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Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

Chapter 8 : Responsibilities of Municipal Officials

Part 1 : Accounting officers

67. Funds transferred to organisations and bodies outside government


(1) Before transferring funds of the municipality to an organisation or body outside any sphere of government otherwise than in compliance with a commercial or other business transaction, the accounting officer must be satisfied that the organization or body—
(a) has the capacity and has agreed—
(i) to comply with any agreement with the municipality;
(ii) for the period of the agreement to comply with all reporting, financial management and auditing requirements as may be stipulated in the agreement;
(iii) to report at least monthly to the accounting officer on actual expenditure against such transfer; and
(iv) to submit its audited financial statements for its financial year to the accounting officer promptly;
(b) implements effective, efficient and transparent financial management and internal control systems to guard against fraud, theft and financial mismanagement; and
(c) has in respect of previous similar transfers complied with all the requirements of this section.


(2) If there has been a failure by an organisation or body to comply with the requirements of subsection (1) in respect of a previous transfer, the municipality may despite subsection (1)(c) make a further transfer to that organisation or body provided that—
(a) subsection (1)(a) and (b) is complied with; and
(b) the relevant provincial treasury has approved the transfer.


(3) The accounting officer must through contractual and other appropriate mechanisms enforce compliance with subsection (1).


(4) Subsection (1)(a) does not apply to an organisation or body serving the poor or used by government as an agency to serve the poor, provided—
(a) that the transfer does not exceed a prescribed limit; and
(b) that the accounting officer—
(i) takes all reasonable steps to ensure that the targeted beneficiaries receive the benefit of the transferred funds; and
(ii) certifies to the Auditor-General that compliance by that organisation or body with subsection (1)(a) is uneconomical or unreasonable.