Professional Documents
Culture Documents
Accountability:
To ensure public sector entities and individuals within them are responsible for their
decisions and actions, including the stewardship of public funds and all aspects of
performance, and submit themselves to appropriate external scrutiny.
Complexity of the public sector
Public sector entities do not operate within a common legislative framework and their
sizes and shapes differ. It is therefore not possible to develop one set of
recommendations for corporate governance that would be applicable to all public sector
entities.
Corporate governance in public entities
Public entities, as described in the Public Finance Management Act, No 1 of 1999,
have accounting authorities which are responsible for leadership and strategic
direction, defining control mechanisms, monitoring the overall management of the
entitys activities and reporting on stewardship and performance. This accounting
authority resembles a board of directors in the private sector. The methods of corporate
governance by which companies in the private sector are directed and controlled are
therefore also applicable to public entities.
Corporate governance in public entities requires that effective and appropriate
measures are established to ensure statutory accountability and accountability for
public money. Communication with stakeholders should be open and transparent and
the roles and responsibilities of the accounting authority, the chief financial officer and
non-executives should be clearly defined. Appointments to the accounting authority
should be made according to specified criteria, adequate and sufficient training
programmes should be accessible and a policy for executive remuneration should be
followed. Objective, balanced, understandable and timeous reporting, (including a
shareholders compact), is required, and appropriate accounting standards should be
applied. The accounting authority should also ensure that a framework of internal
control is established which actually operates in practice, contains effective systems of
risk management and carries out an effective internal audit function. Audit committees
should be established, comprised of non-executive members with the responsibility for
an independent review of the framework of internal control and the external audit
process. Measures should be in place to ensure that the accounting authority complies
with annual budget circulars and that prescribed requirements are met when loans or
guarantees are incurred. Standards of behaviour are to be accepted by all employees
to ensure the openness, integrity and accountability of everyone within the public entity.
Corporate governance in departments, trading entities
In departments, trading entities and constitutional institutions power is exercised in a
more hierarchical and less collegial manner. Nearly all of the aspects relating to
corporate governance in the private sector and for public entities, as discussed above,
are included in the Public Finance Management Act, 1999 and treasury regulations for