Presentation to the

Presentation to the

S. S. MkhontoCompensation Commissioner

20 April 2010

- The Compensation Fund is a public entity of the

Department of Labour.

- It is responsible to administer the Compensation for

Occupational Injuries and Diseases Act (COIDA)

No. 130/1993 as amended by the COIDA 61/1997.

The Fund provides compensation for disablement

caused by occupational injuries or diseases sustained or

contracted by workers, or for death resulting from such

injuries or diseases.

The Fund is financed from levies paid by employers.

The revenue consists mainly of annual assessments paid

by registered employers on a basis of a percentage or

fixed rate of the annual earnings of their workers.

Strategic Intent• To improve claims Turn-Around Time• Timeous Payment of Service Providers• To Address all Auditor-General’s Findings• To Create adequate Financial Management Capacity• To Implement New IT Systems Integrated claims and Revenue Management Systems To implement Management Information System

• To Increase Access to Compensation Services through Decentralisation

• To develop and Implement a new and adequate Organisational Structure

Strategic Intent-cont• To improve Governance and

Legislative Compliance• To Improve investment

Performance• To improve the Public Image of the

Fund

ACTIVITYAppointment of key financial resources to address audit issues

PROGRESSAchieved

CFO appointed on 01 October 2009.

EM: Financial Support appointed 01 November 2009.

EM: Financial Control appointed 01 January 2010.

EM: Internal Audit appointed 15 April 2010.

The following middle management posts have been filled:1 X Manager Financial Reporting 01/08/20091X Manager Bank Reconciliation 01/08/20091X Manager Budget 01/08/20091X Manager HRO 01/07/20093 X Manager OE 01/07/20091 X Manager SCM 01/08/20091X Manager Auxiliary .Service 01/09/2009 1 X Manager Call Centre 01/09/2009

1 X Manager Income 01/01/2010

IMPROVE THE INTERNAL CONTROL ENVIRONMENT

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ACTIVITY

Clearing of suspense accounts(AG Finding)

PROGRESS

AchievedThe suspense account is reconciled every month to identify the items that need to be cleared.

Of the R86million suspense account, R85 million has been cleared by Feb 2010.

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Short-Term Interventions-cont


ACTIVITYIntroduction and monitoring of month end procedures

PROGRESS

Achieved

A standard operating manual to ensure that all transactions that relate to particular are accounted for in that particular month. The fund has introduced month end procedures.

ACTIVITYPerformance of weekly bank reconciliations

PROGRESSAchievedReconciliation of bank balances is now performed on a monthly basis to the general ledger.The weekly bank reconciliation are being performed in terms of Treasury Regulation 31.1.2j.

ACTIVITYClearing of debtors with credit balances

PROGRESSOf the R183 Million debtors with credit balances, R40 Million was

cleared up to end of February 2010. Additional resources were added

to facilitate the capturing of Return of Earnings.

TIMEOUS PRODUCTION OF MONTHLY FINANCIAL STATEMENTS

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ACTIVITYUpdating the Fixed Asset Register (FAR)

PROGRESSAchievedAsset verification exercise has been completed by the Fund.Fixed assets policy was reviewed .

Both Bisho and Compensation House buildings were and will reflect the correct values in the annual financial statements.

The Fixed Asset Register (and the General ledger) will be adjusted to reflect the assets as per the recommendations of the valuators.

Opening balance as per General ledger and Fixed assets register has been reconciled.

Appropriate controls were introduced for the effective management of fixed assets.Monthly reconciliation of General ledger to Asset register is done.


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ACTIVITYFinalisation of merit-rebate and payment

PROGRESSThe approval of merit rebates was obtained.

The affected employers were requested to provide the Fund with their

banking details.

Payment will be effected in April 2010.


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ACTIVITYFinalisation of policy and implementation

PROGRESSAchievedFinancial policies were presented on EXCO in March 2010.

ACTIVITYFinalisation of the computer programming on the

Financial and the Claim Systems

PROGRESS Partialy Achieved

The two IT Systems are complete, however implementation was held back due to Internal Audit findings and recommendations. Management is currently working on those recommendations.

COMPLIANCE WITH LEGISLATION

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ACTIVITY Execution of payments

PROGRESSAchievedThe Fund endeavours to pay all creditors within 30 days of receipt of invoice.

ACTIVITYTo ensure IFRS Compliance

PROGRESSAchievedThe template for IFRS has been completed it is only waiting to be populated (testing to be done the end of February 2010).

COMPLIANCE WITH LEGISLATION

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ACTIVITYComplete the back-scanning project and appoint a

service provider for scanning and indexing

PROGRESSThe initial backlog of 6.5m documents was finalised but however, since the fund continuously receives 45000 documents a day, there are currently 1.3m new documents pending imaging for this current year. These are mainly medical accounts that have already been paid during the current financial year(2009/10).

The Fund has upgraded the Kofax imaging system as from January 2010 and has procured additional scanners in April 2010. With these interventions, It is envisaged that this backlog will be eliminated by end of Q1.

The introduction of the electronic submission of claims during the 2010 financial year will substantially reduce the high volumes of manual paper documents.

STREAMLINE PROCESSES TO IMPROVE PERFORMANCE

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ACTIVITYFinalisation of the financial management project (SAP FI)

PROGRESS

Not AchievedProject initiation completed and project underway. Business has

attended all the workshops. Training for the super users is underway.


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ACTIVITY

Implementation of an Integrated Claims ManagementSystem

PROGRESSThe Fund has been actively involved in two projects that cover the areas of financial and claims management.

The systems are near completion with work progressing on addressing outstanding development, interfaces and data migration.

The projected date for go-live is July 2010.


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ACTIVITYDecentralisation of claims processing to 4 provinces by 31 March 2010 (Limpopo, Free State, KwaZulu- Natal, Eastern Cape)

PROGRESSAchieved •Decentralisation of claims was successfully rolled out to Limpopo; Free State and KZN Provincial offices besides the Port Elizabeth project in the Eastern Cape.• Since July 2009 to 31 March 2010, the collective production of these provinces is as follows: - Over 5000 claims were registered. - Over 6000 claims were adjudicated. - Over 15000 medical accounts worth R30m were paid - Positive feedback from medical providers was received on this intervention. The average turn around on registration is 2 days; 3 days on adjudication and 7 days on payment of medical claims in these provinces.


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IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION

ACTIVITY• New draft Model for Assessments• Complete Sensitivity Modelling• Finalise Stakeholders Consultation• Amend legislation• Implementation

PROGRESS

A draft assessments model was developed by the actuaries to address the inefficiencies in the assessments method. The new Methodology has been approved by Exco and a process of stakeholder consultation must be finalised during this financial year.

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ACTIVITYReview and roll-out of Risk Management Strategy

PROGRESS

Achieved

The Strategy was finalised and is being implemented.


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ACTIVITYStrengthening the Internal Audit function

PROGRESSThe internal audit function was previously conducted by the Department of Labour’s internal audit section. However, due to a high staff turnaround, this function could no longer be provided.

To ensure that an internal audit function is carried out at the Fund, an interim Management capacity was created to assist whilst the Fund finalises the process of filling of posts.

The Executive Manager: Internal Audit has been appointed w.e.f 15 April 2010 and all Manager posts have already been advertised and in we are in the process of finalising interviews for appointments.


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ACTIVITY• Data cleansing of the debt book• Updating the debtors and accounts payable age analysis

PROGRESSDebtor circularisation started in February for the employees to confirm the debt.Correction of Age Analysis - A project is in progress to interrogate the debtor’s transactions in the age analysis to ensure that all valid debtors’ transactions are accurately recorded in the debtor's ledger.The fund is engaging with CIPRO to verify the employer classificationThere is a dedicated team to deal with the ROE’s timeously Management is in process of replacing the current financial system with the SAP financial system that will streamline the assessment process. The debt management policy is in place and is being implemented.


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ACTIVITYCollection of Long Outstanding Debt

PROGRESS

AchievedThe process has started not much progress has happened and we envisage to see much progress in the new year.


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The Minister approved an interim Top Management Structure in Aug 2008.

Breakdown of approved posts: Senior Management

FILLING OF VACANCIES WITHIN THE FUND

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Rank No Approved

No Filled No Vacant

%Vac Rate

CC 1 1 -

CFO: SR14 1 1 -

EM: SR13 11 10 1

M: SR 12 29 24 5

Total 42 36 6 14.2%

The Minister approved an interim Top Management Structure in Aug 2008.

Breakdown of approved posts: Other levels SR 10 – SR 1


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Rank No Approved

No Filled No Vacant %Vac Rate

Ass M: SR 10 22 13 9

Snr P: SR 8 78 76 2

Pract: SR 7 75 54 21

Snr Clerk: SR 6&5

461 440 21

Suport: SR 4&3

31 27 4

Total 667 610 57 8.5%

Total CF Staff Establishment


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Total No Approved posts

Total Filled Total No. Vacancies

Vacancy rate as at 31/3/2009

707 584 123 17.3%

Total No Approved posts

Total Filled Total No. Vacancies

Vacancy rate as at 31/3/2010

709 645 64 9.0%

Status on current 64 Vacancies

• 9 New appointments approved wef 01/04/2010.

• 24 Interviews held awaiting NIA results.

• 28 Posts already advertised, interviews scheduled for May.

• 3 Vacancies still to be advertised.


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New Organisational Structure Design

A project team for reviewing was set up in November 2009 and a lot of work has already been done in this area. The following has been achieved to date:•- Service Delivery Model has been developed.•- Draft macro-structure developed and consulted with Executive

Management and Organised Labour.•- Core business processes mapped.•- Job profiles for positions on the macro-structure developed.•- Competency Framework developed.•- Change Management Strategy developed and currently being implemented.

It is envisaged that the final structure will be submitted to the Minister by 30 June 2010 and will be implemented immediately after approval.

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Financial yearClaims

receivedClaims

AcceptedClaims

repudiated Payments

2007/8 209830 183817 1448 162411

2008/9 203711 171567 654 150090

2009/10 200599 129362 127 87800

Total number of compensation benefits

processed by 31 March 2010-Table

YEAR Number Amount2007 335343 R 652,000,0002008 327647 R 630,000,0002009 336819 R 755,279,042

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171655Total number of compensation benefits processed by 31 March 2010

Compensation benefits processed by 31 March 2010

335343

327647

336819

322000

324000

326000

328000

330000

332000

334000

336000

338000

2007 2008 2009 Years

Num

ber o

f pay

men

ts

Number

Total number of medical payments made by 31 March

2010-Table

Year Payment AmountNumber of payments

2007 Medical R 1,294,380,035 7773202008 Medical R 1,544,970,689 8150452009 Medical R 1,531,131,097 781249

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Total number of medical payments made by 31 March 2010-Graph

Medical payments up to 31 March 2010

777320 815045 781249

0

200000

400000

600000

800000

1000000

Years 2007 2008 2009

Num

ber

of p

aym

ents

Feb 2010Feb 2010R’000 R’000

2008/09 2008/09 R’000R’000

Contributions revenueContributions revenue 4,321,898 4,513,720

Investment incomeInvestment income 1,687,196 2,073,004

Other incomeOther income 0 21,228

Benefits paidBenefits paid 1,956,012 2,929,473

AdminAdmin 783,045 433,565

Provisions and Provisions and Actuarial adjustmentsActuarial adjustments

0 2,073,796

Surplus / deficitSurplus / deficit 3,270,037 1,171,11835

Feb 2010Feb 2010R’000 R’000

2008/092008/09 R’000R’000

InvestmentsInvestments 23,109,485 19,959,335

Property, plant and Property, plant and equipmentequipment

123,442 127,112

ReceivablesReceivables 498,437 818,461

Cash and Cash Cash and Cash equivalentsequivalents

758,891 655,495

Accumulated FundsAccumulated Funds 9,486,040 6,532,805

CreditorsCreditors 345,721 290,525

Provisions and Provisions and accrualsaccruals

14,652,687 14,740,525

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• The current unclaimed monies is currently sitting with a balance of R28.4 million

• A notice was published in the Government Gazette volume 529 No 32346 of 3 July 2009, to request all beneficiaries of unclaimed monies to come CF to claim their dues.

• During the month of March the Fund ran a month –long radio and newspaper advertisement to request the beneficiaries of the unclaimed monies to come forward and provide the Fund their banking details.

• Since the advert went out 1 500 beneficiaries came forward and provided the Fund with the banking details and all have since been paid .

UNCLAIMED MONIES

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Presentation to the

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