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PRESENTATION TO PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT 01 MARCH 2011 PowerPoint Presentation
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PRESENTATION TO PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT 01 MARCH 2011. Purpose of the Presentation. The purpose of this presentation is to present to the Portfolio Committee the 2009/10 Annual Report for SASSA Financial and service delivery challenges

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Presentation Transcript
purpose of the presentation
Purpose of the Presentation
  • The purpose of this presentation is to present to the Portfolio Committee
    • the 2009/10Annual Report for SASSA
    • Financial and service delivery challenges
    • Short and long-term measures to deal with challenges
outline of the presentation
Outline of the presentation
  • The presentation covers the following:
    • Part 1: Overview
    • Part 2: Performance Information
      • Achievements against 2009/10 Strategic Priorities
      • Service Delivery Challenges
    • Part 3: Financial Management
      • Budget and Expenditure for 2009/10
      • Financial and administration challenges
    • Part 4: Audit Outcomes
      • Action Plan to address Audit Challenges
background
Background
  • The year under review 2009/10 was characterized by the following:
    • SASSA was grappling with huge deficit for the previous year of about R839m and overdraft of approximately R410m as at 31 March 2009.
    • The Agency had to maintain a balance between improving service delivery and reducing the budget deficit
    • SASSA also had to migrate from a modified cash to accrual basis of accounting, while changing from legacy systems(BAS, Persal and Logis) to an Enterprise Resource Planning (Oracle) system
background cont
Background cont ….
  • There has been an increase in the demand for services which has been exacerbated by the following:
    • Significant growth in the number of social assistance benefits from 3.2 million in 1998 to 14 million in 2010
    • Marginal growth in number of employees dealing directly with grants administration vs. the significant growth in demand for services.
    • SASSA’s social assistance system has remained largely manual.
    • Investment in systems infrastructure has not materialised due to budgetary constraints.
highlights 2009 2010
Highlights 2009/2010
  • We have increased the number of social grants by 7.5% from about 13m in 2008/09 to just above 14m in 2009/10
    • 10 million are child benefits;
    • 2.5m are older persons; and
    • 1.26m are people with disabilities.
  • The average number of transactions that SASSA dealt with during this financial year increased from about 3.7m in 2008/09 to approximately 4,6m in 2009/10, excluding payments.
  • The deficit for the year reduced by half compared to last year and we reduced irregular expenditure from about R69m in the previous financial year to just below R2.6 m
grant uptake for financial years 2007 08 to 2009 10
Grant Uptake for Financial Years 2007/08 to 2009/10
  • In 2009/10, there was an increase of 1,031,261 in grants uptake which represents a growth rate of 7.5%
  • There is a decrease in the uptake of disability and war veterans grants
  • The decrease in DG is due to intensive review process which led to 90% reduction in temporary disability-grant backlogs
strategic priorities for 2009 10
Strategic Prioritiesfor 2009/10
  • Priorities for the year under review:
    • Customer Care-centred Benefits Administration and Management System;
    • Improved Organisational Capacity; and
    • Comprehensive and Integrated Social Security Administration and Management Services.
priority 1

PRIORITY 1

Customer Care-centred Benefits Administration and Management System

policy and legislation on social assistance implemented
Policy and Legislation on Social Assistance implemented
  • Achieved an increase of 1,031,261 in grants uptake which represents a growth rate of 7.5%
  • There was a decrease in total disability and war veterans grants by about 121,000 and 424 respectively
  • The decrease on disability grants is largely due to intensive review and lapsing of temporary disability grants
implementation of policy and legislation on social assistance
Implementation of Policy and Legislation on Social Assistance

Age Equalisation

  • The target was to reach 129 662 men aged 61 and 62 by 31 March 2010.
    • In total 100,358 males in this age group 61 and 62 are in receipt of older persons grants, which represents 77.4% of the target.
    • Partial achievement of this target could be due to a number of reasons including lack of IDs, inadequate marketing of new reforms, accessibility of our offices

Gradual Expansion of CSG

  • The target was to extend the CSG to about 970,369 above the age of 14 years.
    • A total of 673 553 children over the age of 14 are in receipt of CSG, which represents 69.4% of the target.
    • Non-achievement of this target was due to the fact that effective date of implementation was planned to be April 2009 but the actual implementation date was finally 1 October 2009.
automated core business systems
Automated Core Business Systems
  • The target was to develop and implement the following systems:
    • Improved Grant Application Process (IGAP), Management Information System (MIS) and ERP
  • IGAP
    • The target for implementing IGAP in five regions proved to be unrealistic due to insufficient budget allocation.
    • Implementation of full IGAP is still limited to one region in Free State;
    • Conducted readiness assessments in all regions.
  • MIS
    • Implemented the MIS registry module in all regions which improved decision-making and accountability
    • MIS Interface with other government institutions was not achieved due to failure to reach corporate agreement with key Departments.
  • ERP
    • ERP system was fully implemented, however i-modules could not be rolled out to regions due to the magnitude and complexity of the work to be done.
beneficiary maintenance
Beneficiary Maintenance
  • Target: – to increase percentage of beneficiaries notified of administrative actions and to improve systems for administration and management of reviews
    • 97.9% of the targeted beneficiaries were notified of administrative actions prior to lapsing of grants
    • The development of computerized data quality management systems was not achieved due to lack of funds to acquire external expertise.
    • Implementation of internal review mechanism could not be implemented due to delays in approval of legislation.
comprehensive payment management system
Comprehensive Payment Management System
  • The Comprehensive Payment Management Framework was developed and approved but not fully implemented due to litigation challenges.
  • Consequently, the Agency is revising its approach to improve payment system in South Africa.
  • In addition, the Agency implemented a strategy to promote electronic payments as alternatives to cash payments, where infrastructure exists. The project led to:
    • 23.4% reduction in cash payments from 6.3 million to 4,8 million;
    • ACB payments almost doubled from 1.9m in April 2009 to 3.8m in March 2010
implementation of disability management model
Six targeted regions implemented the prioritized elements of the Disability Management Model which include the gate keeping, medical assessment and medical form modules and this resulted in substantial savings for the agency

Decreased temporary disability grant application significantly by implementing the three months waiting period before reapplication;

In order to minimise fraud with the processing of disability grants, the Agency introduced Medical assessment forms with serial numbers.

Implementation of Disability Management Model
customer relationships management strategy
Customer Relationships Management Strategy
    • Planned to develop and implement the prioritised elements of the Customer Relationship Management and the Integrated Community Registration Outreach Programme (ICROP)
  • Customer Relationship Management – although the strategy was not approved, some critical service delivery initiatives were implemented in some local offices to improve customer experience. These include
    • Enquiry management, queue management, customer care charter, booking system and capacity building on bathopele principles
  • Development of ICROP Strategy not achieved, however
    • Services were taken closer to potential beneficiaries, especially to those in the deep rural areas using mobile units
    • All regions together with other critical government departments have implemented community outreach programmes through participation in the Premier’s Outreach Programme
service delivery model
Service Delivery Model
  • Developed the draft service delivery model, to be finalised in 2010/2011.
improved organisational capacity
Improved Organisational Capacity
  • Under this priority, the objective was to enhance the Agency’s efficiency and improved access to its services.
  • Development and approval of most internal control policies was achieved, however, there is still more work to be done in implementing some of these policies.
  • Improved access to SASSA services:
    • Most local offices and pay points are accessible to beneficiaries; although there are still challenges.
    • Invested in infrastructure improvement at various pay points across country;
    • Continued with efforts to market SASSA’s services .
improved organisational capacity22
Improved Organisational Capacity
  • Approval of the Corporate compliance and integrity Policy was delayed due to consultations with staff
  • Implemented benefits verification elements of the integrity model :
    • 1,994 grant beneficiaries were verified for eligibility and existence.
    • 7,440 grant investigations conducted ;
    • 3,454 people taken to court for grant fraud;
    • 314 inspections conducted
  • Implemented Corporate Compliance Model six regions
    • 91 inspections were conducted in six regions
improved organisational capacity23
Improved Organisational Capacity
  • Litigation
    • Implemented the litigation strategy resulting in:
      • Reduced number of litigation cases from about 15 212 in 2008/09 to approximately 2 735 cases;
      • Reduced litigation costs from about R40m to R20m
  • Financial management
    • Migrated from cash to Accrual basis of accounting
    • Reviewed and Implemented financial controls, policies and procedures in line with GRAP standards
human resources management
A zero tolerance approach to misconduct has been adopted leading to 191 cases finalized and varying sanctions imposed

Challenges have been identified around the management of poor performance and consequently Individual Poor Performance Management Guidelines were developed to capacitate supervisors;

In Order to maintain healthy lifestyle and to encourage a wellness culture the following initiatives were implemented:

Voluntary Testing and Counselling where 700 (10%) of the total staff complement participated;

Financial Management programmes were implemented to address budgeting and debt management skills for individual employees;

Health Screening programmes conducted to detect and treat diseases which include blood pressure, cholesterol, sugar screening, HIV and AIDS

Human Resources Management.
fraud management
Fraud Management
  • Implemented Fraud Management Strategy which resulted in a saving of R180, 9 million
    • 3,454 fraud cases were investigated representing 115% achievement;;
    • Over 32 687 fraudulent grants were removed from the system in the financial year;
    • 223 inspections and 1,260 grant verification completed;
    • 3 797 social grant fraud cases were brought before the courts and 3,491 were finalised with 3,345 convictions; and
    • 8,383 persons signed acknowledgement of debt (total value R51.2m)
  • Developed and implemented an annual Internal Audit Coverage Plan, which clearly articulates the areas of focus for the financial year
grants administration challenges
The following are some of the service delivery challenges the Agency has been experiencing:

Service Points

Overcrowding at service points due to

Sleepovers and early arrivals at service points;

Long waiting periods in waiting rooms

Repeat visits by clients; and

Lack of adequate office accommodation

Payment Services :

Poor conditions of some of our paypoints

A large number of the pay points do not provide humane basic facilities;

Most rural pay points require urgent infrastructural attention; and

there are still reported cases of exploitation of beneficiaries by merchants and money lenders.

Grants administration challenges
grants administration challenges28
Record Management

The physical infrastructure of some of our registries do not meet the requirements of the OHSA

There is a lack of adequate filing space, resulting in multiple registries which also carries a cost implication

Missing files and other critical documentation

Reviews

We have significant backlogs in reviews and life certificates resulting in over payments to non-eligible beneficiaries

Sending of notification letters is very costly

Management of reviews is time-bound which results in staff focusing on the reviews instead of new applications

The dependency on the DSD and the DoJ results in either continuing to paying a grant without a mandate or suspending payment leaving vulnerable children without support.

Grants administration challenges
grants administration challenges29
FRAUD MANAGEMENT:

The nature of SASSA business lends it to be vulnerable to a high risk of fraud and corruption.

The lack of interdepartmental collaboration, collusion of staff and lack of online interfaces has resulted in an environment where fraud flourishes; and

Given the perceived inability of SASSA to successfully deal with the fraud challenges have resulted in a loss of credibility.

Grants administration challenges
comments on grants srd and adjustment estimates 2009 10
Comments on Grants, SRD and Adjustment Estimates: 2009/10

Social Assistance expenditure for 2009/10 amounted to R79,259 billion.

Social Assistance and SRD expenditure highlighted a saving of R1 billion.

There were no budget adjustments for 2009, as a result of savings of R1 billion in the 2009/10 financial year, driven largely by the lack of adequate administration budget and lack of reaching additional beneficiary targets given legislative changes

Actual SRD expenditure amounted to R165 million

The rollover request for R52 million to fund previous year SRD commitments was approved (in full).

38

ag findings and progress report

AG findings And Progress Report

Transfers to households budget

(Social Grants)

background36
Background
  • The Agency together with DSD got a qualified audit opinion for the 2009/2010 financial year due to scope limitation on the transfers to households budget.
  • The Agency in consultation with DSD, Treasury and AG’s office developed a three year action plan to rectify all the discrepancies identified during the 2009/2010 Social Grants Audit.
  • Of the R545million Budget Bid submitted to National Treasury on the automation of grants application, approval and filing (or record management) the Agency was allocated R535million.
audit findings
Audit Findings
  • Exceptions noted during the 2009/10 FY covered the following:
    • Scope Limitation related to the following:
      • Missing Files - 545 076
      • Missing Critical Documents - 159 302
    • Non Performance of Grants Reviews
    • Lack of Accountability on the Social Relief of Distress
    • Poor Management of Grant Debtors
comments on progress achieved
Comments on progress achieved
  • All the exceptions noted during the audit are receiving the necessary attention.
  • However, a significant amount thereof has been resolved.
  • All outstanding matters will be resolved by 15 March 2011.
2008 09 2010 11 sassa administration budget expenditure
2008/09 – 2010/11 SASSA Administration Budget & Expenditure

The Administration budget for SASSA has grown a total of 12% from R4,6 to R5,2 billion between 2008/09 and 2009/10

The total expenditure against budget has decreased from 18% over budget in 2008/09 to 10% over budget in 2009/10.

The Budget vs Expenditure table depicts that over both the financial years the Agency have been overspending on its allocated budget.

The Agency halved the overspending from R839 million reported during the 2008/09 financial year to R490 million due to turnaround strategy interventions which came as a result of Cash Stabilization measures including:

Austerity Measures

Promotion of electronic payment channels (banks) for social assistance grants beneficiaries

Reduction in disbursement fees per beneficiary charged by CPC’s

50

2008 09 2010 11 sassa administration budget expenditure44
2008/09 – 2010/11 SASSA Administration Budget & Expenditure

Key cost drivers were handling fees (CPC’s), shared services and litigations.

For the year under review 44% was spent on CPC’s, 26% on personnel and 25% on Other Operating expenses

The major spending within other operating expenditure includes:

Leases at R229 million - 15% of total other expenditure

Security at R105 million - 7% of total other expenditure

Cleaning at R34 million - 2% of total other expenditure

Travel and Subsistence at R77 million - 5% of total other expenditure

Communication at R103 million - 7% of total other expenditure

The Agency is projecting a surplus of approximately R426 million in the 2010/11 financial year due to Cash Stabilization initiatives presented in previous slide

The surplus will reduce the accumulative deficit.

The performance related rewards for senior management service members as reflected in the annual report represent their service bonus and not performance incentives.

51

audit 2009 10
AUDIT 2009/10

AG FINDINGS

The Auditor General issued a Disclaimer Opinion as they were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion

Audit Findings included:

Late Submission of Financial Statements

Inadequate systems and record keeping

Financial Administration

Material misstatement on sub-ledger accounts resulting in incorrect expenditure, assets and liability reporting on the AFS

Incorrect or non-application of the basis of accounting, GRAP standard

Incorrect or no provision for significant liabilities, in particular legal fees

53

slide47

LATE SUBMISSION

  • The South African Social Security Agency only submitted its financial statements for auditing on 10 August 2010 and not on 31 May 2010, as required by the PFMA.
  • The reason for the late submission was:
    • The extension of 3 years granted by National Treasury proved to be insufficient to ensure readiness for the implementation of GRAP accounting and reconstruction of all prior year comparative figures
    • During the year under review the Agency changed from modified cash to Accrual accounting together with implementing the new Oracle ERP system which resulted in reconciliations not performed as some modules were implemented late.
short term intervention
The Agency have developed and implemented an action plan against the audit findings of the AGSA with monthly progress reports to DSD, the AG and the Minister;

The Agency have appointed an accounting firm to assist with financial management for a period of one year;

The Agency has reviewed and amended policies and procedures and established structures to monitor the implementation there-of

Specific focused training on both the system and accrual basis of accounting principles have been and are continued to be provided to staff

SHORT TERM INTERVENTION
short term intervention cont
EXCO approved a skills audit for the whole Finance Branch in particular the Supply Chain Management environment;

The Agency has identified a need for new posts to be filled and some of the posts are already advertised in order to recruit employees with accrual accounting skills in specific areas of the Finance Branch such as, cash and banking, inventory, assets and financial reporting;

The Agency is busy implementing in-house Change Management initiatives for the Agency as a whole.

SHORT TERM INTERVENTION (cont.)
long term intervention
Completion of the restructuring of the Finance Branch in line with the rest of the Agency;

Professionalization of the Finance Branch (registration with professional bodies such as IPFA, SAIPA, SAICA etc.);

Based on the outcome of the skills audit recommendation we intend to continue with reskilling our current employees whiles at the same time we re-deploy , create environment for job-rotation

Ensure that we provide bursaries for under graduates qualifications working together with various auditing firms and professional bodies such as (IPFA,SAICA, SAIPA etc.)

Develop and implement a retention and succession strategy.

LONG TERM INTERVENTION
progress against action plan
ACCOUNTS PAYABLE

R139 million accrual misstatement

Most of the amounts has been correctly reallocated with R4,2 million remaining unresolved

Accounts payable is soft closed from April to November 2010, with creditors control reconciliations between sub ledger and general ledger completed up to November

Creditor statements remain a matter to be addressed

CASH MANAGEMENT

R35 million opening balance misstatement

The opening balance R35m reallocation of voided payment journal is completed and posted.

Bank reconciliations is completed from April to November and in progress for December and January

ACCOUNTS RECEIVABLE

R45 million debtors misstatement

AR loans module not implemented

Due to the project in progress to fix prior year data as well as to take on debtors excluded previously, monthly reconciliations on movements have not been completed

PROGRESS AGAINST ACTION PLAN
progress against action plan52
PAYROLL

Non Reconciled Payroll Control Account

Reconciliation on payroll control account from April to October is completed with November and December in progress.

Reconciliation of 3rd party is completed up to November 2010 with December in progress.

Note that there are still difference being investigated.

3rd Party payments remain a challenge which needs to be addressed on a more strategic and system orientated level

BUSINESS SUPPORT CENTRE

Non closure of month-ends

Month-ends must be closed in a specific sequence and is dependent on this sequence to ensure a comprehensive “hard” closure

Currently periods have only been soft closed, except for Inventory that is hard closed.

The soft closing is due to the fact that there are duplicate cost manager transactions, reconciliations still needs to be completed and AR Loans data integrity process needs to be finalized.

PROGRESS AGAINST ACTION PLAN
progress against action plan53
PROGRESS AGAINST ACTION PLAN
  • Asset management
    • R11 million Asset clearing account 9/11 misstatement
      • Journal has been reversed and re-allocated
      • Asset register is being updated
      • Mass Additions (MA) for Apr to Dec 2010 has been posted (GL to FA)
        • Mass additions were only run for invoices that were paid and needs to be addressed
    • R13 million Accumulated Funds misstatement
      • The discrepancy remains under investigation
    • Disposal of assets accounting treatment
      • A circular was issued on the treatment regarding disposal of assets, with such assets identified and being updated on the asset register.
    • Lease evaluation and quantification
      • A register is maintained for all leases
      • Contracts are being updated with correct calculations and classifications
      • Transfer of Limpopo properties being addressed
    • Oracle system cost misstatement
      • The cost for the development of ORACLE was identified and the asset register has been updated with the latest development cost of R25 million.
progress against action plan54
INVENTORY MANAGEMENT

R9 million receiving misstatement

Duplicate transactions in cost management have been identified and have now since been resolved.

The only remaining challenge is to complete reconciliations

GRANT DEBTORS:

The UNALLOCATED RECEIPTS account relates to receipts received as debtors’ repayments

The account is used to post monies received or deposits made by debtors to the SASSA’s FNB accounts, wherein a debtor cannot be identified as a result of insufficient reference details.

There is a slow progress on matching receipts to debtors and clearing of the Unallocated receipts account due to several challenges

PROGRESS AGAINST ACTION PLAN
progress against action plan55
PROGRESS AGAINST ACTION PLAN

CRITICAL POSTS:

There is a process of urgently appointing 202 finance staff:

4 finance head office specialists,

18 regional consolidation specialists,

137 grants debtors’ clerks and

43 cashiers

This will address:

AG compliance issues,

Compensate for skills deficiencies,

Bridge skills gap brought on by migration to accrual accounting

Facilitate the creation of a dedicated Revenue and Debt Management Unit

Eliminate the reliance on Grant Administration staff who lack the financial background in collecting and transacting monies due to the Agency

action plan
Action Plan
  • SASSA has developed a detailed plan to address all Agency’s challenges ranging from financial, administrative and service delivery point view.
  • The implementation of this proposal will be divided into short-medium and long term interventions.
financial turnaround
Financial turnaround:
  • The financial measures includes
    • Cash stabilisation
      • Implementation of Austerity Measures,
      • Reduction in the cost of handling fees (costs for payment of grants) and
    • Recouping funds from dormant accounts
    • Restructuring of Finance function
    • Sourcing outside assistance to address immediate challenges
service delivery turnaround
Service Delivery turnaround:
  • The Agency developed integrated service delivery improvement plans, informed by a recently revised Service Delivery Model, to address challenges which include among others:
    • Introduction of queue management,
    • Introduction of booking systems ,
    • establishing satellite and mobile services to ensure that services are expanded;
    • Opening of over crowded service points on Saturdays;
    • Introduction of rapid response teams to deal with backlogs in areas where service delivery pressures are experienced;
    • Establishment of stakeholder forums and regular engagement with beneficiaries.
administrative challenges turnaround
Administrative Challenges Turnaround:
  • Strengthening of SASSA’s Administrative Systems is also being addressed through short and long term interventions in order to reduce challenges with the filing system, lack of reviews and completion of life certificates, and Lack of accountability in the implementation of social relief of distress.
  • The long term objective is to fully automate the business process by integrating all registries and rolling out automated application process.
  • This automation will reduce risk of human error, risk of physical damage as documents will be scanned and filed electronically and reduce transportation time to move files from one region to the other.
short term plan
Short - term Plan

Emergency Management

  • Filling critical posts including those at Management Level as well as CEO post
  • Advertisement of Payment Contracts and appointment of payment providers
  •  Appointment of service provider to prepare for the next audit

Short term Plan

  • Addressing administrative challenges that resulted in disclaimer and qualification audit opinion
  • Implementing quick wins in terms of improving access to SASSA services – improved communication with beneficiaries
medium to longer term turnaround strategy
Medium to Longer-term turnaround strategy
  • The medium to long term strategy will entail implementing:
    • A new Social Assistance payment solution that will ensure that SASSA pays grants cost effectively and efficiently in a dignified manner and under safe conditions.
    • Full Automation of key business processes including employing biometric technology to facilitate access to our systems to ensure security and accountability.
    • Undertaking reviews over the MTEF period and effective record management.
    • Re-organisation and restructuring strategy - SASSA will undertake a skills audit, a detailed analysis of staff requirements and the vetting process of all SASSA staff. Restructuring, Restaffing, & Re-skilling will be undertaken.
conclusion
Conclusion
  • Overall SASSA has, despite the disclaimer on finances, performed fairly well during the year under review;
  • SASSA has identified challenges affecting the institution and it is working tirelessly to remedy the situation; and
  • In this effort SASSA is banking on support from all critical stakeholders, including Hon Members of the PC, as it grapples with these many challenges.