Initially cautious in their outlook for post-1994 South Africa, international economic authorities are now openly singing the praises of the country's macroeconomic stability and transparent financial management. "The Executive Directors commend the South African authorities for the remarkable economic progress achieved since democratisation through sound macroeconomic policies and structural reforms," says an International Monetary Fund (IMF) public information notice dated September 2005. "The economy is now growing strongly, inflation has been lowered, public finances have been strengthened and the external position has improved markedly." Such ringing endorsements are not given lightly, nor easily earned. Behind the scenes over the past 10 years, a radical financial management transformation has been unfolding at the South African National Treasury. Accenture is proud to have been a small part of it. Exceeding norms Among the qualities that impress are the speed, efficiency and accuracy with which government closes its books at financial year-end. In the public sector generally, this process can typically take up to six months. The South African government is closing its books in a month, although some government agencies achieve this in even less time. Not surprisingly, since it is the role model of efficient public financial management, the National Treasury's average is a mere five days. Underpinning this capability are the strong financial management systems implemented by the National Treasury, notably the Basic Accounting System (BAS) and the Logistical Information System (LOGIS). Unlike the batch-based financial system it replaced, BAS is fully automated and integrated, and controls every non-payroll transaction in more than 175 government agencies, tracking everything from receivables and payables to commitment accounting and budgeting. This system integrates directly with LOGIS, which monitors and controls government procurement expenditure on consumables, assets and services. It also records the value of inventory and assets. In all, 10 million physical assets have been registered on the system, allowing the South African Government to report on physical assets according to financial reporting principles. Another major milestone for the National Treasury was the implementation in 2004 of the new Standard Chart of Accounts for the South African government. This was part of the budget reform programme to improve government accountability and modernise accounts by bringing reporting in line with international best practices. The implementation of the Chart of Accounts was extremely complex, as it affected more than 100,000 users compiling 158 sets of financial records. Within a 12-hour window, Accenture converted the current reporting data of all departments in production to an improved Chart of Accounts, paving the way for quantum leaps in the efficiency and effectiveness of government reporting: - The number of account labels used for government accounts was reduced from approximately two million to under 5,000.
- The National Treasury can compare the performance of similar departments in different provinces and can also assess with relative ease the performance of South Africa against other countries.
- Opportunities for "creative" financial reporting practices have been eliminated, enabling government to demonstrate its commitment to accountability and transparency.
- The quality and integrity of data on these financial systems provided by the government to the IMF has improved, with further positive implications for South Africa's international reputation as this information is used by global ratings agencies to assess the country’s public accounts.
Leveraging economies of scale The two systems, which Accenture maintains, enable the National Treasury to compare information across two tiers of government, ensuring better tracking of spending patterns and transparent reporting. Also, by standardising on these financial systems, government is leveraging the benefits of economies of scale, including easier mobility of government officials, common work methods, more effective skills retention and reduced operating costs. To Top |