In this case, the focus is on financial management to improve the effectiveness and efficiency of the South African Revenue Service. The identified problem statement is: “What mechanisms are needed to enable continuous improvement in financial management to keep SARS at the cutting edge of efficiency?” The financial management practice of Operations is discussed, taking into account relevant literature; certain issues that the researcher was concerned about are validated by the participants, while other issues did not prove to be a problem.
Chapter 1: Introduction
- Background
- Problem Statement /Problematic Situation
- Objectives
- Need for the Study
- Research Design
- Research Approaches and Paradigms
- Research Methodology Selected
- Methods of Data Collection
- Limitations of Study
- Analysis and Interpretation
- Sequence of chapters
The purpose of the research was to investigate how financial management in SARS Operations can be improved. The researcher wanted to understand whether a continuous review of financial management can facilitate effective financial management.
Chapter 2: Problem Analysis and Theoretical Considerations
Introduction
Background of SARS
The Operations Division is responsible for more than seventy percent of the organization's revenue collection and employee functions. 16 laws and tax changes, while the Human Resources division is responsible for all people-related operations.
Analysis of Operations Division
However, there is no or limited emphasis on the importance of financial management within Business. Most of the financial management key performance areas (expense management, asset, travel, procurement) are included in the performance agreement of finance employees, not line managers and operational employees.
Analysis of Operations Finance
Finance can learn more from line managers, while line managers can learn more about financial management from their finance colleagues. The institutionalization of a culture of financial management depends on finance and line managers having a common understanding and working together to achieve organizational strategic goals.
Analysis of Financial Management
- Finance Policies and Responsibilities within Financial Management
- Fleet Management
- Asset Management
- Travel Management
- Supply Chain Management and Procurement
- Budgeting Process
- Expenditure Management
- Internal Controls
- Reporting
It is clear from all the graphs that there is a sudden increase in expenses in the last three months of the fiscal year. This makes it difficult for Operations business units to take a holistic view of the organization.
Conclusion
Internal control is important to any organization as it determines whether processes and policies are working as intended. The challenge in business is that there is not much emphasis on internal controls; these are not discussed in regular operational or strategic meetings. Internal controls are only discussed at audit meetings, which are conducted when a mandatory audit or a planned annual internal audit is in progress.
Chapter 3: Literature Review
- Introduction
- The Role of Financial Management
- Importance of Financial Management
- Financial Planning
- Proper Use of Funds
- Financial Decision
- Promoting Savings
- Responsibilities within Financial Management
- Budgeting and Expenditure Management
- Supply Chain Management
- Asset Management
- Internal Controls and Reporting
- Internal Controls
- Internal Finance Reporting
- Conclusion
Budgets are at the heart of financial management, as there is no expenditure without an approved budget or allocation of funds. Supply chain management (SCM) has influenced the way organizations structure their procurement functions considering integration and supply and demand management issues that help create value that will increase customer satisfaction, especially in public sector organizations (Ambe and Badenhorst-Weiss , 2012). Effective financial management depends on the economic, successful, efficient and timely goals achieved by the organization (Abedian, 1997 as cited in Mathiba, 2011).
Chapter 4: Research Design and Methodology
- Introduction
- Research Design
- Research Approach
- Population and Sample
- Research Instruments
- Semi-structured Individual Interviews
- Data Analysis
- Ethical Considerations
- Conclusion
The researcher faced the following practical problems while designing the study; (1) there were no prescribed rules or guidelines consistent with the application of research design to questions in the arts such as science, and (2) research was sometimes limited by external factors in implementing the best design (McGrath, 1981; Bono and McNamara, 2011; McGrath, 1981 as cited by Bono and McNamara, 2011). This helped the researcher to understand the early results of the study before the conclusion of the study. The researcher limited the generalization of the case study findings to the case study itself.
Chapter 5: Findings and Discussion
Introduction
All participants were interviewed in Pretoria; the researcher used the opportunity to meet certain participants (eg KZN) where they traveled to the head office for formal meetings. The general analytical procedure of Hussey and Hussey (1997) was used as the main method of data analysis as it allowed the researcher to use the rough notes made during the interviews to be processed into written records to help the researcher draw conclusions informed by including his reflections. Reliability was also enhanced by the fact that the researcher was involved throughout the study, understanding and using different data collection methods.
General Understanding of Financial Management
Assessment of SARS Operations Financial Management
After reviewing the management reports of several business units, through trend analysis it can be seen that there was an increase in expenses in the last three months of the financial year. Respondent number ten felt that most financial planning was not informed by any strategy. Business plans that are part of the strategy should inform the requested resource in the budget.
Challenges within SARS Operations Financial Management
This means that more than half of the total budgets were controlled by departments that did not have proper financial management (Auditori General, 2012). Two respondents felt that even though SARS had received unqualified audit reports, this did not mean that it had good financial management. There were provincial departments that had received qualified audit reports, which led them to make extra efforts to improve their financial management to the extent that their financial policy implementation was even better than SARS.
The Ways of Improving Financial Management
The other three respondents felt that SARS Operations had little time to plan better, but the problems could not be left undetermined. 76 is allocated to achieve those measurable objectives and what are the risks embedded if it does not play according to the policy. They felt that Finance should educate people about what management is all about and get business partners to make them understand the benefits of following certain policies and procedures.
Finance Policies and Responsibilities within Financial Management
Monthly meetings should be used to share things like the current status and what needed to change until people took ownership of the governance of their environments. There were a few that needed changes and communication had to be a key tool as people had to be constantly reminded of compliance. Respondents believed that finance should be a monitoring function rather than a partner, as this barrier or relationship could be easily influenced.
Budgeting and Expenditure Management
In chapter 3, it was noted that incremental budgeting does not take into account changes in objectives or activities in the new year. It was stated in Chapter 2 that line managers had a responsibility to (a) ensure that expenditure was a valid business requirement, i.e. Moreover, in Chapter 3 it was said that the proper use and distribution of funds leads to the improvement of the operational efficiency of the business concern.
Supply Chain Management (procurement)
Yet, as pointed out in Chapter 3, line managers are responsible for monitoring and controlling expenditure. This confirms a statement made in Chapter 3 that because public sector procurement operates in a rule-bound environment, many of its tasks can be automated. The researcher indicated in Chapter 3 that a well-thought-out control of the supply chain can produce both cost reduction and economizing effects (Jehle et al., 2002).
Asset Management
Respondent number 3 indicated that there was no wealth management strategy but there were good wealth management policies. This is consistent with a statement made by the researcher in Chapter 2 that because there was no replacement strategy associated with the asset management policy, many business units took longer to dispose of their assets. . This is consistent with what was said in Chapter 3 that part of the government (including SARS Operations) considered asset management to be the responsibility of the asset manager, which was not necessarily the case.
Travel Management
85 The asset management solution (asset declaration tool) implemented by SARS Operations was not fully functional; the organization did not approach other organizations to determine how they had overcome some of the problems they faced. Respondents felt that it was a nightmare because there was never proper management in place, even though it was improving. The reality is that asset management cannot be separated from the broader financial management framework.
Fleet Management
One respondent felt that she was satisfied with the way the trip was managed. It was further found that the travel agency received approximately two thousand travel changes per month, which was very high and most of these changes involved non-refundable amounts, especially air tickets, thus causing SARS unnecessary additional costs. Chapter 2 stated that there was a fleet management policy, but no vehicle replacement strategy, which is important to save costs and maintain employee safety.
Internal Controls and Reporting
Operations Finance was to be a unit of internal control; however, it was used as an administrative unit. Therefore there was a lack of understanding of the internal control environment from both business and finance. There was no response from security companies to the organization regarding the movement of assets.
Conclusion
Chapter 6: Conclusion and Recommendations
Introduction
Sound corporate governance principles and international best practices provide a sound basis for effective financial management in the public sector. There have been few developments related to accounting and financial management in the public sector at the national or international level, which aim to address the challenges highlighted above. 93 Despite these developments, the impact of poor financial management in the public sector is widespread and the provincial government of Limpopo was a vivid example where most departments ran out of funds and at some point could not pay salaries.
Conclusion of the Study
Unfortunately, these improvements have occurred while there has been limited or no improvement in the financial management function. They may even develop a desire to find out how other government entities have dealt with some of the challenges they face in financial management of operations. Respondents in the survey rated the effectiveness of financial management in the SARS Operations division as 6.
Recommendations
- Recommendations Based on an Assessment of SARS Operations’ Financial
- Challenges within SARS Operations’ Financial Management
- It is recommended that SARS Academy includes financial
- Finance Policies and Responsibilities within Financial Management
- Budgeting and Expenditure Management
- Supply Chain Management (procurement)
- Asset, Travel and Fleet Management
- Internal Controls and Reporting
- Conclusion
Recommendation: It is recommended that funding benchmark with other organizations on financial management reporting and analysis. It is recommended that SARS learning academy includes financial management training as part of its offering. It is recommended that all new employees, especially managers, be introduced to financial management as part of the induction.
- SARS Top management structure
- SARS Operations management structure
- SARS finance senior management structure
- SARS Operations finance functional and regional structure
- Expenditure trend for business unit 1
- Expenditure trend for business unit 2
- Expenditure trend for business unit 3
- Different kinds of finance
- Sampled locations and business units
Evaluating supply chain management implementation and challenges in the public sector: a case study of Central District Municipality, North West Province, South Africa.
