Compensation Fund
Annual Report Presentation
10 October2013
Overall Responsibility:
Compensation Commissioner: Mr. S. Mkhonto
Table of Contents
Slide
1.
Overview & Objectives of the Fund
3
2.
CF Measurable Objective
4
3.
Service Delivery Outcomes
5
4.
Situational Analysis
6
5.
2012/13 Major Achievements
7
6.
Performance Information
8
7.
Budget Allocation and Utilisation
30
8.
Auditor-General Report
33
2
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.
3
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”
4
Service Delivery Outcomes
Government 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
Providing an efficient social safety net
Compensation, Medical
Improve financial viability
Finance
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
Strategic Objective 5: Strengthening
social protection
Outcome 12: An efficient,
effective and development
oriented public service and an
empowerment and inclusive
citizenship.
Strategic Objective 8: Strengthening
the institutional capacity
5
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
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
PERFORMANCE INFORMATION
Compensation Claims Registered and Adjudicated for 2012/13
System
Claims
Registered
Claims Accepted
Claims
Repudiated
Outstanding
information
E-claims
26 584
15 408
112
12 911
SAP
169 925
113 997
244
63 226
Total
196 509
129 405
356
63 226
Compensation Fund Claims (Comparison with previous financial years)
COMPENSATION FUND
NOT ACCEPTED
PERIOD
CLAIMS
REGISTERED
CLAIMS ACCEPTED
CLAIMS REPUDIATED
OUTSTANDING
INFORMATION
1 April 2012 to 31 March 2013
196 509
129 405
356
63 226
1-APR-2011 TO 31-MAR-2012
141 437
110 180
129
31 128
1-APR-2010 TO 31-MAR-2011
215 493
190 168
447
24 878
1-APR-2009 TO 31-MAR-2010
200 560
178 293
361
21 906
1-APR-2008 TO 31-MAR-2009
203 711
182 788
740
20 183
Compensation benefits processed : April 2012- March 2013
Benefit Type
Additional Compensation
Burial Expense
CAA
Lump sum To widows
Partial Dependency
PD Lump sum Payment
Pension to employee and fatal
TTD
Widow Pension
TOTAL
Total number of
payments (Number
awarded)
Amount(R)
3
2 753 026
207
1 686 996
7 257
13 847 778
459
5 913 711
14
437 870
3 547
95 708 018
295 752
791 291 057
18 722
79 534 725
18 245
1 138 681
325 502
992 311 862
Claims breakdown and comparison with the previous years
Benefit type
Additional Compensation
Awards
2011/2012
Awards
2012/2013
Amount awarded
2011/2012
Amount awarded
2012/2013
1
3
200 000
275 3026
184
207
1 372 866
1 686 996
8 641
7 257
12 520 809
13 847 778
240
459
2 467 344
5 913 711
7
14
77 843
437 870
4 206
3 567
93 395 328
95 708 018
Pension
168 310
295 752
344 526 553
798 291 057
TTD
23 561
18 722
94 439 959
79 534 725
140
18 245
147 913
1 138 681
205 150
325 502
549 000 702
999 311 862
sect 56
Burial Expenses
CAA
Lump sum to Widows
Partial Dependency
PD Lump sum payment
(30%)
Widow pension
Totals
Claims per Province April 2012 –March 2013
PROVINCE
CLAIMS REGISTERED
CLAIMS ADJUDICATED
Eastern Cape
276
114
Free State
212
117
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
Gauteng (Pretoria Office)
Claims Comparison per Provincial Office
Province
Claims
registered
2011/2012
Claims
registered
2012/2013
Claims
accepted
2011/2012
Eastern Cape
24,452
276
24,491
114
Free State
3,516
212
3,375
117
Gauteng Pretoria Office
93,407
23 201
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
103,974
Claims accepted
2012/2013
13 092
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.
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.
2011/2012
2012 / 2013
No. paid
Amount
No. Paid
Amount
824 924
R 1 882 372 383. 00
934 834
R 1 501 616 165. 00
 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.
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.
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.

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.
-
. 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.
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.
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.
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%.
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.
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.
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
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
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
Statement of Financial Position as at 31 March 2013
Inc./ Dec
2013
R '000
Restated
2012
R '000
ASSETS
Current Assets
16,773,322
13,097,520
Non-Current Assets
24,024,984
19,598,273
Total Assets
40,798,306
32,695,793
3,271,348
2,102,549
Non-Current Liabilities
14,172,596
16,411,000
Total Liabilities
17,443,944
18,513,549
Total Funds and Reserves
23,354,362
14,182,244
LIABILITIES
Current Liabilities
Statement of Financial Performance for the year ended 31
March 2013
Restated
Inc./ Dec
2013
R '000
2012
R '000
Revenue
12,232,860
8,453,946
Expenses
-2,319,005
-2,622,765
-424,619
-566,188
-2,743,624
-3,188,953
Administration expenses
Total expenses
Total other gains / losses
-321,450
Surplus for the year
9,167,786
-3,223,106
2,041,887
CF 2012/13 BUDGET ALLOCATION AND UTILISATION
2012/13
Expenditure
Programme Summary Per
Approved
%
31/03/12
Variance R'000
Economic Classification
Budget
Spent
R'000
R'000
Current Payments
1,400,152
771,408
628,744
55%
Compensation of Employees
492,364
293,515
198,849
60%
Goods and Services
907,788
477,893
429,895
53%
Interest and rent on Land
Financial transaction in Asset and Liabilities
Transfers and subsidies
3,134,288
3,131,066
3,222 100%
Provinces and Municipalities
Departmental Agencies & Accounts Universities and Technikons
Households (Benefits):
3,134,288
3,131,066
3,222 100%
Gifts and Donations
Payments on Capital Assets
33,075
Buildings and Other Fixed Structures Machinery and Equipment
33,075
Software and other intangible AssetsLand and Subsoil Assets
Total
4,567,515
814
-
32,261
-
814
32,261
3,903,288
664,227
2%
2%
85%
Auditor-General Report
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.
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.
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.
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.
MATTERS OF EMPHASIS
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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
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
THANK YOU
40