Cost Containment 21 Aug 2014 - Office of the Accountant

Report
COST CONTAINMENT MEASURES
OFFICE OF THE ACCOUNTANT-GENERAL
Presenter: Jonas Shai | Office of the Accountant General, RMS
| August 2014
Spirit of the Instruction
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Outline
• Background
• Current Climate
• Why the CRO and Expectation
• Treasury Instruction
• Conclusion
3
Background
• Section 38(1)(c)(iii) and 51(1)(b)(iii) of the PFMA – accounting officers
and accounting authorities must manage available working capital
efficiently and economically;
• Accounting officers and accounting authorities – ensure key expenditure
control measures are in place and working as planned;
• Cabinet resolution of 23 October 2013 - all public sector institutions to
contain operational costs and eliminate all non-essential expenditure;
4
Current Climate
• Quarterly Labour Force Survey: Unemployment rate 25.5 per cent.
• Consumer inflation: 6.6 per cent
• Labour unrest
• NDP: alignment of allocation of resources & strategic objective
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Why the CRO?
• Risk-Based
– Risk assessments
– Internal Audit rely on this for their work
• Protect your organisation
• Protect your Accounting Officer/Authority
• Key focus/audit area
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Risk Universe
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Expectation
Source: EY : Expecting More from Risk
Management
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Expectation
• Understanding of the whole business
– All assessment sessions should be speaking this language
• This is not a CFO instruction
– Silo mentality demolishing
• Advice on process design
– Review of system descriptions/ operating procedures
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Expectation
• Ability to identify “what could go wrong”
– Risk Assessment process
• Ability to identify assertion deficiencies
– Occurrence, Completeness, Accuracy, Cut-off
• Ability to suggest process improvements
– E.g. King Code: Information Technology
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Engagement of Consultants
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Engagement of Consultants
• Gap analysis
– Innovation and area of efficiency gains
• Rates payable
– Assist Internal audit’s risk based plans
• Penalty clauses in contracts to curb poor performance;
– Risk Monitoring Activities
• Consultancy reduction plans before 31 March of each year;
– Risk Monitoring Activities
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Risk Monitoring Activities
• Chapter 9
• Allocated responsibilities are being executed effectively
• Response strategies are producing the desired result of mitigating risks
or exploiting opportunities; and
• A positive correlation exists between improvements in the system of risk
management and institutional performance
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Travel and subsistence
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Travel and Subsistence
• Domestic hotel accommodation
– Ask the question
– Review of the process/documentation design
• Car hire – Only Group B or any other lower class of vehicle
– Ask the question
– Review of the process/documentation design
• Flights
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Travel and Subsistence
• Official or Parliamentary duties – limited to 3 employees
– How many of you are here
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Credit/ Debit Cards
• Amendment to Treasury Regulation 15.10.3 & 31.2
• Prohibit use of credit or debit card
• May retain or obtain credit or debit card for other specific purposes
• National Treasury may grant exemption
– Ask the question during risk assessments
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Catering and Events Expenses
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Catering and Events Expenses
• No catering for internal meetings, unless approved by AO or AA;
• Entertainment allowance – may not exceed R2000 per financial year;
• Team building exercises and year-end functions;
• In-house strategic, corporate and related planning sessions;
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Guidelines on Cost Containment
• Travel and Subsistence
• Limiting international travel only for meetings – absolutely essential;
• Using corporate voyager miles to acquire air tickets;
• Three quotes for all international travel;
• Prohibit claims for meals if already included in hotel arrangements;
• Inventory
• Bulk purchases of related items;
• Settlement discounts;
• Full cost recovery on promotional items;
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Guidelines on Cost Containment
Inventory- continued
• Minimizing printing costs;
• Use of electronic mail other than registered mail;
• Prohibit of newspaper and magazine allowances, existing contracts
not to be renewed;
• Water and Electricity
• Prudent use to lower utility costs;
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Guidelines on Cost Containment
• Communications
• Private calls – Limit allowances to reasonable value;
• Cellular phones and 3G – Consider nature of work;
• Telephone calls – Distinguish between private and official calls;
• Tele and/or video conferencing – To avoid travel and subsistence
costs;
• Financial assets
• Debts write-off – limit - impact on savings;
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Guidelines on Cost Containment
• Miscellaneous measures
• Avoid duplication of activities, processes and efforts;
• Optimize capacity use of machines by sharing between divisions;
• Extend warranties – Motor vehicles and computer equipment;
• Prohibit unnecessary new furniture or office refurbishments;
• E-learning – In-house training;
• Transversal contracts – Procurement of goods and services;
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Conclusion
• AO and AA - appropriate expenditure control measures in their
respective institutions;
• Limited resources be applied effectively and efficiently to achieve
economic means;
• Institutions to implement measures to contain operational costs and to
eliminate all non-essential expenditure;
• The Treasury Instruction note is applicable to all public sector institutions
- Effective from 01 December 2013;
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Questions and Answers
• Technical Queries with regards to the Instruction
Jayce Nair
Chief Director
Office of the Accountant General
[email protected]
(012) 315 5482
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