The financial management in the public sector can be improved by the
development of an integral accrual accounting system to enable the preparation of
accrual-based budgets, financial statements and performance reports to meet the
needs of the various stakeholders.
Traditionally the management of government expenditures has been focused on a
system of expenditure control, which is based on the cash basis of accounting, to
ensure that budgetary authority granted by the legislature is not exceeded. The
cash basis of accounting does not measure the resources consumed during the
period under review, thus the true costs of government programmes and projects
are not correctly measured, controlled or reported.
In the absence of accurate cost information, performance measures of efficiency
and cost-effectiveness cannot readily be determined. The Public Sector Committee
(PSC) of the International Federation of Accountants (IFAC) is currently involved
with the establishment of International Public Sector Accounting Standards. These
standards will introduce the accrual basis of accounting and is a significant step
towards transparent and accountable information.
The financial successful and efficient organisations are headed by competent
management and make use of effective budgetary control. Effective budgetary
control is based on operating budgets that are closely linked with long-term
strategic plans and desired outcomes. The operating budgets are then compared
with actual results, on an accruals basis, in order to measure performance and
efficiency. It is clear from the above that three prerequisites exist for
performance measurement, namely (i) committed and competent line-managers;
(ii) outcomes-based budgeting; and (iii) accruals-based reporting. The balanced
scorecard is a useful tool to document the strategies and the performance
measures of outputs. A performance measurement framework that uses the balanced scorecard as a
base are developed for provincial governments and incorporates (i) the
implementation of an outcomes-based budget; (ii) the use of an accruals-based
cost/revenue allocation to measure the costs of the various outputs; and (iii) a
performance statement.
Committed and competent line-managers are the first prerequisite for
performance measurement. The responsibilities and training needs of the
Executive Authority, Chief Executive Officer (CEO) and Chief Financial Officer
(CFO) are clearly defined and the training needs of provincial government officials
are highlighted.
Outcomes-based budgeting is the second prerequisite for performance
measurement. The public sector managers in provincial governments should take
cognisance of the shortcomings of the current budgeting process and consider the
implementation of activity-based budgeting.
Reporting on an accruals basis is the third prerequisite for performance reporting.
Internal reporting in provincial government departments should be revitalised and
activity-based costing should be implemented to facilitate accruals-based cost
allocations to all the various activities and processes that are required for each
output.
Finally, the study recommends a performance statement that can be incorporated
into the financial statements of provincial government departments, which will be
in total harmony with the income statement and the balanced scorecard.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufs/oai:etd.uovs.ac.za:etd-11152011-135549 |
| Date | 15 November 2011 |
| Creators | van Wyk, Hendrik Andreas |
| Contributors | Prof HJ Kroukamp |
| Publisher | University of the Free State |
| Source Sets | South African National ETD Portal |
| Language | en-uk |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.uovs.ac.za//theses/available/etd-11152011-135549/restricted/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University Free State or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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