Scribd
Upload
372 views

Model Answers - 116342

This document provides guidance and questions for learners to assess their understanding of managing municipal income and expenditure within a multi-year framework. It addresses [1] criteria for assessing tax instruments and user charges, [2] recommendations for achieving sustainability, and [3] the importance of sustainable revenue management. Key terms are defined, such as tariffs, rates, and policies. The roles and responsibilities of key players in the revenue management process are outlined. Approaches to managing debtors and identifying subsidy leakages are also discussed.

Uploaded by

Marius Buys
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
372 views

Model Answers - 116342

This document provides guidance and questions for learners to assess their understanding of managing municipal income and expenditure within a multi-year framework. It addresses [1] criteria for assessing tax instruments and user charges, [2] recommendations for achieving sustainability, and [3] the importance of sustainable revenue management. Key terms are defined, such as tariffs, rates, and policies. The roles and responsibilities of key players in the revenue management process are outlined. Approaches to managing debtors and identifying subsidy leakages are also discussed.

Uploaded by

Marius Buys
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

Model answers 116342

UNIT STANDARDS: (116342). Apply approaches to managing municipal income and expenditure within
a multi-year framework

date________________ time____________

Learners Names and Surname: _______________________________________________

Training Provider: _______________________________________________

Learners Instructions:

1. Attempt all questions from this section.

2. Answers must be written on a separate page where necessary.

3. Write neatly to loss of marks.

4. All questions must be clearly marked as indicated in the questionnaire.

Section A

1. Describe the criteria for assessing tax instruments and user charges (5)

NB *-Student is expected to demonstrate knowledge of tax instruments and user charges as well as the
criteria for assessing these instruments

2. Identify and explain the recommendations for achieving sustainability. (15)

Recommendations include but are not limited to:

 Cost recovery
 Tariffs,
 User charges,
 Rates,
 Subsidies, affordability, local economic development

3. Explain the importance of managing a municipality’s revenue in a sustainable manner. (4)

 Good financial management is the key to local delivery – local activists and ward committee
members should understand municipal finance and budgets so that they can engage councilors
on the bigger debates about spending and development priorities.
 Effective financial management can help municipalities to transform their local areas into a better
place to live and work. Most councilors and members of the community know what municipal
services they would like to have in their area.

4. Explain the term tax incidence (5)


 Tax incidence is the analysis of the effect of a particular tax on the distribution of economic
welfare. Tax incidence is said to "fall" upon the group that, at the end of the day, bears the
burden of the tax. The key concept is that the tax incidence or tax burden does not depend on
where the revenue is collected, but on the price elasticity of demand and price elasticity of
supply.

5. Who are the key role players in the revenue management process? (8)

 The Accounting Officer


 The Top Management
 Accountant
 Finance manager
 The Chief Financial Officer
 Any Official & External Consultant duly appointed

6. What are the responsibilities of the key role players in relation to revenue and expenditure
management over the medium term? (10)

Roles and Responsibilities of the Accounting Officer

 exercise the functions and powers assigned to an accounting officer in terms of MFMA;
and
 provide guidance and advice to:
-The political structures, political office-bearers and officials of the municipality; and
-Any municipal entity under the sole or shared control of the municipality

Role and Responsibilities of Chief Financial Officer

 is administratively in charge of the budget and treasury office;


 must advise the accounting officer on the exercise of powers and duties assigned to the
accounting officer
 must assist the accounting officer in the administration of the municipality's bank accounts and
in the preparation and implementation of the municipality's budget;

7. Define the following terms: (6)

 Tariffs

A "tariff" means a service charge that the municipality charges for the use of services. The prices
of these services should be affordable, to the people who use the services, and to the
municipality itself. Ward committees should advise councillors on the services needed in the area,
what is an affordable price (or "tariff") for the services, and how to ensure that people pay for their
services. Community organizations should get involved in consultation meetings to discuss
efficient and cost-effective service delivery.

 Rates

Rates" are the property taxes that the municipality can raise from all people and businesses that
own fixed property (land and buildings) in the municipal area, based on the estimated value of
that property.
 Policy
A municipal policy is defined as “a statement, ordinance, regulation, or decision officially
adopted and promulgated by a local governing body's officers

8. Identify and explain the need for subsidies in a municipality (8)

 To retain local jobs and/or increase the number and diversity of jobs that offer stable
employment and/or attractive wages and benefits.
 To encourage additional unsubsidized private development in the area, either directly or
indirectly through “spin off” development.
 To achieve development on sites that would not be developed without municipal subsidies
assistance.
 To remove blight and/or encourage development of commercial and industrial areas in the city
that result in higher quality development or redevelopment and private investment.

9. Explain sound principles of debtor management in a municipality (10)

 Effective debt management can minimize interest costs and even stabilize local government
financial positions

 Periodic review of debt and re-financing when conditions are favorable are essential to e
Manage debt to borrow for the right projects at pre-determined borrowing points that
maximize the government’s borrowing efficiency

 Manage debt to borrow for the right projects at pre-determined borrowing points that
maximize the government’s borrowing efficiency

10. Describe “subsidy leakages" in a municipal context (10)

NB*Student to describe subsidy leakages

Section B:

1. Identify and explain Legislation affecting municipal income (15)


KEY POINTS:
 Political and managerial accountability.
 Separation of responsibilities within a municipal environment.
 Notion of accountability, transparency and integrity within a municipal context.
 Participatory governance within a municipal context.
2. Outline the principles of sustainable revenue management (20)
 Supportive policies, laws, and institutions are in place at all levels of governance and there are
effective linkages between these levels.
 Recognizing the need for a governing framework consistent with international/national laws,
local users of biodiversity components should be sufficiently empowered and supported by
rights to be responsible and accountable for use of the resources concerned.
 There should be arrangements for international cooperation where multinational decision-
making and coordination are needed.

3. Identify and explain the legislatively required components of a credit control policy. (15)

NB*Student to demonstrate knowledge of credit control policy

4. Develop approaches to managing a municipality’s revenue in a sustainable manner. (15)

 Stabilize Cash Flow


 Increase Collection Rate
 Reduce Debtor Days
 Rates and Subsidies
 Rates and Subsidies
 Collections driven by size of Local Economy
 Converting Credit Policies into Credit Solutions

5. Identify and explain programme cycles in the municipal context (10)

NB*Student to demonstrate knowledge of programme cycles. Illustrated below is a diagram to show


programme cycle.
6. Discuss the different approaches to forecasting income and expenditure over the medium term.
(15)

There are different forecasting approaches you can forecast

 Based upon experience,


 Probability, and
 Correlation

It is important that a company forecasts because financial decisions are made dependent upon those
forecasts.

SECTION C :( practical questions)

1. In a written report, explain the legislative framework affecting the structure and types of
tariffs permitted by municipalities and the various tariff-types. (30)

NB*Student to demonstrate knowledge of legislative framework affecting the structure and


types of tariffs.

Key points

 Domestic Tariffs
 Commercial Tariffs
 Lighting Tariffs
 Other Tariffs

2. Develop a credit control and debt collection policy. (20)

2. Identify and explain the effects of subsidy frameworks in a municipal context. (20)
3. Explain the social, institutional, economic, environmental and technical influences forecast on
municipal revenue over the medium term.(20)

You might also like