Day 1 Sebata EMS User Group 7 December 2017 TIME SESSION TOPIC - PowerPoint PPT Presentation

Conclusion  All stakeholders need to acknowledge that the implementation of mSCOA has been a learning process on the part of all and will continue in this fashion for the short to medium term, i.e. refinement of the LG database and data string methodology including validations and reconciliations  There is no go-to manual which provide the blue print for the implementation of a sophisticated and complex reform of this nature (undoubtedly the first in the world)  Need to be acknowledged that there is no one size fits all implementation methodology and that each vendor and respective service provider would have formulated their implementation methodology aligned to their process, one cannot be assessed as being better or worse than another. The true test of mSCOA compliancy will be determined in the compilation and finalisation of the 2017/18 AFS – Auditor General. NOTWITHSTANDING THE ABOVE MENTIONED SEBATA IS FULLY COMMITTED TO NOT ONLY OUR CLIENTS BUT ALL STAKEHOLDERS IN PROVIDING INNOVATIVE SOLUTIONS THAT NOT ONLY PROVIDE FOR COMPLIANCE BUT POSITIVELY CONTRIBUTES TO THE OVERALL IMPROVEMENT OF THE MANAGEMENT OF THE MUNICIPALITIES FINANCES, OPERATIONAL EFFICIENCIES AND EFFECTIVENESS, AND ULTIMATELY IMPROVE SERVICE DELIVERY FOR THE CITIZENS 17

Client feedback Presenter: Simon Moloi 18

1. High level status of mSCOA compliancy per client – Financial Data 19

1. High level status of mSCOA compliancy per client – Financial Data 20

1. High level status of mSCOA compliancy per client – Financial Data 21

1. High level status of mSCOA compliancy per client – Financial Data 22

1. High level status of mSCOA compliancy per client – Financial Data 23

2. High level status of mSCOA compliancy per client – Non Financial Data 24

2. High level status of mSCOA compliancy per client – Non Financial Data 25

2. High level status of mSCOA compliancy per client – Non Financial Data 26

2. High level status of mSCOA compliancy per client – Non Financial Data 27

2. High level status of mSCOA compliancy per client – Non Financial Data 28

3. mSCOA Progress to date Planning:  Unbundling of current ledger and vote structure to mSCOA charts.  Implementation of a full project based budget (Opex, revenue and capex).  Implementation and alignment of policy intents (IDP) to MTREF (Budgets)  Compilation of a mSCOA compliant budget in terms of mSCOA 7 segments.  Implementation of fully fledged balance sheet budgeting.  Initiation of projects on SebataEMS.  Lock down of budgets on SebataEMS.  Capturing of the IDP in line with the national KPA, strategic objectives, IDP programmes, MSTF and UIDF.  Generation of the budget and IDP strings for submission on the LG portal  Uploaded and locked the virement policy. 29

3. mSCOA Progress to date (Continued…) SCM:  Completion of take-on sheets for vendors in accordance with CSD.  Completion of take-on sheets for active creditors used by the municipalities.  Vendors and creditors uploaded and missing information completed on Sebata EMS  Approval of procurement plans  Onsite training to users of the SCM module of the municipalities  User Acceptance Testing demonstration and sign off  Handholding in creating the following on Sebata EMS: Requisitions; • Quotations; • Orders; • Invoice approvals; • Sundry payments. • 30

3. mSCOA Progress to date (Continued…) Ledger:  VAT and cash book set-ups  User Acceptance Testing demonstration and sign off  Bank transfer file and bank payment  Activation of mSCOA trial balance votes and detailed ledger  Modifying on financial reports.  Generating of transaction strings in mSCOA format. 31

3. mSCOA Progress to date (Continued…) HR & Payroll:  Alignment of the employees to the approved departments and divisions  Confirmation of employees as per the legacy system, which were imported to Sebata EMS  Importing master payroll information into Sebata EMS  Setting up of positions in accordance with the reporting lines as per the organogram  Completion of task grades and salary notches Billing:  Property file missing information updated – for municipality that accepted the provided quotations  Set-up and alignments of tariffs according to mSCOA requirements  Import of valuation roll  Import of account information  Set-up of street, towns and suburbs. 32

3. mSCOA Progress to date (Continued…) Assets:  Completion of assets take on based on the audited information for the 2016/17 financial year  Unbundling of asset register in mSCOA format  User Acceptance Testing demonstration and sign off Inventory:  Completion of inventory take on based on the audited information for the 2016/17 financial year  Stock take for inventory take on  User Acceptance Testing demonstration and sign off 33

4. User Acceptance Testing Process • Is a testing procedure intended to sign off all general and municipal specific configurations and system processes of Sebata EMS . • Basically clients need to confirm that:  Settings have been appropriately captured and configured per module; and  System workflow is functioning as it should.  Transferring of skills also takes place during the UAT process. Thereafter • SCOA Champion, CFO and MM needs to sign off UAT working papers for various modules. 34

5. User Acceptance Testing Phases UAT sign off should be completed for: • General settings • Planning module • SCM module • Assets module • Inventory module • Billing module • HR/ Payroll module • Ledger module 35

6. Summary – UAT sign off Procedures 36

Overview of AGSA Findings 2016/2017 Presented by Mubesko Africa (Pty) Ltd Presenter: Smartryk Calitz RGA, CGAP , CFE 37

Index of presentation content • Summary of most critical findings • The immediate future • An audit committee perspective • Closing 38

Summary of most critical findings 39

Assurance levels 40

Root cause and risk areas 41

Status of the internal control drivers 42

Statement of Financial Position • Accumulated Surplus/Reserves • Non-current Employee Benefits • Non-current Provisions • Payables • Unspent Grants • Property Plant and Equipment • Investment Property • Agriculture • Receivables • Cash and Cash Equivalents 43

Accumulated Surplus/Reserves • Effect of qualifications on statement on financial performance; 44

Non-Current Employee Benefits • Basis of qualification for benefits not supported; • Actual benefits paid in the Report from Actuaries differ from General Ledger; • Incomplete lists of employees provided to Actuaries; • Incorrect lists of employees provided to Actuaries - Example a list includes a deceased person; • Impact of fraudulent payments to fictitious employees not considered. 45

Non-current Provisions • Costs on reports of Engineers seems to be incorrect. No provision for permit was made in calculation for landfill-sites operating without permit; • Reports differ if current year report is compared with previous year report. For example: Fencing was included in current year calculation and none was included in previous year calculation; • The validity of license permits could not be verified; 46

Payables • Lack of an adequate creditors system to support the amount disclosed; • Creditors reconciliations are not performed; • No supporting documentation for sundry creditors; • Motor Vehicle Registration account not reconciled; 47

Unspent Grants • Grants payable back to National Treasury not disclosed under Payables; • Grants used for operating activities; • Confusion with regards to agency versus principal with regards to housing transactions; • No supporting documentation for old unspent Grants from various sources. 48

PPE • Incorrect depreciation calculations; • No proof that useful life’s were reviewed; • No proof that testing was performed for indicators of impairment; • Depreciation calculated on Capital Under Construction; • Community Assets were not unbundled – Sport Fields consists of more than 1 asset with different useful lives (Pavilion, rugby field, hall, netball courts, etc.); • Infrastructure Assets not previously recognised, record at incorrect values. DRC was calculated incorrectly; • Municipality has no idea what old WIP projects consist of; • Physical existence of assets could not be verified; • Condition assessments weren’t done properly; • No supporting documentation for calculation of CRC/DRC; • New repairs and maintenance disclosure not complete; • Directive 7 applied incorrectly. 49

Investment Property • Incorrect classification of Investment Property – must be able to demonstrate that property is rented out to make a profit, otherwise it is considered to provide a service to community and must then be classified as PPE; • Fair Values adjustments not obtained for IP carried at Fair Value; 50

Agriculture • No supporting documentation for calculation of fair value for Biological Assets; • No proof that asset count was performed for Biological Assets; 51

Receivables • Calculation for Debt Impairment not in accordance with GRAP 104; • Age analysis differ from General Ledger; • No supporting documentation for Sundry Receivables; • No payment history from departments for unfunded mandates, causing concerns on lack of impairment consideration of the receivable. 52

Cash and Cash Equivalents • Outstanding Deposits not followed-up. Outstanding deposits older than 1 month appear on bank reconciliation; • Investments with maturity date more than 3 months post year-end incorrectly classified as cash and cash equivalents. 53

Statement of financial performance • Revenue from Exchange transactions • No billing and or incorrect billing; • Revenue from non-exchange • No reconciliation performed between valuation roll and financial systems; • No reconciliation performed between rates levied and valuation roll tariff; • Other income • Discount received from Auditor-General must be recorded as non-exchange transactions; • Employee related Cost • S56 employees receiving an Acting Allowance, must also be included in the disclosure note under Employee Related Cost. Only the acting allowance must be disclosed for these employees and not all benefits paid to them; 54

Disclosure notes • Irregular expenditure; • Unauthorised Expenditure; • Fruitless and or Wasteful Expenditure; • MFMA Disclosures; • Related Party Disclosures; • Going Concern; 55

Irregular Expenditure • Prior year instances of Irregular Expenditure not followed-up; • Deviations from SCM not clearly documented; • All deviations from SCM not included on the deviations list submitted to the MM on a monthly basis; • Classification of deviations not clearly documented – Why is it only 1 supplier, Why is it Emergency, etc; • All Irregular Expenditure not identified and disclosed in AFS; What is the impact for the following year? • Incomplete register for Irregular Expenditure • Incorrect members of bid committees • No system in place to accurately identify the occurrence of irregular expenditure • No consequence management 56

Unauthorised expenditure • Unauthorised Expenditure calculated incorrectly; • No supporting documentation for total Unauthorised Expenditure on year-end; 57

Fruitless and or Wasteful expenditure • Incomplete register for fruitless and wasteful expenditure; • Not all expenditure that meets the definition of fruitless and wasteful expenditure was included in the register and disclosure note; 58

MFMA Disclosures • Incorrect disclosure of PAYE/UIF; Pension/Medical Aid, VAT, etc. • Incorrect disclosure of material losses; • Incorrect calculation of distribution losses; 59

Related Party Disclosure • Incomplete disclosure of transactions with related parties – Services with councillors and senior management; • Incomplete disclosure of transactions with people in service of the state; • No declaration of interest from Audit Committee, Council, Staff, etc. 60

Going Concern • No going concern assessment performed; • Going Concern assessment not clearly documented in AFS. 61

Material corrections to AFS • The AGSA includes an emphasis of matter paragraph when material corrections were allowed and report on section 122 of the MFMA. MFMA section 122(1)(a) and (b) • “Every municipality and every municipal entity must for each financial year prepare annual financial statements which — (a) fairly presents the state of affairs of the municipality or entity, its performance against its • 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 123, 124 and 125.” 62

Performance management objectives • We noted the change in the methodology causing the inclusion of paragraphs in the audit report based on the assessment of the specific performance indicator selected. • Service delivery and Local Economic Development appear to feature as high risk theme 63

The immediate future • Audit action plans • Annual report – tabled before 25 January 2018 • Mid-year assessment • Consequence management • Financial Misconduct Disciplinary Board (FMDB) • King IV • mSCOA reporting • Critical to get the various assurance providers to focus on the root causes, provide assurance on the existence of policies and procedures, adequate systems, and implementation of the audit action plan. • Accounting Officers, The Speaker and Council to activate consequence management processes by: • Evaluating the existence of intention and or negligence not to comply with the MFMA, • Classified financial misconduct to be referred to FMDB • Section 32 investigations done and decisions recorded (PAJA) 64

An Audit Committee perspective AGSA/IA reports Action plan • Effectiveness of Finance Unit and CFO (King IV) • Implementation of audit action plan • Risk management • Performance management • Financial management Report Implementation • Effective use of internal audit • mSCOA compliance Follow-up • Consider a special audit committee meeting dealing with the AGSA management report, Audit Report, Audit Action plan, Internal audit follow-up matrices and focus on root cause responses; • Most APRC only have 2 more engagements prior to year-end 30 June 2018, IS it enough to display sufficient leadership and oversight? • More rigorous detailed reviews of mSCOA transactions classification, improved focus on initial recognition, management review of information to and from experts, more timeous AFS, detailed review of AFS and supporting documents. 65

Closing • There might be an expectation that entities transact compliant with GRAP standards in a system that accurately reflect and report on financial information, that will meet the reporting requirements as defined in the framework for the preparation of annual financial statements. • Subsequent measurement, disclosure and presentation should be the result of a clearly defined process, established to ensure compliance with GRAP standards and MFMA disclosure expectations. • Assurance providers including Senior Management, Municipal Manager, Mayor, Internal Audit, Audit Committee, MPAC and Council should work collectively together to achieve the desired result. • In the event of a breach of conduct, appropriate consequence management should be considered, properly documented, referred to the correct oversight bodies who should apply their minds timeously and recommend appropriate actions. • Promotion of Administrative Justice Act should be understood, implemented and adhered to that will enable the assurance providers to assess the appropriateness of actions taken. • Internal audit should be adequately resourced to ensure that assurance providers receive timeous and correct reports to enable corrective steps to be taken. • Together we can achieve the goal of a sustainable economy, implementation of policies, and reporting on institutional performance management that change the lives of our people. 66

Questions 67

MFMA Section 173 and the potential implications on public servants Presenter: Christo Venter 68

• Christo to provide 69

Impact of amended project plans Presenter: Maritz van Zyl 70

EMS implementation agreements • A tailor made project plan where compiled for each municipality • deliverables with timelines is stipulated in the plan • Scope changes could arise due to deviations within the deliverables • If its not in the implementation plan then it deemed to be out of scope 71

Examples of project scope extension: • Regulation changes by NT • mSCOA chart 6.1 to 6.2 • Circular updates • NT reporting assistance • A, B and C-schedule compilation (Old format) • Reconciliation between council approved budget and system budget • General accounting work • Compilation of mSCOA asset register • Stock take • GRAP updates • Revenue enhancement • Data purification of master information (all modules) • Reconciliations of control accounts before migration to Sebata EMS • Alignment of sub-module data into a mSCOA format • mSCOA Budget process (Adjustment Budget 2017.18, 2018/19 Budget) • Unbundling of 2017/18 opening balances • Continuous Handholding and training after UAT sign off 72

A treasury perspective of mSCOA implement and status of Sebata Presenter: Provincial Treasury 73

Recap and conclusion of the day 74

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Day 2 Sebata EMS User Group 8 December 2017

TIME SESSION TOPIC PRESENTED BY TARGET AUDIENCE 08:00 – 09:00 Registration 09:00 – 09:30 G9 - Municipal Sustainability Sebata / UMS Revenue Management, debt - The entire value chain collection, water management and CFO 09:30 – 10:15 G10 The new mSCOA chart 6.2 and the impact on the Sebata Budget Office, all HOD’s and new budget cycle Municipal Executive Management 10:15 – 10:30 G11 Lessons learned during the last project based Sebata Budget Office, all HOD’s and budget Municipal Executive Management 10:30 – 10:45 Session break 10:45 – 11:45 G12 - The power of the Sebata EMS master Sebata Municipal Manager, all HOD’s, agreement Internal Audit, Supply Chain, Risk - Draft regulation 15 Key Business Processes Managers. - Entire value chain 11:45 – 12:00 G13 Centre of Excellence: Training and the Sebata Sebata Budget office, HR and WSP Service Centre 12:00 Conclusion of User Group 77

Municipal Sustainability / The entire value chain Presenter: Leon Vermaak 78

The UMS Model FMS FMS Post-Billing Pre-Billing EMS EMS ERP ERP 79

Pre-billing Process Meter Reading Pre-Billing Data Management & Verification Revenue & Debt Management 80

Pre-billing Solutions Meter Reading Pre-Billing Data Management & Verification Revenue & Debt Management 81

Pre-billing Solutions Meter Reading  Physical Meter Readings Smart Tools  Work Flow Management (WFMS) – Web Based  Phone-in Readings  SMS Communicator – Web Based  “Snap - Snap” App Readings  Handheld (Android)  First & Final Readings  Exception Reporting Data Management & Verification Smart Tools  Work Flow management (WFMS)  Demographic Analysis  Handheld (Android)  Stand Data Verification  Spatial Platform – Web based  Stand Audits (Spatial) Revenue & Debt Management Smart Tools  Data Cleansing &  Debt Book Analysis Verifications  Strategy Development  Online  Policy Review  Batch Analysis Model  By-laws  Consumer verification services (CVS)  Bank Account Verification Services (AVS)  Collection Prioritization Model (CPM) 82

Pre-billing Solutions Arrears Collection Post-Billing Indigent Registrations Infrastructure & Maintenance 83

Post-billing Solutions Smart Tools  Work Flow management (WFMS) Arrears Collection  SMS Communicator – Web Based  Handheld (Android)  Credit Control  Consumer verification services (CVS)  Debt Collection  Bank Account Verification Services (AVS)  Water Flow Restriction Devices  Collection Prioritization Model (CPM)  Electricity Secure Enclosures  Electronic Door Locks Smart Tools Indigent Registration  Work Flow management (WFMS) – Web Based  Indigent Registrations  SMS Communicator – Web Based  Handheld (Android)  Communications & Campaigns  Consumer verification services )(CS)  Management of Authentic Indigent Register  Online  Reporting  Batch Infrastructure & Maintenance  Supply & Install Meters, both Electricity & Water Smart Tools  Meter & Installation Audits  Work Flow management (WFMS) – Web Based  SMS Communicator – Web Based  Meter & Installation Maintenance  Handheld (Android)  Design, Supply and Fitment of Customised Electricity Secure Enclosures  Refurbishment of Electricity Distribution Units & Mini-Subs  Smart Technology/Meters 84

SMART Tools - Bvelaphanda • SMS Communicator - • The SMS Communicator was developed to send short messaging to consumers regarding amongst other things, their monthly balance of account after billing, scheduled maintenance information, or any other special message(s) from the municipality or even the Office of the Speaker. • The SMS Communicator is a pre-built product that assists with communication management between various entities. Amongst others the standard version of the system without any additional configuration can assist a client with the following – SMS Messages for Credit Control, Indigent Management and Infrastructure related matters i.e. meter • placements Categorise individuals into various and customisable groups • User definition per specific area (user access per suburb or depot) • Send pre-configured messages to groups or individuals • Send instant messages or schedule messages for later or repeated messages • Individuals can respond to messages which the system will link with the respondent’s information • Track and report on all inbound and outbound communication between a client and their customers • Full database import of billing system or other data to ensure messages are sent to correct consumers • Data setup and configuration is customizable to Suburb -> Area -> Street groups that can be setup • for specific users Predefined approved message templates to ensure that messages are within the 160 character count • and without spelling or grammar errors, portraying professional image of the municipality. The SMS Communicator is available on desktop, mobile & tablet platforms and designed to be • flexible, simplistic and user friendly 85

SMART Tools - Bvelaphanda ► Spatial Platform - • Customisable setup to suit specific needs • Manage the fieldwork spatially in real-time environment • Communicate with Fieldworkers through Offline App in offline environment • Dedicated approval and quality assurance process included for captured data • Barcode and QR code scan functionality if available on handhelds • Setup of dashboards and reports on data received from field in real-time ► Indigent Profile Manager - • A web based workflow management system, which is easily configured to manage the indigent policy of a municipality • This is done to create a profile of the indigent household, to manage and drive the Free Basic Services as well as Social and Poverty Alleviation initiatives in conjunction with the municipality • The software includes a full audit trail, to update and report the results of an authentic register • This includes the registrations, physical verifications, external scan, appeals and feedback reporting – via SMS communication or template letters. 86

SMART Tools - RUMAS • Credit Man - • Is a tailor made Credit Control Management Software automating and managing the entire credit control process, imposing the municipality’s policy on the workflow based software • It schedules field actions for optimum revenue collection automatically generating follow-up procedures where specific conditions of outcomes are not met. It offers excellent managerial and operational reports portraying the status of every credit control action as well as performance reporting throughout the entire process • The software is a web based system and incorporates handheld technology running on Android OS ► Indigent Profile Manager - • A web based workflow management system, which is easily configured to manage the indigent policy of a municipality • The software includes a full audit trail, to update and report the results of an authentic register • This includes the registrations, physical verifications, external scan, appeals and feedback reporting – via SMS communication or template letters. 87

SMART Tools - TransUnion • Consumer Verification Services – CVS • The External Verification process creates an overview of the applicant using various national databases. This is a web based solution that caters for online and batch verifications. • The verification provides a high level recommendation on whether the applicant will qualify for Indigent Support based on the policy income threshold. • For this process we require valid ID numbers of all applicants. • Account Verification Service - AVS • Online tools that allows a status check for a current or savings account prior to payment processing • Minimize fraud risk and number of returned payments • Consumer Prioritization Model - CPM • Rules based model which provides a score based on data held by Transunion • Score is assigned based on previous experience, past data or behavioral patterns observed wit the collections book or Consumer/Commercial outcomes • Past behavior predicts future behavior • This solution prioritizes ranks and sorts a Collections Book according to a matrix between: • Willingness to pay & • Capacity to pay 88

The new mSCOA chart 6.2 and the impact on the new budget cycle 89

Introduction Why is mSCOA Changing? The whole of local government implementation of mSCOA in terms of the SCOA Regulation on 1 July • 2017 identified critical issues requiring National Treasury to revisit V6.1. National Treasury introduced “Workarounds” at the March 2017 mSCOA / CIGFARO Workshop • necessitating solutions embedded in the Chart of Accounts, for example sufficient posting level accounts had not been requested by municipalities to inform the set-up for Transfers and Subsidies received from District Municipalities and Provincial Treasury . More detail were introduced in the Supporting Tables to the A- schedule not informed at the “same • level of detail by mSCOA V6.1”, for example depreciation, impairment and reversal of impairment. Reconfirm the treatment of Cost of Free Basic Services, Revenue Forgone and Property Rates Rebate in • mSCOA. The impression were created that the proposal made by National Treasury in the SOS Guide had been a “workaround” and not the ultimate solution. 90

Introduction Why is mSCOA Changing? Practicalities from a system development perspective require the same level of detail for all “balance • sheet accounts (Statement of Financial Position) to fully automate balance budgeting and management / financial reporting – EMS Future Enhancements 91

Introduction (Continue) Process followed by National Treasur y Request must be logged on the mSCOA FAQ. • mSCOA Project Team consider the content, complete the assessment of the query and respond if a • clarification of any matter relating to mSCOA, string or report submission. National Treasury is busy “catching - up” on the backlog. Changes in account description and definition maybe made by the Project Team. Additions and retirements • must be approved by the Technical Committee. Changes are only considered by the Technical Committee if backed by a FAQ. • The mSCOA Technical Committee is an In-house National Treasury Committee – drawing opinions and • inputs from their stakeholder group (municipalities, consultants, professional bodies, vendors, provincial treasury, etc.) National Treasury host periodic Reporting Reference Groups to share with the System Vendors envisage • changes and pertinent reporting issues. Sebata issues this opportunity to the best interest of our users to resolve issues. 92

Introduction (Continue) Process followed by National Treasur y Changes to mSCOA is released annually simultaneously with the Budget Circular for the next budget • cycle, i.e. 2018/19. Version 6.2 is expected for release by National Treasury the second week in December. • Although some insights were given by National Treasury at the October 2017 Reporting Reference • Group consideration of the impact of changes bought-about by Version 6.2 can only be done when the approved tables had been released by National Treasury. 93

Introduction (Continue) Process followed by Sebata Sebata to collectively (Technical Team, Implementation, Development, etc.) assess V6.2 changes and • determine the impact (if any) on EMS. Prior to “blindly” making changes, workshop the best possible way to deal with the revised requirements • and consult with municipal experts within our client base “on how to embed the mSCOA changes in EMS to the best interest of our clients, improved budget efficiency and report automation……… Automation of Balance Sheet Budgeting Specific changes requested by Sebata to enable the development of automated balance sheet budgeting • from the point of capturing IE, operational and capital projects simultaneously provide for creating the balance sheet items accounts. Management Reporting, including Annual Report The changes as indicated in the content to follow is a necessity to enable the full automation of most of the • aspects of management reporting requirements as well as the annual report. 94

Region Segment Proposed Changes Impact EMS Budgets and Planning Added towns for Swellendam Update of Regional Indicators in None Municipality: Swellendam, Barry Chart applicable for 2018/19 dale, Suurbrak, Buffelsjagsrivier, Malagas and Infanta Added town for Langeberg: Ashton, Robertson, Montagu, Bonnievale and McGregor Re-aligned the ward councillors and town names for Rand West City Retired some municipalities due to demarcation – 34 municipalities retired Name changes due to demarcation – 16 names changes made 95

Item Segment Proposed Changes Impact EMS Budgets and Planning Corrected Depreciation / The Depreciation accounts provided Update COA for 2018/19 Budget Impairment and Reversal of for in mSCOA V6.1 did not support Preparation Impairment. the level of detail required by the A- Schedule, SA34 d. Closing Balance accounts to be Typically this is a requirement that removed from the Chart. need consideration by Sebata to avoid an unnecessary system change. However, at present not a posting level and should not have any impact on the user. Opening Balance and movement Consistent application of Balance accounts to be added if not Sheet Budgeting Principles. For available in Version 6.1 example: Movements on accruals and payables. These accounts are an absolute necessity for balance sheet automation and automated annual financial statements. 96

Item Segment Proposed Changes Impact EMS Budgets and Planning Add to Expenditure more options Subjected to NT Technical Update COA for 2018/19 Budget for “Capitalisation”….. Committee discussion – not Preparation necessary as the Budget Tables does Budgeting Principle remain. Sebata objected against the not require this level of detail. Require consideration of EMS changes as the only reason for For example: Capitalisation of functionality to assist in Budget having the split on “Salaries and labour cost, contracted services. Preparation Wages” are to Budget for Payroll at Net as required in the existing format of the A-schedule. No similar requirement exist for operational expenditure items. Cost to be capitalised are provided for within “Construction Work -in- progress” Item Assets. If necessary expansion to be done of the existing classification to be more comprehensive. 97

Item Segment Proposed Changes Impact EMS Budgets and Planning Transfers and Subsidies: Revenue Proposed changes to “remove” Detail will still be required and may and Liabilities Unspent / Receivables detail for PT and DMs. NT Technical have an EMS System Change Impact Committee decision pending. re to provide for Breakdown of detail for Management and Reporting Purposes. Transfers and Subsidies: Proposed changes to “remove” Expenditure and Payables detail for DMs. NT Technical Committee decision pending. Accounts providing for debit / credit NT Technical Committee decision Enhance Balance Budgeting and transactions to split to assist in pending. Simplify Monthly / Annual Balance Sheet Budgeting Reporting 98

Fund Segment Proposed Changes Impact EMS Budgets and Planning Transfers and Subsidies Proposed changes to “remove” detail Detail will still be required and may for PT and DMs. NT Technical have an EMS System Change Impact Committee decision pending. re to provide for Breakdown of detail for Management and Reporting Purposes. Transfer from Operational to Capital Provide for more detail. NT Technical Update of COA informing the budget Committee decision pending. process. Detail is needed for management and reporting purposes, for example, fund management. 99

Function Segment Proposed Changes Impact EMS Budgets and Planning Expand definitions Provide more assistance to users Update of the COA to be used for 2018/19 Budget Preparation. Explanatory information, Project Summary Document, was release by the NT on 2 December 2017. 100