submission of the compensation fund annual report minister of … · 2015-04-13 · ii annual...

i

Minister Mildred N OliphantMinister of Labour

Mr Sam MorotobaActing Director-General

Submission of the Compensation Fund Annual ReportMinister of Labour

I have the honour in submitting the Annual Report of the Compensation Fund for the period 1 April 2013 to 31 March 2014.


i dd 1 2014/10/14 9 35 AM

Annual Report of the Compensation Fund 2014ii

TABLE OF CONTENTPART A GENERAL INFORMATION 11. COMPENSATION FUND GENERAL INFORMATION 22. LIST OF ABBREVIATIONS/ACRONYMS 33. FOREWORD BY THE ACTING DIRECTOR-GENERAL 44. COMMISSIONER’S OVERVIEW 65. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE

ANNUAL REPORT 96. STRATEGIC OVERVIEW 10

6.1. Vision 106.2. Mission 106.3. Values 106.4. Strategic outcome oriented goals 10

7. LEGISLATIVE AND OTHER MANDATES 137.1. Constitutional mandate 137.2. Legislative mandate 13

8. ORGANISATIONAL STRUCTURE 149. REPORTING FRAMEWORK 1510. MINIMISING CONFLICT OF INTEREST 1511. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES 1512. CODE OF CONDUCT 1613. SOCIAL RESPONSIBILITY 16

PART B PERFORMANCE INFORMATION 171. INTRODUCTION 182. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES 183. OVERVIEW OF COMPENSATION FUND’S PERFORMANCE 18

3.1. Service delivery environment 183.2. Overview of the organisational environment 303.3. Revenue 313.4. Payments 323.5. Capital investment, maintenance and asset management plan 32

4. PERFORMANCE INFORMATION BY PROGRAMME 33

PART C GOVERNANCE 731. INTRODUCTION 742. PARLIAMENTARY COMMITTEES 743. EXECUTIVE AUTHORITY 744. THE COMPENSATION BOARD 745. RISK MANAGEMENT 836. INTERNAL CONTROL 847. INTERNAL AUDIT UNIT AND AUDIT COMMITTEE 858. COMPLIANCE WITH LAWS AND REGULATIONS 879. AUDIT COMMITTEE’S REPORT 8710. REPORT OF THE AUDIT COMMITTEE FOR THE PERIOD 2013/14 90

PART D HUMAN RESOURCE MANAGEMENT 951. INTRODUCTION 962. HUMAN RESOURCE OVERSIGHT STATISTICS 98

PART E FINANCIAL INFORMATION 1051. REPORT OF THE AUDITOR-GENERAL 1062. ANNUAL FINANCIAL STATEMENTS 117

i dd 2 2014/10/14 9 35 AM

PART A: GENERAL INFORMATION

i dd 1 2014/10/14 9 35 AM

Annual Report of the Compensation Fund 20142

1. COMPENSATION FUND GENERAL INFORMATION

REGISTERED NAME:Compensation Fund

PHYSICAL ADDRESS:Compensation HouseCorner Hamilton and Soutpansberg StreetsPretoria

POSTAL ADDRESS: PO Box 955Pretoria0001

TELEPHONE NUMBER:0860 105 350

FAX NUMBER:012 326 1570 / 012 357 1772

EMAIL ADDRESS: [email protected]

WEBSITE ADDRESS: www.labour.gov.za

EXTERNAL AUDITORS:Auditor General of South Africa (AGSA)

i dd 2 2014/10/14 9 35 AM

Annual Report of the Compensation Fund 2014 3

AGSA - Auditor General of South AfricaAPP - Annual Performance PlanBAS - Basic Accounting SystemBCEA - Basic Conditions of Employment Act BUMS - Business Unit Managers (Provincial

Deputy Directors)BUSA - Business Unity South AfricaCCMA - Commission for Conciliation,

Mediation and ArbitrationCC - Compensation CommissionerCF - Compensation FundCRM - Customer Relationship ManagementCS - Corporate Services CFO - Chief Financial OfficerCOO - Chief Operations Officer CIO - Chief Information Officer COIDA - Compensation for Occupational

Injuries and DiseasesDG - Director GeneralDDG - Deputy Director GeneralDEXCOM - Departmental Executive Committee DoL - Department of LabourDPSA - Department of Public Services and

AdministrationDWCP - Decent Work Country Programme EC - Eastern CapeEEA - Employment Equity Act ES - Employment ServicesESSA - Employment Services for South AfricaEPWP - Extended Public Works ProgrammeEXCO - Executive CommitteeFEMA - Federal Employers Mutual AssuranceFS - Free StateGCIS - Government Communication and

Information ServicesHO - Head Office HPCSA - Health Professions Council of South

AfricaHRM - Human Resource Management ICD - Integrated Client DatabaseICM - Integrated Claims ManagementICT - Information and Communication

TechnologyIES - Inspection and Enforcement Services ILO - International Labour Organisation INDS - Integrated National Disability StrategyIVR - Integrated Voice ResponseKZN - KwaZulu-NatalLMIS&P - Labour Market Information and

Statistics

LP - LimpopoLP & IR - Labour Policy and Industrial

RelationsLRA - Labour Relations Act KRA - Key Result AreaMBDC - Medical Billing Document ControlM&E - Monitoring and EvaluationMISS - Minimum Information Security

SystemMOU - Memorandum of UnderstandingMPU - MpumalangaMTSF - Medium-term Strategic Framework MTEF - Medium-term Expenditure

FrameworkNC - Northern CapeNEDLAC - National Economic Development and

Labour CouncilNT - National Treasury ODMWA - Occupational Diseases in Mines and

Works ActOHS - Occupational Health and Safety PD - Permanent DisablementPDP - Personal Development Plan PES - Public Employment Services PFMA - Public Finance Management ActPMO - Project Management OfficePPP - Public Private PartnershipPTSD - Post Traumatic Stress DisorderPWD - People with DisabilitiesQMS - Quality Management SystemRAF - Road Accident FundRMA - Rand Mutual AssuranceRME - Research Monitoring and Evaluation ROE - Return of EarningsSAP - Systems Application and Products in

Data ProcessingSCM - Supply Chain ManagementSDIP - Service Delivery Improvement PlanSEF - Sheltered Employment Factories SMS - Senior Management ServicesSOE - State Owned EnterprisesSP - Strategic PlanSTEFI - Short-term Financial IndexSWOT - Strengths, Weaknesses,

Opportunities and ThreatsTCOID - Technical Committee on

Occupational Injuries and DiseasesTTD - Total Temporary DisablementUIF - Unemployment Insurance FundWC - Western CapeWSP - Work Place Skills Plan

2. LIST OF ABBREVIATIONS/ACRONYMS

i dd 3 2014/10/14 9 35 AM


3. FOREWORD BY THE ACTING DIRECTOR- GENERAL

Introduction

The Compensation Fund herewith presents its Annual Report for the 2013/14 financial year in terms of Section 55 (1)(d) of the Public Finance Management Act, No 1 of 1999, (as amended by Act 29 of 1999). The Annual Report sets out how the Fund performed on the achievement of outcomes outlined in the 2013/14 Annual Performance Plan. The Annual Report focuses on information that is collected by the Fund in the course of fulfilling its mandate and implementing government policies. This information is vital in enhancing transparency, accountability and oversight in terms of assessing the value-for-money derived from the Fund’s activities. The information reported in the Annual Report include the actual achievements, financial position and human resources information for the reporting period in relation to the planned targets and budgets as published in the Fund’s Strategic Plan, Annual Performance Plan and budget documents.

High-level overview of the Compensation Fund’s Strategy and its performance

During the year under review, the Fund developed its Annual Performance Plan in order to pursue its objective of providing compensation for disablement caused by occupational injuries or diseases and its vision of being a world-class provider of sustainable compensation for occupational injuries and diseases, rehabilitation and reintegration services.

In improving a high performing workforce, the Compensation Fund recruited a Chief Financial Officer. The process to appoint a Chief Director: Operations Management was also initiated in this financial year.

As directed by the Minister in last year’s budget, the Compensation Fund piloted the Rand Mutual Assurance (RMA) Integrated Claims Management System. The Compensation Fund finalised the process of piloting the RMA Claims Management Processing System to assess its capabilities with the view to determine its functionality. Robust change management and consultations were conducted to keep all stakeholders informed of the pilot project.

Challenges faced by the Compensation Fund

The Fund continues to experience a number of business challenges which have led to an untenable situation resulting in:

i dd 4 2014/10/14 9 35 AM


The Fund is still experiencing non-compliance by stakeholders. Stakeholders, such as employers, still submit incomplete information and beneficiaries delay to submit the required documents (banking details, medical reports) resulting in non-payment of compensation benefits. The improvement of the electronic and automated employer declarations and claims processing solutions will resolve some of these challenges. The business processes within the Fund will be simplified, through the introduction of the Smart Forms which will also reduce the administrative burden of employers and other stakeholders, to comply and interact with the Fund.

Fraudulent activities are still negatively affecting the finalisation of employer assessments and the debt book continues to increase. This is due to the fraudulent Letters of Good Standing which were issued, in most cases not in accordance with Compensation Fund policy. To improve governance and risk management, the Fund will put improved internal controls and intelligent audit and risk management systems in place.

Medium- to long-term goals of the Compensation Fund

The Fund has commenced with the implementation of the Turnaround and Modernisation Strategy. Some of the critical initiatives to be undertaken as part of the Strategy include the following:

term Strategic Framework 2014 – 2019

Through the Department of Labour (DoL), the Fund will strive to have an agile and well capacitated ICT organisation which is able to support the current operations and the turnaround initiatives. The Fund will come up with an innovative and flexible sourcing model to provide capacity and services “just in time” and “as and when needed”.

Acknowledgements

I wish to extend my sincere appreciation to staff, management, the Board and the Minister for their unwavering support.


i dd 5 2014/10/14 9 35 AM


4. COMMISSIONER’S REPORT

During the financial year under review, the Compensation Fund (Fund) made progress in achieving its objectives, the details of which are outlined as follows:

1. Income and investments

1.1. Assessment revenue

The Fund raised R8.1 billion (* R7.9 billion) assessment revenue, as compared to R5.3 billion (* R6.4 billion) in the previous financial year, an increase of 53 % (* 24%). This increase is due to the introduction of the Return of Earnings (ROE) website that was initiated for employers to submit electronically and no longer submit their ROE manually. This project was successful as over 94,000 (ninety four thousand) employers submitted their returns online.

Notwithstanding the challenges of the downtime and the slowness of the website, the Fund amassed revenue returns of over R8.1 billion and of which R6.4 billion (* R7.2 billion) rand was collected from the employers, a decrease (* an increase) of 68% (* 12.5%) from R3.8 billion (* R6.4 billion) that was collected in the preceding year.

1.2. Investment revenue

Due to the massive increase of revenue, the Fund had to investment over R1.6 billion (* R4.7 billion) in cash with the Public Investment Corporation (PIC). The net investment income for both the PIC and ABSA (the Fund’s banker) was R4.1 billion (* R1.7 billion) compared to R3.1 billion (* R4.1 billion) the previous years, denoting a decrease of 32% (* 141%) as a result of fair value adjustment.

Overall the total value of assets has increased by R8.1 billion (* R6.1 billion) from R32.7 billion (* R35.3 billion) to R40.8 billion (* R41.4 billion), a 25% (* 17%) increase.

The total surplus for the year increased (* decreased) by 360% (* 50%) from R2 billion (* R8.1 billion) to R9.2 billion (* R4.1 billion) and the accumulated surplus is R23.4 billion (* R26.4 billion). The Fund is fully funded and is in a sound financial position as at 31 March 2014.

2. Compensation claims

Claims incurred for the year amounted to R2 billion (R2.4 billion: 2012) (* R2.7 billion) (* R1.9 billion: 2013), a decrease of 2% (* an increase of 42%). This is merely attributed to the SAP ICM system which posed serious challenges since its inception in 1 October 2011. There was a marginal increase (*decrease) in processing of permanent disability which moved from R79 million (* R89 million) to R118 million (* R87 million).

In order to address the backlog of processing medical claims, the Fund acquired services of EOH medical solutions to electronically process medical claims. Since this project started in December 2012 over 500 million medical claims were paid.

* Subsequent to the receipt of the audit opinion from the AGSA, it was discovered that some of the figures in the Annual Report were incorrect. The revised figures and text are indicated with an asterisk in brackets, which

represent the figures that should have been in the Annual Report.

i dd 6 2014/10/14 9 35 AM


3. Budget

During the year under review the Fund spent 98% (* 79%) budget of compensation for employees and 78% (* 41%) of goods and services.

In terms of revenue, the Fund far exceeded its own expectations by 164% (*151%) mark of its target this is really attributable to ROE website.

4. Social security reforms

In an effort to entrench and transform social security in South Africa, the Fund’s board and management undertook a study tour to Germany to familiarise themselves with the mechanisms and requirements for the implementation of a new transformed compensation system in South Africa.

This will support the Fund in its efforts to ensure guaranteed employment, rehabilitation and alternative re-entry programmes in the labour market. The German government is working closely together with the South African government to ensure that the amendments proposed in the Compensation Bill will contribute to the realisation of a better life for all.

5. Challenges

i. In the year under review the Fund was not able to give employers access to information which could assist them to comply.

ii. Due to the current systems the Fund has been using to process and pay claims, the Fund was unable to meet the growing demands of clients. In the same year the Fund was inundated with queries and complaints from workers – who deservedly were unable to access their benefits – and medical service providers – who had resorted to litigation processes in order to have their invoices adjudicated and paid.

iii. It was confirmed that the Fund’s systems and processes are not able to effectively detect and prevent fraud and corrupt activities perpetrated by both officials and service providers.

Despite the Fund’s efforts to communicate it’s services and employee rights to the public, these efforts have been rendered ineffective as a result of these challenges.

6. Achievements

6.1. Umehluko Pilot Project

These challenges did not deter the Fund in achieving its goals. With the support of the Minister of Labour, the Fund successfully piloted a new claims management system called “Umehluko” offered by Rand Mutual Assurance (RMA). RMA is the licensee under COIDA. This system provides for the online submission of accident reports by employers, and medical reports and invoices by medical service providers. It also allows the Fund to electronically adjudicate and pay compensation benefits and refunds to employers.

Employers and medical providers, through this system, can monitor the progress on each claim submitted. We hope that the new system, if successfully implemented, will do away with the challenges of the past.

6.2. Letters of Good Standing

During the year under review the Fund implemented an online system to process Return on Earnings. This system allows all employers that are paid up, to access their Letters of Good Standing on the website. This has enabled prospective businesses to have easy access to documentation required for tender processes by both government and the private sector.



i dd 7 2014/10/14 9 35 AM


6.3. Increased investments

In the same financial year under review, the Fund was able to generate additional reserves in excess of * R4.7 billion through its operations and investment initiatives to such an extent that at the end the financial year the Fund can proudly report reserves to the amount of * R41.4 billion

The Board, in their desire to promote job creation and investment in the South African economy, has set aside R3.8 billion – available through PIC and IDC as institutions of choice – to implement the investment strategy. In addition, the Fund has set aside R500 million, which is equally matched by the UIF, for the provision of government infrastructure. This is in line with government’s commitment to the provision and supply of service delivery infrastructure to the South African population.

6.4. Fraudulent activities

A hotline for the anonymous reporting of fraudulent and corrupt activities has been established. This has led to a decline in fraud and corrupt activities within the Compensation Fund.

7. Conclusion

My sincere appreciation is accorded to the Minister of Labour for her active involvements, encouragement and unwavering support.

I would like to thank the Board who unreservedly contributed to the performance direction of the Fund.

Lastly, to the staff and management, I would like to acknowledge their commitment and unfailing support.

Mr Shadrack MkhontoCompensation Commissioner



i dd 8 2014/10/14 9 35 AM


5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT

To the best of my knowledge and belief, I confirm the following:

All information and amounts disclosed in the Annual Report is consistent with the Annual Financial Statements audited by the Auditor General. The Annual Report is complete, accurate and is free from any omissions. The Annual Report has been prepared in accordance with the guidelines for annual report as issued by National Treasury.

The Annual Financial Statements (Part E) have been prepared in accordance with the Generally Recognised Accounting Practice standards applicable to public entities. The Accounting Authority is responsible for the preparation of the Annual Financial Statements and for the judgements made in this information.

The Accounting Authority is responsible for establishing and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the Annual Financial Statements. External auditors are engaged to express an independent opinion on the Annual Financial Statements.

In my opinion, the Annual Report fairly reflects the operations, the performance information, the human resource information and the financial affairs of the entity for the financial year ended 31 March 2014.


i dd 9 2014/10/14 9 35 AM


6. STRATEGIC OVERVIEW

6.1. Vision

To be a world-class provider of sustainable compensation for occupational injuries and diseases, rehabilitation and re-integration services.

6.2. Mission

Compensation Fund services

6.3. Values

We shall at all times adhere to or live the Batho Pele Principles.

6.4. Strategic outcome oriented goals

Government has agreed on 12 outcomes as the key focus of its work for the period 2009 to 2014. Each outcome has a limited number of measurable high-impact priority outputs and sub-outputs with targets. These 12 outcomes reflect government’s mandate and link up with the 10 Medium-Term Strategic Framework’s (MTSF’s) priorities. There are two outcomes applicable to the Compensation Fund, which formed the basis of its Strategic Plan. The two outcomes identified for the Compensation Fund were:

inclusive citizenship

Based on the two outcomes discussed above, the Compensation Fund has developed four key strategic outcome oriented goals. These outcome oriented goals are priorities which form the basis of the Compensation Fund’s strategic objectives. The strategic outcomes identified will be the results of the Fund’s performance as viewed by the beneficiaries and will be the consequence of achieving the outputs. The table below indicates the alignment of government outcomes, DoL strategic objectives (KRA’s), CF strategic outcomes and CF strategic objectives.

i dd 10 2014/10/14 9 35 AM


TABLE 1: THE LINKAGE BETWEEN GOVERNMENT, DoL AND CF STRATEGIC GOALS

GOVERNMENT SERVICE DELIVERY

OUTCOMES

DoL STRATEGIC OBJECTIVES

CF STRATEGIC OUTCOMES

CF STRATEGIC OBJECTIVES

Outcome 4: Decent employment through inclusive economic growth

KRA 3: Protecting vulnerable workers

Participate in government initiatives of creating and sustaining decent employment

Promote policy advocacy

Integration of CF within the comprehensive social security reforms

KRA 5: Strengthening social protection

Improve payment of benefits to the beneficiaries of the Fund

Providing an efficient social safety net

Improve the collection of revenue from employers

Improve financial viability

Outcome 12: An efficient, effective and development oriented public service and an empowered and inclusive citizenship

KRA 8: Strengthening the institutional capacity of the Department

Effective administration of the Fund’s operations

Provide professional, efficient and client orientated human resources

Strengthening corporate governance

Improve corporate support and services

Enhance quality and access to COIDA services and information

TABLE 2: CF STRATEGIC OBJECTIVES AND GOALS FOR 2013 – 2018

STRATEGIC OBJECTIVES STRATEGIC OUTPUTS

Providing an effective social safety net

documentation) within 30 days of receiving an invoice by 2016

Policy Framework by 2014

Provide professional, efficient and client-oriented human resource implementation of Work Skills Development Plan (WSP) by 2016

Wellness Strategy by 2016

a 10% vacancy rate by 2016

2016

i dd 11 2014/10/14 9 35 AM


STRATEGIC OBJECTIVES STRATEGIC OUTPUTS

Strengthening corporate governance 2016

(people, process, technology)

annually

Procedures

Integration of the Fund within the comprehensive social security reforms by 2016

five days by 2016

receipt by 2016

Promote policy advocacy

Improve financial viability

financial system to improve payment to 30 days by 2016

Improve corporate support and services March 2013

March 2012

Enhance quality and access to COIDA services and information

information

Fund

in, web, walk-in) by 2016

TABLE 2: CF STRATEGIC OBJECTIVES AND GOALS FOR 2013 – 2018 Continued

i dd 12 2014/10/14 9 35 AM


7. LEGISLATIVE AND OTHER MANDATES

7.1. Constitutional mandate

The mandate of the Compensation Fund is derived from Section 27 (1)(c) of the Constitution of the Republic of South Africa. In terms of this Act, all South Africans have a right to social security. The Compensation Fund is mandated to provide social security to all injured and diseased employees.

7.2. Legislative mandate

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.

The Fund generates its revenue from levies paid by employers, which consists mainly of annual assessments paid by registered employers on a basis of a percentage or fixed rate of the annual earnings of their employees. The COID Act, however, makes provision for a minimum assessment to ensure that the assessment is not less than the administration costs incurred.

The operations of the Compensation Fund are also affected by the following legislation:

i dd 13 2014/10/14 9 35 AM


8. ORGANISATIONAL STRUCTURE

Compensation Commissioner

Mr Shadrack Mkhonto

Acting Director

Internal Audit

Mr Siphiwe Zwane

Director

Risk Management

Ms Katlego Mocwiri

Acting Chief

Director

Operations

Tselane

Acting Chief

Mr Johnny Modiba

Principal Legal

Vacant

Chief Director

Corporate Services

Mr Tshepo

Mkomatsidi

Director

Human Resource

Management

Ms Thembi Moleko

Director

Medical Payments

Mr AK Pillay

Director

Communication &

Stakeholders

Ms Hlonitshwa Mpaka

Acting Director

Medical Services

Ms Dolly Nkabinde

Director

Organisational Effectiveness

Mr Simon Nkhabelane

Director

Compensation

Mr Basimane Dingaan

Director

Financial Reporting

Mr Pitsi Moloto

Acting Director

Financial Control

Mr Mandla Dlamini

Acting Director

Supply Chain Management

Ms Nozipho Zama

Director

Client Care

Vacant

Director

Income

Ms Ella Ntshabele

Mr Johnny Modiba

i dd 14 2014/10/14 9 35 AM


9. REPORTING FRAMEWORK

10. MINIMISING CONFLICT OF INTEREST

In terms of Chapter 3 of the Public Service Regulations, 2001, designated employees (i.e. members of the Senior Management Service) are required to disclose their registrable interests to their Executive Authorities by 30 April of each year. During the period under review all members of the Senior Management Service (SMS) in the Fund had declared their financial interest as required. In addition, when the Fund procures Goods and Services, all suppliers are required to complete standard bidding documents that require them to disclose any conflict of interest with the Fund or any relationship the members of the bidding company may have with staff employed by the Fund or the State. This information is reviewed during the bid process and any discrepancies noted are managed accordingly.

11. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES

Occupational Health and Safety is dedicated to ensuring that the business risks (operations) across the organisation are identified, evaluated and managed accordingly, and ensure compliance with the OHS Act of 1993 which is enforced by the Department of Labour, corporate governance and other legislation.

The Fund ensured that training of employees on how to handle unsafe environments, took place. It also promoted health and safety awareness among all employees within the organisation. In addition it established precautionary measures to protect employees and the public against potential hazards.

MINISTER OF LABOUR

COMPENSATION COMMISSIONER

AUDIT COMMITTEE

COMPENSATION BOARD

BOARD SUB-COMMITTEES

DIRECTOR GENERAL: LABOUR

i dd 15 2014/10/14 9 35 AM


12. CODE OF CONDUCT

Chapter 2 of the Public Service Regulations, 2001 regulates the conduct of Fund staff. The code of conduct acts as a guideline to employees as to what is expected of them from an ethical point of view, both in their individual conduct and in their relationship with others. The purpose of the code of conduct is to enhance professionalism and assist in ensuring confidence in state institutions. During the reporting period the Fund disseminated a copy of the code of conduct through the internal communication channel. The purpose of this was to inform and sensitise staff members about behaviour that is acceptable in the work environment.

13. SOCIAL RESPONSIBILITY

The mandate between PIC and the Fund was concluded and signed off. Over and above the investment initiatives aimed at sustaining the Fund as a going concern, this mandate gives effect to the investment by the Fund in Social Responsibility activities.

The PIC is currently managing two funds for the Compensation Fund, namely, the Compensation Fund (CC) and The Compensation Pension Fund (CP). The Funds are invested at 5% for SRI for CC and 5% for CP. The status at 30 June 2014 was hat there is a total of R1.8 billion of SRI investments in a due diligence phase. These include:

i dd 16 2014/10/14 9 35 AM

PART B: PERFORMANCE INFORMATION

i dd 17 2014/10/14 9 35 AM


1. INTRODUCTION

The Accounting Authority is responsible for the preparation of the Fund’s performance information and for the judgements made in this information. Measures have been put in place to provide reasonable assurance on the integrity and reliability of performance information. The performance information has been monitored on a quarterly basis and fairly reflects the performance information of the Fund for the financial year ended 31 March 2014.

2. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES

In accordance with the PAA and the general notice issued in terms thereof, AGSA reported significant findings on the performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation, as well as internal control.

The objective of the AGSA in conducting tests was to identify reportable findings regarding the reliability and usefulness of performance information but not to gather evidence to express assurance on these matters. Accordingly, AGSA did not express an opinion or conclusion on these matters.

Refer to Part E, page 106, for the AGSA Audit Report.

3. OVERVIEW OF THE COMPENSATION FUND’S PERFORMANCE

3.1. Service delivery environment

The Directorate: Compensation Benefits is divided into three sub-directorates, namely, Claims Registration, Exempted Employers and Private Employers. The main functions of the Directorate are to register claims for injured/diseased employees, adjudicate upon liability of a claim and pay compensation. This section of the report will be focusing on the aforementioned areas.

3.1.1. Registration and processing of claims

The Fund registered a total of 310,710 claims during the financial year 2013/2014. 260,253 of these claims were adjudicated (84%).

Adjudication is the process of establishing the Fund’s liability with regards to a claim. The process involves requesting additional information where information is not sufficient to establish the validity of a claim, accepting liability or repudiating a claim. The table below gives a comparison for the last three financial years of the claims registered, claims accepted, claims repudiated and claims with outstanding information. The number of claims registered has increased and the reasons for this may be the improved claims system that was launched in 2011, together with the backlog elimination projects that have been embarked upon and also partly the positive impact of decentralisation.

i dd 18 2014/10/14 9 35 AM


TABLE 3: COMPARISON OF CLAIMS REGISTERED, ACCEPTED AND REPUDIATED FOR 1 APRIL 2011 TO 31 MARCH 2014

COMPENSATION FUND

PERIOD CLAIMS REGISTERED

CLAIMS ACCEPTED

CLAIMS REPUDIATED

CLAIMS WITH OUTSTANDING INFORMATION

1 April 2012 to 31 March 2012 141,437 110,180 129 31,128

1 April 2012 to 31 March 2013 196,509 129,405 356 63,226

1 April 2013 to 31 March 2014 310,710 260,253 88 50,369

3.1.2. Compensation benefits

During the year under review, a total of 304,234 awards were processed for payment, for different benefits as indicated in the tables below. In some claims, different types of benefits were paid in on one claim.

TABLE 4: PENSION

YEAR AMOUNT CAPITALISED

R

MONTHLY PENSION

PAYMENTSR

2011/12 549,000,702 735,859,691

2012/13 330,887,254 689,407,070

2013/14 420,427,753 789,695,914

TABLE 5: TEMPORARY TOTAL DISABILITY

YEAR AMOUNT PAID DURING THE YEAR

R

2011/12 94,330,529

2012/13 83,618,570

2013/14 69,752,890

TABLE 6: PERMANENT DISABILITY


R

2011/12 59,749,160

2012/13 88,701,628

2013/14 87,029,325

i dd 19 2014/10/14 9 35 AM


TABLE 7: CONSTANT ATTENDANCE ALLOWANCE


R

2011/12 19,719,220

2012/13 13,847,779

2013/14 14,552,688

3.1.3. Benefits improvement

The Compensation Fund Board has reviewed the existing benefits and has made some remarkable increases in the benefits to be paid to injured employees and dependents in the form of lump sums, loss of earnings and monthly pensions. Increases include the following:

- An increase from R26,040 per month to R27,707 per month in respect of the maximum earnings level on which the compensation for temporary total disablement is based

- An increase from R14,584 per month to R15,517 per month in respect of the maximum monthly earnings level on which the compensation for permanent disablement for 30% and less is based

- An increase from R26,040 per month to R27,707 per month in respect of the maximum monthly earnings level on which the compensation for permanent disablement for 31% to 100% is based

- An increase from R3,645 per month to R3 ,878 per month in respect of the minimum earnings level on which compensation for the calculation of temporary total disablement, permanent disablement for 31% to 100% and fatal injuries is based

- An increase from R3.645 per month to R3,878 per month in respect of the minimum earnings level on which compensation for the calculation of permanent disablement for 30% and less is based

- The maximum benefit payable for Partial Dependency increased from R112,527 to R119,729

- The maximum funeral benefit increased from R14,539 to R15,470

- The minimum monthly value for free food increased from R200 to R213 per month and the minimum monthly value in respect of free quarters increased from R89 to R95 per month

- The constant attendance allowance for pensioners who need constant nursing remains at R1,550 per month, in addition to the monthly pension

The adjustment of benefits has been determined on the basis of the actuarial investigations and recommendations by the Compensation Fund Board. The increases are effective from April 2014.

3.1.4. Decentralisation of COIDA Services

The Compensation Fund has decentralised claims processing services to all nine provinces with the aim of being accessible to its stakeholders and to improve claims processing turnaround time. The decentralisation project started in earnest from October 2013 and most of the staff has relocated to the provinces of their choice. HO is supporting them. Challenges of infrastructure, office space, change management, etc. are being addressed by different work streams on the decentralisation project to ensure smooth transition.

i dd 20 2014/10/14 9 35 AM


TABLE 8: PRODUCTION AND STATISTICS – COMPARISON OF PROVINCIAL DECENTRALISATION STATISTICAL REPORT

2011/12 2012/13 2013/14

PROVINCE REGISTERED REGISTERED REGISTERED

Eastern Cape 24,452 781 1,300

Free State 3,516 699 693

Gauteng, Pretoria 93,407 5,775 11,957

Gauteng, Johanneburg 1,685 5,789 48

KwaZulu-Natal 4,853 2,549 3,530

Limpopo 1,672 478 551

Mpumalanga 3,362 831 1,765

Northern Cape 870 333 275

North West 2,561 853 662

Western Cape 4,906 4,240 4,129

Other (unspecified) 0 4,256 285,800

TOTAL 164,532 196,509 310,710

The above table is the comparison of claims registered in the province in question from 2011/12 until 2013/14. This illustrates the number of claims each province has handled and this depends on the size of the province. The number of claims where the province is unspecified includes claims registered by personnel at head office, while they were awaiting deployment to various provinces. Most staff only relocated after October 2013. Claims were still being registered since the start of the financial year.

ChallengesDecentralisation of COID services is not finalised.

Way forward

3.1.5. Compliance with COIDA: Monitoring of exempted employers and unreported accidents

The Fund has determined Section 88 administrative costs for all government departments, mutual associations and exempted municipalities on claims registered during 2013/14 to the value of R3,456,000.

3.1.6. Contributions to the social security comprehensive reforms

The Compensation Fund is a member of the Inter-departmental Task Team on comprehensive social security reforms. The framework for the comprehensive social security reforms has been developed. The Compensation Fund has made contributions to the Consolidated Government Paper, to the Road Accident Benefits Scheme Bill and to the National Health Insurance.

The Fund participated in the SADC conference on the portability of social security benefits, organised by the Southern Africa Trust in partnership with Food Foundation and Southern Africa Mine Workers Association (SAMA). The objectives of the conference were to, amongst others:

Code of Social Security on portability of social security benefits

compensation and explore collaboration for supporting mineworkers

i dd 21 2014/10/14 9 35 AM


TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14

A task team was appointed to chart the way forward in finding mechanisms to support mine workers and their dependents. The task team will commence with its activities in the new financial year.

3.1.7. Prevention of accidents through strengthening of civil society fund

In its quest to advocate policy on injury on duty and occupational health, the Compensation Fund has funded 18 non-profit organisations to train union shop stewards, employees and the communities on the Compensation for Occupational Injuries and Diseases Act as well as on Occupational Health and Safety Act. Of the 18 projects, four projects were running from 2012 while the remaining 14 were approved during 2013 and some only started in April 2014.

The Strengthening Civil Society Fund Committee (SCSF) in the Department is responsible for assessing and approving project proposals from various organisations.

Since all these new projects were only approved in December 2013, most of them started in January 2014 and their reports will be available in the new financial year as they are planned to operate over a period of 12 months.

As part of monitoring and evaluation, the Compensation Fund developed COIDA guidelines as a basis for developing training material to be used by the projects. Spreadsheets for claims enquiries were also developed for all the projects to monitor and evaluate the impact of the training workshops. The Fund participated in training conducted nationwide and in radio interviews with community and national radio stations in five languages.

PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS

Western Cape 1. Swellendam Advice Centre

To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas

December 2013 and workshops started from January 2014

2. Workers World Media Productions (WWMP)

This project focuses on training community radio stations, local TV stations and the community generally on OHS and COIDA countrywide

Achievements and impact:

and support to the local community based presenters and producers of labour shows

production of educational features in five languages: English, Afrikaans, isiXhosa, isiZulu and Sesotho

SAfm, Cape Town TV, Medica Advice centres in Khayelithsa and Alexander were involved

Western Cape

i dd 22 2014/10/14 9 35 AM


TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14 Continued

Free State


Free State 3. Mangaung Advice Centre

To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas for 12 months

December 2013, workshops started from January 2014

the 2014 financial year

4. Maokeng Advice Centre

To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas for 12 months. To also elect farmworkers safety representatives and establish Health and Safety Committees.

in Kroonstad, Edenville, Bothaville and Wesselsbron, Koppies and Steynsrus

R150,000 was spent with the first tranch

ranch workshops in January 2014

accidents is still rife

5. Qholaqhwe Advice Centre

To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas


Farm, Itekeng, Vrede, Clocolan, Bohlokong and Marquard

accidents and illiteracy

Mpumalanga


Mpumalanga 6. Nkomazi Advice Centre

To advocate COIDA and OHS policies by training shop stewards, NGOs, factory workers and farm workers in rural areas



7. Leandra Advice Centre




i dd 23 2014/10/14 9 35 AM



Limpopo


Limpopo 8. Mamadi Advice Centre



9. Opret Advice Centre To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas

OHS workshops in eight villages and farms and 439 workers participated

Ga-Mokaba, Mzobane Ext. 17 and Ext 20, Hospital view, Zone 2 Mahwelereng, Ga- Madiba, Masodi, Mapele Matlou and Mapela (Mzobane 2). The Fund participated in the Mahwelereng training workshop.

tranch.

accidents and illiteracy

North West


North West 10. Lethabong Advice Centre


tranch, 681 farm workers participated in Rietvlei, Brandvlei, Tarlton, Manharaand, Magaliesburg, Mazista, Kroomdraai, Koedoskop and Thabazimbi.

Challenges:

submitted at the various workshops

inspection and enforcement unit

i dd 24 2014/10/14 9 35 AM



KwaZulu-Natal


KwaZulu-Natal 11. Bergville Advice Centre


December 2013

training workshops from April 2014

12. University of KZN This project is based in the University of KZN, focusing in the chemical industry which has substantial health and safety risks and hazards.

since 2012

conducted with 333 participants from December 2013 to March 2014

COIDA and OHS was conducted in March 2014 wherein 40 shop stewards from various trade unions attended

tranch to complete its operations

13. Mooi River The Department of Environmental Health has a strong and viable relationship with trade unions through education on OHS and COIDA. The main objective of the project is to develop curricula in OHS and COIDA for the chemical industry using union representatives as pilot subjects for the modules.

December 2013 and to start from April 2014

i dd 25 2014/10/14 9 35 AM


3.1.8. Medical Services

The strategic goal of the Medical Services Directorate is to process medical expenses and provide medical advice/opinion on occupational injuries and diseases to all claims processing sub-directorates and monitoring of compliance with COIDA legislation, Chapters 7, 8, Sections 72 to 79.

The Medical Services Directorate consists of two units: Medical Payments and Medical Services, consisting of medical officers and nurses. The Directorate focuses on the following:



Northern Cape 14. Sika Sonke Advice Centre


December 2013


15. Hope Town Advice Centre


December 2013, to start from April 2014

16. Marydale Advice Centre


December 2013, to start from April 2014

Northern Cape


Eastern Cape 17. Aliwal North Advice Centre


in December 2013. Training workshops to commence from April 2014

18. Matatiele Advice Centre


December 2013, workshops started from January 2014


Eastern Cape

i dd 26 2014/10/14 9 35 AM


3.1.8.1. Medical Services performance

TABLE 10: MEDICAL SERVICES PERFORMANCE

CLAIM TYPE TOTAL RECEIVED

TOTAL PROCESSED

TOTAL DONE IN 10 DAYS

TOTAL CARRIED OVER

Reopening 2,281 1,377 1,064 278

Chronic medications 343 297 255 33

Prosthesis 2,020 1,660 1,016 118

Unschedulled pds 882 401 253 377

Ods 3,479 778 698 39

Complex accounts 247 163 106 51

TOTAL 9,252 4,676 3,392 896

3.1.8.2. Medical payments

During the financial year under review, 1,817,383 medical invoices were received, compared to 1,003,050 in the previous financial year 2012/2013, of which a total of 684,169 medical invoices were approved within 60 days of receipt. The value of approved medical accounts was R2.1 billion compared to R1.5 billion in 2012/2013. The average turnaround time in the current financial year is 38%, compared to the 67% achieved in the last financial year. The percentage of ICM is low because of the new way of uploading electronic files, as we strive for more streamlined and electronic methods of improving the claims processing.

TABLE 11: MEDICAL CLAIMS COMPARISON FOR THE LAST THREE FINANCIAL YEARS

YEAR NUMBER OF PAYMENTS RAND VALUE

2011/12 824,924 R1,882,372,383

2012/13 934,834 R1,501,606,165

2013/14 1,817,383 R2,129,333,441

3.1.8.3. Tariffs for Medical Aid Expenses

The tariffs of fees for medical expenses are revised on an annual basis after consultation with the healthcare service provider associations.

For 2012/2013, the tariff increase approved was 6% whereas in 2013/2014 it is 6.4%.

3.1.9. Legal Services

The objective of Legal Services is to provide legal support and legal administration to the Compensation Fund to ensure compliance with the provisions of the COIDA.

Legal Services is sub-divided into three sub-sections, namely:

i dd 27 2014/10/14 9 35 AM


3.1.9.1. Litigation

This section is responsible for management of litigation and contracts with the intent to avoid unnecessary legal proceedings against the Fund and to ensure compliance with the Act.

215 notices of motion, summons and letters of demand were received and 26 have been finalised. The remaining applications are active as pleadings are being exchanged.

3.1.9.2. Third-party

The Third-party section recovers moneys from the third parties, specifically the Road Accident Fund where an employee was involved in a motor vehicle accident whilst on duty in terms of Section 36 of the COIDA. If liability for compensation is accepted, the Fund will pay compensation and recover what it has paid from the Road Accident Fund (RAF).

3.1.9.3. Contracts and legal opinions

The section is responsible for the drafting/vetting of contracts to ensure compliance with the relevant legislations and ensure that Supply Chain procedures have been complied with. It is also responsible for legal advice to avoid unnecessary litigation.

3.1.9.4. Hearings

In terms of Section 91 any person who is affected by the decision of the Director-General relating to a claim for compensation, may lodge an objection against such decision which may be reviewed in terms of Section 90 and or be heard by the Compensation Fund tribunal. The tribunal decisions can only be reviewed and appealed in the High Court.

Section 91 objections:

Of the 1,219 files outstanding, 50 employees were untraceable, 172 require further medical advice and referral, and 577 are already enrolled and due for hearing by the tribunal. In terms of Section 56 employees are entitled to claim increased compensation in the event where an accident was caused by the negligence of the employer or a person deemed to be a supervisor/manager. Such claims are adjudicated in a similar process as Section 91 objections.

Section 56 applications:

Close to R3.4 million was paid to panel members, witnesses, recording firms, etc. for their participation in the hearing processes.

i dd 28 2014/10/14 9 35 AM


3.1.10. Client Services

3.1.10.1. Implement customer services at customer touch points

The phone-in, walk-in and web-mail support channels were implemented. The benefits will be easily accessible once all systems are integrated and information is available at the touch of a button.

3.1.10.2. Improve customer satisfaction score by 40% of baseline

Customer feedback ratings is 80% for the year.

3.1.11. Communication

During the year under review, the Fund undertook a number of communication initiatives. These were aimed at ensuring that there is a two-way flow of information between the Fund and its stakeholders.

Educational campaigns conducted

Educational and awareness campaigns have been conducted through different media nationally to educate all stakeholders on the Fund’s services, and on their rights and responsibilities. These campaigns were conducted in all the official languages to ensure maximum reach.

Employees educational campaign

The objective of this campaign was to intensify communication, educate employees about their rights and responsibilities and provide information on how to access services from the Fund.

The campaign ran on the following platforms:

audience)

(Sowetan and Daily Sun)

shopping malls)

Beneficiaries’ educational campaign

The objective of this campaign was to educate the Compensation Fund beneficiaries and the public at large on procedures they should follow when lodging claims with the Fund. It also outlined necessary documents that need to be submitted when reporting an occupational injury, diseases or fatality.

The campaign ran on the following platforms:

audience)

buses advertising, commuta radio stations and commuta screens situated at the taxi ranks and train stations)

Cell C)

i dd 29 2014/10/14 9 35 AM


Return of Earnings (ROE) campaign

The campaign informed employers about the electronic submission of their Annual Returns and the deadline thereof. The employers were also informed about the newly designed electronic Letter of Good Standing which can be downloaded remotely through the website once they have paid their assessments. Awareness on how to identify the security features of this electronic letter was provided to ensure that employers are not defrauded.

The ROE campaign ran on the following platforms:

Media Relations

During this financial year, the Fund had direct interaction with clients through nationwide community radio talk show programmes where clients had a chance to obtain information directly from the Fund. These programmes were conducted in all the official languages to ensure maximum reach.

Three (3) interviews were coordinated for the Compensation Commissioner and profiled on the following business magazines:

21 media enquiries on Fund related issues were responded to and published on both print and electronic media.

Marketing

The Fund participated in the following events where its services were displayed: Ministerial Imbizos in Khayelitsha and Saldana Bay in November 2013 and March 2014, respectively. In addition, exhibitions were held at conferences in KwaZulu-Natal and Gauteng provinces in September 2013 and March 2014, respectively.

3.2. Overview of the organisational environment

During the year under review, the new organisational structure for the Fund was implemented on the Personnel and Salary Administration (PERSAL) system with effect from 1 April 2013. As part of the implementation of the new structure, a number of newly created positions in the middle and senior management levels were prioritised for advertisement in an endeavour to strengthen capacity. In addition, the Placement Panel which was established towards the end of 2012/13 financial year commenced its work of moving employees from the old to the new organisational structure.

As part of the placement process, directorates were invited to the meetings of the Placement Panel where they presented proposals on the positions to which employees in their components could be placed in line with their competencies. Such proposals for placement took place in relation to posts on the same salary levels. Once the Placement Panel was satisfied that the proposals were in line with the Placement Framework and Procedure for employees of the Department of Labour (SR 12 and below), submissions were prepared for the approval of direct placement.

It must also be noted that the need to deliver medical and compensation activities effectively has resulted in the creation of integrated posts. These posts were subjected to a job evaluation process which resulted in the entry level being salary level 6 for claims processors. It is imperative to note that the majority of employees in the Directorates: Medical and Compensation were employed on salary level 5. This matter coupled with the fact that entry level positions in provinces in these two areas, were salary level 6 created a challenge.

i dd 30 2014/10/14 9 35 AM


A proposal was made to organised labour through the established Placement Panel that choice forms should be issued to all the employees in the affected directorates, including those on SR5 to, identify the province where they would like to permanently relocate to. This information together with performance assessment results would be utilised to approach the Minister of Labour with a request to upgrade these employees into newly created salary level 6 posts in provinces. However, upon the analysis of the choices made by employees it was realised that with respect to the Gauteng province there were more employees than the number of posts available on SR 6 in particular. In light of the above, it became clear that the submission to the Minister would have to be delayed in order to ensure that all the SR 5 employees affected are upgraded with effect from the same date. Failure to take this approach would have resulted in grievances being lodged as affected employees would have demanded parity.

In order to improve service delivery, the Fund embarked on a consultative process with Directorates to identify challenges impacting on its ability to function effectively. This process identified a number of challenges which had affected the performance of the Fund. Among some of the most critical challenges were inefficient IT systems, turnaround times in the processing of compensation claims, backlogs in processing claims and payments, human capacity constraints, document and records management system, confrontational nature of engagement with trade unions, delays in the implementation of the structure, non-compliance by stakeholders with regards to incomplete information by employers, failure by employers to submit their annual returns, delay and/or non-reporting of accidents and fraudulent activities which were still negatively affecting the finalisation of employer assessments and the debt book which continues to increase. This process culminated in the development of a Turnaround and Modernisation Strategy.

3.3. Revenue

TABLE 12: SUMMARY OF REVENUE GENERATED

2013/14 2012/13

SOURCESOF

REVENUE

ESTIMATE (TARGET)

R’000

REVENUEGENERATED

R’000

VARIANCE(OVER)/UNDERR’000

ESTIMATE (TARGET)

R’000

REVENUEGENERATED

R’000

VARIANCE (OVER)/UNDERR’000

Levies from employers

5,227,207 7,974,596 (2,747,389) 4,781,484 6,428,307 (1,646,823)

Interest 268,741 0 268,741 230,057 224,100 5,957

Penalties 96,042 211,040 (114,998) 169,836 499,594 (329,758)

TOTAL 5,591,990 8,185,636 2,593,646 5,181,377 7,152,001 (1,970,624)

Revenue generated increased by 14% compared to the previous financial year. The reason for the increase in collections, was due to the introduction of the ROE website two years ago. Interest on late payments was not charged for the year under review. Penalties for late submission of annual returns was levied at 10%.

TABLE 13: SUMMARY OF REVENUE COLLECTIONS

2013/14 2012/13

SOURCESOF

REVENUE

DEBT BOOKR’000

REVENUECOLLECTED

R’000


DEBT BOOKR’000

REVENUECOLLECTED

R’000


Levies from employers

8,805,998 7,249,618 1,556,380 8,839,614 5,786,426 3,053,188

Impairment (8,490,966) - - (6,003,677) - -

TOTAL 315,032 7,249,618 (6,934,586) 2,835,963 5,786,937 (2,950,463)

i dd 31 2014/10/14 9 35 AM


The total debt book excludes a provision for assessments raised as compared to the inclusion of provision for assessments not raised of R947 million. The provision for assessment raised is an estimate of assessment not raised as a result of mainly annual returns not submitted by employers or assessed timeously.

The overall debt collection has increased by 25% as compared to the previous financial year. The increase is attributable to the enforcement of the COID Act as well as intensifying debt collection procedures by strengthening the criteria for issuing letters of good standing.

3.4. Payments

TABLE 14: SUMMARY OF EXPENDITURE BY PROGRAMME

2013/14 2012/13

PROGRAMMENAMER’000

BUDGETR’000

ACTUALEXPENDI-

TURER’000

(OVER)/UNDEREXPENDITURE

R’000

BUDGETR’000

ACTUALEXPENDI-

TURER’000

(OVER)/UNDER

EXPENDITURER’000

Administration 2,296,334 727,022 1,569,312 1,007,932 777,496 230,436

Medical Claims 2,700,000 2,129,333 570,667 3,000,000 1,501,606 1,498,394

CompensationClaims

793,969 591,763 202,206 1,864,061 480,187 1,383,874

TOTAL 5,790,303 3,448,118 2,342,185 5,871,993 2,759,299 3,112,704

During the year under review the Fund had a saving of R2.3 million. Most of the savings came from administration to the amount of R1.6 million.

3.5. Capital Investment maintenance and asset management plan

The Fund is required to develop a capital investment and asset management plan. During the period under review, the Fund developed the capital investment and demand plans. The plans will, however, only be implemented in the next financial year.

The upgrade of the Bisho building was completed on 24 March 2014. This involved the creation of offices and replacement of tiles.

There are currently no infrastructure projects in progress. There are also no plans to close down or down-grade any current facilities. However, the Fund plans to lease the current facilities to the Department of Public Works and occupy new buildings in the nexr five years.

Minor operating maintenance were made to the current infrastructure.

There were no major disposals embarked upon during the year under review. Public Private Partnership assets have been taken over from Department of Labour.

Some of the measures taken to ensure that the Fund’s asset register remained up-to-date during the period under review was the performance of monthly reconciliations.

Currently there is no backlog to be addressed during the period under review.

i dd 32 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E A

N E

FF

ICIE

NT

SO

CIA

L S

AF

ET

Y N

ET

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T

2013

/14

AC

TU

AL

AC

HIE

VE

ME

NT

20

13/1

4

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TAR

GE

T F

OR

20

13/1

4

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ovem

ent i

n C

ompe

nsat

ion

Fun

d cl

aim

s tu

rnar

ound

% o

f new

co

mpe

nsat

ion

clai

ms

adju

dica

ted

with

in m

onth

s of

re

gist

ratio

n

Ach

ieve

d(1

00%

)R

egis

tere

d19

6,50

9A

djud

icat

ed20

5,62

2

80%

of n

ew

com

pens

atio

ncl

aim

sad

judi

cate

dw

ithin

two

mon

ths

of

regi

stra

tion

Ach

ieve

d (

84%

)To

tal r

egis

tere

d 31

0,71

0To

tal a

djud

icat

ed

260,

253

4% m

ore

than

th

e pl

anne

dta

rget

of 8

0%

as p

er th

e an

nual

pla

n

2012

/13

196,

509

cla

ims

regi

ster

ed20

13/1

431

0,71

0 cl

aim

s re

gist

ered

114,

201

repr

esen

ting

(58%

) m

ore

varia

nce

due

to

bac

klog

ac

cum

ulat

ed20

12/1

319

2,96

7 cl

aim

s ad

judi

cate

d20

13/1

426

0,25

3 cl

aim

sad

judi

cate

d67

,286

repr

esen

ting

(27%

) m

ore

clai

ms

adju

dica

ted

The

ach

ieve

men

t is

attr

ibut

ed to

th

e co

ntrib

utio

n by

a s

peci

al

back

log

proj

ects

re

scue

bac

klog

te

am a

nd P

roje

ct

“Saa

mw

erk”

depl

oyed

to c

lean

up

the

prov

inci

alba

cklo

g

4. PERFORMANCE INFORMATION BY PROGRAMMETA

BLE

15:

PE

RF

OR

MA

NC

E O

F C

F P

RO

GR

AM

ME

S A

ND

SU

B-P

RO

GR

AM

ME

SC

OM

PE

NS

AT

ION

BE

NE

FIT

S

i dd 33 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E A

N E

FF

ICIE

NT

SO

CIA

L S

AF

ET

Y N

ET

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Adv

ocac

y of

po

licy

to p

reve

ntac

cide

nts

Fun

d, m

onito

r an

d ev

alua

te

num

ber

of

proj

ects

ann

ually

Ach

ieve

d21

pro

ject

s w

ere

runn

ing

durin

g qu

arte

r 4

afte

r th

e se

cond

tran

che

fund

ing

was

re

leas

ed. T

he

Fun

d pa

rtic

ipat

ed

in th

ree

wor

ksho

ps a

s pa

rt o

f mon

itorin

g an

d ev

alua

tion,

na

mel

y,

Leth

abon

gP

roje

ct in

D

elar

eyvi

lle;

Opr

et P

roje

ct

in M

okop

ane

and

Qho

laqh

we

Pro

ject

in V

rede

, F

ree

Sta

te.

Fun

d, m

onito

r an

d ev

alua

te 1

2 pr

ojec

ts in

all

prov

ince

s

Ach

ieve

d18

pro

ject

s w

ere

fund

ed,

13 m

onito

red.

E

valu

atio

n fo

r th

e fir

st tr

anch

e w

as p

erfo

rmed

fo

r M

aoke

ng;

Qho

laqh

we;

Opr

et a

nd

Leth

abon

g;U

KZ

N a

nd

Wor

kers

Wor

ld

Med

ia P

rodu

ctio

n co

ntin

ued

from

th

e pr

evio

us y

ear

and

wer

e al

so

eval

uate

d.

N/A

N/A

Mor

e th

an

12 p

ropo

sals

re

ceiv

ed q

ualif

ied

for

fund

ing.

Tw

o of

the

21 p

roje

cts

cont

inue

d fr

om

the

prev

ious

yea

r. T

he p

roje

cts

wer

e on

ly a

ppro

ved

in D

ecem

ber

2013

hen

ce

som

e co

uld

not

com

men

ce in

20

13 w

hile

oth

ers

star

ted

late

.

CO

MP

EN

SA

TIO

N B

EN

EF

ITS

Con

tinue

d

i dd 34 2014/10/14 9 35 AM


CO

MP

EN

SA

TIO

N B

EN

EF

ITS

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E A

N E

FF

ICIE

NT

SO

CIA

L S

AF

ET

Y N

ET

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ove

com

pens

atio

nbe

nefit

s

Rev

iew

com

pens

atio

nbe

nefit

s by

end

of

finan

cial

yea

r

Ach

ieve

dB

enef

its in

crea

se

gaze

tte w

as

appr

oved

on

time

and

impl

emen

ted

by th

e du

e da

te

Rev

iew

com

pens

atio

nbe

nefit

s by

end

of

finan

cial

yea

r

No

t A

chie

ved

Onl

y pu

blis

hed

in

Mar

ch 2

014

for

publ

ic c

omm

ents

.T

he fi

nal p

ropo

sal

was

sen

t to

the

Min

iste

r af

ter

26

Apr

il 20

14 fo

r ap

prov

al

Ben

efits

cou

ld

not b

e pu

blis

hed

in D

ecem

ber

for

publ

ic

com

men

ts d

ue to

un

avai

labi

lity

of

actu

aria

l rep

ort

N/A

The

ben

efits

w

ill b

e se

nt

to M

inis

ter

for

appr

oval

afte

r 26

Apr

il, th

e be

nefit

s w

ill b

e pa

id in

May

but

re

tros

pect

ive

from

Apr

il 20

14

i dd 35 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E A

N E

FF

ICIE

NT

SO

CIA

L S

AF

ET

Y N

ET

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Fin

alis

e 10

0% o

f m

edic

al c

laim

s (v

alid

, acc

urat

e an

d co

mpl

ete

docu

men

tatio

n)fin

alis

ed w

ithin

30

days

of r

ecei

ving

an

invo

ice

by

2016

% o

f med

ical

cl

aim

s fin

alis

ed

with

in n

umbe

r of

mon

ths

of

rece

ivin

g an

in

voic

e

No

t A

chie

ved

(6

7%)

Out

of 1

,003

,050

m

edic

al c

laim

s re

ceiv

ed, 6

70,3

65

wer

e pa

id w

ithin

tw

o m

onth

s at

an

am

ount

of

R1,

277,

310,

467

90%

of m

edic

al

clai

ms

final

ised

w

ithin

two

mon

ths

of r

ecei

ving

an

invo

ice

No

t A

chie

ved

(37%

)O

ut o

f 1,8

71,3

83

med

ical

cla

ims

rece

ived

, 684

,169

w

ere

paid

with

in

two

mon

ths

at a

n am

ount

of

R2,

129,

333,

441

53%

Dup

licat

e an

d un

acce

pted

acco

unts

. Man

ual

proc

essi

ng.

Una

vaila

bilit

y of

do

cum

ents

in

the

syst

em. I

T

chal

leng

e. C

laim

s re

gist

ered

with

pa

rt B

del

ays

adju

dica

tion.

Sys

tem

s up

date

of

pay

men

ts.

Unr

egis

tere

dcl

aim

s. In

corr

ect

calc

ulat

ion

of

turn

arou

nd.

Slo

wne

ss o

f th

e IT

sys

tem

s in

pro

cess

ing

paym

ents

.

30%

New

IT s

yste

m

bein

g pi

lote

d to

add

ress

pr

oces

sing

of

com

pens

atio

ncl

aim

s an

d w

ill b

e de

ploy

ed m

id-

year

.

ME

DIC

AL

SE

RV

ICE

S

i dd 36 2014/10/14 9 35 AM


ME

DIC

AL

SE

RV

ICE

S C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E A

N E

FF

ICIE

NT

SO

CIA

L S

AF

ET

Y N

ET

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Pro

vide

med

ical

ad

vice

on

all

med

ical

cla

ims

with

in 2

4 ho

urs

by 2

016

% m

edic

al a

dvic

e on

all

med

ical

cl

aim

s pr

ovid

ed

with

in s

peci

fied

time

No

t A

chie

ved

33%

Out

of 1

3,55

0 re

ques

ts fo

r m

edic

al a

dvic

e on

med

ical

cla

ims

rece

ived

, 4,4

48

wer

e fin

alis

ed

with

in 1

5 da

ys

80%

med

ical

ad

vice

on

all

med

ical

cla

ims

prov

ided

with

in

10 d

ays

No

t A

chie

ved

73%

Out

if 4

,676

re

ques

ts fo

r m

edic

al a

dvic

e on

med

ical

clia

ms

rece

ived

, 3,2

92

wer

e fin

alis

ed

wih

in 1

0 da

ys

7% IT s

yste

m

chal

leng

es.

Ses

sion

doc

tors

no

t app

oint

ed

due

to d

elay

ed

SC

M p

roce

sses

an

d st

aff

shor

tage

.

40%

SC

M to

pro

cess

ap

poin

tmen

t of

sess

ion

doct

ors.

In

crea

se n

umbe

r of

inte

rns

to

capt

ure

mor

e do

cum

ents

whe

n sy

stem

is

wor

king

. D

ecen

tral

isat

ion

and

fillin

g of

all

post

s in

the

new

st

ruct

ure

Dev

elop

a

reha

bilit

atio

nan

d re

inte

grat

ion

polic

y fr

amew

ork

and

part

icip

ate

in c

onsu

ltativ

e pr

oces

ses

by

2014

Sta

keho

lder

cons

ulta

tion

and

wor

ksho

ps

Par

tial

lyA

chie

ved

The

cha

pter

on

reha

bilit

atio

nha

s be

en a

dded

to

CO

IDA

am

endm

ents

Sub

mis

sion

of t

he

draf

t Pol

icy

to th

e M

inis

ter

No

t A

chie

ved

The

Pol

icy

has

not b

een

draf

ted,

on

e of

the

prer

equi

site

s fo

r th

e ne

w P

olic

y is

ben

chm

arki

ng

with

oth

er

coun

trie

s an

d to

alig

n C

OID

A

Sch

edul

e 2

with

th

e A

MA

gui

des

The

Pol

icy

has

not b

een

draf

ted,

on

e of

the

prer

equi

site

s fo

r th

e ne

w P

olic

y is

th

e be

nchm

arki

ng

with

oth

er

coun

trie

s an

d to

alig

n C

OID

A

Sch

edul

e 2

with

th

e A

MA

gui

des

N/A

CF,

RM

A a

nd

FE

MA

med

ical

te

am h

ave

met

to

com

men

ce

disc

ussi

on o

n al

igni

ng S

ched

ule

2 w

ith th

e A

MA

gu

ides

i dd 37 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

95%

com

plia

nce

with

the

perf

orm

ance

man

agem

ent

syst

em a

nnua

lly

Ful

l com

plia

nce

and

enfo

rcem

ent

of th

e pe

rfor

man

cem

anag

emen

tpo

licy

Ach

ieve

dN

atio

nal T

arge

t of

95%

ach

ieve

d

2012

/13

96%

firs

t se

mes

ter

asse

ssm

ents

wer

e re

ceiv

ed(9

29/9

68)

98.6

5%ag

reem

ents

wer

e re

ceiv

ed

(955

/968

)

95%

com

plia

nce

and

enfo

rcem

ent

of th

e pe

rfor

man

cem

anag

emen

tpo

licy

No

t A

chie

ved

2013

/14

69/9

24 (

7.47

%)

855/

924

(ass

essm

ents

rece

ived

and

fin

alis

ed)

(93%

)

Per

form

ance

asse

ssm

ents

are

st

ill o

utst

andi

ng

due

to n

on-

com

plia

nce

by

prog

ram

mes

N/A

To e

nfor

ce

com

plia

nce

thro

ugh

disc

iplin

ary

actio

n ag

ains

t no

n-co

mpl

ying

prog

ram

mes

(war

ning

lette

rs

issu

ed)

HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T

i dd 38 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ove

com

pete

ncy

leve

ls o

f CF

st

aff b

y 82

%

alig

nmen

t and

im

plem

enta

tion

of w

ork

skill

s de

velo

pmen

t pla

n (W

SP

) by

201

6

% o

f ide

ntifi

ed

need

s ad

dres

sed

as p

er P

DP

al

igne

d w

ith W

SP

Ach

ieve

d11

% o

f the

id

entif

ied

trai

ning

ne

eds

wer

e ad

dres

sed.

Six

(on

e ge

neric

and

fiv

e fu

nctio

nal)

trai

ning

nee

ds

wer

e ad

dres

sed

durin

g 20

12/1

3.31

Em

ploy

ees

have

bee

n tr

aine

d du

ring

Qua

rter

4.

Gen

eric

trai

ning

: 11 F

unct

iona

ltr

aini

ng: 2

0

82%

of i

dent

ified

ne

eds

addr

esse

d as

per

PD

P

alig

ned

with

WS

P(4

8 tr

aini

ng

need

s w

ere

iden

tifie

d)

Ach

ieve

d82

%48

of t

he

iden

tifie

d tr

aini

ng

need

s w

ere

addr

esse

d

N/A

N/A

N/A

HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T C

ontin

ued

i dd 39 2014/10/14 9 35 AM


HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

tin

tern

ship

/le

arne

rshi

ppr

ogra

mm

e

Ach

ieve

d11

1 In

tern

s w

ere

appo

inte

d in

to

the

inte

rnsh

ip

prog

ram

me

100

Inte

rns

No

t A

chie

ved

90 In

tern

s w

ere

empl

oyed

as

at

31 M

arch

201

4 (9

0%)

The

rea

son

why

no

t all

100

inte

rns

wer

e em

ploy

ed,

is th

at 1

0 po

sts

wer

e re

serv

ed

for

the

pilo

t im

plem

enta

tion

of th

e U

meh

luko

sy

stem

, the

pr

ojec

t’s

impl

emen

tatio

ndi

d no

t pro

ceed

as

pla

nned

21 In

tern

sD

raft

Inte

rnsh

ip

Impl

emen

tatio

nP

rogr

amm

e ha

s be

en d

evel

oped

to

gui

de m

ento

rs

and

othe

r ro

le

play

ers

on

the

effe

ctiv

e im

plem

enta

tion

of

the

prog

ram

me.

T

he in

tern

ship

im

plem

enta

tion

prog

ram

me

will

be

impl

emen

ted

in th

e 20

14/1

5 fin

anci

al y

ear.

i dd 40 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Ach

ieve

a

cond

uciv

ew

orki

ngen

viro

nmen

t by

impl

emen

ting

an e

mpl

oyee

w

elln

ess

stra

tegy

by

201

6

Em

ploy

eew

elln

ess

stra

tegy

im

plem

ente

dan

nual

ly

Ach

ieve

dsi

x re

ferr

als

wer

e re

ferr

ed to

EH

WP

in

Hea

d O

ffice

. All

empl

oyee

s w

ere

assi

sted

and

gi

ven

all p

ossi

ble

feed

back

.

Impl

emen

tP

ILLA

R 3

Ach

ieve

d10

% o

f the

E

HW

P w

as

impl

emen

ted,

mon

thly

GE

MS

vi

sits

, Wor

ld A

ids

day

part

icip

atio

n,

bloo

d do

natio

ns,

spor

ts a

ctiv

ities

The

10%

of

the

EH

WP

pr

ogra

mm

es w

as

not a

chie

ved

due

to c

apac

ity

cons

trai

nts.

EH

WP

is a

new

ly

esta

blis

hed

unit

N/A

The

Fun

d ha

s ad

vert

ised

two

new

ly c

reat

ed

post

s of

Dep

uty

Dire

ctor

and

A

ssis

tant

Dire

ctor

fo

r th

e E

HW

P

in p

roce

ss o

f be

ing

fille

d in

the

2014

/15

finan

cial

ye

ar

HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T C

ontin

ued

i dd 41 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

tre

crui

tmen

tan

d re

tent

ion

stra

tegy

thro

ugh

mai

nten

ance

of

7% v

acan

cy r

ate

by 2

016

% v

acan

cy r

ate

mai

ntai

ned

annu

ally

Ach

ieve

dV

acan

cy r

ate

is

2.25

% a

s at

31

Mar

ch 2

013

Mai

ntai

n 7%

va

canc

y ra

teN

ot

Ach

ieve

dV

acan

cy r

ate

=

24.9

2%To

tal a

ppro

ved

=

690

Tota

l fill

ed =

518

Tota

l vac

ant =

17

2P

rogr

ess

on

adve

rtis

ed p

osts

:66

pos

ts

adve

rtis

ed12

pos

ts fi

lled

101

post

s ar

e va

cant

an

d no

t yet

ad

vert

ised

due

to

res

truc

turin

g an

d pl

acem

ent

proc

ess

in th

e F

und.

60 p

osts

are

in

pro

cess

of

bein

g fil

led

and

the

reas

on fo

r va

rianc

e, is

de

lay

by c

erta

in

dire

ctor

ates

in

final

isin

g th

e re

crui

tmen

tan

d se

lect

ion

proc

esse

s.

Vac

ancy

rat

e of

22

.67%

Per

form

ance

to d

ecre

ase

Com

pens

atio

nF

und

vaca

ncy

rate

has

bee

n es

cala

ted

to s

enio

r m

anag

emen

tle

vel

HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T C

ontin

ued

i dd 42 2014/10/14 9 35 AM


HU

MA

N R

ES

OU

RC

E M

AN

AG

EM

EN

T C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

VID

E P

RO

FE

SS

ION

AL,

EF

FIC

IEN

T A

ND

CLI

EN

T O

RIE

NTA

TE

D H

UM

AN

RE

SO

UR

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

tE

mpl

oym

ent

Equ

ity P

lan

by

2016

Elim

inat

ew

ork

plac

e di

scrim

inat

ory

and

soci

al

prej

udic

e an

d ac

hiev

e re

alis

tic

EE

targ

ets

Ach

ieve

dE

HW

P &

GD

Y

mee

tings

wer

e at

tend

ed a

nd

inpu

ts g

iven

.In

puts

wer

e gi

ven

on D

isab

ility

P

olic

y.E

E ta

rget

s ar

e m

onito

red.

40%

wom

en

empl

oyed

in S

enio

r M

anag

emen

tS

ervi

ce (

SM

S)

39%

you

th a

nd

3.5%

peo

ple

with

di

sabi

lity

(PW

D)

No

t A

chie

ved

Cur

rent

ly 3

8% o

f S

MS

are

wom

enTo

tal w

omen

= 5

Tota

l men

= 8

Dur

ing

the

perio

d un

der

revi

ew

yout

h ta

rget

s ha

ve b

een

achi

eved

(52

.7%

)

The

Fun

d em

ploy

ed 2

73

yout

h ou

t of

a to

tal o

f 518

em

ploy

ees.

PW

D ta

rget

s ha

ve n

ot b

een

achi

eved

.

The

rea

son

the

targ

ets

wer

e no

t m

et is

that

two

fem

ale

SM

S le

ft th

e F

und,

thus

br

ingi

ng d

own

the

targ

et. T

he F

und

on

ly m

anag

ed

to r

ecru

it on

e fe

mal

e.T

he F

und

had

273

yout

h ou

t of

a to

tal o

f 518

em

ploy

ees.

Thi

s tr

ansl

ates

into

52

.7%

The

Fun

d ut

ilise

s th

e no

rmal

re

crui

tmen

tch

anne

ls to

at

trac

t PW

D.

Thi

s ap

proa

ch

has

prov

en to

be

inef

fect

ive

in

targ

etin

g P

WD

.

Wom

an a

t SM

S

leve

l and

PW

D

targ

ets

have

not

be

en a

chie

ved

The

Fun

d w

ill fo

llow

the

Em

ploy

men

tE

quity

Tar

gets

in

the

fillin

g of

po

sts

whi

ch a

re

earm

arke

d fo

r in

terv

iew

s an

d ap

poin

tmen

tsin

the

2014

/15

finan

cial

yea

r.T

he F

und

will

ha

ve to

est

ablis

h pa

rtne

rshi

ps w

ith

orga

nisa

tions

repr

esen

ting

PW

D in

ord

er

to im

prov

e th

e re

crui

tmen

t of t

his

grou

p.

i dd 43 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: S

TR

EN

GT

HE

NIN

G C

OR

PO

RA

TE

GO

VE

RN

AN

CE

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Ful

lim

plem

enta

tion

of M

inim

um

Info

rmat

ion

Sec

urity

Sta

ndar

d (M

ISS

) by

201

6

Ful

l com

plia

nce

with

MIS

S b

y 20

16

No

t A

chie

ved

Acq

uire

dda

taba

se o

f su

pplie

rs fr

om

SC

M

Ful

lim

plem

enta

tion

of In

form

atio

n se

curit

y (I

CT

) ac

cord

ing

to

MIS

S

No

t A

chie

ved

Dra

ft C

F S

ecur

ity

Pol

icy

was

re

view

ed b

ut

the

alig

nmen

t to

ICT

pol

icy

has

depe

nden

cy o

n H

Q to

app

oint

an

ITC

Com

mitt

ee

Una

vaila

bilit

y of

S

SA

TS

CM

team

.S

SA

is

resp

onsi

ble

for

impl

emen

ting

secu

re e

mai

ls in

go

vern

men

t, bu

t im

plem

enta

tion

is

still

aw

aite

d.H

Q IC

T

com

mitt

ee to

be

appo

inte

d.

N/A

To e

ngag

e H

Q

Sec

urity

For

um

to s

peed

up

the

proc

ess

to r

evie

w

ICT

Pol

icy

RIS

K M

AN

AG

EM

EN

T

i dd 44 2014/10/14 9 35 AM


RIS

K M

AN

AG

EM

EN

T C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E: S

TR

EN

GT

HE

NIN

G C

OR

PO

RA

TE

GO

VE

RN

AN

CE

ST

RA

TE

GIC

G

OA

L/O

UT-

PU

T

KE

Y

PE

RF

OR

MA

NC

EIN

DIC

AT

OR

S

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Fra

udIn

vest

igat

ion

Pre

vent

ion

and

Det

ectio

n S

trat

egy

impl

emen

ted

% fi

nalis

atio

n of

ca

ses

rece

ived

/ de

tect

ed a

nnua

lly

No

t A

chie

ved

(61%

)O

ut o

f 142

ca

ses

rece

ived

/de

tect

ed d

urin

g th

is fi

nanc

ial y

ear,

86 c

ases

wer

e fin

alis

ed in

tern

ally

100

% o

f fra

ud

and

corr

uptio

n ca

ses

rece

ived

/de

tect

ed fi

nalis

ed

with

in fo

ur

mon

ths

No

t A

chie

ved

52%

of 6

0 ca

ses

rece

ived

, 31

case

s w

ere

final

ised

with

in

four

mon

ths

Rel

ianc

eon

out

side

in

stitu

tions

to o

btai

n in

form

atio

n.S

ectio

n no

t ca

paci

tate

d to

de

al w

ith th

e w

ork

load

.Ta

rget

was

un

real

istic

ally

high

.

9% Cou

ld n

ot lo

cate

th

e cl

ient

s as

th

e co

mpa

nies

w

ere

clos

ed.

Wai

ting

for

bank

s to

res

pond

to

subp

oena

s.D

elay

on

rece

ivin

gin

form

atio

nfr

om e

xter

nal

inst

itutio

ns e

.g.

bank

s.H

uman

cap

acity

. N

on-a

vaila

bilit

yof

sta

ff du

e to

fo

rced

leav

e.

Str

engt

hen

exte

rnal

st

akeh

olde

rre

latio

ns.

Str

engt

hen

the

inve

stig

atio

nbu

sine

ss p

roce

ss.

Cap

acita

te th

e in

vest

igat

ion

unit.

E

scal

ate

any

dela

yed

inte

rnal

pr

oces

ses

to

rele

vant

aut

horit

ies

and

stru

ctur

es.

Fol

low

up/

mon

itor

the

impl

emen

tatio

n of

the

inve

stig

atio

n re

com

men

datio

nsby

bus

ines

s un

its.

Num

ber

of r

isk

awar

enes

sca

mpa

ign

cond

ucte

d

Ach

ieve

dN

ine

sess

ions

of

Fra

ud a

nd

Ris

k A

war

enes

s co

nduc

ted

Fou

r F

raud

and

R

isk

Aw

aren

ess

sess

ions

cond

ucte

d

Ach

ieve

dF

our

Fra

ud a

nd

Ris

k A

war

enes

s ca

mpa

igns

cond

ucte

d

N/A

5N

/A

Impl

emen

t an

Ent

erpr

ise

Ris

k M

anag

emen

t(E

RM

) sy

stem

by

201

6

Impl

emen

tE

nter

pris

e R

isk

in a

ccor

danc

e w

ith R

isk

Man

agem

ent

Fra

mew

ork

Ach

ieve

dO

pera

tiona

lris

k re

gist

ers

mon

itore

d an

d re

gist

ers

upda

ted

Ris

k A

sses

smen

t an

d R

isk

regi

ster

sre

view

ed a

nd

upda

ted

annu

ally

Ach

ieve

dR

isk

asse

ssed

an

d al

l Ris

k re

gist

ers

wer

e re

view

ed a

nd

upda

ted

N/A

N/A

N/A

i dd 45 2014/10/14 9 35 AM


LEG

AL

SE

RV

ICE

S

ST

RA

TE

GIC

OB

JEC

TIV

E:

INT

EG

RA

TIO

N O

F T

HE

FU

ND

WIT

HIN

TH

E C

OM

PR

EH

EN

SIV

E S

OC

IAL

SE

CU

RIT

Y R

EF

OR

MS

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Sub

mit

CO

ID A

ct

Am

endm

ent d

raft

to L

MP

offi

ce fo

r co

nsul

tatio

n by

20

13 a

nd m

onito

r th

e pr

oces

s of

the

prom

ulga

tion

of

the

Act

by

2015

CO

IDA

A

men

dmen

tdr

aft s

ubm

itted

to

LP

& IR

by

2013

and

mon

itor

the

proc

ess

for

prom

ulga

tion

by

2015

Ach

ieve

dfin

al d

raft

amen

dmen

tsw

ere

subm

itted

to

the

LP&

IR

bran

ch o

f the

DoL

on

31

Janu

ary

2013

for

furt

her

proc

esse

ssin

g

Mon

itor

and

part

icip

ate

in

cons

ulta

tion

proc

ess

with

the

stak

ehol

ders

No

t A

chie

ved

No

cons

ulta

tion

with

stak

ehol

ders

.T

he B

ill w

as

sent

to L

P &

IR

for

furt

her

proc

essi

ng b

ut

was

ret

urne

d fo

r th

e F

und

to r

evie

w th

e G

over

nanc

ech

apte

r.

Fin

al d

raft

retu

rned

from

H

ead

Offi

ce

with

com

men

ts

and

inpu

ts fo

r th

e dr

afte

rs to

co

nsid

er

N/A

The

Fun

d w

ill

revi

ew th

e ch

apte

r on

go

vern

ance

, as

requ

este

d du

ring

Qua

rter

1 2

014.

T

he L

P &

MP

and

pa

rliam

enta

rypr

oces

s ar

e ou

t of

CF

con

trol

.

i dd 46 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E:

INT

EG

RA

TIO

N O

F T

HE

FU

ND

WIT

HIN

TH

E C

OM

PR

EH

EN

SIV

E S

OC

IAL

SE

CU

RIT

Y R

EF

OR

MS

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Res

olve

95%

of

rec

eive

d ap

plic

atio

nsfo

r in

crea

sed

com

pens

atio

nw

here

ther

e is

no

disp

ute

of fa

ct

% o

f app

licat

ion

for

incr

ease

d co

mpe

nsat

ion

final

ised

with

in 6

0 da

ys o

f rec

eipt

No

t A

chie

ved

(1

7%)

App

licat

ions

rece

ived

: 18

App

licat

ions

final

ised

: 3

75%

of

App

licat

ion

for

incr

ease

d co

mpe

nsat

ion

final

ised

with

in 6

0 da

ys o

f rec

eipt

No

t A

chie

ved

(3

1%)

Car

ry-o

ver

91R

ecei

ved

25To

tal 1

16F

inal

ised

40

44%

Impo

ssib

le to

ac

hiev

e as

the

stra

tegy

doe

s no

t com

ply

with

Sec

tion

56

appl

icab

le in

te

rms

of C

OID

A,

ther

efor

e th

e st

rate

gy n

eeds

to

be

revi

ewed

. Lo

ng p

erio

d of

exc

hang

e of

ple

adin

gs.

Em

ploy

ers

do n

ot

alw

ays

resp

ond

on ti

me.

The

ou

tsta

ndin

gca

ses

have

bee

n di

sput

ed a

nd

empl

oyer

s do

not

re

spon

d on

tim

e.

14%

Fill

all

vaca

nt

lega

l pos

ts in

H

ead

Offi

ce a

nd

in th

e pr

ovin

ces

LEG

AL

SE

RV

ICE

S C

ontin

ued

i dd 47 2014/10/14 9 35 AM


LEG

AL

SE

RV

ICE

S C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E:

INT

EG

RA

TIO

N O

F T

HE

FU

ND

WIT

HIN

TH

E C

OM

PR

EH

EN

SIV

E S

OC

IAL

SE

CU

RIT

Y R

EF

OR

MS

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Res

olve

95%

of

rec

eive

d ob

ject

ions

that

ha

ve b

een

deci

ded

by

the

Rev

iew

C

omm

ittee

with

in

60 d

ays

by 2

016

% o

f Sec

tion

91 o

bjec

tions

final

ised

with

in

60 d

ays

from

the

date

of r

ecei

pt

from

the

Rev

iew

C

omm

ittee

No

t A

chie

ved

(1

9%)

Obj

ectio

nsre

ceiv

ed 1

,072

Obj

ectio

nsfin

alis

ed 2

00

75%

obj

ectio

nsfin

alis

ed w

ithin

60

day

s fr

om th

e da

te o

f rec

eipt

fr

om th

e R

evie

w

Com

mitt

ee

No

t A

chie

ved

(3

2%)

Car

ry-o

ver

1,07

9R

ecei

ved

709

Tota

l 1,7

88F

inal

ised

569

43%

The

str

ateg

y ne

eds

to b

e re

view

ed. T

his

proc

ess

does

no

t sol

ely

rely

on

the

Fun

d bu

t al

so o

n ot

her

stak

ehol

ders

.R

egul

atio

ns in

th

e ad

judi

catio

n of

cla

ims

need

to

be

form

ulat

ed.

Dep

ende

nce

on

othe

r se

ctio

ns.

Trib

unal

can

on

ly h

ear

a lim

ited

num

ber

of c

ases

per

day

pe

r lo

catio

n.

Con

stitu

enci

esde

laye

dap

poin

tmen

tof

ass

esso

rs

of e

mpl

oyee

/em

ploy

ers.

13%

Fill

all

vaca

nt

lega

l pos

ts a

t H

ead

Offi

ce a

nd

in th

e pr

ovin

ces.

Rec

eive

nom

inat

ions

from

co

nstit

uenc

ies

and

appo

int

asse

ssor

s

i dd 48 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E:

INT

EG

RA

TIO

N O

F T

HE

FU

ND

WIT

HIN

TH

E C

OM

PR

EH

EN

SIV

E S

OC

IAL

SE

CU

RIT

Y R

EF

OR

MS

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Res

olve

95%

of

rece

ived

litig

atio

n ca

ses

whe

re

ther

e is

no

fact

ual

disp

ute

with

in fi

ve

days

by

2016

% o

f liti

gatio

n ca

ses

reso

lved

with

in d

ays

of

rece

ipt

No

t A

chie

ved

(3

8%)

Rec

eive

d 48

Fin

alis

ed 1

8

95%

of l

itiga

tion

case

s re

solv

ed

with

in 1

5 da

ys

No

t A

chie

ved

(1

2%)

Rec

eive

d 21

5F

inal

ised

26

83%

Dep

ende

ncy

on

othe

r se

ctio

ns

(tak

ing

time

to

prov

ide

info

re

quire

d fo

r fin

alis

atio

n of

lit

igat

ion

case

s).

The

re a

re

disp

utes

in

alm

ost a

ll ca

ses

rece

ived

.O

ppon

ents

taki

ng

time

to r

espo

nd

to r

eque

sts

for

outs

tand

ing

info

an

d of

fers

, oth

er

case

s ar

e st

ill

activ

e.C

apac

ity(li

tigat

ion

done

by

one

offi

cial

, w

ho is

als

o re

spon

sibl

e fo

r co

ntra

cts,

lega

l op

inio

ns, a

nd

supp

ly c

hain

pr

oces

s).

26%

Fill

all

vaca

nt

lega

l pos

ts a

t H

ead

Offi

ce a

nd

in th

e pr

ovin

ces.

Str

eam

lined

IT s

yste

ms

to

proc

ess

clai

ms.

LEG

AL

SE

RV

ICE

S C

ontin

ued

i dd 49 2014/10/14 9 35 AM


LEG

AL

SE

RV

ICE

S C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

E:

INT

EG

RA

TIO

N O

F T

HE

FU

ND

WIT

HIN

TH

E C

OM

PR

EH

EN

SIV

E S

OC

IAL

SE

CU

RIT

Y R

EF

OR

MS

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

90%

of l

egal

ad

vice

req

uest

s an

d co

ntra

cts

final

ised

with

in

five

days

of

rece

ipt b

y 20

16

% o

f leg

al a

dvic

e an

d co

ntra

cts

prov

ided

with

in

days

of r

ecei

pt

Ach

ieve

d28

req

uest

s fo

r dr

aftin

g of

con

trac

ts

rece

ived

from

CF

su

pply

cha

in.

26 c

ontr

acts

dr

afte

d w

ithin

five

da

ys (

achi

eved

93

%).

10 r

eque

sts

for

lega

l adv

ice

rece

ived

and

ni

ne o

f whi

ch w

as

prov

ided

with

in

five

wor

king

day

s (a

chie

ved

90%

).

90%

of l

egal

ad

vice

and

co

ntra

cts

prov

ided

with

in

five

days

of

rece

ipt

Ach

ieve

dN

/AN

/AN

/A

i dd 50 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: P

RO

MO

TE

PO

LIC

Y A

DV

OC

AC

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

tC

omm

unic

atio

nS

trat

egy/

Mar

ketin

g by

20

17

Com

mun

icat

ion

stra

tegy

impl

emen

ted

by

2017

Ach

ieve

dF

our

med

ia

adve

rts

wer

e ru

n

Run

thre

e m

edia

ad

vert

sA

chie

ved

Fou

r ed

ucat

iona

l ca

mpa

igns

targ

etin

gem

ploy

ees,

bene

ficia

ries

and

empl

oyer

s w

ere

cond

ucte

d on

di

ffere

nt p

rint a

nd

elec

tron

ic m

edia

N/A

N/A

N/A

CO

MM

UN

ICA

TIO

N

i dd 51 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Elim

inat

e de

bt

book

of R

5 bi

llion

by

201

6

R1

billi

on p

er

annu

m o

f the

de

bt b

ook

as a

t 31

Mar

ch 2

011

Par

tial

lyA

chie

ved

Tota

l rec

eipt

s fo

r th

e qu

arte

r w

as

R1.

6 bi

llion

. H

owev

er u

nabl

e to

spl

it re

ceip

ts to

ol

d de

bt b

ook.

R1

billi

on d

ebt

reco

vere

dN

ot

Ach

ieve

dE

ven

thou

gh th

e to

tal r

ecei

pts

for

the

year

und

er

revi

ew w

as

R12

,143

bill

ion

(R4.

9 bi

llion

, R

6.06

bill

ion,

R

740

mill

ion

and

R44

3 m

illio

n pe

r Q

uart

er

resp

ectiv

ely)

, the

F

und

is u

nabl

e to

sp

lit r

ecei

pts

to

old

debt

boo

k

N/A

Put

sys

tem

s in

pl

ace

that

will

as

sist

with

the

allo

catio

n of

deb

t co

llect

ed fr

om

empl

oyer

s.In

tens

ifyco

llect

ion

by e

nfor

cing

th

e Le

tter

of

Goo

d S

tand

ing

requ

irem

ents

.

Incr

ease

rev

enue

by

5%

ann

ually

% in

crea

se in

re

venu

e as

co

mpa

red

to

prev

ious

yea

r

Ach

ieve

dTa

rget

for

Qua

rter

4

R1.

396

billi

on

Act

ual R

3.03

7 bi

llion

5% in

crea

se

in r

even

ue a

s co

mpa

red

to th

e pr

evio

us y

ear

Ach

ieve

dT

here

was

a 2

4%

incr

ease

of R

1,54

bi

llion

in r

even

ue

from

the

2012

/13

finan

cial

yea

r to

the

2013

/14

finan

cial

yea

r

Rev

enue

/co

ntrib

utio

ns b

y E

mpl

oyer

for

the

2012

/13

finan

cial

ye

ar w

as R

6.43

bi

llion

, com

pare

d to

R7.

97 b

illio

n re

venu

e/co

ntrib

utio

nsfo

r th

e 20

13/1

4 fin

anci

al a

s pe

r th

e un

audi

ted

finan

cial

stat

emen

ts,

resu

lting

in 5

%

redu

ctio

n in

re

venu

e

N/A

Con

tinue

to in

tens

ify

colle

ctio

nby

enf

orci

ng

the

Lette

r of

G

ood

Sta

ndin

g re

quire

men

ts

FIN

AN

CE

i dd 52 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Enf

orce

com

plia

nce

of

CO

IDA

thro

ugh

payr

oll a

udits

of

em

ploy

er

decl

arat

ions

App

oint

men

t and

m

anag

emen

t of

payr

oll

N/A

App

oint

Pay

roll

Aud

itors

No

t A

chie

ved

Pay

roll

Aud

itors

w

ere

not

appo

inte

d

Pos

ts h

ave

been

cr

eate

d by

the

Dep

artm

ent o

f La

bour

, on

the

prov

inci

al le

vel,

to

rend

er e

mpl

oyer

pa

yrol

l aud

its fo

r bo

th C

F a

nd U

IF.

The

pay

roll

units

fo

r th

e tw

o F

unds

(C

F a

nd U

IF)

wer

e es

tabl

ishe

d at

pro

vinc

ial

offic

es u

nder

the

ausp

ices

of I

ES

.

N/A

Mot

ivat

e fo

r pa

yrol

l aud

it un

it to

be

esta

blis

hed

and

man

aged

at

CF.

In th

e in

terim

out

sour

ce

the

payr

oll a

udit

func

tion.

FIN

AN

CE

Con

tinue

d

i dd 53 2014/10/14 9 35 AM


FIN

AN

CE

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Dev

elop

men

t of

revi

sed

empl

oyer

as

sess

men

tm

odel

Ful

ly fu

nctio

nal

asse

ssm

ent

mod

el

N/A

Dev

elop

men

t of

revi

sed

empl

oyer

as

sess

men

tm

odel

No

t A

chie

ved

Em

ploy

eras

sess

men

tm

odel

not

de

velo

ped

New

ass

essm

ent

mod

el u

nder

ex

plor

atio

n. T

he

deci

sion

on

the

final

ass

essm

ent

mod

el to

be

adop

ted

still

to b

e fin

alis

ed w

ith k

ey

stak

ehol

ders

.S

oftw

are

not

deve

lope

d du

e to

the

need

to

have

wor

k st

udy

and

cons

ulta

tions

w

ith r

elev

ant

stak

ehol

ders

.

N/A

A fo

rmal

bus

ines

s fo

r th

e ad

optio

n of

the

new

as

sess

men

tm

odel

pla

nned

to

be c

ompl

eted

by

Mar

ch 2

015

i dd 54 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Obt

ain

a cl

ean

audi

t opi

nion

by

2014

Impl

emen

t all

AG

re

com

men

datio

nsN

ot

Ach

ieve

dT

he a

udit

mat

rix

rece

ived

in M

arch

re

cord

ed 7

7/16

3 (4

7%)

findi

ngs

as r

esol

ved.

T

his

has

not

been

ver

ified

by

Inte

rnal

Aud

it.

Impl

emen

t 100

%

prev

ious

yea

rs A

G

reco

mm

enda

tions

No

t A

chie

ved

11%

(22

A

G fi

ndin

g re

com

men

datio

nsou

t of 1

99)

wer

e fu

lly im

plem

ente

d

89% inte

rnal

con

trol

fu

nctio

ns a

t the

F

und

polic

ies

finan

cial

syst

ems

capa

city

to

im

plem

ent

th

e re

com

men

-da

tions

to th

e

findi

ngs.

Thi

s w

as n

ot

achi

eved

due

to c

apac

ity

cons

trai

nts.

Fin

ance

pos

ts

will

be

fille

d as

w

ell a

s so

urci

ng

exte

rnal

capa

city

.

36%

Cap

acita

te a

ll th

e un

its in

tern

ally

w

ith e

xter

nal

reso

urce

s.In

tens

ify th

e ac

tiviti

es o

f au

dit s

teer

ing

com

mitt

ee a

nd

boar

d to

add

ress

si

gnifi

cant

findi

ngs.

FIN

AN

CE

Con

tinue

d

i dd 55 2014/10/14 9 35 AM


FIN

AN

CE

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

R-

MA

NC

EIN

DIC

AT

OR

S

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3P

LAN

NE

DTA

RG

ET

20

13/1

4

AC

TU

AL

AC

HIE

VE

ME

NT

20

13/1

4

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ove

effic

ienc

y of

pr

oces

ses

by fu

ll im

plem

enta

tion

of a

n in

tegr

ated

fin

anci

al s

yste

m

to im

prov

e pa

ymen

ts to

30

days

by

2016

All

paym

ents

pr

oces

sed

with

in 3

0 da

ys

of r

ecei

pt o

f in

voic

e

Par

tial

ly A

chie

ved

Pro

cure

men

tTo

tal p

aym

ents

: R

186,

736,

798.

89 (

83.2

1%)

Cre

dito

rs: R

37,6

73,7

72.2

1 (1

6.79

)O

ver

30 d

ays:

R69

,528

.37

(0.0

003%

)M

edic

alTo

tal p

aym

ents

: R

83,9

60,7

85.3

9 (6

6.92

%)

Cre

dito

rs: R

41,5

05,3

90.0

5 (3

3.08

%)

Ove

r 30

day

s:R

15,9

99,4

29.4

9 (1

2.75

%)

Pen

sio

nTo

tal p

aym

ents

:R

194,

349,

397.

10 (

82.7

7%)

Cre

dito

rs:

R40

,464

,897

.95

(17.

23%

)O

ver

30 d

ays:

R27

,713

,911

.65

(11.

80%

)

Sun

dry

paym

ents

proc

esse

dw

ithin

30

days

of

rec

eipt

of

invo

ice

and

clai

ms

proc

esse

dw

ithin

60

days

of

rec

eipt

of

bank

ing

deta

ils

No

t A

chie

ved

Eve

n th

ough

the

tota

l pay

men

ts

for

supp

liers

an

d be

nefit

s fo

r th

e ye

ar u

nder

re

view

has

im

prov

ed, f

rom

R

536

mill

ion

to

R54

2 m

illio

n an

d fr

om R

1.9

billi

on

to R

2.7

billi

on

resp

ectiv

ely,

the

Fun

d is

una

ble

to a

lloca

te

the

paym

ents

an

d de

term

ine

whe

ther

the

paym

ents

wer

e m

ade

with

in 3

0 da

ys o

r 60

day

s re

spec

tivel

y

N/A

Put

sys

tem

s in

pla

ce th

at

will

ass

ist w

ith

the

mon

itorin

g of

sup

plie

r pa

ymen

ts a

nd

clai

m p

aym

ents

to

ens

ure

that

pa

ymen

ts a

re

mad

e w

ithin

the

set n

orm

s an

d st

anda

rds.

Fur

ther

mea

sure

s w

ill in

clud

e ve

rific

atio

n of

ba

nkin

g de

tails

an

d in

tens

ifyin

g ef

fort

s to

dis

burs

e un

clai

med

mon

ies

whi

ch

will

loca

te a

ll be

nefic

iarie

s fo

r pa

ymen

t.

i dd 56 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T

2013

/14

AC

TU

AL

AC

HIE

VE

ME

NT

20

13/1

4

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ove

asse

t: lia

bilit

y ra

tio to

2:

1 by

201

6

CA

ATo

tal p

aym

ents

:R

3,73

4,68

6 (7

6.44

%)

Cre

dito

rs:

R1,

150,

776.

78(2

3.56

%)

Ove

r 30

day

s:R

435,

600.

98 (

8.92

%)

Co

mp

ensa

tio

nTo

tal p

aym

ents

:R

104,

167,

738.

62(2

5.65

%)

Cre

dito

rs:

R30

2,00

3,14

2.91

(74.

35%

)O

ver

30 d

ays:

R29

7,14

0,07

5.18

(73.

12%

)

Max

imis

ein

vest

men

tre

turn

to a

bove

be

nchm

ark

Fin

anci

al r

atio

m

aint

aine

dA

chie

ved

As

at th

e 28

/02/

2013

th

e ra

tio w

as a

t 4:1

2:1

Fin

anci

al

ratio

mai

ntai

ned

Ach

ieve

dT

he F

und

has

mai

ntai

ned

the

asse

t lia

bilit

y ra

tio o

f 2:1

by

rece

ivin

g 3.

24

N/A

N/A

N/A

FIN

AN

CE

Con

tinue

d

i dd 57 2014/10/14 9 35 AM


FIN

AN

CE

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Allo

cate

5%

of

inve

stm

ent f

unds

to

war

ds S

RI

initi

ativ

es

Rec

eive

abo

ve

the

(ST

EF

I)

benc

hmar

kre

turn

s

Ach

ieve

dF

or th

e Q

uart

er 3

th

e F

und

achi

eved

: C

ompe

nsat

ion

port

folio

2.4

3%

agai

nst 2

.15%

Pen

sion

por

tfolio

18

.69%

aga

inst

18

.09%

Rec

eive

abo

ve

the

(ST

EF

I)

benc

hmar

kre

turn

s

Ach

ieve

dT

heC

ompe

nsat

ion

Por

tfolio

for

the

Fun

d: 3

.69%

was

re

ceiv

ed a

gain

st

the

benc

hmar

k of

2.

23%

.T

he P

ensi

on

Por

tfolio

for

the

Fun

d: 5

.80%

was

re

ceiv

ed a

gain

st

the

benc

hmar

k of

5.

62%

.

N/A

N/A

N/A

i dd 58 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

E: I

MP

RO

VE

FIN

AN

CIA

L V

IAB

ILIT

Y

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Elim

inat

e de

bt

book

of R

5 bi

llion

by

201

6

5% o

f the

in

vest

men

t fun

ds

to b

e rin

g-fe

nced

in

Soc

ially

R

espo

nsib

leIn

vest

men

ts(S

RI)

N/A

R1.

5 bi

llion

No

t A

chie

ved

No

amou

nt o

f m

oney

has

bee

n rin

g-fe

nced

nor

inve

sted

in

Soc

ially

R

espo

nsib

leIn

vest

men

ts(S

RI)

The

Man

date

/ S

trat

egy

on

SR

I ini

tiativ

es,

spec

ifyin

g th

e ne

ed to

rin

g-fe

nce

and

allo

cate

5%

of

inve

stm

ent f

unds

fo

r S

RI p

roje

cts

was

not

fina

lised

on

tim

e to

fa

cilit

ate

appr

oval

an

d al

loca

tion

of

the

fund

s

N/A

Fac

ilita

te th

e ap

prov

al o

f the

m

anda

te/s

trat

egy.

C

FO

to le

ad in

en

gagi

ng w

ith

PIC

to fa

st tr

ack

impl

emen

tatio

n of

th

e st

rate

gy a

nd

SR

I ini

tiativ

es.

FIN

AN

CE

Con

tinue

d

i dd 59 2014/10/14 9 35 AM


INF

OR

MA

TIO

N A

ND

CO

MM

UN

ICA

TIO

N T

EC

HN

OLO

GY

AN

D C

ALL

CE

NT

RE

ST

RA

TE

GIC

OB

JEC

TIV

ES

: IM

PR

OV

E C

OR

PO

RA

TE

SU

PP

OR

T A

ND

SE

RV

ICE

S /

EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

IN-

FO

RM

AT

ION

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

To d

efin

e IT

st

rate

gy a

nd

impl

emen

tsy

stem

s an

d in

fras

truc

ture

to

supp

ort b

usin

ess

goal

s by

Mar

ch

2013

CF

IT s

trat

egy

deve

lope

d,su

ppor

ting

syst

ems

and

infr

astr

uctu

reim

plem

ente

d

Par

tial

lyA

chie

ved

The

DoL

had

ta

ken

a de

cisi

on

that

ther

e w

ill

be a

sin

gle,

ce

ntra

lised

IT

stra

tegy

acr

oss

the

orga

niza

tion.

C

F w

ill n

ot h

ave

its o

wn

stra

tegy

.

The

sys

tem

s de

velo

pmen

tw

hich

was

in

pro

gres

s in

clud

ed:

Sta

ndin

g

advi

ces

port

al

Fin

alis

atio

n of

the

IT s

trat

egy

No

t A

chie

ved

The

IT s

ervi

ce

prov

ider

did

not

ha

ve r

esou

rces

to

del

iver

the

requ

ired

CR

for

data

mig

ratio

n in

ord

er to

im

plem

ent t

he

data

mig

ratio

n.T

he IT

str

ateg

y is

cur

rent

ly u

nder

re

view

to e

nsur

e al

ignm

ent w

ith

the

two

Fun

ds

(UIF

and

CF

) op

erat

ions

and

stru

ctur

es.

Cap

acita

tion

of

CF

CIO

offi

ce.

N/A

The

CF

ICT

st

rate

gy w

ill b

e fin

alis

ed a

nd

appr

oved

by

June

20

14

i dd 60 2014/10/14 9 35 AM


INF

OR

MA

TIO

N A

ND

CO

MM

UN

ICA

TIO

N T

EC

HN

OLO

GY

AN

D C

ALL

CE

NT

RE

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

ES

: IM

PR

OV

E C

OR

PO

RA

TE

SU

PP

OR

T A

ND

SE

RV

ICE

S /

EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

IN-

FO

RM

AT

ION

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

t10

0% c

usto

mer

se

rvic

es a

t all

cust

omer

touc

h po

ints

% C

usto

mer

se

rvic

e su

ppor

t pr

ovid

ed a

t all

cust

omer

ser

vice

to

uch

poin

ts

(pho

ne-in

, web

, w

alk-

in)

Ach

ieve

d80

% c

usto

mer

se

rvic

eim

plem

ente

d

80%

Cus

tom

er

serv

ice

supp

ort

prov

ided

at a

ll cu

stom

er s

ervi

ce

touc

h po

ints

(p

hone

-in, w

eb,

wal

k-in

)

Ach

ieve

dP

hone

-insu

ppor

t cha

nnel

im

plem

ente

d90

%W

alk-

in 1

00%

Web

em

ail 8

0%To

tal a

vera

ge

90%

The

IT s

ervi

ce

prov

ider

susp

ensi

on.

Inte

grat

ion

requ

ired

betw

een

ICM

por

tal a

nd

Um

ehlu

ko h

as

not h

appe

ned

beca

use

the

syst

ems

are

in

pilo

t pha

ses

not

fully

laun

ched

N/A

The

res

ults

of t

he

eval

uatio

n w

ill b

e re

leas

ed d

urin

g qu

arte

r 1

2014

an

d pl

anne

d ac

tion

will

be

impl

emen

ted

i dd 61 2014/10/14 9 35 AM


INF

OR

MA

TIO

N A

ND

CO

MM

UN

ICA

TIO

N T

EC

HN

OLO

GY

AN

D C

ALL

CE

NT

RE

Con

tinue

d

ST

RA

TE

GIC

OB

JEC

TIV

ES

: IM

PR

OV

E C

OR

PO

RA

TE

SU

PP

OR

T A

ND

SE

RV

ICE

S /

EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

IN-

FO

RM

AT

ION

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impr

ove

call

cent

re c

usto

mer

sa

tisfa

ctio

n by

40

% o

f bas

elin

e

Ach

ieve

%

incr

ease

of

cust

omer

satis

fact

ion

ratin

g on

bas

elin

e

Par

tial

lyA

chie

ved

1. E

xten

ded

the

cent

re to

ac

com

mod

ate

mor

e vi

sito

rs 2

. Inc

reas

ed

the

num

ber

of

supp

ort a

gent

s 3

. Cre

ated

ad

ditio

nal h

elp

desk

to d

eal w

ith

onlin

e su

ppor

t qu

erie

s

Impr

ove

cust

omer

satis

fact

ion

ratin

g by

15%

of

base

line

Ach

ieve

dC

usto

mer

Fee

dbac

kQ

uart

er 4

20

13/1

4: 8

1%B

asel

ine

resu

lts

2012

/13:

40%

Ccu

stom

er s

urve

y co

nduc

ted

in

2012

/13

Ove

rall

annu

al

achi

evem

ent

aver

age

80%

No

devi

atio

n.

The

res

ults

use

d w

ere

take

n fr

om

the

wal

k-in

cen

tre

surv

ey to

ol.

N/A

The

sur

vey

tool

us

ed fo

r th

e cu

rren

t res

ults

is

the

wal

k-in

cen

tre

resu

lts (

PO

E

subm

itted

) th

e re

ason

for

the

varia

nce

is d

ue to

cu

stom

ers

ratin

g ea

ch a

gent

’s

serv

ice

whe

reas

th

e in

itial

sur

vey

was

con

duct

ed

by a

ser

vice

pr

ovid

er b

efor

e C

F c

ould

pro

cure

th

eir

own

tool

i dd 62 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: IM

PR

OV

E C

OR

PO

RA

TE

SU

PP

OR

T A

ND

SE

RV

ICE

S /

EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

IN-

FO

RM

AT

ION

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Fin

alis

atio

n of

go

vern

ance

mea

sure

s an

d po

licie

s w

ithin

the

ICT

env

ironm

ent

by M

arch

201

3

Rev

iew

and

im

plem

enta

tion

of p

lan

and

stru

ctur

es

Par

tial

lyA

chie

ved

The

IT

gove

rnan

cefr

amew

ork

has

been

app

rove

d at

CF,

but

was

de

pend

ant o

n th

e fin

alis

atio

n of

the

DoL

fram

ewor

k.Im

plem

enta

tion

has

been

del

ayed

du

e to

the

absc

ence

of a

n IT

se

rvic

e pa

rtne

r.

Rev

iew

and

de

velo

pmen

t of

ICT

pol

icie

s

Ach

ieve

d10

0% o

f go

vern

ance

pla

ns

impl

emen

ted

N/A

N/A

N/A

INF

OR

MA

TIO

N A

ND

CO

MM

UN

ICA

TIO

N T

EC

HN

OLO

GY

AN

D C

ALL

CE

NT

RE

Con

tinue

d

i dd 63 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Ann

ual S

trat

egic

pl

anni

ng a

s pe

r N

T F

ram

ewor

k fo

r pe

rfor

man

ce

info

rmat

ion

Str

ateg

ic P

lan

and

Ann

ual

Per

form

ance

Pla

n de

velo

ped

in

line

the

with

the

NT

Fra

mew

ork

for

perf

orm

ance

in

form

atio

n

Ach

ieve

dS

trat

egic

Pla

n 20

13 –

201

8 an

d A

nnua

l P

erfo

rman

ceP

lan

2013

/14

wer

e de

velo

ped,

ap

prov

ed a

nd

subm

itted

to N

T

as r

equi

red

Coo

rdin

ate

the

deve

lopm

ent

and

appr

oval

of

the

Str

ateg

ic

plan

and

Ann

ual

Per

form

ance

plan

as

per

NT

F

ram

ewor

k

Ach

ieve

dS

trat

egic

Pla

n 20

14 –

201

9 an

d A

nnua

l P

erfo

rman

ceP

lan

2014

/15

wer

e de

velo

ped,

ap

prov

ed a

nd

subm

itted

to N

T

as r

equi

red

N/A

N/A

N/A

Ann

ual

orga

nisa

tiona

lpe

rfor

man

cem

anag

emen

t

Qua

lity,

rel

evan

t an

d tim

elin

ess

of p

erfo

rman

ce

repo

rts

in li

ne

with

the

NT

F

ram

ewor

k fo

r P

erfo

rman

ceIn

form

atio

n

Ach

ieve

dQ

uart

erly

Per

form

ance

Rep

orts

wer

e co

ordi

nate

d an

d su

bmitt

ed fo

r ap

prov

al.

Ann

ual R

epor

t te

mpl

ate

as p

er

NT

Fra

mew

ork

circ

ulat

ed to

all

part

icip

ants

.

Mon

itor

and

eval

uate

orga

nisa

tiona

lpe

rfor

man

ceto

ens

ure

that

qu

arte

rly, m

id-

term

and

Ann

ual

Rep

orts

are

ta

bled

as

per

NT

F

ram

ewor

k

Ach

ieve

dQ

uart

erly

Per

form

ance

Rep

orts

wer

e co

ordi

nate

d an

d su

bmitt

ed fo

r ap

prov

al.

Ann

ual R

epor

t te

mpl

ate

as p

er

NT

Fra

mew

ork

circ

ulat

ed to

all

part

icip

ants

.

N/A

N/A

N/A

OR

GA

NIS

AT

ION

AL

EF

FE

CT

IVE

NE

SS

i dd 64 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Impl

emen

tch

ange

man

agem

ent

prog

ram

me

by

2016

Dev

elop

and

im

plem

ent

orga

nisa

tiona

lw

ide

chan

ge

man

agem

ent

prog

ram

me

by

2016

No

t A

chie

ved

Org

anis

atio

nal

wid

e ch

ange

m

anag

emen

tpr

ogra

mm

e w

as

deve

lope

d an

d no

t im

plem

ente

d

Dev

elop

and

im

plem

ent 4

0%

orga

nisa

tiona

lw

ide

chan

ge

man

agem

ent

prog

ram

me

No

t A

chie

ved

Cha

nge

man

agem

ent

sess

ions

for

Um

ehlu

ko w

ere

held

Lack

of i

nter

nal

capa

city

from

bu

sine

ss to

im

plem

ent

the

chan

ge

man

agem

ent

prog

ram

me

initi

ativ

es

N/A

Cap

acita

te th

e F

und

with

the

rele

vant

exp

ertis

e

Dec

entr

alis

eC

OID

A s

ervi

ces

to n

ine

prov

ince

s by

201

6

CO

IDA

ser

vice

s de

cent

ralis

ed to

ni

e pr

ovin

ces

No

t A

chie

ved

Fou

r st

aff

mem

bers

depl

oyed

and

19

sec

onde

d to

G

aute

ng.

Nin

e st

aff

mem

bers

seco

nded

to

Wes

tern

Cap

e to

ass

ist i

n de

liver

ing

CO

ID

serv

ices

.

CO

IDA

ser

vice

s de

cent

ralis

ed to

tw

o pr

ovin

ces

No

t A

chie

ved

Sta

ff w

ere

not

depl

oyed

to a

ll pr

ovin

ces

Pro

long

edco

nsul

tatio

n w

ith

stak

ehol

ders

N/A

Obt

ain

inte

rven

tion

from

D

epar

tmen

tal

Bar

gain

ing

Cha

mbe

r

OR

GA

NIS

AT

ION

AL

EF

FE

CT

IVE

NE

SS

Con

tinue

d

i dd 65 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Coo

rdin

ate

and

mon

itor

all p

riorit

y pr

ojec

ts c

urre

ntly

ru

nnin

g in

the

Com

pens

atio

nF

und

Coo

rdin

ate

and

mon

itor

the

impl

emen

tatio

nof

all

CF

prio

rity

proj

ects

with

in

com

mitt

ed p

roje

ct

plan

/sch

edul

ew

ith m

easu

rabl

e ta

rget

s an

d bu

dget

as

per

PM

BO

K

Par

tial

lyA

chie

ved

Mon

itorin

gre

port

s w

ere

subm

itted

to v

ario

us

com

mitt

ees:

SA

P

Enh

ance

men

tP

rogr

ess

repo

rt

was

pre

sent

ed

to S

AP

Pro

ject

S

teer

ing

Com

mitt

ee(M

IS, L

ette

rs o

f G

ood

Sta

ndin

g,

Rem

ittan

cew

ere

unde

r de

velo

pmen

t.T

he c

laim

s re

gist

ratio

n po

rtal

w

as d

evel

oped

an

d aw

aitin

g U

AT

).O

rgan

isat

iona

lre

desi

gn a

nd

dece

ntra

lisat

ion

pres

ente

dto

Str

ateg

ic

Ope

ratio

nal

Com

mitt

ee.

Sub

mit

quar

terly

m

onito

ring

repo

rts

Ach

ieve

dP

roje

ct r

epor

ts

are

pres

ente

d to

IT S

teer

co

and

turn

arou

nd

proj

ects

pro

gres

s co

nsol

idat

ed

N/A

N/A

N/A

PR

OJE

CT

MA

NA

GE

ME

NT

OF

FIC

E

i dd 66 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Dev

elop

ing

and

exec

utin

g a

risk

base

d in

tern

al

audi

t pla

n w

ith

100%

cov

erag

e an

nual

ly

Pre

para

tion

and

appr

oval

of t

he

thre

e ye

ar r

isk

base

d in

tern

al

audi

t pla

n an

d th

e an

nual

cov

erag

e pl

an b

y th

e A

udit

Com

mitt

ee

Ach

ieve

dR

isk-

base

dan

nual

aud

it pl

an d

rafte

d an

d ap

prov

ed b

y A

udit

Com

mitt

ee

App

rova

l and

im

plem

enta

tion

of th

e th

ree

year

an

d an

nual

ris

k ba

sed

and

annu

al

cove

rage

inte

rnal

au

dit p

lan

on

1 A

pril

2013

100%

com

plet

ion

of th

e an

nual

au

dit p

lan

No

t A

chie

ved

Thr

ee y

ear

and

annu

al r

isk

base

d co

vera

ge in

tern

al

audi

t pla

n is

dr

afte

d

Ach

ieve

d81

% o

f pro

ject

s (2

6 ou

t of 3

2)

plan

ned

in th

e an

nual

aud

it co

vera

ge p

lan

com

plet

ed

Thr

ee y

ear

and

annu

al r

isk

base

d co

vera

ge

inte

rnal

aud

it pl

an p

rese

nted

to

Aud

it C

omm

ittee

an

d am

endm

ents

w

ere

reco

mm

ende

d

Fou

r pr

ojec

ts

wer

e ro

lled

over

to th

e ne

xt

finan

cial

yea

r

Ann

ual p

lan

deve

lope

d an

d ap

prov

ed in

May

The

upd

ated

th

ree

year

ris

k ba

sed

inte

rnal

au

dit a

nd a

nnua

l pl

an d

evel

oped

an

d pr

esen

ted

but w

as n

ot

appr

oved

in

Mar

ch 2

013

due

amen

dmen

ts/

adju

stm

ents

requ

este

d,su

bseq

uent

lyap

prov

ed in

May

20

13.

The

Uni

t als

o re

ceiv

ed s

ome

ad h

oc a

udit

assi

gnm

ents

from

m

anag

emen

t.P

roje

cts

wer

e su

bseq

uent

lyco

mpl

eted

in

Apr

il/M

ay 2

014.

INT

ER

NA

L A

UD

IT

i dd 67 2014/10/14 9 35 AM


INT

ER

NA

L A

UD

IT C

ontin

ued

ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Rep

ortin

gof

qua

rter

ly

repo

rts

to th

e A

udit

Ste

erin

g C

omm

ittee

Ach

ieve

dR

epor

tssu

bmitt

edto

Ste

erin

g C

omm

ittee

at

mee

ting

held

on

11 M

arch

201

3

Sub

mit

four

qu

arte

rly r

epor

ts

to A

udit

Ste

erin

g C

omm

ittee

san

nual

ly

No

t A

chie

ved

Thr

ee A

udit

Ste

erin

gC

omm

ittee

mee

tings

wer

e he

ld a

nd

quar

terly

rep

orts

w

ere

pres

ente

d

N/A

N/A

The

aud

it pl

an

appr

oved

in M

ay

and

proj

ects

/re

port

s av

aila

ble

from

Jul

y 20

13

Rep

ortin

g of

qu

arte

rly r

epor

ts

to th

e A

udit

Com

mitt

ee

Ach

ieve

dR

epor

tssu

bmitt

ed to

Aud

it C

omm

ittee

at

mee

ting

held

on

19 M

arch

201

3

Sub

mit

four

qu

arte

rlyre

port

s to

aud

it co

mm

ittee

san

nual

ly

Ach

ieve

dF

our

quar

terly

re

port

s w

ere

pres

ente

d to

au

dit c

omm

ittee

s

N/A

N/A

Spe

cial

mee

tings

w

ere

held

ove

r an

d ab

ove

four

qua

rter

ly

mee

tings

Con

form

with

IIA

sta

ndar

ds

by 2

016

(100

%

com

plia

nce)

Dev

elop

and

im

plem

ent

Inte

rnal

Aud

it M

etho

dolo

gy,

Pol

icie

s an

d P

roce

dure

s

% C

onfo

rman

ce

with

IIA

S

tand

ards

,In

tern

al A

udit

Met

hodo

logy

, P

olic

ies

and

proc

edur

esm

anua

ls

N/A

80%

Cus

tom

er

Sat

isfa

ctio

n In

dex

No

t A

chie

ved

Out

of 2

6 au

dits

co

mpl

eted

an

aver

age

of 3

.50%

w

as a

chie

ved

whi

ch e

qual

s 70

% c

lient

sa

tisfa

ctio

n

Impr

ovem

ent o

n m

eetin

g cl

ient

ex

pect

atio

ns

N/A

Six

pro

ject

s w

ere

subs

eque

ntly

com

plet

ed a

fter

year

-end

(M

ay)

henc

e no

t all

surv

eys

wer

e co

mpl

eted

i dd 68 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

% C

onfo

rman

ce

with

IIA

S

tand

ards

,In

tern

al A

udit

Met

hodo

logy

, P

olic

ies

and

proc

edur

esm

anua

ls

Ach

ieve

dQ

ualit

yim

prov

emen

tsu

rvey

s pe

r pr

ojec

t com

plet

ed

(fou

r du

ring

this

Q

uart

er).

Qua

lity

asse

ssm

ent

revi

ew r

eadi

ness

as

sess

men

tby

Nat

iona

l T

reas

ury.

Gen

eral

conf

orm

ance

asse

ssm

ent b

y th

e N

atio

nal

Tre

asur

y

Ach

ieve

dG

ener

alco

nfor

man

ceas

sess

men

t by

the

Nat

iona

l T

reas

ury

was

is

sued

in M

ay

2013

N/A

N/A

N/A

Str

eam

line

all a

ssur

ance

fu

nctio

ns in

to o

ne

ente

rpris

e-vi

ewby

201

4

Com

bine

das

sura

nce

met

hodo

logy

pla

n an

d re

port

s

Ach

ieve

dM

etho

dolo

gy fu

lly

Impl

emen

ted

and

inco

rpor

ated

into

A

udit

Sof

twar

e (T

eam

mat

e),

Met

hodo

logy

. B

ookl

ets

prin

ted.

App

rove

dco

mbi

ned

assu

ranc

em

etho

dolo

gy a

nd

plan

Ach

ieve

dIn

tern

al A

udit

and

Ris

k M

anag

emen

tC

ombi

ned

Ass

uran

ce M

odel

de

velo

ped

and

pres

ente

d at

E

XC

O

N/A

N/A

N/A

INT

ER

NA

L A

UD

IT C

ontin

ued

i dd 69 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Com

bine

das

sura

nce

met

hodo

logy

pla

n an

d re

port

s

Ach

ieve

dC

ombi

ned

assu

ranc

eac

tiviti

es a

re

cont

inuo

usbe

twee

n S

teer

ing

Com

mitt

ee,

Aud

itor-

Gen

eral

and

Ris

k M

anag

emen

t.T

he c

ombi

ned

assu

ranc

e pl

an

is r

egul

arly

up

date

d.

Qua

rter

lym

eetin

gs w

ith

assu

ranc

epr

ovid

ers

Ach

ieve

dC

ontin

uous

mee

tings

with

A

G d

iscu

ssin

g in

tern

al a

udit

scop

e, e

mer

ging

ris

ks, r

isk

man

agem

ent e

tc.

N/A

N/A

N/A

INT

ER

NA

L A

UD

IT C

ontin

ued

i dd 70 2014/10/14 9 35 AM


ST

RA

TE

GIC

OB

JEC

TIV

ES

: EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CE

SS

TO

CO

IDA

SE

RV

ICE

S A

ND

INF

OR

MA

TIO

N

ST

RA

TE

GIC

G

OA

L/O

UT

PU

TK

EY

P

ER

FO

RM

AN

CE

IND

ICA

TO

RS

AC

TU

AL

AC

HIE

VE

ME

NT

20

12/1

3

PLA

NN

ED

TAR

GE

T 2

013/

14A

CT

UA

L A

CH

IEV

EM

EN

T

2013

/14

DE

VIA

TIO

N

FR

OM

PLA

NN

ED

TA

RG

ET

FO

R

2013

/14

VA

RIA

NC

E

FR

OM

201

2/13

T

O 2

013/

14

CO

MM

EN

T O

N

TH

E V

AR

IAN

CE

Com

bine

das

sura

nce

met

hodo

logy

pla

n an

d re

port

s

Ach

ieve

dT

he c

ombi

ned

assu

ranc

e pl

an is

re

gula

rly u

pdat

ed

Dev

elop

men

tan

d ap

prov

al

of k

ey c

ontr

ol

asse

ssm

ent

met

hodo

logy

and

pl

an

No

t A

chie

ved

Key

con

trol

as

sess

men

tm

etho

dolo

gy/

chec

klis

t was

de

velo

ped

Inte

rnal

con

trol

U

nit w

ill ta

ke o

ver

the

key

cont

rol

asse

ssm

ent

N/A

Key

Con

trol

A

sses

smen

tM

etho

dolo

gydr

afte

d bu

t the

fu

nctio

n w

as

hand

ed o

ver

to

Fin

ance

-Int

erna

lC

ontr

ol. C

ontr

ol

self-

asse

ssm

ents

chec

klis

tsco

mpl

eted

by

man

agem

ent.

Lear

ning

and

G

row

thIm

plem

enta

tion

of IA

T le

arne

rshi

p pr

ogra

mm

e

N/A

App

rova

l and

im

plem

enta

tion

of th

e le

arne

rshi

p pr

ogra

mm

e

Ach

ieve

dT

he IA

T

lear

ners

hip

prog

ram

me

was

im

plem

ente

d in

Ju

ly 2

013

N/A

N/A

N/A

Ach

ieve

trai

ning

hou

rs

of C

ontin

uous

P

rofe

ssio

nal

Dev

elop

men

tP

rogr

amm

e (I

IA

– C

P)

N/A

Ach

ieve

480

tr

aini

ng h

ours

of

Con

tinuo

us

Pro

fess

iona

lD

evel

opm

ent

Pro

gram

me

(IIA

–

CP

)

Ach

ieve

dA

chie

ved

512

trai

ning

hou

rs

of C

ontin

uous

P

rofe

ssio

nal

Dev

elop

men

tP

rogr

amm

e (I

IA

– C

P).

N/A

N/A

N/A

INT

ER

NA

L A

UD

IT C

ontin

ued

i dd 71 2014/10/14 9 35 AM


i dd 72 2014/10/14 9 35 AM


PART C: GOVERNANCE

i dd 73 2014/10/14 9 35 AM


1. INTRODUCTION

Corporate governance embodies processes and systems by which public entities are directed, controlled and held accountable. In addition to legislative requirements based on a public entity‘s enabling legislation, and the Companies Act, corporate governance with regard to public entities is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King III Report on Corporate Governance. Parliament, the Executive and the Boards of the public entity are responsible for corporate governance.

2. PARLIAMENTARY COMMITTEES

During the year under review, the Compensation Fund met with the Standing Committee on Public Accounts (SCOPA) and Portfolio Committee mainly on the issue of the Turnaround Strategy. This Strategy was adopted within the Fund, supported by the Minister and adopted by SCOPA and the Portfolio Committee. The Fund is expected to present progress to the two committees as well as the Select Committee on a quarterly basis.

During the year under review, the Compensation Fund presented the performance information and Annual Financial Statements for the 2012/13 financial year and plans for the coming years to the various committees of the national assembly. Furthermore, in an effort to improve the performance of the Fund, a Turnaround Strategy was developed and presented to the Standing Committee on Public Accounts (SCOPA) for noting. As part of the monitoring and evaluation of the Strategy, the Compensation Fund will be providing periodic reports to the committees of the National assembly.

3. EXECUTIVE AUTHORITY REPORTS

The following reports were presented to the Executive Authority during the year under review:i. Progress on the Turnaround Strategyii. AGSA Audit Report 2012/13iii. Performance Information Reportiv. Scoping of the IT environment at the Fund

All the reports were noted and endorsed. The Fund was mandated to report periodically to the Executive Authority on the progress that is being made to implement the initiatives. Furthermore, the Fund will also be providing reports on progress made in the implementation of the recommendations made in the AGSA Audit Report.

4. THE COMPENSATION BOARD

The Compensation Board is established in terms of Section 10 of the Act. The Board gives advice to the Minister on COIDA issues.

i dd 74 2014/10/14 9 35 AM


4.1. The functions of the Board are as follows:

i. To advise the Minister on the following:

Injuries and Diseases Act

employees, including the adjustments of existing pensions

ii. The Board may at the request of the Director-General advise him regarding the performance of a particular aspects of his functions.

4.2. Board Charter

The following progress was made in complying with the charter:

members. Board members were requested to nominate members to serve on the PTSD panel.

advised to consider adopting 6th edition with regards to the assessment of disability

4.3. Composition of the Board

Section 11 (1) The Board shall comprise of:i. The DG or an officer contemplated in Section 2 (1)(a) or (b) designated by him or her, who shall act as

chairpersonii. Two persons appointed by the Minister, one of whom shall be appointed by the Minister and the other shall

be appointed after consultation with Minister of Healthiii. The Chief Inspector for Occupational Health and Safety or his or her nomineeiv. One person as a member and another as an alternate member appointed by the Minister from a list of the

names of not more than three persons nominated in order of preference by RMAv. One person as a member and another as an alternative member appointed by the Minister from a list of the

name of the three persons nominated in order of preference by FEMA Company Limitedvi. Two persons as members and up to two additional as alternate members appointment by the Minister from

a list of the names of not more than six person nominated in order of preference by the South African Medical and Dental Council

vii. Three persons as members and up to three additional as alternative members appointed by the Minister to represent the interest of the employers’ preference by employer’s organisation

viii. Five persons as members and up to five additional as alternate members to represent the interest of the employee’s preference by employee’s organisation

i dd 75 2014/10/14 9 35 AM


TABLE 16: BOARD MEMBERS

NA

ME

& S

UR

NA

ME

DE

SIG

NA

TIO

N (

IN T

ER

M

OF

TH

E P

UB

LIC

EN

TIT

Y

BO

AR

D S

TR

UC

TU

RE

)

DA

TE

OF

A

PP

OIN

TM

EN

T

DA

TE

R

ES

IGN

ED

QU

ALI

FIC

AT

ION

S

AR

EA

OF

EX

PE

RT

ISE

CO

NS

TIT

UE

NC

Y

RE

PR

ES

EN

TE

D

BO

AR

D M

EE

TIN

G

NO

OF

ME

ET

ING

S

AT

TE

ND

ED

OU

TG

OIN

G B

OA

RD

M

EM

BE

R

*Mr M Mngqibisa

Chair-person

1 January 2014

CorporateGovernance

Government Board 9

Mr J Singh Principalmember

2008 MutualAssociation

Board 7 31/12/2013

#1 Ms T Pugh Principalmember

1 January 2014

Health and Safety

MutualAssociation

Board 6

Mr W Shisana Principalmember

2008 EducationalSpecialistdegree(Post-Masters)

Government Board 7 31/12/2013

Mr N Weltman Principalmember

2008 26 June 2013

BCom(Hons), CA (SA)

Business Board

Mr M Majola Principalmember

2008 MBA, MPhil, MCom,PHD

Business Board 5 31/12/2013

#1 Dr B Kistnasamy

Principalmember

1 January 2014

Government Board 8

#1 Mr T Lamati Principalmember

1 January 2014

MBA Health,chemistry, strategicmanagement,financial

Government Board 2

#1 Mr S Tsiane Principalmember

1 January 2014

Labour Board 11

Mr P Magane Principalmember

2008 26 June 2013

Health and Safety Co-orditor

Labour Board

#1 Ms J Bodibe

Principalmember

1 January 2014

OccupationalHealth and Safety, HIV and AIDS policy coordinator

Labour Board 12

#1 Mr S Motloung

Principalmember

1 January 2014

Labour Board 10

Ms B Modise Principalmember

2008 Labour Board 8 31/12/2013

i dd 76 2014/10/14 9 35 AM


NA

ME

& S

UR

NA

ME

DE

SIG

NA

TIO

N (

IN T

ER

M

OF

TH

E P

UB

LIC

EN

TIT

Y

BO

AR

D S

TR

UC

TU

RE

)

DA

TE

OF

A

PP

OIN

TM

EN

T

DA

TE

R

ES

IGN

ED

QU

ALI

FIC

AT

ION

S

AR

EA

OF

EX

PE

RT

ISE

CO

NS

TIT

UE

NC

Y

RE

PR

ES

EN

TE

D

BO

AR

D M

EE

TIN

G

NO

OF

ME

ET

ING

S

AT

TE

ND

ED

OU

TG

OIN

G B

OA

RD

M

EM

BE

R

Dr T Balfour-Kaipa

Principalmember

2008 MBA HealthAdviser, Chamber of Mines

Business Board 5 31/12/2013

Mr S Deva Alternatemember

2008 Business Board 0 31/12/2013

#1 Mr G Mclontosh

Alternatemember

1 January 2014

Mutualassociation

Board 10

#1 Mr F Xaba Alternatemember

1 January 2014

BA Social WorkBA Hons (IndustrialPsychology)

SeniorManagerAurecon

Business Board 8

#2 Mr A Phala Principal Member

1 January 2014

Labour Board 1

#2 Mr K Cowley

Principal Member

1 January 2014

Mastersin Labour, Labour Law and HR

Business Board 1

#1 Dr C Mbekeni

Principal Member

1 January 2014

MSc (Health Economics),MBCHB

Health Policy Business Board 1

#2 Ms E Kula Alternatemember

1 January 2014

MBA Cooperategovernance;HRmanagement,CorporateFinance

Business Board 1

#1 Mr P Matshidze

PrincipalMember

1 January 2014

MBA,Mastersin Public Health

Health care policy expert

Mutualassociation

Board 1

#1 Mr M Samela

PrincipalMember

1 January 2014

Strategic and Operations

Labour Board 1

#1 Prof N Taukobong

PrincipalMember

1 January 2014

Mastersof Physio-therapy

Government Board 0

Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members

TABLE 16: BOARD MEMBERS Continued

i dd 77 2014/10/14 9 35 AM


4.4. Committees of the Board

4.4.1. Assessments and Benefits Committee (ABC)

Mandate of the ABCThe core mandate of the Committee emanates from COIDA and is found in the following sections of the Act:

Functions and responsibilities of the ABCThe Assessments and Benefits Committee will review, investigate, monitor, report and recommend to the Board on matters related to:

recommendations regarding the mandate, including reports on Scheduled Benefits in November and Section 76 benefits payable in February

The table below indicates the number of Assessment and Benefits Committee meetings held, number of members and names of members, as well as the amount of meetings attended by each member.

TABLE 17: ASSESSMENT AND BENEFITS COMMITTEE

NO OF MEETINGS HELD

NO OF MEMBERS

NAMES OF MEMBERS

NO OF MEETINGSATTENDED

12 8

*Chairperson Ms J Bodibe 12

#1 Mr G Mclntosh 7

#1 Mr F Xaba 11

#1 Mr P Stoop 7

#1 Ms T Pugh 1

Term of office ended31 December 2013

Ms B Modise 10

#1 Mr S Motloung 9

#1 Mr S Tsiane 4


i dd 78 2014/10/14 9 35 AM


4.4.2. Technical Committee for Occupational Injuries and Diseases (TCOID)

Mandate of the TCOID The core mandate of the committee emanates from COIDA and other legislative frameworks and it includes:

Functions and responsibilities of the TCOIDThe Technical Committee for Occupational Injuries and Diseases reviews, investigates, monitors, reports and makes recommendations to the Board on matters related to policy formulation, such as:

ODMWA and COIDA

assist it in the execution of its mandate

various views with their supporting evidence with a view to facilitating discussions at the Board level

are referenced and the submission dates are documented.

The table below indicates the number of Technical Committee for Occupational Injuries and Diseases meetings held, number of members, name of members and the amount of meetings attended by each member.

TABLE 18: TECHNICAL COMMITTEE FOR OCCUPATIONAL INJURIES AND DISEASES

NO OF MEETINGS HELD

NO OF MEMBERS

NAME OF MEMBERS


5 11

*Chairperson Mr S Motloung 5

#2 Prof N Taukobong 0


Mr A Letshele 3

#1 Dr B Kistnasamy 1

#1 Dr C Mbekeni 1


Dr D Mokoboto 3

#2 Mr A Phala 1

#1 Dr D Kritzinger 5

#1 Ms J Mahlangu 4

#1 Ms J Bodibe 5


i dd 79 2014/10/14 9 35 AM


4.4.3. Investment Committee (IC)

Mandate of the ICThe core mandate of the Committee emanates from:

Duties and responsibilities of the ICSubject to the powers and duties of the Board and the requirements of the Act, the IC will perform the following duties:

i. Depositors Fund

ii. Finance

(without diluting the Audit Committee’s mandate)

opinion and other related matters

The table below indicates the number of Financial and Investment Committee meetings held, the number of members, names of members and the amount of meetings attended by each member.

TABLE 19: INVESTMENT COMMITTEE

NO OF MEETINGS HELD

NO OF MEMBERS

NAMES OF MEMBERS


7 4

*Chairperson Mr S Tsiane 4

#1 Ms J Bodibe 7

#1 Mr F Xaba 6

Term of service ended31 December 2013

Ms B Modise 7

Mr S Motloung 1


i dd 80 2014/10/14 9 35 AM


4.4.4. Strategic and Operational Committee

MandateThe core mandate of the committee emanates from:

Functions and responsibilities of the Strategic and Operational CommitteeThe Strategic and Operational Committee reviews, investigates, monitors, reports and makes recommendations to the Board, including the following functions:

The table below indicates the number of Strategic and Operational Committee meetings held, number of members, and names of members and the amount of meetings attended by each member.

TABLE 20: STRATEGIC AND OPERATIONAL COMMITTEE

NO OF MEETING HELD

NO OF MEMBERS

NAME OF MEMBERS


4 8

*Chairperson Ms E Kula 1

Term of office ended 31 December 2013

Mr M Majola 3

#1 Mr F Xaba 4

#1 Mr S Motloung 2

#1 Mr P Stoop 3

Term of office ended 31 December 2013

Ms B Modise 3

#1 Mr G Mclntosh 3

#2 Mr M Samela 1


i dd 81 2014/10/14 9 35 AM


4.5. Remuneration of Board Members

The Compensation Fund shall pay members of the Board the prescribed remuneration and travelling and subsistence allowances. Members not in full-time employment of the state must be paid allowances determined by the Minister. Remuneration of Board members is determined by National Treasury Regulations 20.2.2, at R2,056 per day for Committee members.

TABLE 21: MEMBERS THAT ARE NOT REMUNERATED

NAME ORGANISATION

Mr M Mngqibisa Government

Dr B Kistnasamy Government

Mr J Singh Mutual Association

Ms T Pugh Mutual Association

Mr N Weltman Business

Mr G Mclontosh Mutual Association

Ms J Mahlangu Mutual Association

Dr Dzingwa Government

Mr T Lamati Government

Dr T Balfour-Kaipa Business

Mr S Deva Business

Mr G Mclntosh Mutual Association

Mr P Stoop Mutual Association

Dr D Mokoboto Government

Dr D Kritzinger Mutual Association

Dr C Mbekeni Business

Mr P Matshidze Mutual Association

TABLE 22: MEMBERS THAT ARE REMUNERATED

NAME REMUNERATION OTHERALLOWANCE

OTHERREIMBURSEMENTS

TOTAL

Mr FA Xaba R 141,833.00 R 5,093.21 R 41,223.85 R 188,150.06

Mr SM Motloung R 73,005.30 R 5,093.21 R 15,199.83 R 93,298.34

Ms BM Modise R 114,040.09 0 R 140,751.68 R 254,791.77

Mr SM Tsiane R 54,313.00 0 R 22,824.05 R 77,137.05

Mr A Letshele 0 0 0 0

Mr P Magane 0 0 0 0

Ms JM Bodibe R 157,632.31 R 5,093.21 R 171,597.05 R 334,322.57

Mr WO Shisana R 13,847.00 0 0 R 13,847.00

Mr MC Majola R 17,959.00 0 R 9,955.12 R 27,914.12

Mr KA Cowley R 4,112.00 0 R 1,803.26 R 5,915.26

Mr PA Phala R 8,224.00 0 R 3,166.24 R 11,390.24

Mr MD Samela R 2,056.00 0 R 414.00 R 2,470.00

TOTAL R 587,021.70 R 15,279.63 R 406,935.08 R 1,009,236.41

i dd 82 2014/10/14 9 35 AM


5. RISK MANAGEMENT

5.1. Introduction

The Compensation Fund business environment is subject to various inherent risks influenced by both internal and external factors. Managing those risks is an integral part of management’s responsibilities to ensure that all injured and diseased employees in the workplace are provided with social security in a timely manner.

5.2. Governance

The Minister of the Department of Labour is ultimately responsible for the risk management process and system within the Compensation Fund and has appointed the Risk Management Committee (RMC) to assist in discharging these roles and responsibilities. The RMC is mandated to provide strategic direction on how risks should be managed throughout the Fund and advise the Minister, Director-General (DG) and Commissioner accordingly. The Committee is supported by the Directorate: Risk Management (D: RM) in fulfilling its mandate.

5.3. Risk Management Committee

The RMC was appointed in December 2013 and has since convened two meetings during the 2013/14 financial year. The composition of the committee is exhibited in the table below.

TABLE 23: COMPOSITION OF THE RISK MANAGEMENT COMMITTEE

NAME OF MEMBER MEETINGSHELD

MEETINGSATTENDED

DESIGNATION

Mr Luyanda Mangquku 2 2 Independent Chairperson

Mr Khulekani Buthelezi 2 2 Representative of the Audit Committee

Mr Shadrack Mkhonto 2 1 Compensation Commissioner

Miss Katlego Mocwiri 2 1 Director: Risk Management

Mr Twana Makubela 2 2 Deputy Director: Risk Management

Mr Johnny Modiba 2 2 Chief Financial Officer

Mr Tshepo Mokomatsidi 2 2 Chief Director: Corporate Support Services

Ms Kefilwe Tselane 2 2 Acting Chief Director: Operations

Mr Siphiwe Zwane 2 2 Acting Director: Internal Audit

5.3.1. Roles and responsibilities

The RMC has adopted formal Terms of Reference, outlining its roles and responsibilities. The Committee is responsible for reviewing the risk management policy and strategy, the Fund’s risk appetite as well as the fraud prevention plan. The Committee ensures that a risk management methodology is implemented and that risk assessments are performed on a continuous basis to enhance the Fund’s systems and internal control environment. It is the responsibility of the committee to also evaluate the effectiveness and implementation of the fraud prevention plan. The Minister, DG and Commissioner are advised by the Committee on significant issues affecting the Fund, the state of enterprise risk management accompanied by recommendations on how these issues can be addressed.

i dd 83 2014/10/14 9 35 AM


5.3.2. Management

Management is accountable to the DG and the Minister for designing, implementing and monitoring the risk management process and integrating it into the Fund’s daily operations.

5.3.3. Management of risks

The Fund has established the ERM unit and has adopted the enterprise-wide risk management approach. The ERM unit is the custodian of the Risk Management Policy, Strategy and Plan, and coordinates the risk management activities throughout the Fund. The Risk Management Policy outlines the Fund’s risk management philosophy and is subject to annual review, with modifications submitted to the RMC for consideration and recommendation to the Compensation Commissioner for approval.

Minimal progress was realised in the management of risks of the Compensation Fund and this can be attributed to insufficient monitoring of risks and the appointment of the RMC late in the year. This has been addressed by the appointment of a new RMC and Director: Risk Management, including the inclusion of risk management responsibilities in senior management’s performance agreements.

5.3.4. Risk management process

Strategic and operational risk assessments were conducted during the year. The risk management process was followed in conducting risk assessments, which entails risk identification, risk analysis and identification of control activities.

5.3.5. Effectiveness of risk management

The Internal Audit Directorate via the Audit Committee is responsible for providing the DG and the Minister with an independent and objective assurance on the effectiveness of risk management process and system. In the current year ERM unit was not audited for effectiveness and is planned for review in the next financial year. Based on the challenges faced by the unit, it is our view that risk management was not effective in the current year.

5.4. Fraud and Corruption Unit

The Fraud and Corruption Unit assists the Fund by investigating potential fraud and possible criminal activities. The Fund has a fraud prevention plan which has been approved by the Commissioner. All suspected fraud or criminal activity is reported to the Fraud and Corruption Unit via an anonymous fraud hotline, walk in or e-mails. The unit investigates the allegations and provides a conclusive report with recommendations for business to act.

6. INTERNAL CONTROL UNIT

Currently, the Fund does not have an established Internal Control Unit. Measures were put in place with effect from October 2013 to establish the Internal Control Unit within the office of the Chief Financial Officer in line with National Treasury. This measure was initiated by the newly appointed Chief Financial Officer as part of improving corporate governance within the Fund.

Consultations were held with internal and external stakeholders, in particular the National Treasury. It is expected that this function will commence fully with operations on 1 April 2015. Currently, the Fund has outsourced the function.

i dd 84 2014/10/14 9 35 AM


7. INTERNAL AUDIT UNIT AND AUDIT COMMITTEE

7.1. Internal Audit objectives and key activities

Internal Audit is established In terms of Section 51 (1)(ii) of the Public Finance Management Act (PFMA), read with Treasury Regulations 27.1 and 27.2, the Accounting Authority must ensure that the entity has and maintains a system of Internal Audit under the control and direction of an Audit Committee, complying with and operating in accordance with the regulations and instructions prescribed in terms of Sections 76 and 77 of the PFMA.

The Institute of Internal Auditors defined internal audit as, “the Independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps organisations accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes”.

The primary objective of the Internal Audit function is to evaluate the adequacy and effectiveness of internal controls, test the compliance with the applicable laws, regulations, policies and procedures within the Fund processes.

“Adequacy” is defined as determining whether sufficient, efficient and economical controls are in place to provide reasonable assurance that objectives will be achieved.

“Effectiveness” is defined as determining whether the system of internal control is functioning as intended.

Internal control is understood to mean the processes, actions and procedures aimed at achieving reasonable assurance about the achievement of the following objectives:

7.2. Summary of audit work done

The internal audit function therefore evaluates and contributes to the improvement of governance, risk management and control processes of the Fund. The typical inputs/responsibilities of the Internal Audit function include the main three key pillars:

i. GovernanceThe Internal Audit activity assessed and made appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

and management

ii. Risk ManagementThe Internal Audit function assists the Fund in identifying, evaluating and assessing significant organisational risks and provides assurance as to the effectiveness of related internal controls.

Furthermore, Internal Audit evaluates the risk management process of the Fund for efficiency and effectiveness.

i dd 85 2014/10/14 9 35 AM


iii. ControlsThe Internal Audit function assists the organisation in maintaining effective controls by evaluating their adequacy, effectiveness and efficiency and by promoting continuous improvements.

Other internal audit activities may include:

other best practices

guidelines from the SPPIA and other best practices

Internal Audit Section independently executed the following audits based on the risk based annual audit plan and provided practical recommendations to enhance internal controls and to fulfil its legislative mandate.

TABLE 24: AUDITS CONDUCTED

FOCUS AREA TYPE EXTENT

Casual and contract workers Compliance/assurance Ad hoc

ROE Discounts IT Assurance Audit Ad hoc

Mailroom and dispatch Assurance Follow-up

Auxiliary services/Fleet management Assurance Follow-up

Human Resources Compliance/assurance Follow-up

Medical Services Assurance Follow-up

Pensions Assurance Follow-up

Security Services overtime analysis Data analytics/IT audit Planned

Legal Services Compliance/assurance Planned

Third-party claims Assurance/compliance Planned

Revenue and Debtors Assurance Planned

Quarterly Performance Information Performance objectives Planned

IT Security audit IT audit Planned

Exempted employers Assurance Planned

Pensions Data analytics/IT audit Planned

Oracle database review IT audit Planned

Asset management Assurance Planned

AG Audit Matrix validation Assurance/follow-up Planned

Compensation and Claims Data analytics/IT audit Planned

User Account management IT audit Planned

Entity overtime Data analytics/IT audit Planned

Provincial audits (4 provinces) Assurance Planned

i dd 86 2014/10/14 9 35 AM


8. COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

In compliance with laws and regulations, the Fund adheres to the principles of the King III report. Structures and processes were established with appropriate checks and balances to empower directors to perform their legal responsibilities and oversight of compliance with legislation, for example Audit Committee and Risk Committee.

8.1. Fraud and Corruption

The Fraud and Corruption Unit assists the Fund by investigating potential fraud and possible criminal activities.

Fraud Prevention Plan

As required by Section 29.1.1 (e) of the Treasury Regulations prescribed under the Public Finance Management Act, 1999, the Fund has a Fraud and Corruption Prevention Plan to effectively manage the fraud risk to which the Fund is exposed. The Fraud and Corruption Prevention Plan has been approved by the Compensation Commissioner. The Plan comprises of the following components:

During the 2013/14 financial year there was minimal implementation of the Fraud and Corruption Prevention Plan. The anti-fraud and corruption unit conducted four fraud awareness sessions, and the unit only managed to finalise 49% of cases reported.

Mechanisms of reporting fraud and corruption

The Fund has a whistle-blowing policy which encourages employees to disclose any acts of misconduct without fear of any discriminations or reprisals. Any official of the Fund or stakeholder, supplier or service provider who has a reasonable belief that fraud, corruption or unethical behaviour is taking place may report such via the channels provided.

Reporting the cases

Any suspected fraud or corrupt activity is reported to the fraud and corruption unit via an anonymous fraud hotline, walk-in or emails. The unit investigates the allegations and provides a conclusive report with recommendations for business to act.

9. AUDIT COMMITTEE’S REPORT

9.1. Audit Committee objectives and activities

The Audit Committee was established in terms of the PFMA and Treasury Regulations to assist the Executive Authority in fulfilling its oversight responsibility in terms of these statutes. The duties of the Committee are broadly defined in Section 51(1)(a)(ii) of the PFMA and Treasury Regulations.

i dd 87 2014/10/14 9 35 AM


9.2. Objectives

To assist the executive and accounting authorities in fulfilling their oversight responsibilities for:

9.3. Audit Committee activities

The responsibilities of the Audit Committee include the financial reporting process, the system of internal control, risk management, the audit process and the monitoring of compliance with laws, regulations and the Fund’s own code of business conduct.

9.4. Internal control

control

and obtain reports on significant findings and recommendations together with management’s responses.

9.5. Internal Audit

risk based three year rolling and annual audit plan

of follow up action required

Internal Audit and the office of the Auditor-General

Code of Ethics of The Institute of Internal Auditors

9.6. External Audit: Auditor-General

Review the effectiveness of the external audit function and specifically do the following:

ordination with internal audit

and control systems in place to prevent and detect fraud, with the external auditor

9.7. Risk Management

on the effectiveness of the process

i dd 88 2014/10/14 9 35 AM


9.8. Compliance

of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance

compliance therewith

9.9. Management Accounts and Annual Financial Statements

other users of such information and annually review the Annual Financial Statements and recommend its approval to the Director-General

judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements

known to committee members and reflect appropriate accounting principles

accuracy and the completeness of the information

9.10. Reporting

respect to the quality or integrity of the Fund’s financial statements, the compliance with legal or regulatory requirements and the performance of the internal audit function

the accounting authority

how they were discharged, and any other information required by rules

9.11. Ethics

standards and requirements

9.12. Other responsibilities

i dd 89 2014/10/14 9 35 AM


10. REPORT OF THE AUDIT COMMITTEE FOR THE PERIOD 2013/14

Introduction

The Committee is pleased to present its final Annual Report for the financial year ending 31 March 2014. This report is presented in accordance with the requirements of the Public Finance Management Act No 1 of 1999, as amended and the recommendations contained in the third King Report on Governance for South Africa and the King Code of Governance Principles (King III).

Audit Committee responsibility

The Audit Committee reports that it has complied with its responsibilities arising from Sections 51 (1)(a)(ii) and 77 of the Public Finance Management Act read with Treasury Regulation 27.1. The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.

Committee meetings

The Audit Committee of the Compensation Fund comprises of four independent members, who have been instrumental in providing independent advice to the Fund. The term of the current committee commenced in the second semester of the financial year.

TABLE 25: AUDIT COMMITTEE COMPOSITION FOR THE PERIOD 1 APRIL 2013 TO 31 AUGUST 2013

NAME QUALI-FICATIONS

INTERNAL OR EXTERNAL

DATE APPOINTED

ENDED

DATE RESIGNED/CONTRACT

NUMBER OF MEETINGSATTENDED

Mr K Buthelezi ACCA Chairperson(External)

January 2012 August 2013 6/6

Mr M Makhubu CharteredAccountant

Member(External)


Mr F Xaba BA Hons (IndustrialPsychology)

Member(External)


An induction of the new Audit Committee members was held in November 2013.

TABLE 26: AUDIT COMMITTEE COMPOSITION FOR THE PERIOD 1 OCTOBER 2013 TO 31 MARCH 2014

NAME QUALI-FICATIONS

INTERNAL OR

EXTERNAL

DATE APPOINTED

DATE RESIGNED/CONTRACT

ENDED

NUMBER OF MEETINGSATTENDED

Ms R Kalidass CharteredAccountant

Chairperson(External)

October 2013 N/A 3/3

Mr K Buthelezi ACCA Member(External)


Mr L Manqguku CharteredAccountant

Member(External)


Mr C Terhoeven CharteredAccountant

Member(External)


i dd 90 2014/10/14 9 35 AM


Effectiveness of internal controls

The system of internal controls is designed to provide cost-effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed. The system of internal control applied by the Compensation Fund over financial and risk management is ineffective, inefficient and not transparent.

In accordance with the PFMA and the King III Report on Corporate Governance requirements, Internal Audit is required to provide the Audit Committee and management with assurance that the internal controls, governance and risk management processes of the Compensation Fund are appropriate and effective.

This is achieved by means of the risk management, as well as the identification of corrective actions and suggested enhancements to the internal controls and processes. The Risk Management Unit is currently in the process of being capacitated to ensure that risk management is being implemented at both a strategic and operational level within the organisation.

Internal Audit performed periodic independent evaluations of the adequacy and effectiveness of internal controls, financial reporting, performance information and the integrity of information systems and records.

TABLE 27: THE FOLLOWING IS A SUMMARY OF INTERNAL AUDIT WORK COMPLETED DURING THE YEAR UNDER REVIEW

NO FOCUS AREA TYPE TIMING

1 Casual and contract workers Compliance/assurance Ad hoc

2 Project Emerge-Return of Earnings Assurance Ad hoc

3 ROE Discounts IT Assurance audit Ad hoc

4 Mailroom and dispatch Assurance Follow-up

5 Auxiliary services/fleet management Assurance Follow-up

6 Human Resources Compliance/assurance Follow-up

7 Medical Services Assurance Follow-up

8 Pensions Assurance Follow-up

9 Security Services overtime analysis Data analytics Planned

10 Legal Services Compliance/assurance Planned

11 Third-party Claims Assurance/compliance Planned

12 Revenue and Debtors Assurance Planned

13 Quarterly Performance Information Performance objectives Planned

14 IT Security audit IT audit Planned

15 Exempted employers Assurance Planned

16 Pensions Data analytics Planned

17 Oracle database review IT audit Planned

18 Asset management Assurance Planned

19 AG audit matrix validation Assurance Planned

20 Compensation and Claims Data analytics Planned

21 User Account management IT audit Planned

22 Entity overtime Data analytics Planned

23 Provincial audits (four provinces) Assurance Planned

i dd 91 2014/10/14 9 35 AM


From the various reports of the internal auditors, the audit report on the Annual Financial Statements and the management letter of the Auditor-General, it was noted that there has been no improvement since the previous financial year. This could be demonstrated by the late submission of the draft Annual Financial Statements to the Audit Committee as well as the inability to prepare reliable financial statements during the course of the financial year.

The Committee remains concerned about the lack of progress on the implementation of management actions to address audit findings, irregularities and reputational risk associated with the Fund.

Significant matters, which have not been adequately resolved, include the following:

Accordingly, we can report that the general system of internal control for the period under review was unfortunately ineffective and inefficient.

However, subsequent to financial year-end, a firm of chartered accountants have been appointed to assist the organisation in taking remedial action to address the root causes of repetitive audit findings and improve the internal control environment. Under the leadership and guidance of the audit committee, management is expected to implement strategies, resolutions and action plans to address the disclaimed audit opinion.

Monthly/Quarterly management report

The Audit Committee is dissatisfied with the content and quality of monthly reports prepared and issued by the Compensation Fund during the year under review.

The Audit Committee will monitor the process and procedures designed and implemented to ensure there is a consistency and improvement in the quality of performance information for the forthcoming financial year and achievement of planned targets.

Evaluation of Financial Statements

The Audit Committee has:

Auditor-General and the Accounting Authority

i dd 92 2014/10/14 9 35 AM


Of concern to the Audit Committee, is the number of new findings which have appeared in the 2013/14 audit opinion. The table below depicts the regression over the past three financial years:

TABLE 28: BASIS OF AUDIT OPINION FOR THE COMPENSATION FUND

NO BASIS OF AUDIT OPINION 2011/12 2012/13 2013/14

1 Revenue and receivables from non-exchange transactions (Repeat) x x x

2 Allowance for impairment (Repeat) x x

3 Revenue and receivable from exchange transactions (Repeat) x x

4 Benefits paid and payables from exchange transactions (Repeat) x x x

5 Provision for outstanding claims and decrease in provision for outstanding claims (Repeat)

x x

6 Capitalised value of pensions and pension actuarial adjustments (New)

- x

7 Prior period errors (New) - x

8 Cash and cash equivalents (Repeat) x x

9 Cash flow statement (New) - x

10 Statement of comparison of budget and actual amounts (New) - x

11 Administration expenses (New) - x

12 Investment revenue (New) - x

13 Contingencies (New) - x

14 Commitments (Repeat) x x

15 Irregular expenditure (Repeat) x x

16 Related party transactions (Repeat) x x

17 Aggregation of immaterial uncorrected misstatements (Repeat) x x

Repeatdisclaimer

(59%)

NEW OR REPEAT DISCLAIMER MATTERS

New disclaimer (41%)

i dd 93 2014/10/14 9 35 AM


We concur with and accept the Auditor-General of South Africa’s report on the Annual Financial Statements, and are of the opinion that the audited financial statements should be accepted together with the report of the Auditor-General of South Africa.

Auditor-General of South Africa

We have met with the Auditor-General of South Africa to ensure that there are no unresolved issues.

Conclusions

We would like to extend our appreciation to the executive authority, Accounting Authority, management, and internal and external auditors for their efforts being made to address concerns raised by the Audit Committee. We look forward to an improved audit outcome in the 2014/15 financial year.

Ms Rachel KalidassChairperson: Audit Committee

i dd 94 2014/10/14 9 35 AM

PART D: HUMAN RESOURCE MANAGEMENT

i dd 95 2014/10/14 9 35 AM


1. INTRODUCTION

1.1. The value of human capital in the public entity

Successful organisations world-wide recognise that human resource is a valuable asset to the attainment of strategic objectives. In this context, it has also been established that human resource becomes even more critical in an environment where technology is often used as a means of harnessing growth and development to meet demands that are ever changing. There has also been more emphasis on the employment of persons who have the competence to effectively utilise technology to satisfy the needs of citizenry and clients. In its quest to improve efficiencies, the Compensation Fund took a decision to decentralise its functions to the lowest level possible to ensure that timely and qualitative services are provided.

This approach has highlighted the need to ensure that employees at the coal face are knowledgeable about the business of the Fund and the importance of technology to deliver services. To this end, the Fund has created entry level posts which recognise that services will be provided in an integrated manner and compensated in accordance with the skills set required.

1.2. Overview of HR matters of the public entity

During the year under review, the Compensation Fund implemented a decentralised organisational structure which placed an emphasis on the need to deliver quality services to the lowest level possible. As part of this new organisational structure, a total of 1,334 posts were created with 690 of these at the national level and the remaining 644 distributed proportionally among provinces. In order to ensure that the organisational structure is implemented in such a manner that reflects inclusivity, a placement framework and procedure for employees of the Department of Labour (salary levels 1 – 12) was developed as a guide. This framework required that recognised trade unions in the Department of Labour including the Compensation Fund be afforded an opportunity to participate in the restructuring process by representing the interest of their members.

This was done through the established Placement Panel. For example, the panel concerned itself with the movement of employees from the old to the new organisational structure. In the case of the Fund the process was compounded by the fact that entry level posts which would provide medical and compensation services in an integrated manner were created at salary level 6. It is imperative to note that the majority of employees in the Directorates: Medical Services and Compensation Benefits were employed on salary level 5. This matter, coupled with the fact that the entry level posts in provinces in these two areas was salary level 6, created a challenge.

Furthermore, the management of the Fund realised that if open competition for posts was to be followed, a number of employees may be without posts. As a consequence, a proposal was made to organised labour through the established Placement Panel that choice forms should be issued to all the employees in the affected directorates, including those on SR5, to identify the province where they would like to permanently relocate to. However, upon the analysis of the choices made by employees it was found that with respect to the Gauteng province there were more employees than the number of posts available on SR6 in particular. For example, out of 118 posts on salary level 6, choices made were in excess of 247.

1.3. Set HR priorities for the year under review and the impact of these priorities

In the year under review, the Compensation Fund had prioritised the filling of critical posts in the middle and senior management levels. This was done so that the Compensation Fund would be adequately prepared to respond to demands in its internal and external environments. In addition, importance was also placed on the need to implement the new organisational structure and fast track decentralisation of functions and staff to the lowest level possible in line with the new operating model.

i dd 96 2014/10/14 9 35 AM


1.4. Workforce planning framework and key strategies to attract and recruit a skilled and capable workforce

The new organisational structure has created a number of posts at middle and senior management levels. These posts were created with a view to assisting the Compensation Fund to employ persons who were competent and highly skilled, thus contributing to the delivery of its legislative and policy mandates. Some of the strategies followed to source the right skill mix, attributes and knowledge had been the use of print media and public service internal communication. In addition, recruitment agencies were utilised as a means to source candidates with scarce or critical skills in instances where the normal recruitment channels could not yield the desired results.

1.5. Employee performance management framework

The provisions of the policy on performance management system for employees on salary levels 1 – 12 and Chapter 4 of the Senior Management Service Handbook were utilised as instruments to manage performance. During the year under review, a number of challenges were experienced with aspects such as the finalisation of performance assessments for some employees by their supervisors and the timeous conclusion of performance agreements in some cases. As a result of these challenges, the Fund has not been able to comply with the policy directives to the fullest extent.

1.6. Employee wellness programmes

The Employee Health and Wellness Programme play a critical role in the enhancement of employee wellbeing. This programme required organisations to provide the necessary support and referrals as part of the promotion of a conducive and caring workplace. During the year under review, the Compensation Fund participated in a workshop which reviewed the health and wellness management policies and procedures. In addition, a number of health screening sessions were hosted with the Government Employees Medical Scheme (GEMS) where various tests were conducted to assist staff members to monitor their health status on a regular basis so that early and timely intervention, where necessary, could be initiated.

Furthermore, counselling sessions were arranged for staff members who were undergoing decentralisation to various provinces as part of the implementation of the new organisational structure. The reports from this exercise have proved to be useful to both the employees and management in that future restructuring endeavours would be implemented in such a manner that sensitivities surrounding such a process would be taken into consideration.

1.7. Policy development

During the year under review, the Compensation Fund had participated in the review of a number of human resource management policies, such as the resettlement benefits, the death of an employee and health and wellness management.

1.7.1. Highlight achievements

The Compensation Fund successfully implemented the new organisational structure which resulted in the delivery of services being devolved to the lowest level possible. Following the approval of the piloting of the Rand Mutual Assurance (RMA) system for the management and payment of medical and compensation claims, a massive training programme of users and super-users was undertaken. This training intervention ensured that staff members were capacitated and adequately prepared for the pilot and possibly the eventual roll-out of the system.

i dd 97 2014/10/14 9 35 AM


In addition, almost 100% of training interventions identified in the Workplace Skills Plan (WSP) was achieved thus resulting in most employees realising their personal development plans. Furthermore, training interventions geared towards the realisation of some units’ performance targets were successfully arranged and undertaken. As part of providing graduates with the work experience and competence necessary for them to find long term and sustainable employment, 90 interns were appointed for a period of one year.

1.7.2. Challenges faced by the public entity

Critical challenges faced by the Fund in the area of human resource management, among others, continued to be the lack of urgency in the filling of critical management posts in areas such as financial management, operations and support services. There have also been capacity constraints as a result of the fact that there has been dearth of skills in the core business as well as support. This situation has thus meant that the Fund was not capacitated with the required levels of competence to respond to the needs of its clients and customers. In areas where there was some level of optimal capacity, employees were not effectively utilised to contribute to sustained and improved delivery. For example, whilst many industries providing medical and compensation services had continued to rely on technological innovations to support operations, the Fund lagged behind as a result of reliance on the manual processing of claims.

1.7.3. Future HR plans/goals

In the next financial year, the Fund will develop guidelines containing norms and standards which would regulate the filling of vacancies so that human resource management functionaries and responsible line managers are aware of their responsibilities in this area. Furthermore, emphasis will be placed on the need to support effective utilisation and management of human resources as a critical and valuable asset in the delivery of services. In the near future, the Fund will conduct an assessment on how to use talent management and succession planning to support employee growth, contentment and productivity. In short, the Fund will look at ways and means to demonstrate that it values its employees as a critical asset.

2. HUMAN RESOURCE OVERSIGHT STATISTICS

The following tables provide key information on the management of human resources. The tables also provide the costs associated with managing and maintaining such human resources. This is done by ensuring that the amounts in this section are linked to the figures disclosed in the Annual Financial Statements. In cases where there are variances, reasons for these differences will be given.

TABLE 29: PERSONNEL COST BY PROGRAMME

PROGRAMME TOTAL EXPENDITURE

FOR THE ENTITY (R’000)

PERSONNEL EXPENDITURE

(R’000)

PERSONNEL EXP AS A % OF

TOTAL EXP (R’000)

NO OF EMPLOYEES

AVERAGE PERSONNEL COST PER EMPLOYEE

(R’000)

CompensationFund

R3,591,182 R343,901 10% 517 R665

TOTAL R3,591,182 R343,901 10% 517 R665

The personnel expenditure accounted for R343,901,000 which represents 10% of the total expenditure of R3,591,182,000 for the Fund. This could be attributed to the fact that a number of high level posts were vacant during the year under review.

i dd 98 2014/10/14 9 35 AM


TABLE 30: PERSONNEL COST BY SALARY BAND

LEVEL PERSONNEL EXPENDITURE

(R’000)

% OF PERSONNEL

EXP TO TOTAL PERSONNEL

COST

NO OF EMPLOYEES

AVERAGE PERSONNEL COST PER EMPLOYEE

(R’000)

Top management R6,225 2 3 R2,075

Senior management (SMS)

R14,059 4 7 R2,008

Professionaly qualified (Levels 9 to 12)

R98,482 29 50 R1,970

Skilled(Levels 7 to 8)

R105,716 31 120 R881

Semi-skilled(Levels 4 to 6)

R119,419 34 337 R354

TOTAL AVERAGE R343,901 100 517 R665

The bulk of the employees at the Fund were at lower salary levels as reflected by a total of 337 employees classified as semi-skilled. In this regard, the percentage of personnel expenditure in this category accounted for 34% of personnel expenditure. In order to improve the performance of the Fund there is a need to re-configure this category in future to ensure that there are more skilled employees.

TABLE 31: PERFORMANCE REWARDS

PROGRAMME PERFORMANCEREWARDS

PERSONNEL EXPENDITURE

(R’000)

% OF PERFORMANCE

REWARDS TO TOTAL PERSONNEL COST

Top management 0 0 0%


0 0 0%


6 R180 0.3%


38 R463 0.8%


68 R561 0.12%

Unskilled(Levels 1 to 3)

0 0 0%

TOTAL 112 R1,204 0.09%

It is clear from the table above that only 0.09% of performance rewards were paid to staff members below the senior management levels. Of particular importance is the fact that none of the senior managers were paid performance bonuses owing to the state of the organisation.

i dd 99 2014/10/14 9 35 AM


TABLE 32: TRAINING COSTS

PROGRAMME PERSONNEL EXPENDITURE

(R’000)

TRAININGEXPENDITURE

(R’000)

TRAININGEXPENDITURE

AS A % OF PERSONNEL

COST

NO OF EMPLOYEES

TRAINED

AVERAGE TRAININGCOST PER EMPLOYEE

CF R343,901 R2,870 0.8 651* R4,409

TOTAL R343,901 R2,870 0.8 651 R4,409

* Please note that the number of employees during the reporting period was 517. Therefore, the number of 651 employees trained should be understood in the context of the number of training interventions undertaken. Some employees have attended training more than once hence the figure of 651.

During the year under review, the Fund has spent R2,870,000 which represent 0.8% of the personnel costs. It should be noted that the minimum expenditure on training and development should be 1% of personnel expenditure. Given the above, it is clear that the Fund had underspent on training budget by 0.2%. However, it must also be noted that some of the training interventions were conducted in-house resulting in 0.2% under-expenditure on training and development costs.

TABLE 33: EMPLOYMENT AND VACANCIES

PROGRAMME 2012/13NO OF

EMPLOYEES

2013/14APPROVED

POSTS

2013/14NO OF

EMPLOYEES

2013/14VACANCIES

% OF VACANCIES

Office of the Commissioner

3 4 3 1 0.1

Internal Audit 8 13 8 5 0.7

Risk Management 6 18 6 12 1.7

Office of the CFO 0 2 1 1 0.1

Income 128 219 181 38 5.5

Financial Reporting 51 15 8 7 1.0

Financial Control 29 37 24 13 1.8

SCM 72 158 128 30 4.3

CD Corporate Support

1 2 2 0 0

HRM 22 40 25 15 2.1

OE 6 14 4 10 1.4

Communications 1 10 6 4 0.5

ICT 0 10 2 8 1.1

Office of the COO 0 2 0 2 0

Compensation 255 6 5 1 0.1

Medical 109 6 4 2 0.2

Legal Services 4 40 36 4 0.5

Customer Care 0 94 74 20 2.8

Contract staff 289 0 0 0 0

TOTAL 984 690 517 173 24

i dd 100 2014/10/14 9 35 AM


The analysis of the table above shows that that the vacancy rate for the Fund stood at 24% which is considered very high. It must be noted that the new organisational structure implemented on 1 April 2013, created a number of new posts in all the areas of the organisation. The area mostly affected by the high vacancy rate was the Chief Directorate: Financial Management with 12.6%. This is the area which has benefitted the most from the implementation of the new organisational structure.

TABLE 34: EMPLOYMENT AND VACANCIES PER SALARY BAND

PROGRAMME 2012/13NO OF

EMPLOYEES

2013/14APPROVED

POSTS

2013/14NO OF

EMPLOYEES

2013/14VACANCIES

% OF VACANCIES

Top management 1 4 3 1 25


12 14 8 6 42.8


52 116 50 66 56.8


277 185 120 65 35


642 371 336 35 9.4

TOTAL 984 690 517 173 24

The new organisational structure resulted in 150 additional posts being created. Given this high number of posts, the Fund decided to prioritise the filling of critical vacant posts of Assistant Directors and higher. The posts in the middle and senior management levels were only advertised in July 2013. However, due to capacity constraints in the affected components, interviews in most cases could not be finalised on time. In the main, it has taken the Fund on average to fill the posts in excess of the six months required for this purpose.

TABLE 35: EMPLOYMENT CHANGES

SALARY BAND EMPLOYMENT AT BEGINNING OF

PERIOD

APPOINTMENTS TERMINATIONS EMPLOYMENT AT END OF THE

PERIOD

Top management 2 1 0 3


8 3 2 8

Professionalyqualified(Levels 9 to 12)

45 8 3 50


124 1 5 120


349 1 10 336

TOTAL 528 13 20 517

Whilst 13 appointments were made during the reporting period the Fund also experienced 21 terminations of service. This implies that our recruitment and selection processes of new employees was not fast and rigorous enough to counter the effects of terminations of service.

i dd 101 2014/10/14 9 35 AM


TABLE 36: REASONS FOR STAFF LEAVING

REASON NUMBER % OF TOTAL NO OF STAFF LEAVING

Death 6 0.01

Resignation 7 0.01

Dismissal 2 0.003

Retirement 2 0.003

Ill health 0 0

Expiry of contact (Interns) 51 0.09

Other (Transfers out) 5 0.009

TOTAL 22 0.04

The staff turnover for the Fund during the period under review represented a mere 0.04% of the filled 517 posts. As outlined in table above some of the reasons for the turnover have been as a result of death (6), expiry of contract (51) and resignations (7). The overall assessment is that the Compensation Fund has not experienced a turnover rate which could be considered as alarming to require attention during the period under review.

TABLE 37: LABOUR RELATIONS ~ MISCONDUCT AND DISCIPLINARY ACTION

NATURE OF DISCIPLINARY ACTION NUMBER

Verbal warning 0

Written warning 3

Final written warning 7

Dismissal 4

TOTAL 14

The total number of misconduct and disciplinary action of 14 represents 2.7% of the staff in the Fund during the reporting period. This is a demonstration that during the period under review there were less numbers of incidents of misconduct and disciplinary action taken against staff members.

TABLE 38: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR MALES

MALE

AFRICAN COLOURED INDIAN WHITE

LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET

Top management (Levels 15)

1 1 0 0 0 0 0 0

Seniormanagement(Levels 13 to 14)

5 6 0 1 1 0 0 1

Professionalqualified(Levels 9 to 12)

25 49 0 2 0 1 0 5


28 69 1 4 0 2 1 12


145 130 2 5 2 5 5 21


13 19 0 0 0 0 0 3

TOTAL 217 274 3 12 3 8 6 42

i dd 102 2014/10/14 9 35 AM


In order to meet the employment equity targets in respect of male employees there is a need to ensure emphasis in the recruitment of all the targeted groups, with the special emphasis on the appointment of Indians, Coloureds and Whites.

TABLE 39: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR FEMALES

FEMALE

AFRICAN COLOURED INDIAN WHITE

LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET


0 0 0 0 0 0 0 0

Senior management (Levels 13 to 14)

4 7 0 0 0 0 0 1

Professionalqualified(Levels 9 to 12)

22 45 0 1 1 2 3 8


28 67 8 8 0 2 20 21


218 140 14 10 0 3 18 24


4 10 0 0 0 0 0 2

TOTAL 276 269 22 19 1 7 41 56

In order to meet the employment equity targets in respect of female employees in the Fund, there is a need to reduce the emphasis on the recruitment of African in the semi-skilled category as the Fund is over-represented by more than 64%.

TABLE 40: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR PERSONS WITH DISABILITY

DISABLED STAFF

MALE FEMALE

LEVELS CURRENT TARGET CURRENT TARGET


0 0 0 0

Senior management (Levels 13 to 14)

0 0 0 0

Professional qualified (Levels 9 to 12)

0 0 0 0


0 0 0 0


1 4 1 1


1 8 1 1

TOTAL 2 12 2 2

With regards to Persons with Disability (PWD), there is a need for the Fund to intensify recruitment to ensure that the 3.5% target is met. The analysis of the table clearly shows that the Fund is lagging behind in this area.

i dd 103 2014/10/14 9 35 AM


Finally, the implementation of the new organisational structure has resulted in a number of posts being created. The contributing factor to the major variances between the target and current employment equity status was as result of the fact that during the year under review, the Compensation Fund experienced a 24% vacancy rate. Therefore, in filling these posts in the new year an emphasis will be placed on the need to meet the employment equity targets.

i dd 104 2014/10/14 9 35 AM

PART E: FINANCIAL INFORMATION

i dd 105 2014/10/14 9 35 AM


REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE COMPENSATION FUND

Report on the financial statements

Introduction1. I was engaged to audit the financial statements of the Compensation Fund set out on pages 118 to 167, which comprise the statement of financial position as at 31 March 2014, the statements of financial performance, statement of changes in net assets, cash flows and the statement of comparison of budget information with actual information for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting Authority responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standard of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and Compensation for Occupational Injuries and Diseases Act (Act No.130 of 1993) (COIDA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility3. My responsibility is to express an opinion on the financial statements based on conducting the audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Because of the matters described in the basis for disclaimer of opinion paragraphs, however, I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for disclaimer of opinion

Revenue and receivables from non-exchange transactions4. I was unable to obtain sufficient appropriate audit evidence for Revenue from non-exchange transactions and Receivables from non-exchange transactions as the entity did not maintain proper accounting records, journals and adequate controls over assessment revenue and debtors. Furthermore, the entity does not have processes in place to ensure that all employers are registered with the Fund and assessed in terms of COIDA. This had result in revenue being incorrectly recorded and payments received from debtors were not post into the correct period for the current and prior years. Therefore, the interest on outstanding debtors was not charged and penalties were incorrectly charged based on inaccurate assessment revenue and debtors.

In addition to the above, the entity did not recognise revenue received as service in kind in accordance with Standard of Generally Recognised Accounting Practice (GRAP) 23 Revenue from non-exchange transactions in the current year and prior year. The entity’s records did not permit the application of adequate alternative auditing procedures regarding revenue and receivables from non-exchange transactions. Consequently, I was unable to determine whether any adjustment was necessary relating to Revenue from non-exchange transactions of R8.186 billion (2013: R7.152 billion) and Receivables from non-exchange transactions of R1.446 billion (2013: R2.798 billion).

Allowance for impairment5. The entity did not provide appropriate audit evidence for the amount disclosed in the statement of financial performance for impairment allowance and supporting evidence for the assessment of impairment in accordance with GRAP 104 Financial Instruments. Consequently, I could not determine by any alternative means that whether any adjustment to the allowance for impairment stated at R2.266 billion (2013: R1.148 billion) in the financial statements was necessary.

i dd 106 2014/10/14 9 35 AM


Revenue and receivable from exchange transactions6. The entity did not correctly classify revenue and receivables from non-exchange transactions in accordance with GRAP 23 Revenue from non-exchange transactions. Receivables from non-exchange transactions were incorrectly classified as Receivable from exchange transactions. Consequently, Receivables from non-exchange transactions were understated by R511.870 million (2013: R517.860 million) and receivables from exchange transactions were overstated by R511.870 million (2013: R517.860), respectively.

Furthermore, I was unable to obtain sufficient appropriate audit evidence as management did not recognise all revenue from exchange transactions in accordance with GRAP 9 Revenue from exchange transactions for the current year and prior year. The entity records did not permit the application of adequate alternative auditing procedures regarding revenue from exchange transactions. Consequently, I was unable to determine whether any adjustments were required to revenue from exchange transactions stated at R10.910 million (2013: R19.141 million) and receivables from exchange transactions stated at R 527.756 million (2013: R524.351 million).

Benefits paid 7. The entity did not have adequate internal controls to maintain records of benefits paid. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate whether management has correctly accounted for all the claims for the current and prior year. Furthermore material differences were identified between the record of benefits paid and the amount disclosed. The entity records did not permit the application of adequate alternative audit procedures regarding benefits paid. As a consequence, I was unable to determine whether any adjustment is required to benefits paid stated at R2.703 billion (2013: R1.979 billion).

Provision for outstanding claims and decrease in provision for outstanding claims8. The entity did not review and assess the provision for outstanding claims at reporting date and adjust to reflect the best estimate in accordance with GRAP 19 Provisions. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate the amounts disclosed as provision for outstanding claims and change in provision for outstanding claims. I could not confirm, by any alternative means, whether any adjustment to the provision for outstanding claims stated at R6.435 billion (2013: R6.435 billion) and decrease in provision for outstanding claims at R nil (2013: R1.593 billion) in the financial statements was necessary.

Capitalised value of pensions and pension actuarial adjustments9. The entity did not review and assess the capitalised value of pensions at reporting date and adjust to reflect the best estimate in accordance with GRAP 19 Provision. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate the amount disclosed as capitalised value of pensions and pension actuarial adjustments. The entity’s records did not permit the application of adequate alternative auditing procedures. I was therefore unable to determine whether any adjustment was required to capitalised value of pensions stated at R9.716 billion and pension actuarial adjustments stated at R2.416 billion in the financial statements was necessary.

Payables from exchange transactions 10. The entity did not have adequate internal controls to maintain records of benefits paid. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate whether management has correctly accounted for all the payables from exchange transactions for the current and prior year. The entity records did not permit the application of adequate alternative audit procedures regarding payables from exchange transactions. As a consequence, I was unable to determine whether any adjustment is required to payables from exchange transactions stated at R888.872 million (2013: R958.894 million).


i dd 107 2014/10/14 9 35 AM


Prior period errors11. The entity did not provide adequate records in respect of prior period errors reported. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate the amount disclosed as prior period errors. I could not confirm, by any alternative means, whether any the adjustment to the prior period errors stated at R1.019 billion in the financial statements was necessary.

Cash and cash equivalents 12. The entity did not have adequate internal controls to maintain records for reconciling items of cash and cash equivalent. Therefore, I was unable to obtain sufficient appropriate audit evidence for all the un-reconciled items for cash and cash equivalents. The entity’s records did not permit the application of adequate alternative audit procedures regarding cash and cash equivalents. As a consequence I was unable to determine whether any adjustment to cash and cash equivalents stated at R119.720 million (2013: R1.092 billion) was necessary.

Cash flow statement13. The entity did not provide sufficient appropriate audit evidence to substantiate the calculation for presentation of the cash flow statement. Furthermore inaccurate accounting records were used when preparing the cash flow statement. As a consequence, I could not confirm, by any alternative means, whether any adjustment was required to cash flow statement for the year ended.

Statement of comparison of budget and actual amounts14. The entity did not accurately disclose the approved budget amount and present explanation of the material differences between actual amounts and the budget in the financial statements in accordance with GRAP 24 Presentation of Budget Information in Financial Statements. I could not confirm, by any alternative means, whether any adjustment was required to statement of comparison of budget and actual amounts.

Administration expenses15. The entity did not correctly account for expenses in accordance with GRAP 1 Presentation of financial statements for the current and prior year. Consequently, administration expenses is overstated by R134.394 million (2013: R111.834 million) In addition, management did not maintain adequate internal controls and maintain accounting records in respect of administration expenses. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding administration expenses. The entity’s records did not permit the application of adequate alternative audit procedures regarding administration expenses. I was therefore unable to determine whether any adjustment was required to administration expenses stated at R542.307 million.

Investment revenue16. The entity did not accurately account and disclose the investment revenue in note to the financial statements. This had result in investment revenue in the disclosure note to the financial statements understated by R136.340 million. Furthermore material differences were identified between the investment confirmation and the amount disclosed.

Contingencies17. The entity did not maintain adequate internal controls to maintain accounting records in respect of contingencies. As a consequence, I was unable to obtain sufficient appropriate audit evidence for the amount disclosed as contingencies material differences were also identified between the accounting records provided and amount disclosed. The entity’s records did not permit the application of adequate alternative audit procedures regarding contingencies. I was therefore unable to determine whether any adjustment was required to contingencies stated at R288 million.


i dd 108 2014/10/14 9 35 AM


Commitments18. The entity did not maintain adequate internal controls to maintain accounting records in respect of commitments. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding commitments approved and contracted. The entity’s records did not permit the application of adequate alternative audit procedures regarding commitments. Therefore, I was unable to determine whether any adjustments were required to the commitments stated at R4.737 million (2013: R21.517 million).

Irregular expenditure 19. The entity did not maintain adequate controls to maintain accounting records in respect of irregular expenditure. As a consequence, I was unable to obtain sufficient 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 current and prior year. The entity records did not permit the application of adequate alternative audit procedures regarding irregular expenditure. Therefore, I was unable to determine whether any adjustment to the irregular expenditure as stated at R138.584 million (2013: R138.584 million) in the financial statements was necessary.

Related party transactions20. The entity did not maintain adequate controls to maintain accounting records in respect of related party transactions. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding related party disclosures. Furthermore management did not identify and disclose nature of the related party relationships, transactions and outstanding balances in accordance with GRAP 20, related party disclosures. The entity’s records did not permit the application of adequate alternative audit procedures regarding related party transactions. Therefore, I was unable to determine whether any adjustments were required to the related party disclosures.

Aggregation of immaterial uncorrected misstatements21. The financial statements as a whole are materially misstated due to the cumulative effect of numerous individually immaterial uncorrected misstatements in amongst others, the following elements making up the statement of financial position, the statement of financial performance and the notes to the financial statements:

In addition, the entity did not provide assessment of residual values, remaining useful life of assets and impairment of assets in accordance with GRAP 17 Property Plant Equipment. Furthermore the entity did not capitalise lease assets in accordance with GRAP 13 Leases. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate amount disclosed as property plant and equipment and to determine whether any further adjustments to property plan and equipment and leases was necessary.

Disclaimer of opinion22. Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, I do not express an opinion on the financial statements.

Emphasis of matters23. I draw attention to the matters below. My opinion is not modified in respect of these matters.


i dd 109 2014/10/14 9 35 AM


Restatement of corresponding figures24. As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2013 have been restated as a result of an errors discovered during year ended 31 March 2014 in the financial statements of the Compensation Fund.

Material losses25. As disclosed in note 28 to the financial statements, material losses to the amount of R3.008 million (2013: R2.894 million) were incurred as a result of criminal conduct.

Impairments26. As disclosed in the statement of financial performance, material losses to the amount of R2.266 billion (2013: R1.148 billion) were incurred as a result of an increase in the impairment allowance for irrecoverable debtors.

Material underspending of the budget27. As disclosed in the statement of comparison of budget and actual amount, the entity has materially underspent the budget on programme: directorate compensation and directorate medical services to the amount of R3.461 billion.

Additional matter 28. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Material inconsistency in the accounting authority report29. Paragraph 1.1, 1.2 and 2 of the accounting authority’s report is inconsistent with the amount disclosed in the financial statements for assessment revenue, investment revenue, investment assets and benefit claims.

Report on other legal and regulatory requirements

30. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives31. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual performance report for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2014:

32. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

33. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).


i dd 110 2014/10/14 9 35 AM


34. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

35. The material findings in respect of the selected programmes development priorities or objectives are as follows:

Programme 1: Compensation Directorate

Usefulness of reported performance information36. The National Treasury Framework for managing programme performance information (FMPPI) requires that:

total of 67% of the targets relevant to the programme were not specific in clearly identifying the nature and the required level of performance.

targets.

consistently and is easy to understand and use. A total of 67% of the indicators relevant to the programme were not well defined

37. Management did not take corrective action to address previously reported root causes to correct the technical indicator description and management did not adhere to the requirement of the FMPPI.

Reliability of reported performance information38. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. We were unable to obtain the information and explanations we considered necessary to satisfy ourselves as to the reliability of the reported performance information. This was due to limitations placed on the scope of our work due to the auditee’s records not permitting the application of alternative audit procedures.

Programme 2: Medical Directorate



targets.

consistently and is easy to understand and use. A total of 33% of the indicators relevant to the programme were not well defined.



i dd 111 2014/10/14 9 35 AM


Reliability of reported performance information 41. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. We were unable to obtain the information and explanations we considered necessary to satisfy ourselves/myself as to the reliability of the reported performance information. This was due to limitations placed on the scope of our work due to the auditee’s records not permitting the application of alternative audit procedures.

Programme 3: Human Resource Management Directorate



targets.

consistently and is easy to understand and use. A total of 20% of the indicators relevant to the programme were not well defined

programme were not time bound.


Reliability of reported performance information44. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Overall, 25% of the targets were not reliable because we were unable to obtain sufficient appropriate audit evidence for 25% of the targets. In addition, 25% of the targets were not accurate and complete when compared to the source information or evidence provided. This was due to the fact that management excluded information from Provinces when reporting on the targets.

Additional matters45. We draw attention to the following matters

Achievement of planned targets 46. Refer to the annual performance report on pages 33 to 72 for information on the achievement of planned targets for the year. This information should be considered in the context of the findings on usefulness and reliability of the reported performance information in paragraphs 36 to 60 of this report.

Adjustment of material misstatements 47. I identified material misstatements in the annual performance report submitted for auditing on the reported performance information of programme 1: Compensation Directorate. As management subsequently corrected only some of the misstatements, I raised material findings on the usefulness and reliability of the reported performance information.


i dd 112 2014/10/14 9 35 AM


Compliance with laws and regulations48. I performed procedures to obtain evidence that the entity has complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation as set out in the general notice issued in terms of the PAA are as follows:

Strategic planning and performance management 49. Effective and appropriate risk assessment was not conducted regularly so as to identify emerging risks of the public entity as required by Treasury Regulation 27.2.1.

Financial statements, performance and annual reports 50. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by section 55(1) (a) and (b) of the Public Finance Management Act. Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected and the supporting records could not be provided subsequently, which resulted in the financial statements receiving a disclaimer audit opinion.

51. The accounting authority did not submit quarterly reports on actual and projected revenue and expenditure to the accounting officer of the department of Labour, as required by Treasury Regulation 26.1.1

Procurement and contract management52. Effective and efficient supply chain management system for acquisition of goods and services were not maintained as required by the Treasury Regulation 16A3.1.

53. Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury Regulation 16A6.1.

54. Goods and services of a transaction value above R500 000 were procured without inviting competitive bids, as required by Treasury Regulations 16A6.1. Deviations were approved by the accounting officer even though it was not impractical to invite competitive bids, in contravention of Treasury regulation 16A6.4.

55. Invitations for competitive bidding were not always advertised in at least the government tender bulletin, as required by Treasury Regulations 16A6.3(c).

56. Sufficient appropriate audit evidence could not be obtained that bid adjudication was done by committees which were composed in accordance with the policies of the entity, as required by Treasury Regulations 16A6.2(a), (b) and (c).

57. Contracts were awarded to bidders who did not submit a declaration of past supply chain practices such as fraud, abuse of SCM system and non-performance, which is prescribed in order to comply with Treasury regulation 16A9.2.

58. Contracts and quotations were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order as required by Treasury Regulations 16A9.1(d) and the Preferential Procurement Regulations.

59. Sufficient appropriate audit evidence could not be obtained that contracts and quotations were awarded to bidders based on points given for criteria that were stipulated in the original invitation for bidding and quotations, as required by SCM regulation Treasury Regulations 16A6.3(a) and Preferential Procurement Regulations.


i dd 113 2014/10/14 9 35 AM


60. Sufficient appropriate audit evidence could not be obtained that the preference point system was applied in all procurement of goods and services above R30 000 as required by section 2(a) of the Preferential Procurement Policy Framework Act and Treasury Regulations 16A6.3(b).

Expenditure management61. The accounting authority did not take effective steps to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the Public Finance Management Act.

Revenue management62. Effective and appropriate steps were not taken to collect all money due, as required by section 51(1)(b)(i) of the Public Finance Management Act and Treasury Regulations 31.1.2(a) and 31.1.2(e).

63. Not all employers were correctly assessed or provisionally assessed by the director-general according to a tariff of assessment calculated on the basis of such percentage of the annual earnings of his or her employees as the director-general as required by section 83(1) of the COIDA.

64. Penalties for late submission of return of earnings and penalties for late payment of assessment were not correctly charged as required by sections 83 (6) (b) and 87(1) of COIDA for some of the employers.

65. Interest was not charged on all arrears accounts as required by section 86(2) of COIDA.

Claims and payables management66. The accounting authority did not maintain an effective control environment to accept, adjudicate, and make payments to the injuries as required by section 22 and 29 of COIDA.

Liability management 67. Loan were issued without the approval of the Minister of Finance or an official authorised by the Minister, in contravention of section 66(3)(c) of the Public Finance Management Act.

Consequence management68. Effective and appropriate disciplinary steps were not taken against officials who incurred and permitted irregular expenditure, as required by section 51(1)(e)(iii) of the Public Finance Management Act. This is because instances of Irregular expenditure were not investigated

69. Allegations of failure to comply with the supply chain management system laid against officials and role players in the supply chain management system were not investigated, as required by Treasury Regulation 16A9.1(b).

70. Disciplinary hearings were not held for financial misconduct committed by officials, as required by Treasury Regulation 33.1.1.

71. Disciplinary hearings were not held for confirmed cases of financial misconduct committed by the accounting authority, as required by Treasury Regulation 33.1.3.

Internal control

Leadership72. The commissioner did not hold management accountable for poor service delivery and poor audit outcomes. This resulted in no improvement in key controls over processing of claims, debt collection, non-compliance with legislation and the quality of the financial statement has further regressed.


i dd 114 2014/10/14 9 35 AM


73. Management did not exercise oversight responsibility to implement and monitor the new turnaround strategy and its action plan to address previously reported material misstatement as well as internal control deficiencies. This resulted in the recurrence of numerous findings that were reported in the prior years.

74. The entity lack finance leadership and adequate sound management, financial and accounting skills and competencies. Management has not implemented a process to manage poor performance in the fund, resulting in extensive use of external service providers to perform functions of some of the staff members in finance, claims processing and debt collection. In addition management has not implemented a process to manage poor performance and take necessary intervention against employees who fail to meet the expected level of performance and no disciplinary action was taken against employees who committed misconduct.

Financial and performance management75. The information system implemented did not support the entity operation and financial function, in addition manual procedures were not effective to ensure that credible and reliable information is available. As a result, management did not prevent, detect and disclose all the material misstatements to the financial statements, performance information and non-compliance with laws and regulations.

Governance76. The fund risk management assessment was not adequate to ensure that strategic, operational, financial and information technology risks and fraud prevention strategy are adequately identified, addressed and monitored.

77. The audit committee and internal audit department have great concern that there is lack of management ability to monitor the entity’s performance. They have engaged with external auditors and escalated the issues to the commissioner and executive authority with the expectation that management will implement strategies, resolutions and action plans to improve the control environment and performance. However no improvement has been noted.

Other reports

Investigations78. An investigation was conducted by an independent consulting firm on request of the audit committee. The investigation was initiated based on allegations of financial misconduct. The investigation was completed and it was recommended that the entity must institute disciplinary action against certain employees. Disciplinary hearing was not held and no action was taken.

Pretoria31 July 2014


i dd 115 2014/10/14 9 35 AM


i dd 116 2014/10/14 9 35 AM


COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014

The reports and statements set out below comprise the Annual Financial Statements presented to

parliament:

Index PageStatement of Financial Position 118

Statement of Financial Performance 119

Statement of Changes in Net Assets 120

Cash Flow Statement 121

Statement of Comparison of Budget and Actual Amounts 122

Accounting Policies 124

Notes to the Annual Financial Statements 141

The following supplementary information does not form part of the Annual Financial Statements

and is unaudited:

Detailed Income statement 168

The Annual Financial Statements set out on pages 118 to 169, which have been prepared on the going

concern basis, were approved by the Compensation Fund Board on 31 May 2014 and were signed on its

behalf by:

Mr Shardrack Mkhonto

Compensation Commissioner

i dd 117 2014/10/14 9 35 AM


Assets

Current AssetsInvestments 13 13,688,412 11,417,761Inventories 14 2,601 -Receivables from exchange transactions 15 527,756 524,351

Receivables from non-exchange transactions 16 1,445,890 2,797,891Cash and cash equivalents 17 119,720 1,092,748

15,784,379 15,832,751

Non-Current AssetsProperty, plant and equipment 19 84,622 86,447Investments 13 27,735,226 23,929,937Investment property 18 4,900 8,600

27,824,748 24,024,984

Non-Current Assets 27,824,748 24,024,984Current Assets 15,784,379 15,832,751Total Assets 43,609,127 39,857,735

Liabilities

Current LiabilitiesProvision for outstanding claims 20 2,239,000 2,239,000Accruals 22 93,672 113,933Payables from exchange transactions 23 958,894 888,872

3,291,566 3,241,805

Non-Current LiabilitiesProvision for outstanding claims 20 4,196,000 4,196,000Capitalised value of pensions 21 9,716,213 10,085,480

13,912,213 14,281,480Total Liabilities 17,203,779 17,523,285Assets 43,609,127 39,857,735Liabilities (17,203,779) (17,523,285)Net Assets 26,405,348 22,334,450ReservesRevaluation reserve 32 53,945 53,945Accumulated surplus 26,351,403 22,280,505Total Funds and Reserves 26,405,348 22,334,450

2014 2013RESTATED

NOTE(S) R’000 R ‘000

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Financial Position as at 31 March 2014

i dd 118 2014/10/14 9 35 AM


2014 2013RESTATED

NOTE(S) R’000 R ‘000

Revenue

Revenue from non-exchange transactions 3 8,185,636 7,152,001

Revenue from exchange transactions 4 10,910 19,141

Investment revenue 5 1,735,315 4,121,073

Total revenue 9,931,861 11,292,215

Expenses

Benefits paid 6 (2,703,129) (1,978,843)

Administration expenses 7 (542,307) (536,436)

Employee costs - salaried staff 8 (343,902) (306,905)

Board members fees 9 (1,587) (577)

Loss on disposal of assets (134) -

Finance cost 10 (6) (130)

Total expenses (3,591,065) (2,822,891)

Other gains/losses

Fair value adjustments on Investment property 11 (3,700) 4,058

Pension actuarial adjustments 21 - 2,416,000

Decrease in provision for outstanding claims 20 - (1,593,000)

Increase in allowance for impairment of receivables (2,266,199) (1,148,508)

Total other gains/losses (2,269,899) (321,450)

Profit (loss) for the period from continuing operations 4,070,897 8,147,874

Profit (loss) from discontinued operations - -

Surplus for the year 4,070,897 8,147,874

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Financial Performance as at 31 March 2014

i dd 119 2014/10/14 9 35 AM


Opening balance as previously reported 53,945 14,133,993 14,187,938

Adjustments

Prior period errors - (5,704) (5,704)

Balance at 1 April, 2013 as restated 53,945 14,128,289 14,182,234

Changes in net assets

Surplus for the year - 8,147,874 8,147,874

Transfer of unclaimed monies - 4,342 4,342

Total changes - 8,152,216 8,152,216

Balance at 1 April, 2013 as restated 53,945 22,280,506 22,334,451

Changes in net assets

Surplus for the year - 4,070,897 4,070,897

Total changes - 4,070,897 4,070,897

Balance at 31 March 2014 53,945 26,351,403 26,405,348

GRAND TOTALRESERVES

R’000

REVALUATIONRESERVE

R’000

COMPENSATIONRESERVES

R’000

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Changes in Net Assets as at 31 March 2014

i dd 120 2014/10/14 9 35 AM


Cash flows from operating activities

Receipts

Contributions received 7,278,944 6,422,111

Interest received 2,596,167 2,105,693

Dividends received 148,779 106,807

10,023,890 8,634,611

Payments

Employee costs (332,619) (332,856)

Cash payments in respect of claims and other expenditure (4,568,230) (1,877,723)

Investment management fees (12,876) (11,970)

(4,913,725) (2,222,549)

Total receipts 10,023,890 8,634,611

Total payments (4,913,725) (2,222,549)

Net cash flows from operating activities 24 5,110,165 6,412,062

Cash flows from investing activities

Purchase of property, plant and equipment 19 (7,817) (3,386)

Proceeds from sale of property, plant and equipment 19 564 -

Net change in investments (6,075,940) (5,710,955)

Net cash flows from investing activities (6,083,193) (5,714,341)

Net increase/(decrease) in cash and cash equivalents (973,028) 697,721

Cash and cash equivalents at the beginning of the year 1,092,748 395,027

Cash and cash equivalents at the end of the year 17 119,720 1,092,748

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Cash Flow Statement as at 31 March 2014

2014 2013RESTATED

NOTE(S) R’000 R ‘000

i dd 121 2014/10/14 9 35 AM


Revenue from transactions

Contribution by employer 5,227,207 - 5,227,207 7,974,596 2,747,389

Interest on late payment of contribution

268,741 - 268,741 - (268,741) -

Penalties on late payment of contributions

96,042 - 96,042 211,040 114,998

Administrative contributions by employers (s 88)

16,127 - 16,127 3,456 (12,671)

Rental income 143,368 - 143,368 942 (142,426)

Other income from computer equipment

- - - 6,513 6,513

Interest received 3,156,694 - 3,156,694 1,586,536 (1,570,158)

Dividend revenue 111,005 - 111,005 148,779 37,774

Total revenue from transactions

9,019,184 - 9,019,184 9,931,862 913,051

Expenditure

Compensation for permanent disability

(559,869) - (559,869) (87,029) 472,840

Compensation for temporary disability

(218,966) - (218,966) (69,753) 149,213

Pension capitalised during the year

(2,689,000) - (2,689,000) (420,428) 2,268,572

Constant attendance allowance (15,134) - (15,134) (14,553)581

Medical claims (2,700,000) - (2,700,000) (2,129,333) 570,667

Recoveries from third parties - - - 17,967 17,967

Employee cost (430,145) - (430,145) (343,902) 86,243

Board members fees (850) - (850) (1,587) (737)

Depreciation, amortisation and impairments

- - - (8,943) (8,943)

Finance costs (1,512) - (1,512) (6) 1,506

Reversal of assessments, interest and penalties

(586,682) - (586,682) (61,071) 525,611

Repairs and maintenance (17,155) - (17,155) (13,970) 3,185

General expenses (103,867) - (103,867) (67,781) 36,086

ApprovedbudgetR’000

AdjustmentsR’000

Final Budget R’000

Actual amountson comparable

basisR’000

Differencebetween final

budget andactualR’000

ReferenceR’000

Budget on Accrual Basis

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Comparison of Budget and Actual Amounts as at 31 March 2014

Statement of Financial Performance

Revenue

i dd 122 2014/10/14 9 35 AM


ApprovedbudgetR’000

AdjustmentsR’000

Final Budget R’000

Actual amountson comparable

basisR’000

Differencebetween final

budget andactualR’000

ReferenceR’000

Audit fees (29,000) - (29,000) (9,160) 19,840

Consulting and professional fees

(646,381) - (646,381) (62,965) 583,416

Compensation related expenses (13,706) - (13,706) (2,419) 11,287

Investment management fee (13,500) - (13,500) (12,876) 624

PPP (150,000) - (150,000) (8,994) 141,006

Lease rentals on operating lease

(43,321) - (43,321) (25,342) 17,979

Legal expenses (10,060) - (10,060) (3,655) 6,405

Assets less than R5,000 (11,080) - (11,080) (789) 10,291

Printing and stationery (17,149) - (17,149) (4,904) 12,245

Prevention of accidents (13,000) - (13,000) (3,254) 9,746

Software expenses (62,619) - (62,619) (67,040) (4,421)

Travel and subsistence (58,669) - (58,669) (48,203) 10,466

Training (14,802) - (14,802) (2,870) 11,932

Venue expenses (11,833) - (11,833) (3,678) 8,155

Interest on late capitalisation of pension

(200,000) - (200,000) (134,394) 65,606

Total expenditure (8,618,300) - (8,618,300) (3,590,932) 5,027,368

Operating surplus 400,884 - 400,884 6,340,930 5,940,046

Loss on disposal of assets and liabilities

- - - (134) (134)

Fair value adjustments - - - (3,700) (3,700)

Increase/(decrease) in allowance for impairment of receivables

- - - (2,266,199) (2,266,199)

- - - (2,270,033) (2,270,033)

400,884 - 400,884 6,340,930 5,940,046

- - - (2,270,033) (2,270,033)

Surplus for the year 400,884 - 400,884 4,070,897 3,670,013

Deficit before taxation 400,884 - 400,884 4,070,897 3,670,013

Taxation - - - - -

Actual Amount on Comparable Basis as Presented in the Budget and Actual Comparative Statement

400,884 - 400,884 4,070,897 3,670,013

Reconciliation

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Comparison of Budget and Actual Amounts as at 31 March 2014

i dd 123 2014/10/14 9 35 AM


1. Significant accounting policies

The Compensation Fund (“Fund”) is a National Public Entity listed in Schedule 3A of the Public Finance Management Act (“PFMA”), Act No 1 of 1999 (as amended by Act 29 of 1999). The principle accounting policies applied in the preparation and presentation of these Annual Financial Statements are set out below. These policies have been consistently applied to the years presented, unless otherwise stated.

1.1. Basis of preparation

The Fund’s Annual Financial Statements are prepared in accordance with the Standards of Generally Recognised Accounting Practice (“GRAP”) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with Section 55 of the Public Finance Management.

These Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise.

In terms of Notice 991 and 992 in Government Gazette 28095 of December 2005 and Notice 516 in Government Gazette 31021 of 9 May 2008, the Fund must comply with the requirements of GRAP. Directive 5 details the GRAP Reporting Framework comprising the effective standards of GRAP, interpretations of such standards (“GRAPs”) issued by the ASB, ASB guidelines, ASB directives, and standards and pronouncements of other stand setters, as identified by the ASB on an annual basis. The standards that are effective and relevant to the Fund are listed below:

Title StandardGRAP 1 Presentation of financial statementsGRAP 2 Cash flow statementsGRAP 3 Accounting policies, changes in accounting estimates and errors GRAP 4 The effects of changes in foreign exchange ratesGRAP 5 Borrowing costsGRAP 9 Revenue from exchange transactionsGRAP 12 InventoryGRAP 13 LeasesGRAP 14 Events after the reporting dateGRAP 16 Investment propertyGRAP 17 Property, plant and equipmentGRAP 18 Segment reportingGRAP 19 Provisions, contingent liabilities and contingent assetsGRAP 20 Related partiesGRAP 21 Impairment of non-cash generating assetsGRAP 23 Revenue from non-exchange transactionsGRAP 24 Presentation of budget information in the financial statement GRAP 25 Employee benefitsGRAP 26 Impairment of cash-generating assets GRAP 31 Intangible assetsGRAP 104 Financial instrumentsIFRS 7 Financial instruments: disclosuresIAS 19 Employee benefitsIAS 32 Financial instruments: presentationIAS 39 Financial Instruments: recognition and measurementDirective 02 Transitional provisions for adoption of standards of GRAP by public entities, municipal entities and constitutional institutions.

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Accounting Policies

i dd 124 2014/10/14 9 35 AM


Accounting policies for material transactions, events or conditions not covered by the GRAP reporting framework, as detailed above, have been developed in accordance with paragraphs 7, 11 and 12 of GRAP 3 and the hierarchy approved in Directive 5 issued by the ASB.

1.2. Presentation currency

The Annual Financial Statements are presented in South African Rand (“ZAR”), which is the functional currency of the Fund.

1.3. Standards and amendments to standards issued but not effective

The following standards and amendments to standards have been issued but are not effective.

STANDARD SUMMARY AND IMPACT EFFECTIVE DATE

GRAP 105 – Transfer of functions between entities under common control

This standard requires the establishment of accounting principles for the acquirer and transferor in a transfer of functions between entities under common control

No effective date has been determined by the Minister of Finance

GRAP 106 – Transfer of functions between entities not under common control

This standard requires the establishment of accounting principles for the acquirer in a transfer of functions between entities not under common control


GRAP 107 – Mergers This standard requires the establishment of accounting principles for the combined entity and combining entities in a merger


1.4. Rounding

Unless otherwise stated, all financial figures have been rounded to the nearest one thousand Rand (R ‘000).

1.5. Use of estimates and judgement

In preparing the Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the Annual Financial Statements. Estimates and underlying assumptions are reviewed on an ongoing basis, based on historical experience and other factors including expectations. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.


i dd 125 2014/10/14 9 35 AM


1.5.1. Accrual for assessments not raised

Where assessments have not been raised, the Fund makes an estimate by the assessments revenue due from employers. The estimate is based on the most recent assessment recognised in the previous four years impairment, blocked and inactive employees are not included in the estimate.

1.5.2. Accrual for accumulated leave and service bonus

The Fund opted to treat its provision for leave and service bonus (thirteenth cheque) as an accrual.

The cost of all short-term employee benefits is recognised during the period in which the employee renders related service. Employee entitlements are recognised when they accrue to employees. An accrual is recognised for the estimated liability as a result of services rendered by employees up to the reporting date. Accruals relating to employee benefits include annual leave, capped leave and a thirteenth cheque.

1.6. Recognition of revenue contributions

Assessments are recognised on the accrual basis of accounting, at fair value of the consideration received or receivable and consists of assessments issued to registered employers in terms of the Compensation for Occupational Injuries and Diseases Act, (Act No 130 of 1993).

1.6.1. Revenue from non-exchange transactions

Revenue from non-exchange refers to transactions where the Fund received revenue from employers without directly giving an approximately equal value for exchange. Revenue from non-exchange transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no obligation or condition to repay the amount. Revenue from non-exchange transactions includes assessments, penalties and interest.

Interest is recognised, in surplus or deficit, using the effective interest rate method. Penalties are recognised when raised on the individual accounts.

1.6.2. Revenue from exchange transactions

Revenue from exchange transactions refers to revenue that accrued to the Fund directly or indirectly in return for the services rendered or/and goods sold, the value of which approximates the consideration received or receivable. Revenue from exchange transactions includes rent, services rendered for exempted employers and other revenue that may accrue to the Fund

1.7. Claims incurred

Claims incurred comprise the total estimated cost of claims that have occurred in the year and for which the Fund is responsible, whether or not reported by the end of the year. Claims and loss adjustment expenses are charged to surplus or deficit as incurred, based on the estimated liability for compensation. The Fund does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are calculated based on an estimated average cost per claim for each underwriting year. The incurred but not reported claims (“IBNR”) are based on estimated unreported claims as calculated by the actuaries. The average cost per claim is based on the actual claims paid and awards made, and estimated outstanding costs (based on the latest and most reliable information available), and the number of claims registered.


i dd 126 2014/10/14 9 35 AM


1.8. Provision for outstanding claims

Liabilities for unpaid claims are calculated based on a long-term trend of annual claim payments. The long term trend is achieved by grouping claims paid in each of the previous ten financial years according to the year of the accident or diagnosis of the disease and the number of years until a payment is made. The Fund makes an allowance for short-term factors and future claims inflations to project the likely incidence of future claim payments. Furthermore, a ‘tail factor’ is applied to the results to reflect the fact that the claims data contains claim payments in respect of accidents that occurred ten or more years ago.

The average cost per claim is based on the actual claims paid and awards made, estimated outstanding costs (based on the latest and most reliable information available) and the number of claims registered.

1.9. Employee benefits

1.9.1. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

1.9.2. Defined contribution plans

The Fund makes contributions to a defined contribution plan for employees. All employees are part of the defined contribution plan. A defined contribution plan is a post-employment benefit plan under which a fund pays fixed contributions into a separate Fund and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit in the periods during which services are rendered by employees.

1.10. Liability adequacy test in respect of claims and benefits

At each reporting date, liability adequacy tests are performed to ensure the adequacy of the insurance liabilities. In performing these tests, current best estimates of future cash flows and administration expenses, as well as investment income, are used. Any deficiency is recognised in the surplus/deficit for the year. This is done based on actuarial valuations.

Contracts under which the Fund accepts significant insurance risk from another party (the claimant) by agreeing to compensate the claimant if a specified uncertain future event (the insured event) adversely affects the claimant, are classified as insurance contacts. The Fund accepts insurance risk as it is mandated by legislation to compensate victims of work related accidents for injuries suffered as a result of work related accidents.

1.11. Capitalised value of pensions

Pensions are paid to disabled claimants, and widows and children of deceased workers from work-related accidents or occupational diseases. The capitalised value of pensions (“CVP”) is the present value of future liabilities. The liability is based on assumptions as to future pension increases, mortality, demographics,


i dd 127 2014/10/14 9 35 AM


management expenses and investment income, which are reviewed by management on an annual basis for reasonableness. The present value also provides for probable costs payable to the spouse and/or children on subsequent death of the pensioner. In addition to this basic liability value, contingency reserves are held to cover the possible impact of adverse variations of the Compensation Fund. This liability is recalculated at each reporting date, using the assumptions above. Independent actuarial valuations of the CVP are carried out annually and adjusted for any changes in the assumptions. Adjustments to the CVP are included in the surplus or deficit for the year.

1.12. Operating leases – lessee

Leases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating leases. Payments made under operating leases are expensed on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

1.13. Property, plant and equipment

Assets accounted for using the revaluation model

Land and buildings comprise mainly of office buildings. Land and buildings are shown at the revalued amount, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation and impairment losses for buildings. Land and buildings were revalued according to the Income Capitalisation approach. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.

Increases in the carrying amount arising on revaluation of land and buildings are credited to revaluation reserves in the statement of changes in net assets. However, increases shall be recognised in surplus/deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus/deficit. Decreases that offset previous increases of the same asset are charged against other revaluation reserves directly in statements of changes in net assets. All other decreases are charged to the statement of financial performance. Each year the difference between depreciation based on the revalued carrying amount of the asset is charged to the statement of financial performance and depreciation based on the asset’s original cost is transferred from revaluation reserves to accumulated funds.

Land is not depreciated.

Assets accounted for using the cost model

Other items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the assets. Where an item of property, plant and equipment (“PPE”) is acquired at nil or nominal cost (i.e. a non-exchange transaction) the item is recognised initially at its fair value.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.Subsequent costs are included in the assets carrying amount, only when it is probable that future economic benefits associated with the item will flow to the Fund and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of financial performance during the financial period in which they are incurred.

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Accounting Policies

i dd 128 2014/10/14 9 35 AM


Depreciation on other assets is calculated using the straight-line method to allocate their cost amounts to their residual values over their estimated useful lives, as follows: property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses except for land which is carried at revalued amount being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful lifeLand IndefiniteBuildings 50 yearsEscalators and elevators 12 – 20 yearsFurniture and fixtures 6 – 10 yearsMotor vehicles 5 yearsIT equipment 3 years

The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

Assets less than R5,000/capitalisation threshold (assets of a capital nature but costing less than R5,000/capitalisation threshold per unit) are treated as current payments and not capitalised as assets as determined in the economic reporting format.

1.14. Investment property

Investment property includes land and buildings which comprise mainly of office buildings that are held to earn rentals. The Fund uses the fair value model to account for the investment property. Investment property is initially recognised at cost. Subsequently investment property is measured at its fair value. The fair value of investment property is based on annual valuations by external independent valuers, less subsequent fair value adjustments. Land and buildings were revalued according to the Income Capitalisation approach.

The gains and losses arising from the change in fair value of investment property are included in the surplus or deficit for the year.

Investment properties are derecognised when either they are disposed of.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.


i dd 129 2014/10/14 9 35 AM


1.15. Impairment of non-financial assets

The carrying amounts of the Fund’s non-financial assets, except for investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.

The Fund’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in surplus or deficit. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the assets in the units on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the statement of financial performance.

1.16. Recognition of investment income

Investment income comprises interest income on funds invested, dividend income, changes in the fair value of financial assets at fair value through surplus or deficit. Interest income is recognised as it accrues in surplus or deficit. Interest income is recognised on a time proportion basis, by reference to the nominal value and the effective interest method. Dividend income is recognised when the shareholders’ rights to receive payment have been established. Realised and unrealised gains and losses arising from changes in the fair value of instruments traded in an active market are recognised in the surplus/deficit in the period in which they arise.

1.17. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.


i dd 130 2014/10/14 9 35 AM


Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.

A derivative is a financial instrument or other contract with all three of the following characteristics:

price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’)

other types of contracts that would be expected to have a similar response to changes in market factors

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.

A financial asset is:

- receive cash or another financial asset from another entity; or- exchange financial assets or financial liabilities with another entity under conditions that are potentially

favourable to the entity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

A financial liability is any liability that is a contractual obligation to:

entity.


i dd 131 2014/10/14 9 35 AM


Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. Loans payable are financial liabilities, other than short-term payables on normal credit terms.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

A financial asset is past due when a counterparty has failed to make a payment when contractually due.

A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as:

as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or

the net assets of an entity.

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that:

Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.

Financial instruments at fair value comprise financial assets or financial liabilities that are:

- it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or- on initial recognition it is part of a portfolio of identified financial instruments that are managed together and

for which there is evidence of a recent actual pattern of short term profit-taking;


i dd 132 2014/10/14 9 35 AM


- non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and

- financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost

Classification

The entity has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:

Class CategoryLoans and other receivables Financial asset measured at amortised costReceivables from exchange transactions Financial asset measured at amortised cost Receivables from non-exchange transactions Financial asset measured at amortised cost Cash and cash equivalents Financial asset measured at fair valueFair value through profit and loss – held for trading Financial asset measured at fair value Designated as at fair value through profit and loss Financial asset measured at fair value

The entity has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:

Class CategoryProvision for outstanding claims Financial liability measured at amortised costPayables from exchange transactions Financial liability measured at amortised cost

Initial recognition

The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument.

The entity recognises financial assets using trade date accounting.

Initial measurement of financial assets and financial liabilities

The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The entity measures a financial asset and financial liability initially at its fair value.

Subsequent measurement of financial assets and financial liabilities

The entity measures all financial assets and financial liabilities after initial recognition using the following categories:

All financial assets measured at amortised cost, or cost, are subject to an impairment review.


i dd 133 2014/10/14 9 35 AM


Fair value measurement considerations

The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the entity establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, an entity calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.

The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

Reclassification

The entity does not reclassify a financial instrument while it is issued or held unless it is:

Where the entity cannot reliably measure the fair value of an embedded derivative that has been separated from a host contract that is a financial instrument at a subsequent reporting date, it measures the combined instrument at fair value. This requires a reclassification of the instrument from amortised cost or cost to fair value.

If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the entity reclassifies the investment from fair value to cost. The carrying amount at the date that fair value is no longer available becomes the cost.

If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the entity reclassifies the instrument from cost to fair value.

Gains and losses

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.


i dd 134 2014/10/14 9 35 AM


Impairment and uncollectibility of financial assets

The entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.

Financial assets measured at amortised cost:

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly or by adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

Financial assets measured at cost:

If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

Derecognition

Financial assets

The entity derecognises financial assets using trade date accounting.

The entity derecognises a financial asset only when:

asset; or

has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity:- derecognise the asset; and- recognise separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.


i dd 135 2014/10/14 9 35 AM


If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognise either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset.

If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity recognises the new financial asset, financial liability or servicing liability at fair value.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.

If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.

If a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset, the entity continues to recognise the transferred asset in its entirety and recognises a financial liability for the consideration received. In subsequent periods, the entity recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset.

Financial liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.

An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.

The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from non-exchange transactions (taxes and transfers).


i dd 136 2014/10/14 9 35 AM


Presentation

Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Distributions to holders of residual interests are debited by the entity directly to net assets, net of any related income tax benefit [where applicable]. Transaction costs incurred on residual interests is accounted for as a deduction from net assets, net of any related income tax benefit.

A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.

1.18. Key management personnel

Key management personnel are staff that have the authority and responsibility for planning, directing and controlling the activities of the Compensation Fund. Compensation paid to key management personnel is included in the Disclosure Notes.

1.19. Provisions

Provisions are recognised when:

to settle the obligation; and

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.


i dd 137 2014/10/14 9 35 AM


Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits.

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 25.

1.20. Unclaimed monies

If money owing to an employee or his/her dependant has remained unpaid after 12 months because it has not been claimed and the person in question has not been traced, the Compensation Commissioner shall effect a notice to be published annually in the Government Gazette with particulars of every unclaimed amount of more than R100. Any person claiming the amount shall be called upon to submit his/her claim to the Commissioner within one month after the date of the notice.

If at the expiration of the said month, no claim has been submitted, or a claim that has been submitted has been rejected by the Compensation Commissioner, the said amount shall be paid into the reserve fund.

1.21. Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.22. Inventories

Inventories are initially measured at cost except where inventories are acquired through a non-exchange transaction, then their costs are their fair value as at the date of acquisition.

Subsequently inventories are measured at the lower of cost and net realisable value.

Inventories are measured at the lower of cost and current replacement cost where they are held for:


i dd 138 2014/10/14 9 35 AM


Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs necessary to make the sale, exchange or distribution.

Current replacement cost is the cost the entity incurs to acquire the asset on the reporting date.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the formula. The same cost formula is used for all inventories having a similar nature and use to the entity.

When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Change in accounting policy

The entity changed its accounting policy for inventories in 2014. The change in accounting policy is made in accordance with its transitional provision as per Directive 2 of the GRAP Reporting Framework.

According to the transitional provision, the entity is not required to measure inventories for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Inventories. Inventories has accordingly been recognised at provisional amounts, as disclosed in 14. The transitional provision expires on .

In accordance with the transitional provision as per Directive 2 of the GRAP Reporting Framework, where inventories was acquired through a transfer of functions, the entity is not required to measure the inventories for a period of three years from the effective date of the transfer of functions or the effective date of the Standard, whichever is later. The entity acquired a transfer(s) of function in 2014 and inventories has accordingly been recognised at provisional amounts, as disclosed in 14.

Until such time as the measurement period expires and inventories is recognised and measured in accordance with the requirements of the Standard of GRAP on Intangible assets, the entity need not comply with the Standards of GRAP on:


i dd 139 2014/10/14 9 35 AM


The exemption from applying the measurement requirements of the Standard of GRAP on Inventories implies that any associated presentation and disclosure requirements need not be complied with for inventories not measured in accordance with the requirements of the Standard of GRAP on Inventories.

1.23. Related parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties.

Key management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.

Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, management in their dealings with the entity.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

1.24. Event after the reporting date

Recognised amounts in the Annual Financial Statements are adjusted to reflect events arising after the reporting date that provide evidence of conditions that existed at the reporting date. Events after the reporting date that are indicative of conditions that arose after the reporting are dealt with by way of a note.


i dd 140 2014/10/14 9 35 AM


COMPENSATION PORTFOLIO PENSION PORTFOLIOFINANCIAL INSTRUMENT 2014 2013 2014 2013

AAA/Aaa 65.59 % 67.32 % 68.74 % 82.45 %AAA/Aa1 0.71 % 4.61 % 14.96 % 2.41 %AA/Aa2 2.24 % 17.41 % 14.36 % 11.55 %AA/Aa3 0.63 % 5.33 % 0.21 % 2.07 %A+/A1 0.22 % 5.33 % - 0.49 %A/A2 - - - 1.03 %A-/A3 - - 1.73 % 1.03 %Non-rated 30.61 % - - 1.03 %

100.00 % 100.00 % 100.00 % 100.00 %

2. Risk management

Financial risk management

In terms of Section 18(2) of the Compensation of Occupational Diseases Act (Act no 130 of 1993 (“COIDA”), the Public Investment Corporation (“PIC”) is appointed as the Fund’s Investment Manager. The Fund transfers surplus cash to the PIC to invest in terms of the Fund’s investment strategy and the investment policy of the PIC. All investments and deposits are registered by the PIC in the Fund’s portfolio account.

The Fund is exposed to financial risk through its financial assets and liabilities. The main components of financial risk are:

Credit risk

The Fund has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The key areas of exposure are amounts due from employers and investment securities. Assessments due are represented by assessments raised on employers. Assessments raised are distributed nationally across different classes of employers in terms of an industrial classification approved by the Director-General as supported by the Compensation for Occupational Injuries and Diseases Act (Act no 130 of 1993).

Account receivables are presented net of allowance for impairment, estimated by the Fund’s management based on prior experience and the current environment. The credit risk with respect to account receivables is limited due to the large number of employers and their distribution across different industries and geographical areas. However, recoveries of outstanding amounts from liquidated and deceased estates carries a higher risk of non-recovery, due to the nature of accounts.

The Act provides the framework wherein the Fund assess employers and collects the assessments due. The Fund has policies and procedures in place to ensure that assessments are made accurately and followed up timely, including issuing of penalties and interest on late payment.

The Fund has an approved credit risk policy, which has been included in the investment mandate given to the Asset manager. The Fund utilises the policy to manage the credit risk limits and exposures by constraining the magnitude and tenor of exposures to counterparties and issuers.

The Fund also uses the DI900 as a guide on limit setting for the Banking institutions. The Compensation Fund only invests in listed instruments that are at least “A”s defined by Fitch IBCA or any recognised credit rating agency. The mandate also permits investment in the following asset classes: cash, money markets, capital markets and domestic equities.

Financial assets exposed to credit risk at year end were as follows:

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements

i dd 141 2014/10/14 9 35 AM


Concentration of credit risk

The carrying amount of financial assets (net of impairment losses) represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

COMPENSATION PORTFOLIO

PENSION PORTFOLIO TOTAL

2014 2013 2014 2013 2014 2013

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Capital market 17,346,585 13,634,444 10,562,002 10,496,279 27,908,587 24,130,723

Equity 1,202,208 972,523 2,984,691 2,740,697 4,186,899 3,713,220

Money markets 7,414,674 6,248,299 1,444,529 939,703 8,859,203 7,188,002

Cash and cash equivalents

235,671 115,643 233,277 240,869 468,948 356,512

Trade and other receivables

1,445,890 2,797,891 - - 1,445,890 2,797,891

27,645,028 23,768,800 15,224,499 14,417,548 42,869,527 38,186,348

Money market and cash

Establishment of Investment limits per issuer for money markets.

Money market instruments are spread across the South African Banks with a minimum of credit rating of “A” in order to diversify the counterparties exposure.

The limits are guided by DI900 information from the South African Reserve Bank. The limits are as follows:

INSTRUMENTS MAXIMUM LIMIT PER ISSUER

ABSA 0% – 40%

FirstRand 0% – 40%

Investec 0% – 40%

Nedbank 0% – 40%

Standard Bank 0% – 40%

Other Issuers 0% – 40%

Capital markets

Establishment of investment limits per issuer for Capital markets.

INSTRUMENTS MAXIMUM LIMIT PER ISSUER

Government bonds 0% – 100%

Other bonds (Corporate, Parastatal etc.)

0% – 20%


i dd 142 2014/10/14 9 35 AM


Collateral

Licences held in terms of Section 30 of COIDA to carry out the business of the Fund in certain industries have been issued by the Minister of Labour to two mutual associations Rand Mutual Association (“RMA”) and Federation of Employers Association (“FEMA”). These mutual associations must deposit securities with the Fund to cover their liabilities. Furthermore national, provincial government departments as well as certain local authorities have been granted exemption from paying the annual assessments and are liable to pay compensation to their injured employees at their workplace. In terms of Section 30 of the Act, these exempted employers are required to deposit securities with the Fund. These securities are equivalent to the capitalised pension of their employees.

If mutual associations or exempted employers fail to meet in full their liabilities, in terms of the Act the Fund may apply such securities to pay their liabilities, and the balance of the liabilities and future liabilities of the employer will have to be paid from the Fund’s reserves. The securities thus controlled by the Fund amounts to R309,3 million (2013 R1,578 million).

Liquidity risk

The Fund is exposed to a daily call on its available cash resources, arising mostly from short-term claims. Liquidity risk is the risk that cash resources or other financial assets are not available to pay claims when due. The Fund ensures that adequate levels of cash are immediately available without incurring penalties. Cash flow reports are prepared daily to ensure that the Fund has sufficient funds to cover all operational expenses. The Fund’s investment mandate is guided by its operational requirements.

The Fund’s asset allocation ranges and attribution analysis on overall performance benchmark as per investment agreement.

Compensation investment portfolio

Pension investment portfolio


CategoryAsset allocation

ranges

Attribution analysis on overall performance for the portfolio on overall benchmark

Cash and money market 30% 25% – 35%

Capital market 65% 60% – 70%

Domestic equity 5% 0% – 5%

CategoryAsset allocation

ranges

Attribution analysis on overall performance for the portfolio on overall benchmark

Cash and money market 8% 8% – 12%

Capital market 73% 67.5% – 77.5%

Domestic equity 19% 15% – 20%

i dd 143 2014/10/14 9 35 AM


The following are the contractual maturities of financial liabilities, including interest payments.

AT 31 MARCH 2014 CARRYINGAMOUNT

R ‘000

CONTRACTUAL CASH FLOWS

R ‘000

6 MONTHS OR LESS

R ‘000

Debtors with credit balances 553,844 553,844 553,844

Compensation/pension/medical liability 404,000 404,000 404,000

957,844 957,844 957,844

AT 31 MARCH 2013 CARRYINGAMOUNT

R ‘000

CONTRACTUAL CASH FLOWS

R ‘000

6 MONTHS OR LESS

R ‘000

Debtors with credit balances 445,786 445,786 445,786

Compensation/pension/medical liability 441,675 441,675 441,675

Trade creditors (procurement creditors) 49,943 20,607 10,607

937,404 908,068 898,068

Market risk

Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Fund’s income or the value of its holding of financial instruments.

Interest rate risk

The Fund holds more than 50% of its financial assets in debt securities (Government Bonds and Public Utility Bonds) and substantial investments in cash and cash equivalents and money market instruments. The return on these instruments, and the market value of debt securities are affected by fluctuations in interest rates.

Excluding the movement in the pensions liability and rebates provision, which is discretionary, the Fund currently covers all claims and benefits from operational cash, and therefore is not dependent on investment income to sustain its operations. The pensions liability is actuarially valued on an annual basis, which is impacted by the future anticipated interest return. Changes in interest rates are managed on behalf of the Fund by the PIC.

Interest rate profileCOMPENSATION PORTFOLIO PENSION PORTFOLIO

Fixed rate instruments 2014 2013 2014 2013

Capital markets 17,346,586 13,634,444 10,562,002 10,496,279

Inflation linked bonds - - - -

Money market 7,411,674 6,248,299 1,444,529 939,703

Trading cash - - - -

Total fixed rate instruments 24,758,260 19,882,743 12,006,531 11,435,982

Variable rate instruments 2014 2013 2014 2013

Inflation linked bonds - - - -

Money market - - - -

Trading cash 235,672 115,643 233,277 240,869

Total variable rate instruments 235,672 115,643 233,277 240,869

24,993,932 19,998,386 12,239,808 11,676,851


i dd 144 2014/10/14 9 35 AM


This risk is the potential financial loss as a result of adverse movements in interest rates that affects the value of bonds and money market instruments. The Compensation Fund has exposure to interest rate risk through investments in money markets and bonds. The purpose of sensitivity analysis is to reveal any vulnerabilities of the portfolio to changes in the value-drivers. For an equities portfolio the driver of value are the equity prices, while for a fixed income portfolio the interest rates that determine the value of the investments are the value-drivers. This type of analysis is forward-looking in nature in that the current holdings of the portfolio at the point in time is used to assess the impact on the portfolio value due to potential changes in the value-drivers. The limitations of the sensitivity analysis are that there are no probabilities attached to the scenarios created as well as the fact that one is using a limited number of scenarios. The investment portfolio sensitivity is evaluated through stress testing the portfolio using the following methodology:

The portfolio is separated into two: equities and fixed income. The stress test is a point in time estimate.

On bonds the yields to maturity is moved by the specified quantum and the bond re-valued (bond pricing formula). The aggregate value of all instruments represents the bond portfolio value and the difference with the base value i.e. the current value represents the gain or loss.

This risk is the potential financial loss as a result of adverse movements in interest rates that affects the value of bonds and money market instruments. The Compensation Fund has exposure to interest rate risk through investments in money markets and bonds.

The sensitivity to interest rate movements is measured by the duration of the fixed interest exposure. Such duration is managed relative to an appropriate benchmark. To manage the duration, the PIC utilises a combination of instruments to get closer to the benchmark duration.

The fixed income asset class is not as volatile as the equity markets, an assumption of this sensitivity analysis is that the interest rates move by 50 basis points at a time. This analysis assumes that all variables remain constant. The analysis is performed on the same basis for 2013.

The effect of changes in interest rates on the fixed income component of the assets under management, which excludes non performing instruments and over the counter structured products are set out in the following tables:

COMPENSATION PORTFOLIO PENSION PORTFOLIO

SPREAD IN BASIS

POINTS

PROFIT AND LOSSR ‘000

MARKET VALUE OF BONDS

R ‘000



R ‘000

200 (1,937,188) 22,824,071 (1,461,959) 10,544,571

150 (1,493,570) 23,267,389 (1,130,240) 10,872,290

100 (1,028,486) 23,732,773 (778,075) 11,228,455

50 (540,458) 24,220,802 (403,683) 11,602,847

- - 24,733,381 - 12,001,445

(50) 511,001 25,272,261 419,926 12,426,456

(100) 1,078,086 25,839,346 873,814 12,880,345

(150) 1,675,457 26,436,716 1,359,341 13,365,872

(200) 2,305,384 27,066,644 1,879,504 13,886,135


i dd 145 2014/10/14 9 35 AM


3. Revenue from non-exchange transactions

Contribution by employer 7,974,596 6,428,307

Interest on late payment of contributions - 224,100

Penalties on late submission of ROE’s 211,040 499,594

8,185,636 7,152,001

Equity price risk

Equity price risk arises from equity securities held for meeting the Fund’s compensation and pension obligations. This risk is the potential financial loss as a result of movements in the level or volatility of equity prices, which affects the value of equity and equity derivative instruments. The Compensation Fund has an exposure to equity price risk as a result of its investments in equity instruments and equity derivatives.

This is the risk that the Fund will not realise the value if its equity securities, which may impact the Fund’s ability to meet liabilities. The Fund manages this risk by investing in low-risk/no-risk instruments.

Exposure to equity risk

The Fund’s exposure to equity price risk was as follows based on fair value of the equity items:


2014R ‘000

2013R ‘000

2014R ‘000

2013R ‘000

Listed equities 1,202,258 972,523 29,833,691 2,740,696


Spread in basis points PROFIT AND LOSSR ‘000


R ‘000



R ‘000

(20) (243,180) 972,719 (603,781) 2,415,122

(15) (182,385) 1,033,514 452,835 2,566,068

(10) (121,590) 1,094,309 (301,890) 2,717,013

(5) (60,795) 1,155,104 (150,945) 2,867,958

- 1,215,899 - 3,018,903

5 60,795 1,276,694 150,945 3,169,848

10 121,590 1,337,489 301,890 3,320,793

15 182,385 1,398,284 452,835 3,471,738

20 243,180 1,459,079 603,781 3,622,683

2014 2013RESTATED

R’000 R ‘000


i dd 146 2014/10/14 9 35 AM


4. Revenue for exchange transactions

Administrative contributions by employers (s88) 3,456 18,287

Income computer equipment 6,512 -

Rent buildings 942 854

10,910 19,141

5. Investment revenue

Dividend revenue

Dividend income - Compensation portfolio 42,940 26,327

Dividend income - Pension portfolio 105,839 80,480

148,779 106,807

Interest revenue

1,716,407 1,304,753

Interest on bank - Compensation portfolio 27,798 28,738

Interest received - Compensation portfolio 1,688,609 1,276,015

879,760 800,940

Interest on bank - Pension portfolio 1,015 559

Interest received - Pension portfolio 878,745 800,381

Fair value gains (1,009,63 1,908,57

Fair value gains - Compensation portfolio (915,775) 742,330

Fair value gains - Pension portfolio (93,856) 1,166,243

1,586,536 4,014,266

During the year under review the Fund had Bonds selling on the negative hence there was a massive drop on the fair value gains from 2013 to 2014 of R2,917,204. However the bonds have since recovered. All bonds are guaranteed by Government.

6. Benefits paid

Compensation for permanent disability 87,029 88,702

Compensation for temporary disability 69,753 83,619

Pension capitalised during the year 420,428 330,887

Constant attendance allowances 14,553 13,848

Medical claims 2,129,333 1,501,606

Recoveries from third parties (17,967) (39,819)

2,703,129 1,978,843

2014 2013RESTATED

R’000 R ‘000


i dd 147 2014/10/14 9 35 AM


7. Administration expenses

Audit fees 9,160 7,814

Reversal of assessments, interest and penalties 61,071 19,626

Interest late capitalisation of pension 134,394 111,834

Consulting and professional fees 66,620 103,938

Depreciation, amortisation and impairments 8,943 2,810

Service fee towards public private partnership 8,994 67,140

Lease rentals on operating lease 25,342 29,375

Stationery 4,904 8,592

Subsidies for accident prevention 3,253 5,187

Repairs and maintenance 13,970 6,797

Software expenses 67,040 41,896

Travel and subsistence 48,203 34,953

Training 2,870 2,234

Compensation related expenses 2,419 4,510

Reimbursement national department - 77

Other expenses 67,781 72,663

Investment management fees 12,876 11,969

Venue expenses 3,678 4,548

Assets valued at less than R5,000 789 473

542,307 536,436

8. Employee related costs

Basic 266,790 245,582

Thirteenth cheque 17,843 15,199

Contributions towards a defined plan 47,986 42,534

Leave pay 11,283 3,590

343,902 306,905


2014 2013RESTATED

R’000 R ‘000

i dd 148 2014/10/14 9 35 AM


8.1. Members’ emoluments

Executive

2014 DATE OF APPOINT-

MENT

BASICSALARY

R’000

ALLOW-ANCES

R’000

PENSIONCONTRI-

BUTIONSR ‘000

TOTAL R’000

Compensation Commissioner 01/05/2007 736 279 139 1,154

Chief Financial Officer 01/09/2013 391 84 78 553

Director: Medical Services 01/02/1999 510 260 97 867

Director: Medical Payments 01/01/2010 583 88 110 781

Director: Financial Reporting 01/04/2009 512 214 97 823

Director: Income 01/03/2009 468 255 96 819

Director: Communications 01/07/2013 456 73 84 613

Director: Human Resources 01/03/2009 511 199 97 807

Director: Organisational Effectiveness 01/03/2009 507 212 96 815

Director: Compensation 01/01/2011 460 246 94 800

Director: Internal Audit (The Officer resigned on 31/01/2014)

01/04/2010 519 214 97 830

Principal Legal Administration Officer (The officer resigned on 28/02/2014)

01/03/2009 426 148 91 665

Chief Director: Human Resource Management

01/03/2013 605 232 114 951

6,684 2,504 1,290 10,478

2013 DATE OF APPOINT-

MENT

BASICSALARY

R’000

ALLOW-ANCES

R’000

PENSIONCONTRI-

BUTIONSR ‘000

TOTAL R’000

Compensation Commissioner 01/05/2007 699 264 132 1,095

Director: Medical Services 01/02/1999 468 195 89 752

Director: Medical Payments 01/02/1999 523 119 97 739

Director: Financial Reporting 01/04/2009 444 187 82 713

Director: Financial Control 01/01/2010 482 205 91 778

Director: Income 01/03/2009 445 239 91 775

Director: Support Services 01/11/2009 475 191 90 756

Director: Human Resources 01/03/2009 482 187 91 760

Director: Organisational Effectiveness 01/03/2009 482 201 91 774

Director: Compensation 01/01/2011 432 232 88 752

Director: Internal Audit 01/04/2010 505 209 101 815

Principal Legal Administration Officer 01/03/2009 475 166 102 743

Chief Director: Human Resouce Management

01/03/2013 44 18 9 71

5,956 2,413 1,154 9,523


i dd 149 2014/10/14 9 35 AM


9. Board members’ fees

Board members’ fees 1,587 577

Non-executive

2014 COMMITTEEFEES

TOTAL

Mr F Xaba 189 189

Mr Cowley, BUSA 6 6

Mr Phala, BUSA 11 11

Ms Samela, MD 2 2

Mr M Majola, BUSA 28 28

Mr S Tsiane, Cosatu 77 77

Mrs J Bodibe, Cosatu 334 334

Ms B Modise, Nactu 255 255

Mr S Motloung, Fedusa 93 93

Mr W Shisana, HPCSA 14 14

1,009 1,009

2013 COMMITTEEFEES

TOTAL

Mr F Xaba 253 253

Mr M Majola, BUSA 35 35

Mr S Tsiane, Cosatu 34 34

Mrs J Bodibe, Cosatu 78 78

Ms B Modise, Nactu 89 89

Mr S Motloung, Fedusa 51 51

Mr W Shisana, HPCSA 25 25

565 565

This is an advisory board and not an executive board. Members claim for travelling expenses and meeting costs incurred. The above figure shows the total amount of remuneration including travelling to and from meetings as well as venue and any other expenses related to the board. The breakdown of payments to individual members is scheduled above.

Emoluments 1,009 565

Venues and facilities for board members 578 12

1,587 577


2014 2013RESTATED

R’000 R ‘000

i dd 150 2014/10/14 9 35 AM


10. Finance costs

Interest paid 6 130

11. Fair value adjustments

Investment property (Fair value model) (3,700) 4,058

12. Taxation

The Fund is exempted from normal income tax in terms of Section 21 of the Compensation for Occupational Injuries and Diseases Act, 1993, (Act No 130 of 1993).

13. Investments

Designated at fair value through profit and loss 261,585 -

Fair value through profit and loss - held for trading 32,723,469 27,804,184

Loans and receivables 8,438,584 7,543,514

261,585 -

32,723,469 27,804,184

- -

- -

8,438,584 7,543,514

Total other financial assets 41,423,638 35,347,698

Non-current assets

Designated at fair value through profit and loss 261,585 -


27,735,226 23,929,937

Current assets


Loans and receivables 8,438,584 7,543,514

13,688,412 11,417,761

Non-current assets 27,735,226 23,929,937

Current assets 13,688,412 11,417,761

41,423,638 35,347,698


2014 2013RESTATED

R’000 R ‘000

i dd 151 2014/10/14 9 35 AM


31 March 2014

Compensationportfolio

LOANS ANDOTHER

RECEIVABLESR ‘000

FAIR VALUETHROUGH

PROFIT ANDLOSS - HELD

FORTRADING

R ‘000

DESIGNATEDAS AT

FAIR VALUETHOUGH

PROFIT ANDLOSSR ‘000

TOTALCARRYING

AMOUNTR ‘000

FAIR VALUER ‘000

Capital markets - 17,346,585 - 17,346,585 17,346,585

Equity - 1,202,208 - 1,202,208 1,202,208

Derivatives - - - - -

Financial instrument bills, promissory notes and certificates of deposits

- - 1,960,783 1,960,783 1,960,783

Fixed deposits 5,453,892 - - 5,453,892 5,453,892

Trading cash 235,671 - - 235,671 235,671

5,689,563 18,548,793 1,960,783 26,199,139 26,199,139

Pension portfolio

LOANS ANDOTHER

RECEIVABLESR ‘000

FAIR VALUETHROUGH


FORTRADING

R ‘000

DESIGNATEDAS AT

FAIR VALUETHOUGH


TOTALCARRYING

AMOUNTR ‘000

FAIR VALUER ‘000

Capital markets - 10,562,002 - 10,562,002 10,562,002

Equity - 2,984,691 - 2,984,691 2,984,691



- - 145,549 145,549 145,549

Fixed deposits 1,298,979 - - 1,298,979 1,298,979

Trading cash 233,278 - - 233,278 233,278

1,532,257 13,546,693 145,549 15,224,499 15,224,499

Total investments on 31 March 2014

7,221,820 32,095,486 2,106,332 41,423,638 41,423,638


i dd 152 2014/10/14 9 35 AM


Compensationportfolio

LOANS ANDOTHER

RECEIVABLESR ‘000

FAIR VALUETHROUGH


FORTRADING

R ‘000

DESIGNATEDAS AT

FAIR VALUETHOUGH


TOTALCARRYING

AMOUNTR ‘000

FAIR VALUER ‘000

Capital markets - 13,634,444 - 13,634,444 13,634,444

Equity - 962,184 - 962,184 962,184



- - - 1,165,076 1,165,076

Fixed deposits 6,248,299 - - 6,248,299 6,248,299

Trading cash 115,039 - - 115,039 115,039

6,363,338 14,596,628 - 20,959,966 20,959,966

31 March 2013

Pension portfolio

LOANS ANDOTHER

RECEIVABLESR ‘000

FAIR VALUETHROUGH


FORTRADING

R ‘000

DESIGNATEDAS AT

FAIR VALUETHOUGH


TOTALCARRYING

AMOUNTR ‘000

FAIR VALUER ‘000

Capital markets - 10,496,279 - 10,496,279 10,496,279

Equity - 2,711,277 - 2,711,277 2,711,277



- - - - -

Fixed deposits 939,703 - - 939,703 939,703

Trading cash 240,473 - - 240,473 240,473

1,180,176 13,207,556 - 14,387,732 14,387,732

Total investments on 31 March 2014

7,543,514 27,804,184 - 35,347,698 35,347,698


i dd 153 2014/10/14 9 35 AM


Basis of determining fair value

The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments reflected in the table above:

Capital market, equity instruments and derivatives

The fair value of capital market and equity instruments is determined by reference to their quoted closing price at the reporting date.

Money market instruments

Money market instruments (financial instrument bills, promissory notes and certificates of deposits) are valued by the Money Market Curve. The nominal annual rate of interest compounded continuously is converted to a simple rate for discount securities, and to a NACA, NACS, NACQ or NACM for fixed interest instruments depending on the maturity profile.

MONEYMARKET

R ‘000

CAPITALMARKET

R ‘000

EQUITYR ‘000

TRADINGCASHR ‘000

TOTALR ‘000

0 to 3 months 2,448,342 - 1,202,208 235,671 3,886,221

3 to 12 months 4,966,332 107,147 - - 5,073,479

1 to 3 years - 1,360,798 - - 1,360,798

3 to 7 years - 6,633,273 - - 6,633,273

7 to 12 years - 818,294 - - 818,294

12+ years - 8,427,074 - - 8,427,074

Total at year end

7,414,674 17,346,586 1,202,208 235,671 26,199,139

MONEYMARKET

R ‘000

CAPITALMARKET

R ‘000

DERIVA-TIVESR ‘000

EQUITYR ‘000

TRADINGCASHR ‘000

TOTALR ‘000

0 to 3 months 486,175 - - 2,984,691 233,277 3,704,143

3 to 12 months 958,354 66,216 - - - 1,024,570

1 to 3 years - 634,174 - - - 634,174

3 to 7 years - 2,776,648 - - - 2,776,648

7 to 12 years - 2,911,545 - - - 2,911,545

12+ years - 4,173,419 - - - 4,173,419

Total at year end

1,444,529 10,562,002 - 2,984,691 233,277 15,224,499

TOTAL 8,859,203 27,908,588 - 4,186,899 468,948 41,423,638

Maturity schedule Compensation portfolio as at 31 March 2014

Maturity schedule Pension portfolio as at 31 March 2014


i dd 154 2014/10/14 9 35 AM


MONEYMARKET

R ‘000

CAPITALMARKET

R ‘000

EQUITYR ‘000

TRADINGCASHR ‘000

TOTALR ‘000

0 to 3 months 2,741,786 - 962,184 115,039 3,819,009

3 to 12 months 3,506,513 81,054 - - 3,587,567

1 to 3 years - 642,297 - - 642,297

3 to 7 years - 5,053,636 - - 5,053,636

7 to 12 years - 2,574,726 - - 2,574,726

12+ years - 5,282,731 - - 5,282,731

Total at year end

6,248,299 13,634,444 962,184 115,039 20,959,966

MONEYMARKET

R ‘000

CAPITALMARKET

R ‘000

DERIVA-TIVESR ‘000

EQUITYR ‘000

TRADINGCASHR ‘000

TOTALR ‘000

0 to 3 months 255,161 - - 2,711,277 240,473 3,206,911

3 to 12 months 684,542 119,732 - - - 804,274

1 to 3 years - 188,080 - - - 188,080

3 to 7 years - 3,067,345 - - - 3,067,345

7 to 12 years - 3,466,550 - - - 3,466,550

12+ years - 3,654,572 - - - 3,654,572

Total at year end

939,703 10,496,279 - 2,711,277 240,473 14,387,732

TOTAL 7,188,002 24,130,723 - 3,673,461 355,512 35,347,698

Maturity schedule Compensation portfolio as at 31 March 2013

Maturity schedule Pension portfolio as at 31 March 2013

14. Inventories

Consumable stores 2,601 -


2014 2013RESTATED

R’000 R ‘000

i dd 155 2014/10/14 9 35 AM


During the last financial year the Fund agreed to pay five (5) medical service providers an amount totalling R521 million. The reason was that Compensation Fund was unable to process backlogs on medical claims due to the SAP-ICM system being too slow and dysfunctional. A total of R83.7 million has since been repaid and the outstanding amount is R456 million. There was a further advance of R18.2 given which related to the court order under the year under review

This resulted in the Fund facing serious litigations from respective medical service providers due to unpaid claims. In order to mitigate against the litigations the Fund opted for an option of making advance payments to the medical services providers.

It was agreed between the Fund and the medical service providers that as soon as the payments were made on the outstanding claims the providers will hence forth refund the Fund.

16. Receivables from non-exchange transactions assessments raised

Assessments raised

Outstanding balances 8,805,998 8,839,614

Accrual for assessments not raised 947,030 (38,046)

Allowance for impairment (8,490,966) (6,003,677)

Third party claims

Allowance for impairment - (189,410)

Outstanding balances 183,828 189,410

1,445,890 2,797,891

15. Receivables from exchange transactions

Advances 50,903 -

Advances made to medical services providers 456,882 474,671

Recoverable medical expenses 11,338 8,505

Duplicate payments to medical service providers 19,983 19,983

Disallowances 23,167 14,701

PPP re-investment 313 831

Contribution exempted employer 17,016 30,018

Allowance for impairment - (31,680)

Investment income receivable 48,991 31,464

Unallocated receipts (102,090) (26,143)

Creditors with debit balances 964 184

Accrued interest 289 1,817

527,756 524,351


2014 2013RESTATED

R’000 R ‘000

i dd 156 2014/10/14 9 35 AM


17. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 3 3

Trading cash 116,162 542,325

Call accounts 3,555 550,420

119,720 1,092,748

Cash and cash equivalents consist of cash on hand and balances with banks and investments in money market instruments. There are no restrictions placed in the realisation or usability of cash balances.

18. Investment property

2014 2013

COST / VALUATION

COST / VALUATION

Investment property 4,900 8,600

Reconciliation of investment property - 2014

OPENINGBALANCE

FAIR VALUEADJUSTMENTS

TOTAL

Investment property 8,600 (3,700) 4,900

Reconciliation of investment property - 2013

OPENINGBALANCE

FAIR VALUEADJUSTMENTS

TOTAL

Investment property 4,542 4,058 8,600

Details of valuation

The Income Capitalisation approach was used to value the land and buildings as at 28 February 2014 by an independent valuer namely Rhode and Associates (Pty) Ltd (2013: Khanyisa property and management service). This approach considers income and expense data relating to the property being valued and estimates a value through a capitalisation process. A capitalisation rate of 12% has been applied in the cash flow analysis for the Bhisho building. The capitalisation rate is determined by the rate at which similar assets have traded recently. Rental revenue generated by the investment property for the current year amounted to R941,641 (2013: R854,000). There was no direct expenditure that related to the investment property at Bhisho for the current year.


2014 2013RESTATED

R’000 R ‘000

i dd 157 2014/10/14 9 35 AM


19. Property, plant and equipment

2014 2013

COST / VALUATION

ACCUMULATEDDEPRECIATION

ANDACCUMULATED

IMPAIRMENT

CARRYINGVALUE

COST / VALUATION

ACCUMULATEDDEPRECIATION

ANDACCUMULATED

IMPAIRMENT

CARRYINGVALUE

Land 21,200 - 21,200 21,200 - 21,200

Buildings 59,982 (1,982) 58,000 59,982 (983) 58,999

Furniture and fixtures

16,095 (13,169) 2,926 14,031 (10,955) 3,076

Motor vehicles 2,953 (873) 2,080 4,765 (1,593) 3,172

IT equipment 6,513 (6,097) 416 - - -

TOTAL 106,743 (22,121) 84,622 99,978 (13,531) 86,447

Reconciliation of property, plant and equipment - 2014

OPENINGBALANCE

R’000

ADDITIONSR’000

DISPOSALSR’000

DEPRECIATIONR’000

TOTALR’000

Land 21,200 - - - 21,200

Buildings 58,999 - - (999) 58,000


3,076 1,304 - (1,454) 2,926

Motor vehicles 3,172 - (698) (394) 2,080

IT equipment - 6,513 - (6,097) 416

86,447 7,817 (698) (8,944) 84,622

Reconciliation of property, plant and equipment - 2013

OPENINGBALANCE

R’000

ADDITIONSR’000

OTHERCHARGES,

MOVEMENTSR’000

DEPRECIATIONR’000

TOTALR’000

Land 21,200 - - - 21,200

Buildings 58,069 1,881 - (951) 58,999


3,846 1,147 (473) (1,444) 3,076

Motor vehicles 3,229 358 - (415) 3,172

86,344 3,386 (473) (2,810) 86,447


i dd 158 2014/10/14 9 35 AM


Revaluations

The Income Capitalisation approach was used to value the land and buildings on an open market basis and revaluation surplus is included in the Statement of Changes in Net Assets, as at 31 March 2012 by an independent valuer namely JHI Valuers. This approach considers income and expense data relating to the property being valued and estimates a value through a capitalisation process. The capitalisation rate is determined by the rate at which similar assets have traded recently.

Land and buildings are re-valued independently every 3 years.

Buildings comprise

Property 1Compensation House on Lot 70, 66/R, Prinshof, No 349, JR, Pretoria

Market value 58,100 58,100

20. Provision for outstanding claims

Total provision for outstanding claims 6,435,000 4,842,000

Increase/(Decrease) in provision for outstanding claims - 1,593,000

Actuarially calculated closing balance 6,435,000 6,435,000

Transfer to current liabilities (2,239,000) (2,239,000)

Total provision for outstanding claims 4,196,000 4,196,000

21. Capitalised value of pensions

The amounts recognised in the statement of financial position are as follows:

Carrying value

Actuarially calculated opening balance 10,085,480 12,860,000

Increase in capitalised value of pension (369,267) (467,404)

- Pensions capitalised value of pension 420,428 330,887

- Pension payments (789,695) (689,407)

Pension actuarial adjustments - (2,416,000)

9,716,213 10,085,480


2014 2013RESTATED

R’000 R ‘000

i dd 159 2014/10/14 9 35 AM


23. Payables from exchange transactions

Income received in advance - 512

Debtors with credit balances 553,844 445,786

Compensation, pension and medical creditors control 404,000 441,675

Unsettled investments 1,049 896

958,894 888,872

22. Accruals

Reconciliation of accruals - 2014 OPENINGBALANCE

R’000

ADDITIONSR’000

UTILISEDDURING THE

YEARR’000

TOTALR’000

Accumulated leave 29,542 29,825 (50,030) 9,337

Service bonus (thirteenth cheque) 4,679 18,160 (17,413) 5,426

Accrued expenses 79,712 494,387 (495,190) 78,909

113,933 542,372 (562,633) 93,672

Reconciliation of accruals - 2013 OPENINGBALANCE

R’000

ADDITIONSR’000

UTILISEDDURING THE

YEARR’000

TOTALR’000

Accumulated leave 26,409 3,133 - 29,542

Service bonus (thirteenth cheque) 4,299 4,679 (4,299) 4,679

Accrued expenses 87,441 69,274 (77,003) 79,712

118,149 77,086 (81,302) 113,933


2014 2013RESTATED

R’000 R ‘000

i dd 160 2014/10/14 9 35 AM


24. Cash generated from operations

Surplus 4,070,897 8,147,874

Adjustments for:

Depreciation and amortisation 8,943 2,810

Gain on sale of assets and liabilities 134 -

Fair value adjustments 3,700 (4,058)

Debt impairment 2,266,199 1,148,508

Pension actuarial adjustment - (2,416,000)

Increase in the capitalised value of pensions (369,266) (358,520)

Assets less than R5,000 written off - 473

Provision for unreported claims - 1,593,000

Transfer to unclaimed monies - 4,342

Changes in working capital

Inventories (2,601) -

Increase in receivable from exchange transactions 28,275 (398,086)

Increase in receivables from non-exchange transactions (945,878) (1,499,525)

Payables from exchange transactions 70,022 234,964

(Decrease)/Increase in accruals (20,260) (43,720)

5,110,165 6,412,062

25. Contingencies

Securities

Licences in terms of Section 30 of the Act to carry out the business of the Fund in certain industries have been issued by the Minister of Labour to two mutual associations. These mutual associations must deposit securities with the Fund to cover its liabilities. Furthermore, certain local authorities have been granted exemption from paying annual assessments and are liable to pay compensation to their injured employees in the workplace. In terms of Section 31 of the Act, these exempted employers are required to deposit securities with the Fund, which are equivalent to the capitalised pensions of their employees.

If a mutual association or an exempted employer fails to meet in full its liabilities, in terms of the Act, the Accounting Authority may apply such securities to pay the liabilities, and the balance of the liabilities and future liabilities of the employer will have to be paid from the reserves. The securities thus controlled by the Fund amounts to R309.3 million (2013: R1,578 million).

The Fund has received approximately 120 (2013: 223) notices of motions and summons and as a result thereof is financially exposed to approximately R288 million (2013: R100 million), inclusive of legal costs.


2014 2013RESTATED

R’000 R ‘000

i dd 161 2014/10/14 9 35 AM


27. Related parties

Members: Refer to members’ report note 10Board members: Refer to note 11Department of Labour: The Department of Labour pays the salaries of staff and the Fund reimburses them for the spot percentageEOH: They offer IT solutions to the Compensation Fund

Transactions and balances with national departments of government and state-controlled entities which occur other than in accordance with the operating parameters established are regarded as related parties transactions in accordance with IPSAS 20; related parties disclosure. The Fund is an entity of the Department of Labour. Salaries of the Commissioner, and the officers and employees are remunerated out of the National Revenue Fund, which is reimbursed out of the Fund for the expenditure concerned in terms of Section 2 of COIDA. Expenditure in respect of COIDA related services rendered to the Fund by provincial offices and labour centres of the Department of Labour are also reimbursed to the Department of Labour. The following transactions were recorded relating to transactions with related parties as defined. There is a service that the Fund receives in kind, this is in relation to the services of EOH for the processing of the medical invoices

Related party transactions

Expenditure paid on behalf of and recovered in the financial year from the Department of LabourCompensation of employees 365,064 330,606Goods and services 207,678 69,359Transfers 5,705 6,716Capital expense (PPP unitary fee) 16 53,108

Public Private Partnership

The Compensation Fund entered into a Public Private Partnership Agreement (“PPP Agreement”) with EOH Managed Services (Proprietary) Limited, contract ceded from Siemens Business Services (Proprietary) Limited (“private partner”), on 1 December 2002. The PPP Agreement requires the private partner to provide information technology related infrastructure, services and management support to the Department of Labour, the Unemployment Insurance Fund and the Compensation Fund (“the funds”) for a period of 10 years which ended on 30 November 2012. The contract was later extended until 31 May 2014.

26. Commitments

Operating leases - as lessee (expense)

Minimum lease payments due

- within one year 2,965 16,762

- in second to fifth year inclusive 1,772 4,755

- later than five years - -

4,737 21,517


2014 2013RESTATED

R’000 R ‘000

i dd 162 2014/10/14 9 35 AM


Reinvestment fund

The reinvestment fund is a separate bank account for purposes of administering and the separate safekeeping of excess profit, foreign exchange rate savings and service credits. The reinvestment fund may be used during the term of the PPA agreement to fund:

As at 31 March 2014, the balance of the reinvestment fund was:

Compensation Fund 313 305,603

28. Material losses through criminal conduct

Cases - 2014Opening balance - 2013 56 2,894Registered allegations 56 3,302

112 6,196

Finalised 55 3,188Externally - -Internally 55 3,188Previous year - 2013 14 1,830Current year - 2014 41 1,358Recovered 1 1,275Actual loss 11 2,026Potential loss 5 709Referred to law enforcement 11 1,724Write-off 5 414Closing balance - 31 March 2014 57 3,008

Cases - 2013Opening balance - 2012 71 11Registered allegations 71 5,126

142 9,219

Finalised 86 6,324Externally - -Internally 86 6,324Previous year - 2011 33 2,772Current year - 2012 53 3,553Recovered 5 188Actual loss 34 2,475Potential loss 8 1,070Referred to law enforcements 29 1,309Write-off 17 307Closing balance - 31 March 2013 56 2,894


2014 2013RESTATED

R’000 R ‘000

i dd 163 2014/10/14 9 35 AM


29. Fruitless and wasteful expenditure

Opening balances 15,020 14,890

Add: Fruitless and wasteful expenditure current year 6 130

15,026 15,020

Interest charged on overdue accounts by suppliers. The Fund is currently in the process of investigating these incidents that led to fruitless and wasteful expenditure. The amount of interest paid to suppliers amount to R6 184.50

The Fund has incurred fruitless and wasteful expenditure during the period under review. A Financial Misconduct Register is in place and 71 cases have been recorded for investigation. A Financial Misconduct Advisory Board has been established and the cases are being investigated.

30. Irregular expenditure

Opening balance 138,584 20,384

Add: Irregular expenditure - current year - 658,467

Less: Amounts recoverable (not condoned) - (498,315)

Less: Amounts recovered - (41,952)

138,584 138,584

Analysis of expenditure awaiting condonation per age classification

Current year - 138,584

Prior years - 20,384

- 158,968

Details of irregular expenditure recoverable (not condoned)

The Fund has incurred fruitless and wasteful expenditure during the period under review. A Financial Misconduct Register is in place and 71 cases have been recorded for investigation. A Financial Misconduct Advisory Board has been established and the cases are being investigated.


2014 2013RESTATED

R’000 R ‘000

i dd 164 2014/10/14 9 35 AM


31. Prior period errors

The correction of the errors result in adjustments as follows:

Upon inspection is was found that the amount allocated to travel and subsistence this years was captured in the 2012/13 financial year, and had already been paid.

The effect of the error on the individual line items in the financial statements is as follows:

Decrease in accruals - 1

Decrease in travel and subsistence - (1)

- -

Upon inspection at year end of 2013/14 is was discovered that amount in capitalised value of pension was doubled in the capitalised value of pension account

In the other instance the pension account was used to pay constant attendance allowance was used instead of the CAA account


Decrease in the capitalised value of pension - 2,950

Decrease in constant attendance allowance - (422)

Decrease in the benefits for permanent disability - (2,528)

- -

During the year under review there were open items in the creditors that related to the 2006/7 financial year, the item was written off as it didn’t tie up to any transaction in the bank account. This was migrated from the Axsone system. The creditors were paid using cash focus.


Decrease in the trade and other payables - 89

Decrease in admin expenses - (89)

- -

At year end of 2013/14 there were amounts not accrued for but paid from accrued account. The effect of the error on the individual line items in the financial statements is as follows:

Increase in accruals - 87

Increase in admin expenses - (87)

- -


2014 2013RESTATED

R’000 R ‘000

i dd 165 2014/10/14 9 35 AM


During the year under review the Fund charged employers interest and penalties that was due to the employers. The amount needs also to be reversed in the 2012/13 financial as it was also incorrectly posted to this year.

During the year under review the Fund reversed the provision for assessments not raised. The effect of the error on the individual line items in the financial statements is as follows:

Increase in the receivables from non-exchange transactions - 940,571

Decrease in the revenue from non exchange transactions - (940,571)

- -

During the year under review the Fund discovered that the interest lost on late capitalisation of pensions was misallocated back to the capitalised value of pensions instead of it being expensed.


Decrease in capitalised value of pensions - (111,834)

Increase in admin expense - 111,834

- -

At year end of 2013/14 an outstanding amount that was accrued for in the employee costs. The effect of the error on the individual line items in the financial statements is as follows:

Decrease in the employees costs - 29,602

Decrease in accrual - (29,602)

- -

Statement of Financial Position PREVIOUSLYREPORTED

R ‘000

ADJUSTMENTR ‘000

RESTATEDBALANCE

R ‘000

Receivables from non-exchange transactions 3,735,422 (940,572) 2,794,850

Payables from exchange transactions (938,901) 89 (938,812)

Accruals (93,447) 29,457 (63,990)

Capitalised value for pension (9,976,596) (108,884) (10,085,480)

(7,273,522) (1,019,910) (8,293,432)

Statement of Financial Performance PREVIOUSLYREPORTED

R ‘000

ADJUSTMENTR ‘000

RESTATEDBALANCE

R ‘000

Revenue from non-exchange transactions 8,092,646 (940,645) 7,152,001

Employee costs (336,506) 29,602 (306,904)

Benefits paid (1,981,792) 2,950 (1,978,842)

Administrative expenses (424,619) (111,817) (536,436)

5,349,729 (1,019,910) 4,329,819


2014 2013RESTATED

R’000 R ‘000

i dd 166 2014/10/14 9 35 AM


32. Revaluation reserve

The revaluation reserve

Opening balance 53,945 53,945


2014 2013RESTATED

R’000 R ‘000

i dd 167 2014/10/14 9 35 AM


Revenue from non-exchange transactions

Contribution by employer 7,974,596 6,428,307

Interest on late submission of returns - 224,100

Penalties on the late submission of returns 211,040 499,594

3 8,185,636 7,152,001

Benefits paid

Claims incurred (2,703,129) (1,978,843)

Gross surplus 5,482,507 5,173,158

Other income

Administrative contributions by employers (s 88) 3,456 18,287

Reversal of merit rebate 7,454 854

Dividend revenue 5 148,779 106,807

Interest received 5 1,586,536 4,014,266

Fair value adjustments 11 - 4,058

1,746,225 4,144,272

Expenses (Refer to page 169) (887,930) (20,918)

5,482,507 5,173,158

1,746,225 4,144,272

(887,930) (20,918)

Operating surplus 6,340,802 9,296,512

Finance costs 10 (6) (130)

Fair value adjustments 11 (3,700) -

Increase in allowance for impairment of receivables (2,266,199) (1,148,508)

(2,269,905) (1,148,638)

Profit (loss) before taxation 4,070,897 8,147,874

Taxation - -

Surplus for the year 4,070,897 8,147,874

2014 2013RESTATED

NOTE(S) R’000 R ‘000

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Detailed Income Statement

The supplementary information presented does not form part of the annual financial statements and is unaudited

i dd 168 2014/10/14 9 35 AM


Operating expenses

Audit fee (9,160) (7,814)

Reversal of assessments, interest and penalties (61,071) (19,626)

Pension actuarial adjustment - 2,416,000

Interest late capitalisation of pension (134,394) (111,834)

Consulting and professional fees (62,965) (100,415)

Depreciation, amortisation and impairments (8,943) (2,810)

Employee costs (343,902) (306,905)

Compensation related expenses (2,419) (4,510)

Board members’ fees (1,587) (577)

Reimbursement National Department - (77)

Increase(decrease) in the provision for outstanding claims - (1,593,000)

Other expenses (67,781) (72,663)

Investments management fees (12,876) (11,969)

PPP (8,994) (67,140)

Lease rentals on operating lease (25,342) (29,375)

Legal expenses (3,655) (3,523)

Loss on disposal of assets (134) -

Assets less than R5,000 (789) (473)

Printing and stationery (4,904) (8,592)

Prevention of accidents (3,253) (5,187)

Repairs and maintenance (13,970) (6,797)

Software expenses (67,040) (41,896)

Travel and subsistence (48,203) (34,953)

Training (2,870) (2,234)

Venue expenses (3,678) (4,548)

(887,930) (20,918)

2014 2013RESTATED

NOTE(S) R’000 R ‘000

COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Detailed Income Statement

The supplementary information presented does not form part of the annual financial statements and is unaudited

i dd 169 2014/10/14 9 35 AM


NOTES

i dd 170 2014/10/14 9 35 AM


i dd 171 2014/10/14 9 35 AM


NOTES

i dd 172 2014/10/14 9 35 AM

submission of the compensation fund annual report minister of … · 2015-04-13 · ii annual...

Documents