Munsoft Matters: Release of mSCOA 6.5 chart for the 2021/22 MTREF with Budget Circular No. 107

Dear Client,
The mSCOA Chart v6.5 to be used for the 2021/22 MTREF was released by National Treasury on 5 December 2020.
Click here to access the full chart:

National Treasury also released mSCOA Budget Circular No 107 together with Chart v6.5 and provides guidance and focus areas for the preparation of the 2021/22 Municipal Budgets.
Click here to download the complete PDF version of the below documents: 
2021_22 MFMA Budget Circular No 107 - 04 Dec 2020

Keynotes to take into consideration when compiling the 2021/22 Municipal Budgets include:

  • Cash Flow challenges addressed in Chart 6.5 include
    • Duplication of Capital Asset Acquisitions in the Payments section
    • Linking of Advance Payments and Retentions to relevant sections
    • Inventory, Contracted Services, and Other Expenditure sub-categories added to Item Liability Payable and Accruals
  • Forecasted CPI Inflation rates for the 2021/22 MTREF period are 4,1%, 4,4% and 4,5% respectively
  • Any increases in 2021/22 Budget exceeding forecasted inflation rates to be justified in budget narratives, this includes tariff increases for the revenue budget
  • Budget for Bulk Water purchases to be recorded as Inventory in accordance with GRAP 12
  • Expenditure relating to COVID-19 to be ringfenced as per guidance provided in mSCOA Circular 09, this is also applicable for the 2021 Adjustments Budget due February 2021
  • The budget submitted must be funded by taking realistic collection rates into account
  • A1 Schedule for 6.5 Chart to be generated via the Financial System and submitted in PDF format to the LG upload portal

It is evident from the Budget Circular that most municipalities are experiencing financial constraints and it is now even more important to practice good Credit and Debt Collection Control and caution when it comes to expenditure. The 2021/22 Budget will need to be carefully planned and executed to ensure complete and accurate reporting is done as this will set a platform for In-Year Reporting and assist municipalities in their quest for financial stability in difficult unprecedented times.
National Treasury also indicated that the focus of municipalities should remain on quality service delivery and maintain an infrastructure that allows for quality service delivery to take place when compiling the 2021/22 MTREF budgets.
Munsoft understands that there are numerous challenges municipalities face currently to keep delivering quality services while remaining financially stable and comply with all reporting regulations, therefore we would like to assure you that Munsoft will continue to provide you with the necessary solutions for adequate financial reporting that complies with all the relevant regulations and legislation.
Any updates to our financial system to incorporate the 2021/22 MTREF reporting requirements will be communicated in due course.
If you have any queries regarding the 6.5 Chart/Budget Circular No 107 or require assistance with the 2021/22 Budget process, you are welcome to contact your Service Delivery Manager and we will gladly assist.
Kind Regards,

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