An assessment of financial planning and financial performance in municipalities: The case of the City of Tshwane Metropolitan Municipality (CoT).
Mayo, Solomon Kungaera
Mayo, Solomon Kungaera
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Abstract
Long-term financial planning in South Africa was at the time of the study not regulated by legislation. In addition, municipalities were accused of failing to plan their finances, which included failure of adherence to the long-term commitments of long-term contracts, neglecting revenue collection, and consequent over-reliance on government grants and borrowing. The aim of this study was to assess whether the adoption of the Long-term Financial Strategy (LTFS) by the City of Tshwane (CoT), improved the municipality’s financial performance, in order to determine whether a longer term financial strategy should become a legal requirement for all municipalities in South Africa. This study applied content analysis to compare the South African legislative frameworks regulating financial planning with that of Australia and New Zealand to derive possible areas of learning for South Africa. In addition, financial management analysis was performed using financial ratios whose findings were quantified using Mann-Kendall Statistic and Pearson Correlation. The findings of this study indicated that South Africa lagged in the long-term financial planning requirements and the financial plans lacked commitment to financing the operational needs of municipalities, in the long-term. CoT indicated improved financial management in certain areas compared to other municipalities in the sample that did not adopt an LTFS. Based on these findings recommendations were drawn to enable South Africa to develop legislation that would support both the short, medium and long-term commitments of financial planning in South African municipalities.
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Submitted in partial fulfilment of the requirements of the degree Magister Technologiae: Cost and Management Accounting in the Department of Managerial Accounting and Finance, Faculty of Economic Science Tshwane University of Technology.
Date
2015-06-01
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Tshwane University of Technology
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Keywords
Financial planning, Financial performance in municipalities, City of Tshwane Metropolitan Municipality, Long-term contracts