The effectiveness of internal financial controls with specific reference to the Eastern Cape provincial department of basic education.
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Date
2015
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University of Fort Hare
Abstract
The government sector in South Africa comprises the national and provincial governments, municipalities, constitutional institutions, public entities and higher education institutions. The primary activity of these government units is the provision of goods and services to the community or to individual households free of charge or at prices that are not economically significant and to redistribute income and wealth by means of transfers.
The Constitution of the Republic of South Africa states that the national legislation must establish a national treasury and prescribe measures to ensure both transparency and expenditure control in each sphere of government by introducing uniform treasury norms and standards. It stipulates a framework for the division of responsibilities between national, provincial and local government. It prescribes an equitable division of revenue between the spheres of government, taking into account their respective functions. It has also created an independent Auditor General and an independent central bank, and sets out the principles governing financial accountability to parliament, as well as the annual budget process.
The concept of internal control and all its concomitant principles apply to both the private sector world of business and to the government sector. The INTOSA describes internal control one of the primary functions of all managers in government: The head of each government organisation must ensure that proper internal control structure is instituted, reviewed and updated. The importance of internal control in the South African Government sector was brought to the fore and re-emphasised with the issue in 1999 of the Public Finance Management Act (Act1/1999 as amended by Act 29/1999). The objective of the PFMA is to secure accountability and sound management of revenue, expenditure, assets and liabilities of the institutions to which to which the act applies.