Guidelines On The Preparation Of Quarterly Reports For Public
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Summary
Guidelines on the preparation of Quarterly Reports for Public Entities and Constitutional Institutions CONTENTS1. INTRODUCTION 32. BACKGROUND 42.1. Current requirements for quarterly reporting ............................................................ 42.2. Challenges under the current reporting system ....................................................... 43. QUARTERLY REPORTING 43.1. Database................................................................................................................. 53.2. Programme/objective/activity information ................................................................ 53.3. Performance indicators and targets ......................................................................... 53.4. Borrowings and guarantees ..................................................................................... 63.5. Capital investment projects report ........................................................................... 63.6. Risk management ................................................................................................... 73.7. Job creation............................................................................................................. 73.8 Reporting timelines .................................................................................................. 7ANNEXURE A: ADMINISTRATION PROGRAMME CONTENT 8 2 1. INTRODUCTION Public entities are required to report on a quarterly basis to their Executive Authority. Treasury Regulation 5.3.1 requires the accounting officer of a constitutional institution to establish procedures for quarterly reporting to the executive authority in order to facilitate effective performance monitoring, evaluation and corrective action. Treasury Regulations 29.3.1 and 30.2.1 state that the accounting authority of a public entity must establish procedures for quarterly reporting to the executive authority in order to facilitate effective performance monitoring, evaluation and corrective action
These guidelines are aimed at improving transparency and enhancing oversight over the financial and non-financial performance of constitutional institutions and public entities. This requires public entities to provide quarterly reports not only to their Executive Authorities but also to departments at the centre of government. The guidelines provide details on the nature and timing for submission of quarterly reports by constitutional institutions and public entities listed in Schedules 2, 3A and 3B of the Public Finance Management Act (PFMA), 1999
A uniform system of collecting, storing, consolidating and analysing in-year financial and non-financial information is essential to efficient public financial management
The quarterly reporting system will be utilised by all relevant business units within the National Treasury, the South African Reserve Bank and Statistics South Africa
Further, the quarterly reporting process will reduce the reporting burden on public entities and constitutional institutions by providing a single reporting template that can cater for the information requirements of the National Treasury, the South African Reserve Bank and Statistics South Africa. The Department of Performance Monitoring and Evaluation may also require non-financial information from public entities
Section 38(1)(b) of the PFMA states that Accounting Officers of constitutional institutions are responsible for ensuring the effective, efficient, economical and transparent use of the resources in the institution. Section 51(1)(f) of the PFMA states that Accounting Authorities of public entities are responsible for the submission of all reports , returns, notices and other information to Parliament or the relevant provincial legislature and to the relevant Executive Authority or treasury as may be required by the Act. Quarterly reporting will enable institutions1 to review1 ‘Institutions’ refers to constitutional institutions or public entities
3 progress towards the achievement of financial and non-financial performance on a regular basis in a particular financial year
2. BACKGROUND2.1. Current requirements for reporting The reporting requirements of Accounting Officers of constitutional institutions, and Accounting Authorities of public entities are provided in section 40(1)(f) and 51(1)(f) of the PFMA, respectively. This includes reporting on financial affairs and any other information as may be required by the PFMA. Treasury Regulation 25.1.3 requires public entities to submit all information required by National Treasury in terms of the PFMA and the Treasury Regulations
2.2. Challenges under the current reporting system Existing databases available to the National Treasury on public entities and constitutional institutions include budget information, annual financial statements, and performance information to a limited extent. This information is only reported on during the budget period and reflected in the Estimates of National Expenditure
Although there are various systems in place to source more information from different public entities and constitutional institutions, such as, borrowings, guarantees, and capital investment projects, these are fragmented as there is no established formal process for in-year reporting on both financial and non-financial information. This leaves a gap in terms of periodic monitoring and thorough analysis of these institutions to track performance, and to inform policy and budget decisions
On the other hand, the South African Reserve Bank has a separate system to collect information from selected public entities, which is also used by Statistics South Africa
3. QUARTERLY REPORTING Reporting on both financial and non-financial performance is important in measuring the performance of government institutions. While financial information (expenditure and revenue) is critical for determining the costs and efficiencies of programmes/objectives/activities, non-financial information is equally important for assessing progress towards predetermined service delivery or performance targets
Treasury Regulations 29.1.3(b) and 29.1.6(a)-(j) require public entities to report on their borrowing programme on a quarterly basis. The National Treasury also 4 specifically requires public entities to report on guarantees issued on a quarterly basis, including those related to foreign loans in order to comply with International Monetary Fund (IMF) requirements. It is also essential to monitor public entity’s progress of the implementation of their Infrastructure Investment Plan and any other major projects. In-year monitoring reports also serve as an oversight tool to Executive Authorities and as a management tool to institutions
3.1. Database In order for public entities and constitutional institutions to report on similar core aspects of financial and non-financial performance to the Executive Authority and to National Treasury, a comprehensive reporting format has been developed and must be used to compile quarterly reports. Data required from institutions in the Microsoft® Excel reporting format reflects financial, and non-financial performance, information on capital expenditure, borrowings, job creation, and risk, as well as personnel information. The template is customised by type of entity to enable various entities to complete applicable information
3.2. Programme/objective/activity information Each institution should have programmes/objectives/activities and “Administration” should be one of them. The Administration programme should be confined to support services delivered for the institution as a whole which are not specific to programmes, activities or objectives. The Administration programme should include costs of overhead functions that apply to the institution as a whole; it should not include functions involving service delivery to the public or enabling functions performed in respect of other programmes/objectives/activities. Details of what should be included in the Administration programme are provided in Annexure 1
3.3. Performance indicators and targets Performance indicators and targets are identified and included in institution’s Annual Performance Plans or Corporate Plans, to track on-going performance. Quarterly monitoring of these performance indicators is an important element of the planning and budgeting process. Reporting on performance indicators on a quarterly basis provides progress on the implementation of the institution’s plans with particular reference to monitoring delivery against the specific quarterly performance targets set. Quarterly performance reporting is an important management tool for the Accounting Officer, Accounting Authority and Executive Authority
5 Performance indicators and targets should be set relating to the budget year and the Medium Term Expenditure Framework (MTEF) period in respect of strategic objectives and programmes/objectives/activities contained in the Annual Performance Plan or Corporate Plan. Institutions should consult the Framework for Managing Programme Performance Information (FMPPI) and the Framework for Strategic Plans and Annual Performance Plans for guidance on the management of each indicator, the method of collecting data to report on the indicators; for calculating, analysing and for interpreting performance data collected
Quantitative and qualitative indicators and targets must reflect trends and progress between quarters. Indicators must be specific measurements that track progress towards achieving the goals of an institution. Indicators may reflect inputs, activities, outputs, outcomes, or in certain instances, explanatory information about the factors that could affect performance
3.4. Borrowings and guarantees Relevant public entities identified by National Treasury should provide information on their borrowing programme to the National Treasury, reflecting actual borrowings for that quarter and projected borrowings for other quarters. Updates on debt maturity profile and the borrowing programme should also be reported on. The borrowing programme must include terms and conditions on which the money is borrowed, information on proposed domestic and foreign borrowing, short and long- term borrowing requirements, borrowing in relation to a pre-approved corporate plan, the maturity profile of the debt, confirmation of compliance with existing and proposed loan covenants, and debts guaranteed by government. Motivations for government guarantees, and the Executive Authority’s approval of the borrowing programme, if required by the legislation in terms of which the public entity was established should be submitted. Public entities issued with government guarantees should report on compliance with the guarantee conditions as set out in the guarantee agreements
Information on borrowings and guarantees should be submitted through the Microsoft® Excel template and in a written report
3.5. Capital investment projects report Progress on the implementation of the Infrastructure Investment Plan, as reflected in the Corporate Plan, or any major project not reflected in the Corporate Plan of an 6 institution should be reported. The template provides for reporting of progress since inception up to project completion
3.6. Risk management Top enterprise risks and any other new risks identified during the quarter that may impact on the achievement of the public entity's strategic objectives should be included in the quarterly reporting template
3.7. Job creation Jobs created through infrastructure investment projects should be reported on a quarterly basis. This includes direct and indirect jobs, as well as permanent and temporary jobs
3.8 Reporting timelines All quarterly information must be signed off by the Accounting Officer or Accounting Authority of the institution and submitted in the format required, to the Executive Authority and to National Treasury within 30 days after the end of each quarter. In the event that the submission date falls on a non-working day, the quarterly report should be submitted on the first working day following the submission date. The due dates for submission are as follows: Quarter Due date for submission Q1: Quarter ending 30 June 31 July Q2: Quarter ending 30 September 30 October Q3: Quarter ending 31 December 31 January Q4: Quarter ending 31 March 30 April 7 ANNEXURE 1: ADMINISTRATION PROGRAMME CONTENTThe Administration programme should include the following2: Institutional Management: includes all allocable support expenses of the Accounting Officer/ Authority, including the board of directors. For example salaries, direct office support costs, travel expenses and expenses in respect of their staff, costs of advisory staff as well as residential and car allowance(s). It also includes the costs of the programme manager of the Administration programme/ support services function
NB: The salary, allowances and other support costs of other managers for other programmes/ projects should be assigned to the programme or subprogramme/ projects where they are located
Corporate Services: includes Human Resources, Legal Services, Communications, Information Technology and Other support services (based on the entity’s decision)
Finance Administration: includes management of the Office of the Chief Financial Officer, recognising that the reporting channel of the Chief Financial Officer may not be through the programme manager of the Administration programme
Internal Audit: recognising that the reporting channel for the Head of Internal Audit is not through the programme manager of the Administration programme
Office Accommodation: includes activities and costs relating to the provision of office accommodation functions for the entity. Where office accommodation functions relating to other specific programmes/projects of the institution can be identified, they should be assigned to the relevant programme
2 Source: Guidelines on Budget Programmes (National Treasury. 2010.) Content has been amended to suitpublic entities and constitutional institutions 8
All quarterly information must be signed off by the Accounting Officer or Accounting Authority of the institution and submitted in the format required, to the Executive Authority and to National …
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Frequently Asked Questions
How do i prepare for quarterly reporting?
The key to preparing for quarterly reporting is for your company to act like a public company long before an IPO. An extended “rehearsal” as a public company will help you identify and correct problems that arise before the stakes are high. Your quarterly close is key to providing accurate information in a timely manner.
What is a quarterly performance report?
Quarterly performance reports are based on the quarterly targets set in the Annual Performance Plans. The purpose of quarterly performance reports is to provide information on the overall progress made. with the implementation of an institution’s performance plan, on a quarterly, biannually and an annual. basis.
Do public entities need to report to the executive authority?
Public entities are required to report on a quarterly basis to their Executive Authority. Treasury Regulation 5.3.1 requires the accounting officer of a constitutional institution to establish procedures for quarterly reporting to the executive authority in order to facilitate effective performance monitoring, evaluation and corrective action.
When should a pre ipo company start preparing for quarterly reporting?
Because of the quick turnaround needed to file a 10-Q and the requirements for quarterly results in the S-1, pre-IPO companies should ideally begin preparing for quarterly reporting at least 18 months before going public.