SESSION 1INTRODUCTION TO THE ECONOMIC REPROTING

FORMAT (ERF) AND SCOAPRESENTED BY: NATIONAL TREASURY

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WHAT IS ERF AND SCOA?

• Economic Reporting Format (ERF)• New budget reporting format• As prescribed in the guidelines (Blue Book)• Introduced this new budget format in 2004 • Replaced old Standard Item Classification• In line with international best practice

• Standard Chart of Accounts• New structure of government accounts• Setup of the general ledger of government• Translates the budget format to financial systems

structure

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WHY A NEW ERF?

• Old formats outdated• Standard items – Inappropriate management info• Items like Stores and livestock and general items

like Administrative Expenditure• Not enough detail on use of resources

• Part of Public Sector Budget Reform• Part of a process to modernize accounts• Process that started in 1999 with the PFMA• Providing detail on outputs produced

• Improve accountability in the public sector• More detail provided on spending activities• Better information for day-to-day management• Standardization ensure comparability

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WHY A NEW ERF?

• Better quality information to legislatures

• Reinforce legislature’s oversight role

• Single classification standard

• Used throughout the government sector

• Compliance to international reporting standards

• Government Financial Statistics (GFS) classification

• International Federation of Accountants (IFAC) standards – IPSAS

• Special Data Dissemination Standard (SDDS)

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DESIGN PRINCIPLES

• In line with Constitution • Treasury to prescribe classification

• It is clear, user friendly and accessible• Terminology easy to understand• Standardised with clear definitions provided• Data accessible through MISystems

• It is transparent and promotes accountability• Provides details on items purchased

• Easier to calculate relevant economic variables• for e.g. GDP, Governments contribution to capital

formation• GFS tables can be extracted easily

• Ensuring international reporting compliance

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WHAT IS THE SCOA?

• Standardised Chart of Accounts

• New structure of general ledger accounts of government

• Effectively a list of receipts, payments and balance sheet items

• Accounts correspond to ERF requirements

• Budget format mirrored in the financial system by SCOA

• SCOA provides detailed breakdown of categories in the budget format

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WHAT IS THE SCOA?

• Implemented within the financial systems• Mainly developed within the BAS

environment• Mappings to LOGIS and PERSAL to

assist in capturing transactions• Mappings to other systems like FMS2,

Walker, etc.• Controlled by National Treasury

• 6 of the 7 segments standardised • Managed by NT via SCOA Committee• Departments control the lower levels

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FINANCIAL SYSTEMS FOR ERF AND SCOA

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DESIGN PRINCIPLES

• Good governance and financial practice• Aligned to legislative requirements • Provides managers with management information

• Complies with economic and accounting standards (GFS,GRAP,ASB,IPSAS)

• Satisfies reporting requirements of stakeholders• IYM reporting, Infrastructure, AFS, etc• Ensure that data is available for any type of

reporting• Allows for cash and accrual accounting

• Complies with current cash accounting requirements

• Paves the way for a move to accrual accounting in the future

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WHO USES SCOA?

• Budget office officials

• Internal in departments

• Also national and provincial treasury officials

• Accounting officers

• Provided with a view of what is happening to departmental budget

• Accounting clerks

• Economic Analysts

• Statisticians

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MACRO-LEVEL BENEFITS

• Improved quality of information

• Already dramatic improvement after 2004

• Hoping to see further improvements after 2008

• Increased efficiency in extracting information

• Structures allow for standardised reports in BAS

• Automated IYM, IRM, etc.

• Positive public perception

• Comparable financial information

• Across departments, provinces, etc

• Standardised financial information

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MICRO-LEVEL BENEFITS

• Less duplication of accounts

• User-friendly system

• Easier to audit

• Better management information

• Focus on expenditure management

• Standardised process of transacting

• Job satisfaction and transfer of skills

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For any additional questions or issues for clarification, please contact the National Treasury

SCOA Technical Committee at:

• Call centre: (012) 315 5311

• E-mail: scoa@treasury.gov.za

• Website: http://scoa.treasury.gov.za