Conditions applying to both short-term and long-term debt; Security; Disclosure; Municipal guarantees; National and provincial guarantees
07 RESPONSIBILITIES OF MAYORS General responsibilities; Budget processes and related matters; Budgetary control and early identification of financial problems; Report to provincial executive if conditions for provincial intervention exist; Exercise of rights and powers over municipal entities; Municipalities which do not have mayors; Municipalities with executive committees; Delegations of mayoral powers and duties
08 RESPONSIBILITIES OF MUNICIPAL OFFICIALS Part 1 deals with accounting officers: Municipal managers to be accounting officers; Fiduciary responsibilities of accounting officers. Part 2 deals with financial management: General financial management functions; Asset and liability management; Revenue management; Expenditure management; Expenditure on staff benefits; Funds transferred to organisations and bodies outside government; Budget preparation; Budget implementation; Impending shortfalls, overspending and overdrafts. Part 3 deals with reports and reportable matters: Monthly budget statements; Mid-year budget and performance assessment; Reports on failure to adopt or implement budget-related and other policies; General reporting obligation; Information to be placed on websites of municipalities; Protection of accounting officer. Part 4 deals with financial administration: Top management of municipalities; Senior managers and other officials of municipalities; Delegations
09 MUNICIPAL BUDGET AND TREASURY OFFICES Establishment; Role of chief financial officer; Delegations; Competency levels of professional financial officials
10 MUNICIPAL ENTITIES Part 1 deals with establishment and the financial implications for municipalities. Part 2 deals financial governance: Bank accounts; Bank account details; Budgets; Mid-year budget and performance assessment; Remuneration packages; Disposal of capital assets; Financial year; Audit. Part 3 deals with accounting oficers: Chief executive officer to be accounting officer; Fiduciary duties of accounting officers; General financial management functions of accounting officers; Asset and liability management; Revenue management; Monthly reconciliation of revenue and accounts; Expenditure management; Budget implementation. Part 4 deals with reports and reportable matters: Impending under-collection, shortfalls, overspending, overdrafts and non-payment; Irregular or fruitless and wasteful expenditure; Reporting of improper interference by councillors; General reporting obligations. Part 5 deals with other officials of municipal entities: Duties of other officials; Delegation of powers and duties by accounting officers; Competency levels of professional financial officials. Part 6 is a general section dealing with: Borrowing of money; Financial problems in municipal entities
11 GOODS AND SERVICES Part 1 deals with supply chain management: Application of this Part; Supply chain management policy; Supply chain management policy to comply with prescribed framework; Unsolicited bids; Approval of tenders not recommended; Implementation of system; Contracts and contract management; Councillors barred from serving on municipal tender committees; Interference; Competency levels of officials involved in municipal supply chain management. Part 2 deals with public-private partnerships and the conditions and process for public-private partnerships
12 FINANCIAL REPORTING AND AUDITING Preparation and adoption of annual reports; Preparation of financial statements; Disclosures on intergovernmental and other allocations; Disclosures concerning councillors, directors and officials; Other compulsory disclosures; Submission and auditing of annual financial statements; Submission and tabling of annual reports; Compliance to be monitored; Oversight reports on annual reports; Council meetings open to public and certain public officials; Issues raised by Auditor-General in audit reports; Submissions to provincial legislatures; Consequences of non-compliance with certain provisions; Annual report to Parliament
13 RESOLUTION OF FINANCIAL PROBLEMS Part 1 deals with the identification of financial problems and who bears the primary responsibility for resolution of financial problems. Part 2 deals with provincial interventions: Types of provincial interventions; Discretionary provincial interventions; Criteria for determining serious financial problems; Mandatory provincial interventions arising from financial crises; Criteria for determining serious or persistent material breach of financial commitments; Preparation of financial recovery plans; Criteria for financial recovery plans; Approval of financial recovery plans; Amendment of financial recovery plans; lmplementation of financial recovery plans in discretionary provincial interventions; lmplementation of financial recovery plans in mandatory provincial interventions; Regular review of provincial interventions; Termination of provincial interventions; Access to information, records and documents of municipalities; National interventions. Part 3 deals with debt relief and restructuring: Legal rights; Application for stay of legal proceedings; Application for extraordinary relief; Suspension of financial obligations; Termination of financial obligations and settlement of claims; Matters to be prescribed. Part 4 deals with the Municipal Financial Recovery Service: Establishment; Functions and powers; Appointment of Head; Responsibilities of Head; Staff; Delegations
14 GENERAL TREASURY MATTERS Liabilities and risks payable in foreign currencies; Forbidden activities; Internal audit unit; Audit committees; Councillors’ remuneration; Treasury regulations and guidelines; Consultative processes before promulgation of regulations; Departures from treasury regulations or conditions
15 FINANCIAL MISCONDUCT Part 1 deals with disciplinary proceedings: Financial misconduct by municipal officials; Financial misconduct by officials of municipal entities. Part 2 deals with criminal proceedings: Offences; Penalties. Part 3 is a general section dealing with regulations on financial misconduct procedures and criminal proceedings
16 MISCELLANEOUS Liability of functionaries exercising powers and functions in terms of this Act; Delays and exemptions; Transitional provisions; Repeal and amendment of legislation; Short title and commencement

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