Annua port 2011 - 01 - Inseta

Annual Report 2011- 2012

Values INSETA Annual Report 2011-2012page ipurpose:INSETA’s purpose is to grow the pool and quality of scarce and critical skills in the insurancesector, enhancing the sector and supporting the country’s transformation.valuesPartner to enable others• Form strategic partnerships• Be an employer of choice• Consult and collaborate withstakeholdersLead with vision• Develop contemporary solutions toguide the industry• Listen, learn, influence and shapeDeliver quality• Results for real impact• Value for investmentTouch lives• Make a difference• Leave an enduring legacyvisionVISION:In 2013, INSETA will be:• Acknowledged as education and trainingthought leaders and enablers – the mosteffective SETA• Have a highly esteemed reputation asbeing integral to the insurance sector’sgrowth• Demonstrate how a truly transformedorganisation should and does operate• Have grown the talent pool to levelswhere the skills shortage is no longercritical• Have a comprehensive research base oninternational trends and best practices• Delivering quality in all 9 provincesInspire trust• Transparent• Reliable and consistent• Accountable

INSETA Annual Report 2011-2012 Contentspage iiINSURANCE SECTOR EDUCATIONAND TRAINING AUTHORITYannual report2011/12RP: 185/2012ISBN: 978-0-621-41021-12009/10 SA Publication Forum Award winnersfor excellence in communication and writinghigher education& trainingDepartment:Higher Education and TrainingREPUBLIC OF SOUTH AFRICA

Values INSETA Annual Report 2011-2012page iiiHonourable Minister,it is with pleasure that we present to you the Annual Report of the Insurance SectorEducation and Training Authority for the period 1 April 2011 to 31 March 2012.Dr Blade NzimandeMinister of Higher Education & TrainingSandra DunnINSETA Chief Executive Officer

table of contents1. Chairperson’s Report 22. Chief Executive Officer’s Report 63. Report of the Audit Committee to INSETA Council for the year ended 31 March 2011 204. Report of the Auditor-General 245. Annual Financial Statements 286. INSETA Board 787. INSETA Team 808. Appendices:a. Appendix A - INSETA Organogram 82b. Appendix B - National Skills Development Strategy (NSDS) III: Targets and Achievements 83c. Appendix C - INSETA’s staff as at 31 March 2012 86d. Appendix D - INSETA’s Standards Industrial Classification (SIC) Codes 87e. Appendix E - Glossary of Terms 88f. Appendix F - INSETA Highlights during the year under review 89

Chairperson’s Reportpage 2chairperson's report“The innovation point is the pivotal moment when talented andmotivated people seek the opportunity to act on their ideas anddreams.”— W. Arthur PorterThe 1 st of April 2011 ushered ina new phase for SETAs. Changeswere made to improve the leadership,governance and strategy of the SETAsto improve performance. This was thefirst year of the implementation ofthe third National Skills DevelopmentStrategy (NSDS III). The strategyis grounded in the integration ofhigher and further education and skillsdevelopment. It calls for priority to begiven to strengthening the relationshipbetween public colleges and universities andSETAs and employers.insurance sector. We will achieve this bydeveloping a Sector Skills Plan (SSP) whichhas a strong employer led process and whenownership of the SSP vests in the insurancesector. During the year under review weconducted broad consultation with the sectorand focused consultation with a dedicated SSPsteering committee made up of key sectorrepresentatives. The SSP for 2012 has madegreat strides towards articulating the collectiveneeds of both levy and non -levy -payinginstitutions. Going forward we hope to seethe SSP set out an agreed sector strategy toaddress skills needs in the insurance sector.INSETA is positioning itself to become theauthority on labour market analysis in theINSETA, in turn, has a central role to play insupporting our sector to meet its needs in

Chairperson’s Reportpage 3terms of skills development and training. Withthis in mind, we are pleased to report thatINSETA has made a significant contributionin meeting its targets during the year underreview. The INSETA strategy is aligned withgovernment strategic objectives adoptedin 2009 as the Medium- term StrategicFramework (MTSF) with emphasis on thefourth strategic priority, namely to strengthenthe skills and human resource base. INSETAhas also aligned its strategy to Departmentof Higher Education (DHET) goals and NSDSlll. All of these focus areas are underpinnedby a sharp focus to achieve the fundamentaltransformation of inequities which are linkedto class, race, gender, age geography, disabilityand HIV and aids pandemic in our society.The Minister of Higher Education and Traininggazetted a new constitution for all SETAsand INSETA has a licence to operate from 1April 2011 to 31 March 2016. The INSETAlegal structure has now changed from aCouncil to a Board. New provisions in theSETA constitutions have been put in place toincrease the governance in SETAs. The Ministeris now responsible for the appointmentof constituency nominees, two ministerialrepresentatives and one independent BoardChairperson. There were no resignations fromBoard members during the period. Our subcommitteesmet regularly during the yearand provided Council with recommendationsrelating to policy matters, financial matters andprojects. I am pleased to note that the AuditorGeneral has once again issued INSETA with anunqualified audit.Our financial services sector remained buoyant,in the face of the recent financial crisis andglobal economic meltdown. Our levy incomeincreased by 18.6% from R219,8 million for the2010/11 financial year to R260,7million for the2011/12 financial year. Levies received relatingto prior scheme years were significantlymore than in previous years and this is thereason for the large increase. Future growthprojections for levy increases are 14%. INSETAachieved a 95% grant payout ratio formandatory grants.HighlightsArticulation of Wealth Management careerpathwayFor the first time in the history of SETAs andeducation institutions, INSETA ran a pilotproject in the Western Cape that wouldensure articulation from a SETA qualificationoffered by FET Colleges into a Universityqualification. All students on the programmeOur financial services sectorremained buoyant, in theface of the recent financialcrisis and global economicmeltdown.

Chairperson’s Reportpage 4were recruited by large insurance companieswith the exception of South Cape College,who recruited a range of small insurancebrokerages, many of whom were ownersof their own businesses. Each FET Collegeregistered 20 learners. Of the 100 learnerswho started training in the pilot, 77 completedthe programme successfully and 23 haveenrolled at UWC for the Advanced Diploma inManagement Studies (ADM) in 2012.INSETA Skills Development BrokerNetworkINSETA actively partnered with the sector toaddress the most critical skills of the insurancesector through innovative solutions. The INSETANetwork was launched on 2 April 2012 andthe purpose of the network is to enable skillsdevelopment for small and micro independentbrokers to grow jobs through more successfulbrokerages. INSETA’s research indicates thatmany support programmes are either notreaching the small and micro brokers and/or theyare not geared towards meeting the needs ofthe small and micro brokers. INSETA is uniquelypositioned to be a catalyst in improving thesupport targeted for the small and micro brokersfacing an uphill battle out there.SMME LearnershipINSETA launched its SMME Learnershipprogramme which targeted the often neglectedSMME sector. The programme, which is aimedat supporting work-based experience andhelping the sector grow its own skills, will offerits participants a NQF Level 4 qualificationas well as FAIS compliance. Its goal is toboost skills and promote a FAIS compliantindustry as well as to give school leaversvaluable hands-on work experience. Theprogramme comes in response to the highunemployment rate and increasing demandfor skilled professionals in the insurance sector,and offers 180 matriculants the opportunityto gain experience in the workplace, with thepotential for employment once the 12-monthSMME learnership is completed. A total of 60organisations across the Free State, EasternCape, Gauteng, Western Cape and KwaZulu-Natal are hosting learners.Scarce and critical skillsThe year also saw the continuation of thehighly successful partnership between INSETAand the South African Actuaries DevelopmentProgramme (SAADP), a venture aimed atincreasing the pool of Black Actuaries for theInsurance Sector. INSETA provided bursaries

Chief Executive Officer’s Reportpage 6chief executive officer'sreport“The test of our progress is not whether we add more to theabundance of those who have much; it is whether we provideenough for those who have too little.” - RooseveltWhen we touch the lives of ourlearners, we hold the promise ofunlocking and enhancing human potential.One of INSETA’s five core values is to touchlives, and for us this means that we must makea difference and leave an enduring legacy inpeople’s lives. It is thus with this in mind that wehave chosen “Touching Lives” as the theme forour Annual Report for 2011/12.It is my pleasure to present INSETA’s AnnualReport for 2011/12 and to provide a synopsisof activities during the year, and achievementstoward our vision 2013. We detail ourkey successes and our challenges. We haveexperienced a significant increase in our reachthrough our established partnerships and havefound more innovative ways to touch more livesand to make a difference.Delivery on the National SkillsDevelopment Strategy (NSDS III)SETAs are required to enter into a ServiceLevel Agreement (SLA) with the Departmentof Higher Education and Training on an annualbasis indicating their contribution towards theoverall achievement of the NSDS. Details ofachievements against SLA targets appear inAppendix B on page 83.INSETA has identified five key strategicprogrammes that aim to deliver on ourstrategic outcome oriented goals. Below

Chief Executive Officer’s Reportpage 7table represents a high-level summary of the programmes that support the NSDS III alignedStrategic Outcome Oriented Goals.Strategic outcome oriented goalNSDS IIIindicatorProgrammesA credible institutional mechanism for skills planning 4.1 Research andBenchmarkingEffective established career and vocational guidancechannelsIncreased access to Occupationally directed4.84.2Youth Education andDevelopmentprogrammesBetter use of workplace-based skills development 4.5 Scarce and Critical SkillsTraining and support provided to SectorCo-operatives, Small Enterprises and NGO’s4.6 Small and MicroEnterprise DevelopmentOrganisational Effectiveness N/A Operational PerformanceOrganisational effectivenessBoard and Board Sub-CommitteesDuring the 2011/12 financial year, theINSETA Board comprised of six constituentnominees who represent the interests ofbusiness; six constituent nominees whorepresent the interests of labour; twoministerial appointees; and one independentchairperson.The Board committees, comprising of theExecutive Committee, Audit Committee,Finance, IT & Administration Committee andHR Committee met on a regular basis andprovided recommendations to the Boardthroughout the course of the year.boardExecutive CommitteeAudit CommitteeFinance, IT andAdmin CommitteeHR CommitteeWhen we touch the livesof our learners, we hold thepromise of unlocking andenhancing human potential.

Chief Executive Officer’s Reportpage 8Policies and ProceduresStaff ComplimentSeveral policies and procedures werereviewed and approved by the INSETABoard during the year, including the:• Supply Chain Management Policy• Travel Policy• Mandatory Grant Payments Policy• Leave Policy• HR Policy• Fraud Prevention Strategy• INSETA Materiality Framework• Terms of reference for the ExecutiveCommittee• Terms of Reference for the Finance, IT& Administration Committee• Terms of Reference of the HRCommitteeOrganisational ReviewDuring the period under review, INSETAhad a permanent staff compliment of 38.This is made up of full time and fixedterm contract staff. We are committed totransformation in our own staffing and thetable below illustrates our delivery againstthis commitment:GenderRace Female MaleBlack 20 5Coloured 4 1Indian 2 0White 3 3Total 29 9A list of INSETA’s staff appears on AppendixC on page 86 of this Report.Salary Bands for INSETA Staff:During the period of review INSETAappointed ODA consultants to conduct anorganisational review of INSETA structure.Staff BenefitsThe Board approved the introduction of riskand pension benefits to all INSETA staff and amedical aid subsidy effective from 1 April 2012.LevelExecutiveManagementManagementSpecialists/ConsultantsAdministrationSupportSalary BandR1.2M and aboveR500k – R800kR250k –R500kR120k – R250kR60k – R120k

Chief Executive Officer’s Reportpage 9Financial ManagementINSETA’s 80% levy income increased by 18.6%million from R219, 8 million for the 2010/11financial year to R260,7million for the 2011/12financial year. The administration expenditurefor the current financial year was R29,5 million(2010/11 R24,4 million). The total project andmandatory grant expenditure for the currentfinancial year amounted to R222,2 million(2010/11 R187,8 million). Administrationexpenditure is limited, by legislation to 10% oftotal levies received.INSETA continues to operate well withinthe legislative limit and any cost savings ismade available for spending on discretionaryprojects. At the end of each financial year thesurplus from the administration and mandatoryreserves are transferred to the discretionaryreserve. At year end the accumulated surplusamounted to R209,4 million. Reservesrepresent unspent levy funds available to fundfuture project/ discretionary expenditure. Anapplication is made each year to NationalTreasury for the retention of the surplus funds.Investments PolicyThe investment of SETA funds is managed interms of its investment policy. This allowedfor investment by way of short term fixeddeposits with the big four South African banksand a proviso that not more than 40% be heldwithin one institution at any point in time. Thispolicy ensured that there was minimum risk tothe capital and allowed INSETA to capitaliseon the most favourable interest rate offered.Investment income for the period amountedto R14 million (2010/11 was R12. 9 million).Cost of Consultants and TechnicalAdvisorsINSETA’s main service providers, listed below,have not changed during the year and are:Consultants andTechnical AdvisorsDeloitteOMA CharteredAccountantsAuditor GeneralServiceThey provide outsourced services in informationtechnology, financial management and various other backoffice processes. INSETA’s Board approved their contractbe extended to 31 August 2012.They provide the outsourced internal audit function. Theyare contracted until 31 March 2012.They perform the external audit function, which is alegislative requirement for all SETA’s.Cost for2011/12R7,510,096R676,834R1, 371,226INSETA continues to operatewell within the legislative limitand any cost savings is madeavailable for spending ondiscretionary projects.

Chief Executive Officer’s Reportpage 10Levy paying employer informationThe total number of Levy Payers registeredwith INSETA for the year under reviewwas 1712. The table below illustrates thecompany size and number of registered levypaying employers as well at the number ofWorkplace Skills Plans and Annual TrainingReports received for 2011/2012.Submission of WSP/ATR by levy payingcompaniesOrganisation sizeNo ofregisteredlevy payingemployersSubmitted(2011WSP-AllStatuses)Large (150+) 72 69Medium (50–149) 108 97Small (1–49) 1532 714Total 1712 880Submission of Workplace Skills Plans(WSP) and Annual Training Reports(ATR)Through the submission of either aWorkplace Skills Plan (WSP) or an AnnualTraining Report (ATR) employers are ableto claim back 50% of their mandatory grantpayments from INSETA. We are pleased toreport that INSETA achieved a 95% payoutgrant ratio for the financial year, this beingthe highest payout in the last five years ofINSETA.INSETA programmesAll INSETA discretionary projects fall intoone of the programmes that support theStrategic Outcome Oriented Goals andNSDS III indicators. The goal is to continueincreasing the spend rate in order tooptimise impact in the sector. Discretionarygrant projects that were active in 2011/12financial year are distributed across theProgrammes in the following percentages:ProgrammesResearch and benchmarkingYouth education and developmentScarce and critical skillsSmall and Micro Enterprise development

Chief Executive Officer’s Reportpage 11Research and benchmarkingprogrammeSector Skills Plan (SSP) ProjectThe INSETA SSP is a document which servesto identify the skills needs of the insurancesector and report on training planned bythe sector. It also examines the conceptsof employment, skills and qualificationsfrom a broader point of view. It serves toidentify industry dynamics which drivesthe sector. The SSP is a tool which INSETAuses to track its own progress in terms ofaddressing skills shortages and supportingtransformation in the insurance sector.The purpose of the SSP, Annual Updatesand Annual Strategic Plans is to identify andaddress trends and not the details of skillsdemand at individual employee or companylevel. The intention is not to producedetailed skills audits. INSETA is positioningitself to become the authority on labourmarket analysis in the insurance sector. Thiswill be achieved by developing a Sector SkillsPlan (SSP) that has a strong employer ledprocess and ownership of the SSP vesting inthe insurance sector. During the year underreview we conducted broad consultationwith the sector and focused consultationwith a dedicated SSP steering committeemade up of key sector representatives. TheSSP for 2012 has made great strides towardsarticulating the collective needs of both levyand non -levy -paying institutions. Goingforward we hope to see the SSP set outan agreed sector strategy to address skillsneeds in the insurance sector.QCTO ProjectThe new NQF Act as amended in 2008brings changes to the quality assurance roleof the SETA and the ETQA function nowbecomes the mandate of the Quality Councilfor Trades and Occupations (QCTO).Whilst the South African QualificationsAuthority (SAQA) remains as the apex bodyover the quality councils, the QCTO will,going forward, assume the responsibilitiestraditionally carried by the SETA’s ETQAdivision. The QCTO will consider models fordelegating qualifications development andquality assurance functions to suitable bodiesand INSETA’s role in quality assurance willthen be established.The QCTO is now becoming operationalwith the introduction on 1 April 2012of the new CEO, Ms Joyce Mashabela,and the appointment of senior staff.The quality council has since initiated anofficial partnership of consultation andcollaboration with the SETA’s to manageThe SSP is a tool whichINSETA uses to track itsown progress in terms ofaddressing skills shortages andsupporting transformation inthe insurance sector.

Chief Executive Officer’s Reportpage 12transition to the new education and trainingsystem and establish best-practice modelsbased on the ETQA experience to date.The focus is on developing a nationalstandardised policy and procedures forthe development and quality assurance ofoccupational qualifications.INSETA has been awarded the status of“Development Quality Partner” for twoqualifications and has participated in thedevelopment of six occupational qualificationsemanating from extensive consultation withindustry partners to identify priorities. Thevoluntary commitment and tireless dedicationof both employers and independentpractitioners has enabled INSETA’sparticipation in the following qualifications,which are in various stages of developmentand/or registration with the QCTO:• INSETA – Insurance Underwriter(submitted to QCTO)• INSETA – Financial ServicesRepresentative (currently indevelopment)• BankSETA - Organisation Risk Manager(submitted to QCTO)• ETDP SETA – Learning andDevelopment Professional (currently indevelopment)• Principal Officers Association –Professional Principal Executive Officer(currently in development)• MerSETA – Vehicle Damage Quantifier(Motor assessor) (currently indevelopment)Under the new occupationally-driven modelINSETA has had an opportunity to developqualifications that are driven by labourmarket needs creating an alignment betweenskills demand and supply.Youth education and developmentprogrammesLearnerships ProjectLearnerships are selected by companiesto address scares skills identified in thesector and in line with business needs andimperatives. Companies hosted learners inthe following provinces: Gauteng, WesternCape, KwaZulu-Natal and Eastern Cape.Funding allocated for these Learnershipsamounted to R30,7 million. The projectachievements are as follows:• 57 Companies hosted learners inInsurance-Specific and Cross SectoralLearnerships;• 350 Employed Learners

Chief Executive Officer’s Reportpage 13• 739 Unemployed Learners• 108 Disabled Unemployed LearnersThere are 20 learners who terminated theLearnerships before completion, most ofwhom did so because they were offeredemployment elsewhere. Learners whoterminated recorded the challenge ofmeeting work-related targets with learningas the main reason for terminations.Internships ProjectAn amount of R18,7 million was allocatedfor this project. 275 Interns were hosted in58 companies in Gauteng, Western Cape,KwaZulu-Natal and Eastern Cape.INSETA also allocated R1, 2 million to aspecial project targeting 10 People withIntellectual Disabilities to be hostedon internships in companies in theInsurance Sector to assist them to acquireemployment.Promotion of the Insurance SectorProjectINSETA participated in many careerguidance exhibitions which were heldthroughout the country. Here we gaveschool children and the unemployedadvice on what careers are available inthe insurance sector and the qualificationsrequired to enter the sector. Mostnoteworthy was our participation in theMandela Day Career Guidance Festival whichwas held at the Ingwe College (NqgugqusheCampus), in Lusikisiki; the HammanskraalYouth Exhibition (this was coordinated byINSETA); and the Sci Bono Finance weekwhich is held annually each year.INSETA also participated in INMAG whichis an insurance sector publication whichprovides comprehensive guidance on careersavailable in the insurance sector.Scarce and critical skillsprogrammesFETI-HETI Articulation LearnershipProjectFor the first time in the history of SETAs andHigher and Further education institutions,a pilot project was run that would resultin articulation from a SETA qualificationoffered by FET Colleges into a Universityqualification. This project saw the integrationof competencies and efforts of the followingrole players:• Five FET Colleges offering training. Thefive FETs were Boland College; College108 unemployed disabledlearners participated inlearnerships.

Chief Executive Officer’s Reportpage 14of Cape Town; False Bay College;Northlink College, and South CapeCollege.• INSETA funded R3,1 million for 100learners undertaking the NQF Level 5Certificate in Wealth Management andthe quality assurance of the trainingoffered• Financial Planning Institute (FPI)ensuring quality assurance of BoardExams for Financial Planning• University of the Western Cape(UWC) ensuring bridging programmethat would ensure articulation intoAdvanced Diploma in ManagementStudiesUWC agreed to accept all students whopassed the NQF Level 5 Certificate inWealth Management and the FPI Boardexam at 60 % or above into the AdvancedDiploma in Management Studies at NQFLevel 6.All students on the programme wererecruited by large insurance companieswith the exception of South Cape College,who recruited a range of Small InsuranceBrokerages, many of whom were owners oftheir businesses. Each FET College registered20 learners. Of the 100 learners whostarted training in the pilot, 77 completedthe programme successfully. 23 learnerssubsequently enrolled at UWC for theAdvanced Diploma in Management Studies(ADM) in 2012.South African Actuaries DevelopmentProjectThis project has been inspired by a shortageof actuaries in the economy, which willimpact the insurance sector. INSETA andthe South African Actuaries DevelopmentProgramme (SAADP) have partnered forthe third year and INSETA has providedbursaries to 65 actuarial science students inthe financial year.Business and Systems Analyst ProjectThis programme provided both trainingand a 12 month internship, together withinternal mentorship from the host companyand external mentorship via a facilitatedpeer support group. The training compriseda part-time Post-Graduate Diploma inBusiness Analysis and Systems AnalysisDiploma at NQF Level 8, which wascustomised specifically for the InsuranceIndustry by the University of Cape Town’sInformation Systems Department. 40candidates were selected from the poolof suitable applicants by host companiesbased on their own internal operationalrequirements.

Chief Executive Officer’s Reportpage 152 of the 40 interns selected securedpermanent employment before officiallystarting with the programme. At the endof the programme - January 2012, 35 ofthe 38 Interns were employed full-timeor had their contracts extended. Of the 3who were not full-time employed, 1 wasstill going to interviews, 1 decided to studyfurther and 1 went into self-employmentwith his previous host company as hisfirst client. This means only 1 graduateis still looking for employment i.e. 95%employment rate.Fais Fit and Proper ComplianceSupport ProjectThis project is primarily focused on assistingthe insurance industry to become FAIScompliant under the revised FAIS Fit andProper Determination (F&P), whereby theFSB lists extended and new requirements forlicensing of Financial Advisors (FA’s) after 1stJanuary 2010.The FSB extended the deadline forcompleting the Level 1 (Legislation)Regulatory Examinations to 30 June 2012.Many Financial Advisors had not attemptedthe exams, so INSETA, in conjunction withthe FSB and Examining Bodies, conductedfree RE Preparatory seminars around thecountry to assist Advisors in preparingthemselves for the exams.A total of 29 seminars were conductedcountrywide in all nine provinces, and4 318 delegates benefitted from the sessions.Feedback received from them was extremelypositive. The Level 2 (Product Knowledge)exams have not yet commenced, as priorityhas been given to Level 1. INSETA’s FAISProject Office continues to give full supportto stakeholders on a daily basis regardingFAIS requirements. New entrants to theindustry now have to complete a fullrecognised qualification within 6 years ofappointment, and have to do the RegulatoryExams.Bursaries for the Employed ProjectINSETA Bursary policy allowed foremployers to apply for bursary fundingfor their workers in areas of scarce andcritical skills. The process has proved to beburdensome as a number of challenges havebeen experienced. The process is documentintensive and employers did not submit allthe required documentation; training wasoften delayed; learners did not complete thetraining; some training was training providerdriven; and employers misinterpreted scarceskills e.g. IT skills to mean end user skillsINSETA’s FAIS Project Officecontinues to give full supportto stakeholders on a daily basisregarding FAIS requirements.

Chief Executive Officer’s Reportpage 16training in Microsoft word etc. INSETA hasreviewed the top five scarce and criticalskills and this will be implemented goingforward.Small and micro enterprisedevelopmentNational support for SMMEsINSETA has a well-established regionalpresence in all nine provinces throughthe appointment of its Regional Advisors.Regional Advisors promote INSETA’sactivities at a regional level. Over 800support visits were made to stakeholders bythe regional advisors.SMME Learnership ProjectINSETA launched its SMME Learnershipprogramme which targeted the oftenneglected SMME sector. The programme,which is aimed at supporting work-basedexperience and helping the sector growits own skills, will offer its participants aNQF Level 4 qualification as well as FAIScompliance. Its goal is to boost skills andpromote a FAIS compliant industry as wellas to give school leavers valuable handsonwork experience. This project targetedto have 180 learners hosted in InsuranceBrokerages across all provinces in SouthAfrica registered in either a Short Term or aLong Term Insurance Learnerships at Level 4.There are currently 140 learners hosted in24 companies in the following provinces:• Eastern Cape – Mthatha, East Londonand Port Elizabeth with total of 48Learners• Gauteng – Johannesburg and Pretoria59• Western Cape – Cape Town 5• Free State – Bloemfontein 8• KwaZulu-Natal – Durban 20Vodacom has sponsored each of the learnerswith their product, the WebBox, a portabledevice that allows internet access througha television, and a year’s worth of free datafor the device. This means that learners willbe able to obtain all the information neededfor their learnership programmes at noexpense, while at the same time developingtechnological savvy.Burial Society Co-operative SupportProjectThe objective of this project was tosupport Burial Society co-operatives, smallenterprises, worker-initiated, NGO andcommunity training initiatives operating

Chief Executive Officer’s Reportpage 17in the Insurance sector with skills trainingto maximise the economic role of thesebodies. INSETA partnered with BUSOSAand SAFOBS which are two bodies thatrepresent burial societies in the country.Burial Societies from across South Africagathered at the second annual INSETABurial Society Indaba hosted by INSETAin November 2011. The Indaba highlightedimportant facts regarding the state of thesector, and gave those present a chanceto engage with government and keyindustry role-players around the future ofthe industry. The issue that came underclosest scrutiny during the two-day eventwas the new legislation currently beingdeveloped for the micro-insurance industry,and the implications that this would haveon burial societies and their position asinformal bodies. The Indaba discussed theestablishment of a framework to regulatethe burial society industry, while at thesame time, exploring new opportunities forgrowth and skills development within a moreorganised structure.INSETA has appointed providers nationallyto assist burial societies which want toregister as co-operatives.Employment creation and newbusiness opportunities projectThe main objectives of the EmploymentCreation Co-Funding Window are:• To support a best practice businessmodel or innovation that will lead tosustainable job creation.• To increase the number of new jobscreated within the insurance sectorthrough co-Funding of new or existingbusiness opportunities being created byemployers.• To increase the insurance sectorskills base through engagement ofnew entrants or re-employment ofindividuals previously employed in thesector.• To rehabilitate former brokers whohave lost their licences, but wouldlike to return to the sector orprovide employment or new businessopportunities to those previouslyretrenched from the sector.The funding window was recently openedand INSETA has put together an expertpanel that is in the process of evaluating theapplications received.INSETA has a well-establishedregional presence in allnine provinces through theappointment of its RegionalAdvisors.

Chief Executive Officer’s Reportpage 18ComplianceFraud and corruptionNo incidents of fraud were reportedthrough our independent hotline during thecourse of the year. An incident of fraud wasreported to INSETA by a venue providerwhich concerned a fixed term staff member.The matter was investigated and disciplinaryaction was taken and the employee wasfound guilty. A criminal case was openedagainst the employee and after prosecutionthe employee was found guilty of fraudand fined by the courts. No civil action forrecovery was taken because the amountinvolved was only R1 000 and the recoverythereof was not cost effective. INSETA alsoreceived information relating to allegationsof false learnership stipend claims bythree employers in the Western Cape. Thematter has been investigated and INSETA ispursuing the matter in the courts.AuditsI am pleased to note that the AuditorGeneral has once again given INSETA anunqualified audit. An area of weaknesshighlighted was on the recording ofcommitments that resulted in us overstatingour commitments in the financial statementsthat were submitted to the Auditor General.This has subsequently been corrected andmeasures have been put in place to ensurethat there are no future occurrences. Ourinternal auditors during the year wereOMA and they provided assurances onour internal controls through a risk basedaudit. Performance audits were conductedby DHET at the end of each quarter onINSETA performance information.The South African Qualifications Authority(SAQA) statistics of our September 2011bi-annual upload to the NLRD reflecteda decrease in learner numbers from theprevious financial year. Our total submissionto the NLRD for the 2011-12 financial yearscontained the following number of datarecords, which is a noteworthy achievementcompared with other years:Data RecordLearnership enrolment/achievementQualification enrolment/achievementUnit Standardenrolment/achievementTotal data recordsuploaded to NLRD(1 April 2011 to 31March 2012)6243229542159606

Chief Executive Officer’s Reportpage 19PR and marketingINSETA enjoyed increased coverage inthe print media during the year. This wasattributable to us increasing the number ofpress releases issued and positioning INSETAas a thought leader and enabler in educationand training.Challenges and the way forwardAs we enter into the second year ofNSDS lll there are several challenges andopportunities, which the SETA faces, namely:• the implementation of NSDS IIIespecially with the increased focus ondelivery in rural areas and capacitationof FETs;• providing assistance to the sectorespecially small brokers in terms of theFAIS Fit & Proper;• the proposed new SETA GrantRegulations regarding monies receivedby a SETA and related matters willhave an implication upon systemdevelopments and require additionalreporting by the SETA;• implementing the research agenda forthe insurance sector• creating career pathways andqualifications in partnership withpublic higher and further educationinstitutions;• promoting transformation in theInsurance Sector through all levels; and• improving and strengthening internalcontrols of INSETA to limit opportunityfor fraud and corruption involvinglearnership stipend payments toemployers.AppreciationI must express my sincere appreciation toour Chairperson, Mzimkulu Msiwa andall the members of our Board and BoardCommittees, for their strategic guidance andleadership that they provide to the SETA. Toall the managers and staff, thank you for yoursupport, dedication, commitment and hardwork, it is truly appreciated. I am blessedto have such a supportive team. My sinceregratitude goes to our stakeholders for theiron-going involvement and incredible support.Sandra DunnChief Executive Officer

Report of the Audit Committeepage 20report of theaudit committeeReport of the Audit Committee to the INSETA Board for the year ended31 March 2012IntroductionWe are pleased to present our report forthe financial year ended 31 March 2012.Audit Committee Members andAttendanceThe Audit Committee consists of themembers listed below and met six timesduring the period under review. At thedate of this Report the Audit Committeeconsisted of the following members:MemberDr. GerritSandrock(Chairperson)Ms. JeaninePoggioliniMr. ThabitGoolMr. GodfreyNtiMr. JayRamsunderDateappointed byCouncil3 December20093 December2009Appointed 25May 2011Resigned 28February20123 December2009Number ofmeetingsattendedduring periodunder review6 of 66 of 61 of 34 of 66 April 2011 6 of 6

Report of the Audit Committeepage 21Audit Committee ResponsibilityThe Audit Committee has adoptedappropriate formal terms of reference,which are outlined in the Audit CommitteeCharter. The Audit Committee regulatedits affairs in compliance with this Charterand has discharged its responsibilities ascontained therein.The system of controls is designed toprovide effective assurance that assetsare safeguarded liabilities and workingcapital are efficiently managed and thatthere is compliance with relevant laws andregulations in line with the PFMA and theKing II Report on Corporate Governancerequirements. Internal Audit provides theAudit Committee and management withassurance that the internal controls areappropriate and effective. This is achievedby means of the risk management process,as well as the identification of correctiveactions and suggested enhancements to thecontrols and processes.From the various reports of the InternalAuditors, the Audit Report on theAnnual Financial Statements (AFS), andmanagement letter of the Auditor-General,it was noted that no significant or materialnon-compliance with prescribed policiesand procedures have been reported.Accordingly, the Committee can report thatthe systems of internal control for the yearunder review were effective and efficient.Evaluation of Annual FinancialStatementsThe Audit Committee has:• Reviewed the SETA’s PerformanceInformation.• The process to identify and manage risk.• On an ongoing basis, the results of therisk assessment process as outlined inthe Risk Matrix.• The internal audit coverage plan andbudget and identified areas where thework of internal and external auditcould be maximised.• Obtained and considered periodicassurances regarding INSETA’Scontinued compliance with the PFMAand other legislation.• Reviewed and discussed the auditedAnnual Financial Statements to beincluded in the Annual Report togetherwith the Reports from the Auditor-General and the Accounting Authority.

Report of the Audit Committeepage 22• Reviewed the Auditor-Generalmanagement letter and management’sresponse thereto.• Reviewed the appropriateness of andchanges in accounting policies andpractices.Ethics hotlineDuring the period under review nocomplaints were received. However theAudit Committee is investigating andtaking action against certain individuals oremployers who have perpetrated fraud.Conclusion in respect of the yearunder reviewThe Audit Committee wishes to report tothe Board that in its opinion:• The internal auditors (OMA CharteredAccountants) have operated objectivelyand independently. Their mandateincludes providing independentassurances on the effectiveness ofcontrols in terms of an Internal AuditCoverage Plan approved by the AuditCommittee. This Plan is reviewedannually by the Committee so as toensure that all significant functions,business processes and systems will beafforded internal audit coverage withinthe 3 year internal audit cycle requiredby the PFMA.• The external auditors (Office of theAuditor General) have identified noimpediments to conducting their auditof the Annual Financial Statements ofINSETA.• The respective charters of the auditcommittee and internal audit continueto be appropriately aligned to theTreasury Regulations and corporategovernance practices.• The Audit Committee has effectivelycarried out its responsibilities andfunctions in accordance with thestatutory requirements and its charter.• The continued adequacies of themethodology to more comprehensivelyidentify, assess and document the risksare being given appropriate attentionfrom management, the Audit Committeeand internal audit.• The effectiveness of measures taken tomitigate identified risks is continuouslybeing assessed by management andinternal audit.

Report of the Audit Committeepage 23• Control weaknesses identifiedand recommendations for controlenhancements identified by internalaudit receive adequate managementattention.Annual Financial Statements. The AuditCommittee recommended that auditedAnnual Financial Statements be acceptedtogether with the report of the Auditor-General.• The Committee is satisfied that theSETA’s overall system of internal controloperated satisfactorily during the yearunder review.The Audit Committee concurs and acceptsthe Auditor-General conclusions on theDr. Gerrit SandrockChairperson of the Audit CommitteeJuly 2012

Report of the Auditor-Generalpage 24report of theauditor- generalReport of the Auditor-General to Parliament on the Insurance Sector Educationand Training AuthorityReport on the financial statementsIntroduction1. I have audited the financial statementsof the Insurance Sector Education andTraining Authority set out on pages 28to 77, which comprise the statement offinancial position as at 31 March 2012,the statement of financial performance,statement of changes in net assets andthe cash flow statement for the yearthen ended, and the notes, comprisinga summary of significant accountingpolicies and other explanatoryinformation.Accounting authority’s responsibilityfor the financial statements2. The accounting authority is responsiblefor the preparation and fair presentationof these financial statements inaccordance with South African Standardsof Generally Recognised AccountingPractice (SA Standards of GRAP) andthe requirements of the Public FinanceManagement Act of South Africa, 1999(Act No. 1 of 1999) (PFMA), and forsuch internal control as the accountingauthority determines is necessary toenable the preparation of financialstatements that are free from materialmisstatement, whether due to fraud orerror.

Report of the Auditor-Generalpage 25Auditor-General’s responsibility3. My responsibility is to express anopinion on these financial statementsbased on my audit. I conducted myaudit in accordance with the PublicAudit Act of South Africa, 2004 (Act No.25 of 2004) (PAA), the General Noticeissued in terms thereof and InternationalStandards on Auditing. Those standardsrequire that I comply with ethicalrequirements and plan and perform theaudit to obtain reasonable assuranceabout whether the financial statementsare free from material misstatement.4. An audit involves performing proceduresto obtain audit evidence about theamounts and disclosures in the financialstatements. The procedures selecteddepend on the auditor’s judgement,including the assessment of the risks ofmaterial misstatement of the financialstatements, whether due to fraud orerror. In making those risk assessments,the auditor considers internal controlrelevant to the entity’s preparationand fair presentation of the financialstatements in order to design auditprocedures that are appropriate inthe circumstances, but not for thepurpose of expressing an opinion onthe effectiveness of the entity’s internalcontrol. An audit also includes evaluatingthe appropriateness of accountingpolicies used and the reasonablenessof accounting estimates made bymanagement, as well as evaluating theoverall presentation of the financialstatements.5. I believe that the audit evidence I haveobtained is sufficient and appropriate toprovide a basis for my audit opinion.Opinion6. In my opinion, the financial statementspresent fairly, in all material respects,the financial position of the InsuranceSector Education and Training Authorityas at 31 March 2012, and its financialperformance and cash flows for theyear then ended in accordance withSouth African Standards of GenerallyRecognised Accounting Practice(SA Standards of GRAP) and therequirements of the Public FinanceManagement Act of South Africa, 1999(Act No. 1 of 1999).

Report of the Auditor-Generalpage 26Report on other legal andregulatory requirements7. In accordance with the PAA and theGeneral Notice issued in terms thereof,I report the following findings relevantto performance against predeterminedobjectives, compliance with laws andregulations and internal control, butnot for the purpose of expressing anopinion.Predetermined objectives8. I performed procedures to obtainevidence about the usefulness andreliability of the information in theannual performance report as set out onpages 83 to 85 of the annual report.9. The reported performance againstpredetermined objectives was evaluatedagainst the overall criteria of usefulnessand reliability. The usefulness ofinformation in the annual performancereport relates to whether it is presentedin accordance with the National Treasuryannual reporting principles and whetherthe reported performance is consistentwith the planned objectives. Theusefulness of information further relatesto whether indicators and targets aremeasurable (i.e. well defined, verifiable,specific, measurable and time bound)and relevant as required by the NationalTreasury Framework for managingprogramme performance information.The reliability of the information inrespect of the selected objectivesis assessed to determine whetherit adequately reflects the facts (i.e.whether it is valid, accurate andcomplete).10. There were no material findings on theannual performance report concerningthe usefulness and reliability of theinformation.Compliance with laws and regulations11. I performed procedures to obtainevidence that the entity has compliedwith applicable laws and regulationsregarding financial matters, financialmanagement and other related matters.My findings on material non-compliancewith specific matters in key applicablelaws and regulations as set out in theGeneral Notice issued in terms of thePAA are as follows:

Report of the Auditor-Generalpage 27Annual financial statements,performance and annual report12. The financial statements submittedfor auditing were not prepared inaccordance with the prescribed financialreporting framework and supported byfull and proper records as required bysection 55(1) (b) of the PFMA. Materialmisstatements of the commitmentsdisclosure note identified by the auditorsin the submitted financial statementwere subsequently corrected and thesupporting records were provided,resulting in the financial statementsreceiving an unqualified audit opinion.Financial and performancemanagement14. Controls over daily and monthlyprocessing and reconciling oftransactions were not implemented overthe commitments disclosed in the notesto the financial statements. As a resultmaterial adjustments were made to thefinancial statements submitted for audit.Pretoria31 July 2012Internal control13. I considered internal control relevantto my audit of the financial statements,annual performance report andcompliance with laws and regulations.The matter reported below underthe fundamentals of internal control islimited to the significant deficiencies thatresulted in, the finding on compliancewith laws and regulations included in thisreport.

Annual Financial Statementspage 28The Annual Financial Statements for the year ended31 March 2012, set out on pages 28 to 77, have beenapproved by the Accounting Authority in terms of section51(1) (f) of the Public Finance Management Act (PFMA), No1 of 1999 as amended, on 30 July 2012, and are signed ontheir behalf by:Sandra Dunn - CEOMzimkulu Msiwa - Chairperson

Annual Financial Statementspage 29annual financial statementsReport of the Accounting Authority 30Statement of Financial Performance 36Statement of Financial Position 37Statement of Changes in Net Assets 38Cash Flow Statement 39Statement of Comparison of Budget and Actual Amounts 40Accounting Policies to the Annual Financial Statements 41Notes to the Annual Financial Statements 48

Report of the Accounting Authoritypage 30report of theaccounting authorityReport by the Accounting Authority to the Executive Authority and Parliamentof the Republic of South AfricaAs the INSETA Accounting Authority, it is the Board’s responsibility to prepare Financial Statements thatfairly represent INSETA’s Financial Position as at 31 March 2012 and also the Financial Performance andSummary Cash Flow Activities for the year ending 31 March 2012. We are of the opinion that appropriateAccounting Policies, supported by reasonable and prudent judgements and estimates, have been appliedon a consistent basis. The Financial Statements comply with the prescribed Standards of GenerallyRecognised Account Practice (GRAP) and with any interpretations of such Statements issued by theAccounting Standards Board.Corporate GovernanceFrom the outset both INSETA and INSETA’s Management identified good corporate governance, asone of its critical success factors, by setting the highest standards that comply with best practice and thisstance remains unchanged as the SETA ends its twelfth year of operations. The Board is supported inits functions and duties by the Audit Committee, the Finance, IT & Administration Committee and theHR/Remuneration Committee all of which have been functional since the establishment of INSETA.The Audit Committee is governed by a Charter, which outlines its roles and responsibilities. TheFinance, IT & Administration Committee and HR/Remuneration Committee abide by a Terms ofReference.

Report of the Accounting Authoritypage 31INSETA has compiled a Fraud Prevention Plan and a high-level risk profile has been developed toidentify, manage and control the business risks of the SETA. Numerous divisional policies have also beenimplemented to manage the day-to-day operations of the SETA. These policies are approved by the Boardand are reviewed from time to time.General review of the state of affairsThe Insurance Sector Education and Training Authority promote and represent the training anddevelopment interests of the Insurance Sector of the economy in terms of the skills developmentlegislation. INSETA’s mission is “to promote and enable quality skills development throughfunding education and training in South Africa to meet the national skills agenda and contribute totransformation in the sector”.INSETA’s constituents cover the following sub-sectors of the Insurance Sector:• Short-Term Insurance• Life Insurance• Insurance and Pension Funding• Risk Management• Health Care Benefits Administration• Collective Investments• Funeral Insurance• Reinsurance• Pension Funding and• Activities auxiliary to Financial IntermediationThe Insurance Sector is a rapidly evolving, growing and developing major player in the South Africaneconomy. Approximately 8957 employers have registered with the South African Revenue Serviceswithin the Insurance Sector, with 1712 classified as levy contributors. INSETA represents a sectorwith a diverse range of employers, ranging from very small (10 employees) to very large (in excess of12,000 employees). The majority of the workforce represents skilled and highly skilled employees.The sector employs over 100 000 people (excluding people employed in micro-enterprises andinformal businesses).

Report of the Accounting Authoritypage 32The Board, which comprises of Employer, Labour and State representatives, governs the affairs of INSETA. INSETAcurrently has a permanent staff compliment of 38 as at 31 March 2012. Regional Advisors have been appointed inGauteng, Western Cape, Eastern Cape and KwaZulu-Natal to assist, support and guide small employers in terms ofthe skills development legislation.INSETA has adopted a learning strategy, which is aimed at all levels of employment in the sector and is aligned to theNational Skills Development Strategy.INSETA’s 80% levy income increased by R40,9 million from R219,8 million for the 2010/11 financial year to R260,7million for the 2011/12 financial year. Changes in levy income estimates relating to prior years are included in thecurrent year balances. The administration surplus for 2011/12 was R3,6 million (2010/11 R3,1 million). The actualadministration expenditure for the current financial year was R29,5 million (2010/11 R24,4 million). Total project andgrant expenditure for the current financial year amounted to R222,2 million (2010/11 R187,8 million).Allowances paid to board members and board sub-committee membersBoard and Board Sub-Committee members’ or their employers are remunerated for their attendance at Board andBoard Sub-Committee meetings. Disclosure of the allowances paid is in accordance with Treasury Regulation 28.1.2and is as follows:Designation Meeting fee per hour Annual allowance*Chairperson R 492 R79 192Ordinary member R 382 R61 571* The annual allowance is paid when a board member attends more than 50% of the scheduled meetings. The annualallowance is pro-rated in accordance with the number of meetings attended.

Name of Board/Committee memberName of Committee that memberserves onMeeting feesaccrued duringthe periodunder reviewAllowanceaccrued duringthe periodunder reviewTotal Amountaccrued duringthe periodunder reviewG. Sandrock (Dr.) 2 T. Gool (Mr.) 6A. D’Alton (Ms.)Board 9 168HR Committee (Chairperson) 5 90461 571 76 643A. Keet (Prof.)Board 6 112HR Committee 4 58449 257 59 953B. McKay (Mr.)Board 9 168Finance, IT & administration committee 5 73061 571 76 469Board 7 640B. Scott (Mr.)Finance, IT & administration committee56 440 72 9368 856(Chairperson)C. Duma (Mr.)Board 7 640HR Committee 3 43849 257 60 335G. Conradie (Ms.)Board 3 056Executive committee 3 43834 206 40 700G. Nti (Mr.) 1 Audit committee 21 600 - 21 600Board (Ex-officio capacity as Chairperson- 59 678678of Audit Committee)Audit committee(Chairperson) 59J. Poggiolini (Ms.) 3 Audit committee 25 000 - 25 000J. Ramsunder (Mr.)Audit committee 6 876Board 9 16861 571 77 615Finance, IT & administration committeeJ. van Greuning (Mr.) 4 (Chairperson)1 000 - 1 000Board 9 168M. Machai (Mr.) Executive committee 3 438 61 571 78 761HR Committee 4 584M. Msiwa (Mr.)Board (Chairperson) 11 808Executive committee (Chairperson) 4 42879 192 95 428M. Naidoo (Ms.)Executive committee 3 438Finance, IT & administration committee 1 14657 173 73 981Board 7 640HR Committee 4 584R. Govenden (Mr.)Board 6 112Executive committee 2 29241 047 49 451S. Padayachee (Ms.)Board 4 584Finance, IT & administration committee 4 58439 182 48 350Board 7 640 39 581 51 805Audit committee 1 146Finance, IT & administration committee 3 438Report of the Accounting Authoritypage 33

Report of the Accounting Authoritypage 34Meeting fees Allowance Total AmountName of Board/ Name of Committee that member accrued during accrued during accrued duringCommittee memberserves onthe periodunder reviewthe periodunder reviewthe periodunder reviewV. Harrypersadh (Ms.) Board 7 640 32 068 39 708W. Seya (Mr.)Board 7 640Finance, IT & administration committee 5 73055 974 69 344TOTAL R 301 736 R 779 661 R1 078 757Note:The payments indicated above are paid to the member or nominating organisation.Remuneration of the senior managementAs required by Treasury Regulation 28.1.2 of the Public Finance Management Act, the remuneration of seniormanagement during the period of reporting consisted of the following components:CEO: Sandra Dunn2011/12 2010/11Basic Salary R1 084 080 R928 500Bonuses (expensed) R332 424 R320 000Travel Expenses and Allowances R24 000 R24 000Total R1 440 504 R1 272 500The Chief Executive Officer also acts as the Chief Financial Officer of INSETA._______1 Mr. G Nti is remunerated at SAICA rates for the meetings attended.2 Dr. G Sandrock is remunerated at SAICA rates for the meetings attended.3 Ms J Poggiolini is remunerated at SAICA rates for the meetings attended.4 Mr J van Greuning resigned from the Finance, IT and administration committee in May 2011.5 Ms M Naidoo was placed on the HR committee and resigned from the Finance, IT & administration committee in July 2011.6 Mr T Gool was appointed to the Audit Committee in May 2011 and resigned from the committee in February 2012.

COO: Sharon Snell2011/12 2010/11Basic Salary R800 000 R615 859Bonuses (expensed) R75 000 R61 586Total R875 000 R677 445Business addressAnnual Financial Statementspage 35The Insurance Sector Education and Training Authority is situated on the Ground Floor, North Wing, Oakhurst, 11. St.Andrews Road, Parktown, Johannesburg. The postal address is P O Box 32035, Braamfontein, 2017.Mzimkulu MsiwaChairperson, INSETASandra DunnChief Executive Officer, INSETA

Annual Financial Statementspage 36STATEMENT OF FINANCIAL PERFORMANCEfor the year ended 31 March 20122011/12 2010/11Note R'000 R'000REVENUESkills Development Levy: income from non-exchange2 260 721 219 830transactionsSkills Development Levy: penalties and interest from nonexchange1 723 2 168transactionsInvestment income 3 13 983 12 922Other income 4 104 44Total revenue 276 531 234 964EXPENSESEmployer grant and project expenses 5 (222 153) (187 809)Administration expenses 6 (29 520) (24 351)Total expenses (251 673) (212 160)SURPLUS FOR THE YEAR 1 24 858 22 804

STATEMENT OF FINANCIAL POSITIONas at 31 March 2012Annual Financial Statementspage 372011/12 2010/11Note R'000 R'000ASSETSNon-current assetsProperty, plant and equipment 7 1 152 856Intangible assets 8 44 37Total non-current assets 1 196 893Current assetsAccounts receivable from exchange transactions 9 1 932 1 008Accounts receivable from non-exchange transactions 10 8 311 2 522Consumables 33 67Cash and cash equivalents 11 273 658 240 176Total current assets 283 934 243 773TOTAL ASSETS 285 130 244 666Current liabilitiesTrade and other payables from non exchange transactions 12 65 006 48 331Trade and other payables from exchange transactions 13 7 189 8 703Current portion of finance lease obligations 14 - 18Government Grants and donor funding received in advance 15 9 9Provisions 16 3 522 3 059Total current liabilities 75 726 60 120Total net assets 209 404 184 546FUNDS AND RESERVESFunds and reservesAdministration reserve 1 196 893Employer grant reserve 19 129Discretionary reserve 208 189 183 524Total funds and reserves 209 404 184 546

Annual Financial Statementspage 38STATEMENT OF CHANGES IN NET ASSETSfor the year ended 31 March 2012NotesAdministrationreserveEmployergrantreserveDiscretionaryreserveUnappropriatedsurplusTotalR'000 R'000 R'000 R'000 R'000Balance at 31 March 2010 1 143 118 160 481 - 161 742Surplus per Statement of Financial Performance - - - 22 804 22 804Allocation of unappropriated surplus 1 3 192 7 316 12 296 (22 804) -Excess reserves transferred to Discretionaryreserve (3 442) (7 305) 10 747 -Balance at 31 March 2011 893 129 183 524 - 184 546Surplus per Statement of Financial Performance - - - 24 858 24 858Allocation of unappropriated surplus 1 3 680 13 089 8 089 (24 858) -Excess reserves transferred to Discretionaryreserve (3 377) (13 199) 16 576 -Balance at 31 March 2012 1 196 19 208 189 - 209 404An amount of R1 196 000 (2011: R893 000) is retained in the administration reserve equal to the carrying valueof property, plant and equipment and intangible assets.An amount of R19 000 (2011: R129 000) is disclosed in the employer grant reserve relating to levies receivedfrom newly registered member companies, participating after the legislative cut-off date and for who grantapplications may be received and approved.

CASH FLOW STATEMENTfor the year ended 31 March 2012CASH FLOWS FROM OPERATING ACTIVITIES2011/12 2010/11Note R'000 R'000Annual Financial Statementspage 39Operating activitiesCash receipts from stakeholders 255 916 220 423Levies, interest and penalties received 255 812 220 379Other cash receipts from stakeholders 104 44Cash paid to stakeholders, suppliers and employees (235 604) (194 587)Grant and project payments (205 478) (170 374)Compensation of employees (10 960) (10 315)Payments to suppliers and other (19 166) (13 898)Cash generated from operations 17 20 312 25 836Investment income 3 13 934 12 875Finance Costs: Finance lease (1) (3)Net cash inflow from operating activities 34 245 38 708CASH FLOW FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 7 (732) (250)Purchase of Intangible assets 8 (31) (30)Net cash outflow from investing activities (763) (280)Net increase in cash and cash equivalents 33 482 38 428Cash and cash equivalents at beginning of year 11 240 176 201 748Cash and cash equivalents at end of year 11 273 658 240 176

Annual Financial Statementspage 40STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTSfor the year ended 31 March 2012ApprovedOriginalBudgetFavourable/(Unfavourable)varianceBudget adjustmentsFinalBudget Actual2011/12 2011/12 2011/12 2011/12 2011/12R'000 R'000 R'000 R'000 R'000REVENUESkills Development Levy: income from nonexchange215 631 38 814 254 445 260 721 6 276transactionsSkills Development Levy: penalties and interest- - - 1 723 1 723from non-exchange transactionsInvestment income 11 400 1 600 13 000 13 983 983Other income - - - 104 104Total revenue 227 031 40 414 267 445 276 531 9 086EXPENSESEmployer grant expenses (128 031) (23 045) (151 076) (150 059) 1 017Project Expenses (72 046) (12 517) (84 563) (72 094) 12 469Administration expenses (26 549) (4 752) (31 301) (29 520) 1 781Total expenses (226 626) (40 314) (266 940) (251 673) 15 267SURPLUS FOR THE YEAR 405 100 505 24 858 24 353The approved original budget was submitted to the Executive Authority in line with the Public Finance ManagementAct, 1999, Chapter 6 Public Entities, part 2 par 53. Due to large variances on skills development levy incomeINSETA performed a rebudgeting excercise and adjusted the initial approved budget. All changes to the initialbudget were approved by the Accounting Authority.INSETA does not budget for a surplus. The R 405 000 shown as a surplus in the original budget and the R 505 000shown in the final budget was budgeted as capital expenditure of which R 763 000 was spent.For details regarding the difference between budget and actual amounts refer to Note 25.

ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2012Annual Financial Statementspage 41The principal accounting policies adopted in thepreparation of these financial statements are set outbelow and are, in all material respects, consistentwith those of the previous year, except as otherwiseindicated.1. Basis of preparationWhen the INSETA receives resources as a result of anon-exchange transaction, it recognises an asset andrevenue in the period that the arrangement becomesbinding and when it is probable that the INSETA willreceive economic benefits or service potential andit can make a reliable measurement of the resourcestransferred.The annual financial statements have been preparedon the historical cost basis, except where adjustedfor present/fair values as required by the respectiveaccounting standards. The annual financial statementshave been prepared in accordance with Standards ofGenerally Recognised Accounting Practice (GRAP)and the Public Finance Management Act (PFMA),1999 (Act No. 1 of 1999) as amended, includingany interpretations of such Standards issued by theAccounting Standards Board.2. CurrencyThese financial statements are presented inSouth African Rands since that is the currency inwhich the majority of the entities transactions aredenominated.3. Revenue recognitionNon-exchange revenue transactions result inresources being received by the INSETA, usually inaccordance with a binding arrangement.Where the resources transferred to the INSETAare subject to the fulfilment of specific conditions, itrecognises an asset and a corresponding liability. Asand when the conditions are fulfilled, the liability isreduced and revenue is recognised.The asset and the corresponding revenue aremeasured on the basis of the fair value of the asseton initial recognition.Non-exchange revenue transactions include thereceipt of levy income from the Department ofHigher Education, levies from the National SkillsFund, grants from the national government and donorfunding.3.1.1 Levy incomeThe accounting policy for the recognition andmeasurement of skills development levy income isbased on the Skills Development Act, Act No 97 of1998, as amended and the Skills Development LeviesAct, Act No 9 of 1999, as amended.

is measured at the fair value of the considerationreceived or receivable.3.2.1 Interest incomeInterest income is accrued on a time proportionbasis, taking into account the principal outstandingand the effective interest rate over the period tomaturity.4. Grants and project expenditureProject expenditure comprises:- costs that relate directly to the specific contract;- costs that are attributable to contract activity ingeneral and can be allocated to the project; and- such other costs as are specifically chargeable tothe SETA under the terms of the contract.Such costs are allocated using methods that aresystematic and rational and are applied consistentlyto all costs having similar characteristics.Annual Financial Statementspage 43A registered employer may recover a maximumof 50% of its total levy payment as a mandatoryemployer grant (excluding interest and penalties) bycomplying with the criteria in accordance with theSkills Development Act, 1998, as amended and theSETA Grant Regulations regarding monies receivedand related matters (the SETA Grant Regulations).Mandatory grantsGrants are equivalent to 50% of the total leviescontributed by employers during the correspondingfinancial period.Discretionary grant and project expenditureA SETA may out of any surplus monies and inaccordance with criteria as defined in the SETA GrantRegulations allocate funds to employers, and otherassociations or organisations when the conditionshave been met. The criteria for allocating funds areapproved by the SETA Board. Where necessaryinterested employers, associations or organisationsmay be required to complete and submit a fundingapplication for consideration and approval by theSETA.Discretionary grant and project costs are recognisedas expenses in the period in which they are incurred.Effect on revenue adjustments by SARSThe SETA refunds amounts to employers in the formof grants, based on information from SARS. WhereSARS retrospectively amends the information onlevies collected, it may result in grants that have beenpaid to certain employers that are in excess of theamount the SETA is permitted to have granted toemployers. A receivable relating to the overpaymentto the employer in earlier periods is raised at theamount of such grant over payment, net of bad debtsand provision for irrecoverable amounts.5. Irregular and fruitless and wastefulexpenditureIrregular expenditure means expenditure incurredin contravention of, or not in accordance with, arequirement of any applicable legislation, including:- The PFMA, as amended- The Skills Development Act (the Act), 1998 (ActNo. 97 of 1998) as amended

Annual Financial Statementspage 44Fruitless and wasteful expenditure means expenditurethat was made in vain and would have been avoidedhad reasonable care been exercised.for any impairments. Amortisation is charged so as towrite off the cost of assets over their estimated usefullives, using the straight-line method.All irregular and fruitless and wasteful expenditure isrecognised against the respective class of expense inthe period in which it is incurred.6. Property, plant and equipmentProperty, plant and equipment is stated at costless any subsequent accumulated depreciation andadjusted for any impairments. Depreciation is chargedso as to write off the costs of assets over theirestimated useful lives, using the straight line method.The estimated useful lives, residual values anddepreciation method are reviewed at each year end,with the effect of any changes in estimate accountedfor on a prospective basis.Where the carrying amount of an asset is greaterthan its estimated recoverable service amount, it iswritten down immediately to its recoverable serviceamount (i.e. impairment losses are recognised.)The gain or loss on disposal of property, plant andequipment is determined as the difference betweenthe sale proceeds and the carrying amount and aretaken into account in determining operating surplusor deficit for the year7. Intangible assetsIntangible assets are stated at cost less anysubsequent accumulated amortisation and adjustedThe estimated useful lives and amortisation methodare reviewed at each year end, with the effect of anychanges in estimate accounted for on a prospectivebasis.Where the carrying amount of an asset is greaterthan its estimated recoverable service amount, it iswritten down immediately to its recoverable serviceamount (i.e. impairment losses are recognised.)The gain or loss on disposal of intangible assetsis determined as the difference between the saleproceeds and the carrying amount and are taken intoaccount in determining operating surplus or deficit forthe year.8. ConsumablesConsumables are recognised as an asset at coston the date of acquisition and are subsequentlyrecognised in surplus or deficit as they are consumed.9. LeasingFinance leases consistent with the definition set outin the Treasury Regulations refer to a contract thattransfers the risks, rewards, rights and obligationsincidental to ownership to the lessee and arerecorded as a purchase of equipment by means oflong-term borrowing. All other leases are classified asoperating leases.

Payments made under operating leases are chargedto the Statement of Financial Performance on astraight-line basis over the period of the lease. Whenan operating lease is terminated before the leaseperiod has expired, any payment required to bemade to the lesser by way of penalty is recognised asan expense in the period in which termination takesplace.10. ProvisionsProvisions are recognised when the SETA has apresent obligation as a result of a past event andit is probable that this will result in an outflow ofeconomic benefits or service potential that can beestimated reliably.11. Employee BenefitsThe cost of employee benefits is recognised duringthe period in which the employee renders the relatedservice. Employee entitlements are recognised whenthey accrue to employees. A provision is made forthe estimated liability as a result of services renderedby employees up to the reporting date. Provisionsincluded in the Statement of Financial Position areprovisions for bonuses.Termination benefits are recognised and expensedonly when the payment is made.Liabilities for annual leave are recognised as theyaccrue to employees. The SETA recognises the leaveobligation during the vesting period based on the bestavailable estimate of the accumulated leave expectedto vest. The liability is based on the total amount ofleave days due to employees at year end and also onthe total remuneration package of the employee. Theleave liability is recognised as an accrual.No provision has been made for retirement benefitsas the SETA does not provide for retirement benefitsfor its employees.12. Grants and projectsMandatory and discretionary grant paymentsA liability is recognised for grant payments once thespecific criteria set out in the SETA Grant Regulationshas been complied with by member companies andit is probable that the SETA will approve the grantapplication for payment. The liability is measured basedon the expected future cash outflow as determinedin accordance with the Act. The measurement ofthe liability is estimated using the value of the leviesreceived.Discretionary projectsNo provision is made for projects approved at yearend,unless the service in terms of the contract hasbeen delivered. Where a project has been approved,but has not been accrued for or provided for, it isdisclosed as commitments in the notes to the financialstatements.13. Financial instrumentsRecognitionFinancial assets and financial liabilities are recognisedon the SETA’s Statement of Financial Position whenthe SETA becomes a party to the contractualprovisions of the instrument.Annual Financial Statementspage 45

Annual Financial Statementspage 46Financial assetsFinancial assets are recognised and derecognised ontrade date and are initially measured at fair value, netof transaction costs.All financial assets of the SETA are categorised asloans and receivables.Loans and receivablesAccounts receivables, loans, and other receivablesthat have fixed or determinable payments that arenot quoted in an active market are classified as ‘loansand receivables’. Loans and receivables are measuredat amortised cost using the effective interest methodless any impairment. Interest income is recognised byapplying the effective interest rate except for shorttermreceivables where the recognition of interestwould be immaterial.Effective interest methodThe effective interest method is a method ofcalculating the amortised cost of a financial asset andof allocating interest income over the relevant period.The effective interest rate is the rate that exactlydiscounts estimated future cash receipts throughthe expected life of the financial asset, or, whereappropriate, a shorter period.Impairment of financial assetsFinancial assets are assessed for indicators ofimpairment at each reporting date. Financial assetsare impaired where there is objective evidence that,as a result of one or more events that occurredafter the initial recognition of the financial asset,the estimated future cash flows of the investmenthave been impacted. For financial assets carried atamortised cost, the amount of the impairment is thedifference between the asset’s carrying amount andthe present value of estimated future cash flows,discounted at the original effective interest rate.The carrying amount of the financial asset is reducedby the impairment loss directly for all financial assetswith the exception of accounts receivables wherethe carrying amount is reduced through the use ofan allowance account. When accounts receivable isuncollectible, it is written off against the allowanceaccount. Subsequent recoveries of amountspreviously written off are credited against theallowance account. Changes in the carrying amountof the allowance account is recognised in the surplusor deficit.Financial liabilitiesOther financial liabilities are initially measured at fairvalue, net of transaction costs.All financial liabilities of the SETA were classified asother financial liabilities.Other financial liabilitiesOther financial liabilities are subsequently measuredat amortised cost using the effective interest method,with interest expense recognised using the effectiveinterest method.Effective interest methodThe effective interest method is a method ofcalculating the amortised cost of a financial liabilityand of allocating interest expense over the relevant

period. The effective interest rate is the rate thatexactly discounts estimated future cash paymentsthrough the expected life of the financial liability, orwhere appropriate, a shorter period.14. ReservesNet assets are classified based on the restrictionsplaced on the distribution of monies received inaccordance with the Regulations issued in terms ofthe Skills Development Act, 1998 (Act 97 of 1998) asamended as follows:- Administration reserve- Employer grant reserve- Discretionary reserve- Unappropriated surplusEmployer levy payments are set aside in termsof the Skills Development Act as amended andthe regulations issued in terms of the Act, for thepurpose of:2011/12 2010/11% %Administration costs of theSETA 10 10Employer Grant Fund Levy 50 50In addition, contributions received from public serviceemployers in the national or provincial spheresof government may be used to fund the SETA’sadministration costs.Interest and penalties received from SARS as wellas interest received on investments are utilised fordiscretionary grant projects.Surplus funds in the administration reserve andunallocated funds in the employer grant reserve aremoved to the discretionary fund reserve. Provisionis made in the mandatory grant reserve for newlyregistered companies, participating after thelegislative cut-off date.15. Comparative figuresWhere necessary, comparative figures have beenadjusted to conform to changes in presentation in thecurrent year.16. TaxationNo provision has been made for taxation, as theSETA is exempt from income tax in terms of Section10 of the Income Tax Act , 1962 (Act 58 of 1962).Annual Financial Statementspage 47Discretionary grants andprojects 20 20Received by the SETA 80 80Contribution to the NationalSkills Fund 20 20100 100

Annual Financial Statementspage 48NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20121 Allocation of surplus for the year to reserves:Discretionary reserveTotal perStatementof FinancialPerformance2010/11R'000Total perStatementof FinancialPerformance2011/12R'000AdministrationreserveR'000EmployergrantsreserveR'000DiscretionarygrantsR'000ProjectsR'000TotaldiscretionaryR'000Total revenue 234 964 276 531 33 200 163 148 64 477 15 706 80 183Skills DevelopmentLevy: income from nonexchangetransactionsAdmin levy income(10%) 27 499 33 096 33 096 - - - -Grant levy income(70%) 192 331 227 625 - 163 148 64 477 - 64 477Skills Development Levy:penalties and interestfrom non-exchangetransactions 2 168 1 723 - - - 1 723 1 723Investment income 12 922 13 983 - - - 13 983 13 983Other income 44 104 104 - - - -Total expenses 212 160 251 673 29 520 150 059 365 71 729 72 094Administration expenses 24 351 29 520 29 520 - - - -Employer grants andproject expenses 187 809 222 153 - 150 059 365 71 729 72 094Surplus per Statementof Financial Performanceallocated 22 804 24 858 3 680 13 089 64 112 (56 023) 8 089

Annual Financial Statementspage 492. Skills development levy income from non-exchange transactionsThe total levy income per the Statement of Financial Performance is as follows:2011/12 2010/11R'000 R'000Levy income: Administration 33 096 27 499Levies received 33 158 27 563Levies received 33 055 27 557Interseta transfers in 104 6Interseta transfers out (1) -Levies accrued (62) (64)Levy income: Employer Grants 163 148 137 543Levies received 163 460 137 859Levies received 163 072 137 838Interseta transfers in 392 22Interseta transfers out (4) (1)Levies accrued (312) (316)Levy income: Discretionary Grants 64 477 54 788Levies received 64 602 54 914Levies received 64 447 54 903Interseta transfers in 157 11Interseta transfers out (2) -Levies accrued (125) (126)260 721 219 830

Annual Financial Statementspage 50NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 20123. Investment income2011/12 2010/11R'000 R'000Interest income - bank deposits 13 983 12 922Received 13 792 12 780Accrued 191 14213 983 12 922* Interest received in cash for the year is R 13 934 000 (2011: R 12 875 000) which includes the prior yearaccrual.4. Other income2011/12 2010/11R'000 R'000Other income comprises:Learner Certificates reissued 5 -Mandatory grant received 99 44104 445. Employer grant and project expenses2011/12 2010/11R'000 R'000Mandatory grants 150 059 130 227Disbursed 139 295 110 098Movement in provisions and accruals 10 764 20 129Discretionary grants 365 12Disbursed 187 (15)Movement in provisions and accruals 178 27Project expenditure 71 729 57 570Disbursed 74 112 57 871Movement in provisions and accruals (2 383) (301)222 153 187 809

Annual Financial Statementspage 516. Administration expenses2011/12 2010/11R'000 R'000Depreciation / amortisation 454 526Loss on disposal of property, plant and equipment 6 4Operating lease rentals (minimum lease payments) 1 518 1 245Buildings 1 504 1 236Plant, machinery and equipment 14 9Maintenance, repairs and running costs - Property and183 159BuildingsInterest paid: Finance lease 1 3Advertising, marketing and promotions, communication 1 114 559Entertainment expenses 133 95Gifts, donations and sponsorships paid 6 5Consultancy and service provider fees 8 264 7 628Legal fees 31 49Cost of employment 6,1 11 423 10 171Travel and subsistence 540 672Staff training and development 578 388Remuneration to members of the accounting authority 1 775 239Remuneration to members of the audit committee 135 54External auditor's remuneration 1 371 1 200Bad debts written off * 23 -Allowance for doubtful debts (55) (216)Other 2 020 1 570Stationery 147 140Internal audit fees 677 536Professional Indemnity Insurance 166 249Telephone costs 377 308Postage & courier services 102 36Sundry expenses 551 30129 520 24 351* Included in the Bad debts written off is R1 000 relating to a loss through criminal conduct. Disciplinary actionwas instituted and a criminal case of fraud was opened. The employee has resigned from INSETA.

Annual Financial Statementspage 52NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 20126.1 Cost of employment2011/12 2010/11R'000 R'000Salaries and wages 11 216 9 982Basic salaries 10 138 8 362Performance awards 761 1 394Temporary staff 103 94Leave payments 213 132Employee Wellness 1 -Social contributions 193 179UIF 51 45SDL 142 134Workmans Compensation 14 1011 423 10 171Average number of employees 37 33

Annual Financial Statementspage 537. Property, plant and equipmentYear ended 31 March 2012ClosingCostAccumulateddepreciationcarryingamountR'000 R'000 R'000Computer equipment 1 727 (1 326) 401Office furniture and fittings 1 438 (918) 520Office equipment 436 (371) 65Office Fixtures 1 340 (1 174) 166Balance at end of the year 4 941 (3 789) 1 152Year ended 31 March 2011ClosingCostAccumulateddepreciationcarryingamountR'000 R'000 R'000Computer equipment 1 395 (1 100) 295Office furniture and fittings 1 306 (816) 490Office equipment 398 (327) 71Office Fixtures 1 119 (1 119) -Balance at end of the year 4 218 (3 362) 856

Annual Financial Statementspage 54NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 2012Movement summary 2011/2012Carryingamount2010 Additions DisposalsCarryingamount2011DepreciationchargeR'000 R'000 R'000 R'000 R'000Computer equipment 295 341 (6) (229) 401Office furniture and fittings 490 132 - (102) 520Office equipment 71 38 - (44) 65Office Fixtures - 221 - (55) 166Balance at end of the year 856 732 (6) (430) 1 152Movement summary 2010/2011Carryingamount2009 Additions DisposalsCarryingamount2010DepreciationchargeR'000 R'000 R'000 R'000 R'000Computer equipment 283 221 - (209) 295Office furniture and fittings 567 29 - (106) 490Office equipment 123 - (4) (48) 71Office Fixtures 115 - - (115) -Balance at end of the year 1 088 250 (4) (478) 856ClosingCostAccumulateddepreciationcarryingamountYear ended 31 March 2012 R'000 R'000 R'000Owned Assets 4 941 (3 789) 1 1524 941 (3 789) 1 152ClosingCostAccumulateddepreciationcarryingamountYear ended 31 March 2011 R'000 R'000 R'000Owned Assets 4 183 (3 351) 832Leased assets 35 (11) 244 218 (3 362) 856

Annual Financial Statementspage 55The following useful lives are used in the calculation of depreciation- Computer equipment 3 years- Office furniture and fittings 10 years- Office equipment 5 years- Office fixtures over the lease term**The depreciation of office fixtures in linked to an operating lease agreement. The depreciation has been calculatedtaking the renewal option into consideration.8. Intangible assetsClosingApplication SoftwareCostAccumulatedAmortisationcarryingamountR'000 R'000 R'000Balance at 1 April 2010 309 (254) 55Additions 30 - 30Amortisation expense - (48) (48)Balance at 31 March 2011 339 (302) 37Additions 31 - 31Amortisation expense - (24) (24)Balance at 31 March 2012 370 (326) 44The following useful lives are used in the calculation of amortisation.- Application software 2 years (Depending on the license of the software)9. Accounts receivable from exchange transactions2011/12 2010/11R'000 R'000PAYE receivable 323 323Deposits 197 190Prepayments 1 221 353Interest receivable 191 1421 932 1 008The effect of discounting was considered and found to be immaterial.

Annual Financial Statementspage 56NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201210. Accounts receivable from non-exchange transactions2011/12 2010/11R'000 R'000Interseta debtors 24,2 606 161Employer receivable 10,1 7 705 2 3618 311 2 52210.1 Employer receivable2011/12 2010/11R'000 R'000Overpayment to employers 7 811 2 522Allowance for doubtful debt (106) (161)Net effect of SARS retrospective adjustments on affected employers 7 705 2 361R7 811 000 (2011: R2 522 000) was recognised as a receivable relating to the overpayment to the employerin earlier periods, and is based on the amount of such grant over payments. An amount of R106 000(2011: R161 000) was provided for as doubtful debt. INSETA is confident that it will be able to recover the netbalance. Also refer to Note 12 for grant amounts owed to employers as a result of subsequent changes in levyinformation.11. Cash and cash equivalents2011/12 2010/11R'000 R'000Cash at bank and on hand 37 180 12 361Cash at bank 37 178 12 358Cash on hand 2 3Short term investments/instruments 236 478 227 815Cash and cash equivalents at end of year 273 658 240 176

Annual Financial Statementspage 57As required in Treasury Regulation 31.2, National Treasury approved the banks where the bank accounts are held.The weighted average interest rate on short term bank deposits was 5.44% (2011: 5.85%).INSETA as a Public Entity was exempted by the National Treasury from the requirement of Treasury Regulation31.3 to invest surplus funds with the Corporation for Public Deposits, surplus funds were invested in line with aninvestment policy as required by Treasury Regulation 31.3.5.INSETA uses its cash and equivalents to settle its current liabilities and has approved and allocated R214 760 000for future projects and skills priorities as set out in Note 19.1.12. Accounts payable from non exchange transactions2011/12 2010/11R'000 R'000Skills development grants payable - current year 46 656 46 735Skills development grants payable - prior year 18 343 1 595Interseta payables 24,2 7 165 006 48 331An amount of R3 190 000 (2011: R2 690 000) relates to levies incorrectly contributed by employers, and paidover by SARS and the Department, after being exempted from contributing skills development levies due to newlegislation which came into effect 1 August 2005.13. Accounts payable from exchange transactions2011/12 2010/11R'000 R'000Project creditors 3 706 6 089Service provider fees outstanding 270 518Leave Accrual 543 408Sundry payables 2 670 1 688Trade creditors 1 281 690Other accrued expenses 1 389 9987 189 8 703The effect of discounting was considered and found to be immaterial.

Annual Financial Statementspage 58NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201214. Finance lease liability2011/12 2010/11R'000 R'000Finance Lease Liability - 18Less: Short term portion disclosed under current liabilities - (18)Non-current lease liability - -15. Government grants and donor funding received in advance2011/12 2010/11R'000 R'000Opening balance 9 9Closing balance 9 9During 2002 INSETA and the Department of Labour jointly had a project with the focus of training assessors. TheEuropean Union provided the funding for the project. After completion of the project in May 2007 a balance ofR9 000 remained. INSETA has been unsuccessful in establishing the enity and bank account where the refundshould be effected and is currently in the process of requesting that INSETA retain the amount.

Annual Financial Statementspage 5916. Provisions2011/12 2010/11R'000 R'000Employee bonus provision 16,1 332 369Provision for incorrect receipts 16,2 3 190 2 6903 522 3 05916.1 Employee bonus provision2011/12 2010/11R'000 R'000Open carrying amount 369 513Amounts utilised (798) (1 913)Additional provision 943 1 769Change in estimate (182) -Closing carrying amount 332 369Bonus provision is calculated using the total cost of employment and is based on performance evaluations conductedby the CEO of the SETA and the HR and Remuneration committee as appropriate.16.2 Provision for incorrect receiptsOpening Change in ClosingBalance Estimate Addition balanceR'000 R'000 R'000 R'0002011/12Provision for levies from exempt employers 2 690 130 370 3 1902 690 130 370 3 1902010/11Provision for levies from exempt employers 2 182 95 413 2 6902 182 95 413 2 690

Annual Financial Statementspage 60NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201217. Reconciliation of net cash flow from operating activities to net surplus2011/12 2010/11R'000 R'000Net surplus as per Statement of Financial Performance 24 858 22 804Adjusted for non-cash items:Depreciation / amortisation 454 526Loss on disposal of property, plant and equipment 6 4Bad debts written off 23 -Allowance for doubtful debts (55) (216)Finance costs: Finance lease 1 3Increase in provisions 463 364Relating to employment (37) (144)Relating to other 500 508Investment income (13 934) (12 875)Adjusted for working capital changes:Increase in receivables from non-exchange transactions (5 757) (1 047)Increase in receivables (924) (619)Decrease in consumables 34 38Increase in payables 15 143 16 854Movement in VAT receivable/payableCash utilised in operations 20 312 25 83618. Contingencies18.1 Pending LitigationsAt the reporting date three cases of allegedmisappropriation of INSETA funds, relating todiscretionary grant projects, were under investigation.In two of the three cases INSETA received a noticeof intention to defend and INSETA has applied fora summary judgement. INSETA has not received anotice of intention to defend the third case. INSETA isnow applying for default judgement.It is estimated that, as a result, additional legal expenseswill be incurred to finalise these matters.At the reporting date the outcome of the three casesare uncertain. Possible financial impact cannot yet bereliably estimated.18.2 Contingent LiabilitiesSurplus FundsIn terms of the PFMA, all surplus funds as at yearendmay be forfeited to National Treasury should anapplication for retention of surplus funds be denied.

Annual Financial Statementspage 61We have submitted an application to National Treasuryvia the Department for the retention of surplus funds.As in the previous year INSETA expects that NationalTreasury will approve the retention of surplus funds.First time employer registrationsThe Skills Development legislation allows an employer,registering for the first time, 6 months to submit anapplication for a mandatory grant.At the reporting date it is estimated that, as a result,additional mandatory grant expenditure of R19 000(2011 R129 000) will be payable. The amount iscontingent on the number of submission received andapproved.March 2012, R214 760 000 has been approved andallocated for future projects and skills priorities as setout below.Amounts for expenses that have already been contractedor incurred, and therefore included in the employergrant and project expenses in the Statement of FinancialPerformance, are also indicated. A request for theaccumulation of these funds have been submitted toNational Treasury via the Department. At the time ofcompiling the financial statements, no reply had beenreceived.Amounts disclosed in the approved by accountingauthority column should be read as follows:New scheme year levies receivedAt the reporting date levies were received inrespect of the new scheme year, for which, the SkillsDevelopment legislation allows an employer until 30June 2012 to submit an application for a mandatorygrant.At the reporting date it is estimated, as a result, thatadditional mandatory grant expenditure of R1 000(2011 R8 000) will be payable. The amount iscontingent on the number of submissions received andapproved.The positive amounts represents new or additionalapprovals made by the accounting authority. Thenegative amounts represents transfers back to thesurplus funds due to savings on the project.Amounts disclosed in the utilised column should beread as follows:The positive amounts represents credit notes orreallocations of invoice. The negative amountsrepresents expenses that have incurred against theproject.19. Commitments19.1 Discretionary reserveOf the balance of R208 189 000 (2011 R183 524 000)available in the Discretionary reserve at the end of

Annual Financial Statementspage 62Allocation Approvedby AccountingOpening balance2010/11Authority not fullycontractedUtilisedNSDS Project Name R'000 R'000 R'0002000 - 2003 projects (4 731) - -PWC Management fees (Project officeservice provider) 368 (4 064) (4 064)2,7 ABET level 4 support 1 949 70 1 0054,6 Black Business training support 1 301 - 1744,5 Bursaries and voucher project 29 116 (6) 14 454Capacity building seminar 100 (147) (47)2.8 &2.5 Career Guide 1 000 (492) 5084,2 Disability Project 136 - 86Employment Equity 763 (658) 1054,5Financial Advisory and IntermediaryServices Act Support 15 797 (3 372) 3 404Impact study 855 - 8265,3 Institute of Sectoral Excellence 1 018 (963) 55IISA 127 (127) -Insurance leadership programme 110 (24) 864,2 Internships 25 933 (6 300) 11 8894,2 Learnerships 53 201 (18 152) 12 315Materials Development (INSMAT) /Learning Implementation Guides (3) 3 -New Venture Creation Black Brokers 145 (145) -New venture Dol SLA 1 461 (978) 3831,2 New Venture Institutional Support 708 (588) -1,2 NSA Stakeholder Satisfaction 204 (204) -NSF Critical Skills Project 216 (216) -4,2 Partnering with SAADP 5 229 - 4 5554,1 QCTO 4 725 511 1 430QMS Manual 572 (572) -Research 1 816 (788) 8845,2 Research studies 401 (381) 20SAQA / INSETA Joint implementation (25) 25 -SMME Better business toolkit 1 971 (1 960) 11SMME Support (Regional Advisors) 3 564 (2 249) 1 2951 Social Development project 2 201 (1 051) 1 100Training of black actuaries 130 (130) -Train the Trainer: Outcomes BasedEducation Materials Development (65) 65 -Trustee Training Skilling Program (3) 3 -2,8 Work Based Experience 1 474 (335) 1 1242.8 &1.2Workshops for Skills DevelopmentFacilitators 219 (146) 73

Opening balance2011/12Allocation Approvedby AccountingAuthority not fullycontractedUtilisedClosing balance2011/12Future commitments/ contractsR'000 R'000 R'000 R'000 R'000(4 731) 4 731 - - -368 - - 368 -- -1 014 (354) 550 110 -1 127 (18) 1 108 1 -14 656 (85) 3 560 11 011 8 782- - - - -- - - - -50 (27) 23 - -- - - - -9 021 - 4 934 4 087 3 90029 (29) - - -- - - - -- - - - -- - - - -7 744 (137) 4 078 3 529 1 51222 734 (10 503) 5 972 6 259 797- - - - -- - - - -100 (50) 50 - -120 (109) 11 - -- - - - -- - - - -674 (410) 264 - -3 806 - 712 3 094 3- - - - -144 (148) (4) - -- - - - -- - - -- - - - -20 (26) (6) - -50 - 50 - -- - - - -- - - - -- - - - -15 (65) (50) - -- - - - -Annual Financial Statementspage 63

Annual Financial Statementspage 64Allocation Approvedby AccountingOpening balance2010/11Authority not fullycontractedUtilisedNSDS Project Name R'000 R'000 R'0002010/2011 ProjectsBusiness Analyst and systems analyst4,2 training - 1 787 -4,5 FETI-HETI Articulation Pilot - 3 177 1 2114,5GIALSA Settlement and completion oftraining - 585 -4,2INSETA Capacity Building & QualityPromotion - 2 516 1904,2 Learnership Funding Window Year 11 - 57 903 1 433Leon Liedeman & Associates Settlement - 503 5034,5 Management and Leadership Project - 7 910 -4,6 National support for SMMEs 2010 -2011 - 11 835 6894,1 Project Admin 2010/11 - 4 445 402Project for people with Intellectual4,2 Disabilities - 1 283 -4,2 Promotion of Insurance Sector Year 11 - 2 607 1784,2 PWC Project Management fees 2010 - 743 7434,2 SAAD Project 2011 - 8 098 -4,2 Sector-Demand Internships - 18 720 5504,2 Work Readiness Project - 7 082 -2011/2012 Projects4,6Employment Creation and New businessopportunities funding window - - -4,1 Research Project - - -4,6 SME Learnership - - -Burial Societies Co-operatives SkillsSupport Proje - - -4,64,5 Bursaries for the employed: Levy paying - - -4,1 Research – SSP 2011 - - -4,2 LEARNERSHIPS YEAR 12* - - -4,2 BASA 2012 Programme* - - -4,2 SAAD PROJECT YEAR 13* - - -Total project expenditure 151 983 85 823 57 570* These projects were allocated during the current year, but will only start in the following financial year.Note that the definition commitments by the accounting authority includes signed contracts up to the approvaldate of the financial statements, approval letters sent to employers for learnerships, internships and bursaries andopen purchase orders for travel and other related services. Refer below to the reconciliation.

Opening balance2011/12Allocation Approvedby AccountingAuthority not fullycontractedUtilisedClosing balance2011/12Future commitments/ contractsR'000 R'000 R'000 R'000 R'000Annual Financial Statementspage 651 787 (61) 1 713 13 -1 966 - 1 682 284 -585 - 520 65 652 326 - 864 1 462 3256 470 - 21 707 34 763 9 263- - - - -7 910 - 7 7 903 -11 146 - 4 815 6 331 2 1584 043 381 1 402 3 022 581 283 (79) 40 1 164 7802 429 - 846 1 583 215- - - - -8 098 (309) 5 313 2 476 2 20718 170 - 6 794 11 376 8 5927 082 - - 7 082 -- 34 188 212 33 976 978- 6 062 160 5 902 230- 11 450 2 970 8 480 7 354- 3 478 958 2 520 1 500- 9 000 - 9 000 -- 1 000 474 526 -- 33 899 - 33 899 -- 1 387 - 1 387 1 152- 13 087 - 13 087 -180 236 106 253 71 729 214 760 49 578Contracted Amounts 13 278Learnership, Internship and Bursary Agreements 36 30049 578

Annual Financial Statementspage 66NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201219.2 Operating LeasesTotal of future minimum lease payments under non-cancellable leases:2011/12 2010/11R'000 R'000Not later than one year 580 349Later than one year and not later than five years 128 -708 349The operating leases relate to building premises used for office accommodation. The lease agreement for thenorth wing of the building was entered into effective 1 August 2011 and will be operational for a period of oneyear, expiring on 31 July 2012. The lease agreement for the west wing of the building was entered into effective 1September 2011 and will be operational for a period of one year, expiring on 31 August 2012.20. Irregular expenditure20.1 Irregular Expenditure 2011/12 2010/11R'000 R'000Opening balance - 2 161Less: Amounts condoned - (2 161)Irregular Expenditure awaiting condonation - -During 2009/10 the Auditor General identified expenditure deemed irregular of R2 161,000. In May 2008 theINSETA Board approved the recruitment of Regional Advisors which recruitment was done in terms of its HumanResource Policy, however proper tender process had not been followed, and reasons therefore, was considered notadequately recorded and approved by the accounting authority. The expenditure was condoned by the accountingauthority in the previous period.

Annual Financial Statementspage 6721. Critical accounting judgements and key sources of estimation uncertaintyIn the application of the SETA’s accounting policies management is required to make judgements, estimatesand assumptions about the carrying amounts of assets and liabilities that are not readily apparent from othersources. The estimates and associated assumptions are based on historical experience and other factors that areconsidered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimatesare recognised in the period in which the estimate is revised if the revision affects only that period, or in theperiod of the revision and future periods if the revision affects both current and future periods.Key sources of estimation uncertaintyThe following are the key assumptions concerning the future, and other key sources of estimation uncertainty atthe reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assetsand liabilities within the next financial year.Useful lives of property, plant and equipment and intangible assetsThe SETA reviews the estimated useful lives of property, plant and equipment and intangible assets at the end ofeach annual reporting period, refer note 7 and note 8 for the respective carrying values.Management determined, consistent with the prior year, that the useful life of assets should not be limited by theseta's establishment. Management's determination of useful life also impacts the determination of the residualvalue of assets.

Annual Financial Statementspage 68NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201222. Financial instrumentsIn the course of the SETA operations it is exposed to interest rate, credit, liquidity and market risk. The SETA hasdeveloped a comprehensive risk strategy in terms of TR 28.1 in order to monitor and control these risks. The riskmanagement process relating to each of these risks is discussed under the headings below.Categories of Financial Instruments2011/12 2010/11R'000 R'000Financial assetsCash and bank balances 273 658 240 176Other receivables from exchange and non-exchange transactions 8 825 2 987282 483 243 163Financial liabilitiesOther financial liabilities 6 646 8 295Interest rate riskThe SETA manages its interest rate risk by effectively investing SETA surplus cash in term deposits with differentfinancial institutions according to the SETA's investment policy.

Annual Financial Statementspage 69The SETA's exposure to interest rate risk and the effective interest rates on financial instruments at reporting dateare as follows:AmountR'000Floating rateEffectiveinterest rateNon-interest bearingAmountR'000Weightedaverageperiod untilmaturity inmonthsTotalR'000Year ended 31 March 2012AssetsCash 254 719 5,44% 18 939 273 658Accounts receivable - 8 825 12 months 8 825Total financial assets 254 719 5,44% 27 764 282 483LiabilitiesAccounts payable - 6 646 1 month 6 646Total financial liabilities - 6 646 6 646254 719 21 118 275 837Year ended 31 March 2011AssetsCash 240 069 5,85% 107 240 176Accounts receivable - 2 987 12 months 2 987Total financial assets 240 069 5,85% 3 094 243 163LiabilitiesAccounts payable - 8 295 1 month 8 295Total financial liabilities - 8 295 8 295240 069 (5 201) 234 868Credit riskFinancial assets, which potentially subject the SETA to the risk of non performance by counter parties and therebysubject to credit concentrations of credit risk, consist mainly of cash and cash equivalents deposited with financialinstitutions and accounts receivable.The SETA limits its treasury counter-party exposure by only dealing with well-established financial institutionsapproved by National Treasury through the approval of an investment policy in terms of Treasury Regulation TR 28.The SETA’s exposure is continuously monitored by the executive committee.

Annual Financial Statementspage 70NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 2012Credit risk with respect to levy paying employers is limited due to the nature of the income received. The SETAdoes not have any material exposure to any individual or counter-party. The SETAs concentration of credit riskis limited to the industry in which the SETA operates. No events occurred in the industry during the financialyear that may have an impact on the accounts receivable that has not been adequately provided for. Accountsreceivable are presented net of allowance for doubtful debt.The ageing of other receivables from exchange and non-exchange transactions:2011/12 2010/11Gross Impairment Gross ImpairmentR'000 R'000 R'000 R'000Not past due 8 825 (106) 2 987 (161).Liquidity riskThe SETA manages liquidity risk through proper management of working capital and capital expenditure. Adequatereserves and liquidity is maintained.CarryingAmountR'000ContractualCash FlowsR'0006 months orlessR'0006 - 12monthsR'0001 - 2 yearsR'000More than 2yearsR'0002011/12Trade and otherPayables fromexchange transactions 6 646 6 646 6 604 - 22 20CarryingAmountR'000ContractualCash FlowsR'0006 months orlessR'0006 - 12monthsR'0001 - 2 yearsR'000More than 2yearsR'0002010/11Trade and otherPayables fromexchange transactions 8 295 8 295 8 249 22 4 20In case of short term liquidity problems, funding resources might be available in terms of the Department andNational Treasury approval for borrowing requirements in the open market.

Annual Financial Statementspage 71Market riskThe SETA is exposed to fluctuations in the employment market for example sudden increases in unemploymentand changes in the wage rates. No significant events occurred during the year that the SETA is aware of.Fair valuesThe SETA’s financial instruments consist mainly of cash and cash equivalents, account and other receivables, andaccount and other payables. No financial instruments were carried at an amount in excess of its fair value.Fair values could be reliably measured for all financial instruments.The following methods and assumptions are used to determine the fair value of each class of financial instruments:Cash and cash equivalentsThe carrying amount of cash and cash equivalents approximates fair value due to the relatively short-termmaturity of these financial assets.Accounts receivableThe carrying amount of accounts receivable approximates fair value due to the relatively short-term maturity ofthese financial assets.Accounts payableThe carrying amount of accounts payable approximates fair value due to the relatively short-term maturity ofthese financial liabilities.

Annual Financial Statementspage 72NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201223. New accounting pronouncementsAt the date of authorisation of these financial statements, there are Standards and Interpretations in issue but notyet effective. These include the following Standards and Interpretations that are applicable to the SETA and mayhave an impact on future financial statements.Effective date, commencingon or afterImpairment of Non-cash-generating Assets GRAP 21 1 April 2012Revenue from Non-exchange Transactions (Taxes and Transfers) GRAP 23 1 April 2012Presentation of Budget Information in Financial Statements GRAP 24 1 April 2012Employee Benefits GRAP 25 1 April 2013Financial Instruments GRAP 104 1 April 2012Related party disclosures GRAP 20 Not yet EffectiveSegment Reporting GRAP 18 Not yet EffectiveAn entity shall apply Standards of GRAP for Annual Financial Statements covering periods beginning on or after adate to be determined by the Minister of Finance in a regulation to be published in accordance with section 91(1)(b) of the PFMA.GRAP 20 : Related party disclosuresGRAP 20 : Related Party. This standard prescribe the disclosure of information relevant to draw attention to thepossibility that the SETA financial position and surplus/deficit may have been affected by the existence of relatedparties.It is not expected that this standard will significantly impact future disclosures.GRAP 21 : Impairment of Non-cash Generating AssetsGRAP 21 : Impairment of Non-cash Generating Assets. This standard prescribes the accounting treatment for theimpairment of non-cash generating assets and does not significantly differ from IPSAS 21. It is not expected thatthis standard will impact future disclosures.

Annual Financial Statementspage 73GRAP 23 : Revenue from Non-exchange Transactions (Taxes and Transfers)GRAP 23 : Revenue from Non-exchange Transactions (Taxes and Transfers).The standard prescribes requirementsfor the financial reporting of revenue arising from non-exchange transactions. Accounting policies have beenamended to clearly distinguish between exchange and non exchange transactions. It is not expected that the initialapplication will significantly impact the SETA’s financial statements.GRAP 24 : Presentation of Budget Information in financial StatementsGRAP 24 : Presentation of Budget Information in Financial Statements. The standard prescribes the presentation ofa comparison of budget and actual amounts in the financial statements of entities that are publicly accountable forthe use of their funds. The presentation may be in the form of additional financial statement or additional budgetcolumns in their financial statements. The standard becoming effective is not expected to significantly impact futuredisclosures since we have applied the principles outlined in GRAP 24 to inform our current disclosure.GRAP 25 : Employee benefitsGRAP 25: Employee Benefits. This standard prescribes the accounting treatment for employee benefits. The changesprescribed from the current applicable standard relate mainly to the accounting requirements of defined benefitplans and as such is not expected to significantly impact the current accounting policies or disclosures.GRAP 104: Financial InstrumentsGRAP 104 prescribes recognition, measurement, presentation and disclosure requirements for financialinstruments and makes significant modifications to the principles in the previous standards applied in order to:• simplify the recognition, measurement and disclosure of financial instruments; and• accommodate the types of financial instruments entered into in the public sector.

Annual Financial Statementspage 74NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 2012The definitions of the various categories of financial instruments in IAS 39 have been streamlined and replacedwhich will require us to change our accounting policy accordingly.The following disclosures required under IAS are encouraged but not required:• The disclosure of fair values for financial instruments.• Certain disclosures about the use of the fair value using the three tiered hierarchy.• A market sensitivity analysis.The following Standards and Interpretations that have been issued but are not yet affective are not applicable tothe SETA and will not have an impact on future financial statements:Effective date, commencingon or afterImpairment of Cash-generating Assets GRAP 26 1 April 2012Heritage Assets GRAP 103 1 April 2012Transfer of Function between Entities Under Common Control GRAP 105 Not yet EffectiveTransfer of Function between Entities Not Under Common Control GRAP 106 Not yet EffectiveMergers GRAP 107 Not yet Effective24. Related party transactions24.1 Transactions with the controlling entityThe executive authority of INSETA is the Department of Higher Education and Training. The department is part ofthe portfolio of the minister of Higher Education and Training.There were transactions relating to revenue with the Department. (Note 2)24.2 Transactions with entities under common controlBy virtue of the fact that INSETA is a National Public Entity related to other entities and departments in thenational sphere of government it is considered related to Telkom, Eskom, South African Airways, other SETAsand the National Skills Fund. The transactions are consistent with normal operating relationships between theentities, and are undertaken on terms and conditions that are normal for such transactions. Where there weretransactions and balances arising due to the movement of funds between entities under the common control ofthe Department, these amounts were disclosed below.

Annual Financial Statementspage 75The balances at year-end included in receivables and payables are:Amountof thetransaction*2011/12R'000Amountreceivable /payableAmountof thetransaction2010/11R'000Amountreceivable/payableReceivablesInterSETA receivables 653 606 39 161Fasset 207 10 14 6MICT SETA 62 67 - 5Bankseta - 3 - 3Merseta - 1 1 1CETA - - 2 -Services seta 232 376 19 143W&R seta 3 - 3 3TETA 113 113THETA 36 36 - -Payables 7 16 1 10InterSETA payables 7 7 1 1Agri-SETA 7 7 - -Services seta - - 1 1Other - 9 - 9Department of Labour - 9 - 9Total 646 590 38 151*Note that the amount of transaction includes interest and penalties transferred to or from the SETA.

Annual Financial Statementspage 76NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended 31 March 201224.3 Remuneration of Key ManagementThe key management personnel of the SETA are: the members of the accounting authority and the members ofthe senior management group.The accounting authority consists of members appointed in terms of its constitution; the chief executive officerattends meetings of the accounting authority but is not a member of the accounting authority. The aggregateremuneration of members of the accounting authority and the number of members receiving remuneration withinthis category, are:2011/12 2010/11R'000 R'000Aggregate remuneration 1 775 51Number of persons 15 15Refer to the report by the Accounting Authority for detail disclosure concerning the emoluments of members ofthe accounting authority.The senior management group consists of the SETA’s Chief Executive Officer and Chief Operations Officer. Theaggregate remuneration of members of the senior management group and the number of managers receivingremuneration within this category are:2011/12 2010/11R'000 R'000Aggregate remuneration 2 315 1 950Number of persons 2 2Refer to the report by the Accounting Authority for detail disclosure concerning the emoluments of the ChiefExecutive Officer and Chief Operating Officer.25. Notes to comparison of budget and actualLegislation requires that the SETA annually, in September submit a budget to the Minister for approval. Anysubsequent changes required to the initial budget are approved by the Accounting Authority.

Annual Financial Statementspage 7725.1 Skills Development Levy: income from non-exchange transactions:Levy receipts were 2.5% higher than anticipated, The increase is mainly due to large SARS adjustments resultingin levy receipts in the current year that relate to previous scheme years. INSETA has also seen an increase in thenumber of new employers that joined the SETA during the period.25.2 Skills Development Levy: penalties and interest from non - exchange transactionsIncome from penalties and interest arise when employers fail to submit their returns as required by legislation.These amounts typically vary significantly year on year. The full balance is made available for projects. INSETA doesnot budget for this line item.25.3 Investment IncomeInvestment income was higher than the budget as a result of the increased cash balances due to the delay in thereceipt of the SDL information resulting in mandatory grant payments being postponed.25.4 Employer grant expensesEmployer grant expenditure is less than budget by 2% despite the levy income exceeding the budget. This is due tolarger than expected SARS reversals resulting in grant expenditure relating to previous scheme years. The payout% for the previous scheme years was slightly lower than the budgeted payout %.25.5 Project expensesProject expenditure is less than budget due to projects starting later than anticipated.25.6 Administration expensesAdministration expenses are lower than budget by 7%. This is mainly due to savings achieved in the followingexpenses:ApprovedAmountbelowBudget Actual budget2011/12 2011/12 2011/12Description R'000 R'000 R'000Advertising, marketing and promotions 1 415 1 114 301Travel and subsistence 862 523 339Cost of employment 11 665 11 359 306Printing 202 55 147

INSETA Boardpage 78the boardFrom left to right:1. Mr Comfort Duma2. Ms Vanita Harrypersadh3. Ms Gizelle Conradie4. Prof Andre Keet5. Ms Anne-Marie D’Alton6. Mr Mzimkulu Msiwa (Chairperson of the Board)7. Ms Margie Naidoo8. Mr William Seya9. Ms Shantha Padayachee10. Mr Moses Machai11. Mr Thabit Gool12. Mr Jay Ramsunder13. Mr Bryan McKay14. Mr Barry Scott15. Mr Rama Govenden16. Dr Gerrit Sandrock (Chairperson of the AuditCommittee)

INSETA Boardpage 79

INSETA Teampage 80the teamoffice of the ceolearnership divisionFrom left to right:Tumi Peele, Lavern Ogle andTsabuki MakouFrom left to right:Ella Matshikiza, Tshepo Mabika,Sandra Dunn, Sibulele Tena,Sharon Snell, Errol Hanreckand Kim Pretoriusproject officeFrom left to right:Olebogeng Tsitsi, BonginkosiMthombeni, Zibuyile Nkabinde,Glen Edwards and BusiBudulwayo

INSETA Teampage 81skills development divisionThe Skills Development team, ErnestKaplan, Hastings Ngobeni, NkhutlisengMlangeni, Adeline Singh and ItumelengMotaung pose with some of INSETAstakeholders.From left to right:Thilivhali Netshiongolwe, OumaMmethi Neesha Naidoo, Nadia Traut, Michelle van derMerwe, William Fisher and Unathi Jakalaseetqa divisionFrom left to right:Bonginkosi Malinga, LeboPhaleng, Jabu Mabaso, TebogoMaphala, Nonhlanhla Nkabindeand Zodwa Motloungcorporate services division

Appendix A: INSETA Organogrampage 82organogramChief Executive OfficerSandra DunnExecutive OfficePA to CEOElla MatshikizaChief Operations OfficerSharon SnellHuman ResourcesManagementSkills PlanningETQA/QCTOLearning DivisionProject OfficePA to COOErrol HanreckPR & MarketingOfficerVacantCorporateService ManagerVacantHR ManagerSibulele TenaSkills PlanningManagerAdeline SinghETQA ManagerNeesha NaidooLearnership ManagerTumisang PeeleIPO ManagerKaryn PieterseFAIS ManagerGlen EdwardsMarketingAdministratorTshepo MabikaSCM Specialist(x2)VacantHR AdministratorKim PretoriusSkills ResearchSpecialistHastings NgobeniSecretaryOuma MmethiSpecialistTsabuki MakouProject SpecialistBonginkosi MthombeniJunior SpecialistLerato MpataneBursaryConsultantsTebogo Maphala &Nomonde MandlaBursary AdminVacantBursary InternsZibuyile Nkabinde& BusisiweBudulwayoSCMAdministratorVacantOfficeAdministratorLebogang PhalengINSETAReceptionistZodwa MotloungINSETAHousekeeperJabu MabasoSkills Junior SpecialistItumeleng MotaungSkills DevelopmentAdministrators (x2)Ernst KaplanVacantQCTO SpecialistNadia TrautETQA SpecialistsMichele van derMerwe &Unathi JakalseETQA JuniorSpecialistWilliam FisherETQA Data AdminThilivhaliNetshiongolweJunior SpecialistVuyo DinisoLearnershipsAdministratorInternshipsLavern OgleLearnershipsAdministratorRosa SephumaProject AdminOlebogeng TsitsiETQA AdminVacant

Appendix B: Performance Reportpage 83performance reportIntroductionINSETA has identified five key strategic programmes that aim to deliver on the strategic outcome oriented goals. Below table representsa high-level summary of the programmes, strategic objective titles and performance indicators that support the NSDS III aligned StrategicOutcome Oriented Goals.GOAL 1NoStrategicoutcomeoriented goalGOAL 2NSDS IIIindicatorProgrammesGOAL 3Strategicobjective titlePerformanceIndicator(3Yearperiod)Target forYear 12ActualPerformanceYear 12Comments(Where adeviation isnoted)A credibleinstitutionalmechanism forskills planningEffectiveestablishedcareer andvocationalguidancechannelsIncreasedaccess toOccupationallydirectedprogrammes4.1 Research andBenchmarking4.8 YouthEducation andDevelopment4.2 YouthEducation andDevelopment1.Five year SSP Approved SSP Approved SSP INSETA SSP receivedapproval2.Research Board approved Approved The research agendaagenda and implemented Research plan is not yetResearch Agenda agenda approvedCareerguidance anddevelopmentScarce andcritical tertiaryqualificationsCareer guidesavailable in all nineprovinces andrural and remoteareas240 youthsupported togain business andsystems analystqualifications120 youthsupported togain actuarialqualificationsCareer guidesavailable in allnine provinces40 youthsupported togain businessand systemsanalystqualifications40 youthsupported togain actuarialqualificationsCareer Guidancewas provided to 176schools in 7 provincesduring career guidanceexhibition in bothurban and rural areas40 unemployedgraduate internsstarted and 36completed64 actuarial sciencelearners startedand of these 55completed the fullyear of studyNoneDelays in approval of SSPThe Northern Cape andMpumalanga Provincewas not covered and itwill be done in the firstquarter of the new yearINSETA has partnerswith Capaciti 1000 todeliver Bursaries tounemployed graduatesto receive theoreticaland practical training inBusiness and Systemsanalyst trainingINSETA has a partnershipwith South AfricanActuarial DevelopmentProgramme where toplearners are recruitedinto the programme andoffered actuarial Bursariesand mentorship.

Appendix B: Performance Reportpage 84NoGOAL 3 (continued)Strategicoutcomeoriented goalNSDS IIIindicatorProgrammesStrategicobjective titlePerformanceIndicator(3Yearperiod)GOAL 4Target forYear 12ActualPerformanceYear 12GOAL 5Comments(Where adeviation isnoted)Better use ofworkplacebasedskillsdevelopmentTrainingand supportprovided toSectorCo-operatives,SmallEnterprises andNGO’s4.5 Scarce andCritical Skills4.6 Small and MicroEnterpriseDevelopmentWorkplacepracticalexperience andskills1.Identifiedscarce andcritical skills2.Develop andimplementcritical skillsinterventionsSupport Smalland MicroenterprisesincludingCo-operatives,NGO’s andCBO’s2500 youthassisted togain practicalworkplaceexperience andskillsTop 5 Scarceand critical skillsidentified andreported in SSP3000 Employedpeople supportedto achievequalificationsidentified as scarceor critical4000 Small andMicro includingCo-operatives,NGO’s and CBO’ssupported in skillsdevelopmentinitiatives500 youthassisted togain practicalworkplaceexperience andskillsUpdated SSPreflecting top5 scarce andcritical skills500 employedpeoplesupportedto achievequalificationsidentified asscarce or critical500 Small andMicro includingCo-operatives,NGO’sand CBO’ssupportedin skillsdevelopmentinitiatives935 unemployedyouth started newlearning programmesand 1024 completedUpdated SSPreflecting top 5 scarceand critical skills1197 workersstarted new learningprogrammes and3644 were certificatedin the year791 enterprisessupported of which755 were small andmicro; 36 BurialSociety Co-operativesand 1 was an NGOThese are completedlearnerships andInternships which werefunded by INSETA forunemployed learners. Thefigure is inclusive of thefigure reported under 4.2Employed LearnershipsBursaries and SkillsProgrammesSmall and Microenterprises primarilyreceived supportwith FAIS seminar trainingand provision of learningmaterial for FAIS REExam. Burial Societieswere supported from allprovinces to attend theBurial Society Indaba. 36Burial Societies receivedco-operative supporttraining.

Annual financial Appendix statements B: Performance Chapter Report Sixpage 85 85NoStrategicoutcomeoriented goalNSDS IIIindicatorProgrammesStrategicobjective titleGOAL 6PerformanceIndicator(3Yearperiod)Target forYear 12ActualPerformanceYear 12Comments(Where adeviation isnoted)OrganisationalEffectivenessN/AOperationalPerformance1.Corporategovernance2.QualityManagementSystem3.HumanCapital bestpractice4.ProjectManagementbest practiceUnqualified auditsand compliancewith legislationImplementedqualityManagementSystem1.HR Policies andRemuneration willbe benchmarkedannually2.An effectivetalentmanagementmodel will beimplemented3.BenchmarkedsalariesAll projects deliverwithin the time,cost and qualitystandardsUnqualifiedaudits andcompliancewith legislationDevelopedQualityManagementSystemReview andupdate HRpolicy ofrequiredDevelop talentmanagementmodelBenchmarksalariesAll overdueprojects areattended toand broughtin lineUnqualified Auditreceived and INSETAcomplied withlegislationDeveloped QualityManagement SystemThe HR policy wasreviewed, updatedand approved byBoardDevelop talentmanagement modelBenchmarking salaryexercise was limitedto bringing staffbenefits in line withsimilar organisationsAll overdue projectswere attended to andbrought in lineA review process hasstarted on the existingQMS in line with SAQArecommendations andbest practises identifiedby internal auditnoneThe model is basedon performance andrecognition of employeeswho perform wellINSETA introducedpension and medical aidbenefits to align withthe benefits offered inother SETAs and thefinancial sector. No otherbenchmarking wasrequired.

Appendix C: INSETA Staff as at 31 March 2012page 86our staffName Designation Gender Race Disability P/FTC/I1 Adeline Singh Manager -Skills Development Female Indian No P2 Bonginkosi Mthombeni Specialist – Projects Male African No P3 Busisiwe Budulwayo Intern – Bursaries Female African No Intern4 Chono Khorommbi Administrator – Bursaries Female African No FTC5 Ella Matshikiza Personal Assistant to the Chief Executive Officer Female African No P6 Errol Hanreck Personal Assistant to the Chief Operating Officer Male White Yes P7 Ernest Kaplan Administrator – Skills Development Male White No P8 Glen Edwards Manager -FAIS Male White No P9 Hastings Ngobeni Specialist – Research Skills Development Male African No P10 Itumeleng Motaung Junior Specialist - Skills Development Female African No P11 Jabu Mabaso Housekeeper Female African No P12 Karyn Pieterse Manager – Office Projects Female White No P13 Kim Pretorius Administrator – Human Resources Female White No P14 Lavern Ogle Junior Administrator – Learnership Female Coloured No P15 Lebogang Phaleng Administrator – SCM and Finance Female African No P16 Lerato Mpatane Junior Specialist - FAIS Female African No P17 Michelle van der Merwe Specialist Consultant - ETQA Female White No P18 Nadia Traut Specialist – QCTO Female Coloured No FTC19 Neesha Naidoo Manager - ETQA Female Indian No P20 Nkutliseng Mlangeni SMME Project Administrator Female African No F T C21 Nomonde Mandla Bursar Female African No P22 Olebogeng Tsitsi Administrator - Projects F e m a l e African No P23 Ouma Mmethi Secretary - ETQA Female A f r i c a n No P24 Rosa Sephuma Administrator – Learnership Female African No P25 Sandra Dunn Chief Executive Officer Female C o l o u r e d No P26 Sebolelo Malebye Administrator – PR and Marketing Female African No FTC27 Sharon Snell Chief Operating Officer F e m a l e C o l o u r e d No P28 Sibulele Tena Manager – HR Male African No P29 Tebogo Maphala Bursar Female African No P30 Thilivhali Netshiongolwe Data Administrator – ETQA Female African No FTC

Appendix D: INSETA Standards Industrial classification codespage 87Name Designation Gender Race Disability P/FTC/I31 Tsabuki Makou Specialist - Learnership Male African No P32 Tshepo Mabika Administrator – PR and Marketing Male African No P33 Tumisang Peele Manager - Learnership Female African No P34 Unathi Jakalase Specialist Consultant - ETQA Female African No P35 Vuyokazi Diniso Junior Specialist -Learnership Female African No P36 William Fisher Junior Specialist - ETQA Male Coloured No P37 Zibuyile Nkabinde Intern – Bursaries Female African No Intern38 Zodwa Motloung Receptionist Female African No P(P) Permanent (FTC) Fixed Term Contract (I) Interninseta's standards industrialclassification codesSIC Code Scope of Coverage / Description81901 Unit Trusts (or collective investments)81902 Risk Management82100 Insurance and Pension Funding, except compulsory social security82110 Life Insurance82120 Pension Funding82131 Healthcare Benefits Administration82191 Short Term Insurance82192 Funeral Insurance82193 Re-insurance83300 Activities Auxiliary to Insurance and Pension Funding (including Brokers/Intermediaries)

Appendix E: Glossary of Termspage 88glossaryABETATRBEECEOCFOCOODHETETQAFAISFETFSBGAAPGRAPHETIISAINSETAISOEITNLRDNQFNSDSNSFPFMAQCTORESAADPSAQASARSSCOPASDFSETASLASMMESSPWBEWSPAdult Based Education and TrainingAnnual Training ReportBlack Economic EmpowermentChief Executive OfficerChief Financial OfficerChief Operations OfficerDepartment of Higher Education and TrainingEducation and Training Quality AssuranceFinancial Advisory and Intermediary ServicesFurther Education and TrainingFinancial Services BoardGenerally Accepted Accounting PracticeGenerally Recognised Accounting PracticeHigher Education and TrainingInsurance Institute of South AfricaInsurance Sector Education and Training AuthorityInstitute of Sectoral and Occupational ExcellenceInformation TechnologyNational Learner Record DatabaseNational Qualifications FrameworkNational Skills Development StrategyNational Skills FundPublic Finance Management ActQuality Council for Trade and OccupationsRegulatory ExaminationsSouth African Actuaries Development ProgrammeSouth African Qualifications AuthoritySouth African Revenue ServicesStanding Committee on Public AccountsSkills Development FacilitatorsSector Education and Training AuthorityService Level AgreementSmall, Medium and Micro EnterprisesSector Skills PlanWork-based ExperienceWorkplace Skills Plan

highlightsINSETA highlightspage 89smme learnershipsSmall Brokerages throughout the countryeagerly snatched up 140 unemployedlearners. The learners will be hosted in thebrokerages for a year where they will obtainvaluable workplace skills and achieve anNQF level 4 insurance qualification. Vodacomcame on board and sponsored all thelearners with a WebBox, a portable devicethat allows for the learners to access theinternet through their television and also oneyear worth of free data.

INSETA highlightspage 90In response to government’sconcerns about the lack ofqualified IT business analysts in theSouth African workforce, a newinitiative is targeting this potentiallydamaging gap – equipping youngunemployed graduates in the ICTsector with much-needed skills, andcontributing to the creation of upto 5 000 jobs.capaciti 1000Top Learner Keegan Steyn with Sandra DunnINSETA CEO at the CAPACITi 1000 graduation inCape Town. Keegan is now employed as a BusinessAnalyst at Old MutualSouth Africa has a critical shortageof graduate-level IT skills. CAPACITi1000 is a training, internship andintern support programme of theCape IT Initiative (a non-profitorganisation established in 1998).It was created to fast-track non-IT graduates into IT careers incritical short supply, as well as toaddress systemic challenges thatrestrict the supply of high quality,employable, “industry ready”Information Systems, ComputerScience, Informatics and SoftwareEngineering graduates.This is an amazing success story which islinked to a number of government keypriorities and actually operationalised someof the strategic thinking in NSDS III.Industry demanddriven model wherethe insurance sectoradvises on acuteskills shortagesUniversity of Cape TownInformation SystemsDepartment develops anNQF Level 8 programmeUnemployed graduates fasttracked in the programme andsnapped up on full time basis byOld Mutual and SanlamIndustry driven demand forBusiness and Systems Analystin the Insurance Sector

INSETA highlightshighlightspage 91INDUSTRY DEMAND DRIVENMODELGraduate Diploma at NQF Level 8, for theCapaCITi 1000 programme IncIt is an industry-demand driven model –Industry advised what critical skills it needs andthe programme was created to meet theseneeds. Increased industry competitivenessas a result of the development of InnovationProfessionals (as opposed to “certifiedprofessionals”), leading to less offshoring fromjobs from the Western Cape.Educators and curriculum developersThe University of Cape Town, InformationSystems Department created a new Post-Increased graduate employabilityThe key focus is on producing more graduatelevel IT talent, by providing employmentopportunities to unemployed graduates tofast-track themselves into IT professionals.Unemployed graduates given a fast track toemployment in a profession in critical shortsupply. Addresses critical skills shortagesundermining competitiveness. Old Mutual andSanlam have snapped up all the graduatesplaced with them.

INSETA highlightspage 92creating seamless career pathwaysCharl Coetzee - Deputy CEO of Northlink FET College with Craig Wyborn (top performingstudent) who is employed at Alexander Forbes and Sandra Dunn, CEO of INSETA.In a first for South Africa’s financial planning field, the 2011 FETI/HETI pilotclass has graduated, with several using the qualification to enter universityand organisers promising to expand the programme in 2013.The FETI/HETI initiative – a collaboration between the Further Education and TrainingInstitute (FETI), the Financial Planning Institute (FPI), the Insurance Sector Education andTraining Authority (INSETA) and the University of the Western Cape (UWC) – aimed to offer“seamless articulation” between Further Education and Training (FET) and Higher Educationand Training (HET) institutes, increasing the number of qualified professional financial plannersworking in South Africa.

highlightsINSETA highlightspage 93Green Paper for post school education and trainingParticipating FET Colleges• The Green Paper provides a vision for asingle, coherent, differentiated and highlyarticulated post- school education andtraining system.• The central problem identified in theGreen Paper is a lack of coherencewithin the post schooling system andbetween the post schooling system andthe labour market.• In South Africa the post schoolingsystem does not function as a coherentrole and provision is fragmented.• It is difficult for students to moveseamlessly between FET Colleges andUniversities and between educationinstitutions and the world of work• The paper calls for closer workingrelationships between our educationinstitutions and that they support eachother. SETAs must fund and supportprovision in Public FET Colleges andUniversities. The SETAs have a crucialrole in building relationships betweeneducation and the labour market• Articulation with the labour market hastwo elements. Firstly it is about matchingthe supply of and demand for skills andsecondly, it is about developing betterlinks between education institutions andindustry to create further opportunitiesfor apprenticeships, learnerships, workexperience and training.• The Green Paper also calls for capacitybuilding of FET Colleges and this willentail amongst others building strongpartnerships between the colleges andemployers to ensure that the collegesare offering relevant occupational andvocational learning programmes thatmake graduates employable.• The vision for 2030 is to have 23%of post school learners in universities(1 500 000) and 60% of them inFET Colleges and other institutions(4 000 000).

INSETA highlightspage 94micro insurancemotho ke motho ka bathoDeputy Minister of the dti, Ms Elizabeth Thabethe gave the keynote address at the Burial Society Indaba 2011 held in Turffontein.“A person is a person because of others”promoting insurance as a careerINSETA provided career guidance to advice learnersthroughout the country. INSETA also participated in INMAGwhich is an industry career guidance publication whichpromotes the insurance sector as a career of choice.

INSETA highlightshighlightspage 95developing scarce and critical skillsMr Cedric Masondo (SASRIA MD), Ms Adeline Singh(INSETA SD Manager), Mr Cyril Ramaphosa (SAADPBoard Chairman), Ms Sharon Snell (INSETA COO) andMr Themba Gamedze (SAADP Non-Executive Director)at the SAADP Alumni function held last year.Cyril Ramaphosa, recognises top performing actuarial students.

INSETA highlightspage 96national disability awards 2011The National Disability Awards 2011held in Johannesburg to coincide withInternational Day of Persons with Disabilities on 3 December, saw theannouncement of winners in five categories, and sent a clear message that peoplewith disabilities are making a major contribution to the South African workplaceand economy.The main objective of the third annual Awards, was to honour and raise the profileof workers with disabilities in all sectors who are making a remarkable difference inthe workplace, as well as individuals and organisations supporting the advancementof people with disabilities.Motivated by her employer ETANAs values of ‘giving’ and ‘making it happen’ youngKarabo decided she was going to also play her part. Fresh into her learnership atETANA she has been promoting People with Disabilities in her workplace and isheavily involved in fundraising activities for Helene Franz Special School. The winnerof National Disability Young Leader Award 2011 is Karabo Nguyuza of ETANA.

INSETA highlightshighlightspage 97joint winnersNETCAREWith a R10 000 finders fee for their employees who refer aperson with disability who gets employed, a serious message ismade.Netcare has set a 5 year target to increase on a year onyear basis the number of disabled person that they employ.Fellow employees are sensitised and motivated to help thecompany find and retain disabled employees. This has resultedin an increase of 48% in disabled employees. They were alsoinvolved in taking 7 disabled persons who were never employedbefore and giving them a life changing experience throughtraining and thereafter permanent employment.SANLAM LIMITEDCompany Award Joint Winners:Netcare (left) and Sanlam (right)The judges have awarded this award jointly to two companieswho have put in place some incredible programmes to makethe workplace accessible, to sensitise their staff members andgone out on a public drive to recruit more learners. Of note,SANLAM implemented in the year a learnership for FinancialServices Administration with 17 disabled learners. Because theyadapted the learning contents and used RPL to facilitate access,we saw an above average performances from disabled learnerson these programmes. 100% of the learners achieved theirqualification and 80% of them are now permanently employedat SANLAM.

INSETA highlightspage 98Insurance sector sets an exampleKey note speaker, Deputy Minister of Women Children and Persons with Disabilities, Ms Hendrietta Bogopane-Zulu, said that INSETA has set anamazing example by holding the awards; “We need to elevate this awareness to higher levels. Going forward, the government must partner withINSETA so that we can inform programmes – because it’s one thing to implement programmes, but another altogether to ensure they have impact.”

Physical AddressGround Floor, Northwing, Oakhurst Building, 11 StAndrews Road, Parktown, JohannesburgPostal AddressP O Box 32035, Braamfontein, 2017Telephone(011) 544 2000INSETA call centre086 113 0013Facsimile011 484 0862info@inseta.org.zawww.inseta.org.zaRP: 185/2012ISBN: 978-0-621-41021-1