To provide guidelines and procedures with regards to the critical aspects and steps that must be taken by all the relevant role players throughout the department to report on accruals and commitments, and to handle payments and vouchers processed on the Basic Accounting System (BAS).
||Chapters 8.1 and 8.2 of the National Treasury Regulations (NTR), issued on 15 March 2005 in terms of Section 76 of the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA); and
||Chapter 8.1 of the Provincial Treasury Instructions (WCPTI), issued on 5 November 2009 in terms of Section 18(2)(a) of the PFMA; as well as
||Circulars issued by the Provincial Treasury with regard to financial reporting on late payments, unpaid invoices and reporting on accruals and commitments.
||Finance Accounting Minute 01/2011, dated 23 February 2011, is hereby recalled and replaced in totality by this minute owing to new financial reporting requirements to Provincial Treasury.
||Provincial Treasury Circular No. 68 of 2011, dated 15 December 2011, requires departments to report monthly on information related to invoices paid after 30 days of receipt and invoices that have not been paid.
||Provincial Treasury Circular No. 36 of 2010, dated 23 September 2010, requires departments to report quarterly on commitments and accruals.
||Chapter 8.1 of the Provincial Treasury Instructions regulates payments and vouchers and must be adhered to at all times. According to Chapter 8.1.8 of the Provincial Treasury Instructions, the person verifying a voucher for payment must be authorised by delegation. The delegated official must also ensure that the requirements indicated in Chapter 8.1.8(a) to (g) of the Provincial Treasury Instructions have been complied with before proceeding with the payment.
||The following attached Annexures provide guidance on payments, completion of input forms and supporting documents:
||Annexure A: Checklist for payments
||Annexure B: Forms and supporting documents for payments
||Annexure C 1: Input forms PGWC 013 and PGWC 015
||Annexure C 2: Completion of input forms PGWC 013 and PGWC 015
||Annexure D: Common errors on vouchers
||Delegated officials are responsible to ensure that BAS Authorisers comply with the requirements spelled out in this minute.
||Invoices settled after 30 days of receipt
||Officials are hereby reminded of NTR 8.2.3 which states that "Unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice or, in case of civil claims, from the date of settlement or court judgement."
||If a payment due to a creditor is made after 30 days of receipt of the final invoice, the reason for the delayed payment must be provided on the attached checklist for payments (see Annexure A).
||All relevant dates (e.g. "source document date", "source document receipt date") must be correctly captured on the financial system. These dates are crucial for ageing purposes (e.g. to calculate the number of days that elapsed until an invoice is settled). Invoices should be date stamped on the date of receipt for the same purpose. It is important to note that where an invoice received is referred back to a creditor for a correction, the new date of receipt of the corrected invoice is what should be captured under "source document receipt date" and not the date when the original invoice was received.
The date of a contract (e.g. learner transport agreement) should not be used instead of the "invoice received" date as this may erroneously result in a payment being reported as a late payment.
||Offices dealing with invoices and/or payments must report monthly, within 7 days after month-end, to the DFA: Financial Capacity Building unit on all unpaid invoices older than 30 days from receipt of invoice, as well as on all payments settled after 30 days of receipt of the invoice.
||Unpaid Invoices older than 30 days and payments settled after 30 days of receipt of the invoice will be seen in a serious light and only valid reasons for late payments will be accepted in such instances.
||Accruals represent goods/services received and invoices received but not yet paid at the reporting date.
||Offices dealing with invoices and/or payments must keep accruals registers for reporting purposes. A standardised accruals register will be issued by the DFA: FCB unit to offices dealing with payments.
||Above offices must report quarterly by electronically submitting a fully completed and up-to-date standardised accruals register to the DFA: FCB unit within 10 days after each quarter-end. In case of zero accruals, a nil return must still be submitted for control purposes.
||Information on accruals is used by the DFA to compile summarised quarterly reports for submission to Provincial Treasury and is included in the disclosure notes to the financial statements.
||Reporting on commitments
||Commitments represent goods/services that have been approved, which are either contracted or not yet contracted, but no delivery has taken place yet at the reporting date.
||Offices dealing with commitments must keep a register of commitments for reporting purposes and must electronically submit a completed and up-to- date standardised template of commitments to the DFA: Financial Reporting unit within 10 days after each quarter-end. In case of zero commitments, a nil return must still be submitted for control purposes.
||Items are classified as commitments where the department commits itself to future transactions that will normally result in the outflow of resources.
||Approved and contracted commitments means the expenditure has been approved and the contract has already been awarded at the reporting date.
||Approved but not yet contracted commitments means where the expenditure has been approved and the contract has yet to be awarded or is awaiting finalisation at the reporting date.
||Commitments must be classified into current expenditure (e.g. goods and services) and capital expenditure (e.g. buildings and other fixed structures).
||In calculating commitments, the following should be taken into account pertaining to tenders awarded:
- The period of the tender awarded
- Amounts already paid pertaining to that tender/contract
- Amounts for which invoices have been received and which are therefore included in accruals should be deducted
- Commitments loaded on the procurement systems (such as LOGIS)
- Commitments not loaded on the procurement system
||Information on commitments is used by the DFA to compile summarised quarterly reports for submission to Provincial Treasury and is included in the disclosure notes to the financial statements.
||Completion of vouchers
||Officials allocated the function of authorisers on BAS must ensure that completed BAS input forms support each payment processed on the system. All fields on the input forms are compulsory and must be completed.
||Authorisers must ensure that the correct BAS input forms are used (refer to Annexure B for more detail):
- PGWC 001 (Travel & subsistence sundry advance payment) - To apply for authorisation of a travel and subsistence advance. The payment is made by completing a PGWC 001.
- PGWC 002 (BAS allocation attachment) - Summary of the applicable allocations and to be attached to the PGWC 013 and PGWC 015 forms
- PGWC 003 (BAS debt: Agreement maintenance) – For dealing with debtors
- PGWC 004 (BAS journal entry processing maintenance) – For journals
- PGWC 013 (BAS sundry/ recurring payment maintenance) – For sundry payments
- PGWC 015 (BAS purchase order payment) - For the payment of orders placed
- Form 1450 (Order payment transaction form) - In conjunction with PGWC 015
||Prevent re-capturing of transactions
To prevent recapturing transactions, all input forms, invoices and other supporting documents must be stamped "Paid" once the transaction has been authorized on the financial system.
||Cancellation of payment
||When a payment is cancelled and a new payment is prepared as a replacement payment, the cancelled voucher should be attached to the new voucher. This is applicable only when a payment is cancelled owing to an "unpaid" payment and when it is returned by the bank.
||A new payment is prepared as a replacement, with the cancelled voucher number appearing on it, thus creating a link between the cancelled voucher, the replacement voucher and the supporting documentation.
||Elimination of irregular, fruitless and wasteful expenditure
To ensure that payments to creditors comply with statutory requirements and in particular to eliminate irregular, fruitless and wasteful expenditure, the following supporting documents must be attached together with each payment voucher to form part of the supporting documentation:
||A hard copy of the Register of payments (printout from BAS that shows details about the capturer, authoriser, bank details of the entity, e.g. supplier, and the amount paid)
||A completed Checklist for payments (Annexure A), completed and verified by the official(s) is indicated on this form. No checklist need to be completed for the following payment types:
- Salary payments
- Transfer payments
- Travel & subsistence payments
- Entertainment allowance payments
- Petty cash payments
||All necessary supporting documentation must be securely attached to the BAS input forms and submitted to DFA: Financial Capacity Building (FCB) Room 7-03 in the Grand Central Building, Cape Town.
||Completion of journal entries
||To prevent recapturing of journals and supporting documents to journals, it is necessary that supervisors who authorise journals online affix the word "Processed" to the face of the journal and the supporting documentation so as to indicate that it has been posted to books. Supervisors should also ensure that supporting documents are attached to journals before authorising it and signing it off.
||Upon receipt of journals at the office of the Financial Capacity Building section, the official receiving it will check that journals do comply with the above before accepting it for filing purposes. Journals which do not comply will be referred back to the supervisor responsible for the relevant corrective action.
||Submission of vouchers
||The delegated authorisers are responsible for the safekeeping of their vouchers, which are to be submitted, together with their Document Control Reports (DCRs) drawn from BAS at the beginning of each new month, to DFA: Financial Capacity Building (FCB), Room 7-03, Grand Central Building, Cape Town within 7 days after each month-end.
||Each authoriser must draw a monthly Document Control Report for the first to the last day of each month. In cases where there is more than one authoriser per directorate, each authoriser must draw a Document Control Report for their own user ID. The purpose of the report is to indicate all transactions that have been processed for a particular month.
||Authorisers must ensure that all the vouchers listed on each Document Control Report are in their possession.
||The vouchers must be sorted numerically and submitted, together with the relevant Document Control Report and securely attached supporting documentation.
||An official from FCB and the official submitting the vouchers will validate that all vouchers are submitted according to the Document Control Report. The official of the FCB will then certify that all vouchers have been received. Both parties must sign the Document Control Report and keep copies of the certified Document Control Report for record purposes.
||No Document Control Report lacking vouchers will be accepted and it will be referred back to the relevant authoriser for the submission of the complete batch, as stated on the Document Control Report.
||The official from the Financial Capacity Building section will check to ensure that all documents submitted are properly certified, and that all vouchers are accompanied by the necessary supporting documentation.
||A list of all vouchers outstanding will be issued monthly to all authorisers, whereafter, if these vouchers are still not received by the Financial Capacity Building section by the 15th of each month, the list will be escalated to the relevant director for intervention.
||Failure to submit vouchers will be seen in a serious light. The non-submission of vouchers was raised previously as a matter of concern by the Auditor-General in management reports. Should the vouchers not be submitted, the expenditure incurred could be regarded as irregular expenditure and will be reported as such.
||Where payment vouchers are not submitted to Financial Capacity Building section within 31 days after the month-end, user access to BAS by the officials responsible will be reported to the BAS Systems Controller and will be revoked immediately.
||Requesting payment vouchers from the section: Financial capacity building (FCB)
||Officials requiring access to the original BAS vouchers previously submitted to the FCB must complete and sign a replacement voucher which should indicate payment details, such as payment voucher number, the authoriser and the month in which this voucher had been authorised. The replacement voucher must clearly indicate the name and contact details of the person requesting the voucher(s) and the date of request.
||Original vouchers will be issued only for a period not exceeding five working days, whereafter the vouchers must be returned to the FCB. Exceptions to this rule will be allowed only for vouchers issued to the following:
- The Office of the Auditor-General
- Forensic Audit
- Internal Audit or SARS
||It is essential that the contents of this minute be brought to the attention of all officials dealing with the preparation, processing and authorising of payments and journals on the financial system. Your co-operation will be appreciated.
SIGNED: L J ELY
CHIEF DIRECTOR: FINANCIAL MANAGEMENT