Provincial Departments - The role of National Treasury in ...



Public Sector Risk Management Framework | |

|Provincial Departments - |

|The role of National Treasury in risk management |

| |

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Contents

1 Purpose 1

2 Monitoring and assessment of risk management 1

3 Risk management capacity and training 2

4 Enforcement of risk management prescripts 3

Purpose

Accounting Officers of Provincial Departments have an explicit duty to ensure that effective, efficient and transparent systems of risk management are implemented and maintained within their Institution.

This document is intended to outline the specific responsibilities of National Treasury (NT) in developing the risk management activity in Provincial Departments. In this regard NT has specific duties to:

• monitor and assess the systems of risk management in Provincial Departments;

• assist with building risk management capacity in Provincial Departments;

• enforce the PFMA (by implication the specific prescripts therein pertaining to risk management) in Provincial Departments.

Monitoring and assessment of risk management

The PFMA make it clear that Accounting Officers are responsible for implementing effective, efficient and transparent systems of risk management within the Provincial Department under their control.

National Treasury must monitor that Provincial Departments comply in this regard. Furthermore, National Treasury needs to assess the quality of implementation to ensure that implementation does not become the end in itself, but a means to help institutions to understand their risks and manage such risks in a prudent manner.

The role of NT in terms of monitoring and assessing the implementation of risk management in Provincial Departments is regulated by Sections 6(2)(c) [NT to monitor and assess its implementation in provincial entities] as well as by Section 6(2)(g) [NT may do anything necessary to fulfil its responsibilities effectively].

Risk management capacity and training

Accounting Officers are responsible for ensuring that a system of risk management is implemented within their institutions. As such, Accounting Officers are responsible for ensuring that their institutions have sufficient capacity to implement and maintain the risk management activity.

However, in the spirit of co-operative governance, the PFMA confers certain responsibilities on NT to assist institutions build their risk management capacity.

Provincial treasuries may encounter challenges in fully executing their responsibilities as envisaged in the prescripts. This situation is largely attributable to the lack of risk management support structures within the PT’s and/or the lack of capacity within existing structures. It is proposed that in the event that capacity becomes an impediment, that PT’s first seek to leverage any spare capacity within NT before looking at solutions that require the services of third parties. It is also desirous that NT should work through, and where possible, with the PT’s when providing support and guidance to provincial departments. Whilst NT may, in certain instances provide support in areas that are otherwise the main responsibility of the PT’s, PT’s should not lose sight of the need to build their own capacity to effectively monitor and assess the implementation of risk management within the provincial sphere of government.

Enforcement of risk management prescripts

National Treasury have a responsibility to enforce risk management prescripts in instances where non-compliance or poor compliance is observed.

In terms of Section 82 of the PFMA, wilful and negligent failure by NT to fulfil their enforcement responsibilities constitutes an act of financial misconduct. Accounting Officers and other officials who fail to comply with the prescripts also commit an act of financial misconduct. Therefore, in consideration of Section 82, NT is obliged to enforce the PFMA - not only to avoid being guilty of misconduct, but also to ensure that public sector institutions do not commit financial misconduct themselves.

NT needs to ensure that the PT’s enforce the PFMA within Provincial Departments.

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