mSCOA Series - Webinar 3 of 2026

Strengthening Oversight and Performance Accountability through mSCOA

Hosted by: Future Cities Africa and The Municipal Edge, in collaboration with National Treasury

Date: 29 October 2026

Platinum sponsor: PhoenixERP from Business Engineering

Topics: mSCOA Reform - Oversight Structures - Data Integrity - Audit Preparedness - Council and MPAC Accountability - Dashboard Reporting - Provincial Treasury Support - Section 71 Reporting

This webinar brought together National Treasury, a metropolitan CFO, a system implementation specialist, a political office bearer and a provincial treasury director to examine how mSCOA - now more than a decade in development - can be made to deliver on its original promise: one version of the truth, across every municipality, from planning through to accountability. The conversation moved from the reform's legislative foundations to its practical daily application, and asked the harder question of whether the information that mSCOA generates is actually being used by the oversight structures it was designed to serve.

Speaker contributions

Mr Bongani Mdletshe - mSCOA Technical Advisor, National Treasury

Bongani set the policy context, tracing mSCOA from its 2014 gazette through eleven years of implementation and into the next phase of minimum business process and system requirements now being finalised. His framing positioned mSCOA not as a finance reform but as a business reform that touches every function of the municipality.

• mSCOA was promulgated through Gazette 37577 on 22 April 2014 in terms of Sections 168 and 216 of the Constitution and Section 168 of the MFMA. The motivation was the absence of a uniform classification framework across local government, which made aggregation, comparison and trend analysis impossible and allowed poor data integrity to persist.
• The seven mSCOA segments - fund, function, municipal standard classification, item, project, region and costing - are designed to create a single, standardised accountability thread from IDP to annual financial statements. Every project and programme in the IDP must be linked to the correct segment from the outset.
• Effective mSCOA implementation depends on governance structures: a municipal mSCOA project steering committee, the municipal council as policy custodian, national and provincial treasuries in an oversight and support role, and the audit value chain. People, processes and systems are the three pillars - and all three must function together.
• Between 2024 and 2026, Treasury completed work to determine minimum business process and system requirements for mSCOA, including standard operating procedures, position papers and an ICT due diligence assessment. Between 2026 and 2027, these will be issued as MFMA circulars and gazetted, and a transversal tender will be issued. Provincial training has commenced in the Eastern Cape and Limpopo, with municipalities to follow.
• The goal is full automation: by pressing a button, municipalities should be able to produce annual financial statements and Section 71 and Section 72 reports directly from the system - as the budget process already does. This is the next frontier for mSCOA implementation.
• mSCOA is already compulsory - it is grounded in gazette and MFMA Circular 18. The gazetting of minimum requirements takes this further by establishing the basis on which accounting officers can be held directly accountable for non-compliance with specific process requirements.
• National Treasury's role is policy, oversight and standard-setting - not implementation. Treasury cannot be both referee and player. The oversight structures within municipalities - council, MPAC, internal and external audit - are responsible for ensuring that what is planned is being executed. The recent withholding of equitable share should have been triggered by municipal oversight structures long before Treasury acted.

"mSCOA is not a finance reform - it is a business reform that impacts all business units within the municipality. Wherever you are, take that conclusion and apply it to your sector."

Ms Monique Steyl - Senior Manager: Financial Management Services, Stellenbosch Municipality

Monique provided a detailed and practical account of how Stellenbosch has embedded mSCOA into its daily financial management - from budget preparation to interim financial statements - and what that has meant for audit preparedness and data credibility.

• Transparency begins at the point of transaction capture. Regulation 6 of the Municipal Budget and Reporting Regulations requires that the budget be compiled on the same basis as the annual financial statements - and this consistency must be built in from the start. The accounting officer carries responsibility for ensuring uniformity throughout the preparation process.
• Every line item - revenue, expenditure, assets, liabilities, commitments, contracts - must be accurately recorded against the correct mSCOA segmentation at the point of capture. When transactions are classified correctly from the beginning, Section 71 and Section 52 reports are credible; when they are not, no amount of year-end correction can recover the integrity of the data.
• Stellenbosch trains user departments throughout the year on the correct application of mSCOA item segments. At the beginning of each financial year, the municipality circulates budget books that include definitions of expenditure items - because the training and understanding of municipal officials is the foundation of consistent reporting.
• Stellenbosch has used the National Treasury mSCOA F specimen for five years. The municipality takes its pre-audited data string from the financial system and uses it to prepare financial statements directly - but this is only possible because data integrity has been established and maintained throughout the year.
• Monthly main ledger control checks are performed on all general ledger accounts - debtors, payables and all control accounts - to detect errors and discrepancies at the earliest point. Reconciliations are a continuous discipline, not a year-end activity.
• Stellenbosch prepares eight-month interim financial statements by end of February each year. This ensures that when new GRAP accounting standards or changes to the F specimen arise, the municipality has already worked through the implications - and arrives at financial year-end in a position of confidence rather than crisis.
• A specific example: a historical audit finding required Stellenbosch to disclose the actual cash amount spent on property, plant and equipment purchases. mSCOA provided the mechanism - filtering the general ledger on the project capital segment and the bank withdrawal item to determine actual cash outflows with precision. Without mSCOA segmentation, this calculation was contested. With it, it was definitive.

"If you know you are transacting correctly, then there is nothing to hide. This is what transparency is about. This is what our community wants to know - that we are doing the right thing."

Mr Cornel Ebersohn - Project Director, PhoenixERP

Cornel reframed the mSCOA conversation around a central question: not whether municipalities are complying with the reform, but whether they are using the information it generates to make better decisions. His contribution drew on direct implementation experience across multiple municipalities.

• Compliance is the starting point, not the destination. The real question is what a municipality can do with the information it already captures. mSCOA has substantially reduced the burden of reporting on human capital and cost - but how it is used determines whether the benefit is realised or limited.
• A well-integrated mSCOA environment should connect planning, procurement, transaction, invoicing, payment and audit trail into a single, traceable lifecycle. From one transaction - one invoice or one contract adjustment - it should be possible to determine when it was procured, how it was procured, what was bought (in UNSPSC classification), where it was spent, what preferential procurement categories applied, and whether the supplier was local, district, provincial or national.
• Dashboards should not be postmortems. A practical dashboard combines timely indicators with the ability to drill dƒown to the underlying transactions. Summary without detail is a fruitless exercise. The dashboard should identify exceptions, benchmark against red-light thresholds, surface emerging risks and assign ownership with a deadline and a follow-up mechanism.
• The shift required is from reporting what happened to identifying what needs to happen next. For councillors who are not financial specialists, mSCOA data must be packaged in a form that anyone - engineers, doctors, educators - can understand: are we spending? Are we meeting commitments? Is project physical progress aligned to financial progress? Is procurement tracking against the procurement plan in real time?
• Audit readiness must be built into everyday processes - not treated as a July and August activity. Segregation of duties, budget delegation checks, workflow compliance, and exception monitoring should happen daily and consistently. Problems identified in July should be resolved long before the annual financial statements are produced.
• Technology improves the availability and traceability of evidence. People remain accountable for judgment and action. The system is the enabler - data quality, governance and management action create the value. If the system is available and not being used, that is a leadership problem, not a system problem.

"Better information should only strengthen oversight - not replace it. A dashboard cannot replace the function of oversight. It should be an enabler."

Cllr Zukisa Gana - MMC: Budget and Treasury Committee, King Sabata Dalindyebo Local Municipality

Councillor Gana provided the political office bearer's perspective - explaining mSCOA in terms accessible to ward committees and community members, detailing the legal accountability chain for Section 71 reporting, and issuing a pointed call for mutual accountability across all three spheres of government.

• mSCOA can be understood as a barcode scanner for municipalities: it forces every municipality to use exactly the same electronic labels for every transaction, making it impossible to hide money under confusing descriptions or shift it into non-standard accounts. This is the mechanism Section 216(1) of the Constitution anticipated when it required Treasury to prescribe general accepted accounting practice, uniform classification of expenditure, and norms and standards.
• For communities, ward committees and traditional leaders, the seven mSCOA segments provide directly legible information: which specific community target or asset is this money buying (project)? Which division is managing it (function and municipal standard classification)? Which ward or town gets it (region)? Is this a physical product, a staff wage or a service fee (item)? Is it funded from rates, a national grant, or borrowing (fund)?
• The costing segment - largely set to default across most municipalities - is the missing piece in cost of supply studies. Without it, municipalities cannot determine the actual cost of delivering each service, which flows directly into the inability to set defensible tariffs for electricity, water and other services.
• The Section 71 accountability chain is legally established. The monthly budget statement goes to the executive mayor; Section 59 of the MFMA allows delegation to the MMC Finance and Mayoral Committee. Section 60(3) of the Structures Act requires that executive mayor powers be exercised with the Mayoral Committee - which means Section 71 information reaches all Mayoral Committee members monthly. Three monthly Section 71 reports are consolidated into the Section 52D quarterly report that comes before full council.
• Compliance is the bare minimum - not performance. A municipality can have a clean audit and still be in poor financial health. A municipality can be technically compliant and still not be delivering services that residents can see. The objective is service delivery performance, not audit compliance alone.
• The broadest accountability gap is information asymmetry across spheres. Municipalities are visible to provincial and national treasury through mSCOA, but cannot adequately see what provincial and national government is planning and budgeting in their area. A municipality cannot align its capital budget for roads and water to a planned school, clinic or police station it does not know about. Chapter 3 of the Constitution envisaged seamless intergovernmental coordination - the reform agenda must address this gap.
• Accountability must extend beyond the accounting officer and CFO to all senior managers. Section 78 of the MFMA places financial management responsibility on all managers - not only the MM and CFO. Bad audits are not solely the CFO's failure when directors and senior managers who are delegated accounting responsibilities are not being held to account for their own departments.

"Compliance is a bare minimum. It is a guidance that we must use. But the objectives have been set in our IDPs. Compliance is not good performance - compliance is not the service delivery performance that people can see."

Dr Patience Ntuli - Director: Budgeting and mSCOA, Limpopo Provincial Treasury

Patience described Limpopo Provincial Treasury's practical oversight model - from early warning systems and pre-assessment feedback before Section 71 submission deadlines to system vendor engagement sessions and a joint MEC forum that brings mayors into a shared accountability conversation.

• Early warning is the most effective oversight mechanism. Limpopo requires municipalities to upload Section 71 reports within five working days of month-end - before the ten-working-day MFMA deadline. Treasury downloads, reviews for errors and misallocations, and provides written feedback. When the final report is uploaded at the statutory deadline, corrections have already been made. This means the data on the national system is accurate from submission.
• A resolution tracker is essential. Recommendations from provincial treasury and other oversight bodies to municipalities must be followed up month by month. Issues that could have been corrected in the previous reporting period must not be allowed to carry forward unchallenged.
• Multi-validation stages strengthen accuracy and credibility before reports leave the municipality. Junior officials prepare reports; seniors in the finance department review them; the CFO and MM sign off. For reports from line departments, the responsible director - not the CFO - must validate the variance reasons, because the CFO is not the custodian of capital projects, infrastructure spending or technical services delivery.
• Capacity building for system operators is a persistent gap. Limpopo holds system vendor engagement sessions that bring all provincial system vendors to Treasury together, identify bottlenecks, and require vendors to advise on resolution pathways. These sessions have confirmed that system providers, not only municipal officials, require structured engagement to deliver on the capacity needs of their client municipalities.
• Effective steering committees at both administrative and political level resolve most accuracy and credibility challenges in real time. Where municipalities have functioning steer coms, mSCOA problems are identified and addressed before they reach the reporting system.
• Political oversight in Limpopo operates through the MunMEC, a premier forum and quarterly legislature reports - a formal structure of political accountability for municipal financial performance at provincial level. The MEC for Treasury and MEC for COGTA co-chair a forum at which all mayors in the province account for the state of their finances.
• Compliance does not equal performance. Annual performance results from daily actions - and the impact is always felt by communities. Oversight structures that treat compliance as the end point are not performing their function.

"Annual performance results directly from daily actions, and the impact is always felt by the communities."

Key takeaways for practitioners

1. Transaction capture is where transparency begins - or fails. Every line item must be classified correctly against the right mSCOA segment at the point of capture, not corrected at year-end. When the budget, transactions and in-year reports are all on the same basis, the accountability thread from IDP to annual report is traceable, auditable and credible.
2. mSCOA minimum business process and system requirements will be gazetted between 2026 and 2027. This is not a new obligation - it is the enforcement of an existing compulsory framework. Accounting officers who have not aligned their processes to the minimum requirements will be directly accountable under the gazetted regulations.
3. Dashboards are enablers, not replacements. A summary without the ability to drill down to the underlying transaction is not useful for oversight. Dashboards should surface exceptions, assign ownership and require follow-up. The shift from reporting what happened to identifying what must happen next is the measure of a functioning oversight information environment.
4. Early warning requires early submission. Municipalities that submit Section 71 data to provincial treasury before the statutory deadline create the opportunity for error correction before the record is fixed. Limpopo's five-working-day pre-submission model demonstrates that the window for correction exists - but only if the discipline is institutionalised.
5. Councillors receive Section 71 data monthly through the Mayoral Committee and quarterly through the Section 52D report to full council. The accountability chain is in law. The question is not whether the mechanism exists - it is whether councillors are using Section 71 data to ask questions and take action between quarterly council meetings.
6. The costing segment must be activated. Most municipalities run the costing segment on default. Without it, the actual cost of service delivery cannot be determined - and without that, tariff-setting and cost of supply studies are built on incomplete data. This is a structural driver of financial unsustainability that mSCOA is already designed to address.
7. Accountability must include all senior managers, not only the MM and CFO. Section 78 of the MFMA places financial management responsibility on all managers. Directors who are delegated accounting responsibilities for their departments are accountable for variance explanations, project progress alignment and procurement compliance - not the CFO on their behalf.

CPD points available - contact cpd@cigfaro.co.za