. Audit income: The audit income is made of revenue generated by AGSA's employees, private audit firms, recovery of subsistence and travel costs from the auditees and the audit fees paid by the national, provincial and local governments. AGSA budgeted for the audit income of R2.88 billion; however, the actual audit income as at 31 March 2012 compared to the target decreased to R2.7 billion. The decrease on audit income results from the own income and subsistence and travel costs from the auditees; . Tariffs or charged out rate per hour: The budgeted tariff rate per hour was R489, however, the actual tariff rate was R491; . Gross profit: Gross profit remained at 30 per cent the as the previous year within the set target for 2011/12. The variance of 3 per cent results from the present value adjustment of R32.9 million, which was determined at the end of the financial year due to the requirement of the International Accounting Standards; . Direct and indirect overheads: The direct costs were budgeted for 67 per cent against the audit income, however, the actual direct costs increased to 70 per cent on 31 March 2012 exceeding the target by 3 per cent. Indirect costs were budgeted for 31 per cent; the actual expenditure fell at 29 per cent below the target by 2 per cent. AGSA should be commended for maintaining the average trend of expenditure in both the direct and indirect costs. These costs are not easily controllable because are also determined by the economic external factors beyond their control; . Surplus: The target to accumulate surplus was set at 3.8 percent, the actual surplus fell at 4.8 percent (R99 million). The increase in actual surplus is due to interest income being higher than budgeted and remarkable under-spending on indirect cost in certain classes of operating expenses such as staff remuneration, professional assistance and information technology projects. The under-spending results from delays in the start of some projects; . Financial position: The financial position of AGSA indicates a significant increase in equity. Equity is the balance after all debts and obligations have been paid off. It includes outstanding debts that can be converted to cash in a short period of time or within a year. Therefore, AGSA has a strong financial position that means it can still carry on its day-to-day business; . Debtors: At the end of 2011/12 financial year, the total outstanding debt was R480 million compared to 31 March 2011. This indicates that a large number of auditees are not paying their audit fees on time or not paying at all; . Debt collection: The local government on 31 March 2012 was still owing R206 million of the total outstanding debts of R480 million (ageing for 233 days), the national departments owing R63 million (outstanding for 15 days), provincial departments owing R124 million (outstanding for 37 days) and the statutory bodies owing R58 million (ageing for 79 days). AGSA received R29 million from the National Treasury covering the debts of some low capacity municipalities. Due to budget constraint National Treasury could not afford the R24 million from the R53 million that was expected from low capacity municipalities; . Creditors: AGSA paid its creditors on within the agreed period, this is one of leading by example indicators. In its strategic plan AGSA promised to pay its creditors within 45 days, however, they were be to pay their creditors within 31 days exceeding their target by more than 14 days. This also indicates that AGSA has no cash flow problem; . Quick test ratio: AGSA's closing cash balance increased from R352 million in 2011 to R415 million as at 2012. This indicates that AGSA has a healthy financial position although it also confronted with a challenge of debt collection from the municipalities.