Road Traffic Infringement Agency Annual Report Presentation to

Road Traffic Infringement Agency Annual Report Presentation to the Portfolio Committee on Transport Thursday 10 October 2013 By Japh Chuwe Registrar RTIA - Justice in Adjudication

Contents PART I: Strategic Objectives • Performance Summary on Strategic Objectives PART II: Performance review: 2012/13 Period • Background • Corporate governance: internal system of control • Human resource overview • Infringements Report: Issuing Authority Performance • Adjudications Performance • Financial Performance • Challenges • Highlights & Achievements PART III: Annual financial statements PART IV: Audit outcomes PART V: Conclusion RTIA - Justice in Adjudication

PART I: Strategic Objectives RTIA - Justice in Adjudication

Strategic Objectives • SO 1: Increase the Agency’s revenue share from outstanding road traffic infringement penalties • SO 2: Implementation of effective governance processes to achieve an unqualified opinion • SO 3: Implementation of AARTO communication campaigns • SO 4: Implementation of effective adjudication processes • SO 5: Comprehensive legislative review • SO 6: Full transfer of AARTO functions to the RTIA - Justice in Adjudication

Performance Summary on Strategic Objectives No. Strategic objective Performance Reason/Constrai nts 1 Increase the Agency revenue share from outstanding road traffic infringement penalties Achieved • Projected budget – R 50 m • Collected – R 49 m • Increased from R 28. 5 m previous year (2011/12) • Implement effective governance processes to achieve an unqualified opinion Achieved • (Unqualified opinion for the 2011/12 period) None 2 • Non-rollout of AARTO Extended delay in mandate enforcement • Another unqualified opinion for the 2012/13 period 3 Implement AARTO communication campaigns RTIA - Justice in Adjudication Partly achieved • Communication & educational materials distributed through partnerships with Do. T & agencies • Reactive public communication • Lack of funding limited audience target reach

Performance Summary on Strategic Objectives N o. Strategic objective 4 Implement effective Achieved adjudications • Backlog representations processes eliminated • Adjudications framework updated • 100% adjudicated within timeframes • 35, 552 representations received • 34, 869 representations were adjudicated. • A balance of 683 representations carried over to the 1 st quarter of 2013/14 financial year. None 5 Comprehensive legislative review process None RTIA - Justice in Adjudication Performance Achieved • Draft Amendment Bill published for comments in Gazette 36173 dated 20 February 2013 • Draft Regulations Amendments intensively discussed with Reason/Constra ints

Performance Summary on Strategic Objectives N o. Strategic objective Performance Reason/Constra ints 6 Full transfer of the AARTO functions to the RTIA Not Achieved • AARTO Bank accounts not transferred • RTIA not in control of all functions and accounts • RTIA and IAs not receiving their revenue portion timeously • Ineffective dispense of mandate, especially revenue collection from IAs • • RTMC lodged objection on the transfer of AARTO functions and accounts to RTIA Delayed process of transfer Note: This objective has subsequently been achieved and is recognised as a significant event in the current financial year. The transfer of the functions and accounts will be achieved with effect from 1 October 2013 RTIA - Justice in Adjudication

PART II: Performance review 2012/13 Period RTIA - Justice in Adjudication

Background The Agency started the year with a staff of 22 and increased its complement by 16 (72%) to a total of 38 • A government grant of R 5 m was allocated, with an additional virement of R 14 m towards the end of the financial year • The board continued operating, albeit stretched due to limited number of members, exacerbated by 1 resignation • Management continued to be overly stretched due to insufficient staff compliment • RTIA - Justice in Adjudication

Corporate governance: Internal system of control • The Agency committed to implementing processes and systems for ensuring compliance to governance prescripts in the AARTO Act and PFMA • Implemented pro-active measures to address deficiencies and review progress on quarterly basis • Imbedded audit and verification measures in the business process, in the absence of an internal audit unit RTIA - Justice in Adjudication

Human resource overview • Increased staff compliment from 22 to 38 by end of the financial period (16, being 72% but less by 37 being 49% compared to approved target of 75) • 2 managers transferred from RTMC • 8 staff appointed for data clean-up of the NCR • ROs increased to 8 RTIA - Justice in Adjudication

Human resource overview : Staff Profile RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance Number of infringement notices captured in comparison with previous year RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance Number of notices captured per category RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance Number of infringement notices per category captured in comparison with previous year RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance 19

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Infringements report : Issuing Authority performance RTIA - Justice in Adjudication

Analysis of infringement performance • Johannesburg accounts for 73. 7% of captured infringements • Tshwane accounts for 22. 6% of captured infringements • Gauteng Community Safety accounts for 2. 1% of captured infringements • RTMC accounts for 1. 6% of captured infringements • AARTO 01 (handwritten) infringements account for 24% of all notices • AARTO 03 (speed) infringements account for 58% of all notices • AARTO 31 (parking) infringements account for 18% of all notices RTIA - Justice in Adjudication

Other Selective Options – Court option RTIA - Justice in Adjudication

Other Selective Options – Court option RTIA - Justice in Adjudication

Other Selective Options - Representations RTIA - Justice in Adjudication

Other Selective Options - Representations RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Adjudications performance Number of Representations adjudicated in comparison with previous year RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Adjudications performance RTIA - Justice in Adjudication

Agency notices: Courtesy letters RTIA - Justice in Adjudication

Agency notices: Enforcement Orders RTIA - Justice in Adjudication

Agency notices : Others RTIA - Justice in Adjudication

Financial performance : Payments made Payment Time Frames § Payments made within 1 st phase (<32 days) whilst the infringement was still in the discounted stage. Infringer pays 50% which all goes to issuing authorities. § Payments made in 2 nd phase (between 33 and 64 days). IA’s receive 50% and RTIA 50% (discount now forfeited) § Payments made in 3 rd phase (after 64 days). IA’s receive 50% and RTIA 50% RTIA - Justice in Adjudication

Financial performance : Number of Payments made RTIA - Justice in Adjudication

Financial performance : Value of Payments made RTIA - Justice in Adjudication

Financial performance : Payments made Number of total infringement notices paid in comparison with previous year RTIA - Justice in Adjudication

Financial performance : RTIA - Justice in Adjudication

Financial performance : Monthly % payments made The higher payments during June & July was due to the serving of Enforcement Orders RTIA - Justice in Adjudication

Financial performance : % payments made RTIA - Justice in Adjudication

Challenges • Legislative inefficiencies • Inadequate funding - IT infrastructure - Staffing - Limited communication & education • Mandate conflicts on institutional arrangements • Governance (insufficient board membership) RTIA - Justice in Adjudication

Highlights & achievements • Audit Performance - 2 nd consecutive unqualified opinion • Legislative amendments - Amendment Bill published for comment in Gazette 36173 dated 20 February 2013 • Institutional capacitation - cautious & strategic recruitment - establishment of internal audit, IT & debt collection units • Marketing & education - leveraged on the Do. T and other entities for communications RTIA - Justice in Adjudication

PART III: Annual financial statements PART III: Annual Financial Statements RTIA - Justice in Adjudication

Highlights: Financial Performance Revenue Infringement fees Grant received Expenses Impairment loss on receivables Employment costs Other operating expenses Depreciation of property, plant and equipment Amortisation of intangible assets Assets written off Surplus from operations RTIA - Justice in Adjudication 2012/13 68 011 052 49 011 052 19 000 2011/12 45 579 863 28 579 863 17 000 (61 408 113) (31 164 022) (10 538 186) (19 451 088) (34 467 653) (225 103) (22 819) (6 894) (105 719) (16 298) (26 795) 6 602 939 11 112 210 (2 259 932) (32 058 909)

Highlights: Financial Position 2013/12 2012/11 Assets Non- Current Assets 643 257 750 779 Property, plant and equipment Intangible asset 608 934 34 323 693 637 57 142 14 631 608 6 850 327 1 428 816 6 850 281 Cash and cash equivalents 13 202 792 46 Total Assets 15 274 865 7 601 106 Current assets Trade and other receivables RTIA - Justice in Adjudication

Highlights: Financial Position Net Assets Accumulated surplus / (deficit) Current liabilities Trade and other payables Total net assets and liabilities RTIA - Justice in Adjudication 2013/12 12 890 676 2012/11 6 280 802 2 384 189 1 320 304 15 274 866 7 601 106

Financial Performance 2012/13 • Revenue earned increased significantly by 71% from R 28. 5 million to R 49 million. • The year’s overall performance was significantly lower than expected due to the impairment of debtors of R 31 million. Without the impairment the net surplus would have been 240% above last year’s performance of R 11. 1 million. • Staff costs have increased significantly as the Agency skills up with the best of breed employees that will see it into its next phase of National roll-out. • The agency was in a much stronger net asset position as at year end with total assets exceeding liabilities 6. 4 times. RTIA - Justice in Adjudication

PART IV: Audit Outcomes RTIA - Justice in Adjudication

Improved Audit Performance • The Agency achieved an unqualified audit opinion with an emphasis of matter paragraph in 2012/2013 for the second time in a row. • The number of findings also decreased from the previous year as a result of management's commitment to compliant reporting. RTIA - Justice in Adjudication

Audit outcomes Audit opinion Unqualified audit opinion Material impairment RTIA - Justice in Adjudication Basis of opinion The financial statements present fairly, in all material respects, the financial position of the Road Traffic Infringement Agency as at 31 March 2013, and its financial performance and cash flows for the year then ended, in accordance with SA Standards of GRAP and the PFMA. Emphasis of matter As disclosed in note 5 to the financial statements, a material impairment to the amount of R 31 164 022 was incurred as a result of the assessment made on the cash recoverability of the accounts receivable relating to the AARTO management process.

Audit outcomes Report on other legal & regulatory requirements Some objectives, performance indicators and targets not consistent with approved annual performance agreement and not approved by the executive authority. Predetermined objectives 33% of total planned targets were not achieved during the year under review. This was mainly due to the fact that indicators and targets were not suitably developed Achievement of planned targets during the strategic planning process. The agency did not issue and serve any courtesy and enforcement letters to traffic infringers for the period September 2012 to Courtesy and Enforcement letters March 2013 in contravention of the AARTO not issued Act. Material misstatements RTIA - Justice in Adjudication Material misstatements identified by the AGSA were subsequently corrected.

Audit Certification • Audit committee in place and fully operational during the period under review • AG invited and participated in meetings • Reviewed the effectiveness of internal control systems • Reviewed compliance to legal & regulatory provisions, particularly to the AARTO Act & PFMA • Reviewed and adopted a risk management framework RTIA - Justice in Adjudication

Audit Certification • Adopted a going concern premise for the Agency • Reviewed & discussed the AG’s management letter • Reviewed & discussed the AFS & the AG’s report & audit opinion • Reviewed the appropriateness of accounting policies & practises • Reviewed significant adjustments resulting from the audit • Satisfied with the Annual Report & recommended Board approval RTIA - Justice in Adjudication

PART VIII: Conclusion PART V: Conclusion RTIA - Justice in Adjudication

Conclusion In spite of the difficulties experienced, the Agency is fully committed to the achievement of its mandate and believes it will soon be one of the most effective performers under the Department! RTIA - Justice in Adjudication

Conclusion Thank you! RTIA - Justice in Adjudication