Finance
With the formation of the South African Rail Commuter Corporation
Ltd in 1990, the financial staff were faced with a big challenge.
A Financial Division which conformed to the standards of generally
accepted accounting practices had to be created, whilst still conducting
business normally. To do this it was necessary to create and implement
an internal control system for the adequate management and utilisation
of available funds. These systems have been implemented with great
success and are performing above expectation.
The Corporation was divided into functional divisions and the
financial division reports on the functional aspect of financial
issues. Each division is responsible for an operating budget on
which Finance provides a reporting function. The provision of
financial information to line managers keeps them aware of income
and expenditure levels of the Corporation which facilitates decision
making in their area of expertise.
The corporation is unique in that virtually the entire operating
of its business is run by an agent at a set annual fee. During
the first year of operation this fee necessarily had to be verified
as the State was subsidising the socio-economic commuter service
through a transport subsidy. The calculation of the contract amount
based on Spoornet's average costing system for the Republic was
insufficient, and it was decided to negotiate the contract amount
region by region. During the year under review much attention
was paid to analysing the duties performed by the agent in order
to identify functions performed by a third party and merely managed
by the agent.
The agent is also responsible for the collection and payment
of train fares to the Corporation. During the year an amount of
some R310 million was collected. Fares are collected daily at
approximately 350 stations countrywide, which would place a tremendous
administrative burden on the Corporation if it were to handle
this task itself. Consequently, it was agreed that monthly budgeted
amount be paid over on a daily basis. A final reconciliation is
done the following month. The prospect is to streamline the income
system to such a degree that in future each station will pay its
fares directly into the Corporation's bank account.
Computers have played a leading role in the smooth running of
the finance section in the past year. Staff have equipped themselves
to be able to access total management information and accounting
responsibility from a central computerised system. Programmes
have been acquired or developed to ensure better control and comprehensiveness
of financial statements.
When the Corporation was established, it received enough fixed
assets and rolling stock to ensure the effective running of the
Metro commuter service. The total value of the assets was R4 146
million for which a share certificate was issued to the Government.
A treasury department was established during the year to raise
funds for the shortfall after the State subsidy. Capital market
shares have been issued over a three and seven year period as
well as a money market instrument in the form of cycle stock.
Insurance against loss of or damage to Corporation assets as
well as potential third party claims were actively investigated
during the past year. An agreement was reached with the agent
to provide insurance against such claims up to 31 March 1991.
As a result of the extent of the assets and activities, insurance
liability will have to be borne by a number of insurers in future,
and managed by an insurance agent.
Capital expenditure during the year amounted to R76,2 million
compared to a budgeted R87,2 million.
The objectives of the financial division can be summarised as
follows:
- Creation of an accounting system accounting for all income
and expenditure, independently of the agent;
- The lowering of the subsidised amount through effective management
of funds to reduce finance costs;
- Optimal employment of staff and technology to achieve the
Corporation's mission.
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