Policy Brief 10 - How the Cost of Information and Communication Technology Hampers Implementation of Financial Management Reforms in Lesser-Resourced Municipalities

Currently South Africa has 278 municipalities with varying capabilities and capacity. The Municipal
Finance Management Act requires municipalities to maintain efficient, effective and transparent systems and implement proper financial record keeping. One of the key reforms spearheaded in this regard is the Municipal Standard Chart of Accounts (mSCOA). Implementation of mSCOA is information and communication technology intensive and thus expensive. A consequence of this is that many municipalities will not be able to achieve compliance by the compulsory implementation date of July 2017. Given the potential benefits associated with ensuring a national standard around financial reporting at the local government level, it is recommended that ring-fenced funding in respect of mSCOA implementation be made available for lesser-resourced municipalities and that technical assistance be provided
to the most under-resourced municipalities to assist with change management.

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