taking root and settling in - national government...ncv national certificate v ocational nlrd...

Taking rooT and seTTling in

2013/14AnnuAl report

Quality Council for trades and occupations

Annual Report2013/14 Financial Year

ii QCTO AnnuAl RepORT 2013/14 FinAnCiAl YeAR

TAble OF COnTenTs

ParT a: general informaTion

1. publiC enTiTY’s GeneRAl inFORmATiOn 12. lisT OF AbbReviATiOns/ACROnYms 23. FORewORd bY The ChAiRpeRsOn 44. ChieF exeCuTive OFFiCeR’s OveRview 55. sTATemenT OF RespOnsibiliTY And COnFiRmATiOn OF ACCuRACY FOR The AnnuAl RepORT 66. sTRATeGiC OveRview 7

6.1. vision 76.2. mission 76.3. values 7

7. leGislATive And OTheR mAndATes 87.1. Constitutional mandate 87.2. legislative mandate 8

8. ORGAnisATiOnAl sTRuCTuRe 10

ParT B: Performance informaTion

1. AudiTOR’s RepORT: pRedeTeRmined ObjeCTives 122. siTuATiOn AnAlYsis 12

2.1. service delivery environment 122.2. Organisational environment 132.3. Key policy developments and legislative changes 142.4. strategic outcome oriented goals 15

3. peRFORmAnCe inFORmATiOn bY ppROGRAmme 173.1. programme 1: Administration 173.2. programme 2: Occupational Qualifications management 28

4. Revenue COlleCTiOn 41

ParT c: goVernance

1. inTROduCTiOn 432. pORTFOliO COmmiTTees 433. exeCuTive AuThORiTY 434. The ACCOunTinG AuThORiTY 435. RisK mAnAGemenT 566. inTeRnAl COnTROl uniT 567. inTeRnAl AudiT And AudiT COmmiTTees 56

iiiQCTO AnnuAl RepORT 2013/14 FinAnCiAl YeAR

8. COmpliAnCe wiTh lAws And ReGulATiOns 599. unsOliCiTed pROpOsAl 5910. FRAud And CORRupTiOn 5911. minimisinG COnFliCT OF inTeResT 6012. COde OF COnduCT 6013. heAlTh sAFeTY And enviROnmenTAl issues 6014. seCReTARY 6015. sOCiAl RespOnsibiliTY 6016. AudiT And RisK COmmiTTee RepORT 60

ParT d: HUman resoUrce managemenT

1. inTROduCTiOn 622. humAn ResOuRCe OveRsiGhT sTATisTiCs 63

ParT e: financial informaTion

ACCOunTinG AuThORiTY’s RespOnsibiliTies And AppROvAl 67RepORT OF The exTeRnAl AudiTOR 68RepORT OF The AudiT And RisK COmmiTTee 71RepORT OF The COunCil 73

AnnuAl FinAnCiAl sTATemenTs FOR The YeAR ended 31 mARCh 2014sTATemenT OF FinAnCiAl pOsiTiOn 76sTATemenT OF FinAnCiAl peRFORmAnCe 77sTATemenT OF ChAnGes in neT AsseTs 77CAsh FlOw sTATemenT 78sTATemenT OF COmpARisOn OF budGeT And ACTuAl AmOunTs 79ACCOunTinG pOliCies 81nOTes TO The AnnuAl FinAnCiAl sTATemenTs 96

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1QCTO AnnuAl RepORT 2013/14 FinAnCiAl YeAR

1. PUBlic enTiTY’s general informaTion

regisTered name: Quality Council for Trades and Occupations

regisTraTion nUmBer (if applicable): not applicable

PHYsical address: 256 Glyn street hatfield pretoria 0083

PosTal address: private bag x278 pretoria 0001

TelePHone nUmBer: +27 12 003 1800 email address: [email protected]

WeBsiTe address: www.qcto.org.za

eXTernal aUdiTors: Auditor-General of south Africa pO box 446 pretoria 0001

Bankers: AbsA, 2nd Floor, lourie place hillcrest Office park 177 dyer street hillcrest 0083

secreTarY: ms Adri h solomon, director: Governance and secretariat

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2 QCTO AnnuAl RepORT 2013/14 FinAnCiAl YeAR

2. lisT of aBBreViaTions / acronYms

A&AC Assessment and Accreditation CommitteeAGsA Auditor-General of south AfricaAppeTd Association of private providers of education, Training and development AQp Assessment Quality partnerbbbee broad based black economic empowermentCAT Credit Accumulation TransferCeO Chief executive OfficerCd Chief directorateCFO Chief Financial OfficerChe Council on higher educationCOidA Compensation for Occupational injuries and diseases ActdG director GeneraldheT department of higher education and Trainingdol department of labourdQp development Quality partnereTQA education and Training Quality Assurance bodyFeT Further education and TrainingFlC Foundational learning CompetenceFsCC Financial sector Coalition CampaignGenFeTQA General and Further education and Training Quality Assurance Act (no. 58 of 2001)GFeTQF General and Further education and Training Qualifications sub-frameworkiT information TechnologyiTC information Technology and CommunicationhelA Act higher education laws Amendments Act (no. 26 of 2010)heQC higher education Quality CommitteeheQF higher education Qualifications sub-frameworkhR human ResourcesindlelA institute for the development of learnerships, employment skills and labour AssessmentsmeC member of executive CouncilmheT minister of higher education and TrainingmOA memorandum of Agreement

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mol minister of labourmTeF medium Term expenditure Frameworkn/A not applicablenAmb national Artisan moderating bodynATed national education Report 191 part 2 n4 to n6nCv national Certificate vocationalnlRd national learner Records databasenOpF national Occupational pathways FrameworknQF Act national Qualifications Framework Act (no. 67 of 2008)nsA national skills Authoritynsds national skills development strategynsF national skills FundOFO Organising Framework for OccupationsOQsF Trades and Occupations Qualifications sub-Framework (commonly known as Occupational Qualifications sub- Framework for Trades and Occupations)pAYe pay As You earnpFmA public Finance management ActpppFA preferential procurement policy Framework ActQA Quality AssuranceQC Quality CouncilQCTO Quality Council for Trades and OccupationsQdF Qualification development FacilitatorRpl Recognition of prior learningsAbpp south African board for people practices sAnACO south African national Apex Cooperatives sAQA south African Qualifications AuthoritysARs south African Revenue servicessCm supply Chain managementsdA skills development Act (no. 97 of 1998)seTA sector education and Training AuthorityslA service level AgreementTAu Technical Assistance unitTR Treasury RegulationsuiF unemployment insurance Fundumalusi Council for Quality Assurance in General and Further education and Training


3. foreWord BY THe cHairPerson

Prof. Peliwe P lolwana Chairperson of the Council

i am particularly delighted to prepare this foreword for the 2013/2014 Annual Report, as the progress made throughout the period by all elements of the QCTO is moving along quite nicely with the organisation taking root and settling in. i am proud to highlight the following achievements:

• in december 2013, the QCTO moved to a new location at 256 Glyn street in hatfield, pretoria.

• by the end of this fiscal year 17 occupational qualifications will have been registered by the south African Qualifications Authority (sAQA).

• As of 31 march 2014 the QCTO website was live and open to the public.

• As of 31 march 2014 Council approved the Occupational Qualification sub-Framework (OQsF) and it is anticipated that it will be gazetted by August 2014.

• The QCTO held national road shows, covering all nine provinces, during the period October to november 2013. These informed stakeholders about the qualifications development and assessment processes that have now taken root.

• The foundation has now been laid to initiate growth of the organisation and to increase focus on the development and implementation of a quality assurance framework.

The QCTO welcomes the publication of the white paper for post-school education and Training and recognises its vision for an integrated system with

stronger relationships between institutions and the workplace. what is particularly important to the QCTO is the call for education and training entities and institutions to be more responsive to the citizens of our country.

The QCTO remains resolute in its commitment to statements made in each of our previous Annual Reports – our name: the Quality Council for trades and occupations (QCto) – assures the public we are a body fully accountable for quality in the trades and occupations sectors.

Yours sincerely

prof. peliwe p lolwanaChairperson of the Council Quality Council for Trades and Occupationsdate: 30 july 2014

What is particularly important to the QCTO is the call for education and training entities and institutions to be more responsive to the citizens of our country. “

”



4. cHief eXecUTiVe officer’s oVerVieW

ms g Joyce mashabela Chief executive Officer

Continuing with the Annual Report theme “taking root and settling in”, i am proud to record our progress during the year and to report on the grounding of the organisation from an operational perspective.

As at the publication of this Annual Report, all senior managers are in place. This enables all organs of the organisation to move forward with the necessary development and reorganisation activities which will enable the QCTO to deliver effectively on its mandate.The organisation, as it continues to take root and settle in, will commence, in earnest, projects that will build and further establish:

• a stabilised organisational structure to support all QCTO functions;

• a risk management system that is used at all levels of the organisation;

• appropriate and credible qualifications development and assessment systems;

• information and Technology structures;• standard operating procedures for all areas of the

organisation.

Once again i reiterate our commitment to All our partners to work together to establish a learner-centric occupational training system. we support the notion that “No man is an island” that was introduced by john donne more than 500 years ago.

i close this foreword by welcoming all the new staff members who have recently joined the QCTO, and thank

all the dedicated staff members who make personal sacrifices to ensure the QCTO delivers on its mandate. i extend our sincere gratitude to all our partners who work with us to establish a learner-centric occupational training system. To our partners i say, we remain keenly aware that we cannot fulfil our mandate and our vision alone.

No Man Is An IslandNo man is an island,

Entire of itself, Every man is a piece of the continent,

A part of the main. If a clod be washed away by the sea,

Europe is the less. As well as if a promontory were.

As well as if a manor of thy friend’s Or of thine own were:

Any man’s death diminishes me, Because I am involved in mankind,

And therefore never send to know for whom the bell tolls; It tolls for thee.

John DonneCirca. 1624

One of the sayings in our country is Ubuntu – the essence of being human. Ubuntu speaks particularly about the fact that you can’t exist as a human being in isolation. It speaks about our interconnectedness. You can’t be human all by yourself, and when you have this quality – Ubuntu – you are known for your generosity. We think of ourselves far too frequently as just individuals, separated from one another, whereas you are connected and what you do affects the whole world. When you do well, it spreads out; it is for the

“

”Nelson


5. sTaTemenT of resPonsiBiliTY and confirmaTion of accUracY for THe annUal rePorT

The Accounting Authority is responsible for the preparation of the public entity’s annual financial statements and for the judgements made in this information.

The Accounting Authority is responsible for establishing and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the annual financial statements.

in my opinion, the financial statements fairly reflect the operations of the public entity for the financial year ended 31 march 2014.

The external auditors are engaged to express an independent opinion on the Annual Financial statements of the public entity.

The QCTO Annual Financial statements for the year ended 31 march 2014 have been audited by the external auditors and their report is presented on page 68.

The Annual Financial statements of the public entity set out on pages 76 to page 112 have been approved.

Ms G Joyce MashabelaChief executive OfficerQuality Council for Trades and Occupationsdate: 30 july 2014




6. sTraTegic oVerVieW

6.1. Vision

The Quality Council for Trades and Occupations’ (QCTO) vision is access, success and progression for all who want a trade, occupation or profession resulting in a skilled, productive and employable citizenry.

6.2. mission

The mission is to develop and quality assure occupational qualifications that are responsive to the labour market needs and developmental state initiatives.

6.3. Values

ValuesInnovation and excellence

we rise to opportunities and challenges, we continuously learn, we are innovative and we consistently produce work of distinction and fine quality, on time, and in line with our clients’ needs.

empowerment and recognition

we enable people to make things happen, we encourage and support one another when and where needed, and we celebrate successful accomplishment of work.

respect and Dignity

we value and show consideration for all the people we work with, treat one another with kindness and thoughtfulness, and embrace inclusivity.

ethics and Integrity

we embrace and practise a moral code of trustworthiness, honesty and truthfulness in everything we say and do, and we honour our promises and commitments.

ownership and Accountability

we take ownership of our responsibilities and we answer for our decisions and actions.

Authenticity

we protect the public by issuing authentic, quality qualifications.


7. legislaTiVe and oTHer mandaTes

On 31 december 2010 the QCTO was listed as a schedule 3A public entity under the public Finance management Act, effective retrospectively from 1 April 2010 (Gazette notice 33900), as per section 26(G)(1) of the skills development Act (sdA).

7.1. constitutional mandate

The QCTO is not directly referenced in the Constitution. however there are two sections in the bill of Rights to which its functions relate:

in ensuring the quality of occupational qualifications, which include qualifications leading to trades, other occupations and professions, the QCTO contributes to section 22.

in developing and quality assuring occupational qualifications that augment the menu of qualifications in the various sub-frameworks of the national Qualifications Framework, it also contributes to section 29(1)(b).

And in so far as its Foundational learning programmes contribute to adult basic education, the QCTO also contributes to section 29(1)(a).

7.2. legislative mandate

national Qualifications Framework Act and the Skills Development Act

The QCTO has been established in order to accommodate the unique learning requirements for building occupational competence. The QCTO is responsible for Occupational Qualifications development and monitoring.

both the national Qualifications Framework Act, no. 67 of 2008 and the skills development Act, no. 97 as amended in 2008 outline the functions of the QCTO.

The nQF Act specifies that the QCTO should:

• develop and manage its sub-framework, make recommendations and advise the minister on matters relating to its sub-framework.

• Consider and agree level descriptors ensuring that they remain current and appropriate.

• develop and recommend qualifications to sAQA for registration.

• develop and implement a quality assurance policy for registered qualifications.

• maintain a database of learner achievements and submit learners’ achievement data to sAQA for recording on the national learner Records database (nlRd).

• Conduct or commission and publish research.

• inform the public about its sub-framework. The skills development Act, in Chapter 6C

(sections 26F – j), stipulates that the QCTO must:

• Advise the minister on all matters of policy concerning occupational standards and qualifications.

• perform its functions in terms of the skills development Act and the national Qualifications Framework Act.

22. Freedom of trade, occupation and profession

every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law.

29. education

1. everyone has the right

a. to a basic education, including adult basic education; and

b. to further education, which the state, through reasonable measures, must make progressively available and accessible.



• subject to any policy issued by the minister in terms of section 26F:

- design and develop occupational standards and qualifications and submit them to the south African Qualifications Authority for registration on the national Qualifications Framework;

- establish and maintain occupational standards and qualifications;

- ensure the quality of occupational standards and qualifications and learning in and for the workplace;

- promote the objectives of the national Qualifications Framework;

• liaise with the national skills Authority on the suitability and adequacy of occupational standards and qualifications and on the quality of learning in and for the workplace; and

• perform any other prescribed function.

Memorandum of Agreement (MoA) between the QCto and Department of Higher education and training (DHet)

The QCTO and the dheT entered into a memorandum of Agreement (mOA) during the 2011/12 financial year with the understanding that for the transition, the QCTO will use the dheT’s infrastructure and systems to support it while becoming fully operational. The mOA was extended for the 2013/14 financial year. Towards the end of the financial year under review the QCTO was able to completely wean itself from dheT in terms of Finance, sCm, iT, Administration, and some of the hR functions.

public Finance Management Act

The QCTO also ensures compliance with the public Finance management Act, Treasury Regulations, preferential procurement policy Framework Act and the Framework for supply Chain management.


8. organisaTional sTrUcTUre

QCTO Chairpersonprof. peliwe p lolwana

CeOMs G Joyce Mashabela

Chief director: Occupational Qualifications management

Mr thomas X lata

Chief director: Corporate services and CFO

Ms ndivhu Madilonga

Chief director: Occupational Quality Assurance

Mr V naidoo

director: Occupational Qualifications management

Mr S Mkhonza

director: information Technology

Mr S Siwundla

director: Governance, strategy, secretariat services

and Appeals Ms A Solomon

director: Finance and procurement

Mr I Gumbochuma

director: Certifications Vacant

director: Quality Assurance of Assessments

Ms B Mtintsilana



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1. aUdiTor’s rePorT: PredeTermined oBJecTiVes

The AGsA/auditor currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the predetermined Objectives heading in the ‘Report on other legal and regulatory requirements’ section of the auditor’s report.

Refer to page 68 of the Auditors Report, published as part e: Financial information.

2. siTUaTional analYsis

2.1. service delivery environment

The south African Qualifications Authority (sAQA) Act brought into being the national Qualifications Framework (nQF) and a range of standard-setting and quality-assurance arrangements by means of which all south African qualifications were to be registered on a single framework. The skills development Act (sdA) brought sector education and Training Authorities (seTAs) into being, which were legally required to be accredited by sAQA as education and Training Quality Assurance (eTQA) bodies. eTQAs were responsible for the quality assurance of a specified range of qualifications registered on the nQF. The design and registration of qualifications was, however, seen as the responsibility of sAQA.

in 2008 the sAQA Act was repealed and replaced by the nQF Act, no. 67 of 2008. sAQA was given a broad oversight role. sAQA was no longer required to perform a standard-setting function, as this has been devolved to three quality councils, namely, the Council on higher education (Che), umalusi and the Quality Council for Trades and Occupations (QCTO), which now perform both standard-setting and quality-assurance functions.

The publication of proclamation 44 of 2009 led to the creation of the department of higher education and Training (dheT), separate from the department of basic education, which is exclusively responsible for schooling. The entire skills development function of the department of labour was incorporated into the dheT – including the seTAs and the QCTO.

On 23 February 2010 the minister of higher education and Training appointed the members of the Council for the QCTO; however the Council only became operational in April 2010. by september 2011 a new Chairperson for the QCTO Council had to be appointed due to the resignation of the first Chairperson. Furthermore, at that time there were no permanent staff members of the QCTO where only one of these temporary staff members was at an executive level.

while the mandate of the QCTO had been stated in the skills development Act (the legislation that gave birth to the QCTO) the strategic thinking and implementation of activities had a slow start given the change in Council Chairpersonship and the lack of permanent executive staff members. Compounding this issue was a lack of stabilisation of the legislative and regulatory environment governed by the minister and dheT. however several important initiatives were introduced by 2013/2014 giving the QCTO the clear direction it needed to operate as well as a sustainable source of funds. That is,

• by december 2012 the seTA Grant Regulations were promulgated requiring seTAs to set aside funding for the quality assurance activities of the QCTO. The receipt of these funds by the QCTO, however, is only available once the department has, on an annual basis, approved QCTO’s request to receive the said funds.

• in december 2012 the minister’s Government Gazette 36003 on the determination of the sub-frameworks was published (with its amendment 36803 published by August 2013) and in january 2014 the white paper

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for post-school education and Training was released. These legislative documents gave greater clarity to the various components of the post-school sector.

As indicated in section 7.2 of this document the sdA and the nQF Act mandate the QCTO, among other things:

• To oversee the development and maintenance of the Occupational Qualifications sub-Framework (OQsF) on the national Qualifications Framework (nQF);

• To establish and maintain occupational standards and qualifications;

• To quality assure occupational standards and qualifications;

• To design and develop occupational standards and qualifications;

• To ensure the quality of occupational standards and qualifications.

• The qualifications for which the QCTO must execute its mandate consists of the nATed n4 to n6 part qualifications (and associated national diplomas). These qualifications are, by and large, considered out of date having little relevance to industry needs. For this reason the QCTO has embarked on a process to totally revamp these qualifications. The work in this regard is progressing well and the aim is to have all conversion work completed by 2017.

Other qualifications under the QCTO’s aegis are the occupational qualifications originally designed by sAQA which are quality assured by seTAs. in QCTO parlance these are called legacy qualifications. The QCTO is in the process of reviewing these qualifications to determine their relevance, and if found relevant they must be converted to the new design for occupational qualifications. whether relevant or not it is required that a teach-out period be allowed so as to avoid disruption of the system; hence the other work that the QCTO is performing with regards to these qualifications is to ensure that their provision is quality assured.

Finally with regards to qualification development, occupations defined as trades as well as requests for new occupational qualifications are being processed using the QCTO development model.

in terms of the legacy qualifications, trades and new occupational qualifications, at present the QCTO has registered nearly 20 of these qualifications on the Occupational Qualifications sub-Framework (OQsF). The QCTO has been contributing to the development/redesign of qualifications that support the government’s commitment towards infrastructure development which was announced by the president in his 2013 state of the nation Address. These projects are referred to as strategic integrated projects (sips). it has been identified that the QCTO will need to ensure the availability of a total of 32 occupational qualifications sips. To date the QCTO has addressed (or is at advanced stages of addressing) 50% of this need.

As skills shortages remain one of the binding constraints to grow the south African economy, the QCTO will play a significant role within the skills development sector.

2.2. organisational environment

The QCTO finalised an organisational structure in 2011/2012. The Chief executive Officer of the QCTO assumed duty on 1 April 2012. For half of the year the QCTO functioned without any senior staff. during the second half of the year the Chief director: Corporate services, Chief director: Qualifications management and the director: Governance were appointed. These appointments propelled the QCTO to positively deliver on its mandate, but showed a significant gap in the structure, that of the need to divide the work of Qualifications management into two functions – management and quality assurance. Thus in February 2014 a Chief director of Quality Assurance was engaged. This appointment along with those of the directors of iT, Finance, Quality Assurance and Qualifications development have contributed substantially towards building a stable environment for the QCTO.


2.2. organisational environment (COnTinued)

in terms of the governance structure, there is a Council that possesses the necessary experience and expertise, and that functions on the basis of a number of committees, including the executive Committee, Finance Committee, the Audit and Risk Committee, the Qualifications Committee and the Assessment and Accreditation Committee. The existence of a functioning Council ensures that the organisation is well governed and that mission critical decisions for its success are made.

some good progress has been made in relation to the development of systems to support the work of the organisation. These include the implementation of an accrual accounting system, a series of approved financial policies, passage and improvement of qualifications development policies and the establishment of a quality assurance framework. There is however a need to conduct a thorough analysis of systems in order to identify all system requirements, including but not limited to redesign of the organisational structure and the finalisation of a variety of policies. The strong support provided by the dheT must be acknowledged, as the use of a memorandum of Agreement ensures that the QCTO operates with policies that make the organisation compliant with respect to legal and legislative requirements.

in december 2013 the QCTO moved to its new premises that provide sufficient space for staff to operate and an environment that demonstrates to stakeholders that the QCTO is “ready to do business.”

with staff establishment stabilising, performance planning and management aligned to strategy has taken centre stage, facilitated through rigorous operational planning at unit level. performance planning and management will assist the organisation in its effort to focus on its mandate while the implementation of plans and policies related to staff development will enable all levels of the staff establishment to reach

the desired capability to deliver on the QCTO’s strategy. The QCTO has been working with staff to embed better strategic planning processes along with risk management, the latter strengthened by the appointment of the QCTO’s own internal auditor.

Areas that require attention are:

• the manner in which the organisation communicates with external stakeholders. The organisation needs to develop a marketing and communication strategy; and

• development of an appropriate management information system.

2.3. key policy developments and legislative changes

As mentioned above, the publication of the following three documents has impacted strategically on the QCTO:

2.3.1. The Government Gazette 34932 R20 2 (5) which makes provision for seTAs to: “monthly from 1 October 2012 transfer as part of its administration costs as contemplated in sub regulation (1) and approved in the annual seTA strategic plan, a maximum of 0,5% of the total levy received by the seTA to QCTO for quality assurance functions as contemplated in section 26h of the Act;”2.3.2. The Government Gazette published in August 2013 on Amendments to the determination of the national Qualifications Framework’s sub- frameworks (Gazette 36803 published on 30 August 2013); and2.3.3. The white paper for post-school education and Training launched on 16 january 2014 by the minister.

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2.4. strategic outcome oriented goals

The QCTO made the following progress in terms of its strategic Outcome Orientated Goals:

Strategic outcomes oriented Goal 1

effectiveness and efficiency

Goal Statement The QCTO is an effective and efficient organisation that is respected in the labour market by employers, learners and providers.

Indicator QCTO receives an unqualified audit report annually.progress The QCTO received an unqualified audit report for the 2011/12 and

2012/13 financial years.


Access, success and progression

Goal Statement The QCTO provides south Africans with access to an occupational learning system that enables them, through lifelong learning, to succeed and progress in the labour market and to contribute to the country’s growth and development.

Indicator At least a five per cent annual increase in the number of learners registered on and successfully completing new occupational qualifications, once these qualifications are registered on the nQF.

progress A total of 52 qualifications were recommended to sAQA for registration. The learner enrolment is expected to take place a year after the qualification is registered.

The QCTO submitted 7 updated syllabi (n4-n6) to the department of higher education and Training for implementation. The syllabi are for the following subjects: Financial Accounting n6; municipal Administration n6; mercantile law n4; mercantile law n5; municipal Administration n5; Travel and Office procedure n4; and labour Relations n5.


An improved nQF landscape

Goal Statement The QCTO will actively contribute to an improved nQF landscape. Indicator improved annual placement rate of learners into workplaces, following the

establishment of a meaningful baseline figure for 2012/13.

improved employer perception of quality of occupational qualification graduates established by means of a survey on a tri-annual basis amongst those employers who have employed occupational qualification graduates.

progress 2,245 nQF registered qualifications have been allocated to the OQsF. statistics appear to reveal that there is uptake on 747 of these qualifications. letters have been sent to 21 seTAs and 6 professional bodies to confirm if there are 747 qualifications that had learner uptake for the past 3 years. A full report will be tabled next financial year once all data has been collected and analysed.

A policy document on the OQsF was finalised and submitted to sAQA and dheT. implementation of the Qualifications development Facilitators (QdFs) Training project began at the end of the financial year. This project is funded by nsF. its objective is to improve equity representation of registered QdFs, standardise QdFs training and increase significantly the number of QdFs.

The QCTO conducted advocacy campaigns nationally to capacitate stakeholders on QCTO processes. Guideline documents were utilised to capacitate stakeholders on roles they are expected to play for effective participation in QCTO processes. These documents are now available on the website.


2.4. strategic outcome oriented goals (COnTinued)


3. Performance informaTion BY Programme

3.1. Programme 1: administration

The purpose of programme 1: Administration is to ensure effective and efficient corporate services (including financial, supply chain, human resources management, informational technology, communication and administration), corporate governance, strategic management, secretarial services to the QCTO (Council and selected committees) and management of appeals.

The following sub-programmes and strategic objectives link to programme 1:

Sub-programme 1: Ceo/Governance, Strategy, Secretariat Services and Appeals

strategic objective 1.1.1: QCTO contributes continuously through

written submissions, presentations and active participation to the collective efforts of sAQA, Che and umalusi towards the achievement of nQF objectives.

strategic objective 1.1.2: A strategic Risk management strategy is developed, implemented and updated annually to minimise risk for the QCTO.

strategic objective 1.1.3: A five-year strategic plan and annual

performance plan (App) for the QCTO is developed.

strategic objective 1.1.4: A system to conduct quarterly and

annual monitoring and reporting is developed and implemented.

strategic objective 1.1.5: support services are effectively and

efficiently provided to the Council.

Sub-programme 2: Financial Management

Sub-programme purpose: to direct and manage financial planning and expenditure of the QCto

strategic objective 1.2.1: pFmA and Treasury Regulations compliant financial management policies, procedures and systems are developed and implemented.

strategic objective 1.2.2: pFmA, Treasury Regulations and pppFA compliant supply chain management policies, procedures and systems are developed and implemented.

strategic objective 1.2.3: A sustainable financial model and plan

are developed and implemented.

strategic objective 1.2.4: internal audit systems are developed and implemented.


3.1. Programme 1: administration (COnTinued)

Sub-programme 3: Human resources Management

strategic objective 1.3.1: QCTO human resources management capacities, policies, procedures and systems are developed and implemented.

strategic objective 1.3.2: A mechanism and systems to secure a conducive working environment at the QCTO are developed and maintained.

strategic objective 1.3.3: systems and processes for staff development are designed and implemented.

Sub-programme 4: Information technology

strategic objective 1.4.1: master systems plan and master technical plan are developed during 2012/13.

strategic objective 1.4.2: QCTO iCT policies, procedures and systems are developed and implemented.

strategic objective 1.4.3: QCTO website is developed,

implemented and maintained.

Sub-programme 5: Marketing and Communication

strategic objective 1.5.1: A marketing and communication strategy is developed and implemented.

strategic objective 1.5.2: QCTO marketing and communication exhibits and publications are developed and used.

Sub-programme 6: Administration

Sub-programme purpose: to ensure effective and efficient administration within the QCto

strategic objective 1.6.1: Knowledge and records are effectively managed, and easily accessible to all internal and external stakeholders.



Strategic objectives, performance indicators, planned targets and actual achievements

performance Indicator

ActualAchievement2012/13

planned target2013/14

Actual Achievement2013/14

Deviation from plannedtarget to ActualAchievement for 2013/14

Comment on deviations

programme 1: Administration Sub-programme: CeO/Governance, strategy, secretariat services and AppealsStrategic objective 1.1.1: QCTO contributes continuously through written submissions, presentations and active participation to the collective efforts of sAQA, Che and umalusi towards the achievement of nQF objectives.1.1.1.1. % attendance of sAQA, Che and umalusi Council meetings as well as CeO Committee and nQF Forum meetings by the QCTO CeO against agreed meeting schedules of different councils/committees

Target exceeded81%.

80%attendance.

not achieved.

12 out of 16 meetings were attended.

5%4 meetings were not attended.

The CeO attended all meetings where possible but in some cases she had to prioritise attendance of critical meetings.

Strategic objective 1.1.2: A strategic Risk management strategy is developed, implemented and updated annually to minimise risk for the QCTO.1.1.2.1. Risk management strategy developed and implemented

not achieved.

Risk management strategy developed and agreed by Audit and Risk Committee.

update Risk management strategy annually.

not achieved.

updating of document was however a Risk Register for 2013/14 has been approved by Council.

The Risk management strategy was not updated due to lack of capacity (staff).

An Assistant director commenced in February 2014 who will assist with Risk management.

1.1.2.2. QCTO risks monitored on quarterly basis

Achieved. Risk register updatedquarterly.

Achieved.

updated and presented to Audit and Risk Committee.


programme 1: Administration in QCTO performed as follows:








Sub-programme: CeO/Governance, strategy, secretariat services and Appeals (COnTinued)

Strategic objective 1.1.3: A five-year strategic plan and annual performance plan (App) for the QCTO is developed.1.1.3.1. strategic plan & App approved by Council and submitted to the minister by 30 november annually

not achieved.

The final App 2013/14 was submitted by the QCTO to the minister in january 2013 and approved on 17 April 2013.

1 Revised strategic plan and 1 App for 2014/15 approved by the minister.

not achieved. The Revised strategic plan and App for 2014/15 were submitted to the minister and subsequently approved by the minister.

waited for minister’s approval which is outside the control of the QCTO and fell outside the financial year.

Strategic objective 1.1.4: A system to conduct quarterly and annual monitoring and reporting is developed and implemented.1.1.4.1. Adhere to public entities Calendar (wrt document submission) as the system used for quarterly and annual monitoring and reporting

Achieved.

All compliance due dates were met including submission of Quarterly performance Report, strategic plan and App 2013/14.

set of documents as described in the public entities Calendar submitted by required due dates.

Achieved.

All due dates required on public entities Calendar were achieved which includes plans and reports.

Strategic objective 1.1.5: support services are effectively and efficiently provided to the Council.1.1.5.1. number of working days before Council meetings when documents are circulated to all Council

Achieved. 4 days. Achieved.

Council members received packs as required.

1.1.5.2. number of Council meetings held during the financial year

Achieved.

5 meetings were held and 2 workshops.

4 meetings. Achieved.

4 meetings and 1 strategic planning workshop were held.










Sub-programme: Financial managementStrategic objective 1.2.1: pFmA and Treasury Regulations compliant financial management policies, procedures and systems are developed and implemented.1.2.1.1. number of pFmA and Treasury Regulation compliant QCTO financial policies, procedures and systems are developed and implemented in line with agreements from Council or QCTO management Committee.

Achieved.

The draft plan (internal financial policies and systems) to assist the QCTO to function independently from dheT was developed.

12 Financial policies were developed and approved. A list of 9 additional financial policies to be developed in 2013/14 (policies Register) was developed and approved by Council at its meeting held on 20 February 2013.

Accounting systems to be utilised for accrual system and financial statements were identified, namely pastel evolution and Caseware. Approval was granted to procure the systems. systems are to be implemented in 2013/14.

number of QCTO financial policies agreed to by Council developed and approved.

number of QCTO financial procedures and systems agreed to by the QCTO management Committee developed and implemented.

not achieved. 7 draft financial policies developed. Only 2 were approved.

pastel and Caseware systems have been procured and are up and running.

The other draft policies are still to be agreed between FinCOm and Audit Committee level.









Sub-programme: Financial management (COnTinued)

Strategic objective 1.2.2: pFmA, Treasury Regulations and pppFA compliant supply chain management policies, procedures and systems developed and implemented.1.2.2.1. number of pFmA and Treasury Regulation and pppFA compliant QCTO supply chain management policies, procedures and systems developed and implemented in line with agreements from Council or QCTO management Committee

Achieved.

The draft plan to function independently from dheT was developed, which consists of a list of identified sCm policies (policies Register) which was developed and approved by Council at its meeting held on 20 February 2013.

draft QCTO supply Chain policy developed. The draft policy will be considered for approval by Council in may 2013.

QCTO supply chain management (sCm) policies agreed to by Council developed and approved.

number of QCTO sCm procedures and systems agreed to by the QCTO management Committee developed.

Achieved.

Strategic objective 1.2.3: A sustainable financial model and plan are developed and implemented.1.2.3.1. % of income over and above ene transfer

no target set. no target.

Strategic objective 1.2.4: internal audit systems are developed and implemented1.2.4.1. number of internal audit committee meetings to put systems in place and oversee internal audit

not achieved. 4 meetings. not achieved.

Two meetings could not take place.

2 meetings were not held as there was no internal Auditor appointed in Q1 and Q2.

The internal Auditor was appointed in August which resulted in only the Q3 and Q4 meetings taking place.










Sub-programme: human Resources managementStrategic objective 1.3.1: QCTO human resources management capacities, policies, procedures and systems are developed and implemented.1.3.1.1. number of planned posts filled

not achieved.

16 permanent positions filled.

46 posts. not achieved.

34 posts were filled.

12 posts were not filled.

management took a decision that not all posts would be advertised pending the QCTO structure review process planned to be engaged in 2014/15.

1.3.1.2. number of QCTO human resources management (hRm)policies, procedures and systems developed and implemented in line with agreements from Council or QCTO management Committee

Achieved.

The draft plan to function independently from dheT was developed, which consists of a list of 24 identified hR policies (policies Register), which was developed and approved by Council in its meeting held on 20 February 2013.

Although the development of hR policies as agreed with Council was to commence in 2013/14, 2 draft hR policies were developed, namely pmds and Recruitment policy. These will be submitted to the relevant committee for review subsequent to having obtained inputs from management.

number of QCTO hRm policies agreed by Council developed.

number of QCTO hRm procedures and systems agreed to by the QCTO management Committee developed.

not achieved. draft hR policy and procedures manual was developed, but not agreed by Council yet.

draft hR policy and procedures manual is not yet approved and implemented pending consultation with staff which will take place in 2014/15.









Sub-programme: human Resources management (COnTinued)

1.3.1.3. % of staff undergoing performance assessment

not achieved.

75% (out of the 16, 4 were outstanding) permanent staff complied as at 31 march 2013.

66% of interns (out of the 12 interns 4 were outstanding by 31 march 2013).

100%. not achieved. 25 % not achieved. As a result of the complexity of the dheT system, not all employees complied with pdms submission requirements during the year.

QCTO will have its own pms policy pending approval by Council in 2014/15.

Strategic objective 1.3.2: A mechanism and systems to secure a conducive working environment at the QCTO is developed and maintained.1.3.2.1. % staff attrition rate not to be exceeded

Achieved.

There were no staff attritions during the year under review.

5%. Achieved.

Strategic objective 1.3.3: systems and processes for staff development are designed and implemented.1.3.3.1. % of new staff inducted and oriented

not achieved.

staff recruited and appointed for QCTO through dheT were inducted and orientated on policies and procedures that govern QCTO.

100%. not achieved. not all new staff were inducted.

QCTO as a new organisation does not have its own induction programme and induction policy. QCTO is still dependent on dheT’s orientation. The QCTO’s newly drafted hR policies and procedures manual makes provision for the induction and orientation of newly appointed staff.

1.3.3.2. % staff attend capacity building sessions

Achieved. 10%. Achieved.










Sub-programme: information TechnologyStrategic objective 1.4.1: master systems plan and master technical plan developed during 2012/13.1.4.1.1. % completion of the master systems plan and master technical plan

not achieved.

specifications and TORs for the tender for msp are finalised and ready for publishing. The processes have been put on hold pending the appointment of the director: iT who should input and take the processes forward.

100% completion.

not achieved. The master Technical plan was not completed.

due to delays in the finalisation of the master systems plan as a result of delayed tendering processes, the technical plan could not be completed.

Strategic objective 1.4.2: QCTO iCT policies, procedures and systems are developed and implemented.1.4.2.1. QCTO information and Communication Technology (iCT) policies, procedures and systems developed

Achieved.

The draft plan to function independently from dheT was developed, which consists of a list of 3 identified iCT policies (policies Register) which was developed and approved by Council at its meeting held on 20 February 2013.

QCTO iCT policies agreed to by Council developed and approved by 30 sept 2013.

number of QCTO iCT procedures and systems agreed to by the QCTO management Committee developed by 31 dec 2013.

Achieved.

1.4.2.2. QCTO information and Communication Technology (iCT) policies, procedures and systems implemented

no target. no target.









Sub-programme: information Technology (COnTinued)

Strategic objective 1.4.3: QCTO website developed, implemented and maintained during 2012/131.4.3.1. % establishment of the QCTO website

not achieved.

The status quo in relation to the development of the website from the service provider was as follows on 31 march 2013:• home /welcome page

– 100% complete• QCTO data loader –

80% complete• About us page –

100% complete• events page – 90%

complete• FAQ page – 95%

complete• Contact us page –

95% complete• General documents –

95% complete• Find Occupations,

Qualifications and more page – 70% complete.

100%. Achieved.

1.4.3.2. number of visitors per month to the website

not achieved.

website is not yet fully functional.

1,000visitors.

not achieved. QCTO went live on 31 march 2014.

The development of the website was only completed at the end of march 2014, hence less than 1,000 visitors.

Sub-programme: marketing and Communication

Strategic objective 1.5.1: A marketing and communication strategy is developed and implemented.

1.5.1.1. draft marketing and communication strategy developed

A draft marketing and communication strategy is planned for development in 2013/14.

A draft strategy developed by 31 march 2014.

not achieved. development of the draft marketing and Communication strategy is not yet completed.

The process was delayed as a result of delayed procurement processes at dheT for appointment of the QCTO pR Agency.










Sub-programme: marketing and Communication (COnTinued)

1.5.1.2. marketing and communication strategy implemented

marketing and communication strategy will be implemented in 2013/14 subsequent to the development and approval of the strategy scheduled in 2013/14.

Strategic objective 1.5.2: QCTO marketing and communication exhibits and publications are developed and used.1.5.2.1. prepare and print publications

not achieved.

QCTO diaries were printed for marketing.

Annual Report was printed for marketing.

QCTO banners were finalised.

One annual newsletter published.QCTO diaries printed for marketing.Annual Report printed for marketing.update printed publications e.g. frequently asked questions and answers.

not achieved. newsletter and printed publications were not printed.

newsletter and printed publications were not printed because there was a delay in the procurement process at dheT to appoint the QCTO pR Agency. For the greater part of 2013/14 QCTO was still making use of the dheT systems.

1.5.2.2. number of events exhibited at

Target exceeded.

QCTO took part in and exhibited at the sAppb road shows (7) during march 2013, nsA road shows (2) and AppeTd (1).

4 events. Achieved.

Sub-programme: AdministrationStrategic objective 1.6.1: Knowledge and records are effectively managed, and easily accessible to all internal and external stakeholders.1.6.1.1. develop and implement a QCTO document management system

Achieved.

manual filing system is in place.

draft QCTO document management system developed by 31 march 2014.

not achieved. The electronic document management system was not completed.

QCTO did not have the iT infrastructure to host the entire electronic system. The process had to be put on hold until QCTO moves to its own office space.




Strategy to overcome areas of under-performance

The following strategic interventions will be deployed to circumvent under-performance areas:

• urgent filling of critical positions within the approved structure

• expedition of the draft QCTO hR policies and procedures manual for approval by Council in order to completely wean QCTO from dheT hR policies and systems.

• Finalisation of approval processes for the draft Financial policies

• development and implementation of the marketing and Communications strategy

• Technical implementation of the master systems plan

• updating and full implementation of Risk management strategy

Linking performance with budgets

The budget and expenditure could not be presented for each programme. The QCTO relied on the dheT system to capture the budget and expenditure, which only permitted QCTO’s budget and expenditure to be captured as single programme. This challenge will continue to exist for the 2013/14 financial year until the QCTO has finalised acquiring its own system which will be used for capturing both the budget and expenditure information per programme and per each line item. The said QCTO system will be fully implemented in 2014/15.

3.2. Programme 2: occupational Qualifications management

The purpose of programme 2: Occupational Qualifications management is to ensure the availability and currency of authentic qualifications and part qualifications for trades

and non-trade occupations on the OQsF; to ensure a quality assurance environment that is fair, effective and efficient in relation to Accreditation, Assessment and Certification of qualifications for trades and non-trade occupations; and to manage an effective and efficient engagement strategy for the advancement of nQF objectives with stakeholders.

The following sub-programmes and strategic objectives link to programme 2:

Sub-programme 1: occupational Qualifications Development and review Sub-programme purpose: to populate the occupational qualifications sub-framework with authentic quality qualifications and to maintain their currency

strategic objective 2.1.1: policies for occupational qualifications development and review are developed, operationalised and implemented.

strategic objective 2.1.2: A user-focused and user-friendly Trades and Occupations sub-framework is finalised and maintained.

strategic objective 2.1.3: Occupational qualifications are developed, reviewed and recommended for registration.

strategic objective 2.1.4: A system for the ongoing monitoring,

evaluation, quarterly and annual reporting of the development of occupational qualifications is developed and implemented.


Sub-programme 2: occupational Qualifications, Quality Assurance (Assessment, provision, Accreditation, Certification, Foundational learning, Monitoring and evaluation)

Sub-programme purpose: to provide a quality assurance environment that is fair, effective and efficient

strategic objective 2.2.1: policies for occupational qualification quality assurance are developed, operationalised and implemented by 2012/13.

strategic objective 2.2.2: An effective assessment and moderation system is developed and implemented by 2013/14.

strategic objective 2.2.3: An efficient verification and certification system is developed and implemented by 2013/14.

strategic objective 2.2.4: A system for provider and programme accreditation, including for FlC, is developed and implemented by 2012/13.

strategic objective 2.2.5: The occupational foundational learning part qualification is implemented by 2012/13.

strategic objective 2.2.6: historically registered qualifications are managed and phased out.

strategic Objective 2.2.7: monitoring and evaluation of Quality Assurance partners through the establishment of a monitoring and evaluation team.


Strategic objectives, performance indicators planned targets and actual achievements

programme 2: Occupational Qualifications management in the QCTO performed as follows:

programme / Sub-programme:







programme name 2: Occupational Qualification managementSub-programme: Occupational Qualifications development and Review Strategic objective 2.1.1 policies for occupational qualifications development and review are developed, operationalised and implemented.2.1.1.1. policies adopted by Council as per agreed list

Achieved.

Council approved a list of priority policies.

policy on requesting the development or re-registration of occupational qualifications developed.

policy for evaluation of curriculum documents, external assessment specifications document and qualifications document to recommend the qualifications to sAQA for registration developed.

not achieved.

The two policies are available in draft format and must still be approved by Council.

The two policies were not taken to Council for approval. The approval process will take place in 2014/15.

The late start in developing the policies delayed the process of getting these policies approved. These policies had to be aligned with the OQFs policy. draft policies are in place and approval thereof will take place in the next financial year.


3.2. Programme 2: occupational Qualifications management (COnTinued)








Sub-programme: Occupational Qualifications development and Review (COnTinued)

2.1.1.2. Completion of guidelines for the implementation of processes for each policy

Target exceeded.

Criteria and guidelines on requesting the development or re-registration of occupational qualifications developed.

Criteria and guidelines for evaluation of curriculum documents, external assessment specifications document and qualifications document to recommend the qualifications to sAQA for registration developed.

not achieved.

The two sets of criteria and guidelines are available in draft format and must still be approved.

The two criteria and guidelines were not taken through the approval process. The approval process will take place in 2014/15.

The late start in developing the policies delayed the process of developing guideline documents. draft guideline documents are in place and approval thereof will take place in the next financial year.










Strategic objective 2.1.2: A user-focused and user-friendly Trades and Occupations sub-framework is finalised and maintained.2.1.2.1. Turn-around time (weeks) from final qualification received by QCTO to submission to sAQA

not achieved.

The six weeks turn around time as earlier envisaged was found to be far too short compared to the actual time required to evaluate qualifications.

The actual evaluation timeline implications were considered by the Qualifications Committee resulting in a recommendation that was tabled and approved by Council on 16 november 2012.

The approved turnaround time requires a minimum of 90 days to evaluate an occupational qualification. This evaluation timeline includes the public comments process which the QCTO manages.

Qualifications that meet evaluation requirements are then tabled to Council for approval before they are submitted to sAQA with a recommendation for registration.

6 weeks. not achieved. Time exceeded by a multiple of 4.

it became impossible to finish the evaluation processes within the initially envisaged timeframe. in reality the evaluation process takes a minimum of six months.











2.1.2.2. Finalise Occupational Qualifications sub-framework

Achieved.

Comments were submitted to Council on 23 november 2012.

Council to approve final Occupational Qualifications sub-framework.

Achieved.

Council approved the Occupational Qualifications sub-framework.

Strategic objective 2.1.3: Occupational qualifications are developed, reviewed and recommended for registration.2.1.3.1. number of new applications for new and improved qualifications in the development process.

Achieved.

The target of 140 applications was achieved. The application processing is at various phases. stakeholder engagements as part of the applications processing take a long time. not all applications result in the actual development of occupational qualifications.

140applications.

Achieved.

Target exceeded.

A total of 165 applications was received.

25 more applications than expected were received.

The QCTO issued a moratorium on applications with a focus on applications for replacing existing qualifications, hence this influx and exceeding of target.










2.1.3.2. number of qualifications developed and recommended to sAQA for registration

not achieved.

The QCTO received a total of 59 qualifications that were submitted for evaluation.

The outcome of the evaluation process can be summarised as follows:

nine (9) of the abovementioned qualifications were pipeline qualifications which were on the system requiring attention as part of transitional arrangements. These qualifications were evaluated and recommended for registration with sAQA.

Two qualifications were from the newly developed qualification.such qualifications were taken through the entire evaluation process and were recommended for registration. Only one of these qualifications was approved by Council on 20 February 2013. The remaining qualification will be re-tabled at the next Council meeting.

eighteen (18) newly developed qualifications were subjected to the public comments process as part of the evaluation process. A recommendation for registration of these qualifications is expected for tabling at Council’s first meeting in the financial year 2013/2014.

The remainder of the qualifications, totalling 30, were found not to meet the evaluation requirements. These qualifications were sent back to the development Quality partners for further attention.

70qualifi-cations.

not achieved.

The QCTO received an overall total of 82 qualifications for evaluation. Of this overall total, 59 qualifications were recommended for registration (52 being the qualifications and seven being the n4 – n6 re-curriculated subjects).

Two qualifications could not be processed further because there were no Assessment Quality partners in place. Twenty-one qualifications were sent back to development Quality partners for amendments to cover gaps that were identified during the evaluation.

There was a shortfall of 11 qualifications that could not be recommended to sAQA as per the set target.

There were delays experienced in the evaluation process whereby feedback was not received on time. This impacted on the targets that were set per quarter.

Furthermore the postponement of one committee meeting impacted negatively on the qualifications targets that had to be processed at that time.











Strategic objective 2.1.4: A system for the ongoing monitoring, evaluation, quarterly and annual reporting of the development of occupational qualifications is developed and implemented.2.1.4.1. number of monitoring and evaluation reports.

Achieved.

various reports were received as part of monitoring and evaluation of the qualifications development processes.

25 reports. Achieved.

A total of 25 reports are in place as planned.

Sub-programme: Occupational Qualifications, Quality Assurance (Assessment, provision, Accreditation, Certification, Foundational learning, monitoring and evaluation)Strategic objective 2.2.1: policies for occupational qualification quality assurance are developed, operationalised and implemented by 2012/13.2.2.1.1. policies adopted by Council as per agreed list

Achieved.

A list of policies was approved by the Council and the development continued as per the agreed list.

11 policies to be approved by Council

not achieved.

Assessment policy approved by Council (19 may 2014).

10 policies. in terms of the planned target for 2013/14 only one policy was approved by Council. however, the 2013/14 planned target of 11 listed policies in the App erroneously included four policies which were approved in the 2012/13 cycle, as well as two policies which Council determined were outside the mandate of the QCTO.The target for the five policies was not achieved due to manpower and time constraints as well as the filling of key positions (Chief director: Occupational Quality Assurance) to drive the process.









Sub-programme: Occupational Qualifications, Quality assurance (Assessment, provision, Accreditation, Certification, Foundational learning, monitoring and evaluation) (COnTinued)

2.2.1.2. Completion of guidelines for implementation of policies and processes for each policy

no target set.

draft criteria and guidelines for external integrated summative Assessment, Certification, Accreditation of skills development providers and Assessment Centres were developed. Criteria and guidelines for AQps were approved.

- -

2.2.1.3. policies for occupational qualification quality assurance developed, operationalised and implemented

disclosure: no objective, performance indicator and target for 2012/13.

minister approved as addendum 2013/14 in Q4.

QCTO officials nominated to be members of sAQA reference groups in developing Rpl, CAT and Assessment policies.

Achieved.

QCTO staff served on sAQA reference groups for the development of the Assessment, Rpl and CAT policies. All three policies were developed.

Strategic objective 2.2.2: An effective assessment and moderation system is developed and implemented by 2013/14.2.2.2.1. Assessment and moderation system developed and implemented

not achieved.

An assessment centre accreditation system is in place. policy was approved by Council. implementation will start.

Assessment and moderation system implemented by sept 2013.

Achieved.

system for the accreditation of assessment centres is in place.











2.2.2.2. number of AQps assessment systems evaluated to be valid, reliable and fair

not achieved.

10 AQp applications were evaluated and their systems were in order and accordingly.

20 AQps. not achieved. (13 AQps approved).

7 AQps. The applications processed depend on recommendations from the dQps and the readiness of the applicant to approach the QCTO and apply. All applications received were processed.

Strategic objective 2.2.3: An efficient verification and certification system is developed and implemented by 2013/142.2.3.1. verification and Certification system developed and implemented

not achieved.

The Artisan Certification system is still in the offices of dheT. QCTO officials doing Artisan Certification in dheT offices issuing certificates under the guidance of dheT officials.

The QCTO Certification policy was approved by Council on 20 Feb 2013.

verification and Certification system implemented by 31 dec 2013.

not achieved.

verification and Certification system implemented for Trade Certificates only.

system for non-trade occupational qualifications not yet implemented.

system for non-trade occupational qualifications will be implemented to coincide with roll-out of new occupational qualifications in 2014/15.










2.2.3.2. number of apprentices who completed external assessment

not achieved.

2,443 apprentices.

12,000. not achieved.

(5,037 certificates issued).

6,963. The QCTO processes the recommendations received for certification. Only 5,037 recommendations were received and successfully certificated.

The target was an estimation based on the ministerial estimates for artisan development.

2.2.3.3. Average time to issue certificates after assessment (weeks)

Achieved. 7 weeks. not achieved.

Only trade certificates issued.

Certificates for non-trade occupational qualifications not issued as qualifications not yet implemented.

The target was not achieved as the target addresses the complete certification system. Currently only trade certificates are issued. Certificates for the non-trade occupational qualifications will be issued as the qualifications are implemented.

Strategic objective 2.2.4: A system for provider and programme accreditation, including for FlC, is developed and implemented by 2012/13.2.2.4.1. A system for provider and programme accreditation is developed and implemented

Achieved.

A provider accreditation system is in place.Accreditation of skills development providers policy was approved by Council.

A system for provider and programme accreditation implemented by sept 2013.

Achieved.

policy for Accreditation of skills development providers approved.

processes and systems in place to give effect to 2.2.4.2 below.











2.2.4.2. At least one provider accredited per new occupational qualification registered

not achieved 2.

70. not achieved.

2 providers accredited for new qualifications.

68 providers still to be accredited as courses are registered and taken up by providers.

providers are accredited to offer qualifications.The qualifications were registered late in the 2013/14 cycle and hence only a limited number of applications were received, of which only 2 were awarded accreditation status.

Strategic objective 2.2.5: The occupational foundational learning part qualification is implemented by 2012/13.2.2.5.1. number of learners assessed

not achieved 366.

20,000learners.

not achieved.

(4,531 learners assessed).

15,469 learners.

The FlC is a requirement for new occupational qualifications. The qualifications were registered late in the 2013/14 cycle and this impacted negatively on the number of learners registering for the FlC. The target was an estimation based on the estimated qualifications to be registered.

2.2.5.2. number of learners that passed the qualification

not achieved 192.

15,000 learners.

not achieved.

(2,421 learners passed).

12,579 learners.

The number of learners passing is linked to the limited learner uptake on FlC (see 2.2.5.1 above). The target was an estimation based on the estimated learners to be assessed (see 2.2.5.1).










Strategic objective 2.2.6: historically registered qualifications are managed and phased out.2.2.6.1. number of historically registered qualifications managed

Target exceeded by2,245.

1,000qualifications.

Achieved.

2.2.6.2. number of reduced historically registered qualifications

not achieved. 500 qualifications.

not achieved. 500 qualifications were not reduced as per target.

The number of historically registered qualifications will be drastically reduced in 2014/15. letters were sent before the end of the Q4 requesting seTAs to indicate qualifications to be deregistered, in particular those qualifications with no uptake.

Strategic objective 2.2.7: monitoring and evaluation of Quality Assurance partners through the establishment of a monitoring and evaluation team.2.2.7.1. number of monitors and support staff employed

disclosure: no objective, performance indicator and target for 2012/13. minister approved as addendum 2013/14.

26 staff employed.

not achieved. 4 staff not employed.

The Q4 target was incorrectly reported as achieved. Only 22 staff were employed. The target was not met due to 4 offers that were not accepted.

2.2.7.2. number of Quality Assurance partners monitored

disclosure: no objective, performance indicator and target for 2012/13. minister approved as addendum 2013/14.

15 Quality Assurance partners monitored.

Achieved.

19 Quality Assurance partners monitored.

An overachievement was due to the fact that an identified need was established and a decision was taken to monitor all QAps.




Strategy to overcome areas of under-performance

The following strategy will be put in place to address areas of under-performance:

• A developed and implemented year planner should be strictly adhered to.

• Activities and reporting should be aligned to the strategic objectives of the organisation.

• set realistic targets and timelines for qualifications development and assessment.

• Administrative support and managerial capacity to be increased.

• developed processes and procedures to be implemented.

Linking performance with budgets

The budget and expenditure could not be presented for each programme. The QCTO relied on the dheT system to capture the budget and expenditure, which only permitted QCTO’s budget and expenditure to be captured as a single programme. This challenge continued to exist for the 2013/14 financial year until the QCTO has finalised acquiring its own system which will be used for capturing both the budget and expenditure information per programme and per each line item.

The said QCTO system will be fully implemented in 2014/15.

4. reVenUe collecTion

2012/2013 2013/2014

Sources of revenue estimate

Actual Amount

Collected

(over)/under

Collection estimate

Actual Amount

Collected(over)/under

CollectionR’000 R’000 R’000 R’000 R’000 R’000

Government Grant

20,352 20,352 - 21,747 21,747 -

Finance income 837 837 - - 1,314 (1,314)

seTA Grant - - - 15,428 15,428 -

nsF - - - 939 82 659

total 21,189 21,189 - 38,114 38,571 (655)


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1. inTrodUcTion

Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. in addition to legislative requirements based on a public entity’s enabling legislation, corporate governance with regard to public entities is applied through the precepts of the public Finance management Act (pFmA).

parliament, the executive and the Accounting Authorities of the QCTO are responsible for corporate governance.

2. PorTfolio commiTTees

The QCTO met with the higher education and Training portfolio Committee on 22 may 2013. The QCTO could not be represented by the Chairperson of Council, prof. peliwe lolwana, as she was hospitalised and the Chief executive Officer, ms G. joyce mashabela was overseas in Germany. The Acting Chief executive Officer, ms ndivhu madilonga and the Chief director: Qualifications management, mr Thomas lata presented the Annual performance plan for 2013/14.

The Chief executive Officer, the Chief Financial Officer and the Chairperson of Council attended a second meeting with the portfolio Committee on 10 October 2013 to present the QCTO’s Annual Report for the financial year 2012/13.

both meetings with the portfolio Committee were useful as they gave the QCTO the opportunity to understand the portfolio Committee’s expectations and needs.

3. eXecUTiVe aUTHoriTY The QCTO submitted the final 2012/13 Annual Report to the minister via the department of higher education and Training on 31 july 2013. The report was delivered to parliament on 30 August 2013 and tabled in parliament on 11 september 2013.

The QCTO has also submitted all four of the QCTO’s Quarterly performance Reports for the 2013/14 financial year to the minister via the director-General: higher education and Training as required by the department. submission dates were as follows:

a. Quarter 1 performance Report: 30 july 2013b. Quarter 2 performance Report: 29 October 2013c. Quarter 3 performance Report: 30 january 2014d. Quarter 4 performance Report: 29 April 2014

no issue was raised by the executive Authority.

4. THe accoUnTing aUTHoriTY

Introduction

The purpose of the QCTO is to establish, maintain and quality assure occupational standards and qualifications and learning in and for the workplace as referred to in its mandate and legislative requirements cited earlier in the report. The QCTO is one of three Quality Councils (QC) tasked with the role of standards setting and quality assurance.

pART C: GOveRnAnCe


QCto Council

Prof. PeliWe P lolWanaChairperson of the Council

ms g JoYce masHaBelaChief executive Officer QCTO

mr malesela malekadeputy Chairperson of Council

mr Joe samUelsChief executive Officer sAQA member

ms maleBo mogoPodi (leBona)member

dr mafU rakomeTsiChief executive Officer umalusi member

pART C: GOveRnAnCe (COnTinued)


mr THaBo masHongoaneCo-opted member

dr marina le grangemember

ms sTella carTHYmember

ms PUlane maseBemember

mr maliViWelUmkaCo-opted member

ms gerda magnUsCo-opted member

Members not present: 1. mr Ahmed essop2. mr Thulani mabuza3. mr ecliff Tantsi4. mr willy eduard matthiae5. dr bheki mahlobo


The requirements of the QCTO’s Constitution are provided for in the sdA. The second Constitution was approved by the minister in 2011. The Council has commenced with a discussion to identify areas which need to be revised. This has received attention during the 2013/14 financial year and will continue in 2014/15.

name

Designation (in terms of the public entity Board structure) Date appointed Date resigned Qualifications Area of expertise Board Directorships

other Committees (e.g: Audit committee)

no. of meetings attended(4 ordinary Council meetings held)

prof. peliwe lolwana Chairperson 26 sept 2011 n/A phd Knowledge of education and training

Research

policy development

leadership and management

Governance

national Research Foundation

human Resources development of sA Council

metropolitan momentum insurance Foundation

hotazel manganese mines education Trust

university of Fort hare Council

executive Committee (Chairperson)

4 present

mr malesela maleka deputy Chairpersonnominated by nedlAC to represent organisations of community and development interests

20 jan 2010 n/A professional Certificate in public management

member of the Commission on employment equity

member of bank seTA board

executive CommitteeQualifications Committee (Chairperson)

4 present

ms G joyce mashabela

CeO: QCTO 1 Apr 2012 n/A mA, ms, mbA Teachingmanagement Administration

sAQA

Council on higher education (Che)

umalusi

national skills Authority

executive CommitteeFinance Committee

4 present

mr joe samuels CeO: sAQA 1 mar 2012 n/A bsc hons (physiology), mphil (Adult education)

Qualifications framework, policy, adult education

Council on higher education umalusi

QCTO

sAQA

nsA

none 2 present2 apologies received

Council composition



name

Designation (in terms of the public entity Board structure) Date appointed Date resigned Qualifications Area of expertise Board Directorships


no. of meetings attended(4 ordinary Council meetings held)

prof. peliwe lolwana Chairperson 26 sept 2011 n/A phd Knowledge of education and training

Research

policy development

leadership and management

Governance

national Research Foundation

human Resources development of sA Council

metropolitan momentum insurance Foundation

hotazel manganese mines education Trust

university of Fort hare Council

executive Committee (Chairperson)

4 present

mr malesela maleka deputy Chairpersonnominated by nedlAC to represent organisations of community and development interests

20 jan 2010 n/A professional Certificate in public management

member of the Commission on employment equity

member of bank seTA board

executive CommitteeQualifications Committee (Chairperson)

4 present

ms G joyce mashabela

CeO: QCTO 1 Apr 2012 n/A mA, ms, mbA Teachingmanagement Administration

sAQA

Council on higher education (Che)

umalusi

national skills Authority

executive CommitteeFinance Committee

4 present

mr joe samuels CeO: sAQA 1 mar 2012 n/A bsc hons (physiology), mphil (Adult education)

Qualifications framework, policy, adult education

Council on higher education umalusi

QCTO

sAQA

nsA



name

Designation (in terms of the public entity Board structure) Date appointted Date resigned Qualifications Area of expertise

Board Directorships (list the entities)


no. of Meetings attended(4 ordinary Council meetings held)

mr Ahmed essop CeO: Che 7 dec 2010 n/A honours degree in sociology masters in international development education

higher education umalusi

sAQA

QCTO

Old mutual education Trust


dr mafu Rakometsi CeO: umalusi 20 jan 2010 n/A phd history of educationCurriculum, examinations and assessment

sAQA

QCTO

Che


vacant executive Officer: nsA vacant since 1 Apr 2011. dheT to appoint executive Officer: nsA

n/A

ms malebo mogopodi nominated by nedlAC to represent organised labour

12 Oct 2010 n/A AbeT Certificate unisA

eTp practitioner nQF 5

Adult learning and teaching

skills development and training practices

Community development

project management

basadi badiri primary Cooperative

merseta board

2 present1 apology received1 absent

mr ecliff (Zwelitsha) Tantsi

nominated by nedlAC to represent organised labour

20 jan 2010 n/A matric higher certificate in non-formal education

Adult education and Training, labour relations

num national executive

jb marks board

mQA board

eTbmTC board

executive Committee 4 absent

ms stella Carthy nominated by nedlAC to represent organised business

20 jan 2010 n/A Qualified teacher – primary school ipm diploma,hR labour Relations Training

skills development nsA executive CommitteeAssessment and Accreditation Committee (Chairperson)

4 present


Council composition (COnTinued)


name





mr Ahmed essop CeO: Che 7 dec 2010 n/A honours degree in sociology masters in international development education

higher education umalusi

sAQA

QCTO

Old mutual education Trust


dr mafu Rakometsi CeO: umalusi 20 jan 2010 n/A phd history of educationCurriculum, examinations and assessment

sAQA

QCTO

Che


vacant executive Officer: nsA vacant since 1 Apr 2011. dheT to appoint executive Officer: nsA

n/A

ms malebo mogopodi nominated by nedlAC to represent organised labour

12 Oct 2010 n/A AbeT Certificate unisA

eTp practitioner nQF 5

Adult learning and teaching

skills development and training practices

Community development

project management

basadi badiri primary Cooperative

merseta board

2 present1 apology received1 absent

mr ecliff (Zwelitsha) Tantsi

nominated by nedlAC to represent organised labour

20 jan 2010 n/A matric higher certificate in non-formal education

Adult education and Training, labour relations

num national executive

jb marks board

mQA board

eTbmTC board

executive Committee 4 absent

ms stella Carthy nominated by nedlAC to represent organised business

20 jan 2010 n/A Qualified teacher – primary school ipm diploma,hR labour Relations Training

skills development nsA executive CommitteeAssessment and Accreditation Committee (Chairperson)

4 present


name





mr willy eduard matthiae

nominated by nedlAC to represent organised business

20 jan 2010 n/A national Technical diploma mechanical engineeringbCom. (business management & industrial psychology)management development diploma

engineering, management, project management, Training and development

none

Finance Committee (Chairperson)Qualifications Committee

4 present

mr Thulane mabuza nominated by nedlAC to represent organisations of community and development interests

20 jan 2010 n/A not available at time of printing

not available at time of printing


1 absent3 apologies received

dr bheki mahlobo Appointed by the minister to represent the interests of public education and training providers

20 jan 2010 n/A phd Curriculum planning none 4 apologies received

dr marina le Grange member nominated by the private providers of education and training to represent the interests of private education and training providers which are accredited providers in terms of the sdA

20 jan 2010 n/A bAnhOdbedmedded

educationmanagement and leadership

AppeTd board member

director: experiential Technologies

Qualifications Committee, then moved to Assessment and Accreditation Committee

4 present

dheT: vacant member to represent the interests of the state

vacant: jan 2012




name





mr willy eduard matthiae

nominated by nedlAC to represent organised business

20 jan 2010 n/A national Technical diploma mechanical engineeringbCom. (business management & industrial psychology)management development diploma

engineering, management, project management, Training and development

none

Finance Committee (Chairperson)Qualifications Committee

4 present

mr Thulane mabuza nominated by nedlAC to represent organisations of community and development interests

20 jan 2010 n/A not available at time of printing



1 absent3 apologies received

dr bheki mahlobo Appointed by the minister to represent the interests of public education and training providers

20 jan 2010 n/A phd Curriculum planning none 4 apologies received

dr marina le Grange member nominated by the private providers of education and training to represent the interests of private education and training providers which are accredited providers in terms of the sdA

20 jan 2010 n/A bAnhOdbedmedded

educationmanagement and leadership

AppeTd board member

director: experiential Technologies

Qualifications Committee, then moved to Assessment and Accreditation Committee

4 present

dheT: vacant member to represent the interests of the state

vacant: jan 2012


name





ms pulane masebe member to represent the interests of the state

25 Aug 2011 n/A bAdmin honours degree (industrial psychology)

human Resource development

board member in the Aerospace Centre of excellence, university of the witwatersrand

Qualifications Committee 2 present2 apologies received

Co-opted

mr Thabo mashongoane

Co-opted from nsA (non-voting)

16 nov 2011 mTech business Administration

skills development none n/A 2 present2 apologies received

ms Gerda magnus* Co-opted from vocational branch (Curriculum and programmes support to FeT Colleges)

25 April 2013 bA honours human Resource development

skills developmenthReducation and Training

none none 3 present1 apology received

mr maliviwe lumka* Co-opted from skills development branch

25 April 2013 1 present3 apologies received

* The Accounting Authority engaged the director-General of the department of higher education and Training to promote synergy between the QCTO and the two branches and requested staff members to attend Council meetings.




name





ms pulane masebe member to represent the interests of the state

25 Aug 2011 n/A bAdmin honours degree (industrial psychology)

human Resource development

board member in the Aerospace Centre of excellence, university of the witwatersrand

Qualifications Committee 2 present2 apologies received

Co-opted

mr Thabo mashongoane

Co-opted from nsA (non-voting)

16 nov 2011 mTech business Administration

skills development none n/A 2 present2 apologies received

ms Gerda magnus* Co-opted from vocational branch (Curriculum and programmes support to FeT Colleges)

25 April 2013 bA honours human Resource development

skills developmenthReducation and Training

none none 3 present1 apology received

mr maliviwe lumka* Co-opted from skills development branch

25 April 2013 1 present3 apologies received


The Council has appointed the following Committees and quarterly reports from the Committees are presented to Council:

Committee

no. of meetings

heldno. of members name of members

no. of meetings attended

no. of apologies received

executive Committee

4 6 members(5 members plus 1 vacancy)

prof. peliwe lolwana (Chairperson)mr malesela maleka (deputy Chairperson of QCTO)ms joyce mashabela CeO)ms stella Carthymr Zwelitsha (ecliff) Tantsi

4

3

440

n/A

1

n/An/A

1 apology and 3 absent

Finance Committee

3 5 members(4 members plus one vacancy)

mr willy matthiae (Chairperson)mr Gitesh mistryms joyce mashabelamr lunga ntshinga

3

322

n/A

n/A1 1

Qualifications Committee

6 8 members(7 members plus one vacancy)

mr malesela maleka (Chairperson)mr willy matthiaemr louis schuttems nomathemba Kubhekadr Allyson lawlessprof. paul nicholas German beardmrs Kalawathie bella sattarms pulane masebedr marina le Grange (later moved to Assessment and Accreditation Committee)

2

43656

433

4

23

n/A1

n/A

221

Assessment and Accreditation Committee

4 10 members ms stella Carthy(Chairperson)mr Zwelitsha (ecliff) Tantsidr Tholsia naikerdr linda van Ryneveldmr phineas sibanyonimr bogoshi Tshehlams margaret machaba

ms mary pietersmr Rod harker dr marina le Grange (appointed nov 2013)

5

043351

312

n/A

5 absent1 rep

22

n/A2 apologies

and 2 absent24-

*The data of the Audit and Risk Committee appears later.


Council committees

The QCTO Council members are remunerated as per national Treasury rates. Reimbursement is in accordance with the subsistence and Travelling policy of the dheT. members from the public sector do not receive remuneration.

name remuneration other Allowanceother

reimbursement totalprof. peliwe lolwana(Chairperson) 18,046.00 769.44 - 18,815.44mr malesela maleka(deputy Chairperson) 15,072.00 2,935.00 - 18,007.00ms malebo mogopodi 5,606.00 - - 5,606.00mr ecliff (Zwelitsha) Tantsi - - - -ms stella Carthy 14,246.00 2,877.90 - 17,123.90mr willy eduard matthiae - 5,907.20 - 5,907.20mr Thulane mabuza - - - -dr marina le Grange 14,246.00 2,877.90 - 14,246.00ms pulane masebe - - - -dr bheki mahlobo - - - -ms joyce mashabela (CeO) n/A n/A n/A n/Amr joe samuels n/A n/A n/A n/Amr Ahmed essop n/A n/A n/A n/Adr mafu s Rakometsi n/A n/A n/A n/A

* The above amounts constitute remuneration, subsistence and travelling expenses for Council meetings.

remuneration of Council members


5. risk managemenT

The Council approved the QCTO’s Risk management policy in may 2013. The agreed Risk management Framework and strategy was available in the QCTO but due to limited staff could not be fully implemented; however progress has been made.

A Risk manager has also been appointed to drive the process in the QCTO. when the QCTO’s internal Auditor was appointed a two-day risk assessment workshop was conducted at strategic level which resulted in an updated Risk Register against the 2013/14 Annual performance plan. This Risk Register was approved by Council and is updated on a quarterly basis where progress is reported to the Audit and Risk Committee.

planning workshops were held at the directorate level to ensure operational alignment with strategic objectives. during this process teams were encouraged to list risks against operational plans and capture actions that will mitigate these risks, which are to become part of each individual’s performance agreement.

6. inTernal conTrol UniT

Great progress was made to improve internal controls through the appointment of the QCTO’s own internal Auditor. Audit Action plans with findings raised by the AGsA as well as internal Audit are in place and are being closely monitored by the Audit and Risk Committee.

7. inTernal aUdiT and aUdiT commiTTees

Key activities and objectives of Internal Audit

The objective of the internal Audit function is to provide independent, objective assurance designed to add value and improve the QCTO operations. it helps the QCTO accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

The scope of the internal Audit function includes, but is not limited to, an evaluation of:

• The reliability and integrity of financial and operating information and the means used to identify, measure, classify and report such information;

• The systems established to ensure compliance with those policies, plans, procedures, laws and regulations that could have a significant impact on operations and reports;

• The means of safeguarding assets and, where appropriate, verification of the existence of such assets;

• The economic and efficient management of the company’s financial, human and other resources, and the effective conduct of its operations; and

• Operations or programmes to ascertain whether or not results are consistent with established objectives and goals and whether or not the operations are being carried out as planned.

The internal Audit function objectives, defined in terms of audit focus areas, are:

• Financial auditing, which aims to ensure that reliable information is produced for both management purposes and external publication and that adequate controls exist to safeguard assets;

• operational auditing, which focuses on the effectiveness and efficiency of the substructure’s operations;

• Compliance auditing, which addresses compliance with relevant national laws and regulations, best practice and the QCTO’s established policies and procedures;

• It auditing, which reviews the controls over information technology and whether iT supports the QCTO’s objectives; and

• performance auditing, which evaluates measures instituted by management to ensure economic acquisition of resources and efficient and effective utilisation of resources.



7. inTernal aUdiT and aUdiT commiTTees (COnTinued)

Audit work

The following activities as per audit plan were completed from september 2013:

• enterprise Risk management Review• performance and Compliance monitoring Review

(Q1 and Q2 submission)• Review of draft Annual performance plan for

2014/15• internal audit and Auditor-General follow-up

reviews

objectives and key activities of the Audit and risk Committee

objectives of the Audit and risk Committee

1. The objective of the Audit and Risk Committee is to assist the QCTO in the discharge of its responsibilities for financial and management reporting, corporate governance and corporate control, including the review of internal controls and the management and mitigation of risks.2. it should also review the QCTO’s procedures in complying with relevant laws, regulations and ethics.3. The Committee has an advisory role to the Council.

Key activities of the Audit and risk Committee

The Audit and Risk Committee should assist the Council in carrying out its responsibilities as they relate to the QCTO’s:

(a) financial, management and other reporting practices;

(b) internal controls and management of risks;(c) compliance with laws, regulations and ethics;(d) report to the Council any matter

identified during the course of carrying out its duties that it considers significant; and

(e) perform or undertake on behalf of the Council any such other tasks or actions as the Council may from time to time authorise.

Other main activities are to:

• Consider the effectiveness of the internal control and risk management system.

• understand the scope of internal and external auditors’ review of internal control over financial reporting, and obtain reports on significant findings and recommendations together with management’s responses.

• Review the QCTO risk profile on an annual basis and ensure management is effectively managing the risks.

• Review the materiality Framework and Fraud prevention plan of the QCTO.

• Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of managements’ investigation and follow-up (including disciplinary action) of any instances of non-compliance.

• Review the adequacy, reliability and accuracy of the financial information provided to management and other users of such information and annually review the Annual Financial statements.


The table below discloses relevant information on the QCTO Audit and Risk Committee members:

name QualificationsInternal or external Date appointed Date resigned

no. of meetings attended (4 meetings held)

mr paul slack(Chairperson)

CA (sA) – 1981

bCom (hons) (Financial management)

external 8 june 2012 n/A 4

mr Kevin naidoo diploma: internal Audit

diploma: Computer Audit

external 8 june 2012 5 nov 2013 2, then resigned

mr Theuns Tredoux

bCom (hons) Acc

mbl (unisa)

external 8 june 2012 n/A 31 apology

ms Cynthia Chuene

bCom (Financial Accounting)

bCom (hons) (Accounting)

external 8 june 2012 24 july 2013 1, then resigned

mr velile Kweyama

senior secondary Teachers’ diploma (ssTd)

bCompt

CiA and CCsA

external 31 january 2013 n/A 22 apologies


7. inTernal aUdiT and aUdiT commiTTees (COnTinued)


8. comPliance WiTH laWs and regUlaTions To date the QCTO has ensured that it complied with all required documentation in terms of the pFmA and Treasury Regulations, as required by the dheT’s Compliance Calendar.

The QCTO also attends various other Council and committee meetings to keep abreast of laws and regulations that need to be complied with. The QCTO works closely with the department to ensure it is continuously updated with latest laws and regulations.

The QCTO’s Assessment and Accreditation Committee has taken on a strategic role to ensure the proposed draft Trade Test Regulations meet the needs of the QCTO and promote the development of competent artisans.

The CFO also attends the CFO Forum and meetings arranged by national Treasury to keep abreast of new developments.

9. UnsoliciTed ProPosal

during the year under review, the QCTO considered a unsolicited proposal from the wits education policy unit. Through the department of higher education and Training, the QCTO was introduced to the desire of the wits education policy unit to be involved in the upgrade of the n4 – n6 programmes. The wits education policy unit has researched the issue extensively and in the process has made contact with

several groups and individuals that can assist with the project. Furthermore the wits education policy unit’s previous research in the area has enabled them to present a set of sound and practical ideas to the QCTO with respect to the project. informed by the provisions of the national Treasury practice note no. 11 of 2008/2009 on unsolicited proposals, the unsolicited proposal was considered because it described an innovative original concept of how the n4 – n6 dilemma can be addressed. This culminated in a contract with wits education policy unit to the tune of R1,688,000 for a 24-month period. The unsolicited proposal was subsequently reported to the national Treasury and the Auditor General in line with the said practice note as well as the provisions of the national Treasury practice note no. 8 of 2007/2008.

10. fraUd and corrUPTion

The QCTO is covered by the dheT’s fraud prevention plan in view of the mOA with dheT. however, the QCTO has ensured that its own fraud prevention plan was developed and agreed to by the Risk and Audit Committee. due to capacity constraints this plan could not be analysed during the past year to prepare an implementation plan of it for the QCTO. in the meanwhile more staff have been appointed, which could assist in this regard in the year ahead.

The QCTO may use the whistle-blowing policy of the dheT while the mOA exists.

no cases of fraud have become known to the QCTO during the last year.


11. minimising conflicT of inTeresT

The QCTO has permission from the dheT to use its bid committees which follow supply chain management policy. Conflict of interest has been declared by a member of the Finance Committee that should a possibility exist for his organisation to quote or tender, he would like to be excused from any such discussion in the Finance Committee. On 27 August 2013 the Chairperson of the Council declared her conflict of interest in terms of item 13.2 – wits policy unit proposal. On 27 november 2013 a member declared AppeTd’s involvement in the accreditation of providers for n4 – n6. The member declared her service on the AppeTd’s board.

12. code of condUcT

The QCTO has its own approved Code of Conduct for employees which every employee signs.

13. HealTH safeTY and enVironmenTal issUes

The QCTO moved to its own office space in mid – december 2013. The building is generally

compliant with health and safety imperatives as assessed by the landlord and therefore there are no major issues of concern identified thus far.

14. secreTarY

The QCTO does not fall under the Companies Act and therefore this section is not applicable to the QCTO (no Company secretary). The QCTO does have a director: Governance and secretariat and staff that form the secretariat to Council and most of its Committees.

15. social resPonsiBiliTY

not applicable to the QCTO for the 2013/14 financial year.

16. aUdiT and risk commiTTee rePorT

Refer to pages 71 to 72.


pART

d: h

um

An

Res

Ou

RCe

mA

nA

Gem

enT


1. inTrodUcTion

overview of Hr matters at the public entity

QCTO’s approved structure provides for 46 positions. Only 34 could be filled during 2013/14. The CeO only assumed duty as from 1 April 2012 and other senior management posts could only be filled thereafter; this delayed the appointment of staff. moreover the QCTO was challenged by inadequate office space, therefore posts could only be filled after the move to the new office space which happened mid-december 2013. Also with the drive to review the QCTO structure a decision was taken that not all posts should be filled pending the review of the QCTO structure that will align with the revised strategy. This process of structure review will kick off in 2014/15.

policies, procedures and systems used for the year under review were those of dheT. The draft QCTO hR policies and procedures manual is currently being finalised and consultation with staff is taking place. This process will see its end during 2014/15.

Set Hr priorities for the year under review and the impact of these priorities

The main hR focus was to capacitate the entity by filling of positions, more especially at management level. Although not all positions were filled as planned an attempt was made in that appointment of critical management positions was finalised. some targets in the App were not achieved as a result of late filling of positions. Workforce planning framework and key strategies to attract and recruit a skilled and capable workforce

in the drive to attract and retain a skilled labour force, the QCTO has as part of its plans to develop a policy on Remuneration, scarce skills and Retention. The policy will be finalised during 2014/15 pending consultation with staff. The development of the said policy is intended to promote, improve and ensure good practice in all aspects of the scarce skills retention process within the QCTO. in addition it will aim to enable the QCTO to attract and retain high-quality professional candidates regardless of market or demographic conditions.

employee performance management framework

QCTO does not have its own performance management policy, but the framework of dheT was utilised to guide planning and management of performance. The QCTO performance management policy has been drafted and will be submitted for approval by Council during 2014/15.

employee wellness programmes

no employee programmes were planned or implemented specifically for QCTO during the year other than those of the dheT.

Achievements

The QCTO draft hR policies and procedures manual has been developed and consultation with staff is in progress. Approval by the Council is planned for 2014/15.

There has been a substantial increase in staff appointments, from 16 to 34.

The QCTO hR unit was established and designated hR official were appointed. This resulted in the QCTO being able to execute the recruitment and appointment functions independently from dheT.

Challenges faced by the public entity

The QCTO is severely under-capacitated because a large number of posts were only filled at the end of the financial year 2013/14 due to inadequate office space. more than 50% of positions are filled on a contract basis. This situation has adverse implications for the stability of the organisation. Future Hr plans/goals

now that the QCTO hR unit has been established, more emphasis will be placed on the finalisation of the hR policies and procedures manual, approval by Council and implementation. The process of implementing our own payroll system is in progress pending finalisation of regisration of the QCTO as an employer with sARs for pAYe, COidA, uiF, etc. with the finalisation of the structure review process, this will phase out the engagement of contract posts.

pART d: humAn ResOuRCe mAnAGemenT


2. HUman resoUrce oVersigHT sTaTisTics

personnel Cost by programme

programme

total expenditure for the entity

(r’000)

personnel expenditure

(r’000)personnel exp. as a % of total exp.

no. of employees

Avarage personnel cost

(r’000)QCTO R 36,688 R17,440 48% 66 R264

personnel cost by salary band

level personnel

expenditure (r’000)

% of personnel exp. to total

personnel cost no. of employees

Average personnel cost per employee

(r’000)Top management R1,137 7% 1 R1,137senior management R4,666 27% 7 R666professional qualified R7,758 44% 26 R298skilled R1,971 11% 12 R164semi-skilled R1,197 7% 15 R80unskilled R711 4% 5 R142total R17,440 100% 66 R264

Note: The total number of 66 employees includes 38 contract employees.

Performance Rewards

no performance bonuses were paid for the year under review. Finalisation of appraisals will take place in the first quarter of 2014/15. A provision has been raised in the financials for the estimated costs of performance rewards to be paid.

training Costs

Directorate/ Business unit

personnel expenditure

(r’000)

training expenditure

(r’000)

training expenditure as

a % of personnel cost

no. of employees

trained

Avg. training cost per

employeeQCTO R17,440 R113 0% 8 R14


employment and vacancies

programme

2012/2013 no. of

employees2012/2013

Approved posts

2013/2014no. of

employees2013/2014 Vacancies % of vacancies

QCTO 16 46 28 18 39%

programme

2012/2013 no. of

employees

2012/2013 Approved

posts

2013/2014no. of

employees2013/2014 Vacancies % of vacancies

Top management 1 1 1 - 0%senior management 3 7 6 - 0%professional qualified 8 16 14 5 31%skilled 4 14 5 9 64%semi-skilled - 7 1 4 57%unskilled - 1 1 - 0%total 16 46 28 18 39%

in terms of the targets set in the App 2014/15, the QCTO intends to filling all 18 vacant positions during the 2014/15 financial year. Of the 18 positions, six posts were already filled by year end; however incumbents will only commence duties on the 1st of April 2014. All approved positions have been budgeted accordingly throughout the mTeF period.

employment changes

information on changes in employment over the financial year. Turnover rates provide an indication of trends in the employment profile of the public entity.

Salary Band

employment at beginning of

period Appointments

promotions of existing employees terminations

employment at end of the

periodTop management 1 - - 1senior management 3 5 (2) - 6professional qualified 8 8 (1) (1) 14skilled 4 2 - (1) 5semi-skilled - 2 (1) - 1unskilled - 1 - - 1total 16 18 (4) (2) 28

pART d: humAn ResOuRCe mAnAGemenT (COnTinued)

2. HUman resoUrce oVersigHT sTaTisTics (COnTinued)

reasons for staff leaving

reason number % of total no. of staff leavingdeath - -Resignation 2 5%dismissal - -Retirement - -ill health - -expiry of contract - -Other - -

total 2 5%

labour relations: Misconduct and disciplinary action

There were no misconduct cases or disciplinary actions for the year under reporting.

equity target and employment equity Status

in its establishment phase, the QCTO is in the process of finalisation of the employment equity policy which will subsequently inform the development of the QCTO’s employment equity plan.

pART

e: F

inA

nCi

Al

inFO

RmAT

iOn


AnnuAl FinAnCiAl sTATemenTs FOR The YeAR ended 31 mARCh 2014

pART e: FinAnCiAl inFORmATiOn

1. accoUnTing aUTHoriTY’s resPonsiBiliTies and aPProVal

The Council is required by the public Finance management Act (Act 1 of 1999), to maintain adequate accounting records and is responsible for the content and integrity of the Annual Financial statements and related financial information included in this report. it is the responsibility of the Council to ensure that the Annual Financial statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the Annual Financial statements and were given unrestricted access to all financial records and related data.

The Annual Financial statements have been prepared in accordance with standards of Generally Recognised Accounting practice (GRAp) including any interpretations, guidelines and directives issued by the Accounting standards board.

The Annual Financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The Council members acknowledge that they are ultimately responsible for the system of internal financial control established by the entity and place considerable importance on maintaining a strong control environment. To enable the Council to meet theseresponsibilities, the accounting authority sets standards for internal control aimed at reducing the risk of error or deficit in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitoredthroughout the entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. while operating risk cannot be

fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.The Council is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the Annual Financial statements. however, any system of internal financial control can provide only reasonable, and not absolute, insuranceagainst material misstatement or deficit.

Although the accounting authority is primarily responsible for the financial affairs of the entity, it is supported by the entity’s external auditors.

The external auditors are responsible for independently reviewing and reporting on the entity’s Annual Financial statements.

The Annual Financial statements have been examined by the entity’s external auditor and the report is presented on page 68.

The Annual Financial statements set out on pages 76 to 112, which have been prepared on the going concern basis, were approved by the accounting authority on 31 july 2014 and were signed on its behalf by:

Ms G Joyce MashabelaChief executive OfficerQuality Council for Trades and Occupationsdate: 31 july 2014



pART e: FinAnCiAl inFORmATiOn (COnTinued)

2. rePorT of THe eXTernal aUdiTor

report oF tHe AuDItor-GenerAl to pArlIAMent on tHe QuAlItY CounCIl For trADeS AnD oCCupAtIonS

report on tHe FInAnCIAl StAteMentS

Introduction

i have audited the financial statements of the Quality Council For Trades and Occupations (QCTO) set out on pages 76 to 112, which comprise the statement of financial position as at 31 march 2014, the statement of financial performance, the statement of changes in net assets and the cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements

The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with south African standards of Generally Recognised Accounting practice (sA standards of GRAp) and the requirements of the public Finance management Act of south Africa, 1999 (Act no.1 of 1999) (pFmA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility

my responsibility is to express an opinion on these financial statements based on my audit. i conducted my audit in accordance with the public Audit Act of south Africa, 2004 (Act no. 25 of 2004) (pAA), the general notice issued in terms thereof and international standards on Auditing. Those standards require that i comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

i believe that the audit evidence i have obtained is sufficient and appropriate to provide a basis for my audit opinion.

opinion

in my opinion, the financial statements present fairly, in all material respects, the financial position of the QCTO as at 31 march 2014 and its financial performance and cash flows for the year then ended, in accordance with sA standards of GRAp and the requirements of the pFmA.

report on other legal and regulatory requirements

in accordance with the pAA and the general notice issued in terms thereof, i report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control.

The objective of my tests was to identify reportable findings as described under each sub-heading but not to gather evidence to express assurance on these matters. Accordingly, i do not express an opinion or conclusion on these matters.

predetermined objectives

i performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programme presented in the annual performance report of the public entity for the year ended 31 march 2014:

• programme 2: Occupational Qualification management, on pages 30 to 40.



2. rePorT of THe eXTernal aUdiTor (COnTinued)

i evaluated the reported performance information against the overall criteria of usefulness and reliability.

i evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the national Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programme. i further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the national Treasury’s Framework for managing programme performance information (Fmppi).

i assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

usefulness of reported performance information

i did not raise any material findings on the usefulness of the reported performance information for the selected programme.

reliability of reported performance information

The material finding on reliability in respect of the selected programme is as follows:

The Fmppi requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Adequate and reliable corroborating evidence for a significantly important target was not available to assess the reliability of the reported performance information.

The entity’s records did not permit the application of alternative audit procedures. This was due to the lack of a system during the first half of the year to collate, record and validate reported achievements.

Additional matters

i draw attention to the following matters:

Achievement of planned targets

Refer to the annual performance report on pages 19 to 40 for information on the achievement of the planned targets for the year.

Adjustment of material misstatements

i identified material misstatements in the annual performance report submitted for auditing on the reported performance information for programme 2: Occupational Qualification management. management subsequently corrected the misstatements.

Compliance with legislation

i performed procedures to obtain evidence that the public entity had complied with applicable legislation regarding financial matters, financial management and other related matters. my findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the pAA, are as follows:

Annual financial statements The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework, as required by section 55 (1)(b) of the pFmA. material misstatements identified relating to trade payables from exchange transactions, operating expenditure and the operating lease disclosure note were subsequently corrected, resulting in the financial statements receiving an unqualified opinion. expenditure management

The accounting authority did not take effective steps to prevent irregular expenditure, as required by section 51 (1)(b)(ii) of the pFmA.



2. rePorT of THe eXTernal aUdiTor (COnTinued)

Asset management

proper control systems to maintain assets were not implemented, as required by sections 50(1)(a) of the pFmA. This was due to management not maintaining proper and adequate records of the entity’s assets.

Internal control

i considered internal control relevant to my audit of the financial statements, the annual performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the annual performance report and the findings on non-compliance with legislation included in this report. leadership

Key internal controls relating to financial management were not adequately implemented.

The entity did not have documented standard operating policies and procedures detailing how performance information should be prepared, collated, validated and reported in the annual performance report at programme level.

Although action plans were developed and monitored, not all agreed-upon controls were adequately implemented to address internal control deficiencies.

where controls were implemented, their effectiveness was not monitored.

Financial and performance management

management did not perform a thorough review and validation of quarterly and annual reported performance information.

The principles of accrual accounting were not applied in the daily and monthly processing and reconciling of transactions.

pretoriadate: 31 july 2014


3. rePorT of THe aUdiT and risk commiTTee

we are pleased to present our report for the financial year ended 31 march 2014.

Audit and risk Committee responsibility

The Audit and Risk Committee reports that it has complied with its responsibilities arising from section 51(1)(a)(ii) of the public Finance management Act and Treasury Regulation 27.1. The Audit and Risk Committee also reports that it has adopted appropriate formal terms of reference as its Audit and Risk Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein, except that we have not reviewed changes in accounting policies and practices.

effectiveness of Internal Control

The dheT could not provide internal audited services during 2013/14. The director-General approved that the QCTO could share in the competitive tender through which dheT had appointed an internal Auditor. The internal Auditor soon made progress (as from september 2013) to finalise the internal Audit Charter, prepared a three-year internal audit plan and agreed on a one-year audit plan and protocols. The following internal audit work was completed during the year under review:

• enterprise Risk management Review• performance and Compliance monitoring Review

(Q1 and Q2 submission)• Review of draft Annual performance plan for

2014/15• internal Audit and Auditor-General follow-up

reviews

internal Audit identified some weaknesses during the year and these were reported to the Audit and Risk Committee. These items were added to the Audit Action plan for continuous follow-up by internal Audit-as they conduct their regular fieldwork.

A significant area of concern was that some claims were not paid within 30 days.

In-Year Management and Quarterly report

The QCTO has reported quarterly to the Treasury as is required by the pFmA.

The Audit and Risk Committee is satisfied with the content and quality of quarterly reports prepared and issued by the Chief executive Officer of the QCTO. The Committee considered the risk register and ensured that this informed the internal Audit plan. Ongoing monitoring of the progress against the risk register was conducted quarterly.


3. rePorT of THe aUdiT and risk commiTTee (COnTinued)

evaluation of Financial Statements

we have reviewed the annual financial statements prepared by the QCTO and have recommended them to Council for approval.

Auditor’s report

we have reviewed the QCTO’s implementation plan for audit issues raised in the prior year and report that many of the items had not been cleared to audit satisfaction in the year. This will be addressed by the Audit Committee going forward.

The Audit and Risk Committee concurs with and accepts the conclusions of the external auditor on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the auditor.

Mr paul SlackChairperson of the Audit and Risk CommitteeQuality Council for Trades and Occupationsdate: 31 july 2014



4. rePorT of THe coUncil

The Council submits its report for the year ended 31 march 2014.

4.1. incorporation

On 31 december 2010, the QCTO was listed as a schedule 3A public entity under the public Finance management Act, effective retrospectively from 01 April 2010 (Gazette notice 33900), as per section 26 (G) (1) of the skills development Act.

4.2. review of activities

Main business and operations

The QCTO has been established in order to accommodate the unique learning requirements for building occupational competence. The QCTO is responsible for Occupational Qualifications development and monitoring. both the national Qualifications Framework Act, no 67 of 2008 and the skills development Act, no 97 as amended in 2008 outline the functions of the QCTO.

The operating results and state of affairs of the QCTO are fully set out in the attached financial statements and do not in our opinion require any further comment.

net surplus of the entity was R1,883,000 (2013: R5,355,000). The surplus was mainly as a result of overall expenditure being lower than budgeted for as well as interest income which was not budgeted for during the year. The lower than budgeted expenditure is attributed to the compensation of employees as most posts were only filled during the last quarter of the year after the QCTO relocated to new office premises.

4.3. subsequent events

The Council is not aware of any matter or circumstance arising since the end of the financial year that would require an adjustment of the financial statements.

4.4. council members’ interest

The Chairperson of the Council declared her conflict of interest in terms of wits policy unit proposal which was tabled at the Council meeting on the 27th of August 2013.

4.5. accounting authority

The Council of the entity during the year and to the date of this report was as follows:

nameprof. peliwe lolwana (Chairperson)mr Francis malesela malekams joyce mashabela (CeO)mr Ahmed essopmr joe samuelsdr mafu s Rakometsims stella Ruth Carthymr Zwelitsa ecliff Tantsimr willy eduard matthiaedr marina le Grangems malebo mogopodi (lebona)mr Thulane mabuzadr bheki mahloboms pulane masebemr Thabo mushongoanemr maliviwe lumkams Gerda magnus

4.6. secretary

The director: Governance and secretariat of the entity is ms Adri h solomon:

business address 256 Glynn street hatfield pretoria 0083

postal address private bag x278 pretoria 0001



4.7. entity member and executive managers emoluments

total fees2014

total fees2013

Council Members

prof. p lolwana 18,815 46,976

mr F malesela maleka 18,007 26,810ms sR Carthy 17,124 24,996

dr mj le Grange 14,246 465

ms s mogopodi 5,606 15,814

mr e Tantsi - 19,821

mr T mabuza - 22,427

mr we matthiae 5,907 21,13679,705 178,445

Des

igna

tion

effec

tive

date

Basi

c sal

ary

Med

ical

cont

ribu-

tions

Serv

ice/

perf

orm

ance

Bonu

ses

pens

ion

tota

l pac

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2014

tota

l pa

ckag

e20

13

executive Management

ms j mashabela

Chief executive Officer 1 Apr 13 967,131 - 66,320 103,459 1,136,910 1,045,000

mr Tm lataChief director: OQm 1 Apr 13 795,259 - 29,583 85,073 909,915 380,182

mr vd naidooChief director: OQA 1 Feb 14 132,543 - - 14,179 146,722 -

ms n madilonga

Chief Financial Officer 1 Apr 13 767,419 27,840 39,593 85,073 919,925 316,818

ms A solomondirector: Governance 1 Apr 13 644,124 12,000 44,993 70,189 771,306 399,000

mr i Gumbochuma

director: Finance andprocurement 12 Aug 13 444,817 - 2,465 44,789 492,071 -

mr s siwundla

director: information Technology 1 jun 13 489,267 - 15,039 58,491 562,797 -

mr s mkhonza director: OQm 1 sep 13 311,652 8,910 49,549 35,094 405,205 -ms b langa mtintsilana director: OQA 1 sep 13 328,062 - 3,821 35,094 366,977 -

4,880,274 48,750 251,363 531,441 5,711,828 2,141,000

An

nu

Al

Fin

An

CiA

l sT

ATem

enTs

FOR

The

YeA

R en

ded

31

mA

RCh

201

4




note(s)2014

r’0002013

r’000Assets

Current AssetsReceivables from exchange transactions 3 50 -Receivables from non-exchange transactions 4 99 -deferred expenditure 5 - 129Cash and cash equivalents 6 30,015 24,662

30,164 24,791

non-Current Assetsproperty, plant and equipment 7 9,431 880intangible assets 8 94 -

9,525 880

total Assets 39,689 25,671

liabilities

Current liabilitiesOperating lease liability 22 224 -payables from exchange transactions 9 16,178 4,976unspent nsF Conditional Grant 23 198 -provisions 10 1,182 671

17,782 5,647total liabilities 17,782 5,647net Assets 21,907 20,024Accumulated surplus 21,907 20,024

AnnuAl FinAnCiAl sTATemenTs

sTaTemenT of financial PosiTion



note(s)2014

r’0002013

r’000revenue

revenue from exchange transactionsinterest received – investment 19 1,314 837

revenue from non-exchange transactions

transfer revenueGovernment grants & subsidies 19 37,175 20,352Conditional grant (nsF) 19 82 -total revenue from non-exchange transactions 37,257 20,352

total revenue 19 38,571 21,189

expenditureCompensation of employees 21 (17,440) (9,184)depreciation and amortisation (951) (125)Conditional grant (nsF) (82) -Operating expenses 20 (18,215) (6,525)total expenditure (36,688) (15,834)

Surplus for the year 1,883 5,355

sTaTemenT of financial Performance

Accumulatedsurplus

r’000

total netassetsr’000

Balance at 01 April 2012Changes in net assets 14,669 14,669surplus for the year 5,355 5,355Total changes 5,335 5,335

Balance at 01 April 2013 20,024 20,024Changes in net assetssurplus for the year 1,883 1,883Total changes 1,883 1,883

Balance at 31 March 2014 21,907 21,907

sTaTemenT of cHanges in neT asseTs


note(s)2014

r’0002013

r’000Cash flows from operating activities

receiptsstate contribution 37,158 20,352interest income 1,314 837

38,472 21,189

paymentsemployee costs (16,929) (8,608)suppliers (6,595) (4,264)

(23,524) (12,872)

net cash flows from operating activities 11 14,948 8,317

Cash flows from investing activities

purchase of property, plant and equipment 7 (9,491) (756)purchase of other intangible assets 8 (104) -net cash flows from investing activities (9,595) (756)

net increase/(decrease) in cash and cash equivalents 5,353 7,561Cash and cash equivalents at the beginning of the year 24,662 17,101Cash and cash equivalents at the end of the year 6 30,015 24,662


casH floW sTaTemenT

AnnuAl FinAnCiAl sTATemenTs (COnTinued)



Budget on Cash Basis

Appr

oved

bud

get

Adju

stm

ents

Fina

l App

rove

d Bu

dget

Actu

al a

mou

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n ac

rual

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is

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Diff

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ce b

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and

act

ual

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r ‘000 r ‘000 r ‘000 r ‘000 r ‘000 r ‘000 r ‘000

Statement of Financial performance

revenue

revenue from exchangetransactionsinterest received – investment - - - 1,314 - 1,314 1,314 1

revenue from non-exchangetransactions

taxation revenueGovernment grants & subsidies 29,273 21,721 50,994 31,175 (99) 37,158 (13,836) 2

expenditurepersonnel (17,286) (9,895) (27,181) (17,440) (511) (16,929) 10,252 3General expenses (12,077) (3,072) (15,149) (19,248) (12,653) (6,595) 8,554 4

total expenditure (29,363) (12,967) (42,330) (36,688) 13,164 23,524 18,806Surplus before taxation (90) 8,754 8,664 1,883 (13,263) 14,948 6,284

Statement of Financial position

non-Current Assetsproperty, plant and equipment 5,064 3,400 8,464 9,491 - 9,491 - 5intangible assets 200 - 200 104 - 104 -

5,354 5,354 - (7,712) (13,263) 5,353 5,353

sTaTemenT of comParison of BUdgeT and acTUal amoUnTs


1) The majority of interest was earned from investment with sARb which started in september 2013. initially QCTO did not anticipate the excess funds during the year.

2) The difference is due to approved rollovers of accumulated surplus that formed part of the 2013 approved budget.

3) The personel expenditure budget was underspent because of delayed staff appointments due to limited space at dheT offices. most appointments were made in the last quarter of the financial year.

4) The bulk of the general expenses were paid immediately after year end; they were however accounted for correctly under accrual accounting. The bulk of the unpaid creditors relates to dheT claims which had differences and could not be paid until those differences were cleared.

5) The relocation to new office premises necessitated the need for additional expenditure on capital items.

sTaTemenT of comParison of BUdgeT and acTUal amoUnTs (COnTinued)




accoUnTing Policies

1. PresenTaTion of annUal financial sTaTemenTs

The Annual Financial statements have been prepared in accordance with the standards of Generally Recognised Accounting practice (GRAp), and issued by the Accounting standards board in accordance with section 91(1) of the public Finance management Act (Act 1 of 1999).

These Annual Financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise. They are presented in south African Rand.

A summary of the significant accounting policies, which have been consistently applied in the preparation of these Annual Financial statements, is given below.

1.1. Presentation currency

These financial statements are presented in south African Rand which is the functional currency of the entity. Figures have been rounded of to the nearest thousand Rand (R’000).

1.2. going concern assumption

These financial statements have been prepared on the going concern basis. in assessing whether the QCTO is a going concern, the accounting authority has considered the fact that the QCTO receives state contributions (voted Funds) which is sufficient to classify the QCTO as a going concern for at least the next 12 months.

1.3. significant judgements and sources of estimation uncertainty

in the application of the QCTO accounting policies, management is required to make judgements, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on past experience and other factors that are considered to be relevant.

Actual results may differ from these estimates. The estimates and underlying assumptions

are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

provisions

provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 10 – provisions.

property, plant and equipment

The useful lives of assets are based on management’s estimation. management considers the following factors to determine the optimum useful life expectation for each of the individual items of property, plant and equipment.

• expected usage of the asset. usage is assessed by reference to the asset’s expected capacity or physical output;

• expected physical wear and tear, which depends on operational factors such as the number of shifts for which the asset is to be used, the repair and maintenance programme, and the care and maintenance of the asset while idle;

• Technical or commercial obsolescence arising from changes or improvement in production or from a change in the market demand for the product or service output of the asset; and

• exit policy of the company.

1.4. Property, plant and equipment

property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one reporting period.

The cost of an item of property, plant and equipment is recognised as an asset when:


1.4. Property, plant and equipment (COnTinued)

• it is probable that future economic benefits or service potential associated with the item will flow to the entity; and

• the cost or fair value of the item can be measured reliably.

property, plant and equipment are initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

where an asset is acquired through a non- exchange transaction, its cost is its fair value as at the date of acquisition.

where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or assets, or a combination of assets and non-monetary assets, the asset acquired is initially measured at fair value (the cost). if the acquired item’s fair value is not determinable, its deemed cost is the carrying amount of the asset(s) given up.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

major spare parts and standby equipment which are expected to be used for more than

one period are included in property, plant and equipment. in addition, spare parts and standby equipment which can only be used in connection with an item of property, plant and equipment are accounted for as property, plant and equipment.

major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses.

property, plant and equipment are depreciated on the straight-line basis over their expected useful lives.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life leasehold improvements 5 years Furniture and fittings 5 – 10 years Office equipment 3 years Computer equipment 3 years

The residual value, the useful life and depreciation method of each asset are reviewed on an accrual basis at each reporting date. if the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless expectations differ from the previous estimate.

each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.




1.4. Property, plant and equipment (COnTinued)

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use or disposal of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.5. intangible assets

An asset is identifiable if it either:

• is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or

• arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract.

An intangible asset is recognised when:

• it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and

• the cost or fair value of the asset can be measured reliably.

The entity assesses the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.

where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date.

expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:

• it is technically feasible to complete the asset so that it will be available for use or sale.

• there is an intention to complete and use or sell it.

• there is an ability to use or sell it.• it will generate probable future economic

benefits or service potential.• there are available technical, financial and

other resources to complete the development and to use or sell the asset.

• the expenditure attributable to the asset during its development can be measured reliably.

intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential.


1.5. intangible assets (COnTinued)

Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight-line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

internally generated goodwill is not recognised as an intangible asset.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:

Item useful lifeComputer software 2 years

intangible assets are derecognised:

• on disposal; or• when no future economic benefits or service

potential are expected from their use or disposal.

The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. it is recognised in surplus or deficit when the asset is derecognised.

1.6. financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a

financial liability or a residual interest of another entity.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.

A concessionary loan is a loan granted to or received by an entity on terms that are not market related.

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.

A derivative is a financial instrument or other contract with all three of the following characteristics:

• its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’).

• it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. it is settled at a future date.




1.6. financial instruments (COnTinued)

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. when calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the standard of GRAp on Revenue from exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. however, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s-length transaction.

A financial asset is:

• cash;• a residual interest of another entity; or• a contractual right to:

- receive cash or another financial asset from another entity; or

- exchange financial assets or financial

liabilities with another entity under conditions that are potentially favourable to the entity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

A financial liability is any liability that is a contractual obligation to:

• deliver cash or another financial asset to another entity; or

• exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entity.

interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

A financial asset is past due when a counterparty has failed to make a payment when contractually due.



A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as:

• equity instruments or similar forms of unitised capital;

• a formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or

• a formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net assets of an entity.

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.

Initial recognition

The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument.

The entity recognises financial assets using trade date accounting.

Initial measurement of financial assets and financial liabilities

The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to

the acquisition or issue of the financial asset or financial liability.

The entity first assesses whether the substance of a concessionary loan is in fact a loan. On initial recognition, the entity analyses a concessionary loan into its component parts and accounts for each component separately. The entity accounts for that part of a concessionary loan that is:

• a social benefit in accordance with the Framework for the preparation and presentation of Financial statements, where it is the issuer of the loan; or

• non-exchange revenue, in accordance with the standard of GRAp on Revenue from non-exchange Transactions (Taxes and Transfers), where it is the recipient of the loan.

Subsequent measurement of financial assets and financial liabilities

The entity measures all financial assets and financial liabilities after initial recognition using the following categories:

• financial instruments at fair value• financial instruments at amortised cost• financial instruments at cost

All financial assets measured at amortised cost, or cost, are subject to an impairment review.

Derecognition

Financial assets

The entity derecognises financial assets using trade date accounting.

The entity derecognises a financial asset only when:





• the contractual rights to the cash flows from the financial asset expire, are settled or waived;

• the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or

• the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. in this case, the entity:

- derecognises the asset; and- recognises separately any rights and

obligations created or retained in the transfer.

The carrying amounts of the transferred asset

are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.

if the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognises either a servicing asset or a servicing liability for that servicing contract. if the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. if the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the

carrying amount of the larger financial asset. if, as a result of a transfer, a financial asset is

derecognised in its entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity recognises the new financial asset, financial liability or servicing liability at fair value.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.

if the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.

if a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset, the entity continues to recognise the transferred asset in its entirety and recognises a financial liability for the consideration received. in subsequent periods, the entity recognises any revenue on the transferred asset and any expense incurred on the financial liability. neither the asset, nor the associated liability nor the revenue, nor the associated expenses are offset.

Financial liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished – i.e. when the obligation specified in the contract is discharged, cancelled, expires or is waived.


Financial liabilities (COnTinued)

An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.

The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the standard of GRAp on Revenue from non-exchange Transactions (Taxes and Transfers).

1.7. leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.when a lease includes both land and buildings elements, the entity assesses the classification of each element separately.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

minimum lease payments are apportioned between the finance charge and reduction of

the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Any contingent rents are expensed in the period in which they are incurred.

operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term.

The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

1.8. impairment of cash-generating assets

Cash-generating assets are those assets held by the entity with the primary objective of generating a commercial return. when an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.




1.8. impairment of cash-generating assets (COnTinued)

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s-length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use.

useful life is either:

(a) the period of time over which an asset is expected to be used by the entity; or

(b) the number of production or similar units expected to be obtained from the asset by the entity.

Criteria developed by the entity to distinguish cash-generating assets from non-cash-generating assets are as follow:

Value in use

value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life.

when estimating the value in use of an asset, the entity estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the entity applies the appropriate discount rate to those future cash flows.

1.9. impairment of non-cash-generating assets

Cash-generating assets are those assets held by the entity with the primary objective of generating a commercial return. when an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return. non-cash-generating assets are assets other than cash-generating assets.

impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s-length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.

useful life is either:

(a) the period of time over which an asset is expected to be used by the entity; or

(b) the number of production or similar units expected to be obtained from the asset by the entity.

Value in use

value in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.


Value in use (COnTinued)

The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach:

recognition and measurement

if the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.

when the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the entity recognises a liability only to the extent that is a requirement in the standards of GRAp.

After the recognition of an impairment loss,

the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

1.10. employee benefits

employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.

Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) that are not due to be settled within 12 months after the end of the period in which the employees render the related service. vested employee benefits are employee benefits that are not conditional on future employment.

Short-term employee benefits

short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service.

short-term employee benefits include items such as:

• wages, salaries and social security contributions;

• short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within 12 months after the end of the reporting period in which the employees render the related employee service;

• bonus, incentive and performance-related payments payable within 12 months after the end of the reporting period in which the employees render the related service; and

• non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees.

when an employee has rendered service to the entity during a reporting period, the entity recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:

• as a liability (accrued expense), after deducting any amount already paid. if the amount already paid exceeds the undiscounted amount of the benefits, the entity recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

• as an expense, unless another standard requires or permits the inclusion of the benefits in the cost of an asset.




1.10. employee benefits (COnTinued)

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The entity measures the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The entity recognises the expected cost of bonus, incentive and performance-related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments.

1.11. Provisions and contingencies

provisions are recognised when:

• the entity has a present obligation as a result of a past event;

• it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and

• a reliable estimate can be made of the obligation.

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually

certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not

exceed the amount of the provision.

provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised.

provisions are not recognised for future operating deficits.

if the entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

A constructive obligation to restructure arises only when an entity:

• has a detailed formal plan for the restructuring, identifying at least:

- the activity/operating unit or part of an activity/operating unit concerned;

- the principal locations affected;- the location, function, and approximate

number of employees who will be compensated for services being terminated;

- the expenditures that will be undertaken; and

- when the plan will be implemented; and

• has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.


1.11. Provisions and contingencies (COnTinued)

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 14.

1.12. revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s-length transaction.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Interest

Revenue arising from the use by others of entity assets yielding interest, royalties and dividends or similar distributions is recognised when:

• it is probable that the economic benefits or service potential associated with the transaction will flow to the entity, and

• The amount of the revenue can be measured reliably.

• interest is recognised, in surplus or deficit, using the effective interest rate method.

1.13. revenue from non-exchange transactions

Revenue comprises gross inflows of economic benefits or service potential received and

receivable by an entity, which represents an increase in net assets, other than increases relating to contributions from owners.

Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset are required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor.

Control of an asset arises when the entity can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit.

exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services or use of assets) to another entity in exchange. Fines are economic benefits or service potential received or receivable by entities, as determined by a court or other law-enforcement body, as a consequence of the breach of laws or regulations.

non-exchange transactions are transactions that are not exchange transactions. in a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified.

stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting entity.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.




1.13. revenue from non-exchange transactions (COnTinued)

recognition

An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.

transfers

Apart from services in kind, which are not recognised, the entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.

The entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.

Transferred assets are measured at their fair value as at the date of acquisition.

Gifts and donations, including goods in kind

Gifts and donations, including goods in kind, are recognised as assets and revenue when it is probable that the future economic benefits or service potential will flow to the entity and the fair value of the assets can be measured reliably.

1.14. investment income

investment income is recognised on a time-proportion basis using the effective interest method.

1.15. comparative figures

budget information in accordance with GRAp 24 has been provided in the statement of

Comparison of budget Against Actual Amounts for the current financial year only, and forms part of the audited annual financial statements.

when the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated.

The nature and reason for the reclassification is disclosed. where accounting errors have been identified in the current year, the correction is made retrospectively as far as is practicable, and the prior year comparatives are restated accordingly. where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable, and the prior year comparatives are restated accordingly.

1.16. Unauthorised expenditure

unauthorised expenditure means:

• overspending of a vote or a main division within a vote; and

• expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in accordance with the purpose of the main division.

All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.17. fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred.


1.17. fruitless and wasteful expenditure (COnTinued)

The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.18. irregular expenditure

irregular expenditure as defined in section 1 of the pFmA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including:

(a) this Act; or(b) the state Tender board Act, 1968 (Act no.

86 of 1968), or any regulations made in terms of the Act; or

(c) any provincial legislation providing for procurement procedures in that provincial government.

national Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the pFmA requires the following (effective from 1 April 2008):

irregular expenditure that was incurred and identified during the current financial and which was condoned before year end and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditure register. in such an instance, no further action is required with the exception of updating the note to the financial statements.

irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end must be recorded in the irregular expenditure register. no further action is required with the exception of updating the note to the financial statements.

where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the national Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. if liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. immediate steps must thereafter be taken to recover the amount from the person concerned. if recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the financial statements. The irregular expenditure register must also be updated accordingly. if the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant programme/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register.

1.19. Budget information

entities are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which are given effect through authorising legislation, appropriation or similar. General purpose financial reporting by the entity shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.

The approved budget is prepared on a cash basis and presented by economic classification linked to performance outcome objectives. The approved budget covers the fiscal period from 2013-04-01 to 2014-03-31.

The budget for the economic entity includes all the entities approved budgets under its control.

The Annual Financial statements and the budget

are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period has been included in the statement of comparison of budget and actual amounts.




1.20. related parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the south African Government. As a consequence of the constitutional independence of the three spheres of government in south Africa, only entities within the national sphere of government are considered to be related parties.

management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.

Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, that management in their dealings with the entity.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

1.21. changes in accounting policies, estimates and errors

The accounting policies applied are consistent with those used to present the previous year’s financial statements, unless explicitly stated otherwise.

The entity changes an accounting policy only if the change:

• is required by a standard of GRAp; or• Results in the Annual Financial statements

providing reliable and more relevant information about the effects of transactions, other events or conditions, on the performance or cash flow.

Changes in accounting policies that are affected by management have been applied

retrospectively in accordance with GRAp 3 requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of the change in policy. in such cases the entity shall restate the opening balances of assets, liabilities and net assets for the earliest period for which retrospective restatement is practicable.

Changes in accounting estimates are applied prospectively in accordance with GRAp 3 requirements.

details of changes in estimates are disclosed in the notes to the Annual Financial statements where applicable.

Correction of errors is applied retrospectively in the period in which the error has occurred in accordance with GRAp 3 requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of the error. in such cases the entity shall restate the opening balances of assets, liabilities and net assets for the earliest period for which retrospective restatement is practicable.

1.22. events after reporting date

events after the reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. events after the reporting date that are classified as adjusting events have been accounted for in the annual financial statements. events after the reporting date that have been classified as non-adjusting events have been disclosed in the disclosure notes to the Annual Financial statements.

1.23. offsetting

Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or permitted by the standard of GRAp.


noTes To THe annUal financial sTaTemenTs

2. neW sTandards and inTerPreTaTions

2.1. standards and interpretations effective and adopted in the current year

in the current year, the entity has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

Standard Interpretation:effective date:Years beginning on or after expected impact:

• GRAp 25: employee benefits 01 April 2013 not material• GRAp 1 (as revised 2012): presentation of

Financial statements01 April 2013 not material

• GRAp 3 (as revised 2012): Accounting policies, Change in Accounting estimates and errors

01 April 2013 not material

• GRAp 9 (as revised 2012): Revenue from exchange Transactions


• GRAp 13 (as revised 2012): leases 01 April 2013 not material• GRAp 17 (as revised 2012): property, plant and

equipment01 April 2013 not material

• GRAp 31 (as revised 2012): intangible Assets (replaces GRAp 102)


• iGRAp16: intangible assets website costs 01 April 2013 not material• iGRAp1 (as revised 2012): Applying the

probability test on initial recognition of revenue01 April 2013 not material

2.2. standards and interpretations issued, but not yet effective

The entity has not applied the following standards and interpretations, which have been published and are mandatory for the entity’s accounting periods beginning on or after 01 April 2014 or later periods:


• GRAp 105: Transfers of functions between entities under common control

01 April 2014 no impact

• GRAp 20: Related parties 01 April 2014 no impact

• GRAp32: service Concession Arrangements: Grantor


• GRAp108: statutory Receivables 01 April 2014 no impact




2014r’000

2013r’000

deposits 50 -

The deposit was paid as requirement for opening of fuel account with the service provider for refuelling of QCTO rented vehicles.

4. receiVaBles from non-eXcHange TransacTions

Government grants and subsidies 99 -

receivables from non-exchange transactions past due but not impaired

Other receivables from non-exchange transactions which are less than three months past due are not considered to be impaired. At 31 march 2014, R99,000 were past due but not impaired.

One month past due 99 -

5. PrePaid eXPenses

prepaid expenses - 129

prepaid expenses represent payments made in advance to the dheT for employee Costs and Goods and services.

6. casH and casH eQUiValenTs

Cash and cash equivalents consist of:

bank balances 9,989 24,662short-term deposits 20,026 -

30,015 24,662

3. receiVaBles from eXcHange TransacTions

2.3. standards and interpretations not yet effective or relevant

The following standards and interpretations have been published and are mandatory for the entity’s accounting periods beginning on or after 01 April 2014 or later periods but are not relevant to its operations:


• GRAp 106: Transfers of functions between entities not under common control



As required in Treasury Regulation 31.2, national Treasury approved the banks where the QCTO bank accounts are held. The weighted average interest rate on short-term bank deposits was approximately 5.12% for the financial year (2013: 3.18%).

Cash includes cash with AbsA bank. Cash equivalents are short-term, highly liquid investments that are held with the Corporation for public deposits (Cpd) – sARb with maturities of three months or less and that are subject to an insignificant risk of change in value.

For purposes of the Cash Flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with Cpd, net of bank overdrafts.

6. casH and casH eQUiValenTs (COnTinued)

2014 2013Cost /

valuationAccumulateddepreciation

andaccumulatedimpairment

Carrying value

Cost /valuation

Accumulateddepreciation


Carrying value

Furniture and fittings 3,552 (206) 3,346 533 (20) 513

Office equipment 482 (96) 386 81 (17) 64

Computer equipment 3,582 (575) 3,007 400 (97) 303

leasehold improvements 2,890 (198) 2,692 - - -

total 10,506 (1,075) 9,431 1,014 (134) 880

reconciliation of property, plant and equipment – 2014

opening balance Additions Depreciation total

Furniture and fittings 513 3,019 (186) 3,346

Office equipment 64 400 (78) 386

Computer equipment 303 3,182 (478) 3,007

leasehold improvements - 2,890 (198) 2,692

880 9,491 (940) 9,431

reconciliation of property, plant and equipment – 2013

opening balance Additions transfers Depreciation total

Furniture and fittings - - 513 - 513

Office equipment 73 537 (513) (33) 64

Computer equipment 176 219 - (92) 303

249 756 - (125) 880

7. ProPerTY, PlanT and eQUiPmenT




8. inTangiBle asseTs

2014 2013Cost /

valuationAccumulateddepreciation


Carrying value

Cost /valuation

Accumulateddepreciation


Carrying value

Computer software, other

104 (10) 94 - - -

reconciliation of intangible assets – 2014

opening balance Additions Amortisation total

Computer software, other - 104 (10) 94

2014r’000

2013r’000

Trade payables 15,084 4,976Other accrued expenses 1,094 -

16,178 4,976

10. ProVisions

reconciliation of provisions – 2014

opening balance Additions

utilised during the

year

reversedduring the

year totalleave pay provision 362 - - (64) 298

bonus provision 309 884 (309) - 884

671 884 (309) (64) 1,182

9. PaYaBles from eXcHange TransacTions


reconciliation of provisions – 2013

opening balance Additionsreversed

during the year totalleave pay provision 194 168 - 362

bonus provision 387 - (78) 309

581 168 (78) 671

leave is calculated based on leave days outstanding at year end and quantified in terms of total cost of employment per employee. The service bonus and the perfomance bonus accruals relate to 13th cheque as well as approved perfomance bonus commitments owed to QCTO employees at financial year end.

2014r’000

2013r’000

surplus 1,883 5,355

Adjustments for:depreciation and amortisation 951 125

movements in operating lease assets and accruals 224 -

movements in provisions 511 90

Other non-cash items 2 (3)

Changes in working capital:

Receivables from exchange transactions (50) -

Other receivables from non-exchange transactions (99) -

prepaid expenses 129 (129)

payables from exchange transactions 11,199 2,879

unspent nsF Conditional Grant 198 -

14,948 8,317

11. casH generaTed from oPeraTions

10. ProVisions (COnTinued)




2014r’000

2013r’000

Approved and contracted 1,771 550

Capital expenditure commitments - 144

1,771 694

12. commiTmenTs

The commitments relate to goods and services contracted for and there were no capital expenditure commitments.

operating leases – as lessee (expense)

Minimum lease payments due

- within one year 4,630 56

- in second to fifth year inclusive 19,948 28

24,578 84

The QCTO leases three photocopy machines from Konica minolta for a period of 36 months, effective from 1 October 2011 and 1 december 2013 respectively. The monthly lease payments are R4,677.57 and R7,713.36 respectively with no annual escalation. The lease agreement is extendable after 36 months for a further 24 months.

The QCTO further entered into a five-year lease agreement for office premises with liberty properties effective from 1 december 2013. The monthly lease payment is R360,710.58 with an escalation of 8% per annum.


13. financial insTrUmenTs disclosUre

Categories of financial instrument

except as detailed in the following table, QCTO management considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values:

2014

Financial assets

At fair valueAt amortised

cost totalTrade and other receivables from exchange transactions 50 - 50

Other receivables from non-exchange transactions 99 - 99

Cash and cash equivalents 30,015 - 30,015

30,164 - 30,164



cost totalTrade and other payables from exchange transactions 16,178 - 16,178

2013

Financial assets


cost totalCash and cash equivalents 24,662 - 24,662

prepaid expenses 129 - 129

24,791 - 24,791



cost totalTrade and other payables from exchange transactions 4,976 - 4,976



Fair values

As indicated above QCTO’s financial instruments consist mainly of cash and cash equivalents, deferred expenditure and trade and other payables. no financial instruments were carried at an amount in excess of their fair value and fair values could be reliably measured for all financial instruments.

Financial assets and financial liabilities are recognised on the entity’s statement of Financial position when the entity becomes party to the contractual provisions of the instrument. The following methods and assumptions are used to determine the fair value of each class of financial instrument:

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. The carrying amount of cash and cash equivalents approximates fair value due to the relatively short-term maturity of these financial assets.

Deferred expenditure

deferred expenditure is stated at amortised cost, which approximates its fair value due to the relatively short-term maturity of these financial assets.

Accounts payable

Trade and other payables are stated at amortised cost, which approximates their fair value due to the relatively short-term maturity of these financial liabilities.

Financial instrument risk

in the course of the QCTO’s operations it is exposed to market, interest rate, credit, and liquidity risk. As a newly established schedule 3A public entity, the QCTO is in the process of developing a comprehensive risk strategy in order to monitor and control these risks. The risk management process relating to each of these risks is discussed below:

Market risk

Foreign exchange risk

The QCTO does not initiate any transactions with international parties and is therefore not exposed to any exchange risk due to currency fluctuations. All transactions are denominated in south African Rand with local vendors.

Price risk

The QCTO is not exposed to price or commodity price risk as it does not carry any investments. Cash includes cash with commercial banks. These cash equivalents are subject to an insignificant risk of change in value.

Cash flow and fair value interest rate risk

The QCTO does not carry any significant interest-bearing assets, therefore the revenue and operating cash flows are not substantially dependent on changes in market interest rates. As the QCTO does not have significant interest-bearing liabilities, the expense and cash flows are not substantially dependent on changes in market interest rates.


13. financial insTrUmenTs disclosUre (COnTinued)


effectiveinterest rate

Subject to interest rate movement:

Floatingr ‘000

non-interest-bearing

r ‘000total

r ‘00031 March 2014Current financial assetsCash and cash equivalents 5.12% 30,015 - 30,015

Trade receivables n/A - 149 149

5.12% 30,015 149 30,164

Current financial liabilitiesTrade and other payables n/A - 16,178 16,178

- - 16,178 16,178

31 March 2013Current financial assetsCash and cash equivalents 3.18% 24,662 - 24,662

deferred expenditure n/A - 129 129

3.18% 24,662 129 24,791

Current financial liabilitiesTrade and other payables n/A - 4,976 4,976

- - 4,976 4,976

Credit risk

Financial assets, which potentially subject the QCTO to concentrations of credit risk, consist principally of cash and cash equivalents and accounts receivable. Credit risk arises from the risk that a counter-party may default or not meet its obligations timeously.

The QCTO management limits its treasury counter-party exposure by only dealing with well-established financial institutions approved by national Treasury.

The QCTO does not have any material exposure to any individual or counter-party. The QCTO’s concentration of credit risk is limited to the industry in which the QCTO operates. no events occurred in the industry during the financial year that may have had an impact on the recovery of trade and other receivables.

The QCTO’s exposure to interest rate risk and effective interest rates on financial instruments at reporting date is as follows:





The fund’s maximum exposure to credit risk is equal to the total value of the following assets:

rated non-rated total

2014Cash and cash equivalents 30,015 - 30,015

Trade receivables 149 - 149

30,164 - 30,164

2013Cash and cash equivalents 24,662 - 24,662

prepaid expenses 129 - 129

24,791 - 24,791

Liquidity risk

The QCTO manages liquidity risk through proper management of working capital, capital expenditure and actual versus forecasted cash flows. Adequate reserves and liquid resources are also maintained.

Forecast liquidity reserve as of 31 March 2014 is as follows:

2015 2016 2017

r ‘000 r ‘000 r ‘000

Opening balance for the period 30,015 30,015 30,015

Operating proceeds 51,667 69,349 86,328

Operating outflow (51,667) (69,349) (86,328)

Closing balance for the period 30,015 30,015 30,015



The table below analyses the financial liabilities that will be settled on a net basis into the relevant maturity groupings based on the remaining period at balance sheet date to the contractual maturity date:

less than 1 year total

r ‘000 r ‘000

31 March 2014Trade and other payables 16,178 16,178

less than 1 year total

r ‘000 r ‘000

31 March 2013Trade and other payables 4,976 4,976

14. conTingencies

The following contingent liabilities exist:

Retention of accumulated surplus 1,883 5,355

The QCTO applied for the retention of the net surplus for the 2014 financial year in terms of section 53 (3) of the pFmA from national Treasury during the first quarter of the 2014/15 financial year. This approval has not yet been granted by national Treasury. A contingent liability for the total accumulated surplus is therefore disclosed.




15. relaTed ParTies

All related party transactions that occurred during the financial year were at arm’s length and in the normal course of business, in accordance with the mandate of the QCTO.

Relationships departmententities under the department • department of higher education and Training (dheT)

• entities under the department, national skills Fund (nsF)• Agriculture sector education and Training Authority (AGRiseTA)• banking sector education and Training Authority (bAnKseTA)• Culture, Arts, Tourism, hospitality and sports educational and

Training Authority (CAThsseTA)• Chemical industries education and Training Authority (ChieTA)• Construction education and Training Authority (CeTA)• education, Training and development practices (eTdp)• energy and water sector education and Training Authority (ewseTA)• Financial and Accounting services sector education and Training

Authority (FAsseT)• Food and beverages manufacturing industry sector education and

Training Authority (FOOdbev)• Fibre processing manufacturing sector education and Training

Authority (Fp&m seTA)• health and welfare sector education and Training Authority

(hwseTA)• insurance sector education and Training Authority (inseTA)• local Government sector education and Training Authority (lGseTA)• media, Advertising, information and Communication Technologies

sector education and Training Authority (miCT)• mining Qualifications Authority (mQA)• manufacturing, engineering and Related services sector education

and Training Authority (meRseTA)• public service sector education and Training Authority (psseTA)• safety and security sector education and Training Authority

(sAsseTA)• services sector education and Training Authority (services seTA)• Transport education and Training Authority (TeTA)• wholesale and Retail sector education and Training Authority

(w&RseTA)• south African Qualifications Authority (sAQA)



Key management information

Refer to page 74

related party balances

2014r’000

2013r’000

Amounts included in trade receivable (trade payable) regarding related partiesCAThseTA 99 -

dheT (12,257) (4,810)

sAQA - (167)

related party transactions

Grants received from SetAsAGRiseTA 393 -

eTdp seTA 508 -

meRseTA 1,779 -

ewseTA 295 -FAsseT 610 -

w&RseTA 1,235 -

Fp&mseTA 509 -

TeTA 853 -

FOOdbev seTA 395 -

services seTA 894 -

miCT seTA 941 -

CAThseTA 397 -

hwseTA 457 -

mQA 1,299 -

CeTA 781 -

inseTA 503 -

sAsseTA 372 -

ChieTA 640 -

lGseTA 709 -

bankseTA 858 -

15,428 -

transfer from Department of Higher education and training

dheT 21,747 20,352


15. relaTed ParTies (COnTinued)


16. defined conTriBUTion Plan

The QCTO provides for retirement benefits for all its permanent employees through a defined contribution scheme to the Government employees pension Fund (GepF) that is subjected to the pension Funds Act, 1956 as amended. in terms of the pension Funds Act, the fund is not required to be actuarially valued.

The QCTO’s liability is limited to its contributions made. There are 28 employees who are members of the GepF in which the QCTO’s contribution is 13% of pensionable emoluments.

2014r’000

2013r’000

Contributions for the year included in employee cost 1,308 792

17. irregUlar eXPendiTUre

2014r’000

2013r’000

reconciliation of irregular expenditureOpening balance - -

Add: irregular expenditure – current year 328 771

less: Amounts condoned - (771)

less: Amounts recoverable (not condoned) - -

less: Amounts not recoverable (not condoned) - -

328 -

Details of irregular expenditure – current year

Irregular expenditure incurred:

Current year irregular expenditure of R328,320 consists of expenditure incurred in contravention of the internal procurement processes and procedures. in 2012/13 GiZ appointed Abeeda and Associates as the service provider to develop the iT-based capturing tool and system for QCTO. After the expiry of the GiZ contract in march 2013, the system was handed over to the QCTO and the service provider continued to host the system as QCTO did not have the capacity or the infrastructure.

The engagement with the service provider was not formalised through an official contract at the time. This was rectified after the expenditure had already been incurred since QCTO was now liable for the costs associated with the hosting and maintenance of the system.

Condonement of irregular expenditure:

The accounting authority is yet to grant condonement of R328,320 during the next Council meeting.


Analysis of expenditure awaiting condonation per age classificationCurrent year 328 -

prior years - -

328 -


18. donaTions receiVed in kind

unquantifiable

2014

during the current financial year, the QCTO received unquantifiable services in kind from GiZ. These services included the development and testing of a website for the QCTO and the provision of staff to conduct workshops and assist the QCTO with the establishment of systems for the development and assessment of qualifications.

19. reVenUe

2014r’000

2013r’000

interest received - investment 1,314 837

Government grants & subsidies 37,175 20,352

Conditional Grant (nsF) 82 -38,571 21,189

the amount included in revenue arising from exchanges of goods or services is as follows:

interest received - investment 1,314 837

the amount included in revenue arising from non-exchange transactions is as follows:

transfer revenue

Government grants & subsidies 37,175 20,352Conditional grant (nsF) 82 -

37,257 20,352



20. general eXPenses

2014r’000

2013r’000

Accounting fees 19 -

Advertising 497 938Assessment rates & municipal charges 11 -

Auditors remuneration 1,735 -

bank charges 12 -

Cleaning 67 15

Consulting and professional fees 5,716 2,206

Consumables 10 -

insurance 58 -

Conferences and seminars 496 -

iT expenses 819 -

lease rentals on operating lease 1,821 383

marketing 29 -

loss on scrapping of assets 27 -

legal fees 204 -

postage and courier 70 18

printing and stationery 1,524 916

staff welfare and refreshments 22 -

Telephone, internet and fax 506 133

Training 113 58Travel, subsistance and accomodation – local 2,529 -Travel – overseas - 659Assets expensed 3 212electricity 379 -Council & Committees remuneration 63 181laundry services - 3material and supplies - 20seTA levy - 5Administration - 8Repairs and maintenance 139 -Recruitment costs and temporary staff 1,054 -Other expenses 289 770

18,215 6,525



21. emPloYee–relaTed cosTs

2014r’000

2013r’000

Salaries and wages

basic 12,007 6,541bonus 1,207 501leave pay provision charge (6) -

defined contribution plans 1,308 -

Overtime payments 30 20

housing benefits and allowances 139 99

Other 2,619 1,010

Social contributions

medical aid – company contributions 133 220

provident fund contributions: defined contribution plans - 762

bargaining Council 3 1

17,440 9,184

22. oPeraTing lease asseT (accrUal)

Operating lease accrual 224 -

The operating lease accrual was a result of the difference between the payments made up to 31 march 2014 on a straight-line basis calculated over the lease period and actual payments made.

23. UnsPenT nsf condiTional granT

The nsF conditional grant was awarded to the QCTO to train QdFs so that the cohort group of the QdFs is representative of all the races of the country. due to insufficient capacity within the QCTO the project could not be completed as envisaged. The project implementation timelines were extended to the 2014/15 financial year.

unspent conditional grants and receipts comprise:

unspent conditional grants and receiptsunspent grants 1 198 -

Movement during the year

Additions during the year 280 -

income recognition during the year (82) -

198 -


Quality Council for Trades and Occupations256 Glyn Street, Hatfield, Pretoria, 0083

Private Bag X278, Pretoria, 0001www.qcto.org.za

Email: [email protected]

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