1. Chief Financial Officer
Presentation to the Portfolio Committee on Economic Development on ITAC’s Financials as per its Strategic Plan ( )
19 May 2015
Z Koyana
Chief Financial Officer

2. Contents Introduction. Corporate Governance. Budget Management
Auditor General’s Report.

3. Introduction
The ITAC Strategic Plan for 2015 – 2019 was prepared in line with the National Treasury guidelines. This Strategic plan also includes the approved 2015/16 budget to finance the programs and the MTEF estimates.
There have been improvements in the internal controls and compliance related matters over the recent past as evidenced by a clean audit that ITAC obtained for the 2012/13 financial year.
The budget management controls are in place.
ITAC reports quarterly including its financials to EDD as its parent department, which is a pre-requisite for receiving its quarterly transfers.
Over the past financial years, ITAC had retained surpluses which are used to finance programmes where financial gaps exist.
All the relevant governance structures have been put in place.

4. COMPLIANCE & INTERNAL CONTROLS
Corporate Governance
COMPLIANCE & INTERNAL CONTROLS
ITAC strives to comply with all applicable regulations governing the operations of public entities. There are policies that guide the activities of the organisation in order to ensure effectiveness of corporate governance strategies in terms of applicable legislations or guidelines which include amongst others: PFMA; Treasury Regulations; PPPFA & relevant SCM regulation. The checklists have been developed to assist in enhancing compliance and any identified non-compliances are addressed.
ITAC maintains effective internal controls which are designed to ensure that risks are reduced or mitigated to ensure that the organisation is able to meet its objectives. ITAC’s internal control measures include amongst others the risk management activities, internal audit activities, the relevant committees (Risk and Audit) and other internal governance structures.

5. Corporate Governance Continued
RISK MANAGEMENT
AUDIT COMMITTEE
ITAC has the Risk Management unit which works closely with the Internal Audit unit in conducting risk assessment annually and quarterly monitor the risk and then present the risk register to the Risk Management Committee (RMC) for review and recommendation for approval by the Chief Commissioner (CC).
The Internal Audit business unit performs independent tests of whether the Risk Register represents a true picture of risks at ITAC prior to submission to the CC.
ITAC Executive Committee monitors the internal controls and relevant risk management processes to satisfy itself with their effectiveness.
The Audit Committee (AC) meets quarterly to discuss finance related matters, risk management, governance and other matters of interest regarding executing its responsibilities as per the Audit Committee Charter.
In the latest annual financial report of ITAC for the period 2013/2014, the Audit Committee expressed its satisfaction that:
the systems of internal control applied by ITAC over financial risk and risk management is effective, efficient and transparent; and that
it is satisfied with the content and quality of monthly and quarterly reports prepared and issued by the Accounting Authority of ITAC during the year under review.

6. Budget Management
The budget of ITAC is compiled in line with the National Treasury guidelines and regulations.
ITAC is 100% funded from voted funds and the budget for 2015/ 2016 is (R91,2mil), of which
77% (R69,8mil) of the budget is used to pay salaries, while
23% (R21.8mil) is used for goods and services.
The ITAC’s funded staff complement is 131 with 6 vacant positions, excluding 13 contract employees.
The ratio of core business staff to support is 69:55.
The biggest expenditure items outside the personnel include: Legal fees; and Subsistence and Travel. Travel related costs have to do with the core functions verifications domestically and abroad, as well as enforcement. .

7. Budget Management
ITAC had surpluses in the past financial years and below are items that mainly contributed to those surpluses:
Salaries, depending on the vacancy rate;
Legal Fees, depending on cases lodged per financial year; and
Subsistence & Travel, in years where we had lesser investigations.
ITAC’s budget was cut by the National as part of the government wide cost cutting measures to address the fiscal challenges.
The period affected by the cut on the MTEF are 2015/2016, 2016/17, but with its positive bank balance ITAC can still operate.
The budget cuts are as follows:
2015/ 2016 budget reduced by (R ) from R to R
2016/ 2017 budget reduced by (R ) from R to R
These are certainly significant budget cuts.
The surpluses are used to finance where there is shortfall, and have also been earmarked among others, the following: the organisational development, which includes the Job evaluation and the organisational structure re-design; Training; Bursaries; Internships; Contract employees; and IT expenditure.

8. Expenditure Estimate for 2015/16
Budget Management
Expenditure Estimate for 2015/16
Expenditure Estimate for 2015/16
Current Expenses
Programme
2015/16
Administration R
Tariff Investigations R
Trade Remedies R
Import and Export Control R
Total Expense R
Cost Items
2015/16
Compensation of employees R
Goods and services R
Depreciation R
Interest, dividends, and rent on land R
Total Expense R

9. Auditor General Report
OPINION OF AUDITOR GENERAL
The improvement of internal controls resulted in ITAC receiving the clean audit opinion for the first time in 2012/13, but in 2013/14 financial year, ITAC reverted back to an unqualified audit opinion with some findings.
But going forward, ITAC is striving to regain its clean audit opinion status.
IMPLEMENTATION OF AUDIT RECOMMENDATIONS
Audit Finding #1
Irregular expenditure (colour copy instead of original tax clearance certificate)
Action taken
The checklist for submission to approve purchase has been updated to include the word original tax clearance certificate. For the financial year 2014/15, no irregular expenditure was incurred, however AG is still in the process of auditing ITAC.
Audit Finding #2
Reconciliation related finding for accounts payables
Action taken
There has been an improvement in the monitoring of system transactions and review of the reconciliation has been enhanced.

10. Thank You Office Contact Details: Cell: