苏州大学本科生毕业设计(论文)
According to the Policy Strategy to Guide Uniformity in Procurement Reform Processes in Government (2003:4), supply chain management is an integral part of financial management that seeks to introduce internationally accepted best practice principles, while it addresses Government?s budgetary planning processes, with a strong focus on the outcome of actual expenditure in respect of sourcing of goods, services and assets. According to Gildenhuys (1993:605), assets (for the purpose of this thesis the focus is on movable assets) are characterised by A items, which are those inventory items with a minimum annual turnover 3 of less than six for the three preceding years and which are regarded in terms of a certain formula as relatively expensive; B items, which are those inventory items with a minimum annual turnover of six for three years and which are regarded in terms of a certain formula as relatively cheap; C items, namely those items with no specific annual turnover or which have had a minimum annual turnover of less than six for the preceding three years. D items are those items which need to be available on demand, but which are not easily obtainable, for instance items to be ordered from abroad.
Control refers to monitoring and evaluation, but performance monitoring and evaluation must not be an end in itself. We need to use the outcome and output measures to promote a change in behaviour, and create a culture of accountability. We should use the information from the process to help us understand why policies and implementation approaches work, or more importantly, not working so that we can fix them. The data and insights from monitoring and evaluation must relate the planning process.
Pauw, Woods, Van der Linde, Fourie and Visser (2002:133) explain the goal of financial management in government as to ensure that we safeguard and use available funds and other scarce resources in the best interest of the people. The main role players in financial management as selected for this study are the accounting officer, chief financial officer and other managers. Only two of the three role players are referred to in the PFMA (SA, Act 1 of 1999 – see Sections 36 to 45), but in the Treasury Regulations for Departments, Trading Entities, Constitutional Institutions and Public Entities (National Treasury, 2005:7) it is prescribed that each department must have a chief financial officer who is in general responsible “to assist the accounting officer in fulfilling the duties of financial management of the institution
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苏州大学本科生毕业设计(论文)
including the exercise of sound budgeting and budgetary control practices; the operation of internal controls and the timely production of financial reports”. The Department of Correctional Services is divided in to six regions. Each region is divided into management areas, while management areas are divided into six different components. Each component has managers who are responsible for ensuring that the Department achieves its aim.
The role of accounting officer
For the purpose of this section, ?financial management practices? are defined and demarcated as the practices performed by the accounting officer in the areas of budgeting, supply chain management, movable asset management, and control. The heads of national and provincial departments are the accounting officers of their departments. They must personally give account of all the financial transactions and activities of their departments (Burger & Woods, 2008:317). To execute their functions properly, accounting officers must have full control over the finances and other activities of their department (Thornhill, cited in Gildenhuys, 1993:157). The accounting officers obviously do not keep the accounts and other financial records personally – they are not the bookkeepers of the department. They also do not physically compile the draft budget of the department. The accounting officer is also the Minister?s chief advisor on policy and departmental financial matters (Burger & Woods, 2008:318).
Trajectories in financial management reform mention that budget reforms have been wide-spread, and have been driven by two particular external pressures. The first was the need to restrain the growth of public expenditure for macro-economic reasons. The second pressure concerned performance improvement within the public sector – for types of budgeting and financial management that would stimulate greater efficiency, effectiveness, higher quality or some mixture of the three. Taken together, these pressures have led to what in effect has been an expansion in the scope or purpose of budgeting. Instead of a situation where budgets were mainly a process by which annual financial allocations were incrementally adjusted. The accounting officer has the following two functions: the preparation and submission of his/her department?s draft budget to the treasury, and the execution of
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苏州大学本科生毕业设计(论文)
the approved budget of his/her department (Gildenhuys, 1993:157). Budgeting is part of the organisational plan-ning process, which starts with the aim and the mission of an institution (Pauw et al., 2002). Through the strategic management process, top-level managers develop the strategic plans which involve a process of developing mission and long-term objectives, and determining in advance how they will be accomplished (Nieuwenhuizen & Rossouw, 2008:52). The strategic plan leads to the operational plan, indicating how the institution will conduct its activities on a day-to-day basis. The strategic plan defines a broad set of goals for the organisation. Generally, strategic plans do not have specific financial targets; however, they set the stage for specific, detailed budgets that will be established to achieve the goals (Finkler, 2001:27).
For the purpose of this thesis the focus is on movable assets; the acquisition of capital assets can most certainly exert an effect on an organisation?s competitive advantage over the long term. Capital equipment is characterised by large expenditure and non-recurring expenditure. Large expenditure:
Purchasing capital equipment usually requires a relatively large capital outlay, which may sometimes amount to millions of rands and which may have particular financial implications. Buying capital equipment can therefore be regarded as an investment which is financed from long-term, rather than from working, capital. It is important to consider not only the purchase price of capital equipment, but also the total cost of ownership (Hugo et al., 2006:321). Non-recurring expenditure:
Capital equipment is usually purchased at irregular intervals. It is used up gradually in the production process, rather than as a part of the end product. Owing to the relatively long lifespan of equipment, it could take several years before it needs to be replaced and, at the time of replacement, old equipment could prove to be technologically obsolete. If the correct purchasing decision is made, capital equipment generates profits for the organisation. Incorrect decisions may have disastrous consequences for the enterprise, since it will not be able to sell capital equipment over the short term. For the above reason, according to Burt, Dobler and Starling (as cited in Hugo et al., 2006:321), top management should consider the
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苏州大学本科生毕业设计(论文)
acquisition of capital equipment, with care.
The role of Chief Financial Officer
For the purpose of this section, ?financial management practices? are defined and demarcated as the practices performed by the chief financial officer in the areas of budgeting, supply chain management, movable asset management and control. A Chief Financial Officer (CFO) is a person who is exclusively responsible for the financial administration and financial record-keeping, and who is directly responsible to the account-ing officer (Burger, 2008:80). According to Du Preez (as cited in Lewis, 2005:33), the responsibilities of the CFO include the following:
evaluation of existing (and development of new) systems and procedures for financial and risk management and internal control
initiation and coordination of strategic planning budgeting, with an emphasis on its link with planning
monthly and annual reporting on expenditure and performance, as well as the annual report
The CFO also oversees the budgeting (Broyles, 2003:8). “In preparing the budget, the CFO is expected to ensure that estimates of the various directorates (sections) of the Department comply with the direction of executive authority, the Treasury, the Department Minister and the accounting officer” (Burger, 2008:80). Strategic planning and prioritisation present the starting point for preparing departmental medium-term expenditure framework estimates, as they guide departmental reprioritisation within medium-term baseline allocations, and provide the rationale for policy options for changes to baseline allocations over the next three-year period (Burger, 2008:141). The National Treasury, as indicated by Pauw et al. (2002:95), regards the development and implementation of strategic plans into the budget process as fundamental to effective and efficient financial management. As part of the budgeting process, departments are responsible for preparing their Medium Term Expenditure Framework (MTEF) budget in line with government and departmental policy and spending priorities (McThomas, 2003:71). Crowther (2004:196) states that the budget process is a planning process for the operational activities of a firm. In the budget process, resources are allocated, efforts are made to keep as close to the plan
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苏州大学本科生毕业设计(论文)
as possible, and the results are evaluated (Finkler, 2001:45). According to Correia, Flynn, Uliana and Wormald (2003:20–1), financial planning is useful for providing information regarding the future, which may be requested by other parties whose support and cooperation are needed by the company. In this case, both Head Office and the regional offices are supposed to support management areas by allocating a budget and forwarding the needs to National Treasury.
According to Gildenhuys (1993:468), the government budget cycle consists of three phases, namely the preparation, approval and execution phases. Pauw et al. (2002:105) emphasise the involvement of everyone during the budgeting process. According to Pauw et al. (2002:129), managers should not excuse themselves from financial management responsi-bilities. Participatory budgeting motivates managers to achieve the budget targets that are set (Crowther, 2004:196). Shah (2007b:21) defines participatory budgeting as a decision-making process through which citizens deliberate and negotiate on the distribution of public resources, and further states that participatory budgeting allows people or officials to play a direct role, and it improves performance. He further indicates that participatory budgeting empowers citizens and officials; therefore it is necessary for officials to be involved in all budgetary processes. Before finishing the discussion on budget processes, however, it is necessary to define budget.
The Oxford Dictionary (2004:58) defines a budget as: a plan for spending money wisely an amount of money set aside for a purpose
According to Gildenhuys (1993:392, 396), a budget is a financial statement that contains the estimates of revenue and expenditure over a certain period of time, and he further defines budget as a policy statement declaring the goals and specific objectives an authority wishes to achieve by means of expenditure. Crowther (2004:196) states that a budget process is a planning process for the operational activities of a firm. Pauw et al. (2002:92) state that budgeting is part of an institution?s planning process. Burger and Woods (2008:76) also define a budget as a financial or quantitative statement prepared prior to a specified accounting period and containing the plans and policies to be pursued during that period. A budget is a financial plan that serves as an estimate of future operations, and, to some extent, as a
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