<p> Public Sector Risk Management Framework</p><p>Municipalities - The role of National Treasury in risk management</p><p>Published by:</p><p>Template: Municipalities – The role of NT in risk management</p><p>V1.0608</p><p>“Naganela Pele – Think Ahead” Public Sector Risk Management Framework Municipalities - The role of National Treasury in risk management</p><p>Contents</p><p>1 Purpose 1</p><p>2 Monitoring and assessment of risk management 1</p><p>3 Risk management capacity and training 2</p><p>4 Enforcement of risk management prescripts 3</p><p>Template: Municipalities – The role of NT in risk management i v1.0608</p><p>“Naganela Pele – Think Ahead” Public Sector Risk Management Framework Municipalities - The role of National Treasury in risk management</p><p>1 Purpose</p><p>Accounting Officers of Municipalities have an explicit duty to ensure that</p><p> effective, efficient and transparent systems of risk management are</p><p> implemented and maintained within their Institution.</p><p>This document is intended to outline the specific responsibilities of National</p><p>Treasury (NT) in developing the risk management activity in Municipalities. In</p><p> this regard NT has specific duties to:</p><p> monitor and assess the systems of risk management in Municipalities;</p><p> assist with building risk management capacity in Municipalities; </p><p> enforce the PFMA (by implication the specific prescripts therein pertaining</p><p> to risk management) in Municipalities.</p><p>2 Monitoring and assessment of risk management</p><p>The MFMA make it clear that Accounting Officers are responsible for</p><p> implementing effective, efficient and transparent systems of risk management</p><p> within the institutions under their control. National Treasury must monitor that</p><p>Municipalities comply in this regard.</p><p>Furthermore, National Treasury needs to assess the quality of implementation</p><p> to ensure that implementation does not become the end in itself, but a means</p><p>Template: Municipalities – The role of NT in risk management 1</p><p> v1.0608</p><p>“Naganela Pele – Think Ahead” Public Sector Risk Management Framework Municipalities - The role of National Treasury in risk management</p><p> to help institutions to understand their risks and manage such risks in a</p><p> prudent manner.</p><p>Section 5(2)(c)(i) states that the NT may monitor and assess compliance by</p><p> the municipalities with the MFMA. Section 5(2)(f) empowers NT to take any</p><p> other appropriate measures to perform its functions effectively. These</p><p> particular prescripts therefore permit NT to monitor and assess risk</p><p> management within the local sphere of government.</p><p>3 Risk management capacity and training</p><p>Accounting Officers are responsible for ensuring that a system of risk</p><p> management is implemented within their Municipality. As such, Accounting</p><p>Officers are responsible for ensuring that their Municipality has sufficient</p><p> capacity to implement and maintain the risk management activity.</p><p>In terms of Section 34(1) of the MFMA (and in the spirit of the co-operative</p><p> government), “the national and provincial governments must by agreement</p><p> assist municipalities in building the capacity of municipalities for efficient,</p><p> effectiveness and transparent financial management.”</p><p>It can be interpreted that while PT’s are to take the lead in the building of risk</p><p> management capacity in municipalities in their respective provinces, NT has</p><p> also a duty to assist and support PT’s in this regard.</p><p>Template: Municipalities – The role of NT in risk management 2</p><p> v1.0608</p><p>“Naganela Pele – Think Ahead” Public Sector Risk Management Framework Municipalities - The role of National Treasury in risk management</p><p>Municipalities must therefore refer all requests for assistance in risk</p><p> management to their respective PT’s. The PT’s must decide on the best</p><p> course of action to deal with such requests, after taking into consideration</p><p> their own capacity to provide the required support and/or the possibility of</p><p> assistance from NT.</p><p>4 Enforcement of risk management prescripts</p><p>National Treasury have a responsibility to enforce risk management prescripts</p><p> in instances where non-compliance or poor compliance is observed. </p><p>Section 5(1)(c) of the MFMA requires NT to enforce compliance with</p><p> measures established in terms of the Act, in this instance sections 62(1)(c)(i)</p><p> and Section 95(c)(i). Furthermore, Section 5(3)(c) requires PT’s to assist NT</p><p> in enforcing compliance with the measures established in terms of the Act.</p><p>Sections 5(2)(e) and 5(4)(d) empower NT and PT’s respectively to take</p><p> appropriate steps if a municipality in the province commits a breach of the</p><p>MFMA .</p><p>In terms of Sections 171(1)(b), failure by the Accounting Officer of a</p><p>Municipality to comply with their responsibilities for risk management shall</p><p> constitute an act of financial misconduct. Officials in Municipalities delegated</p><p> with responsibilities for risk management may also be guilty of financial</p><p> misconduct if they fail to fulfil such delegated risk management responsibilities</p><p> in terms of Section 171(3)(a).</p><p>Template: Municipalities – The role of NT in risk management 3</p><p> v1.0608</p><p>“Naganela Pele – Think Ahead”</p>