N5 – Module 3
There should exist a common trust between the departmental financial officer and the various officials in the department so that there will not be an unnecessary waste of money. This trust and close relationship will extend upwards to the Accounting Officer who relies heavily on this person for the daily accounting and bookkeeping functions of the department.
Not only are these people advisors to the Accounting Officers (Directors-General), but their daily task is to exercise budget control on behalf of the Accounting Officer. This means a daily scrutiny of income and especially expenditure – any deviations are brought to the attention of the Accounting Officer. All accounts and records of all financial transactions and the annual appropriation statement should be made available to the Auditor-General for scrutiny. See previous page for more on this office, and see also his report on audits with local councils in Module 2 on
www.Publicfinance4sa.info.
Financial and Fiscal Commission Section 220 of the Constitution of 1996 (chapter 13) provides for the Financial and Fiscal Commission which is expected to be a high level expert institution to undertake research, render advice and make recommendations to the national, provincial and local Legislatures on all financial and fiscal matters. The creation of this new institution is an attempt to bring discipline to the financial administration of the country.
Its objectives and functions are to: • familiarise itself with all financial and fiscal (tax) information on central, provincial, and local levels of government;
• render advice and make recommendations to relevant legislative authorities, which includes advice on: – financial and fiscal policies; – taxes, levies that provincial government intend to levy; – raising of loans by provincial or local governments; – setting the criteria for allocation of financial/fiscal resources.
There is a chairperson who is appointed for five years; a deputy who is appointed for the same period plus seven (7) members appointed by the President (for 2 years); they need to match the following criteria: • must be a SA citizen; • must have the necessary experience and training; • must have expertise in: economics; public finance; taxation; management; accountancy; • must be impartial – should NOT hold office for any political party.
The National Revenue Fund This is a fund into which all revenue raised by the central government is paid. It is controlled by the Reserve Bank or central bank. The banking accounts of both the central and provincial government are controlled here.
The Reserve Bank This is the banker of the government of the day; it controls the national revenue fund and plays a vital part in the macro-economic functioning of the country. It is also the only institution which is allowed to release bank notes and coins, and is the custodian of the country’s gold reserves. According to the Constitution its primary function is to protect the value of the South African Rand. Economists often speculate about a change in the interest rates of commercial banks – this seldom happens unless the Reserve Bank Governor has announced a similar change in the lending rate to commercial banks. In fact this clearly shows that the Reserve Bank lays down the monetary policy for the country as a whole – see page 50 for explanation of this.
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