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Annual Report 2008/09 Presentation to the Portfolio Committee on Social Development

Annual Report 2008/09 Presentation to the Portfolio Committee on Social Development. The presentation covers the following: Part One: Overview; Part Two: Achievements against 2008/09 Strategic Priorities; Part Three: Budget and Expenditure for 2008/09 (Financials);

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Annual Report 2008/09 Presentation to the Portfolio Committee on Social Development

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  1. Annual Report 2008/09 Presentation to the Portfolio Committee on Social Development

  2. The presentation covers the following: Part One: Overview; Part Two:Achievements against 2008/09 Strategic Priorities; Part Three: Budget and Expenditure for 2008/09 (Financials); Part Four: Auditor-General Report Part Five: Challenges and Concluding Remarks. Outline of the presentation

  3. PART ONE Overview

  4. SASSA derives its mandate from the following Acts: The Constitution of the RSA, 1996 (Act No.108 of 1996); “Everyone has the right to have access to : Social Security, including, if they are unable to support themselves and their dependants, appropriate social assistance” Social Assistance Act, 2004 (Act No.13 of 2004); One of the key objects of this Act is to “provide for the administration of social assistance and payment of social grants.” South African Social Security Agency Act, 2004 (Act No.9 of 2004); One of the key objects of this Act is to” act, eventually, as the sole agent that will ensure the efficient and effective management, administration and payment of social assistance.” Mandate

  5. To ensure the provision of a comprehensive social security service against vulnerability and poverty within the constitutional and legislative framework. SASSA Strategic Intent Vision “To provide world-class social security services”

  6. To administer quality social security services, cost effectively and timeously using appropriate best practices by: Developing and implementing policies, programmes and procedures for an effective and efficient social grants administration system; Promotion and protection of human dignity; and Delivering innovative, cost-effective and efficient services to individuals, their families and community groups via easy multi-access channels using modern technology. Mission

  7. Priorities for the year under review: Improving the quality of service delivery; Improving organisational capacity; Improving payment services; Enhancing the integrity of the grant process; Improving financial management; and Minimising fraud. Strategic Priorities

  8. Confidentiality; Integrity; Fairness; Transparency; and Equitability. Values

  9. Theme Paying the right social grant, to the right person, at the right time and place. NJALO!

  10. PART TWO Achievements Against 2008/09 Strategic Priorities

  11. Over 13 million South Africans receive social assistance benefits 9 million are children; 2.9m are older persons; and 1.28m are people with disabilities The number of people receiving grant increased from 12,3m in 2007/08 which represents a growth of 5.2% KwaZulu -Natal has the highest number of grants recipients followed by EC and LIM regions respectively; NC has the lowest number of grants recipients Overall Achievements

  12. Grant Uptake for Financial Years 2007/08 and 2008/09 • The table shows that in 2008/09 there was an increase of 639,708 in grants uptake which shows a growth rate of 5.2% over the previous financial year • There is also a decrease in the uptake of disability and war veterans grants

  13. Social Assistance grant expenditure • The table shows that SASSA has spent over R69 billion rands in payment for the social grants in 2008/09; and • There was a significant increase in grants as compared to 2007/08 social assistance grants

  14. New policy Directives Age Equalisation (Reaching 100% of all men aged 63 and 64 by 31 March 2009) Implemented phase 1 of the age-equalization for 63 and 64 year old males from 1 July 2008. In total106,109 males were registered Gradual Expansion of CSG Implemented the extension of the Child Support Grant (CSG) to children up to the age of 15 from 1 January 2009. A total of 30,866 applications were received up until 31 March 2009 Overall Achievements

  15. New policy Directives (continued) Means Test Implemented the changes to the means test allowing more persons access to social assistance with effect from August 2008. Adjustments were made on beneficiaries that were already in the system Regulation10 (6) Implemented Regulation 10(6) allowing persons to apply for social assistance without a identity document. At the end of 2008/09 the number of applications with alternative identity documents was about 4 000 Overall Achievements :

  16. Social Relief of Distress (SRD) An initial budget of R124 million allocated to the Agency for 2008/9 was later augmented by R500 million in November 2008, making the total allocation for SRD for the financial year R624m Spending at year end of financial year stood at about R650m (104%) Targets reached Assistance was in the form of food parcels, cash and school uniforms. A total of 765 347 people were recipients of SRD as follows: A total number of 568 909 food parcels / vouchers were issued; A total number of 128 746 school uniforms were issued; Cash payments to 35 679 recipients; and Other recipients 32 013. Priority 1: Improving the quality of service delivery

  17. Improved Application Process Standardised the application and review processes The average turnaround time for the processing of applications in SASSA decreased from 21 to 9 days, with the ultimate target being a single day. Priority 1: Improving the quality of service delivery

  18. Improved Access to Services Services were taken closer to potential beneficiaries, especially to those in the rural areas, through the Integrated Community Registration Outreach Programme (ICROP) Conducted 500 ICROP outreach programmes in all regions Registered over 133 590 beneficiaries and 80% of those registered were child support grants Implemented the Customer Care Charter which places beneficiaries at the centre of our core activities Priority 1: Improving the quality of service delivery

  19. Developed a Code of Conduct and Ethics for SASSA which was provided to all staff members Developed protocol guidelines to foster a culture of professionalism within the context of the Constitution of the Republic of South Africa. The contract and litigation management frameworks were developed to promote uniformity in the management and administration of contracts and litigations; and The frameworks have resulted in reduction in litigation cases against SASSA and ensured standardization in the management of contracts across SASSA. The number of litigation cases has been reduced from 41 505 in 2006/07 to 453 in 2008/09 Priority 2: Improving organizational capacity

  20. There was continuous improvement in most local offices and pay points in terms of access and service provision to beneficiaries in line with the Batho Pele principles; Infrastructure improvement in 27% of pay points; Developed contract and vendor management strategy; Standardized Service Level Agreements (SLA) for cash payment services; Monitored compliance of payment contractors with SLA; Implemented monitoring tool to monitor services by cash contractors which resulted in regions taking corrective measures in improving the payment of grants. Priority 3: Improving payment services

  21. Promoting electronic payment as alternative payment strategy 70% of beneficiaries are paid through cash and 30% through electronic payment SASSA has embarked on a strategy to promote the use of electronic payment where infrastructure exists The migration of grant beneficiaries to electronic payment is proving to be fairly successful Already 49.78% of new approved applications opted for ACB (banking services) and Post Bank. Priority 3: Improving payment services

  22. Management of dormant accounts In May 2007 60 000 dormant accounts were identified by two banks namely Standard and ABSA. In February 2009 the subpoenas were served on the banks. All the banks complied with the subpoena except for Ithala Bank. 39 000 accounts with unclaimed benefits and 250 000 failed bank accounts where the details of the beneficiary did not match that of the account holder were identified. The SIU did an analysis of the 39 000 beneficiaries and found that 10% were already deceased, some beneficiaries had non identifiable identity documents and some were listed on CIPRO. All the 39 000 beneficiaries are currently under review and will be reported on in the current financial year Priority 3: Improving payment services

  23. Developed an ICT service delivery infrastructure network to support the grants administration and payment processes Interfaced with other systems to verify eligibility status i.e. DHA, Persal, GEPF etc; The first phase (registry module) of the implementation of the MIS was finalized in all the Regions. There is now a central Record Management Centre established for each region The MIS was further complemented by the Piloting of the Improved Grant Application Process (IGAP) in the FS, which aims at reducing the turnaround time for processing applications from 21 days to a single day; Applications in the pilot site are being completed within one day. Priority 4: Enhancing the integrity of the grant process

  24. Implemented the Disability Management Model Standardized disability assessment forms implemented in all regions; Trained medical assessors on the new form; In total 88 300 medical reviews were conducted which is more than the 10% targeted for 2008/09 financial year Completed 77% of the backlogs in reviews; Achieved 90% reduction in temporary disability-grant backlogs Priority 4: Enhancing the integrity of the grant process

  25. Developed and implemented an annual Internal Audit Coverage Plan, which clearly articulates the areas of focus for the financial year The reviews conducted included audits that focused on SASSA’s core business and support operations. Good governance was promoted by providing support and guidance to the Regional Audit Steering Committees; In an effort to strengthen and monitor compliance and governance issues, SASSA provided consulting services to the Risk Management Committee, Financial Misconduct Board and ERP Project Steering Committee The intention was to proactively identify risks and provide advice to ensure achievement of objectives. A risk matrix for SASSA was developed in this regard Priority 5: Improving financial management

  26. SASSA brought 3,930 new fraud cases to court and 3,605 of the accused were convicted; 9,911 fraudsters signed acknowledgement of debt valued at R50,2 million; Conducted 28 internal audit reviews Developed Risk Management Framework and Risk register Conducted 25 compliance inspections The Fraud Prevention Strategy was revised and approved Regional Fraud Prevention Committees were established to facilitate information and strategy sharing among stakeholders. Priority 6: Minimizing fraud

  27. Part III: Budget and Expenditure for 2008/09 (Financials)

  28. SASSA Administration Budget & Expenditure for 2008/09; 2007/08 29

  29. SASSA Administration Budget & Expenditure for 2008/09 - Comments The Agency spent 109% of its allocated budget for the period under review This represents an overspending of 9% amounting to R 400 million on Goods and Services The overspending is attributable to inadequate Budget on Handling Fees as well as the agency’s establishment costs and roll out to district and local offices Major overspending recorded on Handling Fees, Lease payments for accommodation, security and cleaning services Most of the planned spending on Capital Assets was suspended in view of the financial constraints facing the Agency and in line with the austerity measures implemented across the agency 30 30

  30. In an effort to address the financial challenges facing the Agency, a request for overdraft was submitted to National Treasury, conditional to the implementation of a turnaround strategy National Treasury subsequently responded in support of the turnaround strategy and the establishment of a joint NT,DSD and SASSA task team to oversee the implementation of the strategy SASSA Administration Budget & Expenditure for 2008/09 – Comments Cont...

  31. Total budget allocation administered by SASSA in 2008/09

  32. Budget Allocation: 2008/09 (SRD with in-year shifts)

  33. As a result of estimated savings in the 2008/09 financial year, driven largely by the lack of adequate administration budget at SASSA, the following additional allocations were approved by MINCOMBUD: An additional R500 million allocated to SRD as a result of rising food prices and the recession increasing poverty; R65 million was taken away from Social Assistance and shifted to Social Administration to manage the additional beneficiary numbers as a result of the policy decisions announced in January 2008 Policy Decisions announced in January to be accommodated within the current allocations: Old Age Equalisation to 63; Extension of the CSG to age 15 as from January 2009, to be accommodated by the savings in the budget; Adjustment Estimates: 2008

  34. Adjustment Estimates: 2008/09 (Social Assistance and SRD)

  35. Adjustments Budget: 2008/09 (SRD with additional shifts)

  36. Expenditure: 2008/09 (Social Assistance and SRD)

  37. Expenditure: 2008/09 (Social Assistance and SRD)

  38. Expenditure: 2008/09 (SRD Actual Expenditure and commitments)

  39. Social Assistance and SRD expenditure highlighted a saving of R445 million. Commitments for SRD amounted to R52 million. A rollover request for SRD amounting to R52 million was requested to be transferred from the social assistance savings. This was fully funded. Rollover Request for SRD: 2009

  40. SRD Targeted and Actual Numbers (Additional Allocation): 2008/09

  41. SRD Target and Actual Numbers (Additional Allocation): 2008/09 …2

  42. Social Assistance expenditure for 2008/09 amounted to R70,093 billion. Actual SRD expenditure amounted to R623 million, with commitments amounting to R52 million. Social Assistance and SRD expenditure highlighted a saving of R445 million. The rollover request for R52 million was approved (in full) for SRD, which was funded from the social assistance savings. Total adjusted expenditure for SRD amounted to R675 million for 2008/09 financial year. Comments on Grants and SRD spending

  43. PART FOUR Auditor-General Report and Comments

  44. SASSA Administration Audit Findings 2009/09

  45. The Agency has received unqualified audit report for two consecutive years However there are three matters of emphasis for the 2008/09 financial year Asset Management Mobile Trucks- Fruitless Expenditure Irregular Expenditure On the grant budget Audit AG raised the following issues Grant debtors SRD procurement and irregular expenditure Action plans for both Admin and Grant budget have been developed and detailed copies are attached Auditor General Report and Comments

  46. Assets not physically verified Asset register not updated Asset description reflects incorrectly on the asset register Duplicate barcodes Assets duplicated in the asset register Damage/redundant assets not disposed Assets purchased but not allocated Different assets with the same asset number Losses occurred and not recovered or reported Location of assets Centralization of asset register Audit Findings on Asset Management

  47. The Agency embarked on a nation wide verification of its physical assets. Duplicate assets and dummy bar codes were identified and are in the process of being removed from the asset register. Assets without bar codes were labelled and were taken onto the asset register Incorrect asset description were identified and corrected on the asset register Assets purchased were labeled and taken onto the asset register Intangible assets were identified and taken onto the asset register Redundant , obsolete and missing assets were identified for disposal and write-off. Asset Management - Progress to date

  48. The data on the current asset register (BAUD SYSTEM) is being cleaned, re-valued in terms of useful life and migrated onto the Accrual asset register to comply with GRAP standards. A consultant has been appointed to assist the Agency with the migration from cash to accrual basis of accounting in an effort to ensure compliance to GRAP standards The Asset registers are being decentralized to Regional level. The exercise will be completed by 31 March 2010. Asset Management - Progress to date Cont...

  49. An investigation , based on AG’s report was conducted during August and September 2009 in Free State, KZN, Northern Cape, Mpumalanga and Pretoria (Centurion) on 19 mobile units . Expenditure on 10 trucks revealed fruitless expenditure amounting to an estimated cost of R1,229, 479 million was incurred as fruitless expenditure. Losses of assets estimated at an amount of R298 956.00 A cost - benefit analysis reflects the costs exceeds the benefits that accrues to the Agency. The Financial Misconduct Board to rule on disciplinary action to be instituted against responsible officials The Agency is in the process of reducing the number of mobile units A new bid for maintenance and bandwidth will be executed Contract management to be improved Fruitless Expenditure:Mobile Trucks – progress to date

  50. Irregular expenditure incurred through procurement related processes by Head Office and the Regions The total amount of R69, 718,644.00 was condoned as irregular expenditure in 2008/09. This includes expenditure incurred in 2007/08 but condoned during the 2008/09 financial year The 2008/09 actual irregular expenditure is 70% less than that incurred during the 2007/08 financial year A detailed report is attached Irregular Expenditure comments to the finding

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