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South Africa
NATIONAL LEGISLATION OVERVIEWS
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Local Government Municipal Finance Management Act, No. 56 of 2003

Long title


To secure sound and sustainable management of the financial affairs of municipalities and other institutions in the local sphere of government; to establish treasury norms and standards for the local sphere of government; and to provide for matters connected therewith.

Table of contents

SECTION TITLE

ARRANGEMENT OF SECTIONS

CHAPTER 1. INTERPRETATION, OBJECT, APPLICATION AND AMENDMENT OF ACT
1. Definitions
2. Object of Act
3. Institutions to which Act applies
4. Amendments to Act

CHAPTER 2. SUPERVISION OVER LOCAL GOVERNMENT FINANCE MANAGEMENT
5. General functions of National Treasury and provincial treasuries
6. Delegations by National Treasury

CHAPTER 3. MUNICIPAL REVENUE

Part 1. Municipal bank accounts
7. Opening of bank accounts
8. Primary bank account
9. Bank account details to be submitted to provincial treasuries and Auditor-General
10. Control of municipal bank accounts
11. Withdrawals from municipal bank accounts
12. Relief, charitable, trust or other funds

Part 2. Cash, investment and asset management
13. Cash management and investments
14. Disposal of capital assets

CHAPTER 4. MUNICIPAL BUDGETS
15. Appropriation of funds for expenditure
16. Annual budgets
17. Contents of annual budgets and supporting documents
18. Funding of expenditure
19. Capital projects
20. Matters to be prescribed
21. Budget preparation process
22. Publication of annual budgets
23. Consultations on tabled budgets
24. Approval of annual budgets
25. Failure to approve budget before start of budget year
26. Consequences of failure to approve budget before start of budget year
27. Non-compliance with provisions of this Chapter
28. Municipal adjustments budgets
29. Unforeseen and unavoidable expenditure
30. Unspent funds
31. Shifting of funds between multi-year appropriations
32. Unauthorised, irregular or fruitless and wasteful expenditure
33. Contracts having future budgetary implications

CHAPTER 5. CO-OPERATIVE GOVERNMENT
34. Capacity building
35. Promotion of co-operative government by national and provincial institutions
36. National and provincial allocations to municipalities
37. Promotion of co-operative government by municipalities
38. Stopping of funds to municipalities
39. Stopping of equitable share allocations to municipalities
40. Stopping of other allocations to municipalities
41. Monitoring of prices and payments for bulk resources
42. Price increases of bulk resources for provision of municipal services
43. Applicability of tax and tariff capping on municipalities
44. Disputes between organs of state

CHAPTER 6. DEBT
45. Short-term debt
46. Long-term debt
47. Conditions applying to both short-term and long-term debt
48. Security
49. Disclosure
50. Municipal guarantees
51. National and provincial guarantees

CHAPTER 7. RESPONSIBILITIES OF MAYORS
52. General responsibilities
53. Budget processes and related matters
54. Budgetary control and early identification of financial problems
55. Report to provincial executive if conditions for provincial intervention exist
56. Exercise of rights and powers over municipal entities
57. Municipalities which do not have mayors
58. Municipalities with executive committees
59. Delegations of mayoral powers and duties

CHAPTER 8. RESPONSIBILITIES OF MUNICIPAL OFFICIALS

Part 1. Accounting officers
60. Municipal managers to be accounting officers
61. Fiduciary responsibilities of accounting officers

Financial Management
62. General financial management functions
63. Asset and liability management
64. Revenue management
65. Expenditure management
66. Expenditure on staff benefits
67. Funds transferred to organisations and bodies outside government
68. Budget preparation
69. Budget implementation
70. Impending shortfalls, overspending and overdrafts

Reports and reportable matters
71. Monthly budget statements
72. Mid-year budget and performance assessment
73. Reports on failure to adopt or implement budget-related and other policies
74. General reporting obligation
75. Information to be placed on websites of municipalities
76. Protection of accounting officer
77. Part 2. Financial administration

Top management of municipalities
78. Senior managers and other officials of municipalities
79. Delegations

CHAPTER 9. MUNICIPAL BUDGET AND TREASURY OFFICES

Establishment
80. Role of chief financial officer
81. Delegations
82. Competency levels of professional financial officials
83. CHAPTER 10. MUNICIPAL ENTITIES

Part 1. Establishment
84. Financial implications for municipalities

Part 2. Financial governance
85. Bank accounts
86. Bank account details
87. Budgets
88. Mid-year budget and performance assessment
89. Remuneration packages
90. Disposal of capital assets
91. Financial year
92. Audit

Part 3. Accounting officers
93. Chief executive officer to be accounting officer
94. Fiduciary duties of accounting officers
94. General financial management functions of accounting officers
96. Asset and liability management
97. Revenue management
98. Monthly reconciliation of revenue and accounts
99. Expenditure management
100. Budget implementation

Part 4. Reports and reportable matters
101. Impending under collection, shortfalls, overspending, overdrafts, and non-payment
102. Irregular or fruitless and wasteful expenditure
103. Reporting of improper interference by councillors
104. General reporting obligations

Part 5. Other officials of municipal entities
105. Duties of other officials
106. Delegation of powers and duties by accounting officers
107. Competency levels of professional financial officials

Part 6. General
108. Borrowing of money
109. Financial problems in municipal entities

CHAPTER 11. GOODS AND SERVICES

Part 1. Supply chain management
110. Application of this Part
111. Supply chain management policy
112. Supply chain management policy to comply with prescribed framework
113. Unsolicited bids
114. Approval of tenders not recommended
115. Implementation of system
116. Contracts and contract management
117. Councillors barred from serving on municipal tender committees
118. Interference
119. Competency levels of officials involved in municipal supply chain management

Part 2. Public-private partnerships
120. Conditions and process for public-private partnerships

CHAPTER 12. FINANCIAL REPORTING AND AUDITING
121. Preparation and adoption of annual reports
122. Preparation of financial statements
123. Disclosures on intergovernmental and other allocations
124. Disclosures concerning councillors, directors and officials
125. Other compulsory disclosures
126. Submission and auditing of annual financial statements
137. Submission and tabling of annual reports
128. Compliance to be monitored
129. Oversight reports on annual reports
130. Council meetings open to public and certain public officials
131. Issues raised by Auditor-General in audit reports
132. Submissions to provincial legislatures
133. Consequences of non-compliance with certain provisions
134. Annual report to Parliament

CHAPTER 13. RESOLUTION OF FINANCIAL PROBLEMS

Part 1. Identification of financial problems
135. Primary responsibility for resolution of financial problems

Part 2. Provincial interventions
136. Types of provincial interventions
137. Discretionary provincial interventions
138. Criteria for determining serious financial problems
139. Mandatory provincial interventions arising from financial crises
140. Criteria for determining serious or persistent material breach of financial commitments
141. Preparation of financial recovery plans
142. Criteria for financial recovery plans
143. Approval of financial recovery plans
144. Amendment of financial recovery plans
145. Implementation of financial recovery plans in discretionary provincial interventions
146. Implementation of financial recovery plans in mandatory provincial interventions
147. Regular review of provincial interventions
148. Termination of provincial interventions
149. Access to information, records and documents of municipalities
150. National interventions

Part 3. Debt relief and restructuring
151. Legal rights
152. Application for stay of legal proceedings
153. Application for extraordinary relief
154. Suspension of financial obligations
155. Termination of financial obligations and settlement of claims
156. Matters to be prescribed

Part 4. Municipal Financial Recovery Service
157. Establishment
158. Functions and powers
159. Appointment of Head
160. Responsibilities of Head
161. Staff
162. Delegations

CHAPTER 14. GENERAL TREASURY MATTERS
163. Liabilities and risks payable in foreign currencies
164. Forbidden activities
165. Internal audit unit
166. Audit committees
167. Councillors’ remuneration
168. Treasury regulations and guidelines
169. Consultative processes before promulgation of regulations
170. Departures from treasury regulations or conditions

CHAPTER 15. FINANCIAL MISCONDUCT

Part 1. Disciplinary proceedings
171. Financial misconduct by municipal officials
172. Financial misconduct by officials of municipal entities

Part 2. Criminal proceedings
173. Offences
174. Penalties

Part 3. General
175. Regulations on financial misconduct procedures and criminal proceedings

CHAPTER 16. MISCELLANEOUS
176. Liability of functionaries exercising powers and functions in terms of this Act
177. Delays and exemptions
178. Transitional provisions
179. Repeal and amendment of legislation
180. Short title and commencement
Sch.  SCHEDULE. REPEAL AND AMENDMENT OF LEGISLATION [s179]
 
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