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Transcript of Compensation Fund Briefing to the Portfolio Committee on CF Preliminary Annual Performance,...
Compensation Fund
Briefing to the Portfolio Committeeon CF Preliminary Annual Performance,
Strategic Plan for 2013 -2018 and 2013/14 Annual Performance Plan
Overall Responsibility:Compensation Commissioner: Mr. S. Mkhonto
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Table of Contents 1. Overview & Objectives of the Fund 2. CF Measurable Objective 3. Service Delivery Outcomes 4. Vision and MissionPART A : PRELIMINARY ANNUAL REPORT5. CF Performance 6.Challenges contributing to non achievement of some indicators and how we are responding to them 7.Auditor General’s Report8. Summary of Budget allocated and expenditure as at end of Dec 2012
PART B: 2013-2018 STRATEGIC PLAN AND 2013/2014 ANNUAL PERFORMANCE PLAN9. Issues that were in the plan but not finalised10. Priorities for 2013/1411. Compensation Fund Strategic Plan and APP for 2013/14 12. Budget Allocation and MTEF Estimates13. CF expectations of the Portfolio Committee
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Overview & Objectives of the Fund• The Compensation Fund is a public entity of the Department of
Labour.
• The Fund administers the Compensation for Occupational Injuries and Diseases Act no. 130/1993 as amended by the COIDA 61/1997.
• The main objective of the Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from such injuries or diseases, and provide for matters connected therewith.
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CF Measurable Objective
“To pay compensation for death or disablement caused by occupational injuries and diseases
sustained or contracted by employees within 90 days of receipt of full documentation”
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Service Delivery OutcomesGovernment Service Delivery Outcomes
DOL Strategic Objectives CF Strategic Objectives Accountable Programme
Outcome 4: Decent employment through inclusive economic growth
Strategic Objective 3: Protecting vulnerable workers
Promote policy advocacy Communication
Strengthening corporate governance Risk Management, Internal Audit
Integration of CF with the comprehensive social security reforms
Legal Services
Strategic Objective 5: Strengthening social protection
Providing an efficient social safety net Compensation, Medical
Improve financial viability Finance
Outcome 12: An efficient, effective and development oriented public service and an empowerment and inclusive citizenship.
Strategic Objective 8: Strengthening the institutional capacity
Provide professional, efficient and client orientated human resources
HRM
Improve corporate support and services ICT
Enhance quality and access to COIDA services and information
Organisational Effectiveness, PMO, ICT
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Vision
• To be an employer of choice and an internationally reputable provider of compensation for occupational injuries and diseases, rehabilitation and reintegration services.
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Mission
• To utilise\leverage automated solutions to provide efficient, quality, client-centric and accessible Compensation Fund services.
• To ensure effective rehabilitation and re-integration services, through reputable (proven) programmes.
• To ensure financial viability through efficient collections and prudent investments.
• To promote job creation initiatives through social responsible investments.
• To develop and retain a competent and content workforce.
PART A
PRELIMINARY ANNUAL REPORT
(CF PERFORMANCE AGAINST THE 2012-13 ANNUAL PERFORMANCE PLAN)
Status Legend No of Indicators
Achieved Achieved 100% + of Target28 (62%)
Partially Achieved Achieved 50% - 99% of Target
7 (16%)
Not Achieved Achieved 0% - 49% of Target
10 (22%)
Summary of Performance
Claims Registered Accepted Claims Number of Awards
Amount
E-Claims SAP E-Claims SAP E-Claims SAP
26584 175140 14936 84290 47 539 969
201 724 99 226 48 508 986 687 432
Compensation Claims April 2012- March 2013
Compensation Fund Claims (Comparison with previous financial years)
2009/2010 2010/2011 2011/2012 2012/2013Claims registered 200560 215493 141437 201 724
Claims Accepted 178293 190168 110180 99 226
Claims Repudiated 361 447 129 323
Claims with outstanding information/not accepted
21906 24878 31128 83552
Number of Payments issued
340159 329109 205150 48 508
Monetary value Paid R 771 801 533 R 801 774 215 R 549 000 702 R 986 687 432
Claims breakdown per benefit : April 2012- March 2013
Benefit Type Number awarded Amount awarded (R)
Additional Compensation(Sect 56) 3 2 753 026
Burial Expenses 207 1 686 996
Lump sum To Widow 459 5 913 711
partial Dependency 14 437 870
PD Lump sum 3 567 107 418 213
Pension (Employee and fatal) 25 536 783 804 057
TTD 18 722 84 673 559
TOTAL 48 508 986 687 432
Claims breakdown and comparison with the previous years
Benefit typeAwards 2011/2012
Awards2012/2013
Amount awarded 2011/2012
Amount awarded 2012/2013
Additional Compensation
sect 56 1 3 200 000 275 3026
Burial Expenses 184 207 1 372 866 1 686 996
CAA 8 641 - 12 520 809 -
Lump sum to Widows 240 459 2 467 344 5 913 711
Partial Dependency 7 14 77 843 437 870
PD Lump sum payment (30%)
4 206 3 567 93 395 328 107 418 213
Pension 168 310 25 536 344 526 553 783 804 057
TTD 23 561 18 722 94 439 959 84 673 559
Totals 205 150 48 508 549 000 702 986 687 432
Claims per Province April 2012 –March 2013
PROVINCE CLAIMS REGISTERED CLAIMS ADJUDICATED
Eastern Cape 276 114
Free State 212 117
Gauteng (Pretoria Office) 23 201 13 092
Gauteng (JHB Office) 750 447
Kwazulu-Natal 768 462
Limpopo 189 92
Mpumalanga 136 52
North West 166 97
Northern Cape 53 32
Western Cape 833 431
Other SAP 175 140 84 290
TOTAL 201 724 99 226
Claims Comparison per Provincial Office
Province Claims registered 2011/2012
Claims registered2012/2013
Claims accepted2011/2012
Claims accepted2012/2013
Eastern Cape 24,452 276 24,491 114
Free State 3,516 212 3,375 117
Gauteng Pretoria Office 93,407 23 201 103,974 13 092
Gauteng Johannesburg Office
1,685 750 1,332 447
Kwa -Zulu Natal 4,853 768 4,008 462
Limpopo 1,672 189 573 92
Mpumalanga 3,362 136 6,276 52
North West 870 166 1,983 97
Northern Cape 2,561 53 778 32
Western Cape 4,906 833 4,145 431
Other SAP-ICM 23248 175 140 13,647 84 290
Totals 164,532 201 724 160,554 99 226
STRATEGIC OBJECTIVE:PROVIDING AN EFFICIENT SOCIAL SAFETY NET
A total of 21 SCSF projects were funded and monitored namely, Qholaqhwe, Mangaung; Maokeng; Hope Town; Marydale; Sika Sonke; Mooi River; Bergville; UKZN; Himville; Matatiele; Aliwal North; Leandra; Nkomazi; Nkunzi; Opret; Mamadi; Community Regeneration; Swellendam; Lethabong and Workers World Media Productions.
All these projects have finalised their respective workshops for the first tranche payment by 31 December 2012.
Reviewed compensation benefits by end of financial year. Proposal was signed by the Minister and already gazetted for public comments.
STRATEGIC OBJECTIVE:PROVIDING AN EFFICIENT SOCIAL SAFETY NET
Medical claims 2012 / 2013 Financial yearA 12 % increase noted in Invoices processed this financial year. A decrease of 22 % noted in Rand Value this financial year.
Over the last five financial years , the Fund has paid an average of 800 000 invoices per year.The Fund was experiencing a decrease in payments due to challenges on the implementation of the new IT system. This trend was noted up to Quarter 3 ,however there were mitigations such as the Medical Backlog project (Electronic processing of invoices), and the Claims backlog project in Quarter 4.The drop of Rand value is attributed to the project processing a high number of invoices with low monetary value and the controls on the electronic system used during the Backlog Project.
2011/2012 2012 / 2013
No. paid Amount No. Paid Amount
824 924 R 1 872 583 374. 00 934 834 R 1 426 189 044. 00
STRATEGIC OBJECTIVE: PROVIDE PROFESSIONAL, EFFICIENT AND CLIENT ORIENTATED HUMAN RESOURCE (HRM)
More than 100% of the identified training needs were met against the annual target of 82%. 40 training needs were identified and 62 were addressed, which translates to 117% achievement.
In contributing towards job creation, 111 interns were appointed by the end of 31st March 2013 against the annual target of 100 set by CF.
The Fund consistently maintained its vacancy rate. The vacancy rate is 2.81% against the 10% vacancy norm.
STRATEGIC OBJECTIVE: STRENGTHENING CORPORATE GOVERNANCE (RISK MANAGEMENT) Out of 142 Fraud and corruption cases cases 86 finalized within 4months which resulted in two medical health
care providers convicted and sentenced to three years house arrest and five years suspended for both. they were also ordered to pay back R2,1m and R455,212.60 with 15% interest respectively.
Another 4 Medical health care providers are still on trial for defrauding the Fund the value of R1,359,876.7
7 Ex-employees are also on trial for colluding with Health care providers.
Two Health care providers were on trial by HPCSA and the rest are outstanding.
STRATEGIC OBJECTIVE: INTEGRATION OF CF WITH THE COMPREHENSIVE SOCIAL SECURITY REFORMS (LEGAL SERVICES)
Draft amendments of COIDA, which includes a chapter in Reintegration and Rehabilitation to work, were completed and submitted to the LP&IR branch of the Department of Labour for quality assurance and further consultation.
STRATEGIC OBJECTIVE: PROMOTE POLICY ADVOCACY (COMMUNICATION)
Communication Strategy was successfully implemented. - Educational adverts covering employers, employees and
beneficiaries ran on national TV (SABC 1,2,3 and Etv), national radio stations in all official languages.
- Educational advert covering beneficiaries ran on community newspapers in different languages. Educating them on what services the Fund is offering and what their rights are.
- Radio interviews were conducted on community radio stations in different languages educating and responding to enquiries relating to covering all COIDA.
- Adverts were ran on Commuta net (train stations and buss stations) covering employees and beneficiaries TO ENSURE MAXIMUM REACH.
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. NOTICE TO EMPLOYERS- Advertorial ran on national newspapers informing employers of the deadline and how to submit
RETURN OF EARNINGS- Television adverts on SABC 1-3 and etv.- Radio advertorials ran on national radio stations in all official
languages.- Alive advertising, adverts for beneficiaries ran on alive screen nationwide from February to March 2013,- On-line advertising ran on news sites from Feb to March 2013,- Billboard advertorials ran on all Gautrain stations from the month of March 2013, - Airport screens advertorials ran from the month of March 2013.
IMPACT OF THE RETURN OF EARNINGS ADVERTS
As at 28 February 2013, before the advert, we already had 39 000 employers registered on the ROE Website.
85 000 submissions have been filed successfully on the ROE Website between 1 April to 30 April 2013.
The Call Centre and Walk in Centre online submission statistics as of March to 30th April: 16,654 calls and 9,822 emails.
STRATEGIC OBJECTIVE: IMPROVE FINANCIAL VIABILITY (FINANCE)
R1,6 Billion was collected in total in quarter 4 against the annual target of R1 billion per annum of the debt book as at 31 March 2011.
The implementation of the RoE website in 2012 for online submissions has been successful. For the period until the end of March 2013 94,302 online submissions were received with total revenue of R3,3 billion.
In the last two months when the 2012 submissions were opened for submission we have received 82,870 submissions with total revenue of R3,4 billion.
8.10 billion was invoiced by the end of quarter 4 against a target of R5.6bn
STRATEGIC OBJECTIVE: IMPROVE FINANCIAL VIABILITY (FINANCE)
The Fund maintained its financial ratio target. The current ratio was 4:1 against a target of 2:1
For the 4th quarter the Fund received returns on the Compensation Portfolio of 1.39% against a targeted benchmark of 1.24% and on the Pension Portfolio 1.09% against a targeted benchmark of 1.06%.
STRATEGIC OBJECTIVE: IMPROVE CORPORATE SUPPORT AND SERVICES / ENHANCE QUALITY AND ACCESS TO COIDA SERVICES AND INFORMATION (ICT)
The Fund’s IT governance framework was finalised and approved.
A Business Continuity Plan was developed and approved.
The call centre infrastructure was upgraded to newer technologies.
The Return of Earnings website went live and is being extensively used by employers to submit returns.
The Fund is in the process of procuring a new IT solution to pilot in the new year.
STRATEGIC OBJECTIVE: STRENGTHENING CORPORATE GOVERNANCE (Internal Audit)
Risk-Based 3 year and Annual Audit Plan Drafted approved by Audit Committee on the 11th June 2012.
Reporting of quarterly reports to the Audit Committee. 4 Audit Committee meetings took place between April 2012 – 31st December 2012.
As at December 2012, a total of 52% (12 out of 23) of audits were finalised and presented at Audit Committee.
Developed and implemented the internal audit Methodology. Teammate software acquired and the methodology is fully incorporated.
A combined assurance model (IA,RM and AG) was drafted and will be implemented in the new financial year.
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SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM
ChallengeInadequate IT Systems.Turnaround time in processing of compensation claims.Backlog in processing claims and payments.Document management.Records management system.
InterventionProcess automationPilot the RMA system.Initiated a Backlog Project.
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SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM (CONT.)
ChallengeDelay and/or non-reporting of accidentsEmployer non-compliance
InterventionInclude employers in Educational CampaignsEngage Enforcement Inspectorate
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SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM (CONT.)
ChallengeHuman capacity constraints
InterventionFull implementation of the new structure, especially by filling critical posts in the area of Finance and the post of Chief of Operations.
Auditor-General Report
2009 2010 and 2011 2012
Revenue contributions and assessment debtors
Disclaimer Disclaimer Qualification
Bank (reconciliations/ suspense accounts /balances)
Disclaimer Qualification Cleared
Claims incurred Disclaimer Disclaimer Qualification
Accounts payable Disclaimer Qualification Cleared
Property, plant and equipment Disclaimer Qualification Cleared
IFRS 7Disclaimer Qualification
Cleared
Audit Qualification 2011/12Assessment Revenue and ReceivablesCompensation Fund does not have an adequate system and process in place to ensure that all employers are correctly assessed and billed. Therefore I was unable to verify completeness and accuracy of revenue contributions for the year of R4, 9 billion (2011: R4, 8 billion ) as well as completeness and valuation of assessment debtors of R5, 7 billion (2011:R4, 9 billion . The completeness and valuation of the accrual for assessments not raised totalling R1,5 billion. No further alternative procedures could be performed.
Challenges:Inadequate IT SystemsCapacity and skills shortages Prior year backlog reductionUnregistered/untraceable employersNo link between CIPC (CIPRO) and FCEmployer non-complianceSlow networks
Assessment Revenue and Receivables (cont.)
Action Plan: Short-Term•Improvement on standards and norms•Appoint additional managers –new proposed structure•Managers to manage- monitor performance more strongly•Update employer contact details •Accurate Assessment of all received employer ROE•Follow up and clear all queries timeously•Raising of Estimates for employers who did not return ROE’s•ROE project implemented to remove the backlog•Implementation of ROE website and online submission
Assessment Revenue and Receivables (cont.)•Action Plan: Medium - Long term•Comparison of CF employer database to UIF or SARS database.•Adopt a simpler tariff model in order to standardise tariff rates/Actuarial rates.•Appoint payroll auditors
Audit Qualification 2011/12Interest and Penalties on assessment employersI was unable to verify the accuracy and completeness of interest and penalties for late submissions of return of earning’s and late payment of assessment due to interest and penalties incorrectly charged to assessment debtors. The entity’s records and system did not permit the application of alternative procedures relating to interest on assessment of employers. Consequently I did not obtain all the information and explanations I considered necessary to satisfy myself as to the accuracy and completeness of interest and penalties on assessment employers amounting to R347 million.
Action Plan: Short term-Medium term•Identify debt collection service provider •Ensure proper system configuration•Implement moratorium on interest and penalties until such time as system configuration resolved.
Audit Qualification 2011/12Medical claimsI was unable to express an opinion on the completeness, accuracy and occurrence of benefits paid. Included in the R2,2 billion disclosed in note 4 of the financial statements is an amount of R43 million relating to permanent disability and medical claims that have been paid but could not be reconciled to the benefits claims listing. The entities lack of internal control processes did not allow the performance of alternative audit procedures to confirm the completeness and accuracy of benefits paid.
Action Plan: Short- term•Recruit appropriately skilled financial staff•Ensure proper system configuration•Perform monthly reconciliations•Ensure proper management review of reconciliations
Matter of EmphasisMaterial losses Included in Material Losses of R26 million disclosed in note 24 to the financial statements is an amount of R4,8 million relating to (new cases) that were finalised in the current year. The balance of R21,2 million relates to cases reported in the prior year but only finalised in the current year. An amount of R3,1 million relating to these cases was recovered.
Action Plan: Short -term•Review the Fraud prevention Strategy•Review effectiveness of fraud prevention controls •Implement the fraud Hotline.
Performance Information
Presentation of informationThe reported performance information was deficient in respect of the following criteria:Presentation of information: Performance against predetermined objectives is reported using the National Treasury guideline
Usefulness of informationOf the total number of planned targets only eight out of twenty two targets were achieved during the year under review. This represents 63.64% (>20%) of total planned targets that were not achieved during the year under review. This was as a result of the Fund not adequately following up on quarterly targets not achieved during the quarterly monitoring reporting process and implementing action plans to address the non achievement.
Action Plan: Short-termoStrategic plan – SMART principles adopted in setting objectivesoMonthly/ Quarterly reporting of Performance informationoIdentify action plans to address non achievement of targets.
CF 2012/13 BUDGET ALLOCATION& SPENDING
2013/14 BUDGET AND MTEF ESTIMATES
PART B
2013 – 2018 STRATEGIC PLAN AND 2013/14 ANNUAL PERFORMANCE PLAN
Issues that were in the plan but not finalised Enhancement of the Integrated Claims and Financial Management Systems to
deal with AG findings.- The systems development which are in progress include MIS, Letters of Good
standing, Remittance advices, Electronic Portal). Implementation of the Revenue Management Strategy.- Marketing the ROE Website to increase employers access and invoicing- Incentives for filling on line and paying within specified period- Source Pay Roll Auditors to enforce compliance Backlog management (The Rescue Plan: Claims Registration and Adjudication
Projects is in progress). Implementation of the approved Organisational Structure.
- The structure is implemented on PERSAL system- Critical posts are being advertised
Issues that were in the plan but not finalised (cont.) Decentralisation of COIDA services to Provinces. Amendment of COID Act. COIDA Stakeholder engagement.
Priorities for 2013/14 Piloting the RMA system Engage with the medical service in the bargaining chamber Full implementation of the organisation structure Capacitate the Fund in the area of Finance and fill the post of Chief of
Operations within the Fund Decentralisation of COID services Finalisation of the Turn-around Strategy and the implementation
thereof. The amendment of COIDA Claims management strategy
Strategic Objective: Provide an efficient social safety net
Strategic Objective: Provide an efficient social safety net
Strategic Objective: Provide professional, efficient and client orientated human resource
Strategic Objective: Provide professional, efficient and client orientated human resource ( Cont.)
Strategic Objective: Strengthening corporate governance
Strategic Objective: Integration of the Fund with the comprehensive social security reforms
Strategic Objective: Integration of the Fund with the comprehensive social security reforms (Cont.)
Strategic Objective: Promote policy advocacy
Strategic Objective: Improve financial viability
Strategic Objective: Improve financial viability (Cont.)
Strategic Objectives: Improve corporate support and services / Enhance quality and access to COIDA services and information
Strategic Objective: Enhance quality and access to COIDA services and information
Strategic Objective: Enhance quality and access to COIDA services and information (Cont.)
Strategic Objective: Enhance quality and access to COIDA services and information
Strategic Objective: Strengthening corporate governance
Strategic Objective: Strengthening corporate governance (Cont.)
CF EXPECTATIONS OF THE PORTFOLIO COMMITTEE
Support the Amendment of COIDA process. Provide support, advice and guidance on any initiative that the Fund is
undertaking.
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THANK YOU