FINANCIAL PRINCIPLES AND POLICIES

FREE BASIC SERVICES UNIT

2. FINANCIAL PRINCIPLES AND POLICIES

The Ikwezi Municipality have implemented the prescribed statutory policies and they are reviewed on an annually basis. The Financial Policies and By-Laws of the Ikwezi Municipality are to provide sound, secure and fraud free management of financial services.

The detailed adopted Policies and By-Laws are not included in this budget

documentation. However they are available at the Council offices, for viewing as well

as on the website. See underneath the Table reflecting a short description of each

policy and By-Law that was adopted by Council:

2.1.1

T

ABLE ²

L

IST OF

P

OLICIES TO BE DRAFTED

,

REVIEWED AND ADOPTED BY COUNCIL

Policy Name Short Description of Policy

1 Asset Management Policy( Draft) The Asset Management Policy provides direction for the management, accounting and control of Property, Plant & Equipment (Fixed Assets)

owned or controlled by municipality.

2 Budget Policy(Draft) The aim of the policy is to set out the budgeting principles, which the municipality will follow in preparing each annual budget, as well as the responsibilities of the Chief Financial Officer in compiling such budget.

3 Cash Management and Payment of Creditors Policy (adopted)

The objective of this policy is to ensure that the Municipality has a sound cash management and payment system.

4 Cash Receipt and Banking Policy The objectives of this policy are ² to ensure that

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effectively managed and accounted for; and to ensure that receipts of revenue are adequately safeguarded and accounted for.

5 Cost Estimation Policy The Municipality needs to have an appropriate methodology of cost estimation in order to ensure that ² The cost of producing and supplying goods and services to consumers is accurately determined in order to ensure that consumer charges and tariffs reflect the cost involved in their supply; The Municipality is able to quantify savings and /or losses that it may bring about; Expenditure budgets are realistic;

When it executes work for third parties the cost incurred is recovered; and; The cost of inter- departmental service provision is accurately determined and charged out.

6 Credit Control and Debt Collection (Adopted) Revenue By-Law draft

The purpose is to ensure that credit control and

debt collection forms an integral part of the

financial system of the local authority, and to

ensure that the same procedure be followed for

each individual case.

satisfactory level of municipal services to the citizens within the Ikwezi Municipality Municipal area.

8 Investment Policy(adopted) This policy deals with the investment of the

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immediate purposes of the Municipality.

9 Rates Policy(Adopted) To determine or provide criteria for the

determination of categories of properties for the purpose of levying different rates and categories of properties, for the purpose of granting

exemptions, rebates and reductions

10 Rates By-Law(to be drafted) Section 229(1) of the Constitution authorizes a municipality to impose rates on property and surcharges on fees for services provided by or on behalf of the municipality. In terms of section 3 of the Act, a municipal council must adopt a policy consistent with the Act on the levying of rates on ratable property in the municipality. In terms of section 6(1) of the Act, a municipality must adopt by-laws to give effect to the implementation of its rates policy. In terms of section 6(2) of the Act, by-laws adopted in terms of section 6(1) thereof may differentiate

between different categories of properties as well as different categories of owners of properties liable for the payment of rates.

11 Risk Management Policy(draft) The objectives of this policy are ² To provide a framework for the effective identification, measurement, avoidance/ management, and

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and assign risk management roles and

responsibilities within the Municipality; and; To

define a reporting framework which ensures

regular communication of risk management

information to the Council, portfolio committees,

the audit committee and senior management

and officials engaged in risk management

activities.

between these bodies and persons; appropriate lines of accountability and reporting for these bodies and persons; the minimisation and prevention of unnecessary overlapping of responsibilities and duplication of powers between these bodies and persons; that disputes that may arise between these bodies and persons are resolved amicably and timely;

and dynamic and productive interaction between these bodies and persons, other Councillors and officials of the Municipality.

13 Standing Rules and Order(adopted)

14 Tariff By-Law(Draft) The object of this by-law is to ensure that ² Tariffs are determined in order to facilitate and ensure sustainable and affordable services.

15 Rewards, Gifts and Favours Policy(Draft)

To set out in clear terms the rules that apply to offers of a reward, gift or favours from persons having or proposing to have a contractual relationship with the municipality and the responsibilities of councillors and staff members in this regard. The Code of Conduct and

Rewards, Gifts and Favours Policy is aimed at ensuring that councillors and staff members conduct themselves so that their good faith and integrity should not be open to question.

16 Recruitment Policy(Review) To apply consistent, transparent, procedurally and substantively fair recruitment and selection procedures; To give effect to fair recruitment and selection processes; To ensure that the recruitment process complies with the relevant legislations; To provide an effective system to be used by line management and Corporate Services Department in filling vacant positions;

To provide guidelines for the systematic process

through which line managers can request the

approval and filling of vacancies; To ensure

that all candidates are selected objectively and

on merit; To attract and retain the interests of

suitable candidates and to project a positive

the Municipality obtains the best value for money possible when it contracts for the supply of goods and services and the execution of work. The secondary objectives of the supply chain management system are ² To promote local economic development by giving preference to local service providers and contractors; To promote Black economic empowerment by facilitating access by historically disadvantaged individuals to

acquisitions and disposals; To combat corruption in procurement; To promote accountability for procurement decisions and contract

management.

18 Fraud Prevention Policy(adopted) The objective of this policy is to facilitate the development of controls which will aid in the detection and prevention of fraud against IKWEZI MUNICIPALITY. It is the intent of IKWEZI MUNICIPALITY to promote consistent

organizational behavior by providing guidelines and assigning responsibility for the development of controls and conduct of investigations.

19 Indigent Policy(adopted) The objective of this policy will be to ensure the following: The provision of basic services to the community in a sustainable manner within the financial and administrative capacity of the Council; The financial sustainability of free basic services through the determination of appropriate tariffs that contribute to such sustainability through cross subsidization;

Establishment of a framework for the

identification and management of indigent households including a socio-economic

analysis where necessary and an exit strategy;

The provision of procedures and guidelines for the subsidization of basic charges and the provision of free basic energy to indigent

households; and Co-operative governance with other spheres of government.

20 Accounting Policies(draft) The basic objective of Accounting Standards is

followed in the preparation of financial

statements by different reporting enterprises so as to facilitate intra-firm and inter-firm

comparison.

21 Capital Infrastructure Investment Policy(draft)

This policy sets out the process and methodology for capital infrastructure investment regardless of the funding source.