PUBLIC FINANCE MANAGEMENT ACT

to provide for an institutional and regulatory framework for management of public funds; the strengthening of accountability, oversight, management and control of public funds in the public financial management framework; responsibilities and fiduciary duties of controlling officers and Controlling bodies; enhancement of cash management systems to ensure efficient and effective utilisation of cash for the Government; the processes for efficient production of the Financial Report for the Republic; the management and control of public assets and stores; the repeal of the Public Finance Act No. 15 of 2004; and matters connected with, or incidental, to, the foregoing.

[30th May, 2018]

Act 1 of 2018,

SI 42 of 2018.

PART I
PRELIMINARY PROVISIONS

1. Short title

This Act may be cited as the Public Finance Management Act.

2. Interpretation

In this Act, unless the context otherwise requires—

“accountable document” means a validated official document that has a monetary value and required to be accounted for by an accounting officer;

“Accountant-General” means a person appointed as Accountant-General to perform the function of head of Accounting services under section 8;

“accounting officer” means a person appointed as accounting officer under section 13;

“advance” means a recoverable sum of money issued pursuant to section 38;

“aided project” means any project which is partially financed through a loan, grant, donation or technical assistance and partially financed from public funds pursuant to section 40;

“applicable accounting reporting framework” means a common set of accounting principles, standards and procedures provided by the treasury for use in compiling financial statements involving public monies;

“appointed agent” means an institution engaged by Government to collect general revenues on its behalf and public funds;

“appropriation-in-aid” means revenue assigned to and collected by public bodies which they are permitted by the Treasury to appropriate against expenditure approved by Parliament;

“appropriate Minister” in relation to a public body means the Minister to whom responsibility for the ministry, Government institution, department, Government Agency, state owned enterprises or statutory corporation, as the case may be, is assigned;

“audit committee” means a committee established under section 19;

“Auditor-General” means the Auditor-General appointed in accordance with the Constitution;

“bank account” means an account at a bank into which moneys are deposited and drawn;

“cash resources” means cash in form of Bank notes or coins or cash equivalents that include stocks, bonds, etc.;

“Central Government” means the Legislature, Executive and Judiciary, and excludes local authorities and entities in the private sector;

“chief executive officer” means the chief executive officer of a parastatal, statutory body or a local authority;

“Commission” has the meaning assigned to the word in the Constitution;

“Consolidated Fund” means the consolidated fund established under the provisions of the Constitution;

“Constitutional payment” means a payment authorised by the Constitution as a charge on the Consolidated Fund;

“Controller of Internal Audit” means the officer appointed as the controller of internal audit under section 14;

“controlling body” means a board of directors or commissioners or group of persons or person appointed to oversee the management and control of a public body;

“controlling officer” means an officer designated as such pursuant to section 10;

“dormant account” means an account which has had no transactions or activities for a period of at least six months;

“executive authority” in relation to—

(a) the Treasury means the warrant signed by the President to a Minister;

(b) ministries, provinces and departments means the Secretary to the Treasury who is the chief controlling officer of Government;

(d) in relation to statutory corporations and state owned enterprises means appropriate Minister responsible for that statutory corporation and state owned enterprise;

(e) the Board for Government Agencies and Grant aided institutions means the Permanent Secretary for the line ministry;

(f) the National Assembly means the Clerk of the National Assembly; and

(g) the Judiciary means the Chief Administrator;

“financial institution” has the meaning assigned to the word in the Banking and Financial Services Act, 2017;

“financial misconduct” means wilful or negligent act or omission which permits an unauthorised, irregular or wasteful expenditure, theft, or misapplication of funds;

“financial statement” means a statement of the general financial affairs and any note to that statement that constitutes a financial report under section 71 of this Act;

“financial year” means the period of 12 months ending on 31st December in a year;

“general revenues” includes income accruing to the Republic through taxes, fees, fines, levies, charges, sale of Government property and shares, loans, donations and grants raised from within or outside Zambia due to the Republic;

“Government Agent” means an unincorporated person or body of persons to which functions exercisable on behalf of the Republic, involving the use or collection of public moneys or stores are delegated by or under any law and;

“Government Agency” shall be construed accordingly;

“Government building” means any building owned or occupied or under the control of the Republic and used for Government purposes;

“head of expenditure” means a head of expenditure shown in the estimates of revenue and expenditure in respect of a financial year approved by Parliament in accordance with the Constitution;

“idle funds” means funds which recurringly remain unutilised in a bank account for a period of six months or more;

“internal audit” means an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations and help an organisation to accomplish its objectives by bringing through a systematic, disciplined approach to evaluation and improvement of the effectiveness of risk management, control and governance processes;

“internal auditor” means an officer appointed as internal auditor under section 16;

“internal control” means a business practice, policy or procedure that is established within Government to create value or minimise risk;

“irregular expenditure” means expenditure, other than unauthorised expenditure, incurred in contravention of this Act or any other law including—

(a) the Public Procurement Act, 2008, or any regulations made in terms of that Act; or

(b) National Planning and Budgeting Act, 2018;

“local authority” has the meaning assigned to the words in the Constitution;

“misapplication” means unauthorised application of budget provisions to a use on a programme other than for an approved programme;

“office holder” means a public officer, State officer, councillor, Constitutional office holder, judge or judicial officer;

“official use” means the use by a person of public funds, public property or public stores in connection with that person by a public officer in connection with that person’s exercise of an official duty in a public body;

“Privatisation Revenue Account” has the meaning assigned to the words in the Zambia Development Agency Act, 2006;

“property” includes any real or personal property, money or chose in action or other intangible or incorporeal property whether located in Zambia or elsewhere and property of corresponding value;

“public accounts” means all accounts required under this Act to be kept by public bodies in respect of transactions involving assets or liabilities of the Republic;

“public asset” means a resource with economic value that the Republic owns or controls with the expectation that it will provide future benefit and includes public stores and major state assets;

“public body” means the Government, any Ministry or department of the Government, the National Assembly, the Judicature, a local authority, parastatal, Commission or other body appointed by the Government or established by or under, any law, except a professional association or body and “public bodies” shall be construed accordingly;

“public debt” means financial, material and other resources including guarantees acquired or borrowed by a public body in the interest of the Republic;

“public funds” means funds received electronically or in any other form in person, through the bank or any other financial institution on behalf of the Central or local Government by an office holder by virtue of the office holder’s employment, and includes public monies;

“public monies” means money received by an office holder electronically or in any other form in the course of the office holder’s employment or any other person directly or indirectly for the purpose of the Central or local Government, and includes all stores, stamps, negotiable instruments, bonds, debentures, investments, donations and other securities raised by or received by or on behalf of, or for the benefit of the Republic;

“public office” has the meaning assigned to the word in the Constitution;

“public officer” has the meaning assigned to the word in the Constitution;

“public property” has the meaning assigned to the words in the Anti-Corruption Act, 2012;

“public service” has the meaning assigned to the words in the Constitution ;

“public stores” means all chattels of whatever nature purchased, forfeited or donated belonging to or in possession of, or under the control of the Republic and includes plant, vehicles, machinery and equipment;

“relative” has the meaning assigned to the word in the Anti-Corruption Commission Act, 2012;

“Secretary to the Treasury” means the person appointed as Secretary to the Treasury in the Constitution;

“State owned enterprise” means an enterprise in which the Government has sole control or controlling interest;

“Sinking Fund” means a fund established under the Loans, Grants and Guarantee (Authorisation) Act, 2018;

“Special Deposit Account” means the account established under the Loans, Grants and Guarantee (Authorisation) Act, 2018;

“Sovereign Wealth Fund” means a strategic fund established by the Republic for investment purposes;

“stock verifier” means an officer appointed as such under section 18;

“supplementary provision” means an additional amount over and above the appropriated revenue or expenditure for each head in a financial year;

“theft” has the meaning assigned to the word in the Penal Code and “steal” and cognate expressions shall be construed accordingly;

“Treasury” means the Treasury established under section 4;

“Treasury Account” means a treasury account domiciled at the Bank of Zambia;

“Treasury Authority” means an assurance by the Treasury of the availability of financial resources in a financial year;

“treasury minute” means a report on an action-taken by the Treasury in response to the recommendations contained in the report of the Parliamentary Committee on Public Accounts;

“Treasury Single Account” means a System as established under section 25;

“variation” means movement of the budget provision from one vote to another within the Appropriation Act;

“vote” means one of the main segments into which an appropriation Act is divided and which specifies the total amount for individual items which is appropriated per department in an appropriation Act and is separately approved by Parliament;

“wasteful expenditure” means unnecessary expenditure incurred as a result of undue care and attention; and

“working account” means an account established for the purposes defined in section 37 of the Act.

3. Supremacy of Act

Subject to the Constitution, where there is any inconsistency between the provisions of this Act and the provisions of any other law relating to management of public funds, the provisions of this Act shall prevail to the extent of the inconsistency.

PART II
MANAGEMENT OF PUBLIC FINANCES

4. Establishment of Treasury

(1) There is established the Treasury which consists of—

(a) the Minister, who is the head of the Treasury; and

(b) the Office responsible for financial and fiscal matters.

(2) The Minister shall make policy and other decisions of the Treasury, except for those decisions taken under delegation or instruction under section 7.

(3) The powers of the Treasury shall be exercised by the Secretary to the Treasury or any other office holder that may be authorised by the Secretary to the Treasury in writing.

5. Functions and powers of Treasury

(1) The Treasury shall—

(a) promote and co-ordinate the Government’s national fiscal and macro-economic policy;

(b) receive, keep, receipt, manage and disburse public funds;

(d) recall funds from all public accounts to the Consolidated Fund;

(e) manage the national budget preparation process;

(f) promote and enforce transparency and effective management of revenue, expenditure, assets and liabilities of public body;

(g) manage the Consolidated Fund;

(h) manage public debt;

(i) manage risk, promote good governance and control in public bodies for the effective functioning of the Treasury;

(j) provide policy direction on the operation of state owned enterprises;

(k) formulate and co-ordinate public investment policy;

(l) oversee the design and implementation of financial management systems in all public bodies; and

(m) perform such other functions as may be assigned to the Treasury under this Act.

(2) The Treasury shall, for purposes of performing its functions under sub-section (1)—

(i) prescribe uniform treasury norms and standards;

(ii) enforce the provisions of this Act and any prescribed standards of budgeting, accounting and internal auditing practices and uniform classification systems in public body;

(iii) monitor and assess compliance with this Act and any prescribed norms and standards by public bodies;

(iv) develop the capacity of public bodies for efficient, effective and transparent financial management;

(v) review any system of financial management and internal control in any public body;

(vi) take administrative action against a person or public body that is in breach of this Act or refer that person or public body to a relevant institution to redress any serious or persistent breach of this Act by that public body;

(vii) prescribe financial management systems;

(viii) prescribe policies and procedures relating to the proper management of stores and assets of the Republic; and

(ix) do any other things that are necessary or conducive to the performance of its functions.

6. Secretary to Treasury

The Secretary to the Treasury appointed under the provisions of the Constitution shall be the chief controlling officer of the Government.

7. Functions of Secretary to Treasury

(1) The Secretary to the Treasury shall—

(a) Subject to the Constitution, designate a controlling officer in respect of each head of revenue and expenditure provided for in any financial year, as appropriated by Parliament;

(b) manage the Government payroll and Constitutional payments in accordance with the Constitution;

(c) prepare the annual consolidated statement of assets and liabilities including a statement of the public debt of the Republic as well as the consolidated revenue statement;

(d) submit the statements under paragraph (c) to the Auditor-General for examination and certification;

(e) consolidate audited annual revenue statements, appropriation accounts and statements of financial position for incorporation in the financial report to be laid before the National Assembly;

(f) release funds from the Consolidated Fund for appropriation by controlling officers and Boards;

(g) issue treasury authority to expend Public Funds;

(h) implement the recommendations of the Parliamentary Committee on Public Accounts;

(i) prepare the treasury minute in respect of the implementation of the recommendations of the Public Accounts Committee for submission to the National Assembly;

(j) manage and administer the Consolidated Fund and other public funds established under this Act or any other law;

(k) be responsible for opening, maintaining and closing accounting units in ministries, departments, Government Agencies, local authorities, provinces, districts, and projects;

(l) subject to the approval of the Civil Service Commission, be responsible for seconding accounting and internal audit staff to the units referred to in paragraph (k) and ensure that they perform their duties in accordance with the provisions of this Act;

(m) ensure that the annual appropriation accounts and annual consolidated statement of financial position of assets and liabilities of the Republic and consolidated revenue statements are promptly prepared by controlling officers or controlling body for certification by the Auditor-General in accordance with section 73 and included in the financial report as applicable;

(n) ensure that consolidated financial statements for statutory corporations and state owned enterprises are prepared in accordance with applicable accounting reporting framework and Government guidelines for each financial year;

(o) compile financial statistics and aggregation concerning spheres of Government operations in accordance with international standards and publish them in the Gazette;

(p) ensure maintenance of a compatible, effective, efficient and transparent, financial management information systems in ministries, departments and Government agencies, local authorities and projects;

(q) provide advice and guidance on matters relating to budgeting, accounting and internal auditing policy and general financial management;

(r) monitor and inspect the operations of the decentralised accounting and internal audit units in public bodies to ensure value for money;

(s) provide a regulatory framework for sound financial management and accounting in public bodies;

(t) approve accountable documents to be utilised by public bodies;

(u) appoint Audit Committee members and oversee their operations;

(v) submit on a quarterly basis to the Minister, internal audit reports on the performance of public bodies with regard to internal controls, risk management and governance matters;

(w) institute disciplinary action against controlling officers in breach of this Act;

(x) design and implement effective controls, risk management and governance systems in public bodies;

(y) ensure that risk management, internal control and governance systems are regularly reviewed in public bodies so as to enhance transparency and accountability; and

(z) carry out any other functions that may be prescribed by the Minister or that may be considered reasonably necessary for proper financial management of the Republic.

(2) The Secretary to the Treasury or any other office holder authorised by the Secretary to the Treasury may inspect and have access to accounts, documents, books and records in electronic or any form, of any public body as is necessary for the exercise of the functions of the Treasury under this Act and shall be given available information required with regard to the monies and property specified in section 5.

8. Accountant-General

(1) There is an Accountant-General who is a public officer at the level of Permanent Secretary and the head of accounting services in Government.

(2) The Accountant-General shall be a person with qualifications and 10 years’ experience in accountancy and public financial management, and shall be a member of the Zambia Institute of Chartered Accountants.

(3) The Accountant-General may give general or specific directions to accounting officers in relation to the performance of the functions of accounting officers, in accordance with the provisions of this Act or any regulations that may be made under the Act.

(4) The office of the Accountant-General shall be deconcentrated to the ministries, provinces, departments and Government Agencies.

9. Functions of Accountant-General

(1) The Accountant-General is responsible for—

(a) the design, implementation and monitoring and evaluation of financial management systems, policies and guidelines in accordance with this Act or any other law for the proper management of public resources;

(b) policy guidance on financial management matters in local authorities;

(c) research on financial management systems and review performance standards to improve service delivery in the public service;

(d) compilation, management of accounts, custody, safety and integrity of public monies and stores of the Republic;

(e) placement, rotation and seconding of accounting staff to ministries, departments and Government agencies subject to the approval of the Civil Service Commission;

(f) bringing to account tax and non-tax revenues of the Government;

(g) cash management and accounting for stores, assets and liabilities of the Government;

(h) bringing to account revenues raised from the disposal of excess or obsolete public stores and assets;

(i) consolidation of the financial report;

(j) preparation of a memorandum in form of treasury minutes specifying the measures taken by Government to implement, in the ensuing financial year, the recommendations of Parliament in respect of the report of the Auditor-General with respect to this Act, the Public Audit Act or any other law;

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