Table of Contents
3. OBJECTIVES OF THE POLICY.3
4. SCOPE OF THE POLICY.3
5. LEGISLATIVE FRAMEWORK.3
6. POLICY PRINCIPLES.4
7. USE OF CONSULTANTS.4
8. VEHICLES USED FOR POLITICAL OFFICE-BEARERS.5
9. TRAVEL & SUBSISTENCE.5
10. DOMESTIC ACCOMMODATION.6
11. CREDIT CARDS.6
12. SPONSORSHIPS, EVENTS & CATERING.6
14. CONFERENCES, MEETINGS & STUDY TOURS.8
15. OTHER RELATED EXPENDITURE ITEMS.8
16. ENFORCEMENT PROCEDURES.9
17. DISCLOSURES OF COST CONTAINMENT MEASURES.9
18. IMPLEMENTATION & REVIEW PROCES S.9
19. CONSEQUENCES FOR NON-ADHERENCE TO THE COST CONTAINMENT
20. SHORT TITLE.10
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CFO - Chief Financial Officer
CONSULTANT - means a professional person, individual partnership, corporation, or a
company appointed to provide technical and specialist advice or to assist with a design and
implementation of projects or to assist the municipality to achieve its objectives of local
government in terms of section 152 of the Constitution.
COST CONTAINMENT - the measures implemented to curtail spending in terms of this
COUNCIL - Municipal Council of Mogale City Local Municipality
MM - Municipal Manager/Accounting Officer
MSCOA - Municipal Standard Chart of Accounts
MUNICIPALITY - Mogale City Local Municipality
The purpose of the policy is to regulate spending and to implement cost containment measures
at Mogale City Local Municipality.
3. OBJECTIVES OF THE POLICY
The objectives of this policy are to:
3.1 To ensure that the resources of the municipality are used effectively, efficiently and
3.2 To implement cost containment measures.
4. SCOPE OF THE POLICY
This policy will apply to all:
4.1. Councillors; and
4.2. Municipal employees.
5. LEGISLATIVE FRAMEWORK
5.1 The Municipal Finance Management Act, Circular 82, published on 7 December 2016;
5.2 Municipal Cost Containment Regulations, 7 June 2019; and
5.3 Travelling and subsistence policy.
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6. POLICY PRINCIPLES
This policy will apply to the procurement of the following goods and/or services:
i. Use of consultants
ii. Vehicles used for political office-bearers
iii. Travel and subsistence
iv. Domestic accommodation
v. Credit cards
vi. Sponsorships, events and catering
viii. Conferences, meetings and study tours
ix. Any other related expenditure items
7. USE OF CONSULTANTS
7.1 Consultants may only be appointed after an assessment of the needs and requirements has
been conducted to support the requirement of the use of consultants.
7.2 The assessment referred to in 7.1 must confirm that the municipality does not have requisite
skills or resources in its full time employ to perform the function that the consultant will
7.3 When consultants are appointed the following should be included in the Service Level
i. Consultants should be appointed on a time and cost basis that has specific start and
ii. Consultants should be appointed on an output-specific, specifying deliverables and
the associated remuneration;
iii. Ensure that cost ceilings are included to specify the contract price as well travel
and subsistence disbursements and whether the contract price is inclusive or
exclusive of travel and subsistence; and
iv. All engagements with consultants should be undertaken in accordance with the
municipality’s supply chain management policy.
7.4 Consultancy reduction plans should be developed.
7.5 All contracts with consultants must include a retention fee or a penalty clause for poor
7.6 The specifications and performance of the service provider must be used as a monitoring
tool for the work that is to be undertaken and performance must be appropriately recorded
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8. VEHICLES USED FOR POLITICAL OFFICE-BEARERS
8.1 The threshold limit for vehicle purchases relating to official use by political office-bearers
may not exceed seven hundred thousand rand (R700 000) or 70% of the total annual
remuneration package for the different grades, whichever is greater.
8.2 The procurement of vehicles must be undertaken using the national government transversal
8.3 If any other procurement process is used, the cost may not exceed the threshold set out in
8 . 1 .
8.4 Before deciding on another procurement process as in 8.2, the chief financial officer must
provide the council with information relating to the following criteria that must be
i. Status of current vehicles
iii. Extent of service delivery
iv. Terrain for effective usage of vehicle
v. Any other policy of council
8.5 Regardless of their usage, vehicles for official use by public office bearers may only be
replaced after completion of 120 000 kilometers.
8.6 Notwithstanding 8.5, a municipality may replace vehicles for official use by public office
bearers before the completion of 120 000 kilometers only in instances where the vehicle
experiences serious mechanical problems and is in a poor condition, and subject to
obtaining a detailed mechanical report by the vehicle manufacturer or approved dealer.
9. TRAVEL & SUBSISTENCE
9.1 An accounting officer:
i. May only approve the purchase of economy class tickets for officials where the flying
time for a flight is five (5) hours or less; and
ii. For flights that exceed five (5) hours of flying time, may purchase business class
tickets only for accounting officers, and persons reporting directly to accounting
9.2 Notwithstanding 9.1, an accounting officer may approve the purchase business class tickets
for officials with disabilities.
9.3 International travel to meetings or events will only be approved if it is considered critical
to attend the meeting or event, and only the officials that are directly involved with the
subject matter will be allowed to attend the meeting or event.
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9.4 Officials of the municipality must:
i. Utilize the municipal fleet, where viable, before incurring costs to hire vehicles;
ii. Make use of a shuttle service if the cost of such a service provider is lower than:
a. the cost of hiring a vehicle;
b. the cost of kilometers claimable by the employee; and
c. the cost of parking.
iii. not hire vehicles from a category higher than Group B; and
iv. where a different class of vehicle is required for a particular terrain or to cater for
the special needs of an official, seek the written approval of the accounting officer
before hiring the vehicle.
9.5 The municipality must use the negotiated rates for flights and accommodation as
communicated by National Treasury, from time to time, or any other cheaper flight or
accommodation that is available.
10. DOMESTIC ACCOMMODATION
An accounting officer must ensure that costs incurred for domestic accommodation and
meals are in accordance with the maximum allowable rates for domestic
accommodation and meals, as communicated by National Treasury, from time to time,
and the travel and subsistence policy of the municipality.
11. CREDIT CARDS
11.1 An accounting officer must ensure that no credit card or debit card linked to a bank
account of the municipality is issued to any official or public office-bearer.
11.2 Where officials or public office bearers incur expenditure in relation to official
municipal activities, such officials and public office bearers must use their personal
credit cards or cash, and will request reimbursement from the municipality in terms of
the travel and subsistence policy and petty cash policy.
12. SPONSORSHIPS, EVENTS & CATERING
12.1 The municipality may not incur catering expenses for meetings that are only
attended by persons in the employ of the municipality, unless prior written
approval is obtained from the accounting officer.
12.2Catering expenses may be incurred by the accounting officer for the following, if
they exceed five (5) hours:
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i. Hosting of meetings;
vi. Recruitment interviews; and
vii. Council proceedings
12.3Entertainment allowances of officials may not exceed two thousand rand
(R2 000,00) per person per financial year, unless otherwise approved by the
12.4Expenses may not be incurred on alcoholic beverages.
12.5Social functions, team building exercises, year-end functions, sporting events,
budget speech dinners and other functions that have a social element must not be
financed from the municipal budget or by any supplier or sponsor such as but not
■ staff year-end functions
■ staff wellness functions
■ attendance of sporting events by municipal officials
12.6Expenditure may not be incurred on corporate branded items like clothing or
goods for personal use of officials, other than uniforms, office supplies and tools
of trade, unless the costs thereto are recovered from the affected officials.
12.7Expenditure may be incurred to host farewell functions in recognition of officials
who retire after serving the municipality for ten (10) or more years, or retire on
grounds of ill health, the expenditure should not exceed the limits of the petty
cash usage as per the petty cash policy of the municipality.
13.1 All municipal related events must, as far as possible, be advertised on the
municipal website, instead of advertising in magazines or newspapers.
13.2Publications such as internal newsletters must be designed internally and be
published quarterly in an electronic media format and on the municipal
13.3Newspapers and other related publications for the use of officials must be
discontinued on the expiry of existing contracts or supply orders.
13.4The acquisition of mobile communication services must be done by using the
transversal term contracts that have been arranged by the National Treasury.
13.5Allowances for officials for private calls is limited to R50,00 per official.
13.6Provision of diaries be limited to secretaries and electronic diaries be kept by
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CONFERENCES, MEETINGS & STUDY TOURS
14.1 Appropriate benchmark costs must be considered prior to granting approval for
an official to attend a conference or event within and outside the borders of South
14.2The benchmark costs may not exceed an amount determined by National
14.3When considering applications from officials to conferences or events within and
outside the borders of South Africa, the accounting officer must take the
following into account:
i. The officials’ role and responsibilities and the anticipated benefits of the
conference or event;
ii. Whether the conference or event will address the relevant concerns of the
iii. The appropriate number of officials to attend the conference or event,
not exceeding three officials; and
iv. Availability of funds to meet expenses related to the conference or event.
14.4The amount referred to in 14.2 above excludes costs related to travel,
accommodation and related expenses, but includes:
i. Conference or event registration expenses; and
ii. Any other expense incurred in relation to the conference or event.
14.5When considering the cost for conferences or events the following items must be
excluded, laptops, tablets and other similar tokens that are built into the price of
such conferences or events.
14.6Attendance of conferences will be limited to one (1) per annum with a maximum
of two (2) delegates.
14.7Meetings and planning sessions that entail the use of municipal funds must, as far
as practically possible, be held in-house.
14.8Municipal offices and facilities must be utilized for conferences, meetings and
strategic planning sessions where an appropriate venue exists within the
14.9The municipality must take advantage of early registration discounts by granting
the required approvals to attend the conference, event or study tour, in advance.
15. OTHER RELATED EXPENDITURE ITEMS
15.1 All commodities, services and products covered by a transversal contract by the
National Treasury must be procured through that transversal contract before
approaching the market, in order to benefit from savings and lower prices or rates
that have already been negotiated.
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15.2Municipal resources may not be used to fund elections, campaign activities,
including the provision of food, clothing and other inducements as part of, or
during the election periods.
16. ENFORCEMENT PROCEDURES
16.1 Failure to implement or comply with this policy may result in any official of
the municipality or political office bearer that has authorized or incurred any
expenditure contrary to those stipulated herein being held liable for financial
misconduct as set out in Chapter 15 of the MFMA.
17. DISCLOSURES OF COST CONTAINMENT MEASURES
17.1Cost containment measures applied by the municipality must be included in the
municipal in-year budget report and annual cost savings must be disclosed in the
17.2The measures implemented and aggregate amounts saved per quarter, together
with the regular reports on reprioritization of cost savings, on the implementation
of the cost containment measures must be submitted to the municipal council for
review and resolution. The municipal council can refer such reports to an
appropriate council committee for further recommendations and actions.
17.3Such reports must be copied to the National Treasury and relevant provincial
treasuries within seven calendar days after the report is submitted to municipal
18. IMPLEMENTATION & REVIEW PROCESS
18.1 This policy will be reviewed at least annually or when required by way of a council
resolution, or when an update is issued by National Treasury.
19. CONSEQUENCES FOR NON-ADHERENCE TO THE
COST CONTAINMENT MEASURES
19.1 Any person must report an allegation of non-compliance to the cost containment policy to
the accounting officer of the municipality.
19.2The accounting officer must investigate the allegations and if frivolous, speculative or
unfounded, terminate the investigations.
19.3 If the accounting officer determines the allegations are founded, a full investigation must
be conducted by the disciplinary board.
19.4After completion of a full investigation, the disciplinary board must compile a report on
the investigations and submit a report to the accounting officer on:
i. Findings and recommendations; and/or
ii. Whether disciplinary steps should be taken against the alleged transgressor.
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19.5The accounting officer must table the report with recommendations to the municipal
19.6Subject to the outcome of the council decision the accounting officer must
implement the recommendations.
20. SHORT TITLE
20. IThis policy shall be called the Cost Containment Policy of Mogale City Local
Municipality and has taken effect as from 31 August 2019 when the Municipal Council
resolved to adopt the Cost Containment Regulation for implementation.
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