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Compensation Fund Annual Report Presentation 10 October2013

Compensation Fund Annual Report Presentation 10 October2013. Overall Responsibility: Compensation Commissioner: Mr. S. Mkhonto. Table of Contents Slide. Overview & Objectives of the Fund 3 CF Measurable Objective 4 Service Delivery Outcomes 5

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Compensation Fund Annual Report Presentation 10 October2013

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  1. Compensation FundAnnual Report Presentation 10 October2013 Overall Responsibility:Compensation Commissioner: Mr. S. Mkhonto

  2. Table of Contents Slide Overview & Objectives of the Fund 3 CF Measurable Objective 4 Service Delivery Outcomes 5 Situational Analysis 6 2012/13 Major Achievements 7 Performance Information 8 Budget Allocation and Utilisation 30 8. Auditor-General Report 33

  3. 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.

  4. 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”

  5. Service Delivery Outcomes

  6. Situational Analysis IT Systems. Turnaround time in processing of compensation claims. Backlog in processing claims and payments. Delay and/or non-reporting of accidents. Human capacity constraints. Document management. Records management system. 6

  7. 2012/13 Major Achievements Implementation of the ROE Website. 21 Strengthening of Civil Society Fund (SCSF) projects were funded and monitored. Sections for of COID Act to be amended and ready for consultation. 7

  8. PERFORMANCE INFORMATION

  9. Compensation Claims Registered and Adjudicated for 2012/13

  10. Compensation Fund Claims (Comparison with previous financial years)

  11. Compensation benefits processed : April 2012- March 2013

  12. Claims breakdown and comparison with the previous years

  13. Claims per Province April 2012 –March 2013

  14. Claims Comparison per Provincial Office

  15. 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 trench 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.

  16. STRATEGIC OBJECTIVE:PROVIDING AN EFFICIENT SOCIAL SAFETY NET Medical claims 2012 / 2013 Financial year A 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.

  17. STRATEGIC OBJECTIVE: PROVIDE PROFESSIONAL, EFFICIENT AND CLIENT ORIENTATED HUMAN RESOURCE (HRM) 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 2.25% against the 10% vacancy norm.

  18. STRATEGIC OBJECTIVE: STRENGTHENING CORPORATE GOVERNANCE (RISK MANAGEMENT) Out of 142 cases of alleged fraud and corruption cases, 86 were internally finalized. Two medical practitioners were criminally convicted and sentenced to five years suspension sentences, respectively. These medical practitioners were ordered to repay back the total amount of R 2.6 million which they have defrauded. There are other five medical practitioners together with six ex-employees of the Fund whose cases are already at a trial stage at the Commercial Crime Courts. Due to the Fund’s early intervention on fraud we have managed to recover R 137,638 and saved a potential loss of R1,070,743 through fraud.

  19. 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.

  20. 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 newspapersin 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. -

  21. . NOTICE TO EMPLOYERS- Advertorial ran on national newspapers informing employers of the deadline and how to submitRETURN 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.

  22. INPACT 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.

  23. STRATEGIC OBJECTIVE: IMPROVE FINANCIAL VIABILITY (FINANCE) The implementation of the RoE website in 2012 for online submissions has been successful.. R3.3 billion of the total R8 billion revenue generated by the Fund was generated through the ROE Website. As at 31 March 2013, 51,000 employers had registered and filed their annual returns of earnings on the ROE website. The enforcement of the COID Act and intensified debt collection procedures resulted in improved collection of revenue of R5.8 billion compared to R3.7 billion reported in the previous financial year.

  24. STRATEGIC OBJECTIVE: IMPROVE FINANCIAL VIABILITY (FINANCE) The Fund maintained its Assets: liability ratio . 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 11.91% against a STEFI benchmark of 11.30% For Pension Portfolio the Fund received 16.44% against the benchmark of the SWIX 40 of 15.96%.

  25. 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.

  26. 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.

  27. SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM Challenge • Inadequate IT Systems. • Turnaround time in processing of compensation claims. • Backlog in processing claims and payments. • Document management. • Records management system. Intervention • Process automation • Pilot the RMA system. • Initiated a Backlog Project. 27

  28. SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM (CONT.) Challenge • Delay and/or non-reporting of accidents • Employer non-compliance Intervention • Include employers in Educational Campaigns • Engage Enforcement Inspectorate 28

  29. SOME OF THE KEY CHALLENGES FACING THE COMPENSATION FUND AND HOW WE ARE RESPONDING TO THEM (CONT.) Challenge • Human capacity constraints Intervention • Full implementation of the new structure, especially by filling critical posts in the area of Finance and the post of Chief Director: Operations. 29

  30. Statement of Financial Position as at 31 March 2013

  31. Statement of Financial Performance for the year ended 31 March 2013

  32. CF 2012/13 BUDGET ALLOCATION AND UTILISATION

  33. Auditor-General Report

  34. THE BASIS FOR DISCLAIMER OF OPINION Revenue and receivables from non-exchange transactions The AG was unable to obtain sufficient and appropriate audit evidence for revenue and receivables from non-exchange transactions as management did not maintain proper accounting records, journals and adequate controls over assessment revenue and debtors. Allowance for impairment Management did not provide assessment of impairment in accordance with Standard of Generally Recognised Accounting Practice (GRAP) 104. Receivable from exchange transactions The Fund did not correctly account for concessionary loans in accordance with GRAP 104.

  35. THE BASIS FOR DISCLAIMER OF OPINION (Cont) Benefits paid and payables from exchange transactions The Fund’s records did not permit the application of adequate alternative auditing procedures regarding benefit claims and payables. Provision for outstanding claims The Fund did not assess and disclose the reduction amount of provisions resulting from payments and measurements of the estimates in accordance with GRAP 19. Cash and cash equivalents The AG was unable to obtain sufficient and appropriate audit evidence for all the un-reconciled items for cash and cash equivalents as management did not maintain proper accounting records and adequate controls.

  36. THE BASIS FOR DISCLAIMER OF OPINION (Cont) Related party transactions Management did not identify and disclose nature of the related party relationships as well as information about transactions and outstanding balances in accordance with IPSAS 20. Commitments The Fund did not have an adequate system in place to maintain records of commitments approved and contracted. Irregular expenditure The AG was unable to obtain sufficient and appropriate audit evidence relating to the particulars of irregular expenditure in the notes to the financial statements as per section 55(2)(b)(i) of the PFMA for the prior year as the Fund did not maintain proper records and adequate systems of internal controls.

  37. THE BASIS FOR DISCLAIMER OF OPINION (Cont) Aggregation of immaterial uncorrected misstatements The financial statements as a whole are materially misstated due to cumulative effective of numerous individually immaterial uncorrected misstatements.

  38. MATTERS OF EMPHASIS Restatement of correspondence figures Allowance for impairments Predetermined objectives Performance targets not specific Reliability of information Compliance with laws and regulations Annual financial statements Annual Report Procurement and contract management Expenditure and revenue management Claims and payables management Liability management Internal control Leadership Financial and performance management Governance

  39. Priorities for 2013/14 Financial Year Implementation of the approved Organisational Structure. Decentralisation of COIDA services to the provinces. Pilot the RMA System. Administration of medical accounts. Consultation on Amendment of COID Act. Continue with COIDA Stakeholder engagement. Improve revenue collection. Develop a comprehensive action plan to address a disclaimer opinion. 39

  40. THANK YOU

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