TWK Finance

DIRECTOR: S.N.JACOBS

VISION

The Finance Directorate aims to provide the enabling support and advisory service to improve service delivery and to become one of the best Municipal Financial Services Departments in the country by 2011.

The Vision can be summarised with two Japanese words, “Ichiban” (wanting to be the best) and “Kaizen” (continuous improvement).

MISSION

The Finance Directorate acknowledges its role has to change and has adapted to a more strategic and services-orientated role, beyond compliance to improve the quality of the lives of local citizens of Theewaterskloof Municipality.

The Directorate has been transformed and re-aligned its Organogram, Policies, Procedures and Processes to meet the Council’s Strategic Objectives

Providing a Support and Advisory Service to the Accounting Officer, Senior Managers and Council on Financial matters, MFMA compliance and Financial Reforms.
Improved Accounting and Financial Management Services
To Create an Enabling Environment for effective, efficient and economic service delivery
Ensuring that the municipality maintains Financial Viability and a healthy cash flow
Financial Management and Budgetary Control
Implementation of Activity-based Costing to improve affordability and sustainability of services.
Ensure good Customer Service
Ensure Financial Risk Management to safeguard council’s financial resources
Regular, accurate, relevant add meaningful reporting to foster Accountability, Transparency and the use of financial reports to assist in decision-making
Setting and maintaining high standards in financial management and Best Practices.
Capacity Building for Finance and Non-financial Officials, Councillors and Ward Committees.
Improved Internal Control

CORE FUNCTIONS OF THE SECTIONS

1. EXPENDITURE AND SUPPLY CHAIN MANAGEMENT

Salaries: Implementation of approved payroll, paying of salaries, allowances and accounting for payroll implementation
Creditors: Payment and recording of creditors’ payments and reconciliations
Supply Chain Management: Responsible for the Administration and Management of Procurement of goods and services (i.e. Acquisition Management in particular)
Bank Reconciliation
Administration and Management of Investments
Administration and Management of Loans
Maintain Professionalism, Honesty, Integrity and Internal Controls

2. REVENUE SECTION

Facilitation and application for Municipal Services
Debtors Billing Administration and Management
Meter Reading
Administration of Clearance Certificates
Rendering of Monthly Consumer / Rates Debtors Accounts
Debtors Customer Care and Query Administration
Receipting and bank revenue management
Credit Control, Debt Collection and Indigents Management
Maintain Professionalism, Honesty, Integrity and Internal Controls

3. BUDGET OFFICE

Budget
In-year Reporting
Annual Financial Statements,
Budgetary Management and Control
Asset Management
Insurance Management
Costing Services (commencing in September 2009)
Financial Viability
Co-ordinate Financial Policy Formulation
Financial Management Workshops under leadership of CFO
Maintain Professionalism, Honesty, Integrity and Internal Controls

SOME ACHIEVEMANTS BY THE FINANCIAL SERVICES DIRECTORATE

1. FINANCIAL VIABILITY
(i) Financial Viability Strategy
Financial Viability is the heartbeat of any organization. It refers to how healthy you are as a municipality in meeting current commitments and contractual obligations.
It measures the extent to which the municipality is geared to meet short/medium/long term challenges in respect of service delivery, infrastructure development and preservation / maintenance of existing infrastructure.

The Financial Viability strategy had been drafted and implemented by the Finance Directorate.
The Strategy is being reviewed and will be work-shopped at the Annual Strategic Workshop at the end of August 2009)
The revised organogram has been adopted during October 2008 and this will further enhance the strategy once the new positions are filled
Tariffs have been re-engineered to ensure costs are recovered from services rendered
An official has been appointed to implement Activity-based Costing which will ensure improved, effective and efficient business processes (value for money) and to further revise tariffs to be more affordable and sustainable.

(ii) Value for Money

Effective and efficient Supply Chain Management Processes and Procedures have eliminated/reduced costly fraud and corruption risk exposure
Competitive Bidding also ensures reduced prices and value for money
The insurance premiums reduction of approximately 50% (+ R400,000 p.a. since 2006/2007 is proof of the competitive benefits of SCM
The reduction of Insurance Claims also results in ensuring sustainable low premiums
The establishment of the Debt Collection Unit has eliminated the approximately R600,000 annual attorney fees/costs
The incorporation of the SCM unit into the Expenditure unit has encouraged value for money returns
The requisition system has resulted in improved spending as a result of partly centralised purchasing/procurement. It will be fully centralized in 2009.

(iii) Debt Collection

The average debt collection rate during 2006/2007 was 82% and 85% in 2007/2008.
The collection rate during the first quarter of 2008/2009 was 65% and improved to 93% at 30 June 2009.
An automated online Credit Control, Debt Collection and Indigent Management system has since been acquired and will be fully functional by August 2009
This system will manage and control various administrative functions including the following: restriction / cut-off and remedial action lists, pre-legal collections, soft and hard tracing, listing and de-listing of debtors, promise to pay arrangements, legal collections, control of debt collecting process, success management and reporting, password control and access management, indigent registration and management and query and maintenance management
The installation of Prepaid Water meters have also been identified and is one of the single most important Financial Viability interventions along with a credit control and debt collection system. Installation will take place by September 2009 at RDP and Indigent Households due to escalating debts in those areas and to provide a more humane system than water trickle-flow restriction.

(iv) Quality and credibility of Budget

The quality of the budget has improved a great deal
Treasury’s Annual Assessment proved that our Budget is Responsive to the IDP, Sustainable, Credible and complies with Good Governance.
Zero based budgeting have been applied to a much greater extent than previous years
Improved Budget and IDP Alignment have also been achieved
Improved expenditure monitoring and advising and guiding departments to expedite spending on their Operating and Capital votes and Quick Wins initiatives
Budgetary control and other internal controls are also applied to reduce risks of fraud and overspending

2. SERVICE DELIVERY
(i) Analyze needs and financial management blockages and obstacles

Supply Chain Management Procedures, Planning and Management has improved greatly from more than just compliance but to increased spending, value-for money, competitiveness and transparency
The Identification of savings on salaries and the appointment of temporary staff to improve service delivery have been initiated
During 2007/2008 an amount of R1,1m was set aside for temporary job creation and enterprise development projects which sought to addresses poverty alleviation and reduces consumer debts. Percentage was deducted for municipal debts.
Improved expenditure monitoring, advising and guiding departments to expedite spending on Operating and Capital votes and Quick Wins-initiatives have been introduced and successfully implemented.
Several Financial Management Workshops (MFMA, Municipal Structures, Financial Reporting, Supply Chain Management, Insurance Management, Full Cycle in Revenue Management and Credit Control, Debt Collection and Indigent Management) for Finance officials, Non-financial Officials, Councillors, Finance Portfolio and Ward Committees were conducted during 2007/2008 and 2008/2009 on above mentioned matters in order to empower line departments
CFO, as Town Director of Riviersonderend ensured that 295 RDP Houses were completed during 2007/2008 in Riviersonderend, the water purification plant and sewerage plant were upgraded and the water network is in the process of being upgraded within Riviersonderend
Roads and Storm Water, Parks and Libraries in Riviersonderend have been upgraded
Six Toilets were erected and two Water Connections installed within the Joe Slovo Informal Settlement of Riviersonderend and empty squatter structures were demolished
Successful HIV/Aids, Anti Violence and Substance Abuse Campaign was conducted over 3 days in November/December 2007.
CFO initiated and facilitated the development of a Mini Multi-purpose Sports Ground in Bergsig (Caledon) on a piece of unused land which was used for all evils. The facility was opened in October 2008.
CFO played an instrumental role in the Sports Against Crime initiative launched in October 2008.
CFO supporting a volunteer in the community with a Youth Soccer Programme which was established in May 2009. Approximately 50 children are part of the programme which has obtained the blessing of the Executive Mayor.

(ii) Financial Management Workshops

During 2007/2008 and 2008/2009 Workshops were held inter alia, Town Managers and their staff. These include the MFMA, Supply Chain Management, Insurance, Budget, Credit Control / Debt Collection and Indigents
Training Sessions were conducted during September 2008 and included training on the Revenue Cycle, SOP training, Credit Control and Debt Collection, Indigent Policy, MFMA legislative requirements and Abakus training.
A Ward Committee Workshop, Budget Preparation Workshop as well as a presentation on the 2008 Local Government Budget and Expenditure review was conducted during November 2008
Budget and other Financial Management Workshops were conducted in 2009.

(iii) Improve Customer and Stakeholder Relations

A new municipal account which is more user-friendly and ensures earlier rendition of accounts was introduced during 2006
The firwst Newsletter was produced by the CFO in 2006.
Improved Billing and Data Cleansing, recovering millions of rands of services and rates charges not billed.
Batho Pele Principles have been discussed with staff and posted at all rates halls
Query letters are responded to within 5 working days on average. There are however queries that take longer due to delays in receipt of correspondence and where research is required.
Good relations have been established with organized farmers in TWK
Budget and Reporting Feedback to the Community is exceptional as a lot of information and research has gone into it. Financial and Budget Reports are provided monthly to all Directorates and Town Managers to table at Ward Meetings and to keep customers up to date on performance and the financial position of Council. Quarterly reports are also placed promptly on the website. This also improves accountability and transparency which is crucial for improvement of customer relations
The comments complaints book and the customer query register for account queries have been introduced to improve handling of queries and to have an audit trail of queries registered
Pre-printed Letter Books for meters which cannot be read were introduced. Letters are left at premises where meters are inaccessible and cannot be read
Debt collection officers have been provided with cubicles to improve service delivery and provide privacy for consumers
A TWK information brochure has also been distributed during August 2008 to assist consumers with service delivery queries
Annual Budget brochures are developed and distributed.
The Riviersonderend News, the town’s newsletter, is distributed to the public every second month. The newsletter keeps the public informed on completed and anticipated projects as well as important municipal information
To promote client service at the Riviersonderend office, a suggestion box to the public has been implemented, the ‘service with a smile’ attitude is adopted by staff and the Town Manager promotes an open door policy. Extended hours on Saturday mornings have also been implemented in order to sell prepaid electricity to the public
In order to develop a long term financial strategy for infrastructure backlogs within TWK, an Infrastructure Investment Strategy and Framework has been initiated with DBSA
CFO successfully drafted Business Plans and obtained DBSA grant funding in excess of R2m for Electronic Records & Contract Management, Performance Management, Credit Control and Debt Collection, Indigent Management Systems.

3. GOOD GOVERNANCE
(i) Internal Audit

The Internal Audit Unit was strengthened by adding and filling the Audit Clerk position.
The Internal Audit position has been upgraded during 2008/2009 and the development of a strategy and program through which the Internal Audit function was upgraded will be addressed once the position is filled
Deputy Director Internal Audit and Auditor were appointed starting September 2009 and July 2009, respectively.
All quarterly Audit Committee meetings are held
Two additional members (one is a PMS expert and practitioner) were added to the Committee to fulfill the role Performance Audit Committee as well.
Several Internal Audits were conducted in terms of legal and policy compliance, investigations and value-for-money.

(ii) MFMA Compliance Audit

The number of Audit Qualifications in the 2006/2007 Annual Financial Statements were reduced from four to only one. Internal and external audit queries have also been dealt with effectively
The 2007/2008 Financial Statements were timely compiled accurately produced on time (29 August 2008)
Obtained an Unqualified Audit Opinion in 2007/2008
The 2007/2008 audit was completed successfully during a period of six weeks
All 2007/2008 audit queries have been answered and corrective action is instituted
A compliance audit on MFMA will again be conducted once the Internal Audit positions are filled
The municipal website is promptly updated with all the statutory financial information such as IDP & Budget, Quarterly Report, Financial Statements, Annual Report, Policies, Tenders called and Adjudicated
Delegations have been concluded and SCM delegations has been finalized during the second quarter of 2008/2009
SCM compliance and CIDB Tenders registered and place on the website to avoid R100,000 penalty
All creditors are paid within 30 days

(iii) Policies and Strategies

All TWK policies and procedures have been drafted and reviewed, updated and amended during 2007/2008 and 2008/2009
Adopted Policies: Credit Control, Debt Collection, Indigent, Tariff, Virement, Supply Chain Management, Accounting, Cash and Investment Management
The Credit Control, Debt Collection, Indigent and Tariff By-laws have been gazetted on 26 September 2008

(iv) Develop and Introduce Financial Management Dashboard

A user-friendly Financial Reporting Dashboard was developed. It could be regarded as a mini Financial Statement which is produced monthly and quarterly. It focuses on Financial Performance, Financial Health and Cash Flow and is used as a “mirror” to look back at what has happened as well as a “crystal ball” to look into the future for decision making

(v) Compliance Deadlines

All deadlines have been met without any exception. This includes the 2006/2007, 2007/2008 and 2008/2009 Monthly, Quarterly, Mid-year assessment reports, Budgets (Draft, Final and Adjustment) and Annual Financial Statements

(vi) Fixed Assets Register

The GRAP-compliant Asset Register is complete. Shortcomings identified in the 2007/2008 Audit Report have been addressed throughout the year. The GRAP compliant Asset Register Software Program amendmentstoGRAP has been concluded at the end of June 2009.
The Infrastructure Assets are currently being unbundled and re-valuated for GRAP-compliance

(vii) Management of Staff and Comunication

Regular meetings are conducted with Senior Management
CFO has daily interaction with all officials and has a complete “open-door and open-ear” policy. Communication channels top-down and down-up and completely open to enhance pro-active and participatory management.
The Revenue Section process has been refined and enhanced. The CFO has conducted individual interviews with all Revenue staff and a general Revenue Section meeting was held during the last quarter of 2008 which led to gap-analysis and Standard Operating Procedures drafted and work shopped.
KPA discussion meeting was held with Finance staff
Council Vision and Budget Workshop Presentations are shared by the CFO with the entire Finance staff to ensure that they get the bigger picture. The vision is also continuously reinforced.

4. INSTITUTIONAL TRANSFORMATION AND CAPACITY BUILDING
(i) Completion of Micro Design

A cost effective and MFMA-compliant Micro Organogram for Finance Directorate was completed
The Internal Audit Unit was strengthened by adding and filling Audit Clerk position. The other added position of the Deputy Director Internal Audit position has been filled after three attempts beyond our control (at Manager-level), thus the upgrading in the position in October 2008
All required quarterly Audit Committee meetings were held during 2006/2007, 2007/2008 and 2008/2009. We intend to have monthly Audit Committee meetings.

(ii) Skills Development

The CFO is passionate about Skills Development and has drafted a Skills Development / Capacity Building (Personal Development) Plan for Financial Services Directorate after intensive consultation with Finance Management and thereafter individually with each Section’s staff and the Manager of the Section
The Plan was carefully explained and discussed and thereafter populated, based on the needs and relevant expectation
The following workshops were conducted internally during the 2007/2008 financial year for Councilors, Town Managers, Directors, Senior and Middle Managers: Municipal Finance Management Act, Supply Chain Management, Insurance, Budget Workshops, Debt Collection: Letters of Demand, Arrangements, Legal, One-one-One workshops: Requisition System, GRAP Accounting Policy and Assets
The following workshops were conducted externally during 2007/2008 Financial Year: GRAP Accounting and Assets, Fixed Asset Management (on the job) and Debt Collection: Legal Processes and Telephonic Techniques
Training Sessions were conducted during September 2008 and included training on the Revenue Cycle, SOP training, Credit Control and Debt Collection, Indigent Policy, MFMA legislative requirements and Abakus training.
A Ward Committee Workshop, Budget Preparation Workshop as well as a presentation on the 2008 Local Government Budget and Expenditure review was conducted during November 2008
Riviersonderend staff has increased from 23 to 42 staff members encompassing the appointment of law enforcement, housing and technical staff
Riviersonderend staff members have attended several training sessions and have received award certificates for exceptional performance
The CFO is coaching and mentoring the Interns and the programme is yielding the intended returns.

(All Workshop material Developed and Presented by the CFO, assisted by the empowered Interns)
Some of the Returns on Investment on Capacity Building:
Through these workshops the 3 Interns were empowered to be appointed at levels of Accountant Budget Office (Reporting), Accountant Financial Control and Costing and Chief Financial Control and Costing with effect from 01 July 2009. More than 10 other officials applied for higher vacant positions, competed with external candidates and were appointed.

5. LOCAL ECONOMIC DEVELOPMENT

The CFO has assisted with assessing and advising on the Feasibility and Viability of LED projects
Assistance was also offered in the establishment of Non Government Organisations (NGO’s) and Business Plans for Funding and Report. Draft Constitution and Application Forms have been drafted and supplied
Assistance was provided in the establishment of Caledon, Grabouw, Villiersdorp, Riviersonderend and Greyton Tourism Bureau thus contributing to addressing LED- related initiatives
Funds were made available to fund and re-establish the Tourism Bureau within Riviersonderend which contributes to the LED within the TWK

DRAFT HIGH - LEVEL FINANCIAL VIABILITY STRATEGY
Background and Goals / Strategic Objectives
Council has identified Financial Viability as its Budget Theme for 2009/2010 which is also one of the Five (5) Key Performance Indicators of the Local Government Strategic Agenda. It therefore goes without saying that financial viability is a very important and compulsory for any organization, including municipalities.
A Financial Viability Strategy has been drafted and work-shopped in March 2007. The strategy has been partly implemented with many positive and note-worthy returns of which council is still benefiting from.
In this section I am focusing only on Credit Control, Debt Collection and Indigents Management: this is the most important pillar of the Financial Viability Strategy.
Output:
Council’s Budgeted collection rate is 85% and the rate at 30 June 2009 rate is 93%: Target: 85%
Outcomes:
Both organisational effectiveness objectives and the objective of sustainable service provision for all ratepayers/consumers must be achieved. From this improvement in its cash position, Council will be able to improve service delivery and the reduction of loan indebtedness. This will provide greater opportunities to undertake large infrastructure projects and expedite the reduction of infrastructure backlog for the Council.
Financial implication:
Bad Debt Provision at 30 June 2008 is R59,108,681 and the 2008/2009 Budgeted Working Capital is R12,576,000. For every 1% increase in collection rate is equivalent to R1.2 million (2008/2009) and R1.5m (2009/2010), which could be ploughed into service delivery.
Overall Financial Viability Strategy:
The Financial Viability Strategy is being reviewed and refined. It is built on the following pillars:

Credit Control, Debt Collection and Indigents Management (it is the most important pillar).

Improve Revenue Management and maximizing our income generation (includes billing of consumers and ratepayers for all the services they receive and also at the correct tariffs). The Data Cleansing and the Geographic Information System (GIS) update and link to the Abakus Financial System is crucial to ensure that the zoning of properties are correctly categorized on the Billing System in order to ensure that no business or industrial property is charged at residential tariffs. This must also be done on the new General Valuation Roll.

One of the main aims of the strategy is to improve the overall revenue collection of the municipality. The GIS technology is an important tool that will ultimately allow the municipality to integrate various departments’ databases and building a shared services information environment for departments to successfully operate in.
The Data Cleansing assignment will cover all debtors’ accounts at least the past two years which need to be reviewed for correctness, to correct the errors and to charge for under-charged levies, including and not limited to the following:

Are all properties on the Billing System?
Are all charges (Water, Electricity, Refuse and Sewer, Assessment Rates, Availability Charges, Interest) levied
Have all Consumers / Ratepayers paid Deposits?
Is the Assessment Rates Charges for based on both Land and Improvements
Are the approved Tariffs charged for the applicable years?
Are the correct Tariffs charged in terms of land use (eg Residential, Commercial, Business, Farms, etc.)?
Correct Ownership as per Deeds Offices
Reclassification of debtors per category/zoning and reconciling to the GIS
Are there any Dormant Accounts, Insolvency and Deceased Debtors, Untraced Debtors, etc for write off?
Is water meter readings/consumption reasonable (to detect over/under charges and water theft)?
Include addresses, ID No’s, etc, where not available.
Improved Expenditure Management, including factors such as best value for money, efficiency, effectiveness, productivity.

Under-utilised staff, filling of positions where staff cannot be active for 8 hour per day, 5 days a week and 12 months a year is also very costly. Shifts system can be implemented.
The measurement, management and control of expenses such as Overtime, Transport Allowance, Leave, Council Vehicles and Equipment, etc are current focus areas. The general aim is to avoid / eradicate fruitless, wasteful and unauthorized expenditure and to inculcate a culture of responsible spending: this improves accountability.

Improved Asset Management: this includes the optimal utilization of resources, including the use of council assets and infrastructure. Dormant assets and assets such as the Nature Reserve and Swimming Bath which are supposed to generate income and community value are more of a liability and needs to be addressed. Staff Housing is operating at a loss due to rental below market rates and the no contracts by some tenants and ex-tenants who are not paying. Assets Maintenance Plan needs to be created in order to have a structured plan to maintain assets adequately.

Improved Budget Methodology will ensure that the limited resources available to address the challenges faced by the municipality. Properly and more realistic resource allocation will ensure that the strategic service delivery and infrastructure is addressed. Refrain from excessive use of incremental approach. Activity Based Costing is also being implemented to ensure value for money, greater efficiency and effectiveness. This will also improve tariff setting to ensure affordability and sustainability.

The detailed Strategy and Implementation Plan will be available in September 2009