Responsibilities of municipal officials re finance and municipal fiscal management

7.2       Responsibilities of mayors under the Municipal Finance Management Act

The mayor must take all reasonable steps to ensure that the municipality performs its constitutional and statutory functions within the limits of the municipality’s approved budget and must, within 30 days of the end of each quarter, submit a report to the council on the implementation of the budget and the financial state of affairs of the municipality (see the section 52(a)-(e) of the Municipal Finance Management Act).

If the municipality faces any serious financial problems, the mayor must:

·         Promptly respond to and initiate any remedial or corrective steps proposed by the accounting officer to deal with such problems, which may include -

Ø      steps to reduce spending when revenue is anticipated to be less than projected in the municipality’s approved budget;

Ø      the tabling of an adjustments budget;

Ø      steps in terms of chapter 13 Municipal Finance Management Act;

·         Alert the council and the MEC for local government in the province to those problems.

The mayor must ensure that any revisions of the service delivery and budget implementation plan are made public promptly (see section 54(2) and (3) of the Municipal Finance Management Act).

7.3       General responsibilities of municipal officials re finance and municipal fiscal management

According to the Municipal Finance Management Act, the municipal manager of a municipality is the accounting officer of the municipality for the purposes of the Act and, as accounting officer, must exercise the functions and powers assigned to an accounting officer in terms of the Act and provide guidance and advice on compliance with the Act to:

·         The political structures, political office-bearers and officials of the municipality; and

·         Any municipal entity under the sole or shared control of the municipality.

The accounting officer of a municipality is obligated to comply with certain fiduciary responsibilities. In this regard the officer must:

·         Act with fidelity, honesty, integrity and in the best interests of the municipality in managing its financial affairs;

·         Disclose to the municipal council and the mayor all material facts which are available to the accounting officer or reasonably discoverable and which in any way might influence the decisions or actions of the council or the mayor; and

·         Seek, within the sphere of influence of the accounting officer, to prevent any prejudice to the financial interests of the municipality.

An accounting officer may not act in a way that is inconsistent with the duties assigned to accounting officers of municipalities in terms of the Municipal Finance Management Act or use the position or privileges of, or confidential information obtained as, accounting officer for personal gain or to improperly benefit another person (see section 61(2)(a-(b) of the Municipal Finance Management Act). The accounting officer of a municipality is further also responsible for managing the financial administration of the municipality and must, for this purpose; take all reasonable steps to ensure that:

·         The resources of the municipality are used effectively, efficiently and economically;

·         Full and proper records of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards;

·         The municipality has and maintains effective, efficient and transparent systems -

Ø      of financial and risk management and internal control; and

Ø      of internal audit operating in accordance with any prescribed norms and standards;

·         Unauthorised, irregular or fruitless and wasteful expenditure and other losses are prevented;

·         Disciplinary or, when appropriate, criminal proceedings are instituted against any official of the municipality who has allegedly committed an act of financial misconduct or an offence in terms of chapter 15 of the Municipal Finance Management Act.

The accounting officer is responsible for and must account for all bank accounts.  The accounting officer of a municipality is responsible also for the management of the revenue of the municipality. The accounting officer of a municipality is also responsible for the management of the financial expenditure of the municipality.

The accounting officer of a municipality is obligated to inform the provincial treasury in writing of any failure by the council of the municipality to adopt or implement a budget-related policy or a supply chain management policy referred to in section 111 of the Municipal Finance Management Act or any non-compliance by a political structure or office-bearer of the municipality with any such policy (see section 73(a) and (b) Municipal Finance Management Act).

In order to facilitate accountability, openness and public participation, the Municipal Finance Management Act requires that various aspects of information should be placed on each municipal website. In this regard, the accounting officer of a municipality must place on the website referred to in section 21A of the Municipal Systems Act the following documents of the municipality:

·         The annual and adjustments budgets and all budget-related documents;

·         All budge-related policies;

·         The annual report;

·         All performance agreements required in terms of section 57(1)(b) of the Municipal Systems Act;

·         All service delivery agreements;

·         All long-term borrowing contracts;

·         All supply chain management contracts above a prescribed value;

·         An information statement containing a list of assets over a prescribed value that have been disposed of in terms of section 14(2) or (4) during the previous quarter;

·         Contracts to which subsection (1) of section 33 apply, subject to subsection (3) of that section;

·         Public-private partnership agreements referred to in section 120;

·         All quarterly reports tabled in the council in terms of section 52(d); and

·         Any other documents that must be placed on the website in terms of this act or any other applicable legislation, or as may be prescribed.

The budget of a municipal entity must conform to the following requirements (see section 87(5)(a) to (e) of the Municipal Finance Management Act):

·         Be balanced;

·         Be consistent with any service delivery agreement or other agreement between the entity and the entity’s parent municipality;

·         Be within any limits determined by the entity’s parent municipality, including any limits on tariffs, revenue, expenditure and borrowing;

·         Include a multi-year business plan for the entity that –

Ø      sets key financial an non-financial performance objectives and measurement criteria as agreed with the parent municipality;

Ø      is consistent with the budget and integrated development plan of the entity’s parent municipality;

Ø      is consistent with any service delivery agreement or other agreement between the entity and the entity’s parent municipality; and

Ø      reflects actual and potential liabilities and commitments, including particulars of any proposed borrowing of money during the period to which the plan relates; and

·         Otherwise comply with the requirements of section 17(1) and (2) of the Municipal Finance Management Act to the extent that such requirements can reasonably be applied to the entity.

 Compiled by Prof Dr DJ Lötz (BIur, LLB, LLM, LLD)

Brooklyn Court, Block A, 1st floor, 361 Veale Street, Brooklyn

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