1. RTMC ANNUAL REPORT 2011/12 “SAFE ROADS -THE CHANGE WE WANT TO SEE”
PRESENTATION TO PORTFOLIO COMMITTEE
10-11 OCTOBER 2012
ACTING CEO: COLLINS LETSOALO

2. OUTLINE RTMC Audit Journey Overall Financial Position
Statement of Financial Position
Statement of Financial Performance
Opinion Comparatives
Emphasis of Matter
Pre-determined Objectives
Required Funding for RTMC Mandate

3. 2011/12 – Unqualified Opinion
RTMC Audit Journey
2009/10 -Disclaimer
2010/11- Adverse Opinion
2011/12 – Unqualified Opinion

4. Overall Financial Position
Reporting a state of technical insolvency based on material loss of 41m, mainly due to SANRAL debt write off (R26m) and intangible asset write off (R8,1m), leaving the entity with loss of R7m.
R7m - a reduction in the loss from 2009/10 loss of R72m.
Liabilities exceed assets by R203 million.
Main contributor - liability of R200 million relating to irregular use of Transaction Fees in 2009/10 financial year (uncovered and confirmed through the Ministerial Task Team, and an a matter that would resolve the going concern challenge of the Corporation when addressed).

5. Annual Financial Report: 2011/12
STATEMENT OF FINANCIAL POSITION (B/S)
Liabilities
Amount
Details
Reasons
Payables
R449 million
R430 million = Transaction fees due from provinces and payable to DoT
R213 million = Transaction fees (Irregularly utilized (R200 M)and balance at bank plus fair value adjustment )
R50million = AARTO infringements
Same as in account receivables
Mainly transaction fees irregularly utilized in 2009/10 financial year ,these needs to be written off as they recovery is doubtful
Infringements fees paid into AARTO national bank account and payable to issuing authorities

6. Annual Financial Report … Cont.
STATEMENT OF FINANCIAL POSITION (B/S)
Current assets
Amount
Details
Reasons
Cash and bank
R130 million
AARTO Accounts = R32 million
eNaTIS Accounts = R92 million
RTMC Main = R5 million
AARTO Accounts: Infringement fees for both Gauteng Department of Community Safety, Tshwane Metro (TMPD) and RTIA paid into the AARTO national bank accounts
Funds in eNatis account represent transaction fees received by the RTMC from provinces and not yet paid over to the Department of Transport at year end.
Trade and other receivables
R155 million
Transaction fees due from Provinces = R137 million (2011: 125million)
AARTO Infringements due from Issuing Authorities = R18 million
- Transaction fees receivable from Provinces.
70% of all outstanding debts are within the 90 day period
30% of the total debts is long outstanding (R41 million)
R41million of the long outstanding balance is shared amongst the three provinces {Limpopo (R11 million), Mpumalanga (R16 million) and North West (R14 million)} and these relate to the period when issuing authorities were still paying directly to the RTMC
Change in accounting principle to account only on cash basis thus these are monies due by RTIA and GDOC that were overpaid in the previous accounting principle.
Non-current asset
R9 ,2 million
PPE = R7,6 million
Intangible assets = R1,6 million
Intangible asset of R8,1 m written off
Assets register developed and 100% compliant

7. Annual Financial Report … Cont.
STATEMENT OF FINANCIAL PERFORMANCE (I/S)
INCOME
Amount
Details
Reasons
Government grant
R77.9 million (2011: 73,6 million)
MTEF allocation from Treasury
Government grant allocated to the Corporation for 2011/2012 ,the actual requested budget was for R180m
Other income
R53 million
R2. 9 million – contribution by SANRAL for the training of traffic police.
Difference relate to other sponsors and sundry income (disposal of asset)
R98 million owed by JMPD written-off in the previous financial year (restatements of financials).
AARTO
R2,5m
Collecting agency fees as per AARTO regulation
Infringement fees issued by NTP
-3% collection fees recognized as income and only amounted to R1,4m in the reporting period
-R1m infringement fees issued since September 2011
EXPENDITURE
Operating expenditure
R178million ( 2011: 161 million)
Key drivers:
Payroll = R100million
Assets written off/ retired = R9,5 million
Provision for bad debts= R27million
Lease rentals = R11 million
Depreciation = R3,8 million
Accident investigation = 3,8m
Other projects = 9,7million
Payroll costs increased by 10% from the previous financial year
Accident reporting system valued at R57 million discontinued
Impairment of hardware relating to ARS(R8 million impairment)
Deficit for the year
R41 million ( 2011: 72million)
Mainly due to the asset written-off and debt written off amounting to R34m of current loss

8. Opinion Comparison FINDING 2010/11 Finding 2011/12
Audit Opinion 2011/12
WAYFORWARD
1. Trade and other receivables ,audit procedure could not be performed
1.Trade receivables reconciled and audit procedure performed
Unqualified Audit opinion
Continuous management of receivables to ensure audit opinion sustainable
2.Property Plant and Equipment no proper review of asset useful life and residual value
2.PPE asset useful life reviewed and assets damaged written off proper asset management implemented
Continuous management of PPE and appointment of competent asset management staff to ensure continuous monitoring
3.Intangible Assets not assessed for impairment
3.Intangible assets assessed for impairment leading to the R8,1m write off and adjustment of the intangible asset register
Continuous management of intangible and appointment of competent asset management staff to ensure continuous monitoring
4.RTIA information included in RTMC comparative figures
RTIA data removed from all comparative figures
Continuous review of RTMC data to ensure compliance with accounting principles

9. Pre-determined Objectives
FINDING
ROOT CAUSE
MITIGATION
WAYFORWARD
30% Achievement of planed targets
Lack of strategy based funding
Lobbying of various stakeholders including the private sector to fund some of the programs
DOT and Treasury to assist in increasing the budget of RTMC from R82m to R240 this will ensure that the budget is aligned to strategy.
Annual financial statement and performance reports
Inadequate financial controls due to lack of skilled staff
Recruitment process reviewed to ensure only competent and skilled finance staff are appointed
Qualified and Competency based appointment in finance department
Non Compliance with the RTMC act
No agreed meetings of the shareholders committee
Facilitation of advanced agreed meeting where member quorate
DOT should develop a stringent process compelling MEC to attend ,through the mayors of the variance provinces
Inefficient Internal Control process
Lack of monitoring of performance management
Monthly review of the monitoring process. Review of monthly and quarterly report. Internal audit to review evidence and report on deficiencies
Implementation of approved policies and development of policies

10. Emphasis of Matter FINDING ROOT CAUSE MITIGATION WAYFORWARD
1.Going Concern
Asset write n off due the inability to bring the assets into use
Inadequate funding of the RTMC as highlighted by ministerial task team
1.Approval by the shareholders committee to write off those assets, Approval by the minister to condone the write off
2.Unsuccessful request to Treasury to increase grant
Submission to treasury to write off the debt so as to allow the Statement of Financial Performance and Position to be positive thus eliminating the solvency matter
2.Material loss
1.Irregularly procured call centre system of written off R8,1m
2.ANRAL debt written of R26m
Proper case study performed prior to procuring any IT equipment to ensure sustainable maintenance and adherence to supply chain procedures.
Continuous management of internal control process to ensure continued adherence to supply chain process
3.Financial Misstatements
Lack of skilled finance staff in asset management, lack of reconciliation skills in revenue management
AARTO accounted on a cash basis to provide an accurate disclosure
Revaluation of asset done twice annually
Maintenance of accurate asset register
Continuous reconciliation of AARTO account to avoid misstatements
Quarterly preparation of financial statement to avoid misstatements
Implementation of policies.

11. Pre-determined Objectives … Cont.
FINDING
ROOT CAUSE
MITIGATION
WAYFORWARD
Leadership
Lack of communication platforms to create awareness of approved policies and procedures
All approved policies and procedures are circulated a circular and placed on a shared drive
An intranet has been developed internally ,all policies will be placed on the web to ensure easy access for new staff members and old staff members.
Financial and performance management
Lack of financial staff to administer records management
A finance staff has been delegated with the role of record management, separate lockable are created to safe keep all finance records.
The senior manage finance will review all finance records to ensure completeness, Internal audit to conduct a audit of al finance process to ensure completeness of finance records
Governance
Lack of agreed review dates with governvenace stakeholders
Agreed dates with stakeholders to review financial information on a quarterly basis as well as performance information
Monthly review of financial information ,and monthly review of performance information

12. THANK YOU THE RTMC SUPPORTS THE DECADE OF ACTION TO ROAD SAFETY , and is a Member of the United Nations Road Safety Collaboration (UNRSC)