Municipal Timeline

Mayor to submit Q3 Report to Council

Posted on by The CAN Team

Sections 71 and 52(d) of the MFMA work together to ensure robust financial monitoring, oversight, and accountability in municipal financial management. These provisions mandate regular reporting by municipal officials and political leadership, providing a system of checks and balances to safeguard public finances and improve service delivery.

Key Provisions of Section 71

Section 71 focuses on monthly financial reporting by the municipality’s accounting officer (municipal manager). The primary objective is to track the municipality’s financial performance and identify deviations early.

Key Requirements:

  1. Monthly Budget Statements:
    • The accounting officer must submit a monthly budget statement within 10 working days after the end of each month to:
      • The mayor of the municipality.
      • The provincial treasury.
      • The National Treasury (if applicable).
  2. Content of the Monthly Reports:
    • Revenue and Expenditure:
      • Actual revenue collected (e.g., rates, tariffs).
      • Actual expenditure incurred by vote (department/function).
    • Projections:
      • Revised forecasts for revenue and expenditure for the remaining months of the financial year.
    • Cash Flow Management:
      • Details of actual cash inflows and outflows.
      • Revised cash flow projections.
    • Debt Management:
      • Information on outstanding debtors and creditors.
    • Grant Reporting:
      • Utilization of conditional grants.
  3. Purpose of Section 71 Reporting:
    • Promote transparency in financial operations.
    • Allow for early identification of financial risks such as revenue shortfalls or overspending.
    • Provide data for decision-making at both the local and provincial levels.

Key Provisions of Section 52(d)

Section 52(d) places a direct accountability obligation on the mayor to provide quarterly financial oversight to the municipal council. This ensures political leadership remains engaged in financial oversight and performance.

Key Requirements:

  1. Quarterly Financial Reports:
    • The mayor must submit a report to the council within 30 days after the end of each quarter, detailing the implementation of the municipality’s budget and financial performance.
  2. Content of Quarterly Reports:
    • The report must assess whether:
      • Revenue and expenditure are aligned with the approved budget.
      • Measurable performance objectives, as set out in the Service Delivery and Budget Implementation Plan (SDBIP), are being met.
    • It must also include corrective actions for any deviations.
  3. Purpose of Section 52(d):
    • Ensure the council remains informed of the municipality’s financial and service delivery performance.
    • Hold the mayor accountable for monitoring budget implementation and ensuring alignment with strategic priorities.
    • Enable timely intervention when performance targets are not met.

How Section 71 and Section 52(d) Work Together

  1. Monthly and Quarterly Reporting Cycle:
    • Section 71 focuses on operational-level reporting by the accounting officer (monthly), while Section 52(d) elevates this information to the strategic and political level (quarterly).
    • Monthly reports under Section 71 feed directly into the quarterly reports required by Section 52(d), ensuring consistency and accuracy in financial oversight.
  2. Complementary Roles:
    • The accounting officer (Section 71) is responsible for tracking and reporting the municipality’s financial performance.
    • The mayor (Section 52(d)) provides political oversight and strategic guidance based on the accounting officer’s reports.
  3. Informed Decision-Making:
    • Section 71 ensures operational details are available in real-time, while Section 52(d) ensures these details are synthesized into strategic reports for the council.
    • Together, they enable evidence-based decision-making and proactive interventions.
  4. Accountability and Oversight:
    • Section 71 ensures the municipal administration is accountable for day-to-day financial performance.
    • Section 52(d) ensures the political leadership (mayor and council) is accountable for monitoring, guiding, and intervening when necessary.
  5. Alignment with the Budget Process:
    • Both sections ensure that the budget, approved under Section 24, remains a living document. They help track actual performance against budgeted objectives, enabling mid-year adjustments (under Section 72) if needed.

Significance for Municipal Governance

  1. Transparency:
    • Regular reporting under Sections 71 and 52(d) ensures that financial performance is visible to stakeholders, including the council, National Treasury, and the public.
  2. Timely Intervention:
    • By identifying financial risks early, these sections allow for corrective actions before problems escalate.
  3. Improved Service Delivery:
    • Financial health and budget alignment directly impact the municipality’s ability to deliver services effectively. Monitoring ensures resources are used efficiently.
  4. Compliance:
    • Adhering to these provisions ensures compliance with the MFMA and minimizes the risk of financial mismanagement.

Conclusion

Section 71 and Section 52(d) of the MFMA form a cohesive framework for financial monitoring and oversight within municipalities. While Section 71 focuses on detailed operational reporting, Section 52(d) ensures strategic oversight by the political leadership. Together, they enhance accountability, transparency, and the municipality’s ability to deliver on its service delivery mandate. These sections are fundamental to fostering sound financial management and achieving municipal objectives effectively.

 

The CAN Team