Professionalization of the PFM Sector: The CIGFARO Model

1. PROFFESSIONALISATION OF THE PROFFESIONSTHE PFM THE - CIGFARO MODEL Vice President General :Sidwell Mofokeng GIMFO, CRP GARP(Intl), MIODSA, ACP(SA)

2. BURNING QUESTIONS? • How can professionalism be promoted in the Public Finance Management (PFM) sector for PFM for the whole of the public sector assist in this process ? • Which functional /occupational categories should be included? • Does Cigfaro have the recognition, support and influence to participate in the NT project to professionalise PFM? • How will the project be initiated bearing in mind that National Treasury (NT ) has the legal mandate over these matters ?(Reference group participation) • What is the current standard of professionalism in the public sector? • What are the root causes of the poor financial management and poor audit outcomes at local government level?

3. PROFFESSION AND PROFFESSIONALISATION Profession Professions are either self-regulated or regulated by the state through statute. The responsibilities for the regulation of the affairs and behaviour of members are typically delegated to professional bodies who assume the responsibility for setting relevant competence criteria for admission into the profession, overseeing the certification of professionals, and setting and enforcing ethical work practices and behaviour. (NT competency level requirements) Professionalisation Professionalisation is a social process whereby a trade or occupation transforms itself into a true profession of the highest integrity and competence. This process tends to involve establishing acceptable qualifications, a professional body or association to oversee and regulate the affairs and conduct of members of the profession.

4. PROFFESSIONAL BODIES ./2 • In the scope of Public Finance Management (PFM )professional bodies and associations, are expected to - • Apply their Codes of Conduct and ensure that their members adhere to its provisions; • promote and ensure continued professional development to ensure continuous professional development (CPD) and life-long learning; • conduct on-going research and disseminate good practice amongst members; • set and enforce ethical work practices and behaviour; • set relevant competence criteria for admission into the profession and accreditation of educational programmes

5. PROFFESSIONAL BODIES • oversee the certification and licensing of professionals, and assisting national and state level authorities in the setting of legally enforceable occupational standards; • ensure that the supply and demand of technical and professional competence in key sectors are met; • develop a clear set of norms and standards for the relevant occupational category in the public sector; • establish minimum competence levels based on national competence frameworks and job profiles; and • develop Recognition of Prior Learning (RPL) procedures, through which professional bodies can assist employees in obtaining accredited qualifications after the RPL process is completed.

6. PROFFESSIONAL BODIES SINCE 2012 Currently, the following Professional Bodies could influence professionalization of PFM: • AAT (SA) - Association of Accounting Technicians -573 • ACCA (SA) - Association of Chartered Certified Accountants -422 • CIBM-Chartered Institute of Business Management-481 • CIMA - Chartered Institute of Management Accounts -1944 • IAC - Institute of Accounting & Commerce -780 • IIA (SA) - Institute of Internal Auditors -9 278 • SAIBA – South African Institute of Business Accountants-1210 • SAICA – South African Institute of Chartered Accountants -35104 • SAIGA – South African Institute of Government Auditors-480 • SAIPA – South African Institute of Professional Accountants-7339 • SAICSA-Southern African Institute of Chartered Secretaries and Administrators -2486 • ICB-Institute of Certified Bookkeepers-3358 • CIGFARO –Chartered Institute Of Govt Finance Audit and Risk Officers-3169

7. South Africa has implemented many reforms since 1994 that have strengthened corporate financial reporting systems. • Profession All 2003 policy recommendations have been implemented. South Africa enacted the Auditing Profession Act, 26 of 2005, that establishes an Independent Regulatory Board for Auditors. • The Board sets auditing and professional ethics standards, and registers and regulates auditors. The Companies Act, 71 of 2008, strengthens financial reporting requirements, including providing legal backing to financial reporting standards. National accounting and auditing standards are fully aligned to the International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA), respectively. South Africa is one of the earliest adopters of IFRS and ISAs. • The country has also adopted principles of corporate governance in the King Code and requires listed companies to prepare and issue annual integrated reports in place of an annual financial report and a separate sustainability report. • These reforms have strengthened the institutional pillars that support the country’s accounting and auditing practices: South Africa has been ranked first (out of 144 countries) in the past three years in the annual Global Competitiveness Survey, auditing and reporting standards category, conducted by the World Economic Forum(World Bank report 2013). • The PFMA 1999 and MFMA 2003 and associated regulations and adoption of GRAP standards have set high standards in financial management and accounting in the Public Sector.

8. INTERNATIONAL BENCHMARKING WITH INTERNATIONAL PUBLIC SECTOR SISTER BODIES Government Finance Officers Association OF USA & CANADA About GFOA The Government Finance Officers Association (GFOA), founded in 1906, represents public finance officials throughout the United States and Canada. The association's more than 19,000 members are federal, state/provincial, and local finance officials deeply involved in planning, financing, and implementing thousands of governmental operations in each of their jurisdictions. The GFOA’'s mission is to enhance and promote the professional management of governmental financial resources by identifying, developing, and advancing fiscal strategies, policies, and practices for the public benefit. The GFOA has accepted the leadership challenge of public finance. To meet the many needs of its members, the organization provides best practice guidance, consulting, networking opportunities, publications including books, e-books, and periodicals, recognition programs, research, and training opportunities for those in the profession

9. INTERNATIONAL BENCHMARKING WITH INTERNATIONAL PUBLIC SECTOR SISTER BODIES./2 About CIPFA • CIPFA is the only professional accountancy body exclusively dedicated to public finance in the world. • CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Our 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed. • They include the benchmark professional qualification for public sector accountants as well as a postgraduate diploma for people already working in leadership positions. They are taught by our in-house CIPFA Education and Training Centre as well as other places of learning around the world.

10. The Professional Body Disciplines/Fields/Branches/Specialist areas The Professional Body must have appropriate capacity and should be sustainable. This means that the body can plan with confidence for the future, and can acquire the resources it needs to carry out its work and pursue its mission. ‘Professionalism’ refers to the competence, work practices, ethos, behaviour and attitudes typically displayed by members of such a profession. In the PFM domain, these can encompass the disciplines of • Management accounting (planning and budgeting) • Revenue management • Expenditure management • Asset management (movable and immovable) • Financial Accounting • Supply chain management • Enterprise Wide Risk Management • Internal audit.

11. OBJECTIVES OF CIGFARO AS A PROFFESIONAL BODY • As a well organized and respected professional bodys an essential part of a fully functioning public finance audit and risk profession. The main objectives of a professional body include: • Protecting the public interest by ensuring observance by its members of the highest standards of professional and ethical behaviour • Determining the eligibility criteria for membership of the body • Regulating members in public practice • Promoting the interests of its members • Determining the entry requirements for students • Promoting the education ,training and certification of prctitioners (including continuing professional development and practical experience) • Developing good relationships with government, other national and international professional bodies and regional groupings

12. EXAMINATIONS AND PRACTICAL EXPERIENCE As part of its admission requirements, a professional body needs entrance examinations and training requirements. These is follow the International Education Standards (IES) issued by the International Accounting Education Standards Board (IAESB) under the auspices of International Federation of Accountants(IFAC). The IES cover: • Entry requirements to a program of professional accounting education • Content of professional education programs • Professional skills` • Professional values, ethics and attitudes • Practical experience requirements • Assessment of professional capabilities and competence • Continuing professional development • Competence requirements for Public Finance Audit,Risk professionals MINATIONS AND PRACTICAL EXPERIENCE EXAMINATIONS AND PRACTICAL EXPERIENCE

13. FINANCIAL MANAGEMENT LEGISLATIVE FRAMEWORK

14. MIGRATION OF CURRENT DESIGATIONS ALIGNED TO NEW MEMBERSHIP CRITERIA • CIGFARO PROPOSAL TO MIGRATE CURRENT DESIGNATIONS TO NEW CHARTERED DESIGNATIONS • STUDENT MEMBERSHIP- No Designation • Associate • Registered • Certified • Chartered • MEMBERSHIP TO NONE PRACTITIONERS • Affiliate • Corporate

15. WORKING WITH GOVERNMENT TO PROTECT PUBLIC INTEREST • Supporting economic growth and protecting the public interest are objectives shared by governments and professional accountancy bodies. • Where the professional body seeks to meet the needs of accountants, auditors,Risk Officers-Compliance budget staff and others involved in public financial management in the public sector, as well as attract members from the private sector, then government will have an additional interest in the establishment and development of the body. • Regardless of sector, government will also have an interest in ensuring that the profession is properly regulated, and that its structure and governance reflects the public interest. • In working with the government, the group forming the professional body should therefore keep in mind this range of common interests. • Additional considerations include the scope of the mandate the government has in forming the professional body, where government is being proactive in establishing the body, and from where that mandate comes. Working with government to protect the public interest

16. PROFFESSIONAL CODE OF CONDUCT • A code of ethics and other relevant professional requirements have been established, it is critical to ensure that members are aware of them and remain in compliance with them. • In countries where licensing is a governmental function, governmental or regulatory bodies usually have the power to impose the most severe disciplinary actions. • Even when that is the case, a professional accountancy body still needs to have an effective disciplinary process for investigating and disciplining its members(individual members, and if local laws permit, firm members)for breach of the rules, gross professional negligence and other relevant types of misconduct and, where appropriate, to assist governmental and regulatory bodies. • Thus a professional abody will need to consider how disciplinary investigations should be conducted, what due process should be followed, what disciplinary structure should be established, what standards of evidence and proof should be required, what sanctions might be recommended, and what appeals should be permitted.

17. CRITICAL INSTITUTIONAL CAPABILITIES Cigfaro as professional body is reviewing key institutional capabilities to be able to meet its objectives and further develop, and have the capacity to: • Manage office administration • Keep an accurate and up to date register of members and students by using Information Technology; identify those members who are qualified to carry out public audit and distinguish them from those who are not • Organize Council, Committee and Task Force meetings, which should use agendas and minutes • Organize members’ services, communications, and national and international relations • Organize students, examinations and records of training • Organize Continuing Professional Development (CPD)

18. WHERE TO FROM WHERE WE ARE?

19. NEXT STEPS • New Draft Membership Framework– JUNE 2018 • Draft Education and Training Framework JULY 2018 • Draft Qualification Framework AUGUST 2018 – Reasearch to be completed with CIPFA in the UK in JULY2018 • New Designations to be approved August 2018 • MOI Amended and Approved by AGM • Register New Designations with SAQA FEBRUARY 2019 - Roll Out Of New Frameworks