The Public Finance Management Act (PFMA) is a key piece of legislation that governs how public funds are managed in South Africa. It applies to national and provincial governments, public entities, and constitutional institutions. Its main purpose is to ensure that all public resources are handled transparently, efficiently, and in a way that promotes accountability.
This explainer breaks down who the PFMA applies to, its key requirements, and why it matters for governance.
Who Does the PFMA Apply To?
The PFMA applies to the following institutions:
- National and provincial departments
- Public entities listed in Schedule 2 and 3 of the Act
- Constitutional institutions (e.g., Public Protector, Auditor-General)
- Provincial legislatures (with specific conditions)
This includes both government departments and entities that are funded by or accountable to government, such as SOEs (State-Owned Enterprises).
What Are the Core Functions of the PFMA?
The PFMA regulates:
- Revenue and expenditure management
- Asset and liability control
- Budgeting and financial planning
- Internal controls and risk management
- Accountability of officials in charge of public funds
It requires departments and entities to operate within approved budgets and to follow standard financial practices.
Key Responsibilities Under the PFMA
Accounting Officers (e.g., heads of departments) and Accounting Authorities (e.g., boards of public entities) are required to:
- Maintain transparent, cost-effective systems
- Prevent unauthorised, irregular, or wasteful spending
- Report financial misconduct immediately
- Submit accurate financial statements annually
- Implement fair procurement processes
How Does the PFMA Protect Public Funds?
The PFMA provides strong tools to enforce discipline in public finance:
- Unauthorised expenditure must be approved by Parliament or deducted from future budgets
- Financial misconduct can lead to disciplinary or criminal charges
- The National Treasury and Provincial Treasuries can intervene where there is non-compliance
- All funds must be deposited into revenue funds unless excluded by law
Summary: Why the PFMA Matters
The PFMA creates a legal framework that:
- Improves service delivery through better budget use
- Reduces corruption and mismanagement
- Enhances public confidence in government
- Aligns South Africa’s financial practices with international standards
It ensures that public money is spent responsibly, especially in service of community development.
PFMA At-a-Glance
| Area | What the PFMA Requires |
|---|---|
| Budgeting | Clear plans before spending |
| Spending | No overspending or misuse allowed |
| Reporting | Annual financial reports required |
| Oversight | Treasury can intervene if needed |
| Accountability | Officials held responsible for mismanagement |
| Procurement | Must be fair, transparent, and cost-effective |
| Emergency Funds | Strict conditions for urgent, unplanned spending |
