Summary of the Public Finance Management Act, no. 1 of 1999 (With Amendments)


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The Public Finance and Management Act regulates the management of finances in national and provincial government. It sets out the procedures for efficient and effective management of all revenue, expenditure, assets and liabilities. It establishes the duties and responsibilities of government officials in charge of finances. The Act aims to secure transparency, accountability and sound financial management in government and public institutions.

The Act clarifies the laws in relation to the National and Provincial Treasuries, the National and Provincial Revenue Funds, and the National Budgets. It also governs the management of finances in departments, public entities (like ESKOM and TELKOM), Parliament and the provincial legislatures, and constitutional institutions (like the Human Rights Commission, the Commission on Gender Equality and the Independent Broadcasting Authority). The National Treasury website frequently updates material related to the Public Finance Management Act, and any queries about the interpretation of the Act, will be dealt with by Mr Jayce Nair (Email:


[edit] The National Treasury and Revenue Fund

The National Treasury, consisting of the Minister of Finance and national departments responsible for financial and fiscal matters, is the main body that oversees the implementation of the Act. The Treasury promotes the national government’s fiscal policy framework and monitors provincial budgets in government departments and other institutions to which the Act applies. The Treasury must prescribe norms and standards and has the right to investigate any system of financial management in any department, public entity or constitutional institution.

The National Treasury submits annual financial statements for auditing to the Auditor-General for the following bodies:

Once the statements have been audited, they are consolidated and submitted to Parliament for tabling in both houses. This process must be made public, and the National Treasury may publish financial statistics about all spheres of government in the Government Gazette.

The National Treasury is also in charge of the National Revenue Fund, into which money received by the national government must be paid. (This includes most money paid to the government, although there are some exclusions.) No unauthorised money may be withdrawn from the fund.

SARS must also deposit all taxes, levies, duties, fees into a Revenue Fund and may only withdraw money to refund a person or organisation.

Only the National Treasury may withdraw money (and this must be authorised) from the National Revenue Fund.

The Minister of Finance may authorise the use of money for emergency purposes in exceptional circumstances, but these may not exceed two per cent of the total amount appropriated in the national budget.

[edit] Provincial Treasuries and Revenue Funds

Provincial treasuries, consisting of the MEC for finance in and the provincial departments responsible for finance in that province, work much like the national treasury, but on a provincial level. They are responsible for preparing and controlling the provincial budgets and oversee the implementation of this Act in their provinces. A provincial treasury must prepare and submit financial statements for their departments, for public entities that fall under their control, and for the provincial legislature. The consolidated financial statements must be made public.

The provincial treasury is also in charge of the provincial revenue fund for its province, and, as with the national treasury, no unauthorised money may be withdrawn from provincial revenue funds. All money paid to provincial government must be deposited into the revenue fund, apart from a few exclusions.

The national treasury has the right to withdraw any exclusions paid into the Provincial Revenue Funds, as long as it first consults with the provincial treasury concerned. Other than the national treasury, only provincial treasuries are allowed to withdraw money (and only if the withdrawel is authorised).

As with the National Treasury, provincial treasuries are allowed to withdraw funds for emergency situations (but these may not exceed two per cent of the total amount appropriated in the annual provincial budget). Such withdrawels must be reported to the Auditor-General and the provincial legislature and they must be attributed to a vote.

[edit] National and Provincial Budgets

The Minister of Finance must table the annual budget and multi-year budget projections for the financial year for the National Assembly, and the MEC for finance in each province must table the provincial annual budget as well as multi-year budget projections for the national legislature. Budgets set out estimated revenue and expenditure for the year or over a period of years. What is a Multi-Year Budget Projection?

Multi-year estimates ensure good financial planning. They are estimates of the revenue and expenditure for an upcoming period of years, and they must take account of macro-economic projections.

There are limits on the amount of funds that may be withdrawn before a budget has been passed.

Subject to conditions (e.g. unforeseeable financial events), the Minister of Finance may adjust the budget from time to time, if and when necessary. Similarly, the provincial MEC for Finance may adjust the provincial budget.

Reports on the state of the budget must be published in the Government Gazette each month, and, at least four times a year, the provincial treasury must submit a statement of revenue and expenditure to the National Treasury.

The relevant treasury may withhold funds from a department if the funds are for a service that is taken over by another department, and any new draft legislation that gives a provincial department a new function must take account of the costs of that function and include an estimated projection of costs in the draft.

[edit] Accounting Officers

All departments and constitutional institutions must appoint an accounting officer to ensure that money is managed effectively, efficiently and transparently. The accounting officer ensures that resources are used economically and that assets are looked after. He or she maintains an internal audit system and a system for evaluating projects. In general, the accounting officer keeps the finances of the department or institution in order. This does not mean that an accounting officer may enter into financial ventures that have not been approved.

According to the Act, accounting officers must keep full and proper records of the financial affairs of the department or institution and are required to prepare and submit detailed financial statements to the Auditor-General and comprehensive annual reports and statements to the relevant treasury.

The Accounting Standards Board

The Accounting Standards Board must prepare and publish the standards of generally recognised accounting practice for the financial statements of the following:

  • departments,
  • public entities,
  • constitutional institutions,
  • muncipalities and boards, commissions, companies, corporations, funds or other entities under municipal ownership, and
  • Parliement and provincial legislatures.

The standards must take account of local and internation best accounting practices and the capacity of institutions.

[edit] Public Entities

All public entities listed in Schedule 2 and Schedule 3, which is subject to change by the Minister, must appoint a person or body who will be held accountable for the purposes of this Act.

The accounting authority (either a board or other controlling body or a CEO) must protect the assets and records of the public entity and must do everything possible to prevent damaging the financial interests of the State. Accounting officers must always act with fidelity, honesty, integrity and in the best interests of the public entity.
Accounting authorities who represent Schedule 2 public entities must submit an annual budget and corporate plan to the accounting officer. These must show a projection of expected revenue and expenditure and any activity plans for the next three years.

Accounting officers who represent Schedule 3 public entities that are not government business enterprises must submit a budget of estimated revenue and expenditure to the executive authority.

Public entities must seek approval from the relevant treasury before doing any of the following:

  • setting up a company or starting or ending an important business activity,
  • participating in an important partnership, joint venture or trust or changing the nature of an existing interest in a partnership or trust; and
  • acquiring or doing away with a significant shareholding in a company or a significant asset.

The accounting authority of a public entity must keep full and proper financial records of the affairs of the company and must submit statements for auditing, either to the Auditor-General or by a registered external auditor. An annual report, fairly representing the state of affairs of the entity, must also be submitted to the executive authority.

Executive authorities who direct an accounting officer of a public entity to do something that will have financial implications for a department must set out the instruction in writing. It is the accounting officer's responsibility to ensure that unauthorised spending does not occur.

[edit] Loans, Guarantees and Other Commitments

The institutions to which this Act applies may not borrow money or enter into any transaction that binds them financially, unless it is authorised by the Act or some other law.

If it is permissable to enter into a binding transaction, financial interactions may only be conducted through the following persons:

  • For Government: Only the Minister may act on behalf of the National Revenue Fund, and only the MEC for finance in a province may act on behalf of a provincial revenue fund.
  • For Schedule 2 public entities: Only the accounting authority can borrow money or conduct binding transactions.
  • For a national government business enterprise listed in Schedule 3: Only the accounting authority, and the action must be authorised in the national Government Gazette by the Minister of Finance.
  • For a provincial government business enterprise listed in Schedule 3: Only the Minister of Finance or a Cabinet Minister who is the executive authority of the entity (with the approval of the Minister).
  • Any other public entities require the approval of the Minister of Finance or, where relevant, the Cabinet Minister who is the executive authority for the public entity.

Constitutional institutions and provincial public entities can only borrow money with the permission of the Minister of Finance, and then only for bridging purposes and up to a prescribed limit.

[edit] Treasury Regulations

The National Treasury issues regulations concerning financial managementfor the institutions to whom this Act applies. These regulations cover issues such as the recovery of losses and damages and gifts or donations by or to the State, and any matter prescribed for departments in terms of this Act. These are published in the Government Gazette and are made available on the National Treasury website.

[edit] Offences

The Minister of Finance must set up system for dealing with financial misconduct and criminal charges.

Criminal offences include the following:

  • willful or gross negligence on the part of an accounting officer;
  • willful or gross negligence on the part of an accounting authority; and
  • unauthorised loans or entering into a binding financial contract without permission on behalf of a department, public entity or constitutional institution.

If a person is found guilty, they will be liable to a fine or imprisonment for a period of up to five years.

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