Implications of noncompliance with Public Finance Management Act on the maintenance of Fiscal Policy in the North West Province

Abstract

The public sector in South Africa is currently experiencing high levels of exploitation. The public sector is governed by the Public Finance Management Act (PFMA). In the 2019/2020 fiscal year, the Auditor General South Africa (AGSA) reported that only a third of National Departments received clean audits. The aim of the PFMA is to guide public officials' responsibilities and duties relevant to compliance with financial management. Prior research has focussed on a number of topics related to public finance in government departments. Limited research is available on implications of noncompliance with PFMA in South Africa. The purpose of this study was to explore the implications of noncompliance with public Finance Management Act on the maintenance of fiscal policy in the North West Province. The study was underpinned by an interpretivist paradigm. A qualitative research approach and an exploratory research design were adopted in this study. Qualitative data was the target populace for the study comprising of all the employees working in the sustainable resource management and financial governance unit in the North West Provincial Treasury. Participants were selected using a convenience sampling technique. Qualitative data was collected from ten participants using semi-structured face-to-face interviews. All COVID-19 pandemic restrictions were followed. Data was analysed using thematic content analysis. The results of the analysis revealed that noncompliance with the PFMA on the maintenance of fiscal policy poses a challenge to the dividend of governance. The effects of noncompliance with PFMA stretches across the breadth of the department and the society. Non-compliance with PFMA on the maintenance of fiscal policy in North West Province results in poor budgeting. Poor budgeting potentially amounts to poor service delivery within the province. Due to noncompliance with the PFMA requirements by the North West Provincial departments and public entities, billions of Rands are not distributed to the intended incumbents. Such noncompliance with the PFMA requirements is affecting South Africa's development potential negatively. The results

further revealed that the North West Province maintains fiscal policy through regular checking of the department records which helps in providing decision makers with the information on the progress on objectives of the department. The study recommended adequate monitoring of funds allocated and utilised in communities in order to propel grassroots governance. This will also eliminate paper projects whereby the leaders do more on papers rather than in the communities where dividends of governance is experienced. The practical implications for this study is that it could direct research performed by public finance scholars to explore public sector financial management. Suggestions for future research on the impact of noncompliance to financial management requirements in the public sector were also provided.