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Report on the Guardians Fund and the Masters Office

Report on the Guardians Fund and the Masters Office. Portfolio Committee on Justice and Constitutional Development 8 September 2010. Introduction and background.

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Report on the Guardians Fund and the Masters Office

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  1. Report on the Guardians Fund and the Masters Office Portfolio Committee on Justice and Constitutional Development 8 September 2010

  2. Introduction and background • The Guardian’s Fund (GF) is a statutory trust established in terms of Chapter V of the Administration of Estates Act, 1965 (Act 66 of 1965). • The purpose of the GF is to protect and manage monies of persons deemed to be legally incapable or lacking the capacity to manage their own affairs as well as undetermined, unknown or absent heirs and untraceable persons. • The GF has representation in Six Masters Offices namely Pretoria, Cape Town, Pietermaritzburg, Grahamstown, Bloemfontein and Kimberley • Some of the functions are inter alia to - process inheritance applications and make payments to persons entitled thereto - invest monies held with the PIC - Interest calculation in respect of money's received on behalf of beneficiaries

  3. The Financial Management Response • The governance obligations of the Department demanded that a robust response be evolved to address the issues plaguing the Fund. • The Department mobilized resources and expertise and instituted a Project to turn-around and implement various financial and accounting initiatives to redress the decline of the financial environment and ensure better accounting for the Fund. • From September 2006 a multi skilled project team was directed at addressing: - Procedural challenges (staff doing things incorrectly); • - Non-compliance with key legislation and prescripts; • - Errors and accounting backlogs; • - Addressing all processing backlogs; and • - Facilitating the completion of a computer system roll-out.

  4. Audited Outcomes • The Guardians Fund audit report has been consistently Qualified • or Disclaimed from 1993 through to 2006/7 Financial year. • Since then …. • 2009/10 Unqualified Audit report NAQ (No Audit Qualification) • 2008/09 Unqualified Audit report NAQ (No Audit Qualification) • 2007/08 Unqualified Audit report NAQ (No Audit Qualification) • 2006/07 Qualified Audit report (Uncertainty around opening balances)

  5. Accounting Challenges Accounting challenges facing the Guardian's Fund can be ascribed to the issues listed below: • Staff Capacity constraints • Skills Shortage • Inadequate/antiquated accounting systems • Evolving financial accounting standards (GAAP) • Explosive Growth in Fund Size

  6. Surpluses over the years 2006/07 – R65,1 million 2007/08 – R107,4 million 2008/09 – R48,2 million 2009/10 – R119,1 million These surpluses fluctuate as return on investment fluctuate. The beneficiaries are however shielded from the fluctuation

  7. Investments: Public Investment Corporation In terms of Section 87 of the Administration of Estates Act, No.66 of 1965) beneficiary amounts received in the Guardians Funds should be invested with the PIC. All monies except for those required for immediate disbursements are invested with the PIC.

  8. Volumes and values of Receipts:

  9. Transaction volumes and Receipts

  10. Volumes and values of payments :

  11. Growth in beneficiary receipts and payments

  12. GUARDIAN’S FUND ACHIEVEMENTS • Return on investment of 8.5%; • Growth of Fund 15% or R770million • Improved Controls and Turnaround times • MOVIT – online verification of fingerprints in collaboration with Dept of Home Affairs • Unqualified Audit reports • 5 of the 6 Guardians Funds have complete verified beneficiary detail

  13. Service Delivery • The Fund is growing on average at 15% I terms of net-asset base • The transactions doubled from 2008-2010 due to the age of majority being reduced from 21 to 18 years • In 2009-2010 The Fund paid out R754m, which is money in the hands of vulnerable people enabling them to participate in the economy • Services to the beneficiaries are rendered at no cost to them • Interest rate is higher than most low risk investments • The beneficiaries are cushioned from market fluctuations due to the conservative investment strategy that we adopted few years ago i.e we invest at 8.5 return and we pay at 7.5% to beneficiaries. The 1% difference between 8.5 and 7.5 goes to reserves till the end of the financial year where after paid over to the National Revenue Fund.

  14. DECEASED ESTATES, CURATORSHIPS, TRUSTS & INSOLVENCIES 2008 – 2009 Comparisons

  15. Deceased estates registered from 1 January 2010 – 7 September 2010

  16. DECEASED ESTATES, CURATORSHIPS, TRUSTS & INSOLVENCIES 2008 – 2009 Comparisons

  17. COMPARISON: DECEASED ESTATESAVERAGE INVENTORY VALUE / NUMBER OF CASESfor the period January to December 2009

  18. Link of Performance to current strategy Guardian Fund • Previous target for payment from the Fund was 60 days now it is 40 days • 1st quarter we met this target in 4 of the 6 Masters offices and we project to meet for the rest of the year. Deceased Estates • The target is 4 months finalisation of estates less than R125 000. We are on target and project to be on target for the rest of the year • 125000 estates are finalised within 12 months and we are on target

  19. PRESIDENTIAL HOTLINE COMPLAINTS

  20. PRESIDENTIAL HOTLINE COMPLAINTS

  21. CHALLENGES • Physical Structure • Location of our Offices • Proper Accommodation • Cost of accommodation • Relocation impact on service delivery • Organizational Structure • Vacant senior posts; Chief Master, Chief Director, • Right Sized establishments • Communication • Establishment of the Office of the Chief Master • Building Capacity

  22. Masters Environment 1. Focus on our Core Business • Support the vulnerable! • Compliance vs. People focus • Shared Services • Guardian’s Fund 2. Reform • Legislation – Curatorships, Estates & Rescues • Policies – focus on the vulnerable • Procedures & Directives

  23. Masters Environment .3 Stakeholder Management • Legal and Accounting Profession • Legal Aid South Africa • Banks & Trust Companies • Social Welfare entities • Improved NGO and CBO co-operation

  24. Highlights • The increase in the number of people served daily • Co-operation agreement with LASA • ICMS roll out & implementation at 402 Magistrates Courts (Service Points) • Online verification of fingerprints implemented in 2 offices

  25. Payments from the Guardians Fund in Pietermaritzburg period March to August 2010 MONTH VALUE NUMBER MARCH R 17 979 839-00 894 APRIL R 43 428 084-00 948 MAY R 21 879 020-34 1049 JUNE R 14 121 923-21 927 JULY R 20,078,190.99 902 AUGUST R 4 168 333-28 123

  26. Average of New Matters Registered in 2010 per day • January                       714 • February                      832 • March                           757 • April                             767 • May                             874 • June                            886 • July                              915 • August 860

  27. MONETARY VALUE OF BUSSINESS IN THE MASTERS • The following table depicts the totals for the first two months of 2010 • R 4,96 billion passed through the Masters during January and February 2010 • This averages out to R124Million a day; or • R15, 5 Million an hour! • At the bottom-end of the financial range a 22 553 people had a R542Million while at the top end only 68 people had an amount of R311Million.

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