An investigation into the effectiveness of financial management systems in the public service: a case study of the department of health, Eastern Cape Province

The aim of this study is to investigate the effective and efficient of the financial management systems and its translation into good governance in the Department of Health in order to meet all the compliance requirements as contained in legislations. Financial management is a critical element for good governance. It requires a great deal of attention with parallel internal systems and control that support it for optimal performance. To that, the Public Finance Management Act, 1999 (Act 1 of 1999) and National Treasury Regulations require all government departments to ensure accountability on resource allocated yet able to measure value for money in relation to the delivery of goods and services. The Eastern Cape is one of five provinces with at least 60% of its population living in rural parts serviced by small towns. There is a total of 72 small towns in the province. The province has a legacy of endemic rural poverty and is characterized by the historical neglect of rural areas. The Eastern Cape still has many people moving to other provinces and to the two main cities of East London and Port Elizabeth, in search of employment. (ECSECC, 2006). The compliance to all key financial management legislation and policies has been a constant challenge faced by the Department of Health and the province, which has been largely caused by high levels of corruption, poor financial management systems, poor management tools, poor internal resource controls and maladministration practices (Auditor General Report, 2013/14). As a result, several incidents of dissatisfaction by members of the communities has been on the public domain, calling for government to deliver on quality health services throughout the province. The Public Finance Management Act, Act No. 1 of 1999, with regards to government’s utilisation of financial resources outlines the following objectives: Modernise the system of financial management in the public sector; Enable public sector managers to manage, but at the same time be held more accountable; Ensure the timely provision of quality information; and Eliminate the waste and corruption in the use of public assets. The Auditor General, as the supreme audit institution of the Republic, must, in terms of section 4(1) of the Public Audit Act (Act No. 25 of 2004), audit and report on the accounts, financial statements and financial statement of all government entities. Based on the 2014/15 Consolidated General Report issued by the Auditor General, various government entities were found not to have complied with the legislation relating to the payment of suppliers. The Constitution Republic of South Africa (Act 108 of 1996) makes a provision that all the three government spheres to be developmental-oriented in nature with clear accountability and transparency lines towards service delivery. On the same note , The Public Finance Management Act of 1999 (PFMA) is meant “To regulate financial management in the national government and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in those governments; and to provide for matters connected therewith”. Based on these legislations, the department of health is not isolated from the responsibility as it forms part of the provincial government, which is the provincial sphere. With the above introductory contentions from different authors and researchers, this study will provide more detail on the policy documents namely; PFMA so to establish the nature and extent to which effective and efficient Financial Management System has improved good governance in the Department of Health, Eastern Cape Province