estate agency affairs board annual report and financial statements 2013/2014 bryan chaplog (ceo)...
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Estate Agency Affairs BoardANNUAL REPORT AND FINANCIAL STATEMENTS
2013/2014
Bryan Chaplog (CEO)
Silence Mmotong (CFO)
Nikita Sigaba (CRO)
MandateVision & MissionOrganizational StructureCorporate Governance ReportOperational ReportIntegrated Human Capital ReportAnnual Financial StatementsPerformance Information ReportAudit ReportYear Ahead
PRESENTATION OVERVIEW
Primary Mandate of EAAB Regulate, maintain and promote the standard of conduct of estate
agents having due regard to the public interest; Issue fidelity fund certificates to qualifying applicants; Prescribe the standard of training of estate agents; Investigate complaints against estate agents and institute
disciplinary proceedings against offending estate agents where required; and
Manage and control the Estate Agents Fidelity Fund.
Secondary mandate The EAAB is the Supervisory Body of the estate agency profession
pursuant to the Financial Intelligence Centre Act and is obliged to take all steps required to prevent; alternatively, identify and report on, anti-money laundering and terrorist financing activities
MANDATE
VISION & MISSION
VISSIONTo be a world class regulator that is responsive to and surpass its stakeholder expectation
MISSION
To ensure that the integrity of the transaction between the estate agent and consumer is of a high standard by regulating, protecting, guiding and enhancing the conduct of real estate agents’ profession in South Africa.
CORPORATE GOVERNANCE REPORT
BOARD COMPOSITION
•Executive Authority = Department of Human Settlements•Accounting Authority = Board (15 Board Members)
5 members representing estate agents industry 5 members from civil society representing the
interest of consumers 5 members from related professions and
institutions such as legal, financial, property owners
CORPORATE GOVERNANCE REPORT
BOARD COMMITTEES
•Chairman’s committee (10 members)•Audit and Risk Committee (6 members)•Finance Committee (5 members)•HR and Remunerations Committee (6 members)•Education & Training Committee (6 members)•Legal and Claims Committee (6 members)•Social and Ethics Committee (6 members)•Transformation Committee (7 members)
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INSPECTIONS STATISTICSNON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng Western Cape
Limpopo Free State
Eastern Cape
KwaZulu Natal
Mpumalanga Total
ESTATE AGENCIES OPERATING ILLEGALLY
24 36 0 10 15 31 9 210
PRINCIPALS - NO FIDELITY FUND CERTIFICATE
40 48 0 9 9 31 21 168
NON-PRINCIPALS AND INTERNS - NO FIDELITY FUND CERTIFICATE
79 2 0 26 7 24 19 157
PRIMARY TRUST ACCOUNT CONTRAVENTIONS
40 49 1 30 12 20 20 83
SECONDARY/INVESTMENT ACCOUNT CONTRAVENTIONS
22 25 0 17 10 37 9 118
INTEREST EARNED ON TRUST MONEY - NOT PROPERLY DEALT WITH
7 15 0 19 1 11 2 55
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICSNON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng Western Cape
Limpopo Free State
Eastern Cape
KwaZulu Natal
Mpumalanga Total
RETENTION OF TRUST MONIES AND PAYMENTS FROM THE TRUST ACCOUNT
3 4 0 5 5 4 6 27
INSUFFICIENT ACCOUNTING RECORDS OF TRUST ACCOUNT
33 24 0 17 6 6 9 95
IMPROPER ADMINISTRATION OF TRUST ACCOUNT
17 43 2 26 4 11 9 114
ACCOUNTING RECORDS IMPROPERLY MAINTAINED
11 47 0 2 18 9 17 104
CONTRACTS COMPLETED BY UNQUALIFIED PERSONS
0 21 0 12 7 17 2 59
CONTRAVENTIONS OF THE CODE OF CONDUCT IN RESPECT TO CONTRACTS GENERALLY
4 6 0 8 5 26 14 63
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICSNON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng Western Cape
Limpopo Free State
Eastern Cape
KwaZulu Natal
Mpumalanga Total
CONTRAVENTIONS OF THE CODE OF CONDUCT IN RESPECT TO SOLE MANDATES
10 4 0 9 2 21 1 47
CONTRAVENTIONS OF THE CODE OF CONDUCT IN RESPECT TO LEASE AGREEMENTS
3 3 1 9 0 6 0 22
CONTRAVENTIONS OF THE CODE OF CONDUCT IN RESPECT TO SALE AGREEMENTS
2 1 0 8 0 17 2 30
CESSATION OF PRACTICE WITHOUT NOTIFYING THE EAAB
0 1 1 15 0 3 3 23
NON-EXISTANT ESTATE AGENCIES 0 0 0 0 0 3 0 3
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICSNON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng Western Cape
Limpopo Free State
Eastern Cape
KwaZulu Natal
Mpumalanga Total
NON-COMPLIANCE WITH THE FIC ACT iro DUTY TO IDENTIFY CLIENTS AND KEEP RECORDS
18 1 1 30 11 4 3 68
NON-COMPLIANCE WITH THE FIC iro CASH THRESHOLD REPORTING IN TERMS OF TRANSACTIONS EXCEEDING R25000
0 2 0 20 6 2 1 31
NON-COMPLIANCE WITH THE FIC iro INTERNAL RULES
47 23 1 46 11 12 10 150
NON-COMPLIANCE WITH EAAB EDUCATION REQUIREMENTS
0 28 4 35 37 7 0 111
FAILURE TO UPDATE GENERAL INFORMATION WITH THE EAAB
96 101 0 6 7 15 3 225
TOTAL CONTRAVENTIONS 456 484 11 359 173 317 160 1960
TOTAL INSPECTIONS 208 200 56 64 52 143 38 761
OPERATIONAL OVERVIEW
EDUCATION AND TRAINING
OPERATIONAL OVERVIEW
EDUCATION AND TRAINING
OPERATIONAL OVERVIEW
Employment and vacancies
Programme 2012/13No. of employees
2012/14 Approved posts
2013/14 No. of employees
2013/14Vacancies
CEO’s Office 3 9 7 2
Compliance 29 45 34 11
Education and Training 7 7 7 0
Corporate Services 35 30 25 5
Total 74 91 73 18
INTEGRATED HUMAN CAPITAL REPORT
Employment equity status (Male) AFRICAN MALE COLOURED MALE INDIAN MALE WHITE MALE
Skills level Employee EE Target Employee EE Target Employee EE Target Employee EE Target
Top Management
4 5 1 1 0 0 1 1
Senior Management
3 3 0 0 0 0 0 1
Professional Qualified
3 3 0 0 0 0 0 1
Skilled
6 5 0 1 0 1 0 0
Semi-skilled
8 12 0 1 0 1 0 0
Unskilled
2 0 0 0 0 0 0 0
Total
26 28 1 3 0 2 1 3
INTEGRATED HUMAN CAPITAL REPORT
Employment equity status (Female) AFRICAN FEMALE COLOURED FEMALE INDIAN FEMALE WHITE FEMALE
Skills level Employee EE Target Employee EE Target Employee EE Target Employee EE Target
Top Management
1 2 0 0 0 0 0 0
Senior Management
3 4 0 0 0 0 1 0
Professional Qualified
2 3 0 0 1 0 1 1
Skilled
3 11 0 2 0 0 0 1
Semi-skilled
27 19 3 2 0 0 1 4
Unskilled
22 0 0 0 0 0 0 0
Total
38 39 3 4 1 1 3 6
INTEGRATED HUMAN CAPITAL REPORT
ANNUAL FINANCIAL STATEMENTS
2013/14 2012/13 R %
R'000 R'000 ChangeR’000 Change
INCOME STATEMENT Income 80 512 83 059 (2 547) -3% Revenue - FFC 16 279 18 662 (2 383) -13% Revenue - Management Fee 52 253 52 983 (730) -1% Revenue - Examinations 2 541 751 1 790 238% Other Income 9 439 10 663 (1 224) -11%Expenses (74 612) (93 538) 18 926 -20% Operating Expenditure (34 243) (41 516) 7 273 -18% Depreciation and Impairments (2 348) (366) (1 982) 542% Auditors Remuneration (1 461) (1 666) 205 -12% Employee Costs (36 560) (49 990) 13 430 -27%Operating Surplus (Deficit) 5 900 (10 479) 16 379 -156% Investment Income 2 879 5 771 (2 892) -50% Finance Costs - (3) 3 -100%
Net Surplus/(Deficit) 8 779 (4 711) 13 490 -286%
ANNUAL FINANCIAL STATEMENTS
TRENDS
IncomeRevenue from issue of FFC declined due to some estate agents still battling with complying with audit report requirementsRevenue from exams increased due to more estate agents enrolling for exams to meet the regulations deadline
ANNUAL FINANCIAL STATEMENTS
TRENDS
Expenditure Operating expenditure decreased due to less inspections performedStaff costs decreased due to recoupment/reversal of the losses in the pension fund scheme
ANNUAL FINANCIAL STATEMENTS
2013/14 2012/13 R'000 %
BALANCE SHEET R'000 R'000 Change Change
Property, Plant and Equipment 73 377 1 738 71 639 4122%
Intangible Assets 2 055 1 963 92 5%
Inventories 364 165 199 121%
Loan Fund - Fidelity Fund 21 868 17 580 4 288 24%
Financial Assets/Investments 1 355 27 450 (26 095) -95%
Trade and other Receivables 3 940 1 428 2 512 176%
Bank and Cash 33 935 85 099 (51 164) -60%
Total Assets 136 894 135 423 1 471 1%
Capital and Reserves 104 990 96 211 8 779 9%
Current Liabilities 23 681 18 593 5 088 27%
Non-current Liabilities 8 223 20 619 (12 396) -60%
Total Equity and Liabilities 136 894 135 423 1 471 1%
ANNUAL FINANCIAL STATEMENTS
RATIOS
RATIO ANALYSIS
2013/14 2012/13
Return on net Assets (%) 8% (5%)
Current Ratio 2 6
Debt collection rate (Days) 18 6
Creditors Payment rate (Days) 51 17
Gearing/Financial Leverage 23% 29%
ANNUAL FINANCIAL STATEMENTS
FIDELITY FUND
2013/14 2012/13
Net Asset Value (NAV) R571 Million R580 Million
Claims Approved R5.8 Million R0.288 Million
Claims approved as a percentage of NAV 1% 0.05%
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 1: COMPLIANCEStrategic ObjectivesTo improve compliance with the Estate Agency Affairs Act.SUB PROGRAMMES
OUTPUTS Actual Achievements 2012/2013
Planned Targets 2013/2014
Actual Achievements 2013/2014
Deviation from planned target to Actual Achievement for 2013/2014 (under)/over performance
Comment on deviations below target.
Disciplinary Number of complaints received investigated and resolved
1028 1100 634 (466) The enforcement department was only adequately resourced in the 1st Quarter. The enforcement department was focused on late or no audit report submission prosecutions instead of complaints in the 4th Quarter.
Inspection Number of inspections performed
1008 1210 800 (410) The inspection department was under-capacitated for the first 3 quarters.
Licensing Number of new registration FFC issued
8296 9126 12484 3358 N/A
Number of renewals FFC issued
49238 54152 34729 (19423) EAAB was more stringent in supplying Fidelity Fund certificates to Estate Agents which did not submit their Audit reports on time.
KEY PERFORMANCE ANNUAL TARGETS – PROGRAMME 2: CORPORATE SERVICES
Strategic ObjectivesTo increase stakeholder awareness of the EAAB and its stakeholdersTo effectively and efficiently manage the EAABSUB PROGRAMMES
OUTPUTS Actual Achievements 2012/2013
Planned Targets 2013/2014
Actual Achievements 2013/2014
Deviation from planned target to Actual Achievement for 2013/2014 (under)/over performance
Comment on deviations
Stakeholder awareness
Consumer awareness campaigns performed
12 16 13 (3) Lack of capacity to perform adequate consumer campaigns.
Estate Agency capacity building campaigns performed
12 16 22 6 N/A
Number of agent magazine issued
4 4 4 0 N/A
Automation of registration process
Number of on-line registrations performed
364 500 311 (189) Inadequate awareness in the use of on-line registrations.
KEY PERFORMANCE ANNUAL TARGETS – PROGRAMME 3: FIDELITY FUND
Strategic ObjectivesTo improve the sustainability of the Fidelity Fund.
SUB PROGRAMMES
OUTPUTS Actual Achievements 2012/2013
Planned Targets 2013/2014
Actual Achievements 2013/2014
Deviation from planned target to Actual Achievement for 2013/2014
Comment on deviations
Fidelity Fund Growth
Value of claims approved
R1,925,000 Maximum of R4,000,000
R3,051,254
R948,746 N/A
Interest received from Estate Agents Trust account
R10,507,000 R20,000,000 R17,085,869 (R2,914,131) This is due to lower renewals than expected.
Value of claims recoveries
R1,925,000 R2,000,000 R0 (R2,000,000) The Litigation & Recoveries department was under-capacitated for most of the financial year
Interest received from investments
R30,384,000 R32,000,000 R31,277,029 (R722,971) Decrease in Fidelity Fund Investments has resulted in lower return on investments.
Fidelity Fund Growth
2.2% Fidelity fund Growth
5.4% Fidelity Fund Growth
0.014% Fidelity Fund Growth
(5.386%) Fidelity Fund Income grew below expectation and Expenditure was higher than expected.
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 4: EDUCATION AND TRAININGStrategic ObjectivesTo build capacity of key stakeholdersSUB PROGRAMMES OUTPUTS Actual
Achievements 2011/2012
Planned Targets 2013/2014
Actual Achievements 2013/2014
Deviation from planned target to Actual Achievement for 2013/2014
Comment on deviations
Education and Training Number of NQF Level 4 candidates enrolled and passed PDE 4
300 1000 1266 266 N/A.
Education and Training Number of NQF Level 5 candidates enrolled and passed PDE 5
100 150 337 187 N/A
Education and Training Number of candidates enrolled for the CPD 0
15000 (1500) The selection of CPD
system service provider has taken longer than expected. The cost of procuring the service is higher than expected and therefore required a tender process.
AUDIT REPORT
AUDIT OPINION UNQUALIFIED AUDIT OPINION
EMPHASIS OF MATTER NONE
LEGAL AND REGULATORY MATTERS Reportable Irregularity – 3 disqualified board members not vacated their office.
They have since vacated their office PREDETERMINED OBJECTIVES 56% targets not achieved as they did not
meet the SMART criteria
Performance Information System not Integrated with Financial and Reporting Management Systems
AUDIT REPORT JOURNEY
YEAR AHEAD
KEY PLANS FOR 2014/2015Establish regional centersParticipate in finalizing the Property Practitioners BillIntensify the consumer awareness campaignsIncrease inspections
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THANK YOU
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