Presentation to the

Presentation to the S. S. Mkhonto Compensation 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

IMPROVE THE INTERNAL CONTROL ENVIRONMENT • ACTIVITYAppointment of key financial resources to address audit issues • PROGRESS • Achieved • 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 01/08/2009 • 1X Manager Bank Reconciliation 01/08/2009 • 1X Manager Budget 01/08/2009 • 1X Manager HRO 01/07/2009 • 3 X Manager OE 01/07/2009 • 1 X Manager SCM 01/08/2009 • 1X 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 • ACTIVITY • Clearing of suspense accounts(AG Finding) • PROGRESS • Achieved • The 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.

Short-Term Interventions-cont IMPROVE THE INTERNAL CONTROL ENVIRONMENT ACTIVITY Introduction 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.

TIMEOUS PRODUCTION OF MONTHLY FINANCIAL STATEMENTS • ACTIVITY • Performance of weekly bank reconciliations • PROGRESS • Achieved • Reconciliation 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. • ACTIVITY • Clearing of debtors with credit balances • PROGRESS • Of 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 • ACTIVITY • Updating the Fixed Asset Register (FAR) • PROGRESS • Achieved • Asset 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.

TIMEOUS PRODUCTION OF MONTHLY FINANCIAL STATEMENTS • ACTIVITY • Finalisation of merit-rebate and payment • PROGRESS • The 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. 12

COMPLIANCE WITH LEGISLATION • ACTIVITY • Finalisation of policy and implementation • PROGRESS • Achieved • Financial policies were presented on EXCO in March 2010. • ACTIVITY • Finalisation of the computer programming on the • Financial and the Claim Systems • PROGRESS • PartialyAchieved • 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 • ACTIVITY • Execution of payments • PROGRESS • Achieved • The Fund endeavours to pay all creditors within 30 days of receipt of • invoice. • ACTIVITY • To ensure IFRS Compliance • PROGRESS • Achieved • The template for IFRS has been completed it is only waiting to be • populated (testing to be done the end of February 2010).

STREAMLINE PROCESSES TO IMPROVE PERFORMANCE • ACTIVITY • Complete the back-scanning project and appoint a service provider for scanning and indexing • PROGRESS • The 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. 15

STREAMLINE PROCESSES TO IMPROVE PERFORMANCE • ACTIVITY • Finalisation of the financial management project (SAP FI) • PROGRESS • Not Achieved • Project initiation completed and project underway. Business has attended all the workshops. Training for the super users is underway.

STREAMLINE PROCESSES TO IMPROVE PERFORMANCE • ACTIVITY • Implementation of an Integrated Claims Management • System • PROGRESS • The 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.

STREAMLINE PROCESSES TO IMPROVE PERFORMANCE • ACTIVITY • Decentralisation of claims processing to 4 provinces by 31 March 2010 (Limpopo, Free State, KwaZulu- Natal, Eastern Cape) • PROGRESS • Achieved • 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. 18

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.

IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION • ACTIVITY • Review and roll-out of Risk Management Strategy • PROGRESS • Achieved • The Strategy was finalised and is being implemented.

IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION • ACTIVITY • Strengthening the Internal Audit function • PROGRESS • The 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.

IMPROVE THE INTERNAL CONTROL ENVIRONMENT • ACTIVITY • Data cleansing of the debt book • Updating the debtors and accounts payable age analysis • PROGRESS • Debtor 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 classification • There 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.

IMPROVE THE INTERNAL CONTROL ENVIRONMENT • ACTIVITY • Collection of Long Outstanding Debt • PROGRESS • Achieved • The process has started not much progress has happened and we envisage to see much progress in the new year. 23

FILLING OF VACANCIES WITHIN THE FUND The Minister approved an interim Top Management Structure in Aug 2008. Breakdown of approved posts: Senior Management 24

FILLING OF VACANCIES WITHIN THE FUND The Minister approved an interim Top Management Structure in Aug 2008. Breakdown of approved posts: Other levels SR 10 – SR 1 25

FILLING OF VACANCIES WITHIN THE FUND Total CF Staff Establishment 26

FILLING OF VACANCIES WITHIN THE FUND • 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. 27

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.

Total number of compensation benefits processed by 31 March 2010-Table

Total number of compensation benefits processed by 31 March 2010 171655 32

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

Total number of medical payments made by 31 March 2010-Graph 34

UNCLAIMED MONIES • 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 . 37

Presentation to the