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With reports that only 16% of South Africa’s 257 municipalities got a clean audit for the 2020-21 financial year, accounting experts – Xero South Africa, has declared that the overall standard of financial management in the municipalities has regressed considerably over the past five years.
Country Manager, Colin Timmis, thinks that the government should use new technology to improve capacity and financial management in municipalities.
“With the advent of technology, there are tools that municipalities can use for consistent application of the municipal accountability cycle from planning, budgeting, implementation, monitoring and reporting,” Timmis said.
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He believes that by streamlining business processes, this could also result in improved governance, accountability, transparency and the management of public funds.
“Technology can help join the dots between the government, small businesses, accountants, banks, funders, technology companies – the key enablers of the small business community.
“At the moment there isn’t enough collaboration happening between all these stakeholders. Greater collaboration between key stakeholders will help to drive the economy forward. We need to see more openness, awareness and adoption of technology that enables collaboration from the government,” he said.
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Timmis reckons that compliance is one key area where processes could be improved through using technology.
“If you think about compliance for businesses, they are required to comply with legislation like tax and demonstrate how they manage their books. They have regular audit reviews and are required to submit their financials to SARS and from there, any irregularities are reported.
“This is where integration like e-filing of VAT makes a real difference, automating manual data entry and reducing the risk of error to ensure SARS is getting high quality data.
“The government could apply the same processes to ensure efficient financial management, removing any friction and gaps in information, and improving the quality of data,” he said.
Timmis said that there are processes and initiatives they could implement to more seamlessly connect to small businesses, and vice versa.
“Firstly, government needs to see technology adoption as a a key driver of economic recovery and growth. They could run a campaign to promote the benefits of technology and moving online. They also need to develop, promote and educate all small business stakeholders on the importance and opportunities created through existing API technology platforms and tools.
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“We also need to break down the barriers that prevent SMEs from investing in tech by introducing incentives and providing further education around the direct benefits for SMEs.
“And lastly, government can also reduce the red tape caused by outdated and time-consuming communication and data processing methods, by moving the SME community to an environment driven by data, insights and use these to identify opportunities,” he explained.
Timmis concluded by saying that making it easier for small businesses to file taxes should be a priority for the government in order to expand the taxpayer base.
“SARS has made good progress by introducing eFiling options and integrations with tech companies to reduce the time burden on small businesses and their advisors when it comes to filing taxes. But, there is still a big gap between the number of SMEs and those paying taxes. This is where the use of technology can foster a more connected environment, benefiting both small businesses and the government,” he said.
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