Annual Report 2011/12 Contents
1. Vision and Mission 2
2. Chairperson’s Report 3 - 6
3. Director of Civil Aviation’s Report 7 - 10
4. Board of the South African Civil Aviation Authority (SACAA) 11
5. Corporate Governance Report 12 - 17
6. Executive Management Committee 18
7. Strategic Risks 19 - 20
8. Performance Information 21 - 33
9. Operational Review 34 - 83
10. Financial Review 84 - 144
11. Acronyms 145 - 146
Annual Report 2011/12 1 Vision
A model enabler of a safe, secure and environmentally cognisant aviation industry.
Mission
• To promote aviation safety and security in civil aviation through oversight and regulation in line with international standards;
• To minimize the impact of the aviation industry on the environment; and
• To promote transformation, development and sustainability in partnership with industry players.
2 South African Civil Aviation Authority Chairperson’s Report
1. Introduction
It gives me pleasure to present the strategic overview and results of the South African Civil Aviation Authority (SACAA) for the end of March 2012. Of particular note is an improvement trend in both technical operations and support functions, although much still needs to be accomplished. Let me take this opportunity to thank the Department of Transport (DoT), fellow Board members experiencing their fi rst operational cycle, and management and employees for having contributed to the organisational upswing. May I also take this opportunity to welcome the recently appointed Director of Civil Aviation (DCA), Mr Zakhele Thwala.
SACAA welcomes the appointment of the Honourable Minister Ben Martins, MP and the Honourable Deputy Minister Ms Sindisiwe Chikunga, MP and trusts that this will increase velocity in both organisational and national delivery. Let me extend our appreciation to the Hon. Minister Sibusiso J Ndebele, MP for his immense contribution, and I trust that he will continue to add value to the fi ght for service delivery.
2. Strategic Focus
One of the fi rst Board assignments was to review the organisation’s strategic objectives, and this was done in a highly consultative manner with inputs from management, industry, and DoT representatives. Organisational outcomes from the above strategic session were further aligned to the DoT’s and culminated in the following organisational goals:
• Active participation infl uencing national, regional and continental aviation development
• A continuously improving safety and security environment (operations, aircraft, aviation, security, and infrastructure)
• Infl uence on the breadth and pace of the industry development and transformation agenda
• Reduced impact of aviation on the environment
• Embedded principles of corporate governance, underpinning the work of every SACAA team member and service
• Resilient organisational capability and capacity that embraces a high-performance culture.
Annual Report 2011/12 3 The above organisational goals were aligned to the DoT Aviation Strategy under the following four out of a possible six outcomes:
Outcome 1 – An effi cient and integrated transport network for social and economic development Outcome 2 – A transport sector that is safe and secure Outcome 5 – An increased contribution to job creation Outcome 6 – An increased contribution by transport to environmental protection.
3. Regional Contribution
South Africa has a responsibility to contribute to the Southern African Development Community (SADC) and the greater African Indian Ocean (AFI) region. A positive milestone in this direction was the African states’ agreement to improve aviation security in the region, in line with the International Civil Aviation Organisation (ICAO) 2010 Assembly Security Declaration.
Further service to the African brotherhood was concluded by a Memorandum of Understanding (MOU) with the New Partnership for Africa’s Development (NEPAD). This agreement solicits SACAA to train people from various countries in diverse aviation-related professions.
I am encouraged by the ongoing work of the Cooperative Development of Operational Safety and Continuing Airworthiness Programme (COSCAP-SADC), a regional organisation earmarked to consolidate aviation safety oversight. While the current model separates the above safety-oriented organisation from another regional Civil Aviation Security Project (CASP), a security model; SACAA believes that amalgamating the two means taking an effi cient route that will limit overhead costs and enhance cross-functional coordination.
4. Industry Transformational Footprint
A lack of industry transformation is a major concern. The table below indicates 72% dominance by South African white males. South African Historically Disadvantaged Individuals (HDIs) add up to 8.2%, indicating unsatisfactory equity levels. Naturally this racial slant manifests itself in all technical aviation areas. In order to contribute to a transformed aviation, SACAA is enforcing adherence to BBBEE codes when dealing with aviation-related institutions. I realise that it will take more than SACAA’s efforts to effect meaningful industry-wide change; hence the organisation is pursuing greater cooperation with relevant national stakeholders.
African Male Coloured Male Indian Male White Male South South South South Foreign Foreign Foreign Foreign Total African African African African National National National National 2011/2012 National National National National Aeroplane Licence 204 900 68 60 129 390 9384 1154 12289 Helicopter Licence 44 95 16 2 18 5 1897 194 2271 Other Licences 860 489 203 8 168 39 3900 833 6500 Total 1108 1484 287 70 315 434 15181 2181 21060 % 5.3% 7% 1.4% .33% 1.5% 2% 72% 10.4% 100%
4 South African Civil Aviation Authority 5. Organisational Sustainability
Organisational sustainability covers a wide area and this was a challenge in the past, particularly from a fi nancial sustainability perspective. History links fi nancial defi cits with ad-hoc tariff increases. However, the 2011/12 fi nancial year indicates positive results with a fi ve-year fi nancial model implemented to ensure organisational sustainability. SACAA is already experiencing the benefi ts from such an exercise. A steady passenger activity growth is paramount, as 75% of the revenue generated by the organisation results from passenger ticket sales.
R25.00
R20.00
R15.00
R10.00
R5.00
R0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
The above table indicates the historical and futuristic growth of the Passenger Safety Charge (PSC), and is based on steady passenger growth numbers. This futuristic view culminated with the PSC increasing in March 2012 from R12 to R16, mainly to fi nance amongst others, the long-neglected IT infrastructure. From a going concern perspective, the sky is the limit.
6. Performance Management System
A simplistic Performance Management System (PMS) was adopted for the 2011/12 fi nancial year, replacing a historic system with serious defi ciencies. This approach was preferred in order to reward hard-working employees in a competitive aviation sector, dictated by both local and international demands. However, the future looks bright with the process of procuring a system at its fi nal stages, and it is believed that this will contribute to employee retention.
7. Fraud Hotline
It gives me great joy to place another brick in the foundation of proper governance through the implementation of a hotline. This tool is of benefi t to the organisation, as a number of successful investigations were initiated through it. A trend of note is the declining number of reports, indicating a change in behaviour patterns, hopefully for the best, as these could also be attributed to employees being discreet about their indiscretions.
8. Parting Shot
Looking in the rear-view mirror, a number of important events come to mind that I must mention. The departure of fellow Board members, Dr Sangweni and Sello Motau, is a loss to the organisation and I can only wish them well in their future endeavours. Reappointments are a top priority, to ensure that the Board quorates due to limited member numbers. Yes, there has been robust debate, but all in the interests of the organisation, and therefore I would like to express my sincere appreciation of all involved, including the machinery that makes the Board function.
Annual Report 2011/12 5 Though a signifi cant all-round improvement has been witnessed during the year under review, there are specifi c areas of improvement, particularly structural alignment to business processes. Systems integration and processes in the interests of effi ciency maximization, enhanced record-keeping, and maintenance of the audit trail are essential when operating in a security environment. SACAA is walking the talk by ring-fencing funds for capex, at an unprecedented level. As we enter 2012/13, I trust that we will give our utmost for organisational benefi t.
P Riba
Chairperson
6 South African Civil Aviation Authority Director of Civil Aviation’s Report
A full year in the realm of aviation does seem like a moment; looking back I am pleased with the achievements of dedicated SACAA employees, albeit under trying circumstances. Organisational results speak for themselves in both technical and support functions, and due accolades must be given to DoT and the Board.
1. Organisational Performance
Organisational performance from a support function perspective can be traced to the Auditor-General’s results, which is an independent assessment. Once again an unqualifi ed audit opinion, expression of a going concern, and unqualifi ed performance opinion is welcome. Let me take this opportunity to welcome the General Manager: Finance, Mr Asruf Seedat, who joined us late in the year, and to express my sincere appreciation to those that contributed to these excellent results. What is further noteworthy is the signifi cant decrease in fi ndings compared to previous years, signalling that the organisation is in good hands.
2. Safety Indicators
Safety statistics and external technical audits attest to SACAA’s improvement trend, an impetus that has to be maintained going into the future. The delineated 2011/12 Accidents table indicates a 21% decrease in total accidents. Despite the above positive results, fatalities basically remained unchanged. The drag on fatal statistics is attributed to the high number of passengers who were involved in two major general aviation accidents. Going into the future, the SACAA is improving accident data collection and recommendation processes in pursuit of positive results.
Annual Report 2011/12 7 Accidents Cumulative 160 140 120 100 80 2009/10 60 2010/11 40 2011/12 Number of Accidents 20 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Months Accidents - Cumulative Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2009/10 10 26 36 47 54 60 68 85 97 108 128 139 2010/11 6 15 23 40 52 64 81 96 105 110 125 137 2011/12 12 18 26 36 46 56 62 72 80 89 100 107
There is a need to report industry accidents by separating general aviation and scheduled airlines; this is a major contributor to Africa’s skewed statistics. The international norm of recording accidents and incidents on scheduled airlines separately, requires a solid infrastructure of capturing industry fl ying hours, for reporting purposes. I trust that in the following two years SACAA will be in a position to implement the new system.
3. International Compliance
Oversight by the International Civil Aviation Organisation (ICAO) is taking a new shape; in 2011 ICAO launched the Universal Safety Oversight Audit Programme (USOAP) Continuous Monitoring Approach (CMA). This new approach embraces the principles of continuous monitoring, taking into account national risk factors. SACAA has embraced this new approach in line with ICAO’s Transitional Plan and has proactively launched its own USOAP CMA project. The objective is to identify safety defi ciencies by assessing associated risks and then developing strategies to resolve them through consultation with various stakeholders.
SACAA’s oversight endeavours have not gone unrewarded. The successful completion of audits by ICAO and the United States Transport Security Administration (TSA) respectively during the calendar year, attest to organisational effectiveness. In July 2011 the TSA conducted an aviation security assessment, and no fi ndings were recorded against operators as they were found to be compliant to the National Security Plan (NASP) regulations. Similarly in August 2011, ICAO conducted its security audit and did not register any major or signifi cant security concerns. Let me once again extend my appreciation to the staff members, not as employees, but as dedicated family members who could have chosen to do differently.
4. Regulation Amendment
The Civil Aviation Act, 2009 (Act No.13 of 2009) came into operation in 2010 with a transitional arrangement to save the Civil Aviation Regulations promulgated in terms of the repealed Aviation Act, 1962 (Act No. 74 of 1962). Before long it was apparent that this situation was unattainable, as regulation amendments could not be effected. This necessitated amendments to the Regulations and Technical Standards. I am pleased to announce that new Regulations will come into force from 1 August 2012.
8 South African Civil Aviation Authority 5. Systems and Process Improvement
The Chairperson alluded to a strong budget emphasis in capital projects and this is intended to address disparate and outdated software systems. With the current fi nance model in place, process improvement and ultimately systems integration is imminent, and this excites me. Closer interaction with our customers from a service point of view is an added advantage of rolling out these technologies. Smart technologies facilitating a myriad of interphases with our customers, including banking, have moved our capacities from theory to a genuine possibility.
6. Stakeholder Management
EXTERNAL STAKEHOLDER SURVEY
Survey Type Industry Type % Satisfaction Questionnaire circulated Respondent %
Perception Survey Aviation Bodies 84% 358 10%
Satisfaction Survey Licence Personnel 86% 20,410 9%
Responsiveness to African CAA African CAA 100% 7 14%
AFI Working Groups AFI Working Groups 100% 4 25%
In the last year my management and I forecasted on improving stakeholder relationships; in this regard a concerted effort was made to improve ratings. At the end of the year Bytes Technologies was appointed to conduct a stakeholder satisfaction survey. I am pleased to share the results of these surveys that underscore high satisfaction levels. Aviation bodies scored an average of 84%, and licensed personnel in terms of pilots and other related persons scored 86%. Although African CAAs and African Indian Ocean Working Groups are few, 100% satisfaction was registered by those that responded. SACAA will endeavour to continue maintaining these high satisfaction levels.
7. Employer of Choice
I have always been a fi rm believer of being employee-oriented. Once employees are treated fairly as far as possible, this will contribute to organisational performance and the retention of special skills. In pursuit of this fi rm belief, SACAA participated in the Deloitte’s Employer of Choice Survey for the fi rst time. Needless to say, the fi rst results were humbling; however these are baby steps towards a high-performance culture. SACAA is developing plans to improve the average 3.14 score out of 5 concerning employee morale, and this will take extensive internal initiatives before the next external survey.
8. Broad-Based Black Economic Empowerment (BBBEE)
During the year, SACAA embarked on a verifi cation process using March 2012 year-end fi gures. While the achieved Level 6 leaves much room for improvement, it is anticipated that these results will improve, as part of the underperformance relates to record-keeping in a particular format. A minimum BBBEE Level 3 will be acceptable. Other areas of improvement with regard to BBBEE are Preferential Procurement, Enterprise Development, Socio- Economic Development and Women in Top Management.
Annual Report 2011/12 9 9. Aircraft Safety Infrastructure
Aircraft Safety Infrastructure (ASI) performs oversight on aerodromes and this has gone well in the year under review. ASI exceeded performance targets as far as planned audit targets are concerned. Further positive efforts are the department’s contribution to the National Preparatory Work Group coordinated by the Department of Communication (DoC) and the International Telecommunication Union World Radio Conference 2012 (ITU-WRC-12).
From a continental perspective, ASI has assisted South Sudan with a number of initiatives, including a review of 10 airports.
10. State of Aircraft Safety
The Aircraft Safety (AS) department performs oversight in three areas, namely Continued Operational Safety, Certifi cation, and Policy, Regulations and Technical Standards. Aircraft registrations were below the forecast in the period under review, and this could be contextualized by keeping in mind the current prevailing economic conditions. From an oversight audit perspective, the organisation met its annual targets.
11. Aviation Security
Aviation Security (Avsec) performs oversight on Airports and Airlines, Cargo Security, Dangerous Goods and Training and Certifi cation. From a security oversight perspective, the department has achieved its total oversight obligations. Part of the annual highlights is the satisfactory completion of both the TSA and ICAO audits.
12. Air Safety Operations
Air Safety Operations (ASO) performs oversight on pilots, aviation training organisations (ATOs), air operating certifi cated holders (AOC), and designated fl ight examiners (DFEs). From a safety oversight perspective, the department performed all annual renewals but was economic with ad-hoc audits.
The amendment of Technical Standards and Regulations were major departmental highlights. From a medical perspective, the Mood Disorders (Depression) Protocol and Pharmacology (list of acceptable drugs) were approved by the Civil Aviation Regulations (CARCom).
Let me fi nally express my appreciation to all stakeholders for a job well done. However, let us not be complacent, in the interests of the organisation.
Zakhele Thwala Director of Civil Aviation
10 South African Civil Aviation Authority Board of the South African Civil Aviation Authority
Phindile Riba Zakhele Thwala Sello Motau (Chairperson)
Adv. Roshanrai R Dehal Patrick Ndlovu Vuwani Ndwamato
Zukile Nomvete Mohau Motake Dr. Nozipho Sangweni (Company Secretary)
Annual Report 2011/12 11 Corporate Governance
Introduction
Fairness, accountability, responsibility and transparency are core values which are displayed in the activities of SACAA. Ethical leadership and organisational culture imbued with ubuntu and service to the people drive the agenda of the Board. In its quest to realise the legislative mandate, the Board strives to implement the principles of good governance. SACAA adheres to the principles of effective corporate governance and upholds the values and recommendations set out in the King Report on Governance for South Africa, 2009 (“King III”). SACAA is a National Public Entity, and as such, it has to comply with the Public Finance Management Act, 1999 (Act No. 1 of 1999). The Minister of Transport is SACAA’s Executive Authority.
The Board of the SACAA is responsible for the strategic direction of SACAA. It reports to the Minister on a quarterly basis, relating the activities and overall performance of SACAA. It is accountable for the development and execution of SACAA’s strategy, performance and fi nancial results as well as being the custodian of SACAA’s corporate governance.
The role of the Board is to bring independent judgment and experience to the deliberations and decisions involving SACAA. In line with international best practice, the Chairperson is a non-executive director and is therefore not involved in the day-to-day management of the entity. The executive team carries the operational responsibility and deals with the day-to-day functioning of the entity, led by the Director of Civil Aviation (DCA). The Board has delegated a number of functions to the DCA. This facilitates decision-making and the effective running of the organisation.
In terms of the Civil Aviation Act, 2009 (Act No. 13 of 2009), the Minister, the SACAA Board and the DCA enter into a performance agreement on an annual basis. This agreement sets out the key objectives and deliverables that the parties have to achieve over a year. The agreement does not exist in a vacuum; it is supported by the strategic plan. This strategic plan is reviewed on an annual basis to ensure that it remains relevant and in keeping with the ever-changing regulatory landscape. All stakeholders, including the industry and the Department of Transport, participate in the formulation of the strategic plan.
Composition of the Board
The Board comprises seven (7) non-executive directors and one (1) executive director, the DCA, by virtue of his offi ce. All board members are appointed by the Minister for a period of three (3) years, save for the DCA whose appointment is for fi ve (5) years. In line with international best practice, the SACAA has a unitary Board with an independent, non-executive chairperson at the helm of the Board. This position is distinct from that of the DCA. The chairperson is not a member of any of the subcommittees. For the year under review, Ms. P Riba was appointed as chairperson of the SACAA Board for a period of three (3) years. She was a board member of the previous board whose term came to an end in March 2011. The Minister reappointed her to the Board for the sake of continuity.
The Board is responsible for governance and its duties include approving the strategic plan, monitoring and assessing performance, and acting as a resource for management in matters of planning and policy. The fi duciary duties and other general duties of the Board are set out in the PFMA. The Board is governed by a formal written Board Charter, which delineates its duties and responsibilities.
12 South African Civil Aviation Authority The Board has reserved, among other, the following powers for itself:
• Approval and monitoring of the implementation of the strategic plan;
• Determining of overall policies and processes to ensure the integrity of the SACAA’s management of risk and internal controls; and
• Approval of all policies in the organisation.
While retaining overall accountability and subject to matters reserved to itself, the Board has devolved the responsibility of running the day-to-day affairs of the SACAA to the DCA. This is done through written delegations of authority. The Board maintains the highest standards of integrity, responsibility and accountability to ensure a fair balance between conforming to corporate governance principles and the performance of the SACAA.
Board Subcommittees
Specifi c responsibilities have been delegated to the committees of the Board, with full access to independent advice at the SACAA’s expense. The Board has four (4) subcommittees, namely: the Human Resources and Remuneration Committee (HR Committee), the Finance and Audit Committee (Finance Committee), Legislative and Regulatory Committee and the Safety, Security and Environmental Committee. These subcommittees assist the Board in discharging its duties and responsibilities. During the year under review, the following members were appointed to the Committees:
The HR and Remuneration Committee
• Dr. Nozipho Sangweni
• Mr. Patrick Ndlovu
• Mr. Vuwani Ndwamato.
This Committee is chaired by Dr. Nozipho Sangweni. It assists the Board in the discharge of its duties and responsibilities regarding human resources.
Finance and Audit Committee
• Mr. Sello Motau
• Adv. Roshanrai R. Dehal
• Mr. Z Nomvete.
Mr. Sello Motau chairs this Committee. This Committee is responsible for audit-related matters, internal controls, external audit, fi nance and risk management within the SACAA.
Legislative and Regulatory Committee
• Mr. Zukile Nomvete
• Adv. Roshanrai R. Dehal.
Adv. Roshanrai R. Dehal chairs this Committee. This Committee is responsible for all legal and regulatory matters affecting the organisation.
Annual Report 2011/12 13 Safety, Security and Environmental Committee
Mr. Zukile Nomvete
Adv. Roshanrai R. Dehal
Mr. Patrick Ndlovu.
Mr. Zukile Nomvete chairs this Committee. The main function of this subcommittee is to advise the Board on environmental issues and matters related to aviation safety and security.
The DCA is a member of all these subcommittees, save for the Finance and Audit Committee. The Chief Financial Offi cer (CFO) and the Chief Audit Executive are permanent invitees to the Finance and Audit Committee as well as the Board. All executives responsible for the technical divisions attend the Safety Committee. The Executive Manager: HR is a permanent invitee to the HR Committee.
Executive Committee
The Executive Committee (EXCO) is responsible for the day-to-day management of the business of the entity. It facilitates the effective control of the entity’s operational activities, and acts as a medium of communication and coordination between all the various units of SACAA. EXCO is responsible for recommendations to the Board regarding policies and strategies and for monitoring implementation in accordance with the Board’s directives and instructions.
Board Process
The full Board meets formally at least four times per year and at such other times as may be necessary to address any signifi cant matters that may arise, and also communicates regularly between these meetings. The Board is regularly supplied with appropriate and timely information relating to all aspects of the SACAA. In addition, members of the Board are free to seek any further information they consider necessary in order to discharge their duties effectively. The collective responsibility of the Board ensures that all members of the Board are involved in the process of arriving at signifi cant decisions.
Board Induction and continuing Education
All new members of the Board receive a comprehensive induction. The induction is the responsibility of the Company Secretary and includes a comprehensive information pack, an explanation of their fi duciary duties and responsibilities, meetings with the Chairman and executive team to facilitate an understanding of the SACAA’s affairs and operations, and director development programmes arranged through the Institute of Directors.
The Board members undergo training on a regular basis to broaden their knowledge. The Offi ce of the Company Secretary plays a vital role in ensuring that all the relevant courses are sourced and brought to the attention of the Board for attendance. The Company Secretary keeps the Board abreast of regulatory and legislative developments.
Company Secretary
The Company Secretary for the SACAA is Mr. Mohau Motake. He assists the Board in fulfi lling its functions and is empowered by the Board to perform his duties. The Company Secretary, directly or indirectly:
14 South African Civil Aviation Authority • assists the Chairman and DCA with the induction of new members;
• assists the Board with orientation, development and education;
• ensures that the SACAA complies with all applicable legislation;
• monitors the legal and regulatory environment and communicates new legislation and any changes to existing legislation relevant to the Board and the SACAA;
• provides the Board with a central source of guidance and assistance; and
• ensures that the proceedings and affairs of the Board and its committees are properly administered in accordance with relevant legislation.
All members of the Board have direct access to the Company Secretary at all times.
Board Remuneration
The remuneration of board members is determined by the Minister in consultation with the Minister of Finance. The remuneration of the DCA is determined by the Board, based on a recommendation by the HR Committee.
Code of Conduct
The SACAA has endorsed a comprehensive code of conduct founded on the highest levels of honesty, integrity and respect. All employees are expected to comply with the code at all times. The Board confi rms that systems and procedures have been implemented to entrench the values and ethics laid down in the code of conduct, and to monitor compliance with the code. There is a code of ethics in place to complement the code of conduct.
All new staff members receive training on, among others, the code of conduct at induction. The values encapsulated in the code of conduct are continuously instilled through ongoing communication and training.
Attendance of Board and Subcommittee Meetings
The attendance of board meetings is vital. Board members have to contribute meaningfully and constructively to the business of the organisation and to the discussions at board meetings. This enables informed and credible decision- making. During the year under review, one (1) Board member and the Chairperson of FAC, Mr. Sello Motau, resigned from the Board.
Annual Report 2011/12 15 Scheduled Board meeting attendance, from the period 1 April 2011 to 31 March 2012, was as follows:
TYPE OF MEETING FAC HRC SSEC Legislative Comm Board Total Meetings 8 (Including 5 (Including special 3 4 11 (Including special meetings, special meeting) meetings) AGM and strategic planning session and induction)
13. Dr. N Sangweni 14. 1 (Invitee) 15. 5 16. Non-Member 17. Non-Member 18. 9 Chairperson) 11 Ms. P Riba (Board Chairperson)
Mr. P Ndlovu 2 (Invitee) 5 3 Non-Member 10
Mr. Z Thwala 8 5 3 1 11
Mr. S Motau 5 2 resignations Non-Member Non-Member 4
Mr. V Ndwamato 1 2 Non-Member Non-Member 8
Adv. RR Dehal 8 1 3 4 9
Mr. Z Nomvete 7 1 3 3 4
Confl ict of Interest
Members of the Board continually keep the Board advised of any interests that could potentially confl ict with those of the SACAA. Where the Board believes that a signifi cant confl ict exists, the confl ict is clearly recorded in the board minutes and, if considered appropriate by the rest of the Board, the board member concerned is not present at the meeting whilst the item is considered and discussed.
External Audit
During the fi nancial year, the Auditor-General was the external auditor for the SACAA in line with the Public Audit Act, 2004 (Act No. 25 of 2004).
16 South African Civil Aviation Authority Internal Audit Introduction
The Internal Audit department (IA) ensures that there is constant and regular monitoring of performance in the organisation and performs its duties according to the approved Internal Audit Charter (IAC), Annual Audit Plan and Strategy. Part of its functions is to ensure that there is improved control within the organisation and compliance with applicable regulations. The Internal Audit reports are presented to the Board and the Internal Audit department’s performance is reviewed by management and the Board on a quarterly basis.
Internal Audit’s Responsibilities
The Internal Audit department is governed by the PFMA, King III, Treasury Regulations, International Standards for the Professional Practice of Internal Auditing (IIA Standards) and the Code of Ethics of the Institute of Internal Auditors.
The effectiveness of Internal Control
The Internal Audit department is of the opinion that the internal controls within the SACAA have improved, based on the internal audit work done during this reporting period. The Chief Audit Executive reports directly to the Finance and Audit Committee and gives reasonable assurance that the SACAA is achieving its objectives with regard to the following:
(a) the information systems environment;
(b) the reliability and integrity of fi nancial and operational information;
(c) the effectiveness of operations;
(d) safeguarding of assets;
(e) compliance with laws, regulations and controls;
(f) establishment and communication of objectives and values;
(g) the monitoring of its accomplishment of objectives;
(h) ensuring of accountability; and
(i) preserving of corporate values.
The above is in keeping with the Treasury Regulations 3.2.11 and 3.2.12.
King Report on Governance for South Africa (King III), 2009.
Principle 7.3 of the King III report stipulates that the Internal Audit department should provide a written assessment of the effectiveness of the company’s system of internal controls and risk management.
Evaluation of Financial Statements
The Internal Audit department has evaluated the Annual Financial Statements of the SACAA for the year ended 31 March 2012. Based on the information provided, the Board endorses and accepts the Auditor-General’s conclusions on these fi nancial statements.
Annual Report 2011/12 17 Executive Management Committee
Zakhele Thwala Monica Sonjani Sphelo Ntaka Shadrack Lesoro
Director of Civil Aviation Executive Manager: Executive Manager: Executive Manager: HR Legal (Act) Offi ce of the Director of Civil Aviation
Anton Richman Asruf Seedat Poppy Khoza Gawie Bestbier
General Manager: General Manager: General Manager: General Manager: Air Safety Operations Finance Aviation Security Air Safety Infrastructure
Subash Devkaran Essery Hamilton Phila Kewana
General Manager: General Manager: Chief Audit Executive: Aircraft Safety (Act) Risk & Compliance (Act) Internal Audit
18 South African Civil Aviation Authority Strategic Risks Report
In today’s business environment, conditions remain challenging for many, and risk retains its position high on every organisation’s agenda. Businesses themselves are changing, which brings new risk horizons and, at the same time, they are grappling with the changes brought about by a post-downturn economy.
The ability to anticipate threats, respond and continually adapt is as critical a part of the risk management process as it has ever been. The third in its series, the SACAA Business Risk 2011/2012 report is part of an ongoing conversation about business risk; a conversation that has been taking place for three years, asking the question; is SACAA scanning its horizons and what is the scope of probability and impact? In this report, we explore the top fi ve risks facing SACAA that have emerged from our day-to-day organisational activities and support services in the 2011/ 2012 reporting period.
The operational risks arising from SACAA’s business functions and from the practical implementation of the management’s strategy, as such, is a very broad concept concerning human and systemic errors that are inclusive of aviation safety and security.
A strategic objective that is a key driver for the SACAA is ensuring safety and security standards and the regulation of industry compliance in accordance with International Civil Aviation Organisation (ICAO) standards and global best practices. The risk that arises out of this strategic objective is our possible non-compliance to International Civil Aviation Organisation (ICAO) Standards and Recommended Practices. The mitigation measure to treat this risk is the constant monitoring of our level of ICAO compliance in relation to our corrective action plan.
In relation to the strategic objective relating to setting aviation safety and security standards and regulating industry compliance in accordance with ICAO standards and global best practices; the risk is the non-adherence to aviation legislation, including the misinterpretation of legislation by the SACAA. The mitigating measure to address this risk is for SACAA to commit to develop and implement new corrective actions and address ICAO gap analysis recommendations and action plans; together with training pertaining to the regulatory environment and requirements to be provided to all staff.
The support services risks are risks arising from SACAA’s functions in relation to its human capital, fi nancial, legislative, governance and compliance-related matters that could harm the business.
The SACAA commits to building effective organisational systems and processes in order to ensure fi nancial stability, good corporate governance and performance excellence that meet or exceed the expectations of stakeholders. This commitment ensures accurate fi nancial reporting, tighter internal controls and skilled staff in the fi nancial environment, to deal with the risk of a qualifi ed audit report that could result in reputational risk to SACAA and reporting to SCOPA.
The fi nancial accountability and separation of duties by the SACAA contribute to building effective organisational systems and processes. In terms of mitigating the risk of inadequate fi nancial controls and procurement processes that could result in ineffi ciency, missing of milestones or objectives, the possibility of fraud and non-compliance with legislation, the SACAA has ensured the implementation of internal controls and a culture of compliance.
Annual Report 2011/12 19 Judging from current trends, the management of the emerging risk of inadequate human capital management, including attraction, retention, development and succession planning may lead to organisational ineffi ciency. The SACAA has mitigated this risk by ensuring the implementation of a recruitment and retention strategy and will attract, develop and retain skilled human capital, resulting in the assurance of industry participation programmes to develop scarce skills.
The goal of any risk management effort should be to help the organisation achieve its strategic business objectives. At the beginning of this report we stated that with resources shrinking, risk management is affected as well. Risk and compliance management remains as relevant as ever within SACAA. However SACAA sees the investment in risk management as a means of aligning risk and controls with broader strategic goals, building better relationships with stakeholders and enhancing overall performance.
20 South African Civil Aviation Authority Annual Report 2011/12 21 No Variance On Track Will be tabled at next Board meeting achieved through Bytes Survey Target achieved through Bytes Survey Target Revenue Model approved by Board and Audit Committee – performance is tracked approved by Exco and ready for Board tabling Out of 358 sent out, 36 responded Out of 20,410 requests, 1789 responded. Div Cumulative Performance Reason for Variance Fin, P&C Fin 15% SavingsFin, IA Plan was approved by the Finance Achieved Target P&C Draft Stakeholder strategy P&C 84% satisfaction P&C 86% satisfaction 2012 Current Targets for Targets Year 2011- Year Model Implemented original expense budget according to approved plan Nil Fin, IAndings No material repeat fi Progress according to No Variance approved plan Establish baseline Feb 2012 Unit of Measure Plan approved by Board 31 December 2010 %Plan in place 2% saving of Progress Number of ndings fi Progress against approved plan % % 77% Indicators Key Performance Revenue Model in place Break Even Budget Approved Plan No repeat audit ndings fi Approved Plan Implemented Stakeholder Perception Survey carried out Client Satisfaction Survey results Strategic Initiatives Update revenue model; optimise & expand revenue streams Develop and implement a cost containment plan Address audit queries Establish a stakeholder strategy and plan Develop the nancial system’s fi management & controls improvement plan Strategic Objectives Ensure business nancial fi viability Ensure SACAA meets stakeholders’ expectations Improve nancial fi controls Key Area Image Financial of SACAA’s of SACAA’s Performance Improvement Sustainability BSC FINANCIAL STAKEHOLDER PERSPECTIVE
22 South African Civil Aviation Authority Target achieved through Bytes Survey. achieved through Bytes Survey. Target Out of 358 requests, 18 responded. The lower the percentage, greater use of communication tool. achieved through Bytes Survey Target achieved through Bytes Survey Target Seldom/never Seldom/never used Stakeholder NascomATNS/SACAA 66% 50% GASIInd. Liaison 28% Twitter 66% Facebook 78% Publications 84% 61% Contact ListMailbox 23% Website 22% 11% Survey respondents Out of 7 CAA requested, only 1 responded Out of 4 working groups, only 1 responded Div Cumulative Performance Reason for Variance R&C 100% satisfaction from Bytes R&C 100% satisfaction P&C 2012 Current Targets for Targets Year 2011- Year satisfaction Min 25% satisfaction baseline Feb 2012 Unit of Measure Survey performed Min 25% Stakeholder Perception Survey performed % Establish Indicators Key Performance to African CAA requests AFI working groups’ involvement Stakeholder Perception Survey carried out Strategic Initiatives Responsiveness Participation in AFI working groups Upgrade external communication practices to be more effective Strategic Objectives Contribute to the development of Africa’s civil aviation capacity Contribute to the harmonisation of SADC aviation regulations Key Area Performance SACAA’s Image SACAA’s Improvement of BSC STAKEHOLDER PERSPECTIVE
Annual Report 2011/12 23
This deliverable is only possible after initial rating is in place. SACAA aircraft had to undergo repairs during calibration period. Any delays would have materially compromised safety. exceeded, largely due to mass Target career awareness campaign in Limpopo. On track No variance preceded by a rating being in place and new targets formed. For 2011/12 the target is having rating in place. into account an emergency safety procurement for calibrating airports. Otherwise effective % is 50%. annual target of 100. additional recommendations made. 3 workshops held 1) Gauteng 2) Durban 3) Cape Town Div Cumulative Performance Reason for Variance Fin BBBEE level 6 rating achieved achieved Target HR 183 schools were visited out of an HR In principle approval by Board with ASO 2012 Current Targets for Targets Year 2011- Year Maintained Progress according to approved plan Plan approved by 30 April 2011 3 workshops held by 31 March 2012 Unit of Measure % 100%Rating in place Rating Fin Measurement should have been 70% 70% FinProgress measured Achieved 66% without taking against approved plan Progress measured against approved plan Number of workshops Indicators Key Performance Compliance with targets at each level Determine SACAA rating Ensure immediate BBBEE spend Programme impact on SACAA recruitment pipeline Approved Plan Industry workshops conducted Strategic Initiatives BBBEE scorecard approved by Board - establish indicators and targets Establish programme to sustain skills base (training, mentoring & skills transfer) Encourage DoT & data to establish aviation schools accessible to PDIs Develop industry transformation strategy with clear initiatives Strategic Objectives Compliance ve- with BBBEE fi year plan Increase aviation career awareness Infl uence Infl industry to transform
Key Area Industry Performance Transformation BSC STAKEHOLDER PERSPECTIVE
24 South African Civil Aviation Authority (1% (5% Positive (6% negative variance) delayed tariff increases, however all renewal audits were achieved. 293 annual audits were planned with 309 actually performed. variance) delayed tariff increases, however all renewal audits were achieved. 232 annual audits were planned and 217 performed. uctuate, 258 were DFE numbers fl anticipated at planning stage. Currently nal quarter there are 211 DFEs in the fi with 208 being total audits. negative variance) Achieved Target DoT target excluded international Base Stations. (2% positive variance) 1. 14 AMOs present out of a budgeted 17 2. Diff between MSP and Actual due to 3 AMOs that closed down, with average of 3 audits budgeted. (17%) variance (On track, with fewer MOs) Less Int. base stations = 116 Local audits = 335 Div Cumulative Performance Reason for Variance
2012 Current Targets for Targets Year 2011- Year increase caused by inclusion of an average of 1 ad-hoc inspection 530 ASO Cumulative actual = 463 Minimised on ad-hoc audits due to 327 AS Cumulative actual = 451 Unit of Measure AOC & ATO # AOC holders audited # of ATOs audited# of ATOs 500 ASO Cumulative actual = 280# of DFEs audited 258 Minimised on ad-hoc audits due to ASO Cumulative actual = 208 # of AMOs audited # Inspected 49 AS Cumulative actual = 38 Indicators Key Performance Number of inspections/ audits carried out on various stakeholders: Air Operating cate holders Certifi Aviation Training Training Aviation Organisations Designated Flight Examiners Air Maintenance Organisations Manufacturing Organisations Strategic Initiatives Implement effective oversight programme Strategic Objectives Control and regulate Civil safety Aviation & security Key Area and Security Performance Aviation Safety Aviation BSC OPERATIONS PERSPECTIVE
Annual Report 2011/12 25 just major ones. The MSP now provides for 136 licence inspections more than the 94 stipulated in DoT Annexure. in and 23 ATSUs Only 3 ATOs existence. rest unaudited due to decommissioned non-directional beacons resulting from satellite technology replacement. 6% positive variance 6% positive variance administration of examinations. Div Cumulative Performance Reason for Variance 2012 Current Targets for Targets Year 2011- Year 58 ASI Cumulative actual = 48 Only active organisations audited. The Unit of Measure # Inspected 94# Inspected ASI Cumulative actual = 135 28 Included all airports in MSP rather than # of licences ASIissued Cumulative actual = 26# Inspected Achieved. Target 232# Inspected 407 AvSec Cumulative actual = 246# Inspected 181 AvSec Achieved Target Cumulative actual = 430# Inspected 313 AvSec Achieved Target Cumulative actual = 170 AvSec 6% variance due to training and Cumulative actual = 313 achieved Target Indicators Key Performance Airports c Services Air Traffi Units and ATOs Communication Navigation Services and Airports, ATSU Airline Security Dangerous goods and Training Avsec cation Certifi Cargo Security Strategic Initiatives Strategic Objectives Key Area and Security Performance Aviation Safety Aviation BSC OPERATIONS PERSPECTIVE
26 South African Civil Aviation Authority Target achieved - number of accidents Target decreased 1 extra – due to increased economic activity 1 extra - Tzaneen accidents had high fatalities achieved Target division has recruited personnel and is making up for lost time. On track No variance 21% decrease in accidents 2011 = 136 2012 107 6% increase in fatal accidents 2011 = 16 2012 17 3% increase in fatalities 2011 = 32 2012 33 delegates held 2. Cargo security campaign held accident inputs in safety oversight implemented, eg directive on Bell Helicopters. Div Cumulative Performance Reason for Variance P&C P&C P&C AS, Plan in place On track AS, Policy approved No variance AvSec 1. ICAO readiness campaign AS, New initiative of considering 2012 Current Targets for Targets Year 2011- Year on year on year on year 250 P&C Successful seminar with over 250 Progress against plan implemented and practiced One security awareness campaign to be conducted every 6 months Progress against plan Unit of Measure %% 0% increase year % 0% increase year Number of 0% increase year delegates attended Number 38Progress against approved plan P&C 29 promotions held of staff affected the programme; Turnover Policy operational Policy Number semi- annually Progress against plan Indicators Key Performance No negative year on year growth in the number of aviation accidents, fatal aviation accidents and number of fatalities, year on year Host annual Safety Seminar Safety promotions at major aviation events e.g. Airshows & workshops Approved plan by Exco in July 2011 Development of AIID Recommendation Implementation Policy by July 2011 Campaigns held concerning aviation security matters Approved plan with Exco in July 2011 aligning oversight with accident rate Strategic Initiatives Focused industry engagement in aviation safety matters Reduce accident rate by 50% in Mar 2014 Implement AID Safety Recommendations Focused industry engagement in aviation security matters Alignment of safety oversight to address accident rate Strategic Objectives Promote Civil Safety Aviation Promote Civil Security Aviation Key Area Security Aviation Aviation Safety and Performance
BSC OPERATIONS PERSPECTIVE
Annual Report 2011/12 27 No variance The promulgation of regulations had to be fast-tracked meet the ICAO deadline. • Pending CAR amendment approval by the NDoT Minister which is for possible implementation by 1 Jan 2012 • Pending procurement of a national Aeronautical Mapping Solution by SACAA will participate in the ATNS, process with a target date of end ATNS April 2012. 99.30% 3 concurrence to postpone due few issues at hand Div Cumulative Performance Reason for Variance R&C Legal 9 meetings held Legal 100% completed achieved Target AvSec Audit outcome favourable achieved Target AvSec Audit outcome favourable achieved Target 2012 Current Targets for Targets Year 2011- Year Maintain 100% compliance of CARCom per annum as required by Act to implement action plan for Regulation Rewrite Compliance evidenced by up-to-date audit le by 31 May fi 2011 Compliance evidenced by up-to-date audit le by 31 May fi 2011 Unit of Measure Number of ndings by rating fi level Number 12 meetings % 80% compliance Favourable audit outcome Favourable audit outcome Indicators Key Performance Overall compliance to the ICAO 8 critical elements Progress against plan of promulgation and of CATS CARs to achieve compliance with ICAO Annexes and SARPS, where appropriate. Compliance with ICAO security audit Compliance with US Security Transport Administration Audit Strategic Initiatives Implement ICAO Corrective Action Plan from 2007 Audit Develop and implement a promulgation plan for implementing and CARs CATS Prepare for South African security audits Strategic Objectives Ensure ICAO compliance Promulgate Civil Aviation Regulations (“CARS”) and Technical Standards to (“CATS”) conform with the Civil Aviation Act and ICAO Annexes and SARPS Key Area Security Aviation Aviation Safety and Performance
BSC OPERATIONS PERSPECTIVE
28 South African Civil Aviation Authority No variance No variance Paper that gives effect to Framework implementation. tracked non-compliance Div Cumulative Performance Reason for Variance AS Draft plan in placenalisation of Draft White DoT fi Awaiting Legal All enforcements are registered and Legal Appropriate measures taken on AS Submitted for Board approval. Under Board consideration 2012 Current Targets for Targets Year 2011- Year Framework implemented registered and tracked measures taken in all cases of non-compliance by 30 June 2011 Unit of Measure Framework in place Number of cases All enforcement Number of cases Appropriate Approved policy Policy completed Indicators Key Performance Implementation of ciency an energy effi framework Enforcement register updated monthly – reported quarterly Enforcement action taken for non- compliance with regulations Development of AEP policy for SACAA Strategic Initiatives Lead South Africa’s Lead South Africa’s response to the global industry IATA commitment to carbon neutral growth by 2020 Enforce compliance to regulations Develop policy, ensuring that national responsibilities are adhered to and observed Strategic Objectives Promote industry awareness of environmental sustainability to reduce impact of aviation on climate change Enforcement of Safety and Security regulations Key Area Security Aviation Aviation Safety and Performance
BSC OPERATIONS PERSPECTIVE
Annual Report 2011/12 29 Target achieved Target Target achieved Target Senior Manager incumbent in this section left SACAA end 2011. Further work recommended by Board. separately. Review indicates that year on inspections are improving. recommended additional work. Cape Town offi ce is operational. offi Cape Town a chieved Target Plan in place, to be endorsed and actioned by new appointee. Div Cumulative Performance Reason for Variance AS ce reporting offi Cape Town R&C 88.8% achieved through Bytes survey Target AS, ASO, ASI, AvSec Fin Reviewed by Board and ASO, ASI, AvSec R&C Draft Business Process Improvement 2012 Current Targets for Targets Year 2011- Year Year on year Year oversight improvement on decentralised ces offi baseline Year on year Year inspection cost improvement on decentralised ces offi implemented N/A AS, Establish baseline Unit of Measure Comprehensive Oversight Report approved by Exco % Establish Cost per inspection report approved by Exco Plan in place Plan Technology Offi ce operational Offi by 31/03/2010 Capability maturity level Indicators Key Performance Oversight capability enhanced Survey carried out inspection Plan in place operational Establish business process maturity level and improve Strategic Initiatives Customer Service Decentralise ces SACAA offi Customer Reduce cost per Review SACAA’s Review SACAA’s technology plan and prioritise Strategic alignment and process ce offi Cape Town improvement (Review & prioritise key processes to establish qualitative & quantitative standards for productivity) Strategic Objectives Optimise systems and processes Effi cient Effi utilisation of technology and become a hub of knowledge management so that data & information needed for SACAA reporting is readily available Key Area ciency and Performance Operational Effectiveness Effi BSC OPERATIONS PERSPECTIVE
30 South African Civil Aviation Authority Target achieved Target External expertise engaged to review current model. achieved Target On track Target achieved Target Framework/Manual. Ethics workshops conducted by Legal. Strategy under review by Finance and Audit Committee. Charter and 3-year Audit Plan which has been approved by FAC. Board Charter and Terms of Board Charter and Terms Reference in line with King III. Div Cumulative Performance Reason for Variance Fined Audit Report obtained Unqualifi No variance IA Developed an Internal Audit Fin PFMA workshop and R&C Enterprise Wide Risk Management IA Developed an Internal Audit CoSec, P&C 2012 Current Targets for Targets Year 2011- Year All audit fi ndings All audit fi resolved Board reports include King III compliance levels according to plan Conduct a minimum of two regulation update workshops achieved achieved Unit of Measure Number of ndings by rating fi level Quarterly reports with King III compliance levels IA risk mitigation Implementation Number of workshops IA risk mitigation Mitigation IA risk mitigation Mitigation Indicators Key Performance No qualifi cation by No qualifi external auditors Approval of the oversight and reporting framework by the Board Established standard operation procedures Internal & external ndings audit fi Established standard operational procedures Established standard operational procedures Strategic Initiatives Maintain ed audits unqualifi Establish reporting standards Review & prioritise key processes: focus on management reviews and responsibility Integrate and improve management review and reporting requirements Establish a risk assessment and reporting plan - approval by Board By process & reporting practices ensure independence of Internal Audit Strategic Objectives Improve internal control environment Strengthen the corporate governance reporting capability Compliance with PFMA, Supply Chain Management & Treasury regulations Key Area Statutory Corporate Performance Compliance Governance BSC OPERATIONS PERSPECTIVE
Annual Report 2011/12 31 until tariff increase approval. by March 2012 in line Transformation with demographics a challenge due to scarcity of HDI Pilots. until tariff increase KPI rolled over due to cost containment, and further delayed while awaiting tariff increase approval. achieved Target bringing the total complement to 10 employees). 30% (Total Board and further development recommended. by Acting DCA for continuous improvement. Div Cumulative Performance Reason for Variance HR 100% non-technical recruits PDI On track HRcation in place Draft specifi cation for diversity delayed Draft specifi HR, AS 3 additional HDI transferred to FIU, HR Career pathing was reviewed by HR Approved plan under review HR under evaluation Tender KPI rolled over due to cost containment 2012 Current Targets for Targets Year 2011- Year technical recruits PDI Progress against approved plan Alignment to national demographics by March 2012 Progress against approved plan Successors ed for all identifi management roles Progress against approved plan Unit of Measure % 82% of non- Progress against approved plan % (days)Time 60 75% HR HR 78% achieved Currently not applied Cautious recruitment approach taken achieved Target Compliance with national demographics Progress against plan Successors ed for each identifi position Progress against plan Indicators Key Performance Progress against approved EE plan by Board Roll-out plan approved by Board by Feb 2011 ng level in Staffi critical roles Duration of vacant critical posts Transform FIU by Transform March 2012 Career pathing plan complete by 31/03/2010 Implementation of succession plan Leadership Development plan complete by 31/03/2011 Strategic Initiatives Develop an EE plan (diversity plan) that is guided by the organisation’s Management Talent strategy. Diversity training rolled out Establish talent management process Transformation Transformation of FIU Strategic Objectives Increase the number of previously disadvantaged individuals in technical and management roles Ensure that there is a pool of young talent for future roles Key Area Capital Human Performance
BSC PEOPLE PERSPECTIVE
32 South African Civil Aviation Authority Target achieved Target Delayed, awaiting tariff increase. Alignment of training dates and work assignment, together with delayed tariff increases, account for the variance. No variance bonus for 2010/11 fi nancial year. bonus for 2010/11 fi (PMS) reviews conducted in 2012 nancial year. fi in September 2011 quarter and will be completed in 2012/13. out of budgeted 143 submitted to TETA. Div Cumulative Performance Reason for Variance HR Performance Management System HR Organisational structure approved HR 119 (83%) people were trained HR All staff contracted on PMS No variance HR 60% achieved Target 2012 Current Targets for Targets Year 2011- Year New PMS implemented by 1 April 2010 Approved structure implemented by June 2011 N/A HRapproved plan Project commenced late in 3rd contracted by 30 April 2010 satisfaction Unit of Measure Improvement recommendations implemented Recommendations for new organisational structure complete Skills audit conducted Plan in place Progress against % 100% staff % 50%%Survey performed Minimum 25% HR 50% of reviews conducted N/A No variance HR No PMS in place for 2010/11 No appeals possible as there was no Indicators Key Performance Performance Management System Review complete by 31/03/2011 Organisational structure alignment complete by 31/03/2011 Skills audit complete by 31/03/2010 Progress against employee development plan Performance agreements in place by Dec 2010 Quarterly formal and ongoing informal performance feedback appraisals implemented Successful PMS appeals Stakeholder Perception Survey established Strategic Initiatives Conduct performance management system review, improve consistency of implementation and incorporate behaviour perspectives Align organisational structure to revised strategy Conduct skills audit to address capability gaps Establish an employee development programme to sustain skills base, including an accelerated training for PDIs Initiate training that will improve performance management practices throughout the organisation Upgrade internal communication practices to be more effective Strategic Objectives Enhance performance and accountability Develop employee skills to meet the safety and security goals of SACAA Improve organisational climate Key Area Capital Human Performance
BSC PEOPLE PERSPECTIVE
Annual Report 2011/12 33 34 South African Civil Aviation Authority SACAA Mandate
The South African Civil Aviation Authority was established on 1 October 1998, following the enactment of the South African Civil Aviation Authority Act. The South African Civil Aviation Authority is an agency of the Department of Transport. The Act provides for the establishment of a stand-alone authority mandated with promoting, regulating, supporting, enforcing and continuously improving levels of safety and security throughout the civil aviation industry. The above is to be achieved by complying with the International Civil Aviation Authority (ICAO) Standards and Recommended Practices (SARPs) whilst considering the local context.
The Act was revisited with a view to consolidating two other existing pieces of legislation and the result was the promulgation of the Civil Aviation Act No. 13 of 2009, which came into effect at the end of March 2010.
Organisational Structure
Senior Management Structure 03 January 2012 Minister of Transport
CAA BOARD Safety Advisory Committee
Chief Audit Executive: Company Director of Civil Internal Audit Executive Manager: Aviation (DCA) Secretary Accident & Incident Investigation
Accident & Incident Investigation Flight Inspection Executive Manager: Unit Legal RAASA
General Manager: General Manager: Executive Manager: General Manager: General Manager: General Manager: General Manager: Executive Manager: Aircraft Safety Air Safety Air Safety Aviation Security Risk & Compliance DCA Office Operations Infrastructure Finance Human Resources
Corporate Human Resources, Communications & Aircraft Flight Operations Air Navigation Training and Risk Quality & Certification Standards Service Certification Compliance Finance Training and Marketing Development
Client Services, Projects Aircraft Aerodromes & Dangerous Goods Facilities & Aviation Medicine & Cargo Licensing & Airworthiness Facilities Examinations Procurement
Aviation Personnel Airports & Airlines Information Information Cape Town Office Standards Technology Technology
» Regulatory Compliance and Enforcement
The Civil Aviation Regulations Committee (CARCom) is a consultative, statutory body that was established in terms of section 157 of the Civil Aviation Act, 2009 (Act No. 13 of 2009), to advise the Minister on any proposal with regard to, amongst others, the introduction, amendment or withdrawal of regulations. CARCom comprises the Director of Civil Aviation and representatives of all the role players within the civil aviation industry as specifi ed in section 157(2) of the said Act.
The primary role of CARCom is to scrutinise all proposals for amendment, or the introduction of regulations and technical standards, to ensure that they conform to international and domestic standards and to ensure that they are practical and can be implemented.
Annual Report 2011/12 35 The Civil Aviation Act came into operation in March 2010. The transitional provisions of the Act provided for the saving of the Civil Aviation Regulations, 1997, promulgated in terms of the repealed Aviation Act, 1962 (Act No. 74 of 1962) until new Regulations were promulgated in terms of the Civil Aviation Act. On commencement of the Civil Aviation Act, it became apparent that a loophole existed therein which made it impossible to effect any amendments to the Civil Aviation Regulations, 1997. Considering that civil aviation is an evolving fi eld with frequent changes from the international arena, a solution to the problem caused by the loophole had to be sought fast.
A legal opinion obtained from the State Law Advisers from the Department of Justice and Constitutional Development recommended that the Civil Aviation Regulations be overhauled and new regulations be promulgated in terms of the Civil Aviation Act. Since the Regulations are supported by the Civil Aviation Technical Standards, the same principle applied to the latter.
During 2011, the SACAA embarked on the process of overhauling the Civil Aviation Regulations which involved:
» Drafting provisions of the new Civil Aviation Regulations, 2011 and Technical Standards;
» Tabling the Regulations and Technical Standards at CARCom for scrutiny;
» Publication of the Regulations and Technical Standards for public comments;
» Consideration of comments by various subcommittees of CARCom;
» Approval of the fi nal Regulations and Technical Standards by CARCom for submission to the Minister of Transport and the Director of Civil Aviation, respectively, for fi nal approval;
» Submission of the fi nal Civil Aviation Regulations, 2011 to the Minister, and Civil Aviation Technical Standards to the Director of Civil Aviation, for approval.
During the reporting period, CARCom held 11 scheduled meetings. Most of the meetings were for the purposes of handling the process of the overhauling of the Civil Aviation Regulations as indicated above. A total of 21 submissions were tabled during this period.
The table below outlines the submissions tabled at CARCom during the reporting period:
Dates Proposal tabled 11 May 2011 Amendment of Passenger Safety Charge Regulations, 2010
7 July 2011 Civil Aviation Security Regulations, 2011
27 July 2011 No proposals tabled, the meeting dealt with reports of subcommittees
31 August 2011 Civil Aviation Regulations, 2011
28 September 2011 Parts 21, 47, 60, 63, 129 and 187
30 November 2011 Parts 21 and 121 (Amendments and insertions)
25 January 2012 Parts 21, 34, 36, 91, 109 and 110 (Amendments and insertions)
29 February 2012 Part 91 (Amendment)
29 March 2012 Parts 21, 91 and 127 (Amendments and insertions).
36 South African Civil Aviation Authority The table below outlines regulations promulgated during the reporting period:
Regulation Promulgation date
Civil Aviation Authority Passenger Safety Charge Regulations, 2010 1 July 2011
Civil Aviation Regulations, 2011 (Security Regulations) 29 August 2011
Amendment of Civil Aviation Authority Passenger Safety Charge Regulations, 2010 27 January 2012
Enforcement
The following issues were handled by the department:
• 32 cases were completed in this fi nancial year
• Five Pilot’s Licences were suspended and one pilot was issued with a warning letter
• Twelve Pilot’s Licence holders were issued with penalty notices to the total sum of R109 000.00
• One Pilot’s Licence holder was disqualifi ed from writing examinations for 18 months after he was found cheating during examinations.
• Two Aerodrome Licences were suspended and one was given a warning letter after submitting an acceptable action plan. One of the suspended aerodromes was reinstated after an inspection was conducted and all the fi ndings were closed.
• Two Air Operator Certifi cate holders were issued with a penalty notice, with the penalty amount totalling R48 000.00.
• Three criminal cases were reported. Two of the criminal cases have been fi nalized with the offenders convicted and sentenced with fi nes of R1000.00 and R2000.00 respectively.
• One Air Operating Certifi cate holder was issued with a warning letter.
• One Aircraft Maintenance Engineer Licence holder was issued with a penalty notice to the sum of R10 000.00.
• Two Aircraft Maintenance Organisations were issued with penalty notices totalling R624 000.00.
• One Aircraft Certifi cate of Airworthiness was suspended and after inspection of the aircraft, it was reinstated.
Other Regulatory-related Projects
Development of aviation security regulations/security programme.
CARs 108, 109 and CARs 110 (Air Cargo Security, Avsec Training and Screener Certifi cation)
Amendments to Part 109/110 regulations were presented to the Aviation Security Managers’ Forum in October as part of the consultation before the Civil Aviation Regulations Committee (CARCom) process. The amendments will close some of the ICAO fi ndings and will also include new requirements for Instructor Certifi cation due to be implemented by states effectively by July 2012.
Annual Report 2011/12 37 Secondly, Part 108 training (Air Cargo Security training) will be migrated and centralised into Part 109 to avoid fragmentation. This move will result in aviation security training being centralised under one regulation, which will benefi t both the industry and the SACAA in terms of effective oversight. Consultation with the industry through a CARCom Aviation Security Subcommittee is taking place in order to consider the merger of Training under one umbrella. This process is envisaged to be fi nalised in the next fi nancial year.
CARS 111 (Aviation Security Regulations)
The security regulations were amended to include the Aviation Security Training Programme and National Quality Control Programme.
CARS 112 (Aircraft Passenger Identifi cation: Aviation Security)
A new regulation was promulgated dealing with passenger identity verifi cation upon departure at check-in and at boarding. This new requirement will ensure that passengers who have boarded an aircraft are bona fi de passengers and that there is reconciliation of the passenger who checked in and the one on board an aircraft. With airlines having introduced an e-ticketing system, it became critical that this verifi cation should occur, which will add to the minimising of risks in overall security. Another benefi t will be the reduction of fraudulent activities involving air travel. This new requirement comes into effect in August 2012.
National Aviation Security Programme (NASP)
The SACAA amended the NASP in 2011 for the Minister of Transport’s approval, prior to the ICAO Aviation Security Audit of the State. The new amendment of the NASP would include the new developments in the ICAO’s Annex 9 and 17 (facilitation and security) contained in the 12th amendment of Annex 17. This meant that the NASP had to be reviewed to be aligned with the changes. The industry was given an opportunity to comment on the NASP document and a number of workshops were held for input. The Minister of Transport approved the revised NASP in May 2011.
The industry was given some time to adjust their security plans to be in line with the new revision, and a process of approval of these plans began as required by the Civil Aviation Act of 2009. Safety Indicators and the Investigation of Aircraft Accidents
The mandate of the Accident and Incident Investigation Division (AIID)
The AIID is responsible for instituting an investigation into civil aviation accidents and serious incidents involving South African registered aircraft as well as foreign-fl ag civil aircraft that might be involved in such an occurrence within the territory of South Africa. The AIID investigates by means of a ‘no blame’ systemic approach to prevent or minimize repeat occurrences. This is conducted in accordance with international standards and recommended practices (SARPs) for accidents and serious incident investigation, which are stated in the ICAO Annex 13 to the Chicago Convention of 1944, to which South Africa is a signatory.
Does AIID investigate all aviation Aircraft Accidents?
The AIID does not investigate all aviation accidents. Accidents and serious incidents get categorized, based on their severity and the impact on aviation safety (safety benefi ts) on a scale from 1 to 6. Category 5 and 6 accidents and serious incidents are therefore concluded as data reports, which will be used for statistical purposes (safety analysis) only.
38 South African Civil Aviation Authority Creation of the Aviation Safety Investigation Board (ASIB)
According to the Civil Aviation Act No.13 of 2009 which came into effect in March 2010, the establishment of the Aviation Safety Investigation Board (ASIB) is imminent. Signifi cant progress has been made, such as the call for nominations for the Board. The Department of Transport is driving this process.
In the mean time, the Accidents and Incidents Investigations Division within the South African Civil Aviation Authority is continuing with the function of independently investigating aircraft accidents. The AIID is assisted by the Advisory Safety Panel, which consists of fi ve (5) aviation experts from the industry.
Aviation Safety
There was a reduction in the number of accidents during the reporting period. One hundred and thirty-seven (137) accidents were reported in the previous fi nancial year and one hundred and seven (107) accidents were reported for the fi nancial year in question (2011/12). This indicates a reduction of 28% in the number of reported accidents. This is the lowest fi gure in the past three (3) years. This is despite the fact that the aircraft register has grown. This spells good news for aviation safety in South Africa, as it means that any effort to reduce the rate of aircraft accidents is working.
Accident Statistics
Accidents
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total
2009/10 10 16 10 11 7 6 81712112011 139 2010/11 698171212 17 15 9 5 15 12 137 2011/12 12 6 8 10 10 10 6108 9117 107
Monthly Rate of Fatal Aviation Accidents
In terms of fatal accidents, the SACAA noted a slight decrease as compared to the previous fi nancial year. During this reporting period, there were 15 fatal accidents compared to 16 during the previous fi nancial year, which represents a decrease of 7%.
Fatal Accidents Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total
2009/10 010120 13 3021 14 2010/11 220231 02 0220 16 2011/12 114110 02 2111 15
Annual Report 2011/12 39 Monthly Rate of Fatalities
A total of 33 fatalities were recorded in the period under review. During the previous fi nancial year, a total of 32 fatalities were recorded, which translates to an increase of 3%.
Fatalities Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total 2009/10 0101 4025 8031 25 2010/11 23047103 02100 32 2011/12 1242130 02 3213 33
Monthly Rate of Serious Incidents
There is cause for concern with regard to the recorded number of incidents reported to the SACAA by industry. As can be seen below, the number is growing and this doesn’t bode well for the prospects of safety in the country. Experts believe that if the rate of serious incidents shows an upward trend, then the possibility of a fatal accident is on the horizon.
Serious Incidents Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total 2009/10 031201141016 13 2010/11 515245 5 52 1392 44 2011/12 365573 4 8 4 5 11 7 68
Advisory Safety Panel Activities
As usual the Advisory Safety Panel (ASP) has continued with its task of reviewing accident reports, a function that has resulted in a tremendous improvement in the depth of the accident reports over the years. The valuable comments made by the ASP have been considered and, in most cases, implemented by the AIID. The role of the ASP will ultimately fall away when the ASIB is established. The new Act requires that the Minister must appoint the board members who will be performing almost the same functions as this panel.
The table below shows the statistics on the work of the ASP in reviewing accident reports:
ASP Performance 2011 - 2012 Financial Year Memo Memo Memo Memo Memo Memo Memo Memo Memo Memo Memo Memo
004 005 006 007 008 009 010 011 12 001 002 003 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar TOTAL
Reports Tabled 6055011169014 9 52
Reports Approved 5045091580129 46 Reports ref Back 1 010021102 0 6 Safety 1060034401135 Recommendations 64
40 South African Civil Aviation Authority An integrated Approach to Safety
During the fi nancial year, AIID worked very closely with operational divisions within the SACAA, to ensure the speedy implementation of safety recommendations. In certain instances, it was critical to implement a safety recommendation immediately, in particular where a preliminary or initial (on-site) investigation showed a possible technical defect that could be affecting a particular type of aircraft. Most of the safety recommendations proposed by AIID were accepted by the DCA. The DCA keeps records and forwards them to the relevant divisions, and regarding those which are not practical to implement, reasons are given as to why it is not practical. The acceptance of recommendations by the DCA attests to the high quality of the accident investigation reports generated during the period under review.
Central Safety and Security Reporting System
The Central Safety and Security Reporting System (CSSR) was introduced in South Africa for the local aviation industry by SACAA on 20 August 2010. The intention of introducing the CSSR was to comply with the State Safety Programme and Safety Management System (SMS) requirement to have a Centralised Safety and Security Reporting System (CSSR) where all hazards and incidents will be reported.
Initially housed under the Risk and Compliance division, this tool was meant to encourage the reporting of all hazard and incidents to a focal point by fl ight crew, air traffi c personnel, aircraft maintenance engineers, cabin crew, aerodrome personnel and the general aviation (GA) community.
Since the mandate of AIID is to investigate accidents and serious incidents, the intention of the CSSR was to distribute the hazard and incident reports to the CAA technical departments that would be responsible for the investigation of these occurrences. Once the investigation was completed, the reporter was to receive feedback on the outcome of the investigation and actions taken. To facilitate and fast-track the process of distribution, investigation and giving feedback on reported incidents, the CSSR tool was moved to the AIID. The AIID management appointed an interim CSSR Project Team to introduce a process to manage the functions of the CSSR. Eventually, a retired former Accident and Incident Investigator, a contractor, was employed in AIID on 1 February 2012 to work on all the incidents and address the backlog that had built up over time.
Annual Report 2011/12 41 Current Status of the Central Safety and Security Reporting System (CSSR) as of 1 December 2011:
A CSSR Data Base had to be developed by allocating a unique control number to each incident. To date, a total of 551 incident reports were registered on the CSSR Register or Data Base. The number of incident reports was compiled as follows:
Total Report CSSR Incidents
200 177 180 154 160 140 116 120 104 100 80 60 40 20 0 Dec-11 Jan-12 Feb-12 Mar-12
Analysis of the Incident Reports was divided into the following main categories:
Reported Incidents 160 141 140 120 100 80 76
60 51 55 45 40 33 34 25 20 17 5 11 12 10 5 99 0 5 3 5 Totals 0 TCAS Others Weather Accident Technical Level Bust Go-around Missed App Bird/Wildlife Aborted T/Off Pilot Operations Search & Rescue Runway Incursion Altitude Deviation Taxiway Incursion Taxiway Loss of Separation Unlawful Interference Airspace Infringement Emergency/Abnormal International Co-ordination
Confi dential Aviation Hazard Reporting System (CAHRS)
The Confi dential Aviation Hazard Reporting System (CAHRS) was established in September 2005 for the benefi t of the local aviation industry in South Africa. The intention of introducing the CAHRS was to comply with the State Safety Programme and Safety Management System (SMS) requirement to have CAHRS reported to the SACAA.
42 South African Civil Aviation Authority Current Status of Confi dential Aviation Hazard Reporting System (CAHRS):
The CAHRS data base had to be developed by using information that was manually recorded on the CAHRS Register File. To date, a total of 226 CAHRS cases were registered on the CAHRS register. The number of CAHRS reports was compiled as follows:
CAHRS
90 84
80 69 70
60
50 41 CAHRS 40
30 25
20
10 7
0 Year 2008 Year 2009 Year 2010 Year 2011 Year 2012
CAHRS reports have drastically decreased since the reporting system was launched. The cause of the decrease can be attributed to various issues, as follows: Although CAHRS cases are being reported, there is no supporting evidence to show that any CAHRS investigation and/or corrective actions were taken regarding any of them. There was no established system of giving feedback to the industry; hence AIID in partnership with the Safety and Security Promotions section will be working on a method of giving feedback to the aviation industry on safety information analysis pertaining to CSSR/CAHRS statistics. It was found that since the introduction of CSSR in 2010, most of the CAHRS reports end up being forwarded to Enforcement for further investigation. AIID in partnership with the Safety and Security Promotions section will be conducting programmes and campaigns promoting CSSR/CAHRS to educate the industry about its purpose and objectives. There are regulatory and procedural issues about CAHRS that need clarifi cation with the possibility of this tool being amended.
Annual Report 2011/12 43 State of Aircraft Safety
Aircraft Safety Oversight
To ensure compliance, the Aircraft Safety Department, through its various operational units carries out various aircraft safety oversight activities to ensure that non-compliances are addressed and appropriate corrective and enforcement actions are taken.
In an effort to enhance facilitation and improve aviation safety standards, the Aircraft Safety Department implemented systematic audits of Aircraft Design, Manufacturing and Maintenance Organisations in a more comprehensive and wider scope in between the annual renewal audits and the biannual unannounced audits. This was meant to ensure that the approved organisations abide by the regulations in their activities at all times, thus ensuring a greater level of safety for the fl ying public.
Airworthiness Part 121 Unit – Large Aircraft
Airworthiness Part 121 - Large Aircraft 20
18
16
14
12
10
8 Inspections 6
4
2
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 6 6 6 66666666 6
Baseline 5 5 5 55555555 5
Actual 3 8 8 41515128 8 5 1 18
The inspections and audits of AMOs that maintain large aircraft (aircraft with a maximum certifi cated mass of over 5,700 kg) are undertaken by the Part 121 Unit. During the period under review, and as per the graph above, 93 audits were planned and 105 audits were performed, exceeding the target by 12 audits.
44 South African Civil Aviation Authority Airworthiness Part 127 Unit – Helicopters
Airworthiness Part 127 - Helicopters 16
14
12
10
8 Inspections 6
4
2
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 6 6 6 666 666777
Baseline 3 3 3 33 3 333333
Actual 6 11 6 14 13 11 9131014145
All AMOs that maintain helicopters are inspected and audited by the Part 127 Unit. As the graph above depicts; during the period under review, 75 audits were planned and 126 audits were performed, exceeding the target by 51 audits.
Airworthiness Part 135 - General Aviation
Airworthiness Part 135 - General Aviation 30
25
20
15 Inspections 10
5
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 11 17 13 13 13 13 13 13 13 13 13 14
Baseline 9 9 9 99 9 12 9 9 9 9 9
Actual 15 11 14 19 23 19 12 24 13 13 19 21
The Part 135 Unit performs inspections and audits on AMOs that maintain aircraft with a mass of less than 5,700 kg. This Unit predominantly conducts oversight of aircraft that fall within the general aviation category. The graph above illustrates that during the period under review, 159 audits were planned and 203 audits were performed, exceeding the target by 44 audits.
Annual Report 2011/12 45 Aircraft Inspections (New C of A) 2011/12
The Aircraft Safety Department performs continuous inspections on Aircraft that are registered in South Africa. The graph below illustrates that during the period under review, 540 inspections were projected and 583 inspections were performed, exceeding the projected target by 43 inspections.
Aircraft Inspections - Parts 121, 127, 135 & NTCA 70
60
50
40
30 Inspections
20
10
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 45 45 45 45 45 45 45 45 45 45 45 45
Baseline 45 35 35 35 35 35 35 35 35 35 35 35
Actual 61 52 61 33 51 53 49 50 35 32 42 64
South African Civil Aircraft Register (SACAR)
Aircraft Registration Statistics
The graph above shows the activities of the Aircraft Registration Unit with regard to the registration of aircraft in the country. During the year under review, a total number of 420 new aircraft registrations were anticipated and 364 were achieved. A total number of 120 aircraft were deregistered from the South African Civil Aircraft Register during the period under review. A net addition of 244 aircraft was added to the SACAR during the period, providing a positive indicator that the South African aviation industry is growing. At the end of the reporting period, there were 11 554 aircraft registered in South Africa.
46 South African Civil Aviation Authority The Part 147 unit in the Aircraft Certifi cation Department conducts the oversight of Design Organisations. The graph above shows that during the year under review, 7 audits were scheduled and 7 were achieved. A growing number of Design Organisation applications were received during the fi nancial year, showing signs that there is positive growth in the aircraft design sector in the country.
The Part 148 unit in the Aircraft Certifi cation Department conducts the oversight of Manufacturing Organisations. The graph above shows that during the year under review, 16 annual audits were scheduled and 14 were achieved due to two organisations surrendering their approval. A total of 42 inspections were performed at these organisations.
Annual Report 2011/12 47 Annual Reported Incidents and Defects
The graph above shows the incidents and defects reported during the year under review. There has been a reasonably steady reporting of incidents and defects. The reporting of these contributes to aviation safety by allowing investigation and corrective actions to prevent recurrence. State of Aviation Security
One of the key functions of the SACAA is to oversee aviation security in South Africa. This role is undertaken by the SACAA’s Aviation Security (AvSec) division. This mandate relates specifi cally to airports, air operators, cargo, safe transportation of dangerous goods as well as aviation security training organisations and aviation security personnel.
Aviation Security Oversight
This division is responsible for monitoring compliance in the industry and that is done through inspections. Below are the graphs depicting the monthly activities of what was planned, against what was achieved:
Airports and Airlines
Airportspg & Airlines Oversight Statistics 35
30
25
20
15
10
5
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 12 19 18 17 18 23 20 25 22 18 20 20
Baseline 16 23 14 61920202518141820
Actual 13 20 19 19 19 24 16 32 27 14 25 17
48 South African Civil Aviation Authority The Airlines and Airports department had planned a total of 232 inspections for the fi nancial year and had achieved 246. A positive variance of 13 was noted due to an overhaul in the planning of activities, which allowed for scarce resources to be maximised.
Cargo Security
Cargo Security Section - Inspections 50 45 40 35 30 25 20 15 10 5 0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 26 43 38 32 29 26 22 26 8 25 23 15
Baseline 33 39 12 12 30 15 19 30 10 26 41 38
Actual 34 26 33 35 35 26 28 23 9 30 25 9
The Air Cargo Security section had planned a total of 313 inspections for the fi nancial year and had achieved 313. The target was met, due to the planning and maximising of scarce resources to achieve the planned target.
Dangerous Goods
Dangerous Goods - Inspections 100 90 80 70 60 50 40 30 20 10 0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
Target 31 28 25 35 44 31 31 28 28 35 44 47
Baseline 35 33 15 20 15 51 27 30 25 8 38 43
Actual 16 32 30 23 47 48 4 24 11 37 70 88 The Dangerous Goods section had planned a total of 407 inspections for the fi nancial year and had achieved 430. In the previous year the section could not meet the target due to a cost containment plan that was imposed on all departments. Due to the fact that the cost containment plan was no longer in place, they were able to recover from the inadequate performance of the previous fi nancial year. Re-planning also played a key role in the positive variance.
Annual Report 2011/12 49 Training and Certifi cation
Training and Certification - Audits/inspections/ screener examinations and site visits 35 30 25 20 15 10 5 0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Target 15 15 15 15 15 15 15 15 5 10 15 31
Baseline 17 0 2 00 0 267 99 6
Actual 15 15 15 8112010191082613
The Training and Certifi cation department had planned a total of 181 inspections for the fi nancial year and had achieved 170. The negative variance was due to staff shortage and screener examinations which had to be monitored, in the absence of a screener certifi cation system. The screener certifi cation system was under development and will be implemented in June 2012; therefore the number of inspections is expected to increase in the next fi nancial year. State of Air Safety Operations Flight Operations
Air Operating Certifi cate (AOC) Holders
As far as AOCs and ATOs are concerned, the DoT targets include ad-hoc inspections determined largely on a need basis. Planned oversight was performed as follows:
Cumulative fi gures 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Annual Audits planned per Quarter 77 146 212 293 Annual Audits completed per Quarter 73 147 228 309 Percentage of actual vs planned annual Audits 94% 101% 107% 105%
40
35
30
25 Target 20 Baseline
15 Actual
10
5
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
50 South African Civil Aviation Authority Aviation Training Organisations
Cumulative fi gures 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Annual Audits planned per Quarter 69 129 179 232 Annual Audits completed per Quarter 62 143 184 217 Percentage of actual vs planned annual Audits 89% 110% 103% 94%
40
35
30
25 Target
20 Baseline
15 Actual
10
5
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
Designated Flight Examiners (DFEs)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total number of active DFEs per Quarter 228 235 232 211 Actual cumulative Oversights completed per Quarter (see note 2) 81 131 200 208 Percentage of actual vs. Target 125% 101% 103% 81%
250 200 Number of DFEs 150 100 Planned Progressive 50 Completed to date 0
Jul-2011 Jan-2011Feb-2011Mar-2011Apr-2011May-2011Jun-2011 Aug-2011Sep-2011Oct-2011Nov-2011Dec-2011Jan-2012Feb-2012Mar-2012
Cabin Crew Designated Examiners
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Number of CDEs 46 48 50 50 Planned Progressive 20 33 45 52 Number completed to Date 23 31 42 50 Percentage completed 115% 94% 93% 100%
Annual Report 2011/12 51 60
Number of DE’s 40
Planned Progressive 20
Number completed to date 0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
NOTE:
1. The fi gure of 23 for “actual cumulative oversights completed per quarter” includes 7 oversights for the period from January to March 2011 as well as 16 oversights from April to June 2011. The reason for this is the instruction to change the reporting period from a calendar year to the fi nancial year (to correspond to the SACAA’s reporting period). This has necessitated bringing the 4th quarter of 2010 -11 (January- March 2011) into the reporting period of the current year. The total numbers remain valid as the reporting period is effectively 5 quarters for this transitional year. Aviation Personnel Oversight
Designated Flight Examiners Oversight
Ninety-eight percent (98%) of the pilot DFEs who held appointments in December 2011 have had oversights – see table below for breakdown. The number of DFEs as refl ected in the table below shows how many DFEs were re- designated with effect from 1 January 2012, which may still increase as there were several DFEs who were not re- designated due to not having done oversights or not attending conferences. The fi gures in the tables refl ect the number of oversights as a percentage of the number of existing DFEs, which is why some of the fi gures exceed 100%.
Aviation Medicine Oversight
Aeromedical Committee (AMC)
The Aeromedical Committee is an advisory body of medical, psychological, surgical and ancillary health experts charged with advising the SACAA about any medical risks posed by existing or prospective aviation personnel who are required in terms of the Civil Aviation Regulations (1997) to hold a medical certifi cate. The primary role of the AMC is to review and make recommendations on the medical fi tness of licensed aviation personnel referred by the Designated Medical Examiners (DAMES), Aviation Medical Advisors (AMA) and the Institute for Aviation Medicine, so that expert opinions can be tabled for fair and consistent application of assessment. Committee members are appointed for a period of two years. The MOUs for the current Aeromedical Committee will be expiring on 30 June 2012.
The Aviation Medicine (AvMed) department serves as the secretariat of the committee. The department’s role includes, but is not limited to the administration and coordination of committee meetings; distribution of information; tracking of progress with regard to action items; reporting to the chairperson and performing all the tasks allocated to it by the Committee or the Chairperson, and to draft and circulate minutes. The necessary arrangements are underway to ensure a smooth transition between the current committee and the new one, effective from 1 August 2012. The Department will have to revisit the terms of reference, contracts and payment of the committee members.
52 South African Civil Aviation Authority Aeromedical Committee Cases presented:
4th Qtr 1st Qtr 22% 24%
3rd Qtr 2nd Qtr 29% 25%
A total of 235 complicated medical cases were heard by the Aeromedical Committee between April 2011 and March 2012.
The above will form the basis for the AMC performance in the coming fi nancial years, because the committee is still new.
Medical Verifi cation Process
The Institute for Aviation Medicine, which is a unit of the Defence Force, performs certain medical functions on behalf of the Director of Civil Aviation. These functions include the performance of specialised medical tests and quality assurance of the medical examinations performed by the aviation medical examiners. The Aviation Medical Department quality assures aspects of the verifi cation process and communicates the outcome of the verifi cation process through letters to the applicants of medical certifi cates. The department monitors the performance of the Aviation Medical Examiners through this process, and all the doctors making errors are tracked and informed about their performance.
Annual Report 2011/12 53 Medical Verifi cation Letters
1st quarter 2nd quarter 3rd quarter 4th quarter
20% 28%
28%
34%
A total of 518 verifi cation letters were written to members of the industry.
Designation of Aviation Medical Examiners
The designated aviation medical examiners are required to apply for resignation on an annual basis. A total of one hundred and fi fteen (115) renewal letters for the designation of Senior Designated Medical Examiners and one hundred and thirty (130) for Regular Aviation Medical Examiners were written and issued to applicants for designation.
Air Ambulance and First Aid Aviation Training Organisation Oversight
Four Part 138 and 11 Part 141 audits were conducted.
Amended Technical Standards and Regulations
1. A Mood Disorder (Depression) Protocol was presented to the ASO-Subcommittee and CARCom and was accepted with minor changes.
2. Pharmacology (List of acceptable drugs), was presented to the ASO-Subcommittee and CARCom and was accepted.
3. Part 64 (Qualifi cations Criteria for Cabin Crew First Aid Examiners and Instructors) and Technical Standards were submitted, approved and promulgated.
4. Part 91.04.16.Technical Standards with the inclusion of the Universal Precaution List on the standards were submitted, approved and promulgated. Medical Protocols in the pipeline
• Oncology Protocol – two workshops between the Aviation Medicine department and surgeons from Medical Universities were held to discuss the assessment of risk while addressing applicants with cancer.
• Cardiovascular Protocol – 777 workshops were held with cardiologists and physicians to discuss cardiology medical conditions; the document was fi nalised and will be submitted to CARCom.
• Haematology Workshop – the Aviation Medicine department hosted workshops to discuss outdated medical protocols, and to close gaps where protocols were non-existent. The fi nal document will be presented to CARCom in August 2012.
54 South African Civil Aviation Authority • Endocrinology - the fi rst meeting was held between the aviation industry /specialists and Aviation Medicine; and a second workshop is being organised to fi nalise the proposal.
• Medical Requirements for Air Traffi c Controllers – a workshop was held between ATNS and specialists to develop medical requirements specifi c to air traffi c controllers.
• Aviation Pathology Project – the Aviation Medicine department in consultation with AIID worked closely with a UP student to draft the proposal for Aviation Pathology. The purpose of this document was to identify the gaps as per ICAO requirements and propose solutions. The document addresses the following issues, amongst others: possible designation of pathologists, delays in laboratory reports, and the types of tests to be conducted during an accident. Other Aviation Medicine Workshops
AvMed Cabin Crew Examiners Workshop
The AvMed Department hosted a meeting with the Cabin Crew First Aid examiners and instructors on 28 June 2011. The purpose of the meeting was to discuss the incorporation of the recent Cardio-pulmonary Resuscitation (CPR) implemented by the Resuscitation Centre into the cabin crew training. Several issues arose, ranging from the delays related to the entering of examinations into the system to delays in the promulgation of the regulations. The cabin crew examiners will assist the SACAA in the implementation of the CAPSCA project by coordinating a meeting with the relevant stakeholders within their Aviation Training Organisations (ATOs).
Workshop with Designated Aviation Medical Examiners (Gauteng-Johannesburg Region)
The AvMed department organised a workshop for 7 July 2011 with Designated Aviation Medical Examiners to discuss the changes, challenges and interventions in the medical certifi cation processes. The content of the workshop included the Aeromedical Committee, revisions of medical protocols, challenges affecting the SACAA, IAM and AMEs and the proposed interventions.
Aerospace Medicine Honours Students
The University of Pretoria has an agreement with the SACAA through the Institute for Aviation Medicine to provide academic support related to the theoretical and practical aspects of aviation medicine. UP is the only university in the country that offers an honours course in Aerospace Medicine, and the university has offi cially requested the SACAA to participate in the drafting of the course content, lecturing, research topics and exposure of students to the industry, which will require a one-week practical block allocated to the SACAA and the industry (SAA, ATNS, RAASA, Netcare & SACAA). The research topics that have been allocated to students are based on the gaps identifi ed by AvMed in the regulations and technical standards.
Several meetings were held between the SACAA and honours students from the University of Pretoria to discuss a number of AvMed research topics and workshops. The students will be presenting their papers at the International Congress of Psychology to be held in July 2012. The AvMed staff will allocate the fi nal mark of the student’s research module. The SACAA (AvMed) held the fi rst three-day practical session at the SACAA, Awesome Aviation, EMS and SAA at the beginning of June 2011.
Annual Report 2011/12 55 Leadership Development in Aviation Africa
The AvMed Department’s Senior Manager was invited to discuss Leadership in Aviation Medicine at a conference held on 14 July 2011, organised by Global Prospectus. The meeting was organised by Senior Aviation Management and the Air Force.
International Projects and Conferences
ICAO Aviation Medical Seminar
The Aviation Medical Seminar is an initiative of the International Civil Aviation Organisation (ICAO), which aims at providing aviation medical examiners and assessors with a thorough understanding of the ICAO medical requirements contained in Annex 1 and Doc.8984 of Civil Aviation Medicine. The seminar also aims at ensuring that examiners understand the application of safety management principles in aviation medicine and pandemic preparedness planning in the aviation sector. The meeting is normally chaired by ICAO, and presenters include other agencies such as the Singapore Civil Aviation Authority.
In 2011, South Africa was the only agency invited to share a platform with ICAO and the Singapore Civil Aviation Authority to present in Botswana. The SACAA was allocated 4 topics to present at the seminar, and is the only country in the continent that has been afforded such an opportunity. The following topics were presented: Aeromedical Consideration in an African context; Psychiatric Considerations in the African context; Aeromedical Consideration of HIV/AIDS; and Neurology.
State of Air Safety Infrastructure
Air Safety Infrastructure oversight
Aircraft Safety Infrastructure surveillance oversight has progressed well. The DoT Annexure recorded that 94 airports would have been inspected under cost containment conditions. However, current oversight of all airports is taking place, forecasting 136 by year-end, compared to the planned 94.
56 South African Civil Aviation Authority Air Safety Infrastructure Oversight
Planned FY Actual YTD Area of oversight Reason for Variance 2011/12 Apr– Mar12 Airport Licence 94 135 The planned number of inspections was 94 and this was due to the cost-cutting Inspections initiative that was in place during 2010/11. The number of licensed aerodromes in the SACAA records is 136. The fi nancial status of the SACAA improved and the target was increased to 120; however 135 inspections were achieved. The Cradock licence was revoked due to severe non–compliances that posed a danger to human life and/or aircraft. Airport Surveillance 38 38 Ad-hoc inspections will follow up on particular non-compliance and may change Inspections according to the nature of the non-compliance. Surveillance inspections were reduced early in 2011 as a cost-reduction measure and due to compliance noted at particular airports. Air Traffi c Service 28 26 There were 3 ATOs and 23 ATSUS in existence. Inspections CNS inspections 58 revised to 45 due to 48 Umthata and Bisho had to be done twice as part of project X. changes in the available number of NDBs
1. Air Traffi c Services Units and ATOs had a target of 28 inspections according to the DoT Annexure, and this was achieved.
2. As far as Communication Navigation aids is concerned, the DoT Annexure indicates a target of 58 inspections against a revised 51 forecast, due to decommissioning of non-directional beacons; and inspections scrapped due to Polokwane and Bisho equipment installations being delayed. Air Navigation Services
South Sudan Mission
The department assisted in the second DoT Ministerial South Sudan diplomatic mission in March. Follow-up of assessment by the Aerodrome Safety and Air Traffi c Services departments was done at 10 airports in November 2011.
Air Traffi c Services Trainee
Ms Bridget Mathobela, a 23-year-old black female from Garankuwa was identifi ed as a potential Air Traffi c Control trainee. Bridget will spend most of her four-year study programme at the Aviation Training Academy, after which she will be attached to one of the Air Traffi c Service Units to acquire operational experience before rejoining the CAA as an ATS inspector. This is part of the CAA’s social development programme to empower previously disadvantaged individuals, especially women and to also contribute to the Women in Aviation programme.
Discontinuation of CD Publications
The CD publication of AIP Supplements, AIC and NOTAM was discontinued due to the cost of producing such. The AIP Supplements, including charts and AIC are updated in accordance with AIRAC dates. NOTAM were updated daily as received from the ATNS NOTAM Offi ce and these were posted on the website.
Annual Report 2011/12 57 International Telecommunication Union World Radio Conference 2012 (ITU-WRC-12)
The Communication, Navigation and Surveillance section actively participated in the National Preparatory Work group, as coordinated by the Department of Communication (DOC) and the International Telecommunication Union World Radio Conference 2012 (ITU-WRC-12).
ICAO Instrument Flight Procedures Panel
The Procedure Design and Cartography department represented South Africa on the ICAO Instrument Flight Procedures Panel (IFPP) in Montreal and Dublin in September 2011 and March 2012 respectively. The IFPP is an ICAO panel of experienced and skilled experts invited by ICAO to develop and maintain ICAO 8168, Procedures for Air Navigation Services Aircraft Operations (PANS-OPS). The panel consists of subject experts invited by ICAO to assist in the development of ICAO Doc 8168 Procedures for Air Navigation Services (PANS) – Aircraft Operations. This panel makes recommendations as to amendments and additions to ICAO Doc 8168, to the Air Navigation Commission for approval and submission to the Council for ratifi cation and publication. The IFPP consists of approximately 30 members with approximately 20 advisors. The panel meets biannually once in Montreal and a second time in a nominated member state.
SACAA attends these ICAO Panel Meetings on behalf of the South African Government and the Department of Transport to represent South Africa’s, and indirectly Africa’s interests, in the establishment and amendment of the ICAO standards pertaining to Flight Procedure Design and associated disciplines. South Africa was represented by its own Mr Gary Newman, who was able to get the meeting to give priority to standards which would be benefi cial to the enablement of PBN and GNSS operations in remote areas with minimal infrastructure support in line with the requirements contained in the Draft Green Paper on Aviation in South Africa. Further valuable insight was obtained by South Africa as to future amendments of ICAO Doc 8168 and associated ICAO documents, including the intent and interpretation of such amendments. This knowledge will allow the PD&C section of the SACAA to proactively implement improvements to existing procedures and standards. Further advanced OJT will be conducted with all Flight Procedure Designers in South Africa as to future developments in the fi eld. Mr Newman was also able to participate in future work programmes and apply his knowledge and experience in forthcoming proposed amendments to ICAO Doc 8168 and associated ICAO documents.
South Africa directly contributed to three Working Papers tabled at the two panel meetings, two of which dealt with “Hot and High” Baro/VNAV Operations and the other with proposed additions to ICAO Annexes with which to anchor the Standards and Recommended Practices contained in ICAO Doc 8168. Aerodrome Infrastructure Oversight
Safety Awareness campaign at municipal Airports
The department conducted a workshop at municipal airports on 5 October 2011 in Centurion, Pretoria. Similar interventions are being planned for the 2012/2013 fi nancial year. The workshop targeted municipal airports due to the severe non-compliances that the SACAA was experiencing during inspections. The purpose of the workshop was to highlight the duties, responsibilities and accountabilities of licence holders as outlined in the Civil Aviation Regulations, Part 139. The workshop was successful, with good attendance.
58 South African Civil Aviation Authority Quality Management Report
The total number of manuals submitted for approval and review in the fi nancial year 2011 to 2012 is as follows:
Total Number Submitted was 17.
Total of Manuals submitted for Review Total number of Reviews approved Total number of Reviews rejected 15 9 6
Total number of Manuals submitted for the fi rst Total number of Manuals approved. Total number of Manuals rejected approval/ upgrading Aerodromes 202
Aerodrome Operations Manual
The Aerodrome Operations Manual Technical Guidance document was developed and posted on the SACAA website for the industry to access.
Quality Control System alignment to the CAR-CATS
The alignment of the ISO 9001:2008 Quality Control System to the CAR-CATS 139.02.4 (1) (a-h)(2) was undertaken during the reporting period.
Opportunities for improvement were identifi ed in the SACAA Quality Control System Regulations and Technical Standards. Following are the areas of improvement identifi ed:
(a) The Quality Control System Technical Standards are too broad and are interpreted differently by the various aerodrome operators. This has caused an inconsistency in terms of the documenting procedures associated with QCS requirements and complying with CAR-CATS 139-02-4.
(b) The lack of understanding as to what quality is and what quality means within Aviation Safety.
(c) The difference between safety and quality.
(d) The lack of understanding as to why a Quality Control System is important or necessary in the aviation industry.
The following were the recommendations to close the identifi ed gaps:
(a) Review current guidelines.
(b) Conduct workshops.
(c) Conduct gap analysis on ISO 9001:2008 elements vs. CAR 139-02-04 technical standards.
(d) Recommend quality-related training or courses that a person carrying out quality control functions at airport level can attend.
(e) Change the approach towards conducting inspections i.e. instead of just raising non-compliances only, also explain why the non-conformance was raised and also assist in giving recommendations as to how to close the non-compliance.
Annual Report 2011/12 59 (f) Conduct a survey by sending out questionnaires to the aerodrome operators, so as to get to the root cause of the problems. This process will assist in terms of involving the industry in projects and also to get a “buy- in” when changes are being implemented. The questionnaire will be rolled out to sampled aerodromes in the fi nancial year 2012 - 2013. The sample will involve category 1 and category 2 aerodromes, even though it is not a requirement for the Category 2 aerodromes to have an AOM. This will assist in terms of accommodating them, should they require upgrading to a higher category. Airside Safety Information
Below are incidents reported at aerodromes during the fi nancial year:
A/C- RWY AE-A/C AE-AE AE-F/P AE-V V-V V-F/P V-A/C A/C-F/P SPILLS A/C INC TOTAL
1534274424251346205388 2011/2012
AE-A/C
4%
AE-AE
9%
AE-F/P
7%
SPILLS AE-V 11% 53% AE-A/C
AE-AE
V-V 6% AE-F/P
V-F/P AE-V
6%
A/C-A/C A/C-F/P
V-A/C RWY INC 1% 1% 0% 2%
Our Analysis points to the following:
• Based on collected statistics, the number of reported incidents has been increasing since the 2009/10 fi nancial year; • The fuel spillage category contributed 53% to the total number of reported incidents during the reporting period. This has increased by 17% from the previous fi nancial year; • The apron equipment and vehicle category contributed 11% in the 2011/12 fi nancial year; this is a decrease compared to the 2010/11 fi nancial year; • The apron equipment and facility/property category contributed 7% during this reporting period; this is the same as the previous fi nancial year; • The vehicle and facility/property contributed 6%; which is a decrease of 3% when compared with 2010/2011; • The apron equipment and aircraft category contributed 4%; which is 2% less than the 2010/2011’s contribution; • Runway incursions contributed 2% in 2011/2012; which is 4% less than 2010/2011; • Aircraft and facility/property contributed 1%; which is 2% less than 2010/2011.
60 South African Civil Aviation Authority Flight Inspection Unit
Safety in South African skies was fi rst regulated in 1947, when the Directorate of Civil Aviation (DCA) came into existence. In 1949 the fi rst temporary Instrument Landing System (ILS), was installed at Palmietfontein, followed in 1953 by a similar installation at Wingfi eld Air Base. Flight inspection in those days was done in a Locked Lodestar, belonging to South African Airways. During 1953 and 1954, the two ILS systems were moved to new locations, commonly known today as “OR Tambo International Airport (FAJS)” and “Cape Town International Airport”.
The Department of Transport then purchased its fi rst aircraft, a multipurpose De Havilland-Rapide, which also played a role in fl ight calibration. The fi rst aircraft dedicated for fl ight inspection was a De Havilland “DOVE” purchased in 1953. In 1957 a Douglas DC3 was purchased for the astonishing amount of ONE Pound from the South African Air Force, where it was used for VIP transport. The current and only aircraft in use by FIU was purchased in 1985. The DCA’s fl ight inspectors developed an “in-house” system which they installed in the aircraft for fl ight inspections. This system remained in use until 1992, with some upgrades in between. This system was replaced by the newer “in-house” system and this was in use until the year 2000 when it was replaced with a system developed in France (CANAC 21).
Flight Inspection Statistics until March 2012
Targeted hours vs actual hours
Table 1 below shows monthly statistics for the fi nancial year 2011/12. An analysis of the table below indicates no activity during the fi rst quarter of 2011-12 due to maintenance (fi tment of the new navigation equipment and the engines). The table further indicates that from April 2011 to March 2012, FIU fl ew 25.7% more than the planned hours for the fi nancial year.
Hours fl own in the Financial Year 2011-12
Month Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Total %
Target 22 30.5 19.5 12.5 44 33.5 24 25.5 14 26.5 24 18.5 294.5 100% Actual 0 0 0 70.7 22.3 59.7 54.7 15.3 61.8 23.2 26.1 36.6 370.4 125.7%
Variance -22 -30.5 -19.5 58.2 -21.7 26.2 30.7 -10.2 47.8 -3.3 2.1 18.1 75.9 25.7% Table 1
NOTE: The fi gures above do not include the hours used for test fl ights and some training.
Annual Report 2011/12 61 Targeted hours vs actual Hours (accumulative) Accumulative Targeted Revenue vs Actual Revenue for FIN
16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000
Total Revenue Total 0 -2000000 -4000000 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
Target 900240 2148300 2946240 3457740 5258220 6629040 7611120 8654580 9227460 10311840 11293920 12050940
Baseline 0 0 0 2893040 3805556 6248480 8486804 9112880 11641736 12591080 13659092 15050372
Actual -900240 -2148300 -2946240 -564700 -1452664 -380560 875684 458300 2414276 2279240 2365172 2999432
Commentary
The above graph highlights the relation between accumulative targeted hours and actual hours fl own by the FIU in the fi nancial year 2011/12 ending in March 2012. The graph also indicates 294.5 hours targeted for the fi nancial year, measured against 370.4 actual calibration hours fl own as at the end of March 2012, meaning that the FIU has achieved 25.7% more than the target hours. The graph also highlights a positive variance of 77.9 hours fl own by the end of March 2012.
Transformation in the Flight Inspection Unit
The plan was two-fold, namely:
• Transform the crew
• Stabilise the operations.
(i) Transforming the crew:
The management of FIU recruited two black pilots (a male and female) in-house. The pilots were taken through a fast-tracked training plan which was very successful. The one has qualifi ed as an FIU’s Responsible Person Flight Operations (RPO) and he will also be appointed as one of the FIU Captains by the end of June 2012. The other pilot is now rated on a Citation 550 and she will receive further training for rating in a Citation 550 SII by the end of June 2012. At this time she will be qualifi ed to fl y for the FIU as fi rst offi cer until December 2012, when she will undergo a check fl ight before being signed off as an FIU operational pilot.
(ii) Stabilising FIU operations:
Management in this unit discovered that inspectors had roles which opposed the SACAA policy and procedure. For example, the unit had a situation where the inspectors’ duties were not clearly defi ned. This was rectifi ed immediately. This brought about stability, as all know their duties.
62 South African Civil Aviation Authority Lack of Succession Planning
The management of this unit found that there was a lack of succession planning, which led to crew being overworked. The FIU consisted of two (2) fl ight inspectors, including their manager and one pilot who was on a fi xed-term contract. The crew was expected to fl y for fi ve days in succession and only rest on weekends.
The pilots were augmented by a pool of freelance pilots who were available on request to fl y for the FIU. The FIU management decided to have four permanent pilots, including the new recruits as part of the four. The interview and appointments of the pilots was done in June 2012 and the two new pilots joined the FIU team at the beginning of July/August 2012.
Though the number of pilots could be increased, the same cannot be said for the fl ight inspectors, due to the speciality of their work. The fl ight inspectors are the only two who are trained on the fl ight inspection machine (FIM) in the RSA. This meant that when one was sick or on leave, the operations stopped. The status quo could not be allowed to continue, hence the FIU management went on a recruitment drive for two additional inspectors. These inspectors started with the unit on 1 July 2012 and will be sent for training in September/October 2012. The two inspectors are from the previously disadvantaged groups in accordance with the SACAA transformation strategy. The FIU Strategy
A service provider was appointed to assist in developing a strategic document for the unit which will be presented to the DCA and Board at the end of May 2012. Aging Aircraft and Flight Inspection Machine
The SACAA aircraft (a Citation 550 SII) was purchased in 1985 and though it has just over 7000 hours, it is old in terms of the number of years since manufacturing. Consequently the maintenance cost of the aircraft is high, since components have not reached their limits in terms of hours, yet they have reached their limits in terms of calendar time.
SACAA management has made unsuccessful attempts to acquire the SAAF Citation as a standby aircraft for the FIU in the past. The current management has again engaged with the SAAF and the unit has a draft agreement which is being negotiated. The unit hopes to conclude the negotiations by October 2012.
The FIM computer was purchased and commissioned in 2000 and was supposed to serve for 10 years before being upgraded. Its components are now obsolete and are diffi cult to fi nd, as they are no longer being manufactured. The CANAC 21 system has been superseded many times and currently the unit needs to upgrade to the CANAC 30. The unit hopes that the SACAA Board will approve the procurement of the upgrade, as it is now critical. The failure of this system would result in an unsafe situation with regard to all navigation aids in the RSA. Lack of Training
The FIU team has been going from year to year with a lack of training,with a number of exceptions. This practice could not be condoned any longer. It is for this reason that FIU has signed contracts with some of its Designated Flight Examiners (DFE) in the country so that they share their experience with the staff. Also the reason why the unit’s Responsible Person Operations (RPO) was sent for training was so that they could give instruction on the unit’s aircraft.
FIU management is in negotiations with the French CAA and the FIM manufacturer (SAGEM) to train its fl ight inspectors. The fi rst group will undergo training in September/October 2012.
Annual Report 2011/12 63 Special Projects
ICAO Aviation Security Audit
ICAO had announced in December 2010 that South Africa would be subjected to an aviation security Universal Audit Programme from 18 - 25 August 2011. This meant that the SACAA’s Aviation Security Division had to start preparations to ensure readiness for this signifi cant audit, as it was geared to establish whether the requirements placed on South Africa as signatory state to the Conventions of the UN Agency, ICAO, were met in full.
Preparations began and various action steps needed to be put in place, as they would determine the success of the audit. These steps included the following:
» Signing of the Memorandum of Understanding (MOU) between South Africa (SA) and ICAO in relation to the Audit;
» Conclusions of the pre-audit questionnaire by all stakeholders, even those outside the Authority, such as the Airports Company of South Africa, South African Police Service, Department of Home Affairs (DHA), Department of Transport (DoT), State Security Agency (SSA), etcetera;
» Completion of the Security Compliance Checklist;
» Gap analysis undertaken in order to address any potential gaps in the system before the audit on Annex 9 and 17 respectively;
» Continuous stakeholder meetings to consolidate responses which had to be sent to ICAO in advance.
The above list is not exhaustive. All were fi nalised with some requisite documents sent to ICAO before the stipulated due date.
Pre-audit in June 2011
Further to this, a pre-assessment was facilitated where SACAA requested the services of ICAO-accredited auditors in the region to conduct a pre-audit as a precursor that would determine the level of readiness of South Africa. The Ethiopian and Tanzanian CAAs gladly released their two auditors, who conducted a pre-assessment in June 2011. The audit revealed only one major fi nding, pertaining to the development of the National Facilitation Programme under Annex 9. This fi nding was addressed by the DoT in time for the ICAO audit in August 2011.
ICAO Audit Outcome in August 2011
The audit did not reveal any major or signifi cant security concerns; however 30 minor fi ndings were spread across various stakeholders, some outside SACAA.
Corrective Action Plan (CAP):
ICAO requires states to forward a Corrective Action Plan, stipulating how fi ndings will be addressed, irrespective of whether fi ndings are minor or major. The Corrective Action Plan was drafted and sent to ICAO in January 2012 after consultation with stakeholders who are required to address some fi ndings, for example DHA, DoT and SACAA.
64 South African Civil Aviation Authority In terms of the 30 fi ndings, twenty-four (24) related to the amendment of the NASP. The said Programme was subsequently amended to address the bulk of the fi ndings (24) and they have since been closed as the Programme, after review, was approved by the Minister of Transport in March 2012. The six (6) outstanding fi ndings are currently being addressed, as they relate to changes in the Civil Aviation Act, amendment of regulations (Part 109 and 110) as well as policy formulation and direction. It is expected that these fi ndings will be closed in the next fi nancial year, as the process to close them is extensive. US Transport Security Administration (TSA) – Audit
The US Transport Security Administration conducted their annual aviation security assessment in July 2011. The assessment concentrated on South African Airways and Delta Airlines. SACAA approved the assessment, which would also assist to gauge the compliance status prior to the ICAO audit.
Outcome of the Assessment
No fi ndings were recorded against the operators, as they were found to be compliant to the regulations and the NASP. It is worth mentioning that as the airline operators are assessed, the assessment also indirectly looks at the posture of the SACAA systems and legal framework, as SACAA sets standards and directs how airlines must implement measures that will prevent them from being vulnerable to acts of unlawful interference.
Air Safety Operations in terms of additional Oversight and regulatory Activities
• Route inspections were conducted on Mango, Swift Flite, Allegiance, Titan Offshore and South African Airways.
• Follow-up inspections were conducted on Africa Charter Airlines.
• Evacuation demonstration: Plane Easy successfully completed its evacuation demonstration.
• Slide device approval was given to Cranfi eld Aviation Training. Air Safety Operations, Regulations and AICs
• The APS team is working on a proposal for a new Part 61. Once this proposal is complete, it will be submitted to CARCom for referral to the ASO Subcommittee so that the necessary industry and public participation may take place in either recommending or not recommending the proposal.
• Free Balloon regulations have been moved to RAASA for publication under Part 69.
• Powered-lift licences will not be addressed, as there are no such aircraft on the SA register. Air Safety Operations; theoretical knowledge Examinations
• The migration of all examinations to the Question Mark Perception system (QMP) was approved. The implementation date has not been determined yet, however this will happen as soon as the department addresses pressing requirements for manpower and possible delays in meeting the hardware requirements for the system.
Annual Report 2011/12 65 • APS has a challenge with the setting of examination questions and the moderation thereof, as this process is very labour-intensive. Due to the security risk of exposing examination questions to the industry for review, the process must remain internal and within one section (Testing Standards). The staffi ng of additional TSOs would greatly assist this process. ASMA Conference: Alaska
AvMed sent a representative to attend the American Society of Aerospace Medicine Specialists in Alaska. The Association’s annual meeting provides a multi-faceted forum for all aerospace medical disciplines and concurrently provides continuing education credits for those attending the meeting. Lectures, seminars, panels, poster presentations, workshops, fi lm reports and technical and scientifi c exhibits present data on the latest results of clinical and research studies. The meeting brings together a diverse group of specialists, such as clinical health care directors, physicians, scientists, and nurses from the armed services, civil and military aviation, academia, and the industry, plus the many private practitioners in all clinical specialties who care for the total civilian fl ying population on a daily basis. International representation is evident among programme participants and attendees alike.
Topics that were discussed included Flight Surgeon support for the Drug-Free Workplace, American Society of Aerospace Medicine Specialists (ASAMS) Medicine Practice Guidelines, Aerospace Medicine Grand Rounds, Clinical Topics in Aerospace Medicine (Slides), Cardiology Topics in Aircrew Health, Colour Vision, Topical Issues in Aviation Medicine, Global Perspectives on Medical Standards and Aircrew Health. All of these sessions were immensely valuable in compiling a knowledge bank for the rewriting of the Technical Standards.
Department of Transport - ICAO-CAPSCA Project
The Aviation Medical Department was invited to give a presentation at the Facilitation Committee meeting organised by the Department of Transport on 14 June 2011, to provide the background and implementation plan of the project, as ICAO will include CAPSCA questions in the surveillance of states starting in 2012. The purpose of the presentation was to obtain guidance from the facilitation committee as to how to implement Annex 9 of CAPSCA. It was agreed at this meeting that the CAA should establish a CAPSCA-Subcommittee that will eventually report to the Facilitation Committee. It was also agreed that the MOU should be drafted (AvMed and Legal), between the Department of Transport and the Department of Health, to ensure implementation of the International Health Regulations of 2005.
Women in Aviation Presentation
AvMed was invited to do a presentation at the Women in Aviation Conference in Africa. This is the 2nd meeting held in South Africa, and also the department’s second opportunity to give a presentation at this forum. The department received positive feedback as the best presenter. Regional Participation and Engagement
Aerodrome Safety
The Aerodromes department provided assistance to our regional counterparts as indicated below:
Precision Approach Path Indicator (PAPI) Lights calibration was provided outside the borders of South Africa as follows:
66 South African Civil Aviation Authority Namibia:
1. Eros International Airport;
2. Hosea Kutako International Airport;
4. Ondangwa Airport;
5. Luderitz Airport;
6. Walvis Bay Airport. Dar es Salaam in Tanzania on 12-15 July 2011
1. Julius Nyerere International Airport. Regional Cooperation in the Aviation Security Environment
A Memorandum of Cooperation (MOC) between SACAA and US TSA was fi nalised before the end of the fi nancial year. It is expected that it will be signed in the new fi nancial year. This MOC seeks to have technical cooperation between the two agencies and the signing of the memorandum would see the agencies sharing technical information on various aspects relating to aviation security. It stands to benefi t both parties, as it will also enable each party to benchmark best practices without hindrance.
The GM Avsec and Acting DCA attended the Avsec Regional Conference in Dakar on 17 and 18 October 2011 where a joint statement was agreed upon, binding all African States to implement actions that will improve aviation security in the region. This joint statement was in line with the ICAO Security Declaration agreed upon at the 2010 ICAO Assembly.
At the invitation of the Australian delegation, a meeting was held on 24 October 2011 with the Acting DCA and GM Avsec to discuss issues of cooperation on both aviation security and safety. An agreement is the next step to solidifying the discussions, and it is expected that an MOU will be concluded in the new fi nancial year to put into action salient points of interest.
The department held meetings with the International Air Transport Association (IATA) to discuss the new screening initiative called Checkpoint of the Future, to get an in-depth understanding of what is envisaged by the project. IATA subsequently gave a presentation to the National Aviation Security Committee (NASC) representatives where a decision to support the initiative was formalised. A Statement of Principle was thereafter signed by the Department of Transport in support of the project. Since the project is at its infancy stage, much work and research is anticipated before the concept will be fi nalised. South Africa has been invited to serve in the working group that will develop the project further.
South Africa is represented on the ICAO Aviation Security Panel by the General Manager: Aviation Security and also co-chairs the ICAO Aviation Security Panel Work Group on Air Cargo Security. This is a milestone for the country, as the representation adds to the global voice and will ensure that SA is better positioned to infl uence change and direction in the global arena in as far as aviation security matters are concerned.
Annual Report 2011/12 67 Implementation of the CAPSCA Project in SA, Eastern and Southern Africa Region
CAPSCA State Assistance Visit - Kenya
The Deputy-Team Leader (African Technical Advisor) for the ICAO Cooperative Arrangement for the Prevention of Communicable Disease through Air Travel was requested to provide technical advice in a CAPSCA State Assistance visit to Kenya on 29 and 30 September 2011. The purpose of the State Assistance Visit was to ensure harmonisation in the implementation of the ICAO Annexes 6, 9, 11, and 14 related to the CAPSCA Project. State of Quality and Compliance ICAO Coordination and Compliance
ICAO currently has 191 contracting states that are signatories to the Chicago Convention, an international treaty, which enables ICAO to oversee international aviation best practice and monitor these states’ ability to provide effi cient aviation safety and security oversight pertaining to their respective sovereign countries.
This is achieved in many ways such as high level international safety fora, audits on a global scale, safety interventions and aviation training etcetera. In 2011, ICAO launched the Universal Safety Oversight Audit Programme (USOAP) Continuous Monitoring Approach (CMA). This new approach provides for the evolution of the concept of continuous monitoring and also the incorporation of the analysis of safety risk factors, and to apply them on a universal basis, so as to assess the oversight capability of states on an ongoing basis.
SACAA has embraced this new approach and, in line with ICAO’s Transition Plan, has also proactively launched its own USOAP CMA Project early in 2012, the objective being to identify safety defi ciencies, assess associated risks and then develop strategies to resolve any possible defi ciencies. This project will continue throughout 2012 with an evaluation thereof at the end of the year, with the view to continual improvement. Liaison is ongoing and being held with both DoT and ICAO as and when required.
ICAO State Letters and other international Correspondence
ICAO formally communicates at the highest level with states by means of State Letters (SLs). These SLs originate either at the ICAO HQ in Montreal, Canada when they are of a global or strategic nature, or from the ICAO Eastern and Southern African Regional Offi ce (ESAF), which is situated in Nairobi, Kenya, when they are of a regional nature. However, much other such correspondence is received, relating to AFCAC, SADC or COSCAP-SADC. All this is done with and through the National Department of Transport (DoT). The ICAO Coordination and Compliance Section serves as the offi cial contact point for liaison with the DoT with respect to ICAO, SADC, AFCAC and other regional aviation activities and fora.
SLs contain notice of, but are not limited to the following: requests for a state’s offi cial opinion or stance on a specifi c issue; to conduct research or obtain statistical input; safety-related information; the announcement of an amendment to an ICAO Annex or regional procedural documents; and to inform states of important events such as symposiums, seminars, workshops and training initiatives.
The SLs that were received and processed by the SACAA during 2011–2012, as compared to the previous two fi nancial years, are respectively as follows: 193, 228 and 199.
68 South African Civil Aviation Authority State Letters processed
30
25 1Apr - 31 Mar 2010
1Apr - 31 Mar 2011 20 1Apr - 31 Mar 2012
15
10
5
0 Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar
The 199 SLs processed during the reporting period are categorized as follows:
• approximately 30% related to ICAO annex amendments or new proposals (SARPs);
• another 30% to safety-related notices, strategic issues, funding aspects, surveys and statistics etcetera, and
• 40% to event notifi cations which included symposiums, conferences, workshops, and training initiatives. ICAO and AFI Plan Initiatives and Events
During the period under review, SACAA participated in numerous relevant safety, security and environmental events such as seminars, workshops and training initiatives.
Some of the high-level ICAO and AFI initiatives are listed:
• ICAO Regional Seminar on MRTDs, Biometrics and Border Security, held in Rio de Janeiro from 17 to 19 April 2012.
• Second Meeting of the African Frequency Management Group AFI/FMG/2 (Dakar, Senegal, 18 to 19 April 2011).
• AFCAC’s 11th Meeting of the AFCAC Air Transport Committee and the 14th Meeting of the AFCAC Technical Committee - Nairobi, Kenya, 30 May to 3 June 2011.
• The Fatigue Risk Management Systems (FRMS) Symposium in Montreal - 30 to 31 August 2011 and the 3rd Annual FRMS Meeting in Montreal - 1 to 2 September 2011.
• 9th Meeting of the Aerodrome Operations Planning Sub-Group (AOP/SG/9), Dakar, Senegal, 28 to 30 September 2011.
• Symposium on Regional Safety Oversight Organisations (RSOOs) - Montreal, Canada from 26 to 28 October 2011.
• 4th Meeting of the AFI Regional Tactical Action Group (TAG/4) held in Johannesburg on 10 March 2012.
Annual Report 2011/12 69 • Many COSCAP-SADC committees such as the Institutionalised Work Group (IWG) which is the high-level steering committee and the Flight Safety Work Group (FSWG) a technical operational forum.
• A few of the international ICAO training initiatives and workshops attended were:
• ICAO Accident/ Investigation Workshop - Gaborone, Botswana, from 22 to 26 August 2011.
• ICAO ESAF Regional Workshop for National Continuous Monitoring Coordinators - Nairobi, Kenya, from 5 to 9 September 2011.
• Avsec National Inspectors Course - Kenya, from 12 to 20 October 2011.
• Many appropriate Air Navigation Systems (ANS) workshops and seminars, which included ATM, AIM, CNS, PBN, GNSS and FPL TF 2012, all of which will be elaborated upon in the respective sections of this report. This also includes the APIRG events which aim to enhance airspace and associated safety aspects.
SACAA participated in the following international aviation fora during this period:
• Compensation for Damage Caused by Aircraft to Third Parties Arising from Acts of Unlawful Interference or Arising from General Risks, and The Preparatory Commission for the Establishment of the International Civil Aviation Compensation Fund (PCIF).
• The Safety Information Exchange Study Group.
• The Filing of Differences Task Force (FDTF).
• The Safety Information Protection Task Force.
• The Commission of Experts of the Supervisory Authority of the International Registry (CESAIR).
• ICAO AFI Flight Plan (FPL) Task Force.
Furthermore, the SACAA, as part of its initiative to support the government’s SADC programmes, hosted the prestigious ICAO-endorsed Government Safety Inspector Airworthiness Course in Johannesburg during July 2011.
The SACAA, with aviation industry partners, co-hosted the 3rd PAN-AFI Aviation Training Coordination Conference in Cape Town at the end of July 2011.
The SACAA was also involved in the DoT’s special Task Force deployed to Southern Sudan on two occasions to assist this newly established Chicago Convention signatory state with its establishment of a Civil Aviation Authority.
SACAA is 99.3% compliant with the eight (8) critical elements of an oversight system with only two (2) fi ndings remaining open at the end of the period. The attached graph refl ects the ‘Effective Implementation’ of the Safety Oversight system.
70 South African Civil Aviation Authority Effective implementation of eight critical elements (%)
100.00 Global average 42.28% 90.00 (145 States) 80.00 70.00 RSA at July 07 60.00 50.00 40.00 RSA at Dec 08
Percentage (%) 30.00 20.00 RSA at Mar 10 10.00 0.00 RSA at Mar 11
Resolution of Safety Issues Primary Aviation Legislation Qualified TechnicalTechnical Personnel Guidance Material Specific Operating Regulations Continued Surveillance Obligations Licensing and Certification Obligation
CAA Structure and Safety Oversight Functions
Monitoring Safety Risk – Safety Management Systems
As part of the SMS promotion, the Safety Risk division, under the auspices of the Corporate Communications department, is conducting presentations on SMS. The objective of these presentations is to enlighten the industry on the requirements of SMS and what the SACAA is doing to ensure a functional SMS and SSP. These presentations are conducted at different fl ying clubs around the country and the response has been very positive.
Occupational Health and Safety
The SACAA system is compliant with the Occupational Health and Safety Act, no. 85 of 1983.
The progress achieved in the process of improving Occupational Health and Safety, which forms part of the SACAA Integrated Management System, resulted in various activities towards compliance with legislation.
The ongoing cultivation of the Occupational Health and Safety culture within the organisation receives a high priority, and continuous revival and improvement is ensured through monthly Occupational Health and Safety induction training of SACAA employees across the board and SACAA broad management in particular. Quality Management System
Since the fi rst ISO 9001 Certifi cation of the SACAA in 2000, the Authority has maintained its certifi cation every three years, through the high quality standard upheld by all departments.
ICAO has in its latest press release on QMS emphasized the importance of a QMS and stated that “A certifi ed QMS ensures that the needs and expectations of the stakeholders are met, that ICAO is proactive in identifying best practices, that processes are closely monitored and that activities are performed and managed in a more structured way.”
Annual Report 2011/12 71 ISO 9001: 2011/12 Internal Audits
Internal audits allow the Authority to verify the effectiveness of the QMS with the objective of addressing defi ciencies and thus promoting continual improvement. During the last fi nancial year a total of 99 fi ndings were raised of which 56 were closed, and the remainder are in the process of being closed off.
By conducting internal audits the authority was able to identify non-conformances in the QMS. Below is the status of non-conformances identifi ed per department.
Internal Audit Findings
GM:ASO
EM:AIID
DCA
Company Sec
IM
FIU
0 5 10 15 20 25 30 35 40
Company EM: GM:AS GM: FIU Finance Legal RC GM:AS IM Sec HR DCA AIID O AVSEC
Total no. of findings 3 12 17 4 1 4 3 6 5 16 18 10
Open 0 9 8 21 4 334 7123
Closed 3 3 9 20 0 031 96 7
Continuous Improvement
Continuous Improvement Reports (CIRs) in the SACAA are used as a tool to measure compliance to the ISO 9001:2008 Standard and to update QMS documentation. Below is a refl ection of the number of CIRs raised during the 2011/2012 fi nancial year:
CIR Raised
7% 6%
20% Pol
Proc
Forms 67% MOP
72 South African Civil Aviation Authority Legends: Pol – Policies Proc – Procedures MOP – Manual of Procedures Aviation Personnel Licensing
The country has a total of 26 022 active aviation personnel, of which a total of 4963 were made up of licences issued for the fi rst time during the reporting period. There was a 6.6% increase in the number of licences revalidated and a 4.3% increase in the number of initial licences issued by the SACAA during the reporting period, in comparison with the previous fi nancial year.
For effective monitoring of transformation efforts, the total number of active licences is categorized in terms of gender and race as depicted in the tables below:
Aeroplane Licences: Male
African Male Coloured Male Indian Male White Male South South South South Foreign Foreign Foreign Foreign Total Aeroplane Licence African African African African National National National National 2011/2012 National National National National Private Pilot 77 438 28 17 55 119 4554 580 5868 Commercial Pilot 72 445 16 33 33 268 2205 380 3452 Airline Transport Pilot 55 17 24 10 41 3 2625 194 2969 Total 204 900 68 60 129 390 9384 1154 12289
Helicopter Licences: Male
African Male Coloured Male Indian Male White Male South South South South Foreign Foreign Foreign Foreign Total Helicopter Licence African African African African National National National National 2011/2012 National National National National Private Pilot 27 46 3 2 12 5 1019 101 1215 Commercial Pilot 15 49 12 0 6 0 660 75 817 Airline Transport Pilot 2 0 1 0 0 0 218 18 239 Total 44 95 16 2 18 5 1897 194 2271
Other Licences: Male
African Male Coloured Male Indian Male White Male South South South South Foreign Foreign Foreign Foreign Total Other Licences African African African African National National National National 2011/2012 National National National National Student Pilot 167 313 45 4 71 30 1839 130 2599 Cabin Crew 560 34 138 0 69 5 358 10 1174 Hot Air Balloon Pilot 000000307 37 Maintenance Engineers 133 103 20 2 28 0 1602 71 1959 Flight Engineers 000000422 44 Validations 0 39 020429613687 Total 860 489 203 8 168 39 3900 833 6500
Annual Report 2011/12 73 Aeroplane Licences: Female
White African Female Coloured Female Indian Female Female South South South Foreign Foreign Foreign South African Foreign Total Aeroplane Licence African African African National National National National National 2011/2012 National National National Private Pilot 26 23 2 4 5 10 286 37 393 Commercial Pilot 16 48 1 3 4 20 190 34 316 Airline Transport Pilot 404050 14714174 Total 46 71 7 7 14 30 623 85 883
Helicopter Licences: Female
African Female Coloured Female Indian Female White Female South South South South Foreign Foreign Foreign Foreign Total Helicopter Licence African African African African National National National National 2011/2012 National National National National Private Pilot 5 5 1 0 1 0 84 4 100 Commercial Pilot 8 4 1 0 0 1 55 7 76 Airline Transport Pilot 0 0 0 0 0 0 8 3 11 Total 13 9 2 0 1 1 147 14 187
Other Licences: Female
African Female Coloured Female Indian Female White Female South South South South Foreign Foreign Foreign Foreign Total Other Licences African African African African National National National National 2011/2012 National National National National Student Pilot 59 31 12 0 14 1 223 23 363 Cabin Crew 1543 111 362 6 209 4 1164 25 3424 Hot Air Balloon Pilot 0 0 0 0 0 0 2 0 2 Maintenance Engineers 7 3 0 0 0 0 5 0 15 Flight Engineers 0 0 0 0 0 0 0 0 0 Validations 0 40 0 0 0 1 1 46 88 Total 1609 185 374 6 223 6 1395 94 3892 Client Services
The Client Services section in the Client, Licensing and Examination Service department is responsible for front-line services to the SACAA walk-in customers. The number of walk-in clients assisted at the customer service centre for the reporting period was 32090; this is a decrease of 1.37% from the previous reporting period. Examination Systems
The SACAA Examination section administered all pilot, fl ight engineer, cabin crew and aircraft maintenance engineer examinations during the reporting period. A total of 17305 examinations were undertaken at the SACAA Online Examination Centre in Midrand and an additional 3624 examinations were written at the Outstation Examination sittings for the reporting period.
74 South African Civil Aviation Authority During the period under review an additional 22405 examinations were conducted at the various online examination centres situated across the country, mostly at fl ight schools. Information Management
Subsequent to the full approval of the SACAA File Plan by the National Archives and Records of South Africa (NARS) in April 2011, an implementation plan of the fi le plan throughout the organisation was developed and kick-started with the training of key personnel. It is envisaged that the fi le plan will be fully implemented in the entire organisation in the next fi nancial year.
In order to enhance the operational effi ciency and effectiveness of the SACAA, the Technical Library has continued to provide access to strategic and critical up-to-date sources of information that enable the SACAA to achieve its mission, vision and strategic goals and objectives.
State of Human Capital and Skills Development
Staffi ng Profi le
On 31 March 2012 SACAA had a total of 417 employees, which included 9 fi xed-term contracts.
Staff Turnover
The staff turnover comparison between the 2010/11 and 2011/12 fi nancial years depicts an increase in the number of exits across different occupational categories in SACAA. The number of exits has increased from 38 to 50, citing various termination reasons such as resignations, end of contract, retirement, disability as well as dismissals. However, the greatest reasons for termination were resignations as well as non-renewal of contracts.
The table below outlines the number of employees per department:
Approved Total Permanent Fixed-term/ Division Interns Total Employees Numbers Employees Full-time contracts Aircraft Safety 99 85 186 Air Safety Operations 85 64 3 3 70 Air Safety Infrastructure 52 52 1 1 54 Accident & Incident Investigation 27 19 1 20 Finance 51 38 1 2 41 Legal 10 11 1 12 Company Secretary 3 2 2 Offi ce of the DCA 18 11 2 13 Internal Audit 6 4 4 Aviation Security 46 42 42 Human Resources 12 9 110 Risk & Compliance 67 63 63 TOTAL 476 400 9 8 417
Annual Report 2011/12 75 The table below depicts the staff age profi le:
Division <25 25 to 34 35 to 44 45 to 54 55 to 64 >64 Total
Aircraft Safety 40 36 6 4 86 Air Safety Operations 51323169 470 Air Safety Infrastructure 1 11 20 12 10 54 Accident & Incident Investigation 6 10 3 120 Finance 16 17 6 2 41 Legal 1 9 1 112 Company Secretary 1 1 2 Offi ce of the DCA 4441 13 Chief Audit 3 1 4 Aviation Security 63141 42 Human Resources 1441 10 Risk & Compliance 2261813 4 63 TOTAL 9 131 174 66 31 6 417 % OF TOTAL STAFF 2.16 31.41 41.73 15.83 7.43 1.44 100.00
Performance Management 2011/2012
The SACAA Executive Management Committee decided to implement an interim Performance Management System for the period under review. The interim system will be used as an objective measurement to assess individual performance and to serve as a basis to pay 2011/12 performance incentives. The Performance Management and Remuneration guiding principles as stipulated in the respective policies will be applied.
Skills Development
2011 has been a successful skills development year. The SACAA trained 119 employees out of the 143 employees targeted for training. The bulk of training was distributed between functional training such as licence renewals as well as bursaries and developmental training, which focused mostly on formal tertiary qualifi cations.
Type of Training Number of Interventions Technical 28 Functional 75 Bursary 55 Workshops 23 (NOT reported on ATR)
Workplace Skills Plan (WSP) / Annual Training Report (ATR) 2011/2012
WSP ATR Planned Benefi ciaries of Training 143 Actual Benefi ciaries 119 83% Planned Training Intervention 360 Actual training Interventions 158 53%
The workplace skills plan and annual training report were submitted on 30 June 2011. An amount of R579, 451.53 was paid out on 2 April 2012 as part of the fi rst tranche of the mandatory grant. This, in combination with the total mandatory grants of 2010/2011 of R821,500.60 received late last year, will be used in the implementation of further programmes related to skills development.
76 South African Civil Aviation Authority TETA Discretionary Grants 2011/2012
TETA has approved the Discretionary Grant applications that were submitted on 13 January 2012 and the Discretionary Grant award letters were received on 1 May 2012. Tabelled below is a list of programmes approved by TETA and the number of benefi ciaries as per their allocation. However, the Discretionary Grant contracts have not been released or signed yet.
Application Type Number of Learners Amount Approved Apprenticeship – A/C–Sec 28-1st Year (Employed) 1 R22,800.00 Bursary - Instructor Rating Fixed Wing Training 2 R40,000 (Employed) Bursary - Instructor Rating Helicopter Training 2 R40,000.00 (Employed) Bursary - Fixed Wing Pilot Training (Unemployed) 1 R171,000.00 Bursary - Fixed Wing Pilot Training (Unemployed) 2 R342,000.00 Bursary - Helicopter Training (Unemployed) 1 R506,000.00
The total Discretionary Grants allocated amounts to R1 121,800.00. These grants are valid from 2012 to 2014; therefore SACAA is expected to implement the approved interventions within this period.
Human Resources Strategy and Transformation Strategy
The Human Resources Division developed the Human Resources Strategy and the Transformation Strategy, which will be presented to the Human Resources Committee and later to the Board for consideration and approval. Stakeholder Management
Development of a Stakeholder Strategy
A Stakeholder Strategy was submitted and approved by the Executive Management Committee. The next step requires that the same document is tabled for Board approval.
Below are various stakeholder engagements by different departments within the organisation:
National Aviation Security Committee (NASC)
Since the National Aviation Security Committee (NASC) was reconstituted in line with the new Civil Aviation Act, Act 13 of 2009, and SACAA assumed the responsibility of Secretariat, there has been notable improvement in meeting the statutory requirements prescribed in the Act. Meetings are continuing to take place to direct aviation security activities in the country.
CAPSCA Training Projects
AvMed met with the Management of COMAIR, ACSA, South African Airways, 1 Time and SA Airlink to train them on the new SACAA CAPSCA Regulations and Technical Standards on 15 and 22 September 2011. The purpose of the workshops was to create awareness about the CAPSCA project and to assist industry in the development of procedures to comply with the SACAA and ICAO requirements.
Annual Report 2011/12 77 Safety and Security Promotions
The Corporate Communications and Marketing department participated, or facilitated and/or organised the following industry activities in the interests of promoting safety and security:
1 Rand Airport Flying Club Safety Presentation 5 April 2011 2 Ermelo Airshow 9 April 2011 3 Mafi keng Flying Club Safety Presentation 13 April 2011 4 Heidelburg Safety Presentation 16 April 2011 5 Parys Airshow 16 April 2011 6 Polokwane Airshow 30 April 2011 7 Tempe Warbirds Airshow 7 May 2011 8 Rand Flying Club 7 May 2011 9 Heidelburg Airshow 14 May 2011 10 Swartkop Airshow 21 May 2011 11 Grand Rand Airshow 22 May 2011 12 Newcastle Airshow 4 June 2011 13 Wonderboom Airshow 11 June 2011 14 Durban Airshow 16 June 2011 15 Klerksdorp Flying Club 28 June 2011 16 Lowveld Flying Club in Nelspruit 30 June 2011 17 Potchefstroom Safety Meeting 6 July 2011 18 ICAO Government Safety Inspector Airworthiness Course 11 – 29 July 2011 19 Virginia Airshow 16 July 2011 20 Brakpan/Benoni Flying Club Safety Presentation 10 August 2011 21 Tzaneen Airshow 13 August 2011 22 Secunda Airshow 20 August 2011 23 Bethlehem Airshow 27 August 2011 24 Letaba Flying Club Safety Talk 26 September 2011 25 Waterkloof Airshow 1 October 2011 26 Aerodrome Safety Workshop 5 October 2011 27 Durban BBBEE Information Sessions 26 January 2012 28 Cape Town BBBEE Information Sessions 2 March 2012 29 Bultfontein Airshow 10 March 2012
5th National Safety Seminar
The SACAA hosted the above seminar on 19 October 2011. The theme for the seminar was “Working as a Collective Towards Reducing the Accident and Incident rate by half in 2014”. The seminar attracted over 200 delegates, representing various sectors of the industry. The format of the seminar featured breakaway sessions, where each sector of the industry was expected to take a look at its contribution to the accident rate and devise strategies about reducing accidents in its sector. The event outcome was a list of recommendations by all delegates, and work groups were formed by the Acting DCA to ensure that these recommendations were implemented and considered. The work groups will report back at the 6th National Safety Seminar in the next fi nancial year.
78 South African Civil Aviation Authority Aviation Career Awareness
The department, under the auspices of JAAP, participated in the following career awareness campaigns during the fi nancial year:
Details Date No. of Schools Province 13 -15 April Mangaung career exhibition – 1200 learners, 15 schools, Maths & Science 15 Free State 2011 Polokwane school visit – 2 schools (Hwiti and Ditlalemeso High schools) 30 April 2011 2 Limpopo Sci-Bono Science Discovery Central Aviation Week – 3782 learners reached and 77 9 -13 May 2011 Gauteng educators attended Letlhabile school visit – 300 learners, Maths & Science, 12 educators 21 May 2011 North West
Tzaneen school visits – 500 learners, Serurubele and Charles Mathonsi High Schools 27 May 2011 2 Limpopo
Phalaborwa exhibition – Gr 11-12, 1500 learners from Ba-Phalabora Schools 28 May 2011 Limpopo
Newcastle career exhibition – 20 schools, 3000 learners 2 June 2011 20 KwaZulu-Natal
Dundee career exhibition 3 June 2011 KwaZulu-Natal
Mnqanduli school visits – 600 learners 21 June 2011 1 Eastern Cape 24 -25 August Qwaqwa career exhibitions – 3708 learners and a total of 37 schools 37 Free State 2011 14 September Tembisa school visits – Gr 10 - 12 learners Maths & Science - 3 schools – 600 learners 3 Gauteng 2011 5 – 7 December ICAD 2011 2300 learners & 75 schools 75 Eastern Cape 2011 Soweto Aviation Day – 35 learners 28 January 2012 Gauteng Bergville career awareness held at Amangwane High School – 32 schools and 250 4 February 2012 32 KwaZulu-Natal Maths & Science learners reached Learner Career Initiative Day at Phella Matlhako Village NW, Gr 9 – 12 learners, 2190 3 March 2012 North West learners from 10 surrounding villages Bultfontein – 3 schools Maths & Science learners 10 March 2012 3 Free State
TOTAL 190
SACAA Cadet Scheme
The SACAA issued four bursaries to young South Africans who are currently progressing well as pilots and air traffi c control offi cers. The learners are training at a fl ying school at Rand Airport and at ATNS respectively.
Annual Report 2011/12 79 Industry Fora
The SACAA meets with industry in various fora to discuss issues that affect the industry. These meetings are hosted by the SACAA. The following industry forum meetings took place:
Forum Date NASCOM 10 February 2011 12 May 2011 10 August 2011 11 November 2011 9 February 2012 Aviation Security Manager’s Forum 01 June 2011 12 October 2011 16 November 2011 29 February 2012 National Aviation Security Committee (NASC) 03 May 2011 02 August 2011 01 November 2011 15 February 2012 Industry Liaison Forum 21 April 2011 25 July 2011 24 October 2011 16 January 2012 GASI 9 May 2011 4 July 2011 5 September 2011 7 November 2011 6 February 2012 SACAA/ATNS Forum 26 September 2011
Internal Stakeholders
The Corporate Communications and Marketing department is responsible for all corporate and staff events.
Staff events contribute towards staff morale, as it testifi es to the principle that all work and no play make for a non- motivated workforce. Various events were organised and executed during the reporting period, including the following:
• International Nelson Mandela Day in July;
• Take a Girl Child to Work Day;
• Men in the Making campaign;
• Women’s Day in August;
• Secretaries’ Day in September;
• Annual SACAA Charity Golf Day in September;
• Three Staff Braais over a few quarters;
• Casual Day in September, which raised funds for those who are less fortunate;
• Year-end Function in December. International Mandela Day
80 South African Civil Aviation Authority State of Information Technology
Financial System Upgrade
The Financial system Great Plains was upgraded from version 8 to version 11. The parallel model methodology was used to mitigate risk and ensure business continuity in line with IT best practice. Due to the software demands and in an attempt to improve effi ciency and morale, the Great Plains hardware (server and user environment) benefi ted from an upgrade. The upgrade was successful and all major risk system issues were mitigated.
POP – (e-Procurement)
The electronic procurement system (POP) was upgraded, benefi ting from the Great Plains upgrade from version 8 to 11. Additional improvements were realised, based on the features available with the upgrade. The service provider is in the process of unlocking additional features, all in alignment with additional training requirements. A major benefi t to the system is the incorporation of contract management.
Server Environment
The IT department has advertised for the replacement of its server environment. The servers have exceeded a six-year lifecycle and present a major risk to the IT department. However, the servers continue to serve the organisation, but at the risk that should a component fail, the replacement parts would not be available. Servers that have aged are not supported by the manufacturer with regard to certain aspects, such as components. The tender was advertised, evaluated and adjudicated by the various tender subcommittees. The Finance and Audit Committee will decide on this matter in May of 2012.
Aircraft Registry System
The Aircraft Registry System has been advertised by means of an open tender. All bidders have been subjected to an evaluation by the Tender Evaluation Committee and thereafter recommendations have been made to the Tender Adjudication Committee. The Tender Adjudication Committee is in the fi nal stages of concluding the adjudication and making a recommendation to the SACAA Board of Directors for approval.
Audit Software
Annual Report 2011/12 81 The Internal Audit and Risk Management departments have collectively identifi ed a need for a uniform and structured tool for the gathering of data. The consistency provided by a uniform tool will allow departments to interchange data and collaborate in an effort to marginalise or eliminate elements of risk and introduce effi ciencies to the organisation.
Website Development
The SACAA has been criticized by the aviation community for having a website that is static and lacking creativity. The website is content-rich and as such a need has been identifi ed to use SharePoint. Sharepoint is one of the tools made available by means of the Microsoft Enterprise Agreement. The website will cater for content that is updated through document/content management. The website will also have registration pages, inviting the aviation community to participate in aviation legislation such as the CARCom processes.
AIS Project
The AIS department identifi ed the need for the implementation of software such as AUTOCAD and the replacement of hardware, such as desktops and laptops (fl ight procedure planning). Although this had not been included in the budget, IT sacrifi ced on in-house IT projects (server LAN for testing) to accommodate this business request.
Finance Helpdesk System
Finance, as a support service, implemented a helpdesk call reporting system (HEAT) to track and monitor all calls logged for support services under Finance (IT/SCM and Finance). The system will be confi gured, taking into account service level agreements. The system has been developed with quality management methodologies to ensure effi ciency in service compliance and governance.
Internet Bandwidth ISP
Internet Solution has offered a bandwidth upgrade from 1536Mbps to 3Mbps at no cost, with the proviso of utilising fi bre optic reticulation from NEOTEL. The upgrade required approval from the landlord due to excavation, and though the negotiations proved to be lengthy, the excavation was completed. The upgrade has been commissioned and all internet services have improved, with the major impact being the response time in Cape Town and PPL online examinations. The IT department will analyse the situation and propose an additional upgrade in line with technological and internet bandwidth demands.
Aviation Security IT Systems
A Screener Certifi cation System that is aimed at regulating Part 110, dealing with Screener Certifi cation, has been fi nalised, with a number of examination centres having been validated to offer SACAA examinations to aviation security screeners. A Service Level Agreement is almost fi nalised, while all the other logistical arrangements have been fi nalised. The system is expected to go live in the next fi nancial year.
82 South African Civil Aviation Authority The Regulation states that before an aviation security screener is deployed to perform screening duties at an airport, that screener must be certifi ed by the SACAA. The certifi cation is subject to passing a SACAA set examination. Given the vast number of screeners employed at airports, the Division had to develop a system which would assist in fulfi lling this requirement effectively. A manual process was used in the absence of a system, but it is not a sustainable way of effectively implementing this requirement, as it is paper-based and requires much in terms of human resources; hence a system had to be developed to ensure that SACAA is able to regulate this aspect. The system is expected to go live on 1 June 2012. Broad-Based Black Economic Empowerment Several industry workshops were held with industry players all over the country during this fi nancial year. These are facilitated in partnership with the National Department of Transport’s BBBEE directorate. They have proved to be unsuccessful, as the attendance by role players in the aviation sector was important and yet this was decreasing with each workshop. We have managed to get our organisation accredited, as this is a national requirement. We are proud to announce that we managed to enter the accreditation race at level 6. We are striving to improve our level to 4 in the 2011/12 fi nancial year.
We still aim to improve in the areas of Enterprise Development and Socio-economic Participation as an organisation. Our target is to demonstrate a different score in these areas.
BBBEE SPEND - Procurement from BBBEE suppliers over three years
The BBBEE spend for the three-year period is illustrated in the graph. We must emphasise that we identifi ed some challenges on our scorecard and we will strive to improve. Our BBBEE target is 60% and we are proud to announce that we have managed to achieve it and exceeded it by 6% in the 2011/12 fi nancial year. The Supply Chain Management department must be commended for ensuring that we exceeded these levels.
2009 2010 2011
Target % BBBEE Spend % Target % BBBEE Spend % Target % BBBEE Spend %
60 65.48 60 68 60 66
70
68
66 2009 Target%
64 2009 BBBEE Spend%
2010 Target% 62 2010 BBBEE Spend% 60 2011 Target% 58 2011 BBBEE Spend% 56 Target % BBBEE Spend %Target % BBBEE Spend % Target % BBBEE Spend %
2009 2010 2011
2009 2010 2011 Non-BBBEE BBBEE Non-BBBEE BBBEE Non-BBBEE Total Spend Total Spend Total Spend BBBEE Spend Spend Spend Spend Spend Spend 14,167,244.29 4,890,117.93 9,277,126.36 6,622,859.45 1,659,853.48 4,963,005.97 31,319,002.18 15,669,593.76 15,649,408.42
Annual Report 2011/12 83 84 South African Civil Aviation Authority South African Civil Aviation Authority Annual Financial Statements for the year ended 31 March 2012
Contents
The reports and statements set out below comprise the annual fi nancial statements presented to the parliament:
Report of the Auditor-General 86 - 88
Accounting Authority’s Responsibilities and Approval 89 - 90
Finance and Audit Committee Report 91 - 92
Accounting Authority’s Report 93- 95
Company Secretary’s Certifi cation 96
Statement of Financial Position 97
Statement of Financial Performance 98
Statement of Changes in Net Assets 99
Cash Flow Statement 100
Accounting Policies 101 - 122
Notes to the Annual Financial Statements 123 - 144
Annual Report 2011/12 85 REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE SOUTH AFRICAN CIVIL AVIATION AUTHORITY REPORT ON THE FINANCIAL STATEMENTS
Introduction
1. I have audited the accompanying fi nancial statements of the South African Civil Aviation Authority set out on pages 96 to 147, which comprise the statement of the fi nancial position as at 31 March 2012, and the statement of fi nancial performance, statement of changes in net assets and the cash fl ow statement for the year then ended, and the notes, comprising a summary of signifi cant accounting policies and other explanatory information. Accounting authority’s responsibility for the fi nancial statements
2. The board of directors which constitutes the accounting authority is responsible for the preparation and fair presentation of these fi nancial statements in accordance with the South African Statements of Generally Recognised Accounting Practice (SA Statements 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 management determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error. Auditor-General’s responsibility
3. My responsibility is to express an opinion on these fi nancial 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. These standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial 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 accounting policies used and the reasonableness of accounting estimates made by management, as well as the overall presentation of the fi nancial statements.
5. I believe that the audit evidence I have obtained is suffi cient and appropriate to provide a basis for my audit opinion. Opinion
6. In my opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of the South African Civil Aviation Authority as at 31 March 2012, and its fi nancial performance and cash fl ows for the year then ended in accordance with SA Statements of GRAP and the requirements of the PFMA.
86 South African Civil Aviation Authority REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE SOUTH AFRICAN CIVIL AVIATION AUTHORITY (continued)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the PAA and the General Notice issued in terms thereof, I report the following fi ndings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.
Predetermined objectives
7. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual performance report as set out on pages 22 to 33 of the annual report.
8. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability. The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well defi ned, verifi able, specifi c, measurable and time-bound) and relevant as required by the National Treasury Framework for managing programme performance information.
9. The reliability of the information in respect of the selected objectives is assessed to determine whether it adequately refl ects the facts (i.e. whether it is valid, accurate and complete).
10. There were no material fi ndings on the annual performance report concerning the usefulness and reliability of the information. Compliance with laws and regulations
11. I performed procedures to obtain evidence that the entity has complied with the applicable laws and regulations regarding fi nancial matters, fi nancial management and other related matters. My fi ndings on material non- compliance with specifi c matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA are as follows: Procurement and Contract Management
12. Two contracts and quotations were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order as required by Treasury Regulations 16A9.1 (d) and the Preferential Procurement Regulations. Internal control
13. I considered internal control relevant to my audit of the fi nancial statements, annual performance report and compliance with laws and regulations. The matter reported as follows under the fundamentals of internal control are limited to the signifi cant defi ciencies that resulted in the basis for my opinion and the fi ndings on compliance with laws and regulations included in this report.
Annual Report 2011/12 87 REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE SOUTH AFRICAN CIVIL AVIATION AUTHORITY (continued)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Financial and performance management
14. There was a lack of reviewing and monitoring of compliance to laws and regulations, and as a result contracts/quotations were awarded without valid tax clearance certifi cates.
Pretoria
31 July 2012
88 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Authority’s Responsibilities and Approval for the year ended 31 March 2012
The members are required by the Public Finance Management Act (Act 1 of 1999), to maintain adequate accounting records and are responsible for the content and integrity of the annual fi nancial statements and related fi nancial information included in this report. It is the responsibility of the members to ensure that the annual fi nancial statements fairly present the state of affairs of the entity as at the end of the fi nancial year and the results of its operations and cash fl ows for the period then ended. The external auditors are engaged to express an independent opinion on the annual fi nancial statements and were given unrestricted access to all fi nancial records and related data.
The annual fi nancial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The annual fi nancial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.
The members acknowledge that they are ultimately responsible for the system of internal fi nancial control established by the entity and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the accounting authority sets standards for internal control aimed at reducing the risk of error or defi cit in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defi ned framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout 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 members are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the fi nancial records may be relied on for the preparation of the annual fi nancial statements. However, any system of internal fi nancial control can provide only reasonable, and not absolute, assurance against material misstatement or defi cit.
The members have reviewed the entity’s cash fl ow forecast for the year to 31 March 2013 and, in the light of this review and the current fi nancial position, they are satisfi ed that the entity has or has access to adequate resources to continue in operational existence for the foreseeable future.
Although the accounting authority is primarily responsible for the fi nancial 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 fi nancial statements. The annual fi nancial statements have been examined by the entity’s external auditors and their report is presented on pages 89 to 91.
Annual Report 2011/12 89 South African Civil Aviation Authority Accounting Authority’s Responsibilities and Approval (continued) for the year ended 31 March 2012
The annual fi nancial statements set out on pages 96 to 147, which have been prepared on a going-concern basis, were approved by the accounting authority on 26 July 2012 and were signed on its behalf by:
Ms P Riba Mr P Ndlovu Chairperson: SACAA Board Chairperson: Finance and Audit Committee
90 South African Civil Aviation Authority South African Civil Aviation Authority Finance and Audit Committee Report for the year ended 31 March 2012
We are pleased to present our report for the fi nancial year ended 31 March 2012. Finance and Audit committee members and attendance
The Finance and Audit Committee is an independent statutory committee and consists of three independent Non- executive Directors listed hereunder, which have been approved by the Board Committee of SACAA. It meets at least four times per annum as per its approved terms of reference. During the current year eight meetings were held. Name of member Number of meetings attended Mr S Motau (Chairperson. Resigned 17 February 2012) 5 Adv. R R Dehal 8 Mr Z Nomvete (Resigned 10 April 2012) 7 Mr Z Thwala 8 Mr P Ndlovu (Chairperson. Appointed 20 March 2012) 0 The Chairman of the Board, Director of Civil Aviation, General Manager Finance, Chief Audit Executive, external auditors and other assurance partners (legal, compliance and risk) attend meetings by invitation only.
Finance and audit committee responsibility
The Finance and Audit Committee’s roles and responsibilities include its statutory duties as per the Public Finance Management Act, 1999 (Act No.1 of 1999) (“PFMA”) as well as the Treasury Regulations issued in terms of the PFMA and the responsibilities assigned to it by the Board Committee. The Committee reports that it has complied with its responsibilities arising from section 38(10)(1) of the PFMA and Treasury Regulation 3.1.
The Finance and Audit Committee executed its duties in terms of the requirements of King III, and also reports that it has adopted appropriate formal terms of reference as its audit committee charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein. The effectiveness of internal control
The system of internal controls applied by the entity to fi nancial and risk management is effective, effi cient and transparent. In line with the PFMA and the King III Report on Corporate Governance requirements, Internal Audit provides the fi nance and audit committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identifi cation of corrective actions and suggested enhancements to the controls and processes. From the various reports of the Internal Auditors, the Audit Report on the annual fi nancial statements, and the management report of the Auditor-General of South Africa, it was noted that no matters were reported which indicate defi ciencies in the system of internal control or any deviations therefrom. However, these matters were not material enough to infl uence the audit opinion. Accordingly, we can report that the system of internal control over fi nancial reporting for the period under review was effi cient and effective.
The Finance and Audit Committee is satisfi ed with the content and quality of the monthly and quarterly reports prepared and issued by the Accounting Authority of the entity during the year under review.
Annual Report 2011/12 91 South African Civil Aviation Authority Finance and Audit Committee Report (continued) for the year ended 31 March 2012 Evaluation of annual fi nancial statements
The Finance and Audit committee has:
• reviewed and discussed the audited annual fi nancial statements to be included in the annual report, with the Auditor-General and the Accounting Authority; • reviewed the Auditor-General of South Africa’s management report and management’s response thereto; • reviewed the entities’ compliance with legal and regulatory provisions;and • reviewed signifi cant adjustments resulting from the audit.
The Finance and Audit Committee concurs with and accepts the Auditor-General of South Africa’s report on the annual fi nancial statements, and is of the opinion that the audited annual fi nancial statements should be accepts and read together with the report of the Auditor-General of South Africa. Internal audit
The Finance and Audit Committee is responsible for ensuring that the SACAA’s Internal Audit function is independent and has the necessary resources, standing and authority within the SACAA to enable it to discharge its duties. Furthermore, the Committee oversees cooperation between the internal and external auditors, and serves as a link between the Board of Directors and these functions.
The Finance and Audit Committee considered and recommended the Internal Audit Charter and three-year Coverage Plan for approval by the Board. The Committee also approved the annual Internal Audit Plan.
The Internal Audit function reports centrally with responsibility for reviewing and providing assurance on the adequacy of the internal control environment across all of the SACAA’s operations. The Chief Audit Executive is responsible for reporting the fi ndings of the internal audit work against the agreed internal Audit Plan to the Finance and Audit Committee on a regular basis. The Chief Audit Executive has direct access to the Committee, primarily through its Chairperson. The Committee is also responsible for the assessment of the performance of the Chief Audit Executive and the Internal Audit function. During the year, the Committee met with the external auditors and with the Chief Audit Executive without Management being present.
The Finance and Audit Committee is satisfi ed that the Internal Audit function is operating effectively and that it has addressed the risks pertinent to the entity and its audits. Auditor-General of South Africa
The Finance and Audit Committee has met with the Auditor-General of South Africa to ensure that there are no unresolved issues.
Chairperson of the Finance and Audit Committee
92 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Authority’s Report for the year ended 31 March 2012
The members submit their report for the year ended 31 March 2012. 1. Introduction
The Board as Accounting Authority presents its fourteenth report in terms of the Civil Aviation Act, 2009 (Act No. 13 of 2009) and the Public Finance Management Act , 1999 (Act No. 1 of 1999), which forms part of the audited fi nancial statements for the year ended 31 March 2012.
The Board is of the opinion that the SACAA, to a great extent, complies with the provisions of the PFMA. 2. Review of activities Main business and operations
The entity is a statutory body of which the primary focus is to control and regulate civil aviation in the Republic of South Africa and to oversee the functioning and development of the civil aviation industry.
The SACAA was established as a juristic body in terms of the now repealed South African Civil Aviation Authority Act, 1998 ( Act No. 40 0f 1998), and is presently regulated in terms of the Civil Aviation Act, 2009. This, read in conjunction with the South African Civil Aviation Authority Levies Act, 1998 (Act No. 41 of 1998), enables the SACAA to charge the Passenger Safety Charge on scheduled operations, fuel levy on non-scheduled operations and general aviation, and charges for services to the aviation industry, allowing it to generate revenue to fund its operations.
The SACAA continues to conduct aviation and incident investigations on behalf of the Department of Transport and receives an annual payment for these services.
During the year there were no major changes in the activities of the business.
The operating results and state of affairs of the entity are fully set out in the attached annual fi nancial statements and do not, in our opinion, require any further comment.
The net surplus of the entity was R 11,745,384 (2011: Surplus R 3,872,210).
3. Going concern
The annual fi nancial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to fi nance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
4. Subsequent events
Subsequent to year-end 1Time Airlines has defaulted on its payment arrangements with SACAA (Refer to Note 32). Other than this matter, the members are not aware of any matter or circumstance arising since the end of the fi nancial year.
Annual Report 2011/12 93 South African Civil Aviation Authority Accounting Authority’s Report (continued) for the year ended 31 March 2012
5. Accounting policies
The annual fi nancial statements are prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations of such statements issued by the Accounting Standards Board.
6. Accounting Authority
The members of the entity during the year and to the date of this report are as follows:
Name Appointment Date Ms P Riba Appointed 01 April 2011 Mr Z Nomvete Appointed 01 April 2011 Dr N Sangweni Appointed 01 April 2011 Mr P Ndlovu Appointed 01 April 2011 Adv. RR Dehal Appointed 01 April 2011 Mr V Ndwamato Appointed 01 April 2011 Mr S Motau Appointed 01 April 2011, resigned 17 February 2012.
7. Secretary The secretary of the entity is Mr A Motake of:
Business address Ikhaya Lokundiza Building 16, Treur Close Waterfall Park, Bekker Street Midrand
Postal address Private Bag X73 Halfway House 1685.
8. Corporate governance General
The accounting authority is committed to business integrity, transparency and professionalism in all its activities. As part of this commitment, the accounting authority supports the highest standards of corporate governance and the ongoing development of best practice.
The entity confi rms and acknowledges its responsibility to total compliance with the Code of Corporate Practices and Conduct (“the Code”) laid out in the King Report on Corporate Governance for South Africa, 2009 (“King 111 Report”). The accounting authority discusses the responsibilities of management in this respect at Board meetings and monitors the entity’s compliance with the code on a quarterly basis.
The salient features of the entity’s adoption of the Code is outlined on the next page:
94 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Authority’s Report (continued) for the year ended 31 March 2012
Board of directors
The Board:
• retains full control over the entity, its plans and strategy; • acknowledges its responsibilities as to strategy, compliance with internal policies, external laws and regulations, effective risk management and performance measurement, transparency and effective communication both internally and externally by the entity; • is of a unitary structure, comprising: - non-executive directors, all of whom are independent directors as defi ned in the Code; and - executive directors. • has established a Board directorship continuity programme. Chairperson and Director of Civil Aviation
The Chairperson is a non-executive and independent director (as defi ned by the Code).
The roles of Chairperson and Director of Civil Aviation are separate, with responsibilities divided between them, so that no individual has unfettered powers of discretion.
Remuneration
The upper limits of the remuneration of the Director of Civil Aviation who is the only executive director of the entity, is determined by the Parent entity, and the accounting authority will determine the remuneration within the above- mentioned limits.
Board meetings
The accounting authority has met on 11 separate occasions during the fi nancial year. The accounting authority schedules to meet at least 4 times per annum.
Non-executive directors have access to all members of management of the entity.
9. Auditors
The Auditor-General will continue in offi ce for the next fi nancial period.
10. Number of Employees
The average number of employees during the period was 447 (2011: 433).
11. Materiality Framework
The South African Civil Aviation Authority has a materiality framework whereby all material and signifi cant information is disclosed to the Finance and Audit Committee on a quarterly basis.
Annual Report 2011/12 95 South African Civil Aviation Authority Company Secretary’s Certifi cation for the year ended 31 March 2012
I hereby certify that SACAA has lodged all returns as required by the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended by Act No 29 of 1999.
Mr A. Motake
Company Secretary Midrand
96 South African Civil Aviation Authority South African Civil Aviation Authority Statement of Financial Position as at 31 March 2012
2012 2011 Note(s) R R Assets
Current Assets Investments 3 - 20,000,000 Trade and other receivables 4 48,991,920 32,071,371 Cash and cash equivalents 5 165,617,033 56,691,558
214,608,953 108,762,929
Non-Current Assets Property, plant and equipment 6 20,037,144 18,665,770 Intangible assets 7 136,607 75,512
20,173,751 18,741,282 Total Assets 234,782,704 127,504,211
Liabilities Current Liabilities Operating lease liability 8 8,877,857 9,458,914 Trade and other payables 9 34,639,929 25,578,110 Unspent conditional grants and receipts 10 4,256,629 - Provisions 11 82,795,718 - 130,570,133 35,037,024 Total Liabilities 130,570,133 35,037,024
Net Assets 104,212,571 92,467,187
Net Assets Reserves Non-distributable reserves 12 53,275,516 53,275,516 Accumulated surplus 50,937,055 39,191,671 Total Net Assets 104,212,571 92,467,187
Annual Report 2011/12 97 South African Civil Aviation Authority Statement of Financial Performance for the year ended 31 March 2012
2012 2011 Note(s) R R
Revenue Revenue 14 311,437,958 266,506,662 Other income 15 5,205,023 2,101,328 Accident and incident investigations 10,716,000 8,223,000 Interest received 16 5,719,671 4,972,818 Total Revenue 333,078,652 281,803,808
Expenditure Personnel cost 17 (216,023,047) (188,973,235) Depreciation and amortisation (4,575,726) (7,570,461) Impairment loss (1,800,190) (2,458,394) Finance costs 21 (622,223) (31,019) Debt impairment 18 (6,520,831) (7,763,141) Repairs and maintenance (4,742,182) (3,217,473) Loss on disposal of assets (29,841) (34,418) Operating expenses 19 (87,019,228) (73,796,664)
Total Expenditure (321,333,268) (283,844,805) Fair value adjustments 20 - 5,913,207 Surplus for the year 11,745,384 3,872,210
98 South African Civil Aviation Authority South African Civil Aviation Authority Statement of Changes in Net Assets for the year ended 31 March 2012 Non- Accumulated Total net assets Distributable surplus Reserves RR R
Balance as at 01 April 2010 53,275,516 41,186,590 94,462,106 Changes in net assets Surplus for the year - 3,872,210 3,872,210 Fair value adjustment through equity - 46,078 46,078 Fair value adjustment released to statement of fi nancial - (5,913,207) (5,913,207) performance
Total changes - (1,994,919) (1,994,919) Balance as at 01 April 2011 53,275,516 39,191,671 92,467,187 Changes in net assets Surplus for the year - 11,745,384 11,745,384 Total changes - 11,745,384 11,745,384 Balance as at 31 March 2012 53,275,516 50,937,055 104,212,571 Note(s) 12
Represented by: Capital funding by Government 43,275,516 7,931,000 51,206,516 Government subsidies received - 49,404,915 49,404,915 Accumulated funds - (6,398,860) (6,398,860) Asset replacement reserve 10,000,000 - 10,000,000 Total 53,275,516 50,937,055 104,212,571
Annual Report 2011/12 99 South African Civil Aviation Authority Cash Flow Statement for the year ended 31 March 2012 2012 2011 Note(s) R R
Cash fl ows from operating activities
Receipts Receipts from customers and Department of Transport 305,233,409 274,395,793 Interest income 5,719,671 4,972,818 310,953,080 279,368,611
Payments Payments made to suppliers and employees (213,567,154) (286,195,959) Finance costs (622,223) (31,019) (214,189,377) (286,226,978) Net cash infl ows / (outfl ows) from operating activities 24 96,763,703 (6,858,367)
Cash fl ows from investing activities
Purchase of property, plant and equipment 6 (7,679,802) (3,846,006) Proceeds from sale of property, plant and equipment - 87,781 Purchase of other intangible assets 7 (158,426) - Proceeds from liquidation of investments 20,000,000 59,009,133
Net cash fl ows from investing activities 12,161,772 55,250,908
Net increase in cash and cash equivalents 108,925,475 48,392,541 Cash and cash equivalents at the beginning of the year 56,691,558 8,299,017 Cash and cash equivalents at the end of the year 5 165,617,033 56,691,558
100 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies for the year ended 31 March 2012
1. Presentation of Annual Financial Statements
The annual fi nancial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
These annual fi nancial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specifi ed otherwise. They are presented in South African Rand.
A summary of the signifi cant accounting policies, which have been consistently applied, are disclosed below.
1.1 Signifi cant judgements and accounting estimates
In preparing the annual fi nancial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual fi nancial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual fi nancial statements. Signifi cant judgements include:
Loans and receivables
The entity assesses its loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or defi cit, the entity makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash fl ows from a fi nancial asset.
Management has applied judgement in estimating the extent of any impairment deemed necessary on the gross carrying value of loans and receivables and have impaired all accounts in arrears for a period longer than normal expected trading terms. The impairment loss is recognised in surplus and defi cit when there is objective evidence that it is impaired.
Fair value estimation
The fair value of fi nancial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for fi nancial assets held by the entity is the current bid price.
The fair value of fi nancial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The entity uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash fl ows, are used to determine fair value for the remaining fi nancial instruments.
Annual Report 2011/12 101 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
The carrying value less impairment provision of trade receivables and payables is assumed to approximate fair value. The fair value of fi nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash fl ows at the current market interest rate that is available to the entity for similar fi nancial instruments.
Impairment testing
The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumption may change, which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.
The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level at which identifi able cash fl ows are largely independent of cash fl ows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash fl ows for each group of assets. Expected future cash fl ows used to determine the value in the use of tangible assets are inherently uncertain and could materially change over time.
Useful lives of property, plant and equipment
The entity’s management determines the estimated useful lives and related depreciation charges for property, plant and equipment. This estimate is based on industry norm. Management will increase the depreciation charge where useful lives are less than previously estimated useful lives.
In estimating the useful lives of the assets, management assesses the present status of the assets and the expected future benefi ts associated with the continued use of the assets.
Provisions
Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions is included in the notes to the annual fi nancial statements under provisions.
1.2 Property, plant and equipment
Property, plant and equipment are tangible non-current 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 period.
The cost of an item of property, plant and equipment is recognised as an asset when: • it is probable that future economic benefi ts or service potential associated with the item will fl ow to the entity; and
• the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
102 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
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 at no cost, or for a nominal cost, its cost is its fair value as at date of acquisition.
Where an item of property, plant or equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, its deemed cost is the carrying amount of the asset(s) given up.
When signifi cant components of an item of property, plant or equipment have different useful lives, they are accounted for as separate items (major components) of property, plant or equipment.
Costs include costs incurred initially to acquire or construct an item of property, plant or equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant or equipment, the carrying amount of the replaced part is derecognised.
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 or 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 stand-by equipment which are expected to be used for more than one period are included in property, plant and equipment. In addition, spare parts and stand-by equipment which can only be used in connection with an item of property, plant or equipment are accounted for as property, plant and equipment.
Major inspection costs which are conditional to the continuing use of an item of property, plant or equipment and which meet the recognition criteria above, are included as a replacement in the cost of the item of property, plant or equipment. Any remaining inspection costs from the previous inspection are derecognised.
Property, plant and equipment are depreciated on a straight line basis over their expected useful lives to their estimated residual value.
Property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses.
The useful lives of items of property, plant or equipment have been assessed as follows:
Annual Report 2011/12 103 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
2012 2011 Aircraft Refer note Refer note below below Calibration equipment 15 years 15 years Furniture and fi ttings 6 years 6 years Computer equipment 3 years 3 years Motor vehicles 5 years 5 years Leasehold improvements Period of lease Period of lease
Included in the aircraft are the following components with the respective remaining useful lives:
Airframe 13 years 14 years Left engine 3178 hours 100 hours Right engine 3231 hours 3500 hours Avionics 9,5 years 6 years Undercarriage 19368 cycles 19551 cycles Interior 4 years 5 years
The residual value, and the useful life and depreciation method of each asset are reviewed at the end of 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 signifi cant in relation to the total cost of the item is depreciated separately.
The depreciation charge for each period is recognised in surplus or defi cit, unless it is included in the carrying amount of another asset.
Items of property, plant or equipment are derecognised when the asset is disposed of or when there are no further economic benefi ts or service potential expected from the use of the asset.
The gain or loss arising from the derecognition of an item of property, plant or equipment is included in surplus or defi cit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant or equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.3 Intangible assets
An asset is identifi ed as an intangible asset when it:
• 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, assets or liability; or
104 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
• arises from contractual rights or other legal rights, regardless whether those rights are transferable or separate from the entity or from other rights and obligations.
An intangible asset is recognised when:
• it is probable that the expected future economic benefi ts or service potential that are attributable to the asset will fl ow to the entity; and
• the cost or fair value of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
When an intangible asset is acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition.
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 benefi ts or service potential.
• there are available technical, fi nancial 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 indefi nite 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 infl ows or service potential. 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 lives.
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 fi nite useful life after it was classifi ed as indefi nite 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.
Annual Report 2011/12 105 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
Item Useful life Computer software 3 years
1.4 Financial instruments Classifi cation
The entity has the following types of fi nancial assets (classes and category) as refl ected on the face of the statement of fi nancial position or in the notes thereto:
Class Category Investments Financial asset measured at amortised cost Trade and other receivables Financial asset measured at amortised cost Cash and cash equivalents Financial asset measured at amortised cost
The entity has the following types of fi nancial liabilities (classes and category) as refl ected on the face of the statement of fi nancial position or in the notes thereto:
Class Category Trade and other payables Financial liability measured at amortised cost Operating lease liability Financial liability measured at amortised cost
Initial recognition
The entity recognises a fi nancial asset or a fi nancial liability in its statement of fi nancial position when the entity becomes a party to the contractual provisions of the instrument.
The entity recognises fi nancial assets using trade date accounting.
Initial measurement of fi nancial assets and fi nancial liabilities
The entity measures a fi nancial asset and fi nancial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the fi nancial asset or fi nancial liability.
The entity measures a fi nancial asset and fi nancial liability initially at its fair value.
Subsequent measurement of fi nancial assets and fi nancial liabilities
The entity measures all fi nancial assets and fi nancial liabilities after initial recognition, using the following categories:
106 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
• Financial instruments at fair value.
• Financial instruments at amortised cost.
• Financial instruments at cost.
All fi nancial assets measured at amortised cost, or cost, are subject to an impairment review.
Fair value measurement considerations
The best evidence of fair value is quoted prices in an active market. If the market for a fi nancial instrument is not active, the entity establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash fl ow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specifi c inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing fi nancial instruments. Periodically, an entity calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modifi cation or repackaging) or based on any available, observable market data.
The fair value of a fi nancial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the fi rst date that the amount could be required to be paid.
Reclassifi cation
The entity does not reclassify a fi nancial instrument while it is issued or held unless it is:
• a combined instrument that is required to be measured at fair value; or
• an investment in a residual interest that meets the requirements for reclassifi cation.
Where the entity cannot reliably measure the fair value of an embedded derivative that has been separated from a host contract that is a fi nancial instrument at a subsequent reporting date, it measures the combined instrument at fair value. This requires a reclassifi cation of the instrument from amortised cost or cost to fair value.
If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the entity reclassifi es the investment from fair value to cost. The carrying amount at the date that fair value is no longer available, becomes the cost.
Annual Report 2011/12 107 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the entity reclassifi es the instrument from cost to fair value.
Gains and losses
A gain or loss arising from a change in the fair value of a fi nancial asset or fi nancial liability measured at fair value is recognised in surplus or defi cit.
For fi nancial assets and fi nancial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or defi cit when the fi nancial asset or fi nancial liability is derecognised or impaired, or through the amortisation process.
Impairment and uncollectibility of fi nancial assets
The entity assesses at the end of each reporting period whether there is any objective evidence that a fi nancial asset or group of fi nancial assets is impaired.
Financial assets measured at amortised cost:
If there is objective evidence that an impairment loss on fi nancial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective interest rate. The carrying amount of the asset is reduced directly or through the use of an allowance account. The amount of the loss is recognised in surplus or defi cit.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly or by adjusting an allowance account. The reversal does not result in a carrying amount of the fi nancial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date on which the impairment is reversed. The amount of the reversal is recognised in surplus or defi cit.
Financial assets measured at cost:
If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the fi nancial asset and the present value of estimated future cash fl ows discounted at the current market rate of return for a similar fi nancial asset. Such impairment losses are not reversed.
108 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
Derecognition Financial assets
The entity derecognises fi nancial assets using trade date accounting.
The entity derecognises a fi nancial asset only when:
• the contractual rights to the cash fl ows from the fi nancial asset expire, are settled or waived;
• the entity transfers to another party substantially all of the risks and rewards of ownership of the fi nancial asset; or
• the entity, despite having retained some signifi cant risks and rewards of ownership of the fi nancial 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 defi cit in the period of the transfer.
If the entity transfers a fi nancial asset in a transfer that qualifi es for derecognition in its entirety and retains the right to service the fi nancial 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 fi nancial asset.
If, as a result of a transfer, a fi nancial asset is derecognised in its entirety but the transfer results in the entity obtaining a new fi nancial asset or assuming a new fi nancial liability, or a servicing liability, the entity recognises the new fi nancial asset, fi nancial liability or servicing liability at fair value.
On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or defi cit.
If the transferred asset is part of a larger fi nancial asset and the part transferred qualifi es for derecognition in its entirety, the previous carrying amount of the larger fi nancial 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 defi cit.
Annual Report 2011/12 109 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
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 fi nancial liability for the consideration received. In subsequent periods, the entity recognises any revenue from the transferred asset and any expense incurred on the fi nancial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset.
Financial liabilities
The entity removes a fi nancial liability (or a part of a fi nancial liability) from its statement of fi nancial position when it is extinguished i.e. when the obligation specifi ed in the contract is discharged, cancelled, expires or is waived.
An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original fi nancial liability and a new fi nancial liability is recognised. Similarly, a substantial modifi cation of the terms of an existing fi nancial liability or a part of it is accounted for as having extinguished the original fi nancial liability and having recognised a new fi nancial liability.
The difference between the carrying amount of a fi nancial liability (or part of a fi nancial 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 defi cit. 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).
Presentation
Interest relating to a fi nancial instrument or a component that is a fi nancial liability is recognised as revenue or expense in surplus or defi cit.
Dividends or similar distributions relating to a fi nancial instrument or a component that is a fi nancial liability are recognised as revenue or expense in surplus or defi cit.
Losses and gains relating to a fi nancial instrument or a component that is a fi nancial liability are recognised as revenue or expense in surplus or defi cit.
A fi nancial asset and a fi nancial liability are only offset and the net amount presented in the statement of fi nancial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
In accounting for the transfer of the fi nancial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.
110 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
1.5 Leases
A lease is classifi ed as a fi nance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classifi ed 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 building elements, the entity assesses the classifi cation of each element separately.
Finance leases - lessee
Finance leases are recognised as assets and liabilities in the statement of fi nancial 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 fi nancial position as a fi nance 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 fi nance charge and reduction of the outstanding liability. The fi nance charge is allocated to each period during the lease term so as to produce a constant periodic rate of return 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 is recognised as an operating lease asset or liability.
1.6 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 profi t-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 benefi ts or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefi ts or service potential through depreciation (amortisation).
The carrying amount is the amount at which an asset is recognised in the statement of fi nancial position after deducting any accumulated depreciation and accumulated impairment losses thereon.
Annual Report 2011/12 111 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
A cash-generating unit is the smallest identifi able group of assets held with the primary objective of generating a commercial return that generates cash infl ows from continuing use, that is largely independent of the cash infl ows from other assets or groups of assets.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding fi nance 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. Identifi cation
When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.
The entity assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the entity estimates the recoverable service amount of the asset.
Irrespective of whether there is any indication of impairment, the entity also tests a non-cash-generating intangible asset with an indefi nite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.
Value in use
Value in use of an asset is the present value of the asset’s remaining service potential.
The present value of the remaining service potential of an asset is determined using the following approach:
112 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
Depreciated replacement cost approach
The present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to refl ect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to refl ect the already consumed or expired service potential of the asset.
The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the entity would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus refl ects the service potential required of the asset.
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 defi cit.
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 it 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.
Reversal of an impairment loss
The entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable service amount of that asset.
An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to the reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.
Annual Report 2011/12 113 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
The reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or defi cit.
After the reversal of an impairment loss is recognised, 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.
1.7 Employee benefi ts
Employee benefi ts are all forms of consideration given by an entity in exchange for services rendered by employees.
Termination benefi ts are employee benefi ts payable as a result of either:
• an entity’s decision to terminate an employee’s employment before the normal retirement date; or
• an employee’s decision to accept voluntary redundancy in exchange for those benefi ts.
Other long-term employee benefi ts are employee benefi ts (other than post-employment benefi ts and termination benefi ts) that are not due to be settled within twelve months after the end of the period in which the employees rendered the related service.
Vested employee benefi ts are employee benefi ts that are not conditional on future employment.
A constructive obligation is an obligation that derives from an entity’s actions where, by an established pattern of past practice, published policies or a suffi ciently specifi c current statement, the entity has indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
Short-term employee benefi ts
Short-term employee benefi ts are employee benefi ts (other than termination benefi ts) that are due to be settled within twelve months after the end of the period in which the employees rendered the related service.
Short-term employee benefi ts 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 twelve months after the end of the reporting period in which the employees rendered the related employee service;
• bonus, incentive and performance-related payments payable within twelve months after the end of the reporting period in which the employees rendered the related service; and
• non-monetary benefi ts (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees.
114 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
When an employee has rendered services to the entity during a reporting period, the entity recognises the undiscounted amount of short-term employee benefi ts 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 benefi ts, 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 benefi ts in the cost of an asset.
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.
Post-employment benefi ts: Defi ned contribution plans
Defi ned contribution plans are post-employment benefi t plans under which an entity pays fi xed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold suffi cient assets to pay all employee benefi ts relating to employee service in the current and prior periods.
When an employee has rendered service to the entity during a reporting period, the entity recognises the contribution payable to a defi ned contribution plan in exchange for that service:
• as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the reporting date, an 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 contribution in the cost of an asset.
Where contributions to a defi ned contribution plan do not fall due wholly within twelve months after the end of the reporting period in which the employees rendered the related service, they are discounted. The rate used to discount refl ects the time value of money. The currency and term of the fi nancial instrument selected to refl ect the time value of money is consistent with the currency and estimated term of the obligation.
Annual Report 2011/12 115 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
Termination benefi ts
The entity recognises termination benefi ts as a liability and an expense when the entity is demonstrably committed to either:
• terminate the employment of an employee or group of employees before the normal retirement date; or
• provide termination benefi ts as a result of an offer made in order to encourage voluntary redundancy.
The entity is demonstrably committed to a termination when the entity has a detailed formal plan for the termination, without realistic possibility of withdrawal. The detailed plan includes:
• the location, function, and approximate number of employees whose services are to be terminated;
• the termination benefi ts for each job classifi cation or function; and
• the time at which the plan will be implemented.
Implementation begins as soon as possible and the period of time to complete implementation is such that material changes to the plan are not likely.
Where termination benefi ts fall due more than 12 months after the reporting date, they are discounted using an appropriate discount rate. The rate used to discount the benefi t refl ects the time value of money. The currency and term of the fi nancial instrument selected to refl ect the time value of money is consistent with the currency and estimated term of the benefi t.
In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefi ts shall be based on the number of employees expected to accept the offer.
1.8 Provisions and contingencies
Provisions are recognised when:
• the entity has a present obligation as the result of a past event;
• it is probable that an outfl ow of resources embodying economic benefi ts 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 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.
116 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
Provisions are reviewed at each reporting date and adjusted to refl ect the current best estimate. Provisions are reversed if it is no longer probable that an outfl ow of resources embodying economic benefi ts 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 refl ect 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 defi cits.
If an 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;
- 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.
A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are both:
• necessarily entailed by the restructuring; and
• not associated with the ongoing activities of the entity.
No obligation arises as a consequence of the sale or transfer of an operation until the entity is committed to the sale or transfer, that is, there is a binding arrangement.
After their initial recognition, contingent liabilities recognised in entity combinations that are recognised separately are subsequently measured at the higher of:
• the amount that would be recognised as a provision; and
• the amount initially recognised less cumulative amortisation.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 26.
Annual Report 2011/12 117 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
1.9 Revenue recognition from non-exchange transactions
Non-exchange transactions are defi ned as transactions where the entity receives value from another entity without directly giving approximately equal value in exchange.
Revenue is the gross infl ow of economic benefi ts or service potential during the reporting period when those infl ows result in an increase in net assets, other than increases relating to contributions from owners.
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
The invoice value of sales and services rendered, excluding value-added tax, in respect of trading operations is recognised at the date on which services are provided.
The safety charge is based on the number of passengers on scheduled services departing from all airports in the country. This data is obtained from all the airports in South Africa and the various airline companies.
Fuel levies are based on fuel supplied by fuel companies to the general aviation operations and charter operators. This is based on the litres audited by the fuel company auditors.
Accident and incident investigation fees are based on the number of accidents and incidents that are investigated and the revenue generated varies according to the nature and extent of the investigation.
User fees are generated from examinations, licence renewals, certifi cations, airworthiness and calibrations. The revenue is recognised when the service is rendered.
Government grants are not recognised until there is reasonable assurance that the organisation will comply with the conditions attached to them and the grants will be received.
Government grants of which the primary condition is that the organisation should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the statement of fi nancial position and transferred to surplus or defi cit on a systematic and rational basis over the useful lives of the related assets.
Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate fi nancial support to the organisation with no future related costs, are recognised in surplus or defi cit in the period in which the grant becomes receivable.
The organisation has recognised the government grants immediately, with the exception of the grant relating to the Plettenberg Bay accident, as there are no conditions attached thereto. The organisation is therefore unconditionally entitled to the grant awarded on the award date.
118 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
1.10 Investment income
Investment income is recognised on a time-proportion basis, using the effective interest method.
1.11 Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:
• Actual borrowing costs on funds specifi cally borrowed for the purpose of obtaining a qualifying asset less any investment income on the temporary investment of those borrowings.
• The weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.
The capitalisation of borrowing costs commences when all the following conditions have been met:
• expenditures for the asset have been incurred;
• borrowing costs have been incurred; and
• activities that are necessary to prepare the asset for its intended use or sale are undertaken.
Capitalisation is suspended during extended periods in which active development is interrupted.
‘Extended periods’ means periods that exceed 6 months.
Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.
When the entity completes the construction of a qualifying asset in parts and each part is capable of being used while construction continues on other parts, the entity ceases capitalising borrowing costs when it completes substantially all the activities necessary to prepare that part for its intended use or sale.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
1.12 Translation of foreign currencies
Foreign currency transactions
A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
Annual Report 2011/12 119 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
At each reporting date:
• foreign currency monetary items are translated using the closing rate;
• non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
• non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising from the settlement of monetary items or from translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous annual fi nancial statements, are recognised in surplus or defi cit in the period in which they arise.
When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is recognised in surplus or defi cit, any exchange component of that gain or loss is recognised in surplus or defi cit.
Cash fl ows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cash fl ow.
1.13 Comparative fi gures
Where necessary, comparative fi gures have been reclassifi ed to conform to changes in presentation in the current year.
1.14 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 fi nancial performance in the year that the expenditure was incurred. The expenditure is classifi ed in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of fi nancial performance.
1.15 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided, had reasonable care been exercised.
120 South African Civil Aviation Authority South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of fi nancial performance in the year that the expenditure was incurred. The expenditure is classifi ed in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of fi nancial performance.
1.16 Irregular expenditure
Irregular expenditure as defi ned 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.
The 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 identifi ed during the current fi nancial year and which was condoned before year-end and/or before fi nalisation of the fi nancial 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 fi nancial statements.
Irregular expenditure that was incurred and identifi ed during the current fi nancial 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 fi nancial statements.
Where irregular expenditure was incurred in the previous fi nancial year and is only condoned in the following fi nancial year, the register and the disclosure note to the fi nancial statements must be updated with the amount condoned.
Irregular expenditure that was incurred and identifi ed during the current fi nancial 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 by law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting offi cer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the fi nancial statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable by law, the expenditure related thereto must remain against the relevant programme/expenditure item, be disclosed as such in the note to the fi nancial statements and updated accordingly in the irregular expenditure register.
Annual Report 2011/12 121 South African Civil Aviation Authority Accounting Policies (continued) for the year ended 31 March 2012
1.17 Conditional grants and receipts
Revenue received from conditional grants, donations and funding is recognised as revenue to the extent that the entity has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met, a liability is recognised.
1.18 Budget information
An entity is typically subject to budgetary limits in the form of budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar.
General purpose fi nancial reporting by an entity shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.
The annual fi nancial 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 annual fi nancial statements.
1.19 Related Parties
The entity operates in an economic environment currently dominated by entities directly or indirectly owned by the South African Government. As a result of the constitutional independence of all three spheres of the South African Government, only parties within the national sphere of the South African Government will be considered to be related parties.
122 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements for the year ended 31 March 2012 2. New standards and interpretations
2.1 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 2012 or later periods:
Standard/Interpretation: Effective date: Expected impact: Years beginning on or after GRAP 18: Segment Reporting 01 April 2013 No impact on entity GRAP 23: Revenue from Non-exchange Transactions 01 April 2012 Impact currently being assessed GRAP 24: Presentation of Budget Information in the 01 April 2012 The standard will result Financial Statements in additional disclosure being presented GRAP 103: Heritage assets 01 April 2012 No impact on entity GRAP 21: Impairment of non-cash-generating assets 01 April 2012 Impact currently being assessed GRAP 26: Impairment of cash-generating assets 01 April 2012 No impact on entity GRAP 25: Employee benefi ts 01 April 2013 Impact currently being assessed GRAP 104: Financial instruments 01 April 2012 Impact currently being assessed IGRAP 7: The Limit on a Defi ned Benefi t Asset, 01 April 2013 No impact on entity Minimum Funding Requirements and their interaction GRAP 106: Transfers of functions between entities not 01 April 2014 No impact on entity under common control GRAP 107: Mergers 01 April 2014 No impact on entity GRAP 20: Related parties 01 April 2013 Impact currently being assessed
Annual Report 2011/12 123 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR 3. Investments Held to maturity Investments - 20,000,000 Held to Maturity Investments comprise Investec Bank - Fixed Deposit Account of R20 million at a fi xed interest rate of 6.6% and a maturity date of 8 September 2011. Momentum Group Limited Opening balance - 28,963,055 Fair value through equity - 46,078 Transfer to call account - (29,009,133) --
Current assets Held to maturity - 20,000,000
4. Trade and other receivables
Trade receivables 59,407,330 45,134,398 Provision for bad debts (12,819,887) (15,985,931) Unallocated receipts (860,794) (1,218,306) Prepayments 428,184 389,417 Deposits 634,163 634,171 Other debtors 1,939,383 2,158,888 Accrued interest income - 787,312 Staff advances 263,541 171,422
48,991,920 32,071,371 Trade receivables ageing
As at the end of the year, the trade receivables ageing was as follows:
Current 30,159,795 21,190,840 0 to 30 days 5,413,630 1,689,761 31 to 60 days 4,557,430 3,521,136 61 to 90 days 4,573,083 759,522 Over 91 days 14,703,392 17,973,139
59,407,330 45,134,398
124 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
Credit quality of trade and other receivables
The credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates as well as payment history.
None of the fi nancial assets that are fully performing have been renegotiated in the last year.
Fair value of trade and other receivables Trade and other receivables 48,991,920 32,071,371
The Board of Directors considers the carrying amount of other fi nancial assets to approximate fair value. Trade and other receivables past due but not impaired
Trade and other receivables which are past due are not considered to be impaired. At 31 March 2012, R18,232,246 (2011: R9,737,162) were past due but not impaired.
The ageing of amounts past due but not impaired is as follows:
1 month past due 4,934,992 1,812,087 2 months past due 3,723,781 3,465,818 3 months past due 3,729,867 575,344 Older than 3 months past due 5,843,606 3,883,913
18,232,246 9,737,162
Included in trade and other receivables past due but not impaired is an amount owing by 1Time Airlines of R9 360 416. This amount has not been impaired and based on information currently available, management is of the view that the airline’s current turnaround plan will improve the airline’s fi nancial sustainability.
Trade and other receivables impaired
As at 31 March 2012, trade and other receivables of R12 819 887 (2011: R15 985 931) were impaired and provided for.
The ageing of these loans is as follows: 0 to 3 months 2,134,237 70,843 Over 3 months 10,685,650 15,915,088
12,819,887 15,985,931
Annual Report 2011/12 125 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR Reconciliation of provision for impairment of trade and other receivables
Opening balance 15,985,931 6,904,788 Provision for impairment 7,910,828 9,639,341 Unused amounts reversed (11,076,872) (558,198)
12,819,887 15,985,931
The creation and release of provision for impaired receivables have been included in the surplus for the year.
The maximum exposure to credit risk at the reporting date is the fair value of each class of trade and other receivable balances mentioned above. The entity does not hold any collateral as security. 5. Cash and cash equivalents
Cash and cash equivalents consist of:
Cash on hand 17,000 17,000 Bank balances 68,319,464 5,192,274 Short-term deposits 97,280,569 51,482,284
165,617,033 56,691,558
6. Property, plant and equipment 2012 2011
Cost Accumulated Carrying Cost Accumulated Carrying depreciation value depreciation value and and accumulated accumulated impairment impairment
Furniture and fi xtures 10,337,141 (6,992,119) 3,345,022 10,681,609 (7,255,275) 3,426,334 Motor vehicles 1,890,933 (1,250,560) 640,373 1,830,420 (1,415,991) 414,429 IT equipment 13,861,185 (12,758,927) 1,102,258 13,255,146 (12,073,380) 1,181,766 Leasehold improvements 2,295,187 (1,838,205) 456,982 2,295,187 (1,455,674) 839,513 Generator 733,989 (20,389) 713,600 - - - Aircraft 21,383,221 (10,710,940) 10,672,281 20,049,032 (11,085,922) 8,963,110 Calibration equipment 12,085,100 (9,050,155) 3,034,945 12,085,100 (8,244,482) 3,840,618 Canteen equipment 75,900 (4,217) 71,683 - - - Total 62,662,656 (42,625,512) 20,037,144 60,196,494 (41,530,724) 18,665,770
126 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
Reconciliation of property, plant and equipment - 2012
Opening Additions Disposals Depreciation Impairment Total balance loss Furniture and fi xtures 3,426,334 1,109,296 (29,842) (1,160,766) - 3,345,022 Motor vehicles 414,429 420,513 - (194,569) - 640,373 IT equipment 1,181,766 851,480 - (930,988) - 1,102,258 Leasehold improvements 839,513 - - (382,531) - 456,982 Generator - 733,989 - (20,389) - 713,600 Aircraft 8,963,110 4,488,624 - (979,263) (1,800,190) 10,672,281 Calibration equipment 3,840,618 - - (805,673) - 3,034,945 Canteen equipment - 75,900 - (4,217) - 71,683 18,665,770 7,679,802 (29,842) (4,478,396) (1,800,190) 20,037,144
Reconciliation of property, plant and equipment - 2011
Opening Additions Disposals Depreciation Impairment Total balance loss Furniture and fi xtures 4,333,617 583,514 (7,170) (1,483,627) - 3,426,334 Motor vehicles 713,788 - (9,216) (290,143) - 414,429 IT equipment 2,936,441 530,346 (86,641) (2,198,380) - 1,181,766 Leasehold improvements 1,222,044 - - (382,531) - 839,513 Aircraft 10,419,020 2,732,146 - (1,729,662) (2,458,394) 8,963,110 Calibration equipment 4,669,235 - (19,172) (809,445) - 3,840,618
24,294,145 3,846,006 (122,199) (6,893,788) (2,458,394) 18,665,770
Included in the movement in aircraft is an impairment loss of R1 800 190 (2011: R2 458 394) which arises from the difference between the carrying value of the aircraft compared to the recoverable amount. The recoverable amount is the fair value less cost to sell, based on a valuation performed in dollars. The impairment is as the result of the deterioration of the ZAR / USD exchange rate together with a decline in the market.
7. Intangible assets 2012 2011
Cost Accumulated Carrying Cost Accumulated Carrying amortisation value amortisation value and and accumulated accumulated impairment impairment Computer software 7,251,793 (7,115,186) 136,607 7,093,366 (7,017,854) 75,512
Annual Report 2011/12 127 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR Reconciliation of intangible assets - 2012
Opening Additions Amortisation Total balance Computer software 75,512 158,426 (97,331) 136,607
Reconciliation of intangible assets - 2011
Opening Amortisation Total balance Computer software 752,182 (676,670) 75,512
8. Operating lease liability
Operating lease liability 8,877,857 9,458,914
The operating lease liability relates to the smoothing of the rental lease payment over the lease period.
9. Trade and other payables
Trade payables 1,784,560 3,172,913 Income received in advance 1,512,659 667,568 Sundry accruals 16,313,214 9,166,101 Salaries control account 6,897,837 2,356,481 13th Cheque accrual 675,241 636,302 Leave pay accrual 7,456,418 9,578,745
34,639,929 25,578,110
10. Unspent conditional grants and receipts Unspent conditional grants and receipts comprise:
National Department of Transport 4,256,629 - Movement during the year
Additions during the year 4,500,000 - Income recognition during the year (243,371) -
4,256,629 -
128 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
The grant was received in October 2011 from the National Department of Transport specifi cally to be utilised towards the investigation of the underwater survey and salvage of the aircraft that crashed into the sea near Plettenberg Bay on 8 February 2011.
11. Provisions Reconciliation of provisions - 2012
Opening Additions Total Balance Performance bonus provision - 21,662,308 21,662,308 Passenger safety charge provision - 61,133,410 61,133,410 - 82,795,718 82,795,718
Reconciliation of provisions - 2011
Opening Utilised during Reversed during Total Balance the year the year Performance bonus provision 15,000,000 (14,524,715) (475,285) -
Uncertainties and assumptions
Provisions are recognised when the company has a present obligation, whether legal or constructive, because of a past event for which it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised only when the reimbursement is virtually certain. The amount to be reimbursed is recognised as a separate asset. Where the company has joint and several liabilities with one or more other parties, no provision is recognised to the extent that those other parties are expected to settle part or all of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation at the balance sheet date. The discount rate used to determine the present value refl ects current market assessments of the time value of money and the risks specifi c to the liability.
Performance bonus provision
The performance bonus provision is calculated based on the performance of the company as well as the individual performance ratings for the fi nancial year ended 31 March 2012.
Annual Report 2011/12 129 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
Passenger safety charge provision
The passenger fee provision is as a result of the uncertainty that exists with regards to the over-collection of the passenger fee. The gazette that increased the fee from R12 to R18 per passenger was effected and charged to the passengers on 1 August 2011 prior to the Finance Minister’s concurrence to a passenger safety fee of only R16 on 1 November 2011. The Transport Minister only accepted this concurrence at R16 with effect from 1 March 2012, which resulted in an over-collection of R6 per passenger from 1 August to 29 February 2012. This provision will be released to revenue in compliance with GRAP 23 when the conditions attached to the provision are satisfi ed.
12. Non-distributable reserves
Assets transferred from the National Department of Transport at inception 43,275,516 43,275,516 Asset replacement reserve 10,000,000 10,000,000 53,275,516 53,275,516
13. Employee benefi t obligations Defi ned contribution plan
It is the policy of the entity to provide retirement benefi ts to all its employees. A defi ned contribution provident fund subject to the Pension Fund Act exists for this purpose.
The entity is under no obligation to cover any unfunded benefi ts.
The amount recognised as an expense for defi ned contribution plans is 25,557,117 24,273,699 14. Revenue
Revenue 311,437,958 266,506,662
The amount included in revenue arising from non-exchange transactions is as follows: Aircraft passenger safety charge 231,477,358 200,914,268 User fees 65,145,331 58,752,529 Fuel levy 14,815,269 6,839,865 311,437,958 266,506,662
130 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
15. Other income
Sundry income 2,566,899 1,900,660 Sponsorship income 2,557,154 85,750 Insurance claim received 80,970 114,918 5,205,023 2,101,328
16. Interest received
Interest received Financial institutions 5,277,281 4,624,176 Interest charged on trade and other receivables 442,390 348,642 5,719,671 4,972,818
17. Personnel cost
Basic 141,964,571 139,584,324 Bonus 21,932,336 (475,285) Medical aid - company contributions 9,064,086 8,765,514 UIF 640,867 664,472 WCA 627,281 480,463 SDL 1,579,874 1,642,999 Leave pay provision charge 3,600,770 2,727,146 Post-employment benefi ts - Pension - Defi ned contribution plan 25,557,117 24,273,699 Travel, motor car, accommodation, subsistence and other allowances 911,230 1,116,977 13th Cheques 346,901 (333,552) Acting allowances 881,586 258,641 Stand-by allowance 1,802,435 1,776,351 Temporary staff 7,113,993 8,491,486 216,023,047 188,973,235
18. Debt impairment
Debt impairment 6,520,831 7,763,141
Annual Report 2011/12 131 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR 19. Operating expenses
Advertising 1,249 13,550 Auditors’ remuneration 243,515 1,040,580 Bank charges 413,996 403,395 Cleaning 1,221,784 1,101,715 Consulting and professional fees 16,217,921 9,256,736 Consumables 190,680 165,662 Entertainment 672,325 324,024 Gifts - 7,800 Hire charge 355,647 257,706 Insurance 1,198,610 1,297,113 Conferences and seminars 807,625 1,233,693 IT expenses 1,562,975 2,059,212 Lease rentals on operating lease 14,180,985 12,992,356 Marketing 3,188 4,548 Public relations 571,328 709,038 Magazines, books and periodicals 3,205,364 2,269,401 Motor vehicle expenses 6,536 106,621 Fuel and oil 159,169 164,877 Placement fees 463,735 529,675 Postage and courier 473,107 1,778,723 Printing and stationery 1,875,232 3,366,000 Safety and promotions 258,501 51,995 Security 1,977,957 1,678,475 Software expenses 676,374 1,482,521 Staff welfare 282,236 458,926 Telephone and fax 4,362,143 4,528,435 Training 7,294,748 2,372,577 Travel - local 8,487,723 10,968,697 Travel - overseas 4,052,850 2,746,720 Electricity 3,739,374 3,035,707 Refuse 103,618 32,729 Uniforms 32,491 44,611 Sponsorships 2,456,428 92,900 Recreation Aviation Administration of South Africa 3,043,800 2,958,300 Premises 1,531,263 1,569,138 Aircraft operation expenses 3,379,584 2,375,037 Regulation development (108,267) 286,493 Other expenses 1,623,434 30,978 87,019,228 73,796,664
132 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
20. Fair value adjustments
Other fi nancial assets • Fair value gain released to income - 5,913,207
21. Finance costs
Foreign exchange loss 276,635 31,019 Interest paid on late payment of old government pension fund contributions 345,588 - 622,223 31,019
22. Taxation
No provision has been made for 2012 tax, as the entity is exempted in terms of section 10 (1) (CA) (1) of the Income Tax Act.
23. Auditors’ remuneration
Fees 243,515 1,040,580
24. Cash generated from / (used in) operations
Surplus 11,745,384 3,872,210 Adjustments for: Depreciation and amortisation 4,575,726 7,570,461 Loss on sale of assets 29,841 34,418 Fair value adjustments - (5,913,207) Impairment loss 1,800,190 2,458,394 Debt impairment 6,520,831 7,763,141 Movements in operating lease liability (581,057) (357,245) Movements in provisions 82,795,718 (16,992,336) Changes in working capital: Trade and other receivables (16,920,551) 2,770,205 Consumer debtors (6,520,831) (7,763,141) Trade and other payables 9,061,823 (301,267) Unspent conditional grants and receipts 4,256,629 - 96,763,703 (6,858,367)
Annual Report 2011/12 133 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
25. Commitments Authorised capital expenditure
Not yet contracted for and authorised by Accounting Authority • Property, plant and equipment 13,140,402 - • Intangible assets 10,890,000 -
24,030,402 -
This expenditure relates to property, plant and equipment and intangible assets and will be fi nanced by the available bank facilities, retained surpluses, existing cash resources, and funds internally generated.
The capital expenditure budget for the year ending 31 March 2013 is approximately R37,100,000.
Operating leases - as lessee (expense)
Minimum lease payments due - within one year 12,758,675 13,458,921 - in second to fi fth year inclusive 20,501,806 42,254,719 33,260,481 55,713,640
Operating lease payments represent rentals payable by the entity for certain of its offi ce properties. Leases are negotiated for an average term of fi ve years. No contingent rent is payable.
26. Contingencies
Pending litigation 29,150,000 17,313,080
These contingent liabilities relate to estimated legal or settlement costs with regard to legal cases for or against the SACAA. While the entity’s legal representation believes that the cases are unlikely to be successful, the entity is obliged to disclose these amounts.
134 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR 27. Related parties
The sole shareholder of the company is the Minister of Transport, on behalf of the South African Government, in terms of the Civil Aviation Act, 2009 (Act No. 13 of 2009)
Related party balances
Loan accounts - Owing (to) by related parties Department of Transport (Grant received) - 9,891,490 Department of Transport (Secondments) (1,466,959) - South African Airways 249,798 264,078 Denel (Certifi cation and maintenance) (20,350) 3,970 Air Traffi c and Navigation Services 2,096,314 2,467,418 South African Police Services 11,664 1,623 South African Air Force 206,338 210,687 Eskom (Mass towers) 13,340 15,170 National Parks Board 590 1,969 Telkom (Masts) 5,060 5,060 Airport Company of South Africa (Licences) (3,137) (2,747) SA Express (Passenger safety charge and general aviation) (32,315) (174,718) Mango 26,842 26,842 Telkom - Telephones and IT - (20,209) South African Revenue Services (PAYE,SDL) (4,328,398) (1,250) Government Printers (3,675) (137,490) Airports Company of South Africa (305,891) - (3,550,779) 12,551,893
No expense has been recognised in the current period for impairment of trade receivables in respect of amounts owed by related parties.
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
All the companies listed above report to the various ministerial departments of the government and hence are considered related parties.
Annual Report 2011/12 135 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR Related party transactions
Transaction value received / (paid) to related parties Department of Transport (Accidents and Incidents) 15,216,000 8,223,000 Department of Transport ( Secondments) (891,245) 1,142,210 Telkom (Masts) 5,200 1,180 Air Traffi c and Navigation Services (Calibration) 11,005,338 10,089,988 Airports Company of South Africa (Licences) 1,171,633 719,776 South African Airways (Safety fees and general aviation) 82,516,778 61,470,000 SA Express ( Safety fees and general aviation) 23,886,529 15,108,019 South African Air Force (Calibration) 2,412,948 2,960,004 South African Police Services (AIPs - Info) 79,440 87,440 Denel (Certifi cation and Maintenance) 69,788 63,343 National Parks Board (Aerodrome licences) 15,440 15,388 Eskom ( Aerodrome licences and mass towers) 15,090 187,038 Mango (Safety fees) 24,657,036 15,576,951 South African Revenue Service (PAYE, SDL) (36,436,935) (45,095,802) Recreation Aviation Administration of South Africa (2,603,499) (3,457,050) Telkom - Telephone and IT (638,354) (741,774) Government Printers (13,431) (126,572) ACSA (659,453) (1,213,225)
119,808,303 65,009,914
These transactions are carried out on commercial terms and conditions.
136 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
28. Members’ emoluments Executive Management 2012 Salary Medical Aid Provident Lump sum / Total Fund leave pay / bonus Mr A Richman 1,061,952 63,136 189,691 - 1,314,779 Mr GH Bestbier 995,969 59,637 177,428 - 1,233,034 Mr NR Magoai (Resigned 31 January 2012) 826,718 51,202 148,045 235,158 1,261,123 Mr O Chakarisa (Resigned 29 February 2012) 1,006,997 - 169,065 150,444 1,326,506 Mr S Lesoro 1,019,868 - 172,968 66,850 1,259,686 Mr S Ntaka (Acting CFO) * 1,020,125 53,916 173,202 161,580 1,408,823 Ms GNB Khoza 966,619 65,674 174,045 46,390 1,252,728 Mr MG India ** 1,169,356 84,222 190,634 394,930 1,839,142 Ms L Stols *** 118,571 2,709 14,416 2,470 138,166 Mr P Kewana 914,794 48,105 108,500 20,574 1,091,973 Mr ZG Thwala (Acting DCA)**** 264,527 - - - 264,527 Mr AAA Seedat (Appointed 4 January 2012) 200,112 21,075 42,079 - 263,266 Mr E Hamilton (Acting from May 2011 to 189,899 14,860 35,316 - 240,075 August 2011) Ms M Stephens (Acting from 1 September 452,059 18,412 70,492 15,524 556,487 2011) Mr S Devkaran (Acting from 1 March 2012) 63,035 1,847 10,245 - 75,127 Ms M Sonjani (Acting from 1 February 2012) 114,959 3,718 18,739 31,707 169,123 Mr G Van Der Haar ( Acting from 1 November 106,867 4,244 16,682 - 127,793 2011 to 2 January 2012)
10,492,427 492,757 1,711,547 1,125,627 13,822,358
* Mr S Ntaka was acting as CFO until 10 August 2011.
** Mr India was seconded to the Department of Transport in March 2007 with the creation of the National Aviation Security Programme (NASP). Mr India had to champion the implementation of the NASP on behalf of the Minister of Transport and the Republic of South Africa as a whole.
*** Ms L Stols was seconded to ICAO Namibia with effect from 1 May 2011.
**** Mr Z Thwala is employed by the Department of Transport as Deputy Director-General: Transport. He was seconded to the SACAA by the Minister of Transport with effect from 1 January 2011. Before his secondment he served as ex-offi cio member on the SACAA Board.
Annual Report 2011/12 137 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012 2011 Salary Medical Aid Provident Lump sum/ Total Fund leave pay/ bonus Mr CF Jordaan * 1,857,973 41,112 264,557 - 2,163,642 Mr DN Maphumulo ** 630,401 - 94,855 137,508 862,764 Mr A Richman 991,344 55,899 181,522 201,071 1,429,836 Mr GH Bestbier 882,679 55,452 169,788 229,487 1,337,406 Mr NR Magoai 931,675 57,543 171,606 143,670 1,304,494 Mr O Chakarisa 1,021,663 - 177,382 148,505 1,347,550 Mr S Lesoro 951,001 - 165,519 183,344 1,299,864 Mr S Ntaka (Acting CFO 1 March 2011 to 947,824 45,882 165,488 341,923 1,501,117 current) Ms GNB Khoza 920,538 40,095 166,786 139,634 1,267,053 Mr MG India *** 936,098 25,202 169,641 - 1,130,941 Ms L Stols 939,996 30,708 170,374 188,721 1,329,799 Mr P Kewana 378,252 22,662 35,820 - 436,734 Mr ZG Thwala (Acting DCA) **** 48,004 - - - 48,004 Ms Z Maseko (Acting CFO from 1 November 232,384 9,840 41,761 - 283,985 2010 to 28 February 2011) 11,669,832 384,395 1,975,099 1,713,863 15,743,189
*The former DCA’s contract expired on 31 December 2010.
** The former CFO (DN Maphumulo) resigned effective 31 October 2010.
*** Mr India was seconded to the Department of Transport in March 2007 with the creation of the National Aviation Security Programme (NASP). Mr India had to champion the implementation of the NASP on behalf of the Minister of Transport and the Republic of South Africa as a whole.
**** Mr Z Thwala is employed by the Department of Transport as Deputy Director-General: Transport. He was seconded to the SACAA by the Minister of Transport with effect from 1 January 2011. Before his secondment he served as ex-offi cio member on the SACAA Board.
Non-executive Directors’ fees 2012 Members’ fees Total Ms P Riba 200,282 200,282 Mr Z Nomvete 179,102 179,102 Dr N Sangweni 165,964 165,964 Mr P Ndlovu 170,202 170,202 Adv. RR Dehal 205,025 205,025 Mr S Motau 141,605 141,605 1,062,180 1,062,180
138 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
Non-executive Directors’ fees 2011 Members’ fees Total Ms P Riba 124,607 124,607 Mr MMM Mangethe 124,607 124,607 Mr DK Golding 160,269 160,269 Ms N Mtshali 124,607 124,607 534,090 534,090
29. Comparative fi gures
Certain comparative fi gures have been reclassifi ed.
30. Risk management
Capital risk management
The entity’s objectives when managing capital are to safeguard the entity’s ability to continue as a going concern in order to provide returns for the owner and benefi ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the entity consists of cash and cash equivalents disclosed in note 5, and equity as disclosed in the statement of fi nancial position.
As SACAA is not exposed to debt, there is no meaningful debt to equity ratios such as gearing ratio to be disclosed.
There are no externally imposed capital requirements.
There have been no changes to what the entity manages as capital; the strategy for capital maintenance or externally imposed capital requirements are the same as the previous year.
Financial risk management
The entity’s activities expose it to a variety of fi nancial risks: market risk (including currency risk, fair value interest rate risk, cash fl ow interest rate risk and price risk), credit risk and liquidity risk. The entity does not enter into or trade fi nancial instruments, including derivative fi nancial instruments, for speculative purposes.
Management meets on a regular basis to analyse interest rate exposures and evaluate treasury management strategies against revised economic forecasts. Compliance with policies and exposure limits is reviewed by the management on a continuous basis. Management believes, to the best of its knowledge, that there are no signifi cant undisclosed fi nancial risks.
Annual Report 2011/12 139 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
Liquidity risk
Liquidity risk refers to the risk that an entity will encounter diffi culty in meeting obligations associated with fi nancial liabilities.
Prudent liquidity risk management implies maintaining suffi cient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Management is satisfi ed that the entity will be able to settle its fi nancial liabilities (payables and provisions) in the normal course of business.
The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity risk through an ongoing review of future commitments and credit facilities.
Cash fl ow forecasts are prepared and adequate utilised borrowing facilities are monitored.
2012 2011 RR The liquidity ratio below illustrates: Current Assets 214,608,953 108,762,929 Current Liabilities 130,570,133 35,037,024 Current Ratio 1.64 : 1 3.10 : 1
Interest rate risk
Interest rate risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market interest rates. SACAA is exposed to interest rate risk as it invest funds in the money market at fl oating interest rates. As at 31 March 2012 no derivative fi nancial instruments were used to manage the SACAA’s exposure to interest rate risk.
SACAA has adopted a policy of investing the majority of surplus cash in fi xed investment options as a means to safeguard and mitigate interest rate risk. The risk is further managed through the fact that the surplus funds are invested with reputable fi nancial institutions.
Credit risk
SACAA has exposure to credit risk, which is the risk of fi nancial loss to SACAA if a counterparty to a fi nancial instrument fails to meet its contractual obligations.
Credit risk consists mainly of cash deposits, cash equivalents, derivative fi nancial instruments and trade receivables. The entity only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.
South African Civil Aviation Authority
140 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its fi nancial position, past experience and other factors. Individual risk limits are set, based on internal or external ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored.
Certain credit limits were exceeded during the reporting period, and where management considered these debtors to be impaired a provision for doubtful debts was raised.
Financial assets exposed to credit risk at year-end were as follows:
Financial instrument Trade receivables less unallocated receipts 58,546,536 43,916,092 Other debtors 1,939,383 2,158,888 Staff advances 263,541 171,422 Cash and cash equivalents 165,617,033 56,691,558
226,366,493 102,937,960
Default
Default occurs when: a) Credit limits are exceeded; and or b) Payments are not received within the approved period. In such cases the necessary collection measures were taken with due regard to the fi nancial risk connected to a specifi c debtor account. Collection measures included handing accounts over to the legal department to follow up.
As at 31 March 2012, the entity did not consider that any signifi cant concentration of credit risk existed in the receivables book which had not been adequately provided for.
The table below provides an analysis of credit risk exposure inherent in the loans and receivables book at the year-end reporting dates, reconciled to the carrying value of net trade receivables as reported in note 4.
2012 Direct Charges Indirect Charges Total Current balances 641,858 29,517,937 30,159,795 Overdue balances 12,261,515 16,986,020 29,247,535 Total 12,903,373 46,503,957 59,407,330 Impairment provision (3,694,209) (9,125,678) (12,819,887)
Annual Report 2011/12 141 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2011 Direct Charges Indirect Charges Total Current balances 1,123,513 20,067,328 21,190,841 Overdue balances 19,719,516 4,224,041 23,943,557 Total 20,843,029 24,291,369 45,134,398 Impairment provision (12,716,800) (3,269,131) (15,985,931)
Defi nitions
Direct charges include regulatory fees and calibration fees
Indirect charges include passenger safety fees and fuel levies
Liquidation
As soon as it becomes known that a debtor has been placed into provisional liquidation / sequestration or has been placed into fi nal liquidation / sequestration, the credit facility is automatically revoked. Interest is charged from the date of last payment to the date of fi nal liquidation / sequestration and the debt is provided in full as irrecoverable.
Foreign exchange risk
SACAA incurs currency risk as a result of expenses in foreign currencies, hence exposure to exchange rate fl uctuations arises. The currency in which SACAA primarily deals is the US Dollar. No forward cover is taken out for these transactions. Management considers the foreign currency risk to be insignifi cant.
31. Going concern
The annual fi nancial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to fi nance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
32. Events after the reporting date
1Time Airline has defaulted on its current payment terms to SACAA. The amount owing as at 31 March 2012 amounted to R9 360 416. Subsequent to year-end, 1Time Airline has submitted a proposal to the management of SACAA in which it proposes restructuring its current debt of R9 360 415. Management is currently considering this proposal.This amount has not been impaired and based on information currently available, management is of the view that the airline’s current turnaround plan will improve the airline’s fi nancial sustainability.
Other than 1Time Airline, management is not aware of any other signifi cant events that occurred after the reporting date that would require adjustments to or disclosure in the fi nancial statements. Furthermore, management is not aware of any circumstances which exist that would impede the company’s ability to continue as a going concern.
142 South African Civil Aviation Authority South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
33. Fruitless and wasteful expenditure
Arbitration Award - 538,000 Offi cial in Finance Department - 38,772 Penalties on late payment of workmen’s compensation 58,000 - Interest paid on late payment of pension fund 345,588 - VAT paid to non-registered VAT vendor 146,791 - 550,379 576,772
During the year under review R550,379 (2011: R576 772) was recorded as fruitless and wasteful expenditure. R58 000 was paid as a penalty for the late payment of workmen’s compensation. R345 588 was paid as interest for late payment of contributions relating to members that belonged to the old government pension fund. R146,791 related to VAT was paid to a non-registered VAT vendor.
34. Irregular expenditure
Opening balance 1,887,134 - Add: Irregular Expenditure - current year 8,079,980 1,887,134 Less: Amounts condoned (8,079,980) - 1,887,134 1,887,134
Details of irregular expenditure current year Contracts renewed and utilised without competitive bidding 6,710,829 1,785,145 Goods and services procured without competitive bidding 1,369,151 101,989 8,079,980 1,887,134
The reasons for the deviations where contracts were renewed or utilised without competitive bids and where goods and services were procured without competitive bidding were documented and reported to the accounting authority who considered them and subsequently approved the deviation from the normal supply chain management regulations.
Annual Report 2011/12 143 South African Civil Aviation Authority Notes to the Annual Financial Statements (continued) for the year ended 31 March 2012
2012 2011 RR
35. Reconciliation between budget and statement of fi nancial performance
Reconciliation of budget surplus with the surplus in the statement of fi nancial performance:
Net surplus per the statement of fi nancial performance 11,745,384 3,872,210 Adjusted for: Fair value adjustments - (5,913,207) Impairments recognised 1,313,654 2,458,394 Loss on the disposal of assets 29,841 34,418 Foreign exchange losses 276,635 31,019 Insurance gains received (80,970) (114,918) Bad debts written off 9,686,876 558,198 Bad debts provision adjustment (3,166,044) 7,204,942 (Decrease)/increase in performance bonus provision 862,308 (475,285) Smoothing of lease liability (581,057) (357,245) Shortfall on budgeted revenue 68,429,332 33,949,002 Saving on staff costs (35,614,487) (29,935,432) Saving on budgeted expenses (19,849,559) (11,285,170) Net surplus per approved budget 33,051,913 26,926
144 South African Civil Aviation Authority ACRONYMS
ACSA Airports Company South Africa AFCAC African Civil Aviation Commission AFI African and Indian Ocean AIC Aeronautical Information Circular AIID Accident and Incident Investigations Division AIP Aeronautical Information Package AMO Aircraft Maintenance Organisation ANS Air Navigation Services AO Air Operator ASIB Accident Safety Investigation Board ASP Advisory Safety Panel ATNS Air Traffi c and Navigation Services ATOs Aviation Training Organisations ATSUs Air Traffi c Service Units AVMED Aviation Medicine AVSEC Aviation Security BBBEE Broad-based Black Economic Empowerment CAHRS Confi dential Aviation Hazard Reporting System CAP Corrective Action Plan CAPSCA Cooperative Arrangement for the Prevention of a Spread of Communicable Disease by Air Travel CARCom Civil Aviation Regulations Committee CARS Civil Aviation Regulations CATS Civil Aviation Technical Standards CMA Continuous Monitoring Approach COSCAP Cooperative Development of Operational Safety and Continuing Airworthiness Programme CRM Customer Relationship Management DCA Director of Civil Aviation DFEs Designated Flight Examiners DoD Department of Defence DoE Department of Education DoL Department of Labour DoT Department of Transport DPE Department of Public Enterprises EM Executive Manager EXCO Executive Management Committee FAA Federal Aviation Administration FIU Flight Inspection Unit GA General Aviation GASI General Aviation Safety Initiative GIS Geospatial Information Services GM General Manager GNSS Global Navigation Satellite Systems
Annual Report 2011/12 145 HR Human Resources ICAO International Civil Aviation Organisation ICASA Independent Communications Authority of South Africa IAF Internal Audit Function ILF Industry Liaison Forum ISO International Standard Organisation JAAP Joint Aviation Awareness Programme KPIs Key Performance Indicators LACC Local Airport Command Centre LOC Local Organising Committee MOU Memorandum of Understanding NATJOC National Joint Operational Centre NAMP National Airspace Master Plan NASC National Aviation Security Committee NASCOM National Airspace Committee NASP National Aviation Security Plan NATJOINTS National Joint Operational and Intelligence Structure NDoT National Department of Transport NOTAM Notice To Airmen OHS Occupational Health and Safety PAPI Precision Approach Path Indicator PFMA Public Finance Management Act, 1999 RAASA Recreational Aviation Administration of South Africa RBO Relationship Building by Objective RSOO Regional Safety Oversight Organisation RTF Radio Telephony RVSM Reduced Vertical Separation Minimum SAA South African Airways SACAA South African Civil Aviation Authority SADC Southern African Development Community SARPs Standards and Recommended Practices SMS Safety Management Systems TETA Transport Education and Training Authority TEWG Training Experts Working Group UAS Unmanned Aircraft Systems USOAP Universal Safety Oversight Audit Programme VOC Venue Operational Centre VOR Very high frequency Omnidirectional radio Range YTD Year to Date
146 South African Civil Aviation Authority Notes
Annual Report 2011/12 147 Notes
148 South African Civil Aviation Authority