ASSIGNMENT – PUBLIC SECTOR FINANCE
PUBLIC SECTOR FINANCE
MASTERS IN DEVELOPMENT FINANCE
UNIVERSITY OF STELLENBOSCH: GRADUATE SCHOOL OF BUSINESS
Prof Gavin Woods
7 MAY 2009
I herewith declare this work to be my own, that I have acknowledged all sources I have consulted in this assignment itself and not only in the bibliography, that all wording unaccompanied by a reference is my own, and that no part of this assignment can be found on the internet, any published source, or in any other document that has been submitted to any university in partial of full satisfaction of the requirements for a subject or course degree.
I acknowledge that if any part of this declaration is found to be false, I shall receive no marks for this assignment, and I shall not be allowed to complete this module, and that all charges can be laid against me for plagiarism before the Central Disciplinary Committee of the University.
Table of Contents
ASSIGNMENT – PUBLIC SECTOR FINANCE
(i) STRATEGIC PLANNING AND RISK MANAGEMENT PLANNING.
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people.
Most organizations use techniques such as The Strength, Weaknesses, Opportunities and Threats (SWOT) and the Political, Economic, Social and Technological (PEST) analysis to determine where the organization is, where it wants to go and how it can get there. This requires an analysis of the situation using environmental scanning, establishing priorities, resource assessment and allocation and risk assessment among other activities.
A Risk Management Plan is a document prepared by a project manager to foresee risks, to estimate the effectiveness, and to create response plans to mitigate them. A well prepared strategic plan can direct Management to identify threats to the business and other areas of weaknesses. With this information, Management can then be able to devise a Risk Management Plan to manage and possibly eliminate the risk.
For example, using strategic planning, Management can identify overstaffed departments likely to lead to unnecessary expenditure on salaries and negatively affect business profitability. In a recessionary period, overspending on staff salaries can lead to financial collapse of the company. Therefore if Management can foresee a financial crisis, they will be forced to find ways of controlling expenditure (risk Management planning) and this could be done through retrenchments or redeployment of staff to needy departments.
(ii) USING EXAMPLE OF PUBLIC SECTOR INTERNAL CONTROL AND AUDIT PLAN
In the public sector, strategic planning and risk management planning could also be conducted by departments such as the Internal Control Units with the help of Human Resources Departments using the Internal Audit Plan. For Example, each Municipality must have an Internal Control and Audit Unit. This unit should be responsible for preparing audit plans including employee audit plans and programmes and advising on issues of internal controls (e.g training), risk and risk management, performance management (e.g performance appraisals) and loss control (e.g resignations), amongst others responsibilities. As pointed out by Woods, Lindie and others, the primary function of the Internal Audit Unit should be to monitor the effectiveness of risk management and the internal controls within the municipality although they should not be actively or directly involved in the identification, assessment or control of risks.
Other than the Internal Control Unit, the Risk Management Unit must work with the Human...
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