A performance measurement approach to improve financial management in provincial governments in South Africa - Van Wyk, Hendrik Andreas (University of the Free State)
Die finansiële bestuur in die openbare sektor kan verbeter deur die implementering van ‘n geïntegreerde rekeningkundige stelsel om begrotings, finansiële jaarstate, en prestasieverslae op ‘n toevallingsbasis op te stel en sodoende die behoeftes van die belanghebbendes te bevredig. Die bestuur van regeringsuitgawes was tradisioneel gefokus op ‘n stelsel van uitgawebeheer, wat gebaseer was op kontantbasis-rekeningkunde. Die beheer het ten doel gehad om te verseker dat bedrae wat deur regeringsowerhede voorgeskiet is, nie oorskry word nie. Kontantbasis-rekeningkunde meet nie uitgawes wat gedurende die periode aangegaan is of ontstaan het nie en derhalwe word die koste van projekte van die regering nie akkuraat gemeet, beheer en oor verslag gedoen nie. In die afwesigheid van akkurate koste-inligting kan die prestasiemeting en kosteeffektiwiteit nie bepaal word nie. Die Openbare Sektor Komitee van die Internasionale Federasie van Rekenmeesters is tans besig om internasionale rekeningkundige standaarde op te stel. Hierdie standaarde sal toevallingsrekeningkunde aanbeveel wat ‘n wesenlike stap na deursigtige en verantwoordbare inligting is. Finansieel gesonde instellings word gelei deur bekwame bestuur en maak gebruik van effektiewe begrotingsbeheer. Effektiewe begrotingsbeheer is nou gekoppel aan langtermyn strategiese doelwitte en verlangde uitkomste. Die bedryfsbegrotings word dan met die werklike resultate wat volgens die toevallingsgrondslag voorberei is, vergelyk om prestasie en effektiwiteit te meet. Dit is duidelik uit die bogenoemde dat daar drie voorvereistes vir prestasiemeting bestaan, te wete (i) Lojale en bekwame lynbestuurders; (ii) uitkomsgebaseerde begrotings; en (iii) toevallingsgebaseerde verslagdoening. Die gebalanseerde telkaart is ‘n bruikbare instrument om strategiese doelwitte en prestasiemaatstawwe te dokumenteer. ‘n Prestasiemetingsraamwerk wat die gebalanseerde telkaart as basis gebruik, word vir provinsiale regerings ontwikkel wat die volgende inkorporeer; (i) die implementering van ‘n uitkomsgebaseerde begroting; (ii) ‘n kosteberekeningstelsel om koste van uitsette te meet en wat op ‘n toevallingsbasis gegrond is; en (iii) ‘n staat van prestasie. Lojale en bekwame lynbestuurders is die eerste voorvereiste vir prestasiemeting. Die verantwoordelikhede van die uitvoerende liggaam, hoof uitvoerende beampte en hoof finansiële amptenaar van provinsiale departemente word duidelik gedefinieer. Die opleidingsbehoeftes van regeringsamptenary word ook aangespreek. Uitkoms-gebaseerde begrotings is die tweede voorvereiste van prestasiemeting. Die bestuur in provinsiale departemente moet ag slaan op die huidige tekortkominge in die begrotingstelsels en moet die implementering van aktiwiteitsbasisbegrotings oorweeg. Verslagdoening op ‘n toevallingsgrondslag is die derde voorvereiste vir prestasiemeting. Interne verslagdoening in provinsiale regeringsdepartemente moet herontwikkel word. Die koste van aktiwiteite en programme moet op ‘n aktiwiteitsbasis en toevallingsgrondslag bereken word en na elke uitset geallokeer word. Laastens word aanbeveel dat ‘n staat van prestasie in die finansiële jaarstate van provinsiale departemente geïnkorporeer word en wat in harmonie met die inkomstestaat en die gebalanseerde telkaart behoort te wees.

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.
Thesis (Ph.D. (Public Management))--University of the Free State, 2003
Keywords: Provincial governments -- South Africa; Accrual basis accounting; Tax and expenditure limitations -- South Africa; Accrual accounting; Activity-based budgeting; Activity-based costing; Balanced scorecard; Financial management; Performance measurement; Performance reporting