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Annual Report (2011/2012) Presentation to the Portfolio Committee on Economic Development

Annual Report (2011/2012) Presentation to the Portfolio Committee on Economic Development 23 October 2012 Siyabulela Tsengiwe Chief Commissioner. Introduction. Key Strategic Objectives & Performance Areas & Services. Tariff Investigations. Anti-Dumping Investigations.

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Annual Report (2011/2012) Presentation to the Portfolio Committee on Economic Development

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  1. Annual Report (2011/2012) Presentation to the Portfolio Committee on Economic Development 23 October 2012 Siyabulela Tsengiwe Chief Commissioner

  2. Introduction. Key Strategic Objectives & Performance Areas & Services. Tariff Investigations. Anti-Dumping Investigations. Import and Export Control. Corporate Governance. Auditor General’s Report. Financial Performance. Contents

  3. The global financial crisis and its adverse impact on the domestic economy presented new challenges with respect to the environment in which ITAC operates. The developmental approach to tariff setting is aimed at promoting domestic manufacturing; employment creation and international competitiveness. In the vast majority of our investigations we have met the new turnaround times without compromising on quality. One of the central aims of the NGP is to build a lower carbon-emission economy and, in making a contribution to this objective, ITAC has embarked on an analysis of the tariff regime for green goods with a view to identifying opportunities and threats. Conditionalities to tariff support. Acting swiftly against unfair trade. Introduction

  4. Key Strategic Objectives, Performance Areas & Services • Technical Inputs on Trade and Industrial Policy , including Sector Strategies • Ensure contribution to employment creating growth and development through effective delivery of international trade instruments • Ensure strategic alignment and continued relevance with the Department of Economic Development and national agenda • Ensure organisational efficiency and effectiveness of ITAC • International Trade Instruments • International Trade Technical Advice • Business Support Services • Customs Tariff Investigations • [Increasing Duties, Reducing Duties, & Creation of Rebates] • Human Resources • Finance • Information Technology • Legal Services • Policy and Research • ITAC will become more proactive in the provision of technical inputs and contributions to trade and industrial policy implementation, as well as trade negotiations at bilateral, regional and multilateral levels. • What will be pivotal in improving the provision of customs tariffs, trade remedies, and import and export control will be the quality and turnaround times. • Technical Inputs on Trade Negotiations • [WTO, SADC & SACU] ; • Bilateral Agreements • [EU, EFTA, MERCOSUR, & INDIA] • Trade Remedies Investigations • [Antidumping, Countervailing & Safequards] • Import & Export Control • [Permits & Enforcement] • The performance of the institution will be driven through appropriate business solutions, efficient and effective utilisation of material, human and information technology resources.

  5. Tariff Investigations Completed During 2011\2012

  6. Tariff Investigations Continued

  7. Tariff Investigations Continued

  8. Administration of MIDP MOTOR INDUSTRY DEVELOPMENT PROGRAM (MIDP) • The MIDP is a rebate scheme based on customs duties that are phased down over time that can be rebated using Import Rebate Credit Certificates (IRCCs) which are issued based on economic performance of qualifying motor vehicles and components thereof. Furthermore, Productive Asset Allowance (PAA) certificates are issued based on investments in qualifying productive assets. • thedti is the policy making authority for the MIDP & ITAC administers the program. • The MIDP will be replaced by a new programme, the Automotive Production Development Programme (APDP) in 2013. • Certificates issued under the MIDP: • Import Rebate Credit Certificates (IRCCs) - 2231 • Heavy Commercial Vehicle (HCVs) - 70 • Eligible Export Certificate (EECs) - 50 • Productive Asset Allowance Certificate(PAAs) - 43

  9. Anti-Dumping Investigations ORIGINAL INVESTIGATIONS REVIEWS

  10. Import and Export Control IMPORT PERMITS ISSUED • During 2011/2012 import permits issued amounted to 16 224. The target was 13 000. • Majority of the permits were for the following imported products: • Marine Resources • Mineral fuels and oils • Chemicals • Rubber and tyres • Metals • Mechanical Appliances • Automotives EXPORTPERMITSISSUED • Export permits issued in 2011/2012 amounted to 6839. The target was 7000.

  11. ITAC adheres to all applicable regulations governing the operations of public entities. The policies are developed to ensure effectiveness of corporate governance strategies in terms of applicable legislations or guidelines which are: PFMA; Treasury Regulations; PPPFA & relevant SCM regulations; King III Report; etc. ITAC maintains effective internal controls which are designed to ensure that risks are reduced or managed and 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. The internal controls are continuously monitored throughout the year by Management, Internal Audit and by other relevant Committees. All identified gaps are referred for correction to relevant officials. Corporate Governance COMPLIANCE & INTERNAL CONTROLS

  12. Corporate Governance Continued RISK MANAGEMENT AUDIT COMMITTEE REPORT • ITAC has an effective risk management function and conducts its risk assessment continuously and then present the risk register to the Risk Management Committee. The committee then refers those risks whose status has changed to the Internal Audit Unit to perform independent test of whether the Risk Register represent the true situation of the organisational risk. • ITAC Executive Committee monitored the internal controls and relevant risk management processes for 2011/2012 year-end and is satisfied with their effectiveness. • The Risk Management Committee played the role of reviewing the organisational risk and makes recommendations for improvement on risk management activities to be implemented by management. • The Audit Committee held 4 meetings in the year under review. • According to the Audit Committee report: • The system of internal control applied by ITAC over financial risk and risk management is effective, efficient and transparent. • The Audit Committee 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. • The Audit Committee is satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to ITAC in its audit.

  13. Auditor General Report IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE • Irregular Expenditure for ITAC in 2011/2012 amounts to R788 708.00, of which • 73% was for not specifying the criteria (preference points) for evaluation of the quotes. Though the criteria was not specified to the service providers when requesting the quotes, the 80/20 evaluation criteria was in fact applied before appointing the successful service provider, • 25% relates to procuring services with less than three quotation, and • 2% was for exceeding petty cash limit. • Fruitless and wasteful expenditure in 2011/ 2012 amounts to R35 074.00 and relate to penalty for underpayment of pension as a result of underpayment due to system. • Processes for condonation of the above expenditures have been followed and correspondence has been sent to National Treasury and AG’s Office as required by SCM regulation.

  14. Auditor General Report Continued OPINION OF AUDITOR GENERAL • ITAC has obtained an unqualified opinion in 2011/ 2012 financial year with findings on compliance with laws and regulations, and also findings on predetermined objectives. • Compliance findings relate to the above mentioned irregular expenditure on the previous slide and predetermined objective findings relate to usefulness of performance information, in terms of consistency between planned and reported targets and clear data definition. IMPLEMENTATION OF AUDIT RECOMMENDATIONS • ITAC has developed an Audit Action Plan template with clear actions to be taken to address the audit finding. • Some of the findings have already been addressed and progress is being reported on outstanding findings still to be addressed. • Internal Audit Unit has been given responsibility to examine as part of its audit process the Audit Action Plan to test whether the proposed or implemented actions will address the AG findings. • The Executive Committee also plays the role of monitoring the implementation of the action plan through a report presented on Action Plan progress on implementation.

  15. Financial Performance • ITAC has a sound financial position as assets are more than its liabilities. • ITAC’s total assets amount to R30.4 million and this figure consists of Cash and Bank-89%, Fixed Asset-7% and Account Receivables-4%. • ITAC’s total liabilities amount to R10.1 million and this amount consists of Provisions and Commitments for both Non Current Liabilities-21% and Other Current Liabilities-39%; and Account Payables-40%. • The difference between ITAC’s assets and liabilities, R20.3 million relates to the Net Asset. This amount is a cumulative figure included in the AFS in line with GRAP standard for basis of preparation of AFS. It includes various financial years in which approval was granted to ITAC by National Treasury to retain surpluses for ITAC’s projects meant for its operational effectiveness. OPERATING RESULTS - ASSETS AND LIABILITIES

  16. Financial Performance Continued

  17. Financial Performance Continued • ITAC’s total revenue amounts to R71.7 million and R69.6 million (97%) is EDD allocation, other part relates to interest received and other revenue. • ITAC’s total expenditure amounts to R68.8 million and 75% of this expenditure relates to compensation of employees while 25% relates to Goods and Services, depreciation and impairment of long outstanding debtors as per Bargaining Chamber resolution. • ITAC had a surplus of R2.9 million in 2011/2012 and 80% of this relates to saving on employees cost as a results of resignations during the year. Other saving relates to legal fees of which payment is depended on finalisation of litigation that ITAC is involved in. • The surplus of 2010/2011 has been restated from R2.6 million to R1.4 million as the Depreciation Recovery of R1.2 million has been reversed. OPERATING RESULTS - REVENUE AND EXPENSES

  18. Financial Performance Continued

  19. Thank YouOffice Contact Details: 012 394 3713Cell: 082 454 8979 stsengiwe@itac.org.zawww.itac.org.za

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