Annual Report of the Compensation · PDF fileAnnual Report of the Compensation Fund ......

Annual Report of theCompensation Fundfor the year ended 31 March 2013

Street Address:Compensation HouseCnr Hamilton and Soutpansberg StreetsPretoria

Postal Address:PO Box 955Pretoria0001 Tel: 0860 105 350Fax: 012 326 1570 / 012 357 1772

www.labour.gov.za

Annual R

eport of the Com

pensation Fund for the year ended 31 March 2013

COVER OPTION 24 SEPT 2013 final.indd 1 2013/09/26 1:04 PM

RP241/2013ISBN: 978-0-621-42122-4

Vision

To be an employer of choice and an internationally reputable provider of compensation for occupational injuries and diseases, rehabilitation and reintegration services.

Mission

· To utilise or leverage automated solutions to provide efficient, quality, client-centric and accessible Compensation Fund services

· To ensure effective rehabilitation and re-integration services, through reputable (proven) programmes

· To ensure financial viability through efficient collections and prudent investments

· To promote job creation initiatives through socially responsible investments

· To develop and retain a competent and content workforce


Submission of the Compensation Fund Annual Report Minister of Labour

I have the honour of submitting the Annual Report of the Compensation Fund for the period 1 April 2012 to 31 March 2013.

Mr Shadrack MkhontoCompensation Commissioner

Mr Shadrack Mkhonto Compensation Commissioner

Minister Mildred N Oliphant Minister of Labour

Table of conTenTParT a General InformaTIon1. LISt OF AbbRevIAtIONS 22. StRAtegIC OveRvIew 33. LegISLAtIve ANd OtheR MANdAteS 64. RepORtINg FRAMewORk 65. ORgANISAtIONAL StRuCtuRe 76. bOARd MeMbeRS 87. COMMISSIONeR’S OveRvIew 9

ParT b Governance1. COMpeNSAtION bOARd 142. RISk MANAgeMeNt 223. INteRNAL CONtROL 224. COMpLIANCe wIth LAwS ANd ReguLAtIONS 235. FRAud ANd CORRuptION 236. MINIMISINg CONFLICt OF INteReSt 257. COde OF CONduCt 258. heALth SAFety ANd eNvIRONMeNtAL ISSueS 259. AudIt COMMIttee 2510. AudIt COMMIttee RepORt FOR the yeAR eNded 31 MARCh 2013 26

ParT c Performance InformaTIon1. INtROduCtION 302. AudItOR-geNeRAL’S RepORt: pRedeteRMINed ObjeCtIveS 303. OveRvIew OF the COMpeNSAtION FuNd’S peRFORMANCe 304. peRFORMANCe OF COMpeNSAtION FuNd pROgRAMMeS ANd Sub-pROgRAMMeS 55

ParT D InformaTIon anD communIcaTIon TechnoloGy anD call cenTre1. INFORMAtION ANd COMMuNICAtION teChNOLOgy 742. CALL CeNtRe 75

ParT e human resource manaGemenT1. INtROduCtION 802. huMAN ReSOuRCe OveRSIght StAtIStICS 81

ParT f commIssIoner anD auDITor-General‘s rePorTsRepORt OF the COMpeNSAtION COMMISSIONeR 88RepORt OF the AudItOR-geNeRAL tO pARLIAMeNt ON the COMpeNSAtION FuNd RepORt ON the FINANCIAL StAteMeNtS 110

ParT G annual fInancIal sTaTemenTsStAteMeNt OF FINANCIAL pOSItION AS At 31 MARCh 2013 118StAteMeNt OF FINANCIAL peRFORMANCe FOR the yeAR eNded 31 MARCh 2013 119StAteMeNt OF ChANgeS IN Net ASSetS AS At 31 MARCh 2013 120CASh FLOw StAteMeNt AS At 31 MARCh 2013 121ACCOuNtINg pOLICIeS 122NOteS tO the ANNuAL FINANCIAL StAteMeNtS 136StAteMeNt OF COMpARAtIve ANd ACtuAL INFORMAtION FOR the yeAR eNded 31 MARCh 2013 172detAILed INCOMe StAteMeNt FOR the yeAR eNded 31 MARCh 2013 173

Part A GenerAl InformAtIon

p 2 | Annual Report of the Compensation Fund for the year ending 31 March 2013

AgSA - Auditor general of South AfricaApp - Annual performance planbAS - basic Accounting SystembCeA - basic Conditions of employment Act buMS - business unit Managers (provincial

deputy directors)CCMA - Commission for Conciliation,

Mediation and ArbitrationCC - Compensation CommissionerCF - Compensation FundCRM - Customer Relationship ManagementCS - Corporate Services CFO - ChiefFinancialOfficerCOO - ChiefOperationsOfficerCIO - ChiefInformationOfficerCOIdA - 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 - HeadOfficehpCSA - 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 StatisticsLp - Limpopo

Lp & 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 - ProjectManagementOfficeppp - 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 Fund wC - western CapewSp - work place Skills plan

1. lIsT of abbrevIaTIons/acronyms

Annual Report of the Compensation Fund for the year ending 31 March 2013 | p 3

2. sTraTeGIc overvIeW2.1. Vision

to be an employer of choice and an internationally reputable provider of compensation for occupational injuries and dis-eases, rehabilitation and reintegration services.

2.2. Mission

• Toutiliseorleverageautomatedsolutionstoprovideefficient,quality,client-centricandaccessibleCompensationFundservices

• Toensureeffectiverehabilitationandre-integrationservices,throughreputable(proven)programmes• Toensurefinancialviabilitythroughefficientcollectionsandprudentinvestments• Topromotejobcreationinitiativesthroughsociallyresponsibleinvestments• Todevelopandretainacompetentandcontentworkforce

2.3. Values

• Wetreatemployeeswithcare,dignityandrespect• Werespectandpromote: - Client centred services - Accountability - Integrity and ethical behaviour• Learninganddevelopment• WelivetheBathoPelePrinciples• WelivetheprinciplesoftheDepartment’sServiceCharter• Weinculcatethesevaluesthroughourperformancemanagementsystem

2.4. Strategic outcome oriented goals

government has agreed on 12 outcomes as key focus areas for 2014. each outcome has a limited number of measurable high-impactpriorityoutputsandsub-outputswithtargets.These12outcomesreflectgovernment’smandateandlinkupwith the ten Medium-term Strategic Framework (MtSF) priorities. there are two outcomes applicable to the Compensation FundandthesewerethebasisfortheCompensationFundStrategicPlan.ThetwooutcomesidentifiedfortheCompensa-tion Fund are:• Outcome4:Decentemploymentthroughinclusiveeconomicgrowth• Outcome12:Anefficient,effectiveanddevelopmentorientedpublicserviceandanempowered,fairandinclusive

citizenship

based on the two outcomes discussed above, the Compensation Fund has developed four key strategic outcome oriented goals. these strategic outcomes oriented goals are strategic priorities which form the basis of the Compensation Fund’s strategicobjectives.ThestrategicoutcomesidentifiedwillbetheresultsoftheFund’sperformanceasviewedbytheben-eficiariesandwillbetheconsequenceofachievingtheoutputs.

the table below summarises the link and the alignment between government outcomes, doL strategic objectives, CF strategic outcomes and objectives.


tAbLe 2.4.1. ALIgNMeNt OF gOveRNMeNt OutCOMeS, doL StRAtegIC ObjeCtIveS (kRA’S), CF StRAtegIC OutCOMeS ANd CF StRAtegIC ObjeCtIveS

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

ImprovepaymentofbenefitstothebeneficiariesoftheFund

Providinganefficientsocialsafety net

Improve the collection of revenue from employers

Improvefinancialviability

Outcome12:Anefficient,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

Provideprofessional,efficientand client orientated human resources

Strengthening corporate governance

Improve corporate support and services

enhance quality and access to COIdA services and information

tAbLe 2.4.2. CF StRAtegIC ObjeCtIveS ANd gOALS FOR 2013 – 2018

STRATEGIC OBJECTIVES STRATEGIC OUTPUTS

providing an effective social safety net

• Improvementincompensationclaimturnaroundtime• Implementnewbusinessprocessesbyquarter4• Advocacyofpolicytopreventaccidents• Contributetosocialsecurityreformswithinprescribedtime• Improvecompensationbenefits• Finalise 100% of medical claims (valid, accurate and complete documentation)

within 30 days of receiving an invoice by 2016• Providemedicaladviceonallmedicalclaimswithin24hoursby2016• Development and implementation of rehabilitation and reintegration policy

framework by 2014


STRATEGIC OBJECTIVES STRATEGIC OUTPUTS

Provideprofessional,efficientand client orientated human resource

• 100%compliancewiththeperformancemanagementsystemannually• ImprovecompetencylevelsofCFstaffby100%alignmentandimplementationof

work Skills development plan (wSp) by 2016• Achieveaconduciveworkingenvironmentbyimplementinganemployeewellness

strategy by 2016• Promotesoundlabourrelationsintheworkplaceby2016,through80%reduction

of grievances and misconduct• Implement recruitment and retention strategy through maintenance of 10%

vacancy rate by 2016• Increaserepresentationonemploymentequityto50%atalllevelsby2016

Strengthening corporate governance

• FullimplementationofMinimumInformationSecurityStandard(MISS)by2016• Fraudpreventiondetectionstrategyimplementedannually• ImplementanEnterpriseRiskManagement(ERM)systemby2016(people,process,

technology)• Developing and executing a risk based internal audit planwith 100% coverage

annually• ConformwithIIAstandardsby2016(100%compliance)• DevelopandimplementInternalAuditMethodology,PoliciesandProcedures• Streamlineallassurancefunctionsintooneenterprise-viewby2014

Integration of the Fund within the comprehensive social security reforms

• DraftAmendmentCOIDActavailableforconsultationby2013• Resolve95%receivedSection56and91caseswithin60daysofreceiptby2016• Resolve95%ofreceivedcaseswherethereisnofactualdisputewithinfivedaysby

2016• 90%oflegaladvicerequestsandcontractsfinalisedwithinfivedaysofreceiptby

2016

promote policy advocacy • BrandCFsuchthatitcomplieswiththeGCISCorporateIdentityManual• Toachieveclientcommunicationeffectivenessof85%by2016

Improvefinancialviability • EliminatedebtbookofR5billionby2016• Increaserevenueby8%by2016• Obtainacleanauditopinionby2014• Improveefficiencyofprocessesby full implementationofan integratedfinancial

system to improve payment to 30 days by 2016• Improveasset:liabilityratioto2:1by2016• Maximiseinvestmentreturnto3.8%abovebenchmark

Improve corporate support and services

• ToimplementsystemsandinfrastructuretosupportbusinessgoalsbyMarch2013• Implementationof governancemeasureswithin the ICTenvironmentbyMarch

2012

enhance quality and access to COIdA services and information

• AnnualstrategicplanningasperNTFrameworkforperformanceinformation• Annualorganisationalperformancemanagement• Implementchangemanagementprogrammeby2016• CoordinateallpriorityprojectscurrentlyrunningundertheCompensationFund• Implement100%customerservicesatallcustomertouchpoints(phone-in,web,

walk-in) by 2016• Achievecustomersatisfactionforcallcentreat95%by2016

tAbLe 2.4.3. CF StRAtegIC ObjeCtIveS ANd gOALS FOR 2013 – 2018 Continued


3. leGIslaTIve anD oTher manDaTes3.1. 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 the right to social security. the Compensation Fund is then mandated to provide social security to all injured and diseased employees.

3.2. Legislative mandate

the Compensation Fund is a public entity of the department of Labour. the Fund administers the Compensation for Oc-cupational 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 regis-teredemployersonabasisofapercentageorfixedrateoftheannualearningsoftheiremployees.TheCOIDAct,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:• PublicFinanceManagementAct,Act1of1999,asamended• OccupationalHealthandSafetyAct,1993• NEDLACAct,1994• LabourRelationsAct,1995,asamended• BasicConditionsofEmploymentAct,1997,asamended• EmploymentEquityAct,1998• SkillsDevelopmentAct,1998,asamended• UnemploymentInsuranceAct,2001,asamended• UnemploymentInsuranceContributionsAct,2002

4. rePorTInG frameWorKthe following represents the reporting framework of the Compensation Fund:

MINISTER OF LABOUR

COMPENSATION COMMISSIONER

AUDIT COMMITTEE

COMPENSATION BOARD

BOARD SUB-COMMITTEES

DIRECTOR GENERAL: LABOUR


5. orGanIsaTIonal sTrucTure

Compensation CommissionerMr Shadrack Mkhonto

Acting Chief Financial Officer

Mr Brian Leshnick

Director Income

Ms Ella Ntshabele

DirectorFinancial Reporting

Mr Pitsi Moloto

DirectorFinancial Control Ms Pumla Mjoli

DirectorSupport Services

Mr Leon van der Westhuizen

DirectorInternal Audit

Ms Tshidi Ikaneng

Deputy Director Organisational

Monitoring and EvaluationMr Madodana Tuntulwana

Deputy Director Risk Director

Mr Twana Makhubela

Director Medical Services

Ms Kefilwe Tselane

DirectorCompensation ClaimsMr Basimane Dingaan

DirectorMedical Services

Mr AK Pillay

Acting Project Manager

Mr Simon Nkhabelane

Acting Chief Director Human Resource

ManagementMs Thembi Moleko

Deputy Director Communications

Ms Dikentsho Seabo

Chief Information Officer

Mr Vikash Sirkisson

DirectorOrganisational Effectiveness

Mr Simon Nkhabelane

Acting Director Human Resource

Management Ms Inna Schoeman

Senior Legal Admin Officer

Ms Nontobeko Mathe-Ndlazi


Mr Andile Solwandle


Mr Orphan Letsoko


6. boarD members

dr t balfour-kaipa (Chamber of Mines)

Mr M Majola(buSA)

Mr t Lamati (department of Labour OhS)

Ms tt pugh(FeMA)

Mr j Singh (RMA)

Mr N weltman(buSA)

Mr w Shisana (hpCSA)

dr dzingwa #(department of health)

dr Mb kistnasamy(department of health)

Mr F Xaba *(buSA)

Mr M Mngqibisa (National Treasury)

Mr p Magane (COSAtu)

Ms b Modise (NACtu)

Mr S Motloung (FeduSA)

Mr g McIntosh * (FeMA)

Mr S tsiane (NuMSA)

Ms j bodibe (COSAtu)

* Alternate member# Resigned

Chairperson


7. commIssIoner ’s overvIeWIntroduction

this Annual Report outlines the work undertaken by the Compensation Fund in fulfilling the Government’s medium-term objectives during the 2012/13financialyear.ThemainfocusoftheAnnualReportistomeasureperformanceagainst the Strategic plan and the budget of the Fund, while taking account of key developments and the context in which they occurred. the information presented in the Annual Report provides a clear insight into the business of the Fund, how it was conducted and the resultant outcomes.

Highlights of the year

the Fund has contributed to the improvement of the well-being of workers by payingbenefitsforlossofincomeandpensionasaresultofinjuriesordeathon duty. For example, the compensation for permanent disability amounted to R110 million, whilst compensation for temporary disability was R79 million and R798 million was paid in respect of pension. As part of the efforts to expand

thesocialsecuritynet,theFundreviewedthecompensationbenefitsandgazettedthemforpubliccommentsbytheendofthefinancialyear.

A major achievement has been the positive turnaround in the area of income generation. the Fund has implemented the Revenue Management Strategy which, among others, includes the successful launch of the online submission of annual returns of earnings by employers – the ROe website. the ROe website forms part of the overarching turn-around strategy of the Compensation Fund to improve and simplify its services to the Nation. R3.3 billion of the total R8 billion revenue generated by the Fund was generated through the ROe website. As at 31 March 2013, 51,000 employers had registered andfiledtheirannualreturnsofearningsontheROEwebsite.

TheenforcementoftheCOIDActandintensifieddebtcollectionproceduresresultedinimprovedcollectionofrevenueofR5.8billioncomparedtoR3.7billionreportedinthepreviousfinancialyear.

Duringthethisfinancialyear,21StrengtheningofCivilSocietyFund(SCSF)projectswerefundedandmonitored,whichincluded amongst others: Qholaqhwe, Mangaung, hope town, Marydale, Sika Sonke, Mooi River, bergville, Swellendam, Lethabong and workers world Media productions. the purpose of these projects is policy advocacy on injury on duty and occupational health and safety. this includes training of union shop stewards and employees on Compensation for Occupational Injuries and diseases Act (COIdA). A total of R5.2 million was spent on these projects.

the Fund contributed towards job creation by appointing 111 interns by the end of 31 March 2013 against the annual target of 100 set by Fund. this is part of government’s programme to equip graduates with the necessary competencies and experiencetobeabletofindpermanentemploymentandcontributemeaningfullytoeconomicgrowth.Inaddition,theFundachievedandmaintainedavacancyrateof2.81%againsttheoverallnormof10%.Duringtheyearunderreview,theFundhasfocused on improving its institutional capacity to ensure the attainment of its objectives by absorbing 316 contract workers into its structure. In enhancing its capacity to deliver key services, the Fund also focused on capacitating the management cadre by enrolling 14 managers on an executive development programme.

the Fund is serious in dealing with fraud and corruption matters through its Risk Management Section. Out of 142 cases ofallegedfraudandcorruptioncases,86wereinternallyfinalized.Twomedicalpractitionerswerecriminallyconvictedandsentenced tofiveyears suspension sentences, respectively.Thesemedicalpractitionerswereordered to repayback thetotalamountofR2.6millionwhichtheyhavedefrauded.Thereareotherfivemedicalpractitionerstogetherwithsixex-employees of the Fund whose cases are already at a trial stage at the Commercial Crime Courts. due to the Fund’s early intervention on fraud we have managed to recover R137,638 and saved a potential loss of R1,070,743 through fraud.

Mr Shadrack MkhontoCompensation Commissioner


Challenges of the year

Duringthe2012/13financialyear,theFundcontinuedtofacechallengeswithregardtocompliancebystakeholderstotherequirements of COIdA. this non-compliance includes the submission of incomplete information and/or documentation by employersanddelaysinthesubmissionofbankingdetailsbybeneficiaries.Employersthatfailtosubmittheirannualreturnsalso contribute to the magnitude of the challenges that often result in employer assessment backlogs.

Thisyearhaspresentedmanychallenges,bothinternallyandexternally,thathavepreventedusfromfulfillingourlegislativemandateoptimally.Fraudulentactivitiesarestillnegativelyaffectingthefinalisationofemployerassessmentsandthedebtbook continues to increase. this is due to the fraudulent letters of good standing which were issued, in most cases not in accordance with the Compensation Fund policy.

the Fund is still experiencing service delivery challenges associated with inadequate It system for processing claims resulting in backlogs. the resultant backlog in registration and adjudication of compensation claims and processing of medical invoices led to the medical practitioners threatening the Fund with legal action as well as not servicing the COId patients. As a result of the afore-mentioned challenges, the Fund resorted to the option of upfront recoverable payments to the six selected medical service providers to circumvent potential litigation. the Fund, as assisted by eOh, embarked on a project to provide a temporary solution to deal with medical invoice backlog. this process allowed the medical services providers to electronically send their invoices directly to eOh to process the invoices. this initiative brought some positive results in terms of processing medical invoices.

due to the prolonged engagement with trade unions, the implementation of the structure was delayed. this resulted in a vacuumincriticalareassuchasfinance,whichnecessitatedthatlowerlevelstaffbeexpectedtoassistinperformingfunctionsat a higher level.

Financial viability

Alexander Forbes Financial Actuaries performed the actuarial valuation of the Fund based on the Audited Management Accounts of the Compensation Fund as at 31 March 2013. According to the actuarial valuation report, the Fund should hold an outstanding claims reserve of R6.4 billion as at 31 March 2013 (R4.8 billion 31 March 2012). the liability accounting for what will be paid to pensioners for the current year should be R10 billion (R12.9 billion 31 March 2012). the Fund showed asurplusofR9.2billioninthe2012/13financialyear(R2billion2011/12).TheFundhasanaccumulatedsurplusofR23.3billionasat31March2013(R14.2billion2011/12).TheFundwasthereforeinasoundfinancialpositionat31March2013.

Plans for the year ahead

ThefuturevisionoftheFundenvisagesastateinwhichprocessesarewelldefinedandhighlyautomated,peoplearehighlymotivated and trained, and systems are functioning optimally in support of the business objectives. the Fund will be piloting the RMA system, which is tried and tested and compatible with the business of the Fund.

the Fund has set aside R3.8 billion to invest in socially responsible investments. R1 billion of this amount will be utilised in the building of hospitals and rehabilitation centres. the public Investment Commission (pIC) in conjunction with the Fund has identifiedsiteswheretherehabilitationcentreswillbebuilt.AnotherR2.3billionhasbeenearmarkedaspartofaprogrammeto stimulate agricultural growth and job creation. the remaining R500 million will be directed towards acquisition of property andofficeaccommodationfortheDepartmentofLabouranditsentitiesinsupportoftheDepartmentofPublicWorks’initiative for housing government departments throughout the country. discussions with the Investment development Corporation (IdC) are at an advanced stage to utilise their knowledge and experience in rolling out job creation projects.

the Compensation Fund will continue to promote a culture of compliance with its legislative mandate by establishing a payroll audit function. the payroll audit function aims to identify unregistered employers, verify employer payroll declarations andverifyindustryclassificationsofemployers.ThisinitiativealsoaimstoaddressthecompletenessofrevenuethathasbeenamajorcontributingfactortotheAuditor-General’sauditfindings.


the management of the Fund will develop a comprehensive action plan to address the disclaimer opinion. the plan will be a priority for the Fund and will be strictly monitored on quarterly basis. Internal audit will be involved to ensure that the Fund addressesalltherootcausesandqualifications.

ThroughitsWorkplaceSkillsPlan(WSP),theFundwillcontinuetotrainstaffinfinance,compensationandmedicalfunctions.the implementation of the wSp will include enrolling management team in executive development programme.In order to strengthen capacity within the Fund, implementation of the new organisational structure, the positions of Chief Director:CorporateServices,ChiefFinancialOfficer,andDirectors:FinancialControlandSupplyChainManagementwereadvertisedandfilledinthenewfinancialyear.

Appreciation

In conclusion, I would like to express my appreciation to the Minister, the director general, the board, management and the entirestaffoftheFund,withoutwhomtheachievementsreflectedinthisreportwouldnothavebeenpossible.

MR ShAdRACk MkhONtOCOMpeNSAtION COMMISSIONeR


Part B GOVERNANCE


1. COMPENSATION BOARDThe Compensation Board is established in terms of Section 10 of the Act. It is an advisory board that advises the Minister on COIDA issues.

1.1. The role of the Board

i. To advise the Minister on matters of policy arising out of or in connection with the application of Compensation for Occupational Injuries and Diseases Act, 1993 (Act no 130 of 1993) as amended.

ii. The Board may advise on the nature and extent of the benefits that may be payable to employees or dependents of employees, including the adjustments of existing pensions.

iii. The Board may advise on the amendment of the Act.

1.2. Board Charter

The following progress was made in complying with the charter :• Amendments to the COID Act was submitted to the Minister in January 2013• Post Traumatic Stress Disorder (PTSD) Panel: terms of reference were approved by the Board members.• Adoption American Medical Association guidelines (AMA guide) 6th edition: The Fund was advised to consider adopting

the 6th edition in relation with assessment of disability• The Board made a recommendation on the increase of benefits for 2012/2013 and increase of medical tariffs for

2012/2013• The Board contributed towards the successful implementation of the mailroom backlog reduction initiative

1.3. Board composition

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

Chairpersonii. Two persons are appointed by the Minister of Labour, one of whom shall be appointed after consultation with the

Minister of Healthiii. The Chief Inspector of Occupational Health and Safety or his or her nomineeiv. One person as a member and one person as an alternate member appointed by the Minister from a list of names of not

more than three persons nominated in order of preference by RMAv. One person as a member and one person as an alternative member appointed by the Minister from a list of three names

nominated in order of preference by FEMA company limitedvi. Two persons as members and up to two persons as alternate members appointed by the Minister from a list of names

of no more than six persons nominated in order of preference by the South African Medical and Dental Council vii. Three persons as members and up to three persons as alternative members appointed by the Minister to represent the

interest of employersviii. Five persons as members and up to five persons as alternate members to represent the interest of employees


TABLE 1.3. COMPENSATION FUND BOARD MEMBERSN

AM

E A

ND

SU

RN

AM

E

DES

IGN

ATIO

N

(IN T

ERM

S O

F T

HE

PUBL

IC E

NT

ITY

BO

AR

D

STR

UC

TU

RE)

APP

OIN

TM

ENT

Y

EAR

DAT

E R

ESIG

NED

QU

ALI

FIC

ATIO

NS

AR

EA O

F EX

PERT

ISE

AR

EA O

F EX

PERT

ISE

BOA

RD

MEE

TIN

G

BOA

RD

MEE

TIN

G

OU

TG

OIN

G

BOA

RD

MEM

BER

Mr M Mngqibisa

Board Chairperson

2011 MBL, BCom (Hons), National Higher Certificate for Technicians

Corporate Governance

GPAA Board 6 30/09/2013

Mr J Singh Principal Board member

2008 RMA CEO

Board 5 30/09/2013

Ms T Pugh Principal Board member

2008 Certificate Internal Auditing and Internal Control

Insurance industry

FEMA CEO

Board 3 30/09/2013

Mr W Shisana

Principal member

2008 BSc Psychol-ogy, MSc Industrial and Organisational Psychology

HPCSA Board 6 30/09/2013

Mr N Weltman

Principal Board member

2008 BCom (Hons), CA (SA)

BUSA Board 2 30/09/2013

Mr M Majola


2008 MBA, MPhil, MCom,PhD

BUSA Board 5 30/09/2013

Dr Dzingwa Principal Board member

2008 Sept 2012

Depart-ment of Health

Board 0 30/09/2013

Dr MB Kistnasamy


Oct 2012

MMed Com-munity Health

Community Health

Depart-ment of Health

Board 2 30/09/2013

Mr T Lamati Principal Board member

2008 MBA Health, chemistry, strategic management financial

Depart-ment of Labour

Board 3 30/09/2013

Mr S Tsiane Principal Board member

2008 NUMSA Board 4 30/09/2013

Mr P Magane


2008 Health and Safety Co-orditor

CEPP- WAWU

Board 2 30/09/2013

Ms J Bodibe Principal Board member

2008 Occupational Health and Safety, HIV/AIDS policy coordinator

COS-ATU Board 6 30/09/2013


Mr S Motloung


2008 Certificates in Nursing, Local Government Administration and Manage-ment

FEDUSA Board 4 30/09/2013

Ms B Modise

Principal Board members

2008 NACTU Board 5 30/09/2013

Dr T Balfour-Kaipa


2008 FCTHM, MBA Health adviser, Chamber of Mines

BUSA Board 3 30/09/2013

Mr S Deva Alternate Board member

2008 BUSA Board 1 30/09/2013

E Lefhungu Alternate Board member

2008 RMA Board 0 30/09/2013

Mr G Mclntosh

Alternate Board member

2008 MBA FEMA CIO

Board 4 30/09/2013

Mr F Xaba Alternate Board member

2008 BA Social Work, BA (Hons) Industrial Psychology

Senior Manager Aurecon

BUSA Board 6 30/09/2013

1.4. Board Committees

1.4.1. AssessmentsandBenefitsCommittee(ABC)

COMPOSITION The Committee is composed of the following representatives:• All representatives (seven members) of various constituencies as represented on the Board• All Executive Managers/Directors representing all departments within the Fund have a standing/permanent invitation to

attend committee meetings. Directors may bring their supporting managers/representative as and when they deem fit.• The Committee may invite any other personnel, party to the meeting when deemed necessary• The Board may nominate alternative members to serve on the Committee• The Committee will nominate a coordinator who will serve as Chairperson during meetings• Committee members are nominated to serve for a period of three years, in line with the main Board office term• Members may serve more than one term, provided it is approved by the Board• The Board Secretariat will provide secretarial services to the Committee

MANDATEThe core mandate of the Committee emanates from COIDA and are found in the following sections of the Act:• Sections 47 to 64: determination and calculation of benefits and or compensation • Sections 80 to 89: obligations and assessment of employers • Regulations issued in terms of COIDA

NA

ME

AN

D

SUR

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ME

DES

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ERM

S O

F T

HE

PUBL

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ITY

BO

AR

D

STR

UC

TU

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APP

OIN

TM

ENT

Y

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DAT

E R

ESIG

NED

QU

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FIC

ATIO

NS

AR

EA O

F EX

PERT

ISE

AR

EA O

F EX

PERT

ISE

BOA

RD

MEE

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G

BOA

RD

MEE

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G

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TG

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G

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RD

MEM

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TABLE 1.3. COMPENSATION FUND BOARD MEMBERS Continued


• PFMA and its regulations • Other applicable legislation and directives

FUNCTIONS AND RESPONSIBILITIES OF ThE ABCThe Assessments and Benefits Committee will review, investigate, monitor, report and recommend to the Board on matters related to: • Policies on assessments, benefits and compensation payable• Obligations, registration and assessment of employers (Sections 80 to 89)• Raising of provisional assessments• Determination and revision of assessments and standard rates• Benefits and compensation payable (Sections 47 to 64) in terms of the Act• Medical fees payable in terms Section 76 of the Act • Information contained in the quarterly reports• Any other matters relating to benefits payable as well as assessments of employers• The Chairperson of the Committee will report to the Board on its functions and also make 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 Assessments and Benefits Committee meetings held, number of members attending and names of attending members:

TABLE 1.4.1.

NO OF MEETINGS hELD NO OF MEMBERS ATTENDING

MEMBERS ATTENDING NO OF MEETINGS ATTENDED

9 6 Mr McIntosh 4

Ms J Bodibe 8

Mr F Xaba 8

Mr P Stoop 7

Ms B Modise 9

Mr S Motloung 6

1.4.2.TechnicalCommitteeforOccupationalInjuriesandDiseases(TCOID)

COMPOSITION The Committee shall consist of: • The Chairperson of the Committee is a member of the Board (nominated by the Board or the Committee)• All executive managers/directors representing all departments within the Fund have standing/permanent invitation to

attend committee meetings. Executive managers may bring their supporting managers/representative as and when they considered necessary.

• The Committee may nominate the meeting Chairperson in the absence of the Chairperson• One official nominated by the Department of Health• One official nominated by the Department Mineral Resources• Five persons representing organised labour• Five persons representing organised business • Members are nominated for a period of three years, which is in line with the office term of Board members• Members can serve more than one term provided it is approved by the Board and the Compensation Commissioner• The Committee can identify and invite technical experts to assist the Committee with a specific issue that is related to

their area of expertise• The Committee may consult with any person or group who may have an interest in the matter(s) under investigation• The Board Secretariat provides secretariat functions to the Committee


MANDATEThe core mandate of the Committee emanates from COIDA and other legislative frameworks include:• Occupational Health and Safety Act • Regulations issued in terms of COIDA• Health Act • PFMA and its regulations

FUNCTIONS AND RESPONSIBILITIES OF ThE TCOID COMMITTEEThe Technical Committee for Occupational Injuries and Diseases reviews, investigates, monitor, report and make recommendations to the Board on matters related to policy formulation, such as: • The policy on assessment and diagnosis of occupational injuries and diseases• The policy on evaluation of impairment from occupational diseases and injuries• The policy on certification of disability from occupational diseases and injuries• Review of existing guidelines and schedules and make necessary recommendations to the Board• Investigate the management of Occupational Injuries and Diseases and their impact on compensation• All the above matters must be investigated and reported, taking full cognisance of the corroboration with ODMWA and

COIDA• The Committee may request for access to any documents or records of the ODMWA institutions that may assist it in

the execution of its mandate• The Committee, through the Chairperson, will report to the Board on its activities• On matters where there is more than one expert view or opinion, the drafting of a final report will collate the various

views with their supporting evidence with a view to facilitating discussions at Board level• All final reports will be circulated to the Committee prior to submission to the Board• A schedule of all reports submitted to the Board will be kept. To assist with document management all reports will be

referenced and the submission dates will be documented.

The table below indicates the number of Technical Committee for Occupational Injuries and Diseases meetings held, number of members attending and names of members attending:

TABLE 1.4.2.



5 7 Dr L Dzingwa (resigned September 2013)

1

Dr W Dilotsothle 1

Mr A Letshele 4

Mr S Motloung 5

Dr D Mokoboto 5

Ms Feyers 0

Dr D Kritzinger 4

1.4.3.InvestmentCommittee(IC)

COMPOSITIONThe Committee is represented as follows:• The Board must appoint members of the Committee, who will be non-executive directors of the Board• The Committee consists of three members representing the Board


• Representative(s) from the finance section within the Fund have a standing invitation, other departments/executive managers may be invited as and when required

• Board Secretariat oversees the proceedings of all meetings• The Committee may invite any other personnel, party, experts with financial/investment experience to the meeting when

deemed necessary• The Board nominates alternative members to serve on the Committee• Members of the Committee must have knowledge and experience with regard to FAIS Act and other finance/investment

related practices• Committee members are nominated to serve on the Committee for the office term that is consistent or equal to Board

members• Members may serve for more than one term, provided it is approved by the Board

MANDATEThe core mandates of the Committee emanate from: • COIDA • Regulations issued in terms of COIDA• FAIS (Financial Advisory and Intermediary Services) Act, 2002 (Act 37 of 2002)• PFMA and its regulations• Other applicable legislation, directives financial/accounting standards and best practices

DUTIES AND RESPONSIBILITIES OF ThE FICSubject to the powers and duties of the Board and the requirements of the Act, the IC will perform the following duties:

INVESTMENTS• Review and recommend to the Board, investment policy and strategy in in respect of investments fund• Oversee the implementation of investment decisions• Monitor performance of investments on a quarterly basis• Report the activities of the FIC to the Board on issues relating to investment of depositors fund• Review and make recommendations to the Board on finance policies and strategy in respect of the Fund• The FIC will report to the Board about the annual financial statements (financial position) of the Fund (without taking

away the mandate of the Audit Committee)• The FIC, in conjunction with business units/directorates, reports to the Board on the status of audit opinion and other

related matters• The FIC will present to the Board monthly management and financial statements/information

The table below indicates the number of Investment Committee meetings, number of members attending and names of members attending:

TABLE 1.4.3.



4 4 Mr S Tsiane 4

Mr J Mojapelo 0

Ms J Bodibe 1

Mr F Xaba 1

Ms Mugqibisa 1


1.4.4. Strategic and Operational Committee

COMPOSITION The Committee is composed of the following representatives:• At least five representatives of the constituencies as represented on the Board • All EXCO members, representing all Directorates within the Fund a have standing/permanent invitation to attend

committee meetings• The Committee may invite any personnel/party to the meeting when deemed necessary• The Board shall nominate alternative members to stand on the Committee• The Committee will nominate a coordinator who will serve as Chairperson during meetings• Committee members are nominated to serve for a period of three years, which is in line with the main Board office term• Members may serve more than one term, provided it is approved by the Board• The Board Secretariat provides secretariat services to the Committee

MANDATEThe core mandates of the committee emanate from: • COIDA • Regulations issued in terms of COIDA• PFMA and its regulations• Other applicable legislation and directives

FUNCTIONS AND RESPONSIBILITIES OF ThE STRATEGIC AND OPERATIONAL COMMITTEEThe Strategic and Operational Committee will review, investigate, monitor, report and make recommendations to the Board, including the following functions: • Oversee the implementation and progress of the Fund strategy• Incorporate bests practices/service delivery activities of the Fund as per COIDA• Protect the reputation and image of the Fund• Review and monitor internal and external communication and marketing strategies• Identify, analyse and report on the reliability and credibility of statistical information• Evaluate and analyse the performance of the Fund• Incorporate best practices to brand and market the activities of COIDA• Provide contribution on management structure and governance imperatives of the Fund• Implementation of resolutions and directives• Implementation of Batho Pele principles• Any other matters as assigned by the Board from time to time

The table below indicates the number of Strategic and Operational Committee meetings, number of members attending and name of members attending:

TABLE 1.4.4.



5 7 Mr F Xaba 1

Mr P Magane 1

Mr S Motloung 4

Mr J Singh 1

Ms B Modise 4

Mr G Mclntosh 0

Mr M Majola 4


1.5. Remuneration of Board Members

Members of the Board will be paid the prescribed remuneration, traveling and subsistence allowances by the Compensation Fund.

Members not in full-time employment by the state must be paid allowances determined by the Minister.

Remuneration of Board members is determined by National Treasury Regulations 20.2.2.Committee members earn R1,947 per day.

TABLE 1.5.1. MEMBERS THAT ARE NOT REMUNERATED

NAME ORGANISATION

Mr M Mngqibisa GPAA

Mr J Singh RMA

Ms T Pugh FEMA

Mr N Weltman BUSA

Dr Dzingwa Department of Health

Mr T Lamati Department of Labour

Dr T Balfour-Kaipa BUSA

Mr Sushil Deva BUSA

Mr G McIntosh FEMA

Mr P Stoop RMA

Dr D Mokoboto Department of Mineral and Energy

Dr D Kritzinger RMA

Dr B Kistnasamy Department of Health

Ms J Mahlangu FEMA

TABLE 1.5.2. MEMBERS THAT ARE REMUNERATED

NAME TOTAL

Mr F Xaba R54,685.25

Mr S Motloung R44,011.00

Ms B Modise R50,889.46

Dr Dilotsotlhe R1,766.00

Mr S Tsiane R30,764.00

Mr A Letshele R9,192.00

Ms Feyers -

Dr C Mbekeni R5,660.00

Mr P Magane R3,532.00

Ms J Bodibe R44,596.24

Mr W Shisana R25,130.00

Mr M Majola R25,068.00

TOTAL R305,804.00


2. RISK MANAGEMENTDuring the period under review strategic and operational risk assessments were conducted and various risk owners updated their risk registers. The Risk Committee is chaired by an independent member who reviews and monitors the risk control matrixes to ensure effectiveness of the risk management process. Out of four Risk Committee meetings, only three were held during this period due to the resignation of the Chairperson.

Risk champions were appointed and trained. The main focus of risk champions are to assist the risk owners in identifying risks and implementing risk control measures.

3. INTERNAL CONTROLThe Control Maturity Assessment’s (CFMA) was launched on 13 July 2012 and concluded on 3 August 2013. The main focus was to assess the maturity of the Compensation Fund internal control environment. The objective of the CFMA was to help the Fund understand and assess the maturity of the current control environment versus the desired state. An appropriate control environment is necessary to manage risk and also to enhance performance. The control environment is measured across three categories; namely governance, people, and methods and practices.

Participants were requested to score five questions per section based on the following scale:

TABLE 3.1.

Basic

1

Evolving

2

Established

3

Advanced

4

Leading

5

Very minimal or basic level in relation to the individual component of the maturity model

Inconsistently applied and/or not well understood in a number of business areas

Activities are established. There is a need for enhancement to become more effective/efficient

Activities are consistently applied and well understood across the organisation

Activities consistently applied, integrated, regularly reviewed, aligned and co-ordinated

OVERALL RESULTS OF CURRENT STATE VERSUS DESIRED STATE Based on the results of the Control Framework Maturity Assessment, Board members and executive management regarded the Fund’s control environment to be “evolving”, which means that though the activities relating to risks and controls are established there is a need for performance to become more effective/efficient across the Fund on all fifteen components.

At “evolving” the Fund understands that the existing risk and control processes are inconsistently applied and/or not well understood in a number of business areas.

CATEGORY RATINGThe graph below illustrates the assessed ratings per category against the desired state:


FIGURE 3.1.

The results as per the three categories of governance, people, and methods and practices show that governance was ranked highest with a score of 2.53 and people was ranked lowest with a score of 1.89. In all categories the results indicate that the Compensation Fund’s control activities are “evolving”. However there is a need for performance to become more effective/efficient.

The rating given on governance, and methods and practices categories are above “basic” which is an indication that the control framework requires some improvement to get to the desired state of “established” where control activities are consistently applied and well understood across the Fund.

The following areas have been identified as the areas that show the biggest gap from the desired state. These areas need to be addressed by management:Governance: compliance and tone at the topPeople: culture alignment and coordinationMethods and practices: ICT control design and effectiveness

4. COMPLIANCE WITH LAWS AND REGULATIONSThe Compensation Fund has adopted the recommended principles of King III report, as good governance does not exist separately from the law. The Fund has established structures and processes with appropriate checks and balances that enable directors to perform their legal responsibilities and oversight of compliance with legislation, e.g. Audit Committee, Risk Committee, ICT etc..

5. FRAUD AND CORRUPTION As required by Section 29.1.1. of the Treasury Regulations, issued in terms of the Public Finance Management Act no1 of 1999, the Fund reviewed its fraud prevention plan and strategy to effectively manage the risks to which the Fund is exposed.

The Audit Committee ensures that the Fraud Prevention Plan and Strategy is implemented to minimise exposure to criminal acts. The Risk Management Unit addresses these threats. Its work covers fraud risk assessment, fraud prevention, detection, response and investigation. Fraud, corruption and irregularities were investigated during the financial year to enable management to deal appropriately with these matters and prevent them from recurring.

Governance Average

3.5

3

2.5

2

1.5

1

0.5

0People Average Methods and

Practice Average

Current state

Desired state


TABLE 6. STATISTICS ON INVESTIGATION CASES

TOTAL NUMBER OF

CASES

INVESTIGATION COMPLETED

ACTUAL LOSS AMOUNT RECOVERED

REFERRED TO SAPS

AMOUNT REFERRED TO

SAPS

142 86 R2,475,304 R137,638.97 27 R2,289,792

FIGURE 6.1. STATISTICS OF AREA AFFECTED

FIGURE 6.2. RISK AND FRAUD AWARENESS CONDUCTED

Mechanisms are in place to report fraud and corruption as follows:The Fund has outsourced the service to an independent contractor to ensure the fraud hot-line is managed objectively. Officials are encouraged to make use of the facility to confidentially report suspected fraud and corruption activities within the Fund. The Fund fraud hot-line number is 0800 2049 74.

Finance44%

Medical13%

Assessment13%

Pension15%

Registration14%

SCM 1%

Finance19%

Medical 16%

Assessment5%

Pension12%

Registration13%

Auxilary5%

Call Centre11%

Institute of Safety Management

19%


How these cases are reported and what action is taken:Once the case is reported it is registered on a fraud case database and assigned to an investigating officer for investigation. If the allegation is true, a report with recommendations is forwarded to Human Resource Management to take action in terms of the Department of Labour’s disciplinary procedures. A criminal case will be opened if needed.

6. MINIMISING CONFLICT OF INTERESTOfficials are encouraged to declare their conflict of interest and recourse themselves while performing their duties. Declaration forms are distributed ahead of bid adjudication processes and before the proceedings of the Board and Audit Committee meetings.

7. CODE OF CONDUCT The Compensation Fund has adopted the Department of Labour’s code of conduct that defines how officials should behave as public servants. Awareness of the code of conduct is created during induction. This covers relationships with the public, co-workers, legislature and executive as well as personal conduct and private interests.

8. HEALTH SAFETY AND ENVIRONMENTAL ISSUESThe Compensation Fund has established a Safety Committee that oversees all health and safety matters within the Fund. The safety representatives from both Compensation House and Benstra buildings have played a major role in ensuring that the work environment is safe and that the representative’s health safety and environmental issues are addressed accordingly.

9. AUDIT COMMITTEEThe 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 issued in March 2005.

COMPOSITION• Section 77 of the Public Finance Management Act, 1999 (Act no 1 of 1999) regulates the membership of the Audit

Committee• The Audit Committee consists of four independent members• The Chairperson was appointed by the Director General in consultation with the Executive Authority. At least once during

the term of membership the Audit Committee meets with the executive authority or the Minister of the Department of Labour.

• The Chairperson is not employed by the Department of Labour• Members are appointed for a four year term of office• The Director General has to agree with any termination of the services of a person serving on the Audit Committee• A quorum for any meeting is 50% one member

ThE AUDIT COMMITTEE ChARTERThe Audit Committee has adopted formal terms of reference as its Audit Committee Charter that has been approved by the accounting authority. The terms of reference do not replace the responsibilities in terms of the above Act and regulations, but complement and clarify the role of the Audit Committee in terms of their responsibilities. The Committee has conducted its affairs in compliance with this Charter and has performed its responsibilities contained therein. The Charter is available on request from the Fund.


ROLES AND RESPONSIBILITIESThe Audit Committee’s roles and responsibilities include its statutory duties as required by Public Finance Management Act (PFMA) and Treasury Regulations issued in March 2005. Primarily the Audit Committee is established to assist the accounting authority in discharging its duties relating to, among others:• The safeguarding of assets• The operation of adequate systems and controls• Ensuring the preparation of accurate financial reporting and statements in compliance with all legal requirements and

accounting standards• Effective risk management• Ensuring good corporate governance• Ensuring the effectiveness of internal and external audit processes• Ensuring that the codes of governance principles are maintained

AUDIT COMMITTEE MEMBERS The Chairman of the Board, Compensation Commissioner, Chief Financial Officer, Chief Audit Executive, external audit and executive management attend meetings by invitation.

10. AUDIT COMMITTEE REPORT FOR THE YEAR ENDED 31 March 2013REPORT OF ThE AUDIT COMMITTEEThe Fund’s Audit Committee is firmly committed to sound corporate governance. The Committee subscribes to a set of values that amongst others fosters integrity, respect, honesty and openness. We hereby present our report for the financial year ended 31 March 2013.

AUDIT COMMITTEE MEMBERS AND ATTENDANCEThe Audit Committee consists of the members listed below and should meet at least four times annually, as per the approved terms of reference. During the current year ten meetings were held.

NAME

11/0

5/20

12

22/0

5/20

12

30/0

5/20

12

11/0

6/20

12

31/0

7/20

12

03/1

0/20

12

10/1

0/20

12

12/1

2/20

12

05/0

2/20

13

15/0

3/20

13

Mr K Buthelezi * a a a a a a a a a a

Mr G Nzalo a a a a x x a a 1 1

Mr S Makhubu a a a a a a a a a a

Mr F Xaba a a a a a a a x a a

Legend:

a = Attended

X = Apology

1 = Resigned

* = Chairperson

AUDIT COMMITTEE RESPONSIBILITYThe Audit Committee confirms that it has complied with its responsibilities as stated in Section 51(1)(a)(ii) of the PFMA and Treasury Regulation 27.1.


The Audit Committee operates in terms of its charter and reviews audit, accounting and financial reporting issues and endeavours to ensure an effective internal control environment. The Audit Committee adopted the Charter and satisfied its responsibilities for the year.

OVERSEEING AND INFORMING ThE RISk MANAGEMENT PROCESSRisk management processes are being implemented through a formal risk management strategy that was adopted to ensure effective, efficient and transparent risk processes that focus on strategic and operational risks. From this risk process, the Committee concluded that an adequate risk management framework needs to be aligned with the overall strategy of the Fund to identify, focus, manage and monitor business risks. The Fund is predominantly focusing on operational risks in their efforts of risk management. This is inadequate from best practice and legislative perspectives as both calls for strategic objectives being the departure point for risk management. The Internal Audit Department assists the committee and management in monitoring the risk management process.

ThE EFFECTIVENESS OF INTERNAL CONTROLSIn line with the PFMA Internal Audit provides the Audit Committee and management with assurance on the appropriateness and effectiveness of internal controls. Accounting and internal controls focus on critical risk areas. The systems of internal controls implemented by the Fund within its business processes were not entirely effective for the year under review, as compliance with prescribed policies and procedures were lacking in certain instances. Internal and external audit highlighted numerous internal control deficiencies. The control environment has been assessed as inadequate and ineffective. The Committee therefore recommends improved controls to be designed to provide reasonable assurance that assets of the Fund are safeguarded from loss or unauthorised use and the financial records may be relied on for preparing the financial statements and maintaining accountability for assets and liabilities.

The Audit Committee is of great concern that there is lack of management’s ability to monitor the Fund’s performance in the following areas:• Control environment: management’s philosophy and operating style does not promote an effective control over financial

reporting and internal controls in relation to operations• Implementation of audit recommendations and management action plans• Project governance in relation to SAP FI and ICM• Integrity and reliability of financial information• Revenue and debt collection• Leadership and capacity within the finance and project management offices

The Audit Committee has engaged all stakeholders namely management, Auditor-General, accounting authority and executive authority regarding the above matters.

It is expected that management will implement strategies, resolutions and action plans agreed upon by governance structures.

Internal Audit and the management report of the Auditor-General indicated certain internal control deficiencies and matters that have not yet been satisfactorily addressed by management as reported in prior years. This indicates that there has been little progress made to improve the Fund’s internal controls. The Committee however acknowledges that in some cases, these matters are dependent on the newly implemented information technology solutions (SAP FI and ICM) of the Fund. Other matters have been escalated as top-priority through robust action plans that are being monitored by the Audit and Risk Committee.

The Audit Committee as part of its commitment in improving the current state has arranged and put measures in place to monitor the progress. Management will on a regular basis report directly to the Audit Committee, with Internal Audit reporting independently on the progress by management in implementing the plan to enable the Audit Committee to evaluate the progress made.


The quality of management and quarterly reports submitted in terms of the PFMA.

There has been good progress on the content and quality of quarterly reports prepared and issued by the accounting officer of the Fund during the year under review. It was however noted that the progress on revenue, accounts receivables and implementation of a new system for the Fund has been very slow.

INTERNAL AUDITThe Internal Audit function was co-sourced in this financial year, this has assisted the Fund in ensuring that the internal audit function has adequate resources and is able to execute on their mandate

Internal Audit performed periodic independent evaluations of the adequacy and effectiveness of controls, financial reporting, and the integrity of information systems and records. We are satisfied with the operations of the Internal Audit unit.

EVALUATION OF ThE ANNUAL FINANCIAL STATEMENTSThe Audit Committee has:• Engaged with finance management, the Chief Financial Officer and the Commissioner and has reviewed the performance

and financial statements• Reviewed and discussed with the Auditor-General and accounting officer the audited annual financial statements to be

included in the annual report• Reviewed the Auditor-General’s management letter and management responsesThe Committee concurs and accepts the conclusions of the Auditor-General on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report from the Auditor-General.

AUDITOR-GENERAL SOUTh AFRICAThe Audit Committee has met with the Auditor-General South Africa to ensure that there are no unresolved issues.

Mr k ButheleziChairman of the Audit Committee

Part C PerformanCe information


1. INTRODUCTIONThe Accounting Authority is responsible for the preparation of the Fund’s performance and for the judgements made in this information. Measures have been put in place to provide reasonable assurance of 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 2013.

2. PREDETERMINED OBJECTIVESIn accordance with the PAA and the General Notice issued in terms thereof, the Auditor-General (AG) reported the findings relevant to performance against predetermined objectives, but not for the purpose of expressing an opinion.

Auditor-General found that performance targets were not specific and required more detail. Secondly, the explanations considered necessary to satisfy the validity and accuracy with respect to objective 1 Directorate: Compensation, objective 2 Directorate: Medical Services, and objective 7 Chief Directorate: Finance was not available. This was due to limitations placed on the scope of work.

3. OVERVIEW OF THE COMPENSATION FUND’S PERFORMANCE3.1. Strategic outcome oriented goals

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 provides for matters connected therewith. There are two outcomes applicable to the Compensation Fund and these were the basis for the Compensation Fund Strategic Plan: outcome 4 (decent employment through inclusive economic growth) and outcome 12 (an efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship). Based on the aforementioned two outcomes, the Compensation Fund has developed four key strategic outcome oriented goals. The strategic outcome oriented goals are strategic priorities which form the basis of the Compensation Fund’s strategic objectives. The strategic outcomes identified are the results of the Fund’s performance as viewed by the beneficiaries and will be the consequence of achieving the outputs. Performance of the Fund during the year under review is explained in more detail under service delivery.

3.2. Service delivery environment

The Compensation Claims Directorate 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, to adjudicate the validity of a claim and to pay out compensation.

3.2.1. Registration and processing of claims

The Fund registered a total of 196,509 claims during the financial year, 192,509 were adjudicated (98%) of which 129,405 were accepted. Adjudication is the process of determining liability for the Fund. The process involves accepting liability, repudiating and requesting additional information, and where no sufficient information is available deciding upon the validity of a claim.

325,981 awards amounting to the value of R480,186,515 were processed. All accidents occurring from 1 October 2011 were registered on a new system (SAP), whereas all claims where accidents occurred before October 2011 were registered on an e-claims system.


3.2.2. Compensation benefits

TABLE 3.2.2. TEMPORARY DISABLEMENT, PERMANENT DISABLEMENT AND PENSION PAYMENTS

YEARNO OF PAYMENTS

PROCESSEDVALUE OF AMOUNT

PROCESSED

MONTHLY PENSION PAY-OUTS

2008/2009 327,647 R630,708,449 R526,371,359

2009/2010 340,159 R771,801,533 R572,023,432

2010/2011 329,109 R549,220,271 R581,102,286

2011/2012 205,150 R549,000,702 R735,859,691

2012/2013 325,981 R480,186,515 R798,291,067

The above graph is the illustration of payments processed from 2008 until 2012. It demonstrates the trend/the movement of payments. If we compare payments processed in 2011/12 and 2012/2013, it obvious that there is a huge improvement in the number and amount of claims paid. One reason for this increase could be that the system is now stable. In 2012/13 the amount paid has doubled as compared to the previous years.

FIGURE 3.2.2. MONThLY PENSION PAYOUTS (R) BY 31 MARCh 2013

This graph illustrates the amount of benefits paid between 2008 and 2013 in Rand.

2008 / 2009

526 371 359

2009 / 2010

572 023 432

2010 / 2011

581 102 286

2011 / 2012

735 859 691

2012 / 2013

798 291 067

900 000 000

800 000 000

700 000 000

600 000 000

500 000 000

400 000 000

300 000 000

200 000 000

100 000 000

R 0


FIGURE 3.2.3. COMPENSATION BENEFITS PROCESSED IN NUMBERS BY 31 MARCh 2013

The graph illustrates the number of payments between 2008 and 2013. It complements the table on compensation benefits processed. It demonstrates the number of claims processed which also shows an improvement in number of compensation benefits paid for the year 2012/13.

TABLE 3.2.3. STATISTICAL ILLUSTRATION OF CLAIMS REGISTERED AND ADJUDICATED FOR YEAR 2012/13

SYSTEMCLAIMS

REGISTEREDCLAIMS

ACCEPTEDCLAIMS

REPUDIATEDOUTSTANDING INFORMATION

E-claims 26,584 15,408 112 12,911

SAP 169,925 113,997 244 63,226

TOTAL 196,509 129,405 356 63,226

The table indicates the number of claims registered and adjudicated for the year 2012/13. It clearly shows that the number of claims registered on SAP is greater than the number of claims registered on e-claims. In last year’s report, claims registered on e-claims were higher than claims registered on SAP. This is due to old claims that occurred prior to 1 October 2010 diminishing, while claims registered on SAP are increasing.

TABLE 3.2.4. COMPARISON OF CLAIMS REGISTERED, ACCEPTED, REPUDIATED FOR 1 APRIL 2008 TO 31 MARCh 2012

COMPENSATION FUND NOT ACCEPTED

PERIODCLAIMS

REGISTEREDCLAIMS

ACCEPTEDCLAIMS

REPUDIATEDOUTSTANDING INFORMATION

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

1 April 2011 to 31 March 2012 141,437 110,180 129 31,128

1 April 2010 to 31 March 2011 215,493 190,168 447 24,878

1 April 2009 to 31 March 2010 200,560 178,293 361 21,906

1 April 2008 to 31 March 2009 203,711 182,788 740 20,183

2008 / 2009

327 647

2009 / 2010

340 159

2010 / 2011

329 109

2011 / 2012

205 150

2012 / 2013

325 981

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0


The table is the comparison of claims registered, accepted and repudiated for the past five years. In 2008/09, 2009/10, 2010/11 claims registered were above 200,000. In 2011/12 the number declined due to the introduction of a new system. In the year 2012/13, the table shows that the performance on SAP is improving and 196,509 claims were registered as compared to 141,437 of 2011/12. Measures have been put in place to improve performance and further improvements are expected in the year 2013/14.

TABLE 3.2.5. BREAKDOWN OF COMPENSATION BENEFITS PROCESSED ON E-CLAIMS AND SAP

BENEFIT TYPETRANSACTIONS

ON E-CLAIMSTRANSACTIONS

ON SAPTOTAL NUMBER OF PAYMENTS

AMOUNT (R)

Additional compensation 3 - 3 2,753,026

Burial expense 199 8 207 1,686,996

CAA 7,257 - 7,257 13,847,778

Lump sum to widows 443 16 - 5,913,711

Partial dependency 14 - 14 437,870

PD lump sum payment 3,535 32 3,547 95,708,018

Pension to employee and fatal 295,538 214 295,752 798,291,057

TTD 18,023 699 18,722 79,534,725

Widow pension 164 - - 1,138,681

TOTAL 325,176 969 325,502 999,311,862

The table is an illustration of compensation benefits processed. The benefits are shown per type for the year 2012/13. The first column shows the type, then the number of claims processed on e-claims and SAP for that type of benefit and the amount paid. The ‘not available’ means that information for the benefit type mentioned was not available.

3.2.3. Improvement on benefits and policy development

The Compensation Board has reviewed the existing benefits and made some remarkable increases in the benefits to be paid to injured employees and dependents in a form of lump sums, loss of earnings and monthly pensions. Major increases include the following:• Increase of the salary ceiling from R292,032 to R312,480 per annum• The monthly compensation pension increased by 6% plus 100% purchasing power of the low pension earners• The minimum earnings increased from R3,406 to R3,645 per month for the Temporary Total Disablement (TTD) and for

Permanent Disablement PD lump sum payment. Earnings have a big influence in the calculation of benefits• Maximum earnings increased from R24,336 to R26,040 (75% = 19,530) per month for Temporary Total Disablement

(TTD) and monthly pension payments for Permanent Disablement (PD) for 31% to 100%• Maximum earnings for the calculation of compensation for Permanent Disablement (PD) of 30% and less were increased

from R13,630 to R14,584 per month• The constant attendance allowance for pensioners who need constant nursing increased from R1,449 per month to

R1,550 per month in addition to the monthly pension• Maximum funeral benefits increased from R13,716 to R14,539• Approval was granted for pensions below R1,000 per month to be increased to R1,000 per month, for employees and

widow/ers

These increases have been determined on the basis of the actuarial investigations and recommendations of the Compensation Board. The recommendations were approved by the Minister of Department of Labour before they were implemented. The increases were then gazetted with effect from 1 April 2013.


3.2.4. Decentralisation Project Annual Report

3.2.4.1. Background information

The Compensation Fund has decentralised some of its services to all nine provinces with the aim of being more accessible to its stakeholders and to improve claims turnaround time. Though most of the claims are still registered at the Compensation Fund, gradually provincial statistics are increasing and the number of claims registered at Compensation Fund is reducing. Decentralised functions include registration of claims, adjudication of claims and processing of medical accounts. Processing of compensation benefits is still done at Compensation Fund head office. Officials were deployed to all the provinces to attend to decentralised functions.

TABLE 3.2.4.1. PRODUCTION AND STATISTICS: COMPARISON OF PROVINCIAL DECENTRALISATION STATISTICAL REPORT

2010/11 2011/12 2012/13

PROVINCE REGISTERED REGISTERED REGISTERED

Eastern Cape 1,351 24,452 781

Free State 3,732 3,516 699

Gauteng North 202,146 93,407 5,775

Gauteng South 152 1,685 5,789

KwaZulu-Natal 4,726 4,853 2,549

Limpopo 2,635 1,672 478

Mpumalanga 135 3,362 831

Northern Cape 185 870 333

North West 257 2,561 853

Western Cape 224 4,906 4,240

SAP registration - 23,248 169,925

Other (unspecified) - - 4,256

TOTAL 215,493 164,532 196,509

The above table is the comparison of claims registered in the province from 2010/11 until 2012/13. This illustrates the number of claims each province handled and is dependant on the size of the province. Between 2010 and 2011 the table shows an improvement in the number of claims registered. In 2012 it shows a decline in number of claims registered in the provinces, however shows for the same period a drastic increase in the number of claims registered on SAP. SAP report does not indicate a province where the case was registered but the total number of claims registered.


FIGURE 3.2.4.1. CLAIMS REGISTERED BY PROVINCE FOR 2012/13

The above graph is the illustration of the previous table. It is a demonstration of provincial performance in respect of claims registered. This graph illustrates the total contribution made by each province in respect of number of claims registered.

TABLE 3.2.4.2. NUMBER OF ACCEPTED CLAIMS BY PROVINCE FOR YEAR 2012/13

PROVINCE 2010/11 2011/12 2012/13

Eastern Cape 15,867 24,491 1,213

Free State 5,804 3,375 834

Gauteng North (CF) 173,006 103,974 6,899

Gauteng South 278 1,332 7,942

KZN 7,669 4,008 3,285

Limpopo 3,861 573 611

Mpumalanga 110 6,276 961

Northern Cape 57 778 477

North West - 1,983 1,007

Western Cape 199 4,145 7,324

Other SAP - 13,647 113,997

Other (unspecified) - - 15,145

TOTAL 206,851 164,582 129,405

The table above shows the comparison of claims accepted per province for the past three financial years. The number of claims accepted is few compared to the previous years. There are measures put in place to ensure that there is an improvement in performance and the impact will be assessed in the current financial year.

CLAIMS ACCEPTED PER PROVINCE FOR FINANCIAL YEAR 2012/13The graph above demonstrates the number of claims accepted by province, this is dependant on the size of the province. Gauteng and Western Cape are the highest, meaning that they have a high volume of claims received.

Eastern Cape

Free State

Gauteng Pta

Gauteng Jhb

Kwa-Zulu Natal

Limpopo Mpuma-langa

Northern West

Western Cape

SAP registration

Other (unspecified)

Northern Cape

781 699

5 775 5 7892 549

478831

333853

4 240

169 925

4256

100 000

10 000

1 000

100

10

1


3.2.4.2. Challenges

• No SAP access at the Labour Centres• All SAP related enquiries are forwarded to provincial office and Compensation Fund• Not all functions are decentralised to provinces• Establishment for COID in the provinces is not finalised or fully deployed • No management information system to help monitor provincial performance in the provinces

3.2.4.3. Lessons learnt from the pilot project

MAjOR DEPENDENCIES:• Information technology compatibility• Efficient and effective performance of e-claims system• Knowledgeable and skilled human resource availability• Availability of space or accommodation

1. Turnaround time on registration of claims has improved at provincial level 2. Stakeholders are aware of services rendered at provincial level3. Payments of medical accounts for doctors and service providers are made available at local level4. Provincial offices still do not have adjudication for occupational diseases which is centralised due to capacity constraints5. Dysfunctional imaging system at the provincial offices does not assist document management

3.2.4.4. Way forward

• The Compensation Fund organisational structure has been finalised, approved by both Ministers of Labour and Public service and Administration

• Upfront scanning and indexing deployed at the provincial offices for an improved and efficient document management service

• The implementation of the new SAP-ICM system to provinces takes the Compensation Fund services to its stakeholders• The SAP-ICM system is automated and will facilitate the electronic submission of claims as well as improve productivity

of staff due to automation of many processes and improvement of service delivery• Deployment of ICD system to all provincial offices has improved the office efficiency levels• Training and re-training of staff on all new processes is on-going

3.2.5. Compliance with COIDA

3.2.5.1. Monitoring of exempted employers and unreported accidents

• The Fund has determined Section 88 administrative costs for all government departments and exempted municipalities to the value of R17,093,492.17 million for the 2012/13 financial year

• The Director General reviewed the existing provisional settlements to improve service delivery by the Fund• Securities for all exempted municipalities were reviewed, shortfalls were identified and provided for

3.2.6. Contributions to the social security comprehensive reforms

Since its inception, the inter-departmental task team on comprehensive social security reforms, has developed a framework for the comprehensive social security reforms. The Compensation Fund has made contributions to the Consolidated Government Paper, to the Road Accident Benefits Scheme Bill and to the National health Insurance. During this financial year, the Fund participated as follows:• The Consolidated Government Paper on social security reforms was once again reviewed and sent back to the cabinet

for deliberation• The Compensation Fund provided additional inputs into the Road Accident Benefits Scheme Bill for further discussion

and is awaiting feedback from the Department of Transport in this regard


3.2.7. Prevention of accidents through strengthening civil society

BACkGROUNDIn its quest to advocate policy on injury on duty and occupational health, the Compensation Fund has funded 21 non-profit organisations to train union shop stewards and employees on the Compensation for Occupational Injuries and Diseases Act as well as on Occupational health and Safety Act.

The Strengthening Civil Society Fund Committee (SCSF) at Department of Labour (head Office) is responsible for assessing and approving project proposals from these organisations to promote sound labour relations. The Compensation Fund is represented on this Committee.

During July 2012, the Director General approved all 19 new projects that were recommended by the SCSF Committee. Including the Workers World Media Productions (WWMP) and University of KZN (UKZN) projects, continuing from the previous year, there was a total number of 21 projects active.

MONITORING AND EVALUATION OF THE wORkSHOPSAs part of monitoring and evaluation, the Compensation Fund developed COIDA guidelines for developing training material by the projects. Spreadsheets for claims enquiries were also developed for the projects to monitor and evaluate the impact of the training workshops.

Project managers were briefed by the SCSF through visits and by correspondence. Of the 21 projects, SCSF visited all the new projects for administrative matters while the Fund participated in some COIDA training workshops.

The Fund participated in training in five provinces conducted by Lethabong Advice Centre in North West (Maokeng), Mangaung Advice Centre in Free State, Opret Advice Centre in Limpopo (Mokopane), University of KwaZulu-Natal (Durban), Qholaqhwe Advice Centre in the Free State and Workers World Media Productions (WWMP) in the Western Cape.The cluster training workshops conducted by WWMP took place on 14 to 18 April 2012 in Cape Town, July 2012 in Gauteng, from 14 to 15 August 2012 in East London and 28 to 29 August 2012 in Durban. These workshops were attended by all union federations, officials from the Fund and community radio stations representatives countrywide.

The Fund also participated in radio interviews for community radio stations and national radio stations in five languages.

A summary of the projects performances is as follows:

STRENGThENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2012/2013

PROVINCENAME OF PROjECT

MAIN OBjECTIVE

PROGRESS AND ACHIEVEMENTS

Eastern Cape 1. Aliwal North Advice Centre

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

• The project conducted 11 workshops in four area: Greenslade hall, Mount Carnel, help Mekaar and Braamspruit

• To improve dissemination of information and to create awareness, the Takalani community radio station was a partner of the project

• The number of COIDA cases has decreased as most employees are well informed and take their enquiries straight to the Labour Centre

• The overall budget spent was R179,600


2. Matatiele Advice Centre

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

• The project conducted training in 26 farming areas: Chaplain farm, Cold stream farm, Meadow Brook farm, Chillsfontein farm, John and Sandy farm, Mc Donald farm, Cherston farm, Bon Accord farm, Fraainitsag farm, Midlands farm, Merino Walk farm, Blackly farm, Southfield farm, Umzimvubu farm, Paradise farm, Cross Road farm, Cedarberg farm, Corner More farm, harmony farm, Grootvlei farm, Waterfall farm and harmony Trust farm

• A total of 407 farm workers participated• Most employees are not registered as employees• Lack of protective clothing against inhalation of chemicals and

hazardous substances• There is no Labour Centre in Matatiele and consequently

employees have to travel long distances to the Kokstad and Mont Ayliff Labour Centres. There is a satellite Labour Centre, but there is need for a permanent Labour Centre in Matatiele due to the vastness of the district.

• On some farms employees and their families have no clean water as they use contaminated water from the employers’ rusty water tanks

• There was reluctance from the chairperson of the white farmers union to facilitate the meeting between the farm owners and the project organisers. This was contrary to willingness and cooperation by the chairperson of the black farmers union.

• The project was allocated a budget of R200,000 of which R176,404 was spent (variance R23,595.26)

Free State 3. Mangaung Advice Centre

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

Pending tranch 2 report• This organisation held six workshops: Thaba-Nchu, Verkerdevlei,

Bloemspruit, Botshabelo and Bloemfontein• A total of 256 employees participated.• A total of R146,555 was utilised for the first tranch training• Four community forums were established and 74 people

attended• Means of verification: attendance registers• The Compensation Fund officers, D Mphahlele and J Mtimkulu,

attended one of the workshops for monitoring and lending technical support on policy matters

Issues and challenges:• Most employees are not able to attend workshops during the

week• The sustainability of the forums cannot be guaranteed

Continued


MAIN OBjECTIVE



4. Maokeng Advice Centre


• This project conducted ten workshops in the following areas: Kroonstad, Viljoenskroon, Koppies and Steynsrus.

• A total of 506 workers participated in phase one of the project• A number of COIDA cases were reported after the workshops,

dating from 2001• Attendance registers and photos were taken as means of

verification• The Fund participated in the training workshop in Kroonstad • Non-reporting of accidents is still very rife• Employees are fearful of victimisation in reporting OhS and

COIDA issues• A total of R293,110 was approved for this project and

R146,555 was spent for the first tranch. Financial statement still pending.

5. Qholaqhwe Advice Centre


• Total of 624 participants reached, Exceeded target of 600 by 11%.• Expenditure R395,866.84 against budget of R400,000 (balance

R4,133.16.)• The project conducted ten workshops in the following areas:

Metsimaholo 2x, Mafube 4x, Setsoto 2x, Dihlabeng and Phumelela-Vrede

• The Fund participated in the training workshop in Vrede• The number of recorded cases have increased and except

for the participants, more people have been reached through community radio stations awareness campaigns

• Facilitation reports for each workshop• Attendance registers• Some captured workshop moments on photo• Participation by the Fund: Mr Lengolo participated in

Phumelela-Vrede

Issues and constraints:• Late release of funds impacting on timeframes• Late arrival of participants• Participants totally ignorant about OhS and COIDA• Workshops over the weekends shortens the time available• Non-availability of farm workers during harvest times

Gauteng 6. Community Re-Generation Development Centre

To advocate COIDA and OhS policies by training mainly shop stewards, farm workers and industrial workers for 12 months

Second tranch report still outstanding• The project trained ten facilitators to train 2,000 farm workers• Three open training sessions were held after hours• A total of 229 farm workers attended • Need to engage farm owners before the workshops to get

their buy in• The farm strikes prevailing in Western Cape had a negative

impact on the access to farms• Approached the Live-Bright-Life company to facilitate access to

the farms

Continued


MAIN OBjECTIVE



KwaZulu- Natal

7. Bergville Advice Centre


1 August 2012 to December 2012Second tranch report still pending

Achievements and impact:• Conducted workshops on 12 farms • Laid emphasis on effective communication and good working

relationship between employers and employees• Some farms not on the lists started calling for workshops on

their farms• Most cases brought forward are old cases

Issues and constraints:• Lack of communication between employees and employers• Indunas are seen as puppets of the employers and are accused

of not communicating effectively with employees• Long working hours from 7 am to 6 pm• Employees are not provided with protective clothing despite

dangerous substances they work with• Chemicals sprayed in the fields are blown into the river which

provides drinking water for the community• Earnings are the same irrespective of risk• Farmers delayed the workshops due to the planting season

during December• The workshops on Saturdays and Sundays attract

troublemakers • Employees feel freer to ask questions when the workshops are

held in community halls

8. hemville Advice Centre


• Conducted 12 workshops for 15 farms as follows: Briar Lear, Pinelands, Argle, Inchgarth, Goxhill, Peters Field, Bromley, Scafell, Finelands, Beaverstone, Dieu Donne, Sani Valley Lodge, Serath Forth Farm

• 278 participants attended• Budget utilised R33,182• The chairperson misused funds to the tune of R1,398 as re-

payment of his loan.• The stop order was cancelled by the manager of the himeville

Advice Centre. SCSF is following up on the case.• Was assisted by John Pearce who is working with farm issues to

contact farmers• Leaflets for COIDA and OhS were provided by CCJ who

trained the presenters

Issues and constraints:• No contact details for some farms• Farm owners denying access for fear of farm killings, they always

expect the company of SAPS• Sotho-speaking employees were hidden for unknown reasons• Employees afraid to raise issues in the presence of farm owners• Some farm owners not supporting the project• Discrimination in terms of race: white employees living

in healthy conditions, while blacks living in unhygienic and unhealthy conditions without toilets.

• Some farmer owners still physically abusing workers by kicking them

Continued


MAIN OBjECTIVE



9. University of KZN

• OhS and COIDA modules are still under development.• 15 unions participated in four pilot workshops in June, July,

August and October 2013• A total of 142 participants attended the workshops as follows: - Trade union shop stewards - Trade union officials - health and safety representatives - Organisers• A year-end evaluation workshop was held on 4 December

2013 and the Fund attended. It was observed that: - More unions are requesting for training on COIDA and OhS - Increased number of unions using the health Clinic at the

University - The project leader was assisted on training by doctors from

the Department of Occupational Medicine• A pre-assessment and post assessment evaluation was

conducted

Issues and constraints:• The accreditation of learners who left school at lower levels is

problematic• Newly appointed shop stewards not yet trained on OhS and

COIDA• The learning process is slow as the learning material is pitched

at intermediary level

10. Mooi River To advocate COIDA and OhS policies by training mainly shop stewards and farm workers in the rural areas for 12 months

• The project conducted 16 workshops at the following farming areas: honeydue, John Armstrong, Inkululeko, Gugulethu, Vrystaat, Doornkllo, Butt, Trent lodge, Thwalisthe, Riverside, Weston, Summerhill, Sierra Ranch, Velem, Mpofana and Groove

• 322 employees participated in the workshops• From the budget of R58,319.50, R56,710,87 was spent (unspent

funds R1,608.63)

Challenges:• People coming to work drunk• Lack of information to employees about injury on duty• Farm owners need education about OhS and COIDA• Employees work with poisonous and dangerous chemicals

without protective clothing• Employees get fired for standing up for their rights• Zimbabweans accused of spying on local employees and getting

better pay• Working under contract indefinitely• Public holidays regarded as working days by employers• Assault of workers by farmers• Not all workers are allowed to attend educational workshops• One employee cut his fingers but was forced to go to work

without compensation• The presenter accused of inciting workers to strike and a case

opened against her

Continued


MAIN OBjECTIVE



Limpopo 11. Mamadi Advice Centre


• Budget used R70,205.53, against the budget of R82,500 for the first tranch and R82,904.80 for the second tranch

• Conducted 17 workshops as follows: Uitdraai, Vetfontein, Simons Drop In, Makhatho hall, Pax, Tlolwe Sport, Tlowe School, Tlolwe Village, Grootpan, Gedion Crech hall, Wegdraai Tribal Gatgering Place, Slaaphoek Dropping Centre, Ga-Sebola, All Days Community Centre, Mokhurumela, Mokhurumela Tribal and Taaiboschgroet

• Total number of participants: 619• Participants were trained with manuals and pamphlets in their

own languages• There were some unreported cases of COIDA

Issues and constraints:• Inspectors accused of not assisting employees but colluding with

employers.• Work environment not healthy• Employees are forced to resign due to injury on duty without

getting their benefits• Employees need education on other labour legislation

12. Nkunzi Development Center

To advocate COIDA and OhS policies by training mainly shop stewards, NGOs, factory workers and farm workers in the rural areas for 12 months

1 August 2012 to January 2013Tranch 2 report still outstanding • The Fund analysed and recommended the project to the

Director General in Q1• Budget utilised R188,819 (variance R11,180)• The project covered Modimolle, Makhado, Modikopong and

Greater Tzaneen• Number of participants 131

Issues and constraints:• Farm workers lose their salaries during the week hence they

can are only available on weekends• The Fund has advised the organisation to plan the workshop for

only one day over the weekend. Only basic information should be provided at these workshops.

Continued


MAIN OBjECTIVE



13. Opret Advice Centre

To advocate COIDA and OhS policies by training mainly shop stewards, NGOs, factory workers and farm workers in the rural areas for 12 months

• Conducted 20 COIDA and OhS workshops in 17 villages and farms

• Overwhelming total of 1,024 participants attended• The total budget was R300,000 and R293,325 was utilised• The areas covered: Nduna, Baloyi, Tshamahanzi, Modimolle,

Mosesetjane, Mapela, Rhenosterfontein, Mabula Village, Mokopane-hans van Strydom, Tayob Mokopane, Moshate Village, Park More, Extension 19, Nkgoru Village, Diretsaneng, Polar Park, Kabeane, Basterpad, Sekgakgapeng, Mahwelereng and Ga-Mokaba Village

• The Fund participated in the Mahwelereng training workshop• Six cases of unreported COIDA claims were reported and

were also used as case studies at the workshops. Of these cases two had been reported but have not yet been finalised by the Compensation Fund. The Fund is assisting the project with the reporting and finalisation of these cases.

Issues and constraints:• Claims not lodged through ignorance• Employers are not assisting employees with their claims• Illiteracy on the part of employees• Employers not complying with OhS rules and regulations

Mpumalanga 14. Nkomazi Advice Centre

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

• Conducted six workshops at Magudu, Vlakbult, Riverside Farm, Achoemansdale, Buffelspruit, Kwa-Mkwarukwaru

• The total budget utilised R59,931 and the balance is R5,000• A total of 258 participants were trained and the following were

achieved: - Of the five claims submitted, two were existing claims while

three were unreported accidents. The Fund is assisting with the processing.

- The Farm workers committee is referring COIDA cases to the Labour Centre

- Farm workers invite the Labour Centre to provide continuous training at their work places

- Employees have been assisted by the Centre on their mediation and arbitration on dismissals

- Contract workers working in the RDP projects were also assisted

Issues and constraints:• Unfair labour practices/dismissals• No formal registration of employees with UIF and no identity

documents• Employers blame employees for negligence regarding injuries• No light duties offered. Instant dismissal of employees with

occupational injuries.• Venomous snakes are a threat to workers during the harvest

season• No transport offered for employees by employers• Non-citizens supervisors oppress the locals and are not

knowledgeable about COIDA and OhS policies

Continued


MAIN OBjECTIVE



15. Leandra Advice Centre


• This organisation conducted a total of nine workshops in the following farm areas: Lebohang farm hall, Moederverloren, Roode Bank, Kortlaagte farms, Strehla farm, hartebees and Ezinteni

• A total of 1,000 farm dwellers and employees participated, including some employers

• Initially most farmer owners would not allow training under the guise that employees were aware and happy about OhS and COIDA issues ,but later cooperated after some of them attended the training workshops

• Training manuals and pamphlets were developed for training and distribution of information

• As means of verification, photos were taken, attendance registers kept and the Department of Labour also visited the project

• Total budget utilised: R243,600

Northern Cape

16. Sika Sonke Advice Centre


1 August 2012 to December 2012Tranch 2 report pending• The project reached 411 participants compared to the 200

projected• Overwhelming interest from farm workers and communities• Employees became aware of the need for safety representatives

and hazards in the workplace• 46 farm owners participated • SAPS accompanied the team to Loxton and Victoria Wes• The De Aar Labour Centre accompanied the team as well• Means of verification: attendance registers and photos

Issues and constraints:• Before the workshops farm workers were totally ignorant of

the OhS and COIDA • Labour Centres are situated too far from farms

17. hope Town Advice Centre


Tranch 2 report pending• Conducted 13 workshops as follows: Garieb, Campbell, Salt

Lake, Douglas, Philipstown, Petrusville, VanderKloof, Strydenberg, De Bron, hopetown, Karrekloof, Big Foot and Belmont

• A total of 319 participants were trained• Budget used R136,000• Case studies were used to ensure practicality

Major issues and constraints:• Lack of visibility of Labour inspectors.• Closure of Phillipstown Advice Centre• Farm workers situated far away from labour centres• No safety representatives in the workplace• Employers pay cash for IOD to avoid compliance• Employees dismissed post injury

Remedial action:• Established a working relationship with the Community

Development Workers (CDW). Claim forms are handed to them for assistance.

• Follow up sessions• Claim forms to be supplied to local drop in Centre

Continued


MAIN OBjECTIVE



18. Marydale Advice Centre


1 August 2012 to December 2012Tranch 2 report pending • Conducted six workshops in Marydale 2x, Grobelershoop,

Niekerkshoop, Prieska and Wilcot Boerdery• A total of 145 participants mainly farmworkers and a few from

industries• A total of 14 COIDA complaints were reported.• The Local Councilor also attended• Farm owners also attended in Prieska and Marydale respectively

Issues and constraints:• Farmers refuse to provide transport for injured employees to

see the doctor• Employers fail to report accidents/ diseases• Unlawful deduction for COIDA• No protective clothing for employees• No danger signs for hazards in the workplace• No safety representatives in the workplace• Victimisation by employers of employees who reported on

their own to DoL• Eviction of employers who are disabled by occupational injuries• Injured employees sent to clinic for pain killers only• Employers raised concerns about non-observance of safety

rules by employees• Employers accuse employees of abusing alcohol at work• Absence of Labour inspectors

North West 19. Lethabong Advice Centre


• An overwhelming 1,259 farm workers were reached in 18 educational workshops: Stella farms, hartebeespoort (SANGIRO FARM), Bokfontein farms, Beestekraal farms, Syferbult farms, Moedwul farms, Groot Morico, Skeerpoort farms, hepoort farms, Ventersdorp farms, Ottoshoop farms, Derby farms, Swartruggens, Sannieshof farms, Delareyville, Makwassie farms, Koster farms and Ratsagae farms

• Total budget expended R200,000• The Fund guidelines were used during the presentations• A total of 33 COIDA cases recorded: most unreported

accidents and four with existing claims numbers. The Fund is assisting with reporting the accidents and following up on the existing claims.

• Brought Labour inspectors to farmers to obtain proper pay slips• The Compensation Fund attended training workshop in

Delareyville, hekpoort, Ventersdorp and Groot Marico.

Issues and constraints:• Farmers exploit workers by deducting money for mealie meal• Farmers charge hospital fees for injury on duty• Collude with farm doctors to in misstating injury on duty• Farm doctors disclose the hIV/AIDS status to farmers who

then fire hIV positive employees• No protective clothing provided to employees

Continued


MAIN OBjECTIVE



Western Cape

20. Swellendam Advice Centre


• Conducted nine workshops at Swellendam, Buffelsjag, Barrydale, Suurbank and Riviersonderend

• A total of 272 participants from the various farms• Farm workers were supplied with English and Afrikaans

pamphlets• From a total budget of R250,000, a total of R246,729 was spent

and R3,270.69 was not spent• The presentations covered schedule 2 for permanent diseases,

hearing impairment, and hand and arm vibrations• Concerns from employees who die without compensation

were recorded• More COIDA cases (22) were recorded and are being followed

up with the Labour Centres. Of these cases eight have existing claim numbers, while three are unreported accidents.

21. Workers World Media Productions

This project focuses on training community radio stations. Local TV stations and the community generally on OhS and COIDA nationwide.

• Live OhS and COIDA radio talk shows were held in 41 community radio stations that have signed the Memorandum of Agreement

• Capacitated through training a total of 100 community radio show hosts

• held Labour Community Media Forums in all nine provinces and a total of 215 attended at the following places: Boland, Barberton, Bushbuck Ridge, Newcastle, Memoth, Kwambonambi, Eshowe, Durban, Worcester, Pietermaritzburg, Upington, East London, Port Elizabeth, Mokopane, Phalaborwa, Botlokwa, Polokwane, Mohodi, Zebediela, Alexandra, Soweto and Khayelitsha

• hosted Labour TV shows on Africa Labour Media Project and Arab Labour Community project

• Total amount spent was R279,161 from a tranch of R613,975.• Cosatu, Fedusa and Nactu participated in these projects• Topics on OhS and COIDA were determined and scripts

translated into five languages by Fund presenters for the pre-recorded programmes for national radio stations.

• Five officials from the Fund held a pre-recorded radio interview on COIDA in five different languages

• SCSF held an evaluation meeting with Workers World Media Productions on 20 February 2013

• The Fund participated in four provincial cluster workshops in Cape Town, Durban, Johannesburg and East London

• An average of 20 pilot subjects attended the workshops

Issues and constraints:• Non availability of COIDA and OhS pamphlets in some

provinces• Callers asking irrelevant questions not related to COIDA and

OhS• Community radio stations changing slots in the nick of time

which changes the schedules on short notice

Continued


MAIN OBjECTIVE



CONCLUSION• The training workshops have reached a huge number of trainees above target. These workers have been empowered

with knowledge on COIDA and OhS policies.• Unreported cases have been registered at the training workshops• Farm workers deal with a lot of challenges like non-reporting of accidents, medical doctors colluding with employers for

not providing accurate reports about injuries• In some cases non-citizens get preferential treatment over the local employee citizens. This creates tension and conflict.• Most farm owners do not allow employees to attend training during working hours• Some farm owners still abuse employees physically• Some employers still not providing protective clothing more especially on chemicals, pesticides and other harmful

substances• Employees who sustain injuries on duty are dismissed by some farmers• Labour inspectors are accused of not being visible or colluding with employers• Continuous training on COIDA and OhS is necessary• Some farm owners who attended workshops view the training in a positive light, for example Leandra Project in

Mpumalanga • Ward councillor’s have been attending for example, Delareyville and hekpoort in North West and Marydale and Prieska

in the Northern Cape

3.2.8. Medical Services

The Medical Services Directorate consists of two units: Medical Payments and Medical Services. Medical Payments is a unit responsible for the payment of all medical expenses incurred by employees who were injured on duty or who contract occupational diseases. Medical Services (medical officers and nurses) is a support unit that provides medical advice and medical opinion, to all programmes within the Fund, and focuses on:• Processing and finalisation of all occupational injuries and diseases claims• Formulation of a policy framework on rehabilitation and reintegration to work of all injured and diseased employees,

including restoration of functionality• Provision of medical advice on continued medical aid and chronic medication• Provision of assistive devices• Determination of COIDA medical tariffs in conjunction with service provider representative bodies• Provision of medical advice on the Fund’s liability and extent thereof for occupational injuries and diseases

3.2.8.1. Medical Payments

For the financial year under review, 934,834 medical accounts were approved, compared to 824,924 during the financial year 2011/2012. The value of these medical accounts for 2012/2013 is R1.501 billion compared to R1.882 billion in 2011/2012.

TABLE 3.2.8.1. MEDICAL CLAIMS

YEAR NUMBER OF PAYMENTS RAND VALUE

2006/07 886,511 R1,430,143,788

2007/08 777,320 R1,294,380,035

2008/09 815,045 R1,540,340,287

2009/10 781,249 R1,451,516,511

2010/11 868,284 R1,903,377,305

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

2012/13 934,834 R1,501,616,165


3.2.8.2. Turnaround time

In the 2011/2012 financial year of the 824,924 invoices paid, 533,423 invoices were paid within 30 days and an accumulative total of 670 365 were paid within 60 days.

The Directorate only achieved 67% against the strategic target of paying 70% of medical invoices within two months of receipt.

For the financial year 2012/2013 of the 1,003,050 medical invoices paid, 670,365 were paid within 60 days.

The Directorate only achieved 67% against the strategic target of paying 80% of medical invoices within two months of receipt.

3.2.8.3. Tariffs for medical aid expenses

The tariffs of fees for medical services are revised on an annual basis after consultation with health care service provider associations. For 2012/13, the tariff increase approved by the Minister of Labour is 5% across the board.

3.2.8.4. Medical Services

The Strategic Plan of the Compensation Fund is informed by Government’s National Priorities, the Department of Labour’s Strategic Plan and priorities for the next five years. The strategic goal of the Medical Services Directorate is to provide an efficient and effective social safety net through providing medical advice, medical case management and medical 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. In ensuring effective administration, the Medical Services Directorate has developed Standard Operating Procedures (SOP) that will simplify referrals and thus allow for a response within the prescribed time.

TABLE 3.2.8.4. MEDICAL SERVICES PERFORMANCE 2011/2012

CLAIM TYPE TOTAL FINALISED NOT FINALISED

Occupational injuries 4,268 3,045 1,223

913 finalised within 20 days

2,132 Finalised > 20 days

Occupational diseases

12,467 2,579 9,888

1,805 finalised within 20 days

774 Finalised > 20 days


TABLE 3.2.8.5. MEDICAL SERVICES PERFORMANCE 2012/13

CLAIM TYPETOTAL

RECEIVEDTOTAL PROCESSED

TOTAL DONE IN 15 DAYS

TOTAL CARRIED OVER

Reopening 3,273 1,774 1,214 1,499

Chronic medications 464 205 182 259

Prosthesis 1,850 1,721 1,156 129

Unschedulled PDS 1,140 483 296 657

Occupational diseases 6,343 5,073 1,504 1,270

Complex accounts 480 95 90 385

TOTAL 13,550 9,351 4,442 4,199

3.2.9. 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 Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA).

Legal Services is sub-divided into three sub-sections, namely:• Litigation and third party• Contracts and legal opinions• hearings

3.2.9.1. Litigation and third party

LITIGATIONThis section is responsible for management of litigation and contracts with the intent to avoid unnecessary legal costs against the Compensation Fund and to ensure compliance with the COID Act.

Legal Services received 6 summonses issued against the Compensation Fund during the financial year ended 31 March 2013. None of these were finalised and are still active litigation matters where pleadings are or were exchanged in preparation for trials.

68 Court applications to compel compliance with COID Act were received and only 34 have been finalised. The remaining 34 applications are active as pleadings have been closed. Such cases are being enrolled for hearing in different courts. It must be noted that the above figures respresent all litigation cases received and includes the number of cases without dispute of fact as reported quarterly. Only 18 of 48 (38%) litigation cases classified as cases without dispute of fact were finalised within 21 days of their receipt.

THIRD PARTY The Third Party section recovers moneys from 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).• 139 Claims were lodged against RAF amounting to R22,317 019.56 • 3,172 third party claims were finalised and R12,584 951.94 was recovered from the RAF• State Attorney’s Office was instructed to collect R6,208,462.30 from the RAF for Compensation paid to employees who

sustained injuries as a result of motor vehicle accidents whilst on duty against 19 claims• 73 offers to the amount of R13,860,799.93 from the RAF were accepted. Payment of such offers is yet to be made.• Further claims are still pending and are being processed


The Third Party section experienced procedural delays in recovery of third party claims and challenges with an electronic link between Compensation Fund and the Road Accident Fund. Ongoing negotiations are currently underway between the Compensation Fund and the RAF to address administrative challenges with the recovery of monies already paid by the Compensation Fund to employees who suffered occupational injuries and diseases as a result of motor vehicle accidents. The focus is mainly on improving the turnaround times for the payment of claims lodged by the Fund with the RAF.

3.2.9.2. Contracts and Legal Opinions

This Section is responsible for the drafting/vetting of contracts to ensure compliance with relevant legislation and ensures that supply chain procedures are been complied with. It is also responsible for legal advice to avoid unnecessary litigation.

• Legal Services drafted and vetted 25 contracts.• Ten legal opinions were requested on the interpretation of contracts and COIDA and Legal Services provided all the

requested legal opinions.

3.2.9.3. Hearings

In terms of Section 91 of COIDA 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 tribunal.

The tribunal decisions can only be reviewed and appealed in the high Court.Section 91 objections, total number of objections 2,151:• 1,079 outstanding from previous year• 1,072 received current year• 360 finalised• 1,791 outstanding due to: - 437 Section 90 of the Act, by the review committee - 302 due for Section 42 examinations to be arranged - 62 are subject to Section 7 investigations due to employees untraceable, medical practitioners delaying with further

medical reports and employers lacking to provide certain and crucial information. - 1,058 are due for hearing by the tribunal inclusive of Section 56 Applications

In terms of Section 56 of COIDA 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:• 49 outstanding previous year• 24 received current year• 5 finalised• 68 outstanding due to: - Delayed response from employers to applications - Delayed response from employees

It should be noted that this is a very strict procedural process. A total approximately of R3,498,528 was paid to panel members, witnesses, recording firms, etc. for their participation in the hearing processes.

3.2.10. Communications

The Communications Directorate is responsible for ensuring that there is a two-way flow of information between the Fund and its stakeholders. This directorate is also responsible for educating stakeholders on the Fund’s services and on how to access them easily. The Fund’s marketing, promotion and branding are done through this unit.


The Directorate also ensures that there are good working relations between the Fund and the media, as well as with stakeholders so that negative publicity is prevented or minimised.

EDUCATIONAL CAMPAIGNSEducational campaigns have been conducted through different media nationally. These campaigns were conducted in all official languages to ensure maximum reach. The purpose of these campaigns was to ensure that stakeholders, clients and the public in general are aware of the Fund’s services, how to access them and that they know their rights and responsibilities.

An extensive ROE campaign was ran targeting employers and encouraging them to file their returns electronically.

VULNERABLE EMPLOYEES CAMPAIGN• Television adverts ran on SABC 1-3 and on etv for the month of October 2012• Conducted live radio talk shows adverts ran on community radio stations for the month of September to October 2012• National radio adverts targeting beneficiaries on national and regional radio stations in all official languages• Print adverts placed in national newspapers covering employers and in community newspapers educating beneficiaries

on Fund claim process• Adverts for beneficiaries ran on Comutanet (taxi rank radio stations and TV screens) covering major taxi ranks nationwide• Alive advertising: adverts for beneficiaries ran on alive screens nationwide

BENEFICIARY CAMPAIGNConducted print advertorials for beneficiaries ran in community newspapers nationwide.

NOTICE TO EMPLOYERSAdvertorial in national newspapers.

RETURN OF EARNINGS CAMPAIGN• Television adverts flighted on SABC 1-3 and etv• Radio advertorials on national radio stations in all official languages• Alive advertising: adverts for beneficiaries on alive screens nationwide• On-line advertising on news websites, (news24, Mail & Guardian)• Billboard advertorials on all Gautrain stations • Airport screens advertorials• SMS and email messages

MEDIA RELATIONSDuring this financial year, the Fund had a direct interaction with its client through community radio talk show programmes nationwide. These programmes were conducted in official languages covering all services of the Fund. About ten media enquiries were positively responded to.

MARkETING/EXHIBITIONSThe Fund’s services have been marketed through various media, print, outdoor and electronic. The Fund has during the financial year through the Communications Directorate participated in the following exhibitions. Information pamphlets and other promotional material were also distributed.

MINISTERIAL jOB FAIR EXHIBITIONS

PROVINCE DATE VENUE

Gauteng 12 October 2012 Gallagher Estate, Midrand

Mpumalanga 19 October 2012 Graceland Casino, Secunda

Western Cape 26 October 2012 Cape Town

North West 3 March 2012 Rustenburg Civic Theatre


MINISTERIAL IMBIZO

PROVINCE DATE VENUE

KwaZulu-Natal 5 to 6 June 2012 Richards Bay hall

STRATEGIC DOCUMENTSThe Annual Report, Strategic Plan and Annual Performance Plan were produced and delivered to Parliament on time for presentation by the Minister and were distributed as follows:

STRATEGIC DOCUMENTS BREAkDOwN

ITEM

NO

PR

OD

UC

ED

DIS

TR

IBU

TED

TO

PA

RLI

AM

ENT

DIS

TR

IBU

TED

TO

M

AN

AG

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T

AN

D

STA

kEH

OLD

ERS

CO

ST P

ER U

NIT

R

TOTA

L C

OST

R

Annual Report, litho 500 65 435 188.08 94,036.00

Annual Report, digital 65 65 - 438.47 28,500.00

Annual Performance Plan, litho

100 - 100 262.66 26,266.00

Annual Performance Plan, digital

70 65 5 458.63 32,104.00

Strategic Plan, litho 500 - 500 58.74 29,366.00

Strategic Plan, digital 70 65 5 354.86 24,840.00

3.3. Overview of the organisational environment

The first phase of the implementation of the Migration Framework was completed, 317 contract workers with contracts expiring on 30 September 2012 were absorbed into the structure. A placement panel consisting of representatives from organised labour and management of the Fund was established. The purpose of the placement panel is, amongst others, to ensure and oversee the fairness and consistent application of the migration and placement process and advise employees of their rights to lodge an objection to any aspect relating to his or her placement or displacement. In addition, preparations for the implementation of the new organisational structure on the Personnel and Salary Administration (PERSAL) system were completed. Capacity building initiatives were implemented during the year under review to improve the skills of managers and staff in order to assist them in executing their functions and enhancing productivity. In addition, a number of Directors and Deputy Directors were enrolled in the Executive Development Programme that is offered under the auspices of the Public Administration Leadership and Management Academy (PALAMA). Training needs were identified and implemented in functional and generic courses. A senior manager in Financial Control resigned during the last quarter of the financial year which impacted on the operations of the Fund. The Public Private Partnership (PPP) contract with Siemens terminated at the end of November 2012. The Department of Labour has invoked a termination support and handover period clause in the contract, whereby Siemens have to provide support and maintenance to the Department for an extended period at a set price, after the term of the contract. During the month of October 2012, Siemens was wholly acquired by EOh which is one of the largest IT companies in South Africa. For the remaining period the IT services were provided by EOh. The exit and transfer of the PPP progressed to ensure that all knowledge, information, intellectual property, assets etc. are transferred back to the Department. During the last quarter


the Fund experienced numerous problems with the IT provider and the relationship deteriorated due to non-delivery and non-cooperation. This included refusal to complete the changes requested to systems, stopping of the phase II portion of the system development and non-cooperation on data migration. The suspension of the IT services to review the governance processes of the appointment. This had a negative impact on the Compensation Fund as it could not proceed with the development of various system enhancements.

3.4. Summary of revenue generated

2012/2013 2011/2012

SOU

RC

ES O

F R

EVEN

UE

EST

IMAT

E

(TA

RG

ET)

R’0

00

REV

ENU

E

GEN

ERAT

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R’0

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VAR

IAN

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EST

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E (T

AR

GET

) R

’000

REV

ENU

E

GEN

ERAT

ED

R’0

00

VAR

IAN

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%

Levies from employers

5,227,179 7,375,337 41% 5,109,288 4,978,266 -3%

Interest 268,741 243,302 -9% 259,249 255,944 -1%

Penalties 96,042 474,007 394% 166,631 91,469 -45%

TOTAL 5,591,962 8,092,646 45% 5,535,168 5,325,678 -4%

The increase in employer contributions is attributable to the implementation of the online submission of annual returns (ROE website) as well as the efforts made towards clearing the assessment backlogs. The ROE website was launched in May 2012.

Interest is charged at a prime rate on late payment of assessments. Penalty for late submission of annual returns is levied at 10%.

3.5. Summary of revenue collections

2012/2013 2011/2012

SOU

RC

ES

DEB

T B

OO

k

R’0

00

REV

ENU

E

CO

LLEC

TED

R

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VAR

IAN

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%

DEB

T B

OO

k

R’0

00

REV

ENU

E

CO

LLEC

TED

R

’000

VAR

IAN

CE

%

Levies from employers

9,705,861 5,786,426 -40% 7,315,429 3,795,460 -48%

Impairment (6,003,651) (4,833,530)

TOTAL 3,702,210 5,786,425 56% 2,481,899 3,795,460 53%

The total debt book includes a provision for assessment raised of R1.5 billion (2012) and R947 million (2013). The provision for assessment raised is an estimate of assessment not raised as a result of mainly annual returns not submitted by employers timeously.

The overall achievement in debt collection is attributable to the implementation of the revenue strategy in January 2013 in respect of the enforcement of the COID Act as well as intensifying debt collection procedures by strengthening the criteria for issuing letters of good standing.


3.6. Summary of payments by programme

2012/2013 2011/2012

PRO

GRA

MM

E N

AM

E R’

000

BUD

GET

R’

000

AC

TUA

L EX

PEN

DIT

URE

R’

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UN

DER

EX

PEN

DIT

URE

R’

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BUD

GET

R’

000

AC

TUA

L EX

PEN

DIT

URE

R’

000

UN

DER

EX

PEN

DIT

URE

R’

000

Administration 880,000 761,702 118,298 825,363 749,506 75,857

Medical Claims 3,000,000 1,501,606 1,498,394 2,208,692 1,882,372 326,320

Compensation Claims

1,864,061 480,187 1,383,874 1,533,460 586,633 946,827

Provinces 42,019 24,894 17,125 - - -

TOTAL 5,786,080 2,768,389 3,017,691 4,567,515 3,218,511 1,349,004

During the year under review the Fund didn’t overspend on its budget. There was a saving of R3 billion, mainly from Compensation and Medical claims.


4. PERFORMANCE OF COMPENSATION FUND PROGRAMMES AND SUB-PROGRAMMES

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nce

with

the

pe

rfor

man

ce

man

agem

ent

syst

em a

nnua

lly

Full

com

plia

nce

and

enfo

rcem

ent

of t

he p

erfo

rman

ce

man

agem

ent

polic

y

100%

com

plia

nce

and

enfo

rcem

ent

of t

he p

erfo

rman

ce

man

agem

ent

polic

y

Ach

ieve

d

Nat

iona

l Tar

get

of 9

5%

achi

eved

.

2012

/201

3

96.0

0% fi

rst

sem

este

r as

sess

men

ts w

ere

rece

ived

(929

/968

)

98.6

5% a

gree

men

ts w

ere

rece

ived

(95

5/96

8)

3.2

Im

prov

e co

mpe

tenc

y le

vels

of C

F st

aff b

y 10

0%

alig

nmen

t an

d im

plem

enta

tion

of w

ork

skill

s de

velo

pmen

t pl

an

(wSP

) BY

201

6

% o

f ide

ntifi

ed n

eeds

ad

dres

sed

as p

er P

DP

alig

ned

with

WSP

82%

of i

dent

ified

ne

eds

addr

esse

d as

per

PD

P al

igne

d w

ith W

SP

(48

Trai

ning

nee

ds w

ere

identified)

Ach

ieve

d

11%

of t

he id

entifi

ed t

rain

ing

need

s w

ere

addr

esse

d.

6 (1

Gen

eric

& 5

Fun

ctio

nal)

Trai

ning

nee

ds w

ere

addr

esse

d du

ring

quar

ter

4

31 E

mpl

oyee

s ha

ve b

een

trai

ned

durin

g qu

arte

r 4:

Gen

eric

tra

inin

g: 11

Func

tiona

l tra

inin

g: 20

Impl

emen

t In

tern

ship

/ Le

aner

ship

pro

gram

me

100

Inte

rns

Ach

ieve

d

111

Inte

rns

wer

e ap

poin

ted

into

the

Inte

rnsh

ip p

rogr

amm

e


3.3

Ach

ieve

a

cond

uciv

e w

orki

ng

envi

ronm

ent

by

impl

emen

ting

an e

mpl

oyee

w

elln

ess

stra

tegy

by

201

6

Empl

oyee

wel

lnes

s st

rate

gy im

plem

ente

d an

nual

ly

Impl

emen

t PI

LLA

R 2

Ach

ieve

d

6 re

ferr

als

wer

e re

ferr

ed t

o Eh

WP

in h

ead

Offi

ce. A

ll em

ploy

ees

wer

e as

siste

d an

d gi

ven

posit

ive

feed

back

.

3.4

Im

plem

ent

recr

uitm

ent

and

rete

ntio

n st

rate

gy t

hrou

gh

mai

nten

ance

of

7% v

acan

cy r

ate

by 2

016

7% v

acan

cy r

ate

mai

ntai

ned

annu

ally

Mai

ntai

n 7%

vac

ancy

ra

teA

chie

ved

Vaca

ncy

rate

is 2

.25%

as

at 3

1 M

arch

201

3

3.5

Im

plem

ent

Empl

oym

ent

Equi

ty b

y 20

16

Elim

inat

e w

ork

plac

e di

scrim

inat

ory

and

soci

al p

reju

dice

and

ac

hiev

e re

alist

ic t

arge

t

Con

duct

an

anal

ysis

of e

mpl

oym

ent

polic

ies,

prac

tices

, pr

oced

ures

and

w

orki

ng e

nviro

nmen

t to

iden

tify

barr

iers

to

the

em

ploy

men

t an

d ad

vanc

emen

t of

peo

ple

from

de

signa

ted

grou

ps

Ach

ieve

d

EhW

P &

GD

Y m

eetin

gs w

ere

atte

nded

and

inpu

ts g

iven

.

Inpu

ts w

ere

give

n on

Disa

bilit

y Po

licy.

EE t

arge

ts a

re m

onito

red.

PRO

VID

E PR

OFE

SSIO

NA

L, E

FFIC

IEN

T A

ND

CLI

ENT

OR

IEN

TAT

ED H

UM

AN

RES

OU

RC

E C

ontin

ued

3. D

IREC

TOR

ATE:

HU

MA

N R

ESO

UR

CE

MA

NA

GEM

ENT

(H

RM

)

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL


STR

ENG

TH

ENIN

G C

OR

POR

ATE

GO

VER

NA

NC

E

4. D

IREC

TOR

ATE:

RIS

k M

AN

AG

EMEN

T

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

4.1

Ful

l im

plem

enta

tion

of M

inim

um

Info

rmat

ion

Secu

rity

Sta

ndar

d (M

ISS)

by

2016

Full

com

plia

nce

with

M

ISS

by 2

016

Full

impl

emen

tatio

n of

In

form

atio

n se

curit

y (IC

T)

acco

rdin

g to

M

ISS

Not

ach

ieve

d

Acq

uire

d da

taba

se o

f sup

plie

rs

from

SC

M

Writ

ten

subm

issio

n fr

om

the

Secu

rity

Man

ager

is

awai

ted

to a

ppoi

nt

priv

ate

serv

ice

prov

ider

to

con

duct

vet

ting

inst

ead

of S

SA.

Req

uest

the

inte

rven

tion

of t

he h

ead

of S

ecur

ity

in D

oL.

4.2

Fra

ud

Inve

stig

atio

n,

Prev

entio

n an

d D

etec

tion

stra

tegy

im

plem

ente

d

% o

f cas

es r

egist

ered

fin

alise

d w

ithin

agr

eed

time

fram

e

100

% o

f fra

ud a

nd

corr

uptio

n ca

ses

rece

ived

/ de

tect

ed

final

ised

with

in 4

m

onth

s

Not

ach

ieve

d (6

1%)

Out

of 1

42 c

ases

rec

eive

d/de

tect

ed d

urin

g in

thi

s fin

anci

al

year

, 86

case

s w

ere

final

ised

in

tern

ally.

Rel

ianc

e on

out

side

inst

itutio

ns t

o ge

t in

form

atio

n. S

ectio

n no

t ca

paci

tate

d to

dea

l with

th

e w

ork

load

. Tar

get

was

re

alist

ical

ly h

igh.

Esca

late

and

Eng

age

the

rele

vant

inst

itutio

ns

on t

he im

port

ance

of

avai

ling

info

rmat

ion.

Im

plem

ent

the

appr

oved

st

ruct

ure.

Targ

et h

as b

een

revi

sed

to b

e ac

cum

ulat

ive

for

the

next

fina

ncia

l yea

r.

Num

ber

of r

isk

awar

enes

s ca

mpa

ign

cond

ucte

d

4 Fr

aud

and

Risk

aw

aren

ess

sess

ion

cond

ucte

d

Ach

ieve

d

9 se

ssio

ns o

f fra

ud a

nd r

isk

awar

enes

s co

nduc

ted.

4.3

Im

plem

ent

an

Ente

rpri

se R

isk

Man

agem

ent

(ER

M)

syst

em b

y 20

16

Impl

emen

t E

nter

prise

R

isk in

acc

orda

nce

with

Risk

Man

agem

ent

Fram

ewor

k

Risk

Ass

essm

ent

and

Risk

reg

ister

s re

view

ed

and

upda

ted

annu

ally

Ach

ieve

d

Ope

ratio

nal r

isk r

egist

ers

mon

itore

d an

d re

gist

ers

upda

ted.


INT

EGR

ATIO

N O

F C

F w

ITH

IN T

HE

CO

MPR

EHEN

SIV

E SO

CIA

L SE

CU

RIT

Y R

EFO

RM

S

5. D

IREC

TOR

ATE:

LEG

AL

SERV

ICES

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

5.1

Sub

mit

CO

ID

Act

Am

endm

ent

draf

t to

LM

P &

IR o

ffice

for

cons

ulta

tion

by

2013

and

Mon

itor

the

proc

ess

of

the

prom

ulga

tion

of t

he A

CT

by

2015

CO

IDA

Am

endm

ent

draf

t su

bmitt

ed t

o LP

& IR

by

2013

and

m

onito

r th

e pr

oces

s fo

r pr

omul

gatio

n by

20

15

Fina

lise

and

subm

it C

OID

Am

endm

ent

draf

t to

LP

& IR

for

furt

her

proc

esse

s

Ach

ieve

d

Fina

l dra

ft am

endm

ents

wer

e su

bmitt

ed t

o th

e LP

&IR

Bra

nch

of t

he D

oL o

n 31

Janu

ary

2013

fo

r fu

rthe

r pr

oces

ses.

5.2

Res

olve

95%

of

rec

eive

d ap

plic

atio

n fo

r in

crea

sed

bene

fits

whe

re t

here

is n

o di

sput

e of

fact

% o

f app

licat

ion

for

incr

ease

d co

mpe

nsat

ion

final

ised

with

in 6

0 da

ys o

f re

ceip

t

65%

of A

pplic

atio

n fo

r in

crea

sed

com

pens

atio

n fin

alise

d w

ithin

60

days

of

rece

ipt

Not

ach

ieve

d (1

7%)

App

licat

ions

rec

eive

d: 1

8

App

licat

ions

fina

lised

: 3

Rul

es a

pplic

able

to

sect

ion

appl

icat

ions

pr

olon

g th

e fin

aliz

atio

n.

Empl

oyer

s ta

ke t

ime

to

resp

ond.

Am

endm

ent

of t

he A

ct

to r

emov

e th

e ap

plic

able

ru

les.

5.3

Res

olve

95%

of

rec

eive

d ob

ject

ions

th

at h

ave

been

de

cide

d by

th

e R

evie

w

Com

mitt

ee

with

in 6

0 da

ys b

y 20

16

% o

f Sec

tion

91

obje

ctio

ns fi

nalis

ed

with

in 6

0 da

ys fr

om

the

date

of r

ecei

pt

from

the

Rev

iew

C

omm

ittee

65%

obj

ectio

ns

final

ised

with

in 6

0 da

ys fr

om t

he d

ate

of r

ecei

pt fr

om t

he

Rev

iew

Com

mitt

ee

Not

ach

ieve

d (1

9%)

Obj

ectio

ns r

ecei

ved:

107

2

Obj

ectio

ns fi

nalis

ed:

200

Lega

l Ser

vice

s is

unde

rsta

ffed

– on

ly

5 le

gal o

ffice

rs fo

r al

l Pr

ovin

ces.

Not

eno

ugh

med

ical

of

ficer

s to

ass

ist w

ith

med

ical

opi

nion

s.

Una

vaila

bilit

y of

w

itnes

ses

for

the

Fund

/ob

ject

ors.

Del

ays

in r

evie

win

g al

l of

the

files

by

the

Rev

iew

C

omm

ittee

.

Inad

equa

te IT

sys

tem

.

Cap

acita

te L

egal

Ser

vice

s w

ith m

ore

pers

onne

l.


5.4

Res

olve

95%

of

rece

ived

litig

atio

n ca

ses

whe

re

ther

e is

no

fact

ual

disp

ute

with

in 5

da

ys b

y 20

16

% o

f liti

gatio

n ca

ses

reso

lved

with

in d

ays

of r

ecei

pt

95%

of l

itiga

tion

case

s re

solv

ed w

ithin

21

days

Not

ach

ieve

d (3

8%)

Rec

eive

d: 4

8

Fina

lised

: 18

Sect

ions

stil

l pro

vidi

ng

info

rmat

ion

beyo

nd

21 d

ays

afte

r re

ques

t. O

ppon

ents

tak

ing

long

to

res

pond

to

the

Fund

’s of

fers

.

Mee

ting

was

hel

d w

ith

all r

elev

ant

sect

ions

to

pro

pose

way

s of

im

prov

ing

on t

he

turn

-aro

und

times

for

prov

ision

of r

equi

red

info

rmat

ion.

5.5

90%

of l

egal

ad

vice

req

uest

s an

d co

ntra

cts

final

ised

with

in 5

da

ys o

f rec

eipt

by

2016

% o

f leg

al a

dvic

e an

d co

ntra

cts

prov

ided

w

ithin

day

s of

rec

eipt

90%

of l

egal

adv

ice

and

cont

ract

s pr

ovid

ed

with

in 5

day

s of

rec

eipt

Ach

ieve

d

28 r

eque

st fo

r dr

aftin

g of

co

ntra

cts

rece

ived

from

CF

Supp

ly C

hain

. 26

con

trac

ts

draf

ted

with

in 5

day

s (a

chie

ved

93%

).

10 r

eque

sts

for

lega

l adv

ice

rece

ived

and

9 o

f whi

ch w

as

prov

ided

with

in 5

wor

king

day

s (a

chie

ved

90%

).

INT

EGR

ATIO

N O

F C

F w

ITH

IN T

HE

CO

MPR

EHEN

SIV

E SO

CIA

L SE

CU

RIT

Y R

EFO

RM

S C

ontin

ued

5. D

IREC

TOR

ATE:

LEG

AL

SERV

ICES

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL


PRO

MO

TE

POLI

CY

AD

VOC

AC

Y

6. D

IREC

TOR

ATE:

CO

MM

UN

ICAT

ION

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

6.1

Im

plem

ent

Com

mun

icat

ion

Stra

tegy

/M

arke

ting

by

2017

Com

mun

icat

ion

stra

tegy

impl

emen

ted

by 2

017

Run

4 m

edia

adv

erts

Ach

ieve

d

4 M

edia

adv

erts

wer

e ru

n.


IMPR

OV

E FI

NA

NC

IAL

VIA

BILI

TY

7. C

HIE

F D

IREC

TOR

ATE:

FIN

AN

CE

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

7.1

Elim

inat

e de

bt

book

of R

5 Bi

llion

by

201

6

R1

billio

n pe

r an

num

of

the

deb

t bo

ok a

s at

31

Mar

ch 2

011.

R1

billio

n de

bt

reco

vere

dPa

rtia

lly a

chie

ved

Tota

l rec

eipt

s fo

r th

e qu

arte

r w

as R

1.6

billio

n. h

owev

er

unab

le t

o sp

lit r

ecei

pts

to o

ld

debt

boo

k.

Due

to

syst

em

cons

trai

nts

we

are

unab

le t

o ex

trac

t re

port

s w

hich

allo

cate

rec

eipt

s to

diff

eren

t pe

riods

ac

cura

tely.

IT is

ass

istin

g in

ex

trac

ting

rele

vant

re

port

s.

7.2

Inc

reas

e re

venu

e by

5%

ann

ually

% in

crea

se in

rev

enue

as

com

pare

d to

pr

evio

us y

ear

5% in

crea

se in

rev

enue

as

com

pare

to

the

prev

ious

yea

r

Ach

ieve

d

Targ

et fo

r qu

arte

r 4:

R1.

396

billio

nA

ctua

l R3.

037

billio

n

7.3

Obt

ain

a cl

ean

audi

t op

inio

n by

20

14

Impl

emen

t a

ll A

G

reco

mm

enda

tions

Impl

emen

t 50

%

prev

ious

yea

rs A

G

reco

mm

enda

tions

Not

ach

ieve

d

The

aud

it m

atrix

rec

eive

d in

M

arch

rec

orde

d 77

/163

(47

%)

findi

ngs

as r

esol

ved.

Thi

s ha

s no

t be

en v

erifi

ed b

y In

tern

al

Aud

it.

Inte

rnal

Aud

it is

not

satis

fied

that

th

e re

spon

ses

by

man

agem

ent

are

corr

ect.

The

y w

ill va

lidat

e re

spon

ses

as p

art

of

thei

r pr

oces

ses.

Man

agem

ent

to

cont

inua

lly a

sses

s th

eir

resp

onse

s an

d re

fine

thei

r pr

oced

ures

.


7.4

Im

prov

e ef

ficie

ncy

of

proc

esse

s by

full

impl

emen

tatio

n of

an

inte

grat

ed

finan

cial

sys

tem

to

impr

ove

paym

ent

to 3

0 da

ys b

y 20

16

All

paym

ents

pr

oces

sed

with

in 3

0 da

ys o

f rec

eipt

of

invo

ice

Sund

ry p

aym

ents

pr

oces

sed

with

in 3

0 da

ys o

f rec

eipt

of

invo

ice

and

clai

ms

proc

esse

d w

ithin

60

days

of r

ecei

pt o

f ba

nkin

g de

tails

Part

ially

ach

ieve

dPr

ocur

emen

tTo

tal P

aym

ents

:R

186,

736,

798.

89 (

83.2

1%)

Cre

dito

rs:

R37

,673

,772

.21

(16.

79)

Ove

r 30

day

s:R

69,5

28.3

7 (0

.000

3%)

Med

ical

Tota

l Pay

men

ts:

R83

,960

,785

.39

(66.

92%

)C

redi

tors

:R

41,5

05,3

90.0

5 (3

3.08

%)

Ove

r 30

day

sR

15,9

99,4

29.4

9 (1

2.75

%)

Pens

ion

Tota

l Pay

men

ts:

R19

4,34

9,39

7.10

(82

.77%

)C

redi

tors

:R

40,4

64,8

97.9

5 (1

7.23

%)

Ove

r 30

day

s:R

27,7

13,9

11.6

5 (1

1.80

%)

Out

stan

ding

ban

king

de

tails

tha

t st

ill ne

eds

to b

e su

bmitt

ed b

y be

nefic

iarie

s an

d ca

ptur

ed b

y th

e Fu

nd.

Unc

laim

ed m

onie

s pr

ojec

t is

in p

rogr

ess

and

is fo

cuss

ing

on r

educ

ing

outs

tand

ing

cred

itors

.

IMPR

OV

E FI

NA

NC

IAL

VIA

BILI

TY

Con

tinue

d

7. C

HIE

F D

IREC

TOR

ATE:

FIN

AN

CE

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL


CA

ATo

tal P

aym

ents

:R

3,73

4,68

6 (7

6.44

%)

Cre

dito

rs:

R1,

150,

776.

78 (

23.5

6%)

Ove

r 30

day

s:R

435,

600.

98 (

8.92

%)

Com

pens

atio

nTo

tal P

aym

ents

:R

104,

167,

738.

62 (

25.6

5%)

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%

)

7.5

Im

prov

e as

set:

liabi

lity

ratio

to

2:1

by 2

016

Fina

ncia

l rat

io

mai

ntai

ned

2:1

Fina

ncia

l rat

io

mai

ntai

ned

Ach

ieve

d

As

at t

he 2

8/02

/201

3 th

e ra

tio

was

at

4:1

The

fina

l figu

res

for

Mar

ch n

ot y

et a

vaila

ble

due

to y

ear-e

nd

7.6

Max

imis

e in

vest

men

t re

turn

to

abov

e be

nchm

ark

Rec

eive

abo

ve t

he

(ST

EFI)

benc

hmar

k re

turn

s

Rec

eive

abo

ve t

he

(ST

EFI)

benc

hmar

k re

turn

s

Ach

ieve

d

For

the

third

qua

rter

the

Fun

d ac

hiev

ed:

Com

pens

atio

n po

rtfo

lio 2

.43%

ag

ains

t 2.

15%

Pe

nsio

n po

rtfo

lio 1

8.69

%

agai

nst

18.0

9%

The

fina

l figu

res

for

Mar

ch n

ot y

et a

vaila

ble

due

to y

ear-e

nd

IMPR

OV

E FI

NA

NC

IAL

VIA

BILI

TY

Con

tinue

d

7. C

HIE

F D

IREC

TOR

ATE:

FIN

AN

CE

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL


IMPR

OV

E C

OR

POR

ATE

SUPP

ORT

AN

D S

ERV

ICES

/ EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CES

S TO

CO

IDA

SER

VIC

ES A

ND

INFO

RM

ATIO

N

8. D

IREC

TOR

ATE:

INFO

RM

ATIO

N A

ND

CO

MM

UN

ICAT

ION

TEC

HN

OLO

GY

(IC

T)/

CA

LL C

ENT

RE

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

8.1

To

defin

e IT

St

rate

gy a

nd

impl

emen

t sy

stem

s an

d in

fras

truc

ture

to

supp

ort

busi

ness

go

als

by M

arch

20

13

CF

IT s

trat

egy

deve

lope

d,

supp

ortin

g sy

stem

s an

d in

fras

truc

ture

im

plem

ente

d

Inte

grat

ed s

yste

ms

and

infr

astr

uctu

re

impl

emen

ted

Part

ially

ach

ieve

d

The

DoL

had

tak

en a

dec

ision

th

at t

here

will

be a

sin

gle,

ce

ntra

lised

IT s

trat

egy

acro

ss

the

orga

nisa

tion.

CF

will

not

have

its

own

stra

tegy

.

The

sys

tem

s de

velo

pmen

t w

hich

was

in p

rogr

ess

incl

uded

:-

M

IS-

Le

tter

s of

Goo

d st

andi

ng-

R

emitt

ance

adv

ices

-

Elec

tron

ic P

orta

l

One

str

ateg

y ac

ross

DoL

-

CF

to b

e in

clud

ed in

it.

8.2

Im

plem

ent

100%

cus

tom

er

serv

ices

at

all

cust

omer

tou

ch

poin

ts

% C

usto

mer

ser

vice

su

ppor

t pr

ovid

ed a

t al

l cus

tom

er s

ervi

ce

touc

h po

ints

(ph

one-

in,

web

, wal

k-in

)

70%

Cus

tom

er s

ervi

ce

supp

ort

prov

ided

at

all c

usto

mer

ser

vice

to

uch

poin

ts (

phon

e-in

, w

eb, w

alk-

in)

Ach

ieve

d

80%

cus

tom

er s

ervi

ce

impl

emen

ted.

8.3

Im

prov

e cu

stom

er

satis

fact

ion

for

call

cent

re b

y 40

% o

f bas

elin

e

Ach

ieve

% in

crea

se o

f cu

stom

er s

atisf

actio

n ra

ting

on b

asel

ine

Det

erm

ine

cust

omer

sa

tisfa

ctio

n ba

selin

ePa

rtia

lly a

chie

ved

1.

Exte

nded

the

cen

tre

to a

ccom

mod

ate

mor

e vi

sitor

s.2.

In

crea

sed

the

num

ber

of

supp

ort

agen

ts.

3.

Cre

ated

add

ition

al h

elp

desk

to

dea

l with

onl

ine

supp

ort

quer

ies

Lim

ited

cust

omer

in

form

atio

n an

d la

ck

of w

ritte

n fe

edba

ck

to v

alid

ate

the

ratin

g to

be

able

to

gath

er

reco

mm

enda

tions

Inve

stig

ate

and

impl

emen

t a

solu

tion

to

capt

ure

deta

ils a

nd a

llow

fo

r w

ritte

n fe

edba

ck


8.4

Fin

alis

atio

n of

go

vern

ance

m

easu

res

and

polic

ies

with

in t

he IC

T

envi

ronm

ent

by

Mar

ch 2

013

Fina

lisat

ion

of a

go

vern

ance

pla

n an

d im

plem

enta

tion

Rev

iew

of p

lan

and

stru

ctur

es

Upd

ate

and

impl

emen

tatio

n

Part

ially

ach

ieve

d

The

IT g

over

nanc

e fr

amew

ork

has

been

app

rove

d at

CF,

but

was

dep

enda

nt o

n th

e fin

alisa

tion

of t

he D

oL

fram

ewor

k.

Impl

emen

tatio

n w

as d

elay

ed

due

to t

he a

bsen

ce o

f a IT

se

rvic

e pa

rtne

r.

Dep

ende

ncy

on t

he D

oL

It fr

amew

ork

and

plan

s.T

he D

oL m

ust

appo

int

a ne

w s

ervi

ce p

rovi

der

or

capa

cita

te it

self.

IMPR

OV

E C

OR

POR

ATE

SUPP

ORT

AN

D S

ERV

ICES

/ EN

HA

NC

E Q

UA

LIT

Y A

ND

AC

CES

S TO

CO

IDA

SER

VIC

ES A

ND

INFO

RM

ATIO

N C

ontin

ued

8. D

IREC

TOR

ATE:

INFO

RM

ATIO

N A

ND

CO

MM

UN

ICAT

ION

TEC

HN

OLO

GY

(IC

T)

/ CA

LL C

ENT

RE

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL


ENH

AN

CE

QU

ALI

TY

AN

D A

CC

ESS

TO C

OID

A S

ERV

ICES

AN

D IN

FOR

MAT

ION

9. D

IREC

TOR

ATE:

OR

GA

NIS

ATIO

NA

L EF

FEC

TIV

ENES

S (O

E)

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

9.1

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

Stra

tegi

c Pl

an a

nd

Ann

ual P

erfo

rman

ce

Plan

dev

elop

ed in

lin

e th

e w

ith t

he

NT

Fra

mew

ork

for

Perfo

rman

ce

info

rmat

ion

Coo

rdin

ate

the

deve

lopm

ent

and

appr

oval

of t

he

Stra

tegi

c pl

an a

nd

Ann

ual P

erfo

rman

ce

plan

a p

er N

T

Fram

ewor

k

Ach

ieve

d

Stra

tegi

c Pl

an 2

013

– 20

18

and

Ann

ual P

erfo

rman

ce P

lan

2013

/14

wer

e de

velo

ped,

ap

prov

ed a

nd s

ubm

itted

to

NT

as

req

uire

d

9.2

Ann

ual

orga

nisa

tiona

l pe

rfor

man

ce

man

agem

ent

Qua

lity,

rele

vant

an

d tim

elin

ess

of p

erfo

rman

ce

repo

rts

in li

ne w

ith

the

NT

Fra

mew

ork

for

Perfo

rman

ce

Info

rmat

ion

Mon

itor

and

eval

uate

or

gani

satio

nal

perfo

rman

ce t

o en

sure

tha

t qu

arte

rly,

mid

-ter

m a

nd a

nnua

l re

port

s ar

e ta

bled

as

per

NT

Fra

mew

ork

Ach

ieve

d

Qua

rter

ly P

erfo

rman

ce

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 t

o al

l par

ticip

ants

.

9.3

Impl

emen

t cha

nge

man

agem

ent

prog

ram

me

by

2016

Dev

elop

and

im

plem

ent

orga

nisa

tiona

l wid

e ch

ange

man

agem

ent

prog

ram

me

by 2

016

Dev

elop

and

im

plem

ent

10%

or

gani

satio

nal w

ide

chan

ge m

anag

emen

t pr

ogra

mm

e

Not

ach

ieve

d

Org

anisa

tiona

l wid

e ch

ange

m

anag

emen

t pr

ogra

mm

e w

as d

evel

oped

and

not

im

plem

ente

d.

Lack

of c

apac

ity t

o im

plem

ent

chan

ge

man

agem

ent.

A C

hang

e M

anag

emen

t Sp

ecia

list

com

pany

will

be a

ppoi

nted

to

driv

e th

e im

plem

enta

tion

of

the

prog

ram

me.

9.4

Dec

entr

alis

e C

OID

A s

ervi

ces

to 9

pro

vinc

es b

y 20

16

CO

IDA

ser

vice

s de

cent

ralis

ed t

o 9

prov

ince

s

CO

IDA

ser

vice

s de

cent

ralis

ed t

o 2

prov

ince

s)

Not

ach

ieve

d

4 st

aff m

embe

rs d

eplo

yed

and

19 s

econ

ded

to G

aute

ng; a

nd9

staf

f mem

bers

sec

onde

d to

Wes

tern

Cap

e to

ass

ist in

de

liver

ing

CO

ID s

ervi

ces.

Infr

astr

uctu

re n

ot r

eady

Indi

vidu

als

have

be

en id

entifi

ed a

t pr

ovin

cial

leve

l to

orga

nise

infr

astr

uctu

re

requ

irem

ents

.


ENH

AN

CE

QU

ALI

TY

AN

D A

CC

ESS

TO C

OID

A S

ERV

ICES

AN

D IN

FOR

MAT

ION

10.

DIR

ECTO

RAT

E: P

ROG

RA

MM

E M

AN

AG

EMEN

T O

FFIC

E (P

MO

)

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

10.1

Coo

rdin

ate

and

mon

itor

all p

rior

ity

proj

ects

cur

rent

ly

runn

ing

in t

he

Com

pens

atio

n Fu

nd.

Co-

ordi

nate

an

d m

onito

r th

e im

plem

enta

tion

of a

ll C

F pr

iorit

y pr

ojec

ts

with

in c

omm

itted

pr

ojec

t pl

an/ s

ched

ule

with

mea

sura

ble

targ

ets

and

budg

et a

s pe

r PM

BOK

Subm

it Q

uart

erly

m

onito

ring

repo

rts

Part

ially

ach

ieve

d

Mon

itorin

g re

port

s ar

e su

bmitt

ed t

o va

rious

co

mm

ittee

s:

SAP

Enha

ncem

ent

Prog

ress

re

port

was

pre

sent

ed t

o SA

P Pr

ojec

t St

eerin

g C

omm

ittee

(M

IS, L

ette

rs o

f goo

d st

andi

ng,

rem

ittan

ce w

ere

unde

r de

velo

pmen

t. T

he C

laim

s R

egist

ratio

n Po

rtal

was

de

velo

ped

and

awai

ting

UAT

).

Org

anisa

tiona

l Red

esig

n an

d D

ecen

tral

isatio

n.

Pres

ente

d to

Str

ateg

ic

Ope

ratio

nal C

omm

ittee

.

Lack

of c

apac

ityT

he n

ew s

truc

ture

w

ill be

app

oint

ed a

nd

addi

tiona

l res

ourc

es w

ill be

app

oint

ed.


STR

ENG

TH

ENIN

G C

OR

POR

ATE

GO

VER

NA

NC

E

11.

DIR

ECTO

RAT

E: IN

TER

NA

L A

UD

IT

STR

ATEG

IC G

OA

LS /

OU

TPU

TS

kEY

PER

FOR

MA

NC

E IN

DIC

ATO

RS

AC

TU

AL

PER

FOR

MA

NC

E A

GA

INST

TA

RG

ETR

EASO

NS

FOR

VA

RIA

NC

ER

EMED

IAL

AC

TIO

N

2012

/13

TAR

GET

2012

/13

AC

TU

AL

11.1

Dev

elop

ing

and

exec

utin

g a

risk

ba

sed

inte

rnal

au

dit

plan

with

10

0% c

over

age

annu

ally

Prep

arat

ion

and

appr

oval

of t

he 3

yea

r ris

k ba

sed

inte

rnal

au

dit

plan

and

the

A

nnua

l cov

erag

e pl

an b

y th

e A

udit

Com

mitt

ee

App

rova

l of t

he 3

yea

r an

d an

nual

risk

bas

ed

and

annu

al c

over

age

inte

rnal

aud

it pl

an o

n th

e 1s

t Apr

il 20

12

Ach

ieve

d

Risk

-bas

ed A

nnua

l Aud

it Pl

an

Dra

fted

appr

oved

by

Aud

it C

omm

ittee

Rep

ortin

g of

qua

rter

ly

repo

rts

to t

he A

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Part D INFORMATION AND COMMUNICATION TECHNOLOGY AND CALL CENTRE


1. INFORMATION AND COMMUNICATION TECHNOLOGY (ICT)1.1. Introduction

The Compensation Fund views technology as a key enabler in attaining its strategic business objectives. In this regard, the Fund’s leadership has been actively involved in technology initiatives towards automating processes and improving services. The focus has been on integrated claims management and financial systems for the Fund that went live in October 2011. A phase II project has been initiated and additional enhancements are being pursued through this process.

With the various technology projects in progress, risk and governance were key elements that received attention to ensure that these areas were not compromised. The key challenge has been the migration of large volumes of data into the new claims system. This is currently a key focus area.

1.2. ICT Function

The core functions of the ICT component are:• Provide strategic ICT leadership• Improvement of business functionality through automation of business processes• To manage outsourced IT services• To develop and implement ICT policies and guidelines

1.3. 2012/13 Priorities

• To define IT strategy and implement systems and infrastructure to support business goals by March 2013 • Finalisation of governance measures and policies within the ICT environment by March 2013• Finalisation of a business continuity plan

1.4. Public Private Partnership

The Compensation Fund’s information technology services were provided through a Public Private Partnership (PPP) between the Department of Labour and Siemens IT Solutions and Services that terminated in November 2012. The period following the PPP is being addressed in collaboration with the Department.

1.5. Systems development

The development and implementation of the integrated claims management and financial systems were the key focus areas during the financial year. The SAP platform was utilised for the deployment of these systems using specialist skills that were required. The systems went live in October 2011 with the financial data migration being completed. The claims system went live with all new claims being registered and processed as from October 2011. The integrated solution also includes automated payment interfaces, a scanning and indexing component, workflow, document management and an integrated client database that automatically populates client information from master sources, including the Department of Home Affairs and the Companies and Intellectual Properties Commission.

A phase II project is already underway which addresses further components including:• Capitilisation of pensions• SMS and email• On-line Return of Earnings• MIS reporting


1.6. ICT governance and risk management

Strategic and operational risk assessments were conducted and documented and subsequent follow-ups were made to review improvements. Continuous risk assessments were conducted on the projects, to ensure governance, controls and risk mitigation, and operational and project risk registers were maintained.The IT steering committee, made up of executive management, met on a frequent basis to ensure oversight and governance.

1.7. Disaster recovery

The disaster recovery plan was updated and agreed with the service provider in preparation for implementation. A new backup infrastructure was procured and implemented and the server consolidation exercise completed. The hosting site was setup with the necessary cabling, infrastructure, cooling etc. and went live in December 2011 with the relevant tests successfully completed.

Information security awareness sessions were held and ICT orientation for new employees and interns on policies, security, risks, governance, systems usage etc. was conducted to create awareness and ensure proper usage.

2. CALL CENTRE2.1. Operational overview

In 2012/2013 the call centre set out to achieve five key strategic priorities namely:• Implement 80% customer service support provided at all customer service touch points (phone-in, web, walk-in)• Achieve 70% customer satisfaction rating• Increase human resources to meet customer call volumes• Continuous improvement of operational efficiencies at the contact centre and walk-in centre • Training and development (customer service and etiquette skills, COIDA and basic services)

2.2. Staffing and training

Staff training and development plans remain a critical part of the yearly goals to achieve operational and customer experience improvements that can not be achieved without continuously empowering the workforce. The modernisation and upgrade services of a customer and contact centre were completed successfully. There is a dedicated drive to find more efficient and effective methods to improve service.

The contact centre and the walk-in centre staff have a staff complement of 70, including the support desk for the Presidential and Director General hotlines, and are supported by a team of 12 interns hosted from April 2012 to 2013. These staffing numbers are not sufficient to efficiently and effectively respond to the call volumes and visitor time expectations.

2.3. Performance metrics

2012/2013 has been a challenging year for the client care desks. Unexpected high volumes of calls and visitors were received and this led to the Fund not being able to service all requests or perform as expected. Customer support alternatives were explored during the Return of Earnings submission peak times to meet customer expectations and needs.

Challenges included:• Business process re-engineering: created a lot of confusion in handling queries, because the centre did not have consistent

and uniform sources of information• Time to get feedback from back office to close call is too long• Business system instability remained the biggest obstacle to effective and efficient service delivery


Monthly call voluMes 2012/2013

april May June July august september october november December January February March

RECEIVED 48511 62032 20421 57833 65841 55696 70249 64073 82048 27835 61826 58803

HANDLED 28214 34513 33499 36423 36490 28208 42648 36600 16899 142180 21851 25702

ABOND 19295 26260 20421 20079 26909 19395 22146 23184 50881 104634 31071 26411

48511

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26909

19395 2214623184

50881

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104634

27835

142180

82048

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70249

28208

5569636490

36423

57833

33499

16899

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160 000

130 000

100 000

70 000

400 000

100 000

analysis: The call volumes remained consistent for the year, however in December and January there was a change in business processes and problems were encountered with the network. This culminated in having more calls presented when compared to the other months. In terms of why less calls were answered, many officials had taken leave over the December period.

2.4. Perfomance by skill set 2012/2013

april May June July august september october november December January February March

Compensation 8329 7330 8781 8736 7463 6127 8646 8396 4091 5200 4079 4826

Medical 1227 1321 1854 1806 1305 941 898 513 319 469 321 381

Assessment 15437 22780 19839 22694 24543 18107 29868 25571 10900 19614 16137 18879

Finance 2460 2075 2360 2583 2606 2447 2594 1702 1213 1535 961 1202

General 761 1007 665 607 573 586 639 418 376 1017 353 414

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0


analysis: 1. Revenue and income, particularly Letter of Good Standing, remained the number one call driver due to the following

reasons:• Employers issued with Letter of Good Standing valid for three months instead of one year • Returns of Earnings manual processing and delays in generating invoices• Manual submission• Employers on an instalment plan issued with Letters of Good Standing valid for one month

2. Compensation claims were the second highest call driver, however the trend was consistent when compared with previous years and there were no major process changes for the period under review.

2.5. Walk-in centre performance metrics

2.5.1. Service summary

analysis:The graph above represents the customers who visited the Compensation Fund and the results clearly indicate that a 95% average service level was maintained. It should also be noted that the no show brown line in the graph does not mean the Fund turned away customers, however these customers were assisted at various desks that did not have the system to capture the query details during peak times.

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Served 51885 4799 11898 26428 2201 27 110 97348 52,885

No show 8932 59 294 365 131 6 0 9787 5593

% 85.00% 98.00% 97.00% 98.00% 99.00% 82.00% 100.00% 90.00%

120 000

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2.5.2. Customer satisfaction feedback

Customer feedback is an important and critical measurement tool that provides the Fund with essential feedback to enable the Fund to identify negative and positive service gaps in order to have continuous service improvements and maintain good service. The results below indicate customer feedback rating for all services.

custoMeR FeeDBacK annual 2012

Feedback total %

Excellent Service 22,447 84%

Very Good Service 3,348 12%

Very Bad Service 460 2%

Good Service 322 1%

Bad Service 152 1%

total 26,729 100%

84% Excellent Service

12% Very Good

Service

2% Very Bad Service

1% Good Service 1%

Bad Service

custoMeR FeeDBacK %

custoMeR FeeDBacK total

30 000

25 000

20 000

15 000

10 000

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ExcellentService

22,447

Very Good Service

3,348

Good Service

322

Very Bad Service

460

Bad Service

152

Total

26,729

Part E Human rEsourcE managEmEnt


1. INTRODUCTION 1.1. The value of human capital in the Compensation Fund

The Compensation Fund like many other public entities in South Africa provides labour intensive activities to deliver on its mandate. These labour intensive activities have seen a steady growth in the use of technological initiatives to support human intervention as part of delivery mechanisms. Therefore, the combination of labour and technology has the potential to ensure that timely and quality services can be provided to employees who have been injured on duty or in the case of death, payments of benefits to their families. However, for the above activities to be successful, the Compensation Fund has realised that it needs to harness the intellectual capabilities, competencies, personality traits, talents and creativities of its employees. In this regard, the Compensation Fund had placed a premium on the management and development of its human capital as its most critical resource.

1.2. Overview of HR matters at the Compensation Fund

During the year under review, the Compensation Fund had continued to place emphasis on performance management and development as an important tool to address skills development, improve productivity and reward good performance. The utilisation of performance management by managers and supervisors has not always been optimal with the result that feedback to employees in some instances did not reflect actual performance. The Fund has also recognised that continuous training of its staff is imperative for them to be able to deal with the many challenges which are impacting negatively on the Fund’s ability to fulfil its legislative mandate. Whilst efforts have been made to identify training opportunities for employees in line with the needs of the Fund’s core business, these were not always met due to other competing demands. An area where the Fund has been most successful the maintenance of the vacancy rate at about 2.8%. The concern though has been that this low vacancy rate has not always translated into improved productivity. The Fund has continued to promote and maintain sound labour relations during the year under review.

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

The Compensation Fund has prioritised the employment of youth, woman and Persons with Disability (PWD). In the area of youth, 100 unemployed graduates were appointed as interns to expose them to the work environment and for them to gain experience and increase their employability. This initiative has also contributed to poverty alleviation by ensuring a temporary source of income for inexperience graduates. In the area of women empowerment, the Fund managed to achieve 50% of target at SMS and middle management level. With regards to the employment of PWD the Fund has achieved 1.8% of target which is still below the national target of 2%.


2. HUMAN RESOURCE OVERSIGHT STATISTICS The following tables provide key information on the management of human resources. The tables will also provide the costs associated with managing and maintaining such human resources. This is done by ensuring that the amounts provided in this section are linked to figures disclosed in the annual financial statements. In cases where there are variances, reasons for these differences are given.

TABLE 2.1. 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)

Office of the Commissioner

1,753 1,7530.1%

3 584

Risk Management 2,416 2,416 0.1% 6 403

Monitoring and Evaluation

658 658 - 2 329

Claims 664 664 - 1 664

Income 53,620 53,620 0.2% 175 306

Support Services 20,948 20,948 0.8% 72 291

Financial Reporting 15,530 15,530 0.6% 51 305

Financial Control 12,965 12,965 0.5% 39 332

Medical Services 70,235 70,235 2.6% 230 305

Compensation 147,879 147,879 5.4% 497 298

Human Resource Management

9,836 9,836 0.4% 27 364

Organisational Effectiveness

2,124 2,124 0.1% 5 425

Legal Services 1,460 1,460 0.1% 4 365

Internal Audit 3,219 3,219 0.1% 8 402

TOTAL R343,307 R343,307 - - -


TABLE 2.2. PERSONNEL COST BY SALARY BAND

LEVEL PERSONNEL EXPENDITURE

(R’000)

% OF PERSONNEL

EXP TO TOTAL PERSONNEL COST (R’000)

NO OF EMPLOYEES

AVERAGE PER-SONNEL COST PER EMPLOYEE

(R’000)

Top management 1,095 0.3% 1 1,095

Senior management (SMS) 8,428 2.5% 12 702

Highly skilled supervision (Levels 9 to 12)

19,712 5% 52 365

Highly skilled production (Levels 6 to 8)

82,134 24% 277 293

Skilled (Levels 3 to 5) 226,691 67% 642 293

Lower skilled (Levels 1 to 2) - - - -

TOTAL 338,060 984 2,748

TABLE 2.3. PERFORMANCE REWARDS

LEVEL PERFORMANCE REWARDS


(R’000)

% OF PERFORMANCE REWARDS TO

TOTAL PERSONNEL COST (R’000)

Senior management (SMS) - - -

Highly skilled supervision (Levels 9 to 12) 11 246 -

Highly skilled production (Levels 6 to 8) 64 1,490 0.4%

Skilled (Levels 3 to 5) 92 2,055 0.6%

Lower skilled (Levels 1 to 2) - - -

TOTAL 167 3,731 1%


TABLE 2.4. TRAINING COSTS

DIRECTORATE/BUSINESS UNIT


(R’000)

TRAINING EXPENDITURE

(R’000)

TRAINING EXPENDITURE

AS A % OF PERSONNEL

COST

NO OF EMPLOYEES TRAINED

AVERAGE TRAINING COST PER EMPLOYEE

Office of the Commissioner

R1,753 R30,812.55 1.75% 4 R7,703.14

Income R53,620 R73,063.38 0.13% 18 R4,059.80

Financial Reporting R15,530 R97,016.13 16.1% 8 R12,868.51

Financial Control R12,965 R73,218.55 0.56% 9 R8,135.39

Support Services R20,948 R267,998.46 1.27% 37 R7,243.20

Compensation R147,879 R66,727.30 0.04% 21 R3,177.49

Medical Services R70,235 R324,405.12 0.46% 36 R9,011.25

Claims R664 R77,095.56 11.61% 22 R3,504.34

Human Resource Management

R9,836 R240,599.43 2.44% 51 R4,717.64

Organisational Effectiveness

R2,124 R145,032.95 6.82% 27 R5,445.66

Internal Audit R3,219 R309,402.72 9.61% 69 R4,484.10

Risk Management R2,416 R208,196.87 8.61% 38 R5,498.86

Monitoring and Evaluation

R658 R147,744.21 22.75% 5 R29,948.84

Legal Services R1,460 R294,607.55 20.17% 47 R6,268.24

TOTAL R2,355,920.78 392 R151,002.37

NOTE:Number of people trained is per event count and not head count for training with cost implications excluding on-job training. This means that one delegate might have attended more than one intervention.


TABLE 2.5. EMPLOYMENT AND VACANCIES PER PROGRAMME

PROGRAMME 2011/2012 NO OF

EMPLOYEES

2012/2013 APPROVED

POSTS

2012/2013 NO OF

EMPLOYEES

2012/2013 VACANCIES

% OF VACANCIES

Office of the Commissioner 3 3 3 - 0%

Office of the CFO 1 2 - 2 0.28%

Risk Management 5 6 6 - 0%

Monitoring and Evaluation 2 2 2 - 0%

Claims 1 2 1 1 0.5%

Income 125 131 128 3 0.02%

Support Services 68 73 72 1 0.01%

Financial Reporting 51 51 51 - 0%

Financial Control 30 30 29 1 0.03%

Medical Services 107 111 109 2 0.01%

Compensation 253 257 255 2 0%

Human Resource Management 21 24 22 2 0.08%

Organisational Effectiveness 5 5 5 - 0%

Legal Services/Communications 4 4 4 - 0%

Internal Audit 10 10 8 2 0.2%

TOTAL 686 711 695 16 2.25%

ADDITIONAL 421 - 421 - -

GRAND TOTAL 1107 711 1116 16 2.25%

TABLE 2.6. EMPLOYMENT AND VACANCIES PER SALARY BAND

LEVEL 2011/2012 NO OF

EMPLOYEES

2012/2013 APPROVED

POSTS

2012/2013 NO OF

EMPLOYEES

2012/2013 VACANCIES

% OF VACANCIES

Top management (Level SR 15 to16)

1 1 1 - 0%

Senior management (Level SR 13 to 14)

12 13 12 1 7.69%

Highly skilled supervision (Levels SR 9 to 12)

51 59 52 7 11.86%

Highly skilled production (Levels SR 6 to 8)

200 286 277 8 2.79%

Skilled (Levels SR 3 to 5) 422 433 642 - 0%

Lower skilled (Levels SR 1 to 2) - - - - 0%

TOTAL 686 711 984 16 2.25%

During the year under review the Fund struggled to fill the position of the Chief Financial Officer (CFO). Due to the scarcity of financial management skills, the post remained vacant. An acting CFO was appointed.


TABLE 2.7. EMPLOYMENT CHANGES

SALARY BAND EMPLOYMENT AT BEGINNING OF

PERIOD

APPOINTMENTS TERMINATIONS EMPLOYMENT AT THE END OF

THE PERIOD

Top management (Levels SR 15 to 16)

1 - - 1

Senior management (Levels SR 8 to 14)

12 1 1 12


51 2 5 52


200 2 9 277

Skilled (Levels SR 3 to 5) 422 16 22 642

Lower skilled (Levels SR 1 to 2) - - - -

TOTAL 686 330 19 984

TABLE 2.8. REASONS FOR STAFF LEAVING

REASON NUMBER % OF TOTAL NO OF STAFF LEAVING

Death 3 2.36%

Resignation 24 26.08%

Dismissal 4 4.34%

Retirement 4 4.34.5%

Ill-health 2 2.17%

Expiry of contract (internship) 55 59.70%

Other - -

TOTAL 92 9.34%

TABLE 2.9. LABOUR RELATIONS: MISCONDUCT AND DISCIPLINARY ACTION

NATURE OF DISCIPLINARY ACTION NUMBER

Verbal warning -

Written warning 7

Final written warning 11

Dismissal 4

TOTAL 22


TABLE 2.10. EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR MALES

MALE

AFRICAN COLOURED INDIAN WHITE

LEVEL CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET

Top management (Level SR 15 to 16) 1 1 - - - - - -

Senior management (Level SR 13 to 14) 4 4 1 1 1 1 - -


24 26 - - - - - -


47 56 3 3 - 1 3 7

Skilled (Levels SR 3 to 5) 257 265 5 9 3 7 6 27

Lower skilled (Levels SR 1 to 2) - - - - - - - -

TOTAL 333 352 9 13 4 9 9 34

TABLE 2.11. EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR FEMALES

FEMALE

AFRICAN COLOURED INDIAN WHITE

LEVEL CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET

Top management (Level SR 15 to 16) - - - - - - - -

Senior management Level SR 13 to 14) 6 7 - - - - - -


26 27 - - 1 1 1 2


62 65 16 11 1 1 32 27

Skilled (Levels SR 3 to 5) 410 367 26 31 3 4 27 52

Lower skilled (Levels SR 1 to 2) - - - - - - - -

TOTAL 504 466 42 42 5 6 60 81

TABLE 2.12. EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR PERSONS WITH DISABILITY

DISABLED STAFF

MALE FEMALE

LEVEL CURRENT TARGET CURRENT TARGET

Top management (Level SR 15 to16) - 1 - 1

Senior management (Level SR 13 to14) - 2 - 2

Highly skilled supervision (Levels SR 9 to12) - 2 - -

Highly skilled production (Levels SR 6 to 8) 3 4 4 4

Skilled (Levels SR 3 to 5) 3 22 5 22

Lower skilled (Levels SR 1 to 2) - - - -

TOTAL 6 31 9 29

Part F Commissioner and auditor-General‘s rePorts


REPORT OF THE COMPENSATION COMMISIONERDuring the financial year, under review the Compensation Fund (Fund) made progress in achieving its objectives, as follows:

1. Income and investments

1.1. Assessment revenue

The Fund raised R8.1 billion assessment revenue as compared to R5.3 billion in the previous financial year, which is an increase of 53%. This increase is due to the introduction of the Return of Earnings (ROE) website that was initiated to allow employers to submit their ROE online an alternative to post or hand delivery to the Compensation Fund.

Employers are now able to log on onto the website and file their ROE’s online. Even though the campaign has had its challenges, it has been a success as over 94,000 employers submitted their returns online. The online submission of ROE makes it possible for an employer to be assessed immediately, giving the employer an opportunity to receive the invoice and make a payment. The campaign has been widely advertised in the both electronic and print media.

Notwithstanding the downtime and the slowness of the website, the Fund amassed revenue returns of over R8.1 billion and over R6.4 billion rand was collected from employers. This is a massive increase of 68% from R3.8 billion that was collected in the previous year.

1.2. Investment revenue

Due to the massive increase in revenue, the Fund had to invest over R1.6 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 million compared to R3.1 million in the previous year, denoting an increase of 32%. This was coupled with the sound investment strategy of the PIC, wherein the Fund has increased the mandate of the unhedged equities in the Pension Portfolio to 7.5% of the R14 billion invested in that portfolio.

The total value of assets has increased by R8.1 billion from R32.7 billion to R40.8 billion, which is a 25% increase. The total surplus for the year increased by 360% from R2 billion to R9.2 billion and the accumulated surplus is R23.4 billion. The Fund is fully funded and is in a sound financial position as at 31 March 2013.

2. Compensation claims

Claims incurred for the year amounted to R2 billion (R2.4 billion: 2012), which is a decrease of 16%. This is attributed to the SAP ICM system that has posed serious challenges since its inception on 1 October 2011. However, there was a marginal increase in processing of permanent disability claims which improved from R79 million to R110 million due to the increase in the tariffs of benefit payments.

In order to address the backlog that the Fund is facing in medical claims, the Fund acquired the services of EOH Medical Solutions to electronically process medical claims to certain medical service providers. Since this project was started in December 2012, over 300 million medical invoices have been paid, to the amount R341 million.

3. Budget

During the year under review, the Fund did not exceed its budget. The Fund utilised 98% of its budget on employee costs and spent 78% of the allocation on goods and services.

In revenue collection, the Fund far exceeded its own expectations by 164% of the set target. This is attributed to the ROE website.

The Fund budgeted for capital expenditure for decentralisation of COID services to the provinces, however only 26% of the budget was spent. This was due to the prolonged engagement with trade unions on the implementation of the new structure and decentralisation.


4. Social security reforms

As part of the process of social security reforms in the country, the Fund actively participated in all inter-departmental task team meetings.

5. Corporate governance and responsibilities

The Fund is compliant and guided by, inter alia, the provisions of the PFMA, other legislation and corporate governance principles as outlined in the King III Report. The King III Report brings about added compliance requirements that the Fund has embraced.

6. Oversight structures

6.1. Risk Management

The Fund has formalised the Fraud Prevention Plan to prevent, detect and investigate fraudulent activities and to protect assets and other resources from any dishonest and unethical conduct.

The Risk Management Unit has a mandate to implement risk management processes; to build a culture of risk management to ensure that all major risks are identified, managed and reported on; and monitor the entire risk profile of the Fund.

Strategic risk assessment workshops are conducted in order to identify strategic risks that the Fund is exposed to. A comprehensive operational risk assessment exercise was conducted and a Risk Committee operated during the year.

6.2. Internal Audit

Internal Audit has completed a number of audits, part of which were follow ups and action plans addressing issues raised in last year’s Auditor-General’s recommendations. Audits are planned after evaluating the risk profile of the Fund.

The Internal Audit annual plan was approved by the Audit Committee.Areas needing attention were discussed with management and the Audit Committee. Attention was given to weaknesses identified and the Fund will continue to address these weaknesses.

6.3. Audit Committee

The Minister, in consultation with the Accounting Officer, appoints the members of the Audit Committee. The Audit Com-mittee consists of independent members and has remained instrumental in providing independent advice to the Fund.It has met more than four times this financial year to review the work of the internal audit section, the internal control en-vironment and the financial results. However, one member of the Audit Committee resigned during the year under review.

7. Discontinued activities

None

8. Events after reporting date

None

9. Performance information

The Fund has a monitoring and evaluation unit that reports to the Commissioner and Department of Labour’s Chief Operations Officer. Quarterly performance reports are compiled and presented in accordance with the applicable prescripts.

During the audit, the AG has disclaimed the performance information as set out in pages 55 to 71 of the Annual Report. This was due to the fact that the information provided to the AG by management was not correct and accurate. Subsequent to the finalisation of the audit, management corrected the performance information and as set out below.


% o

f new

com

pens

atio

n cl

aim

s

adju

dica

ted

with

in

mon

ths

of r

egist

ratio

n

Ach

ieve

d (8

0.98

%)

165,

081

clai

ms

regi

ster

ed

133,

676

clai

ms

adju

dica

ted

80%

of n

ew

com

pens

atio

n cl

aim

s

adju

dica

ted

with

in t

wo

mon

ths

of r

egist

ratio

n

Not

ach

ieve

d (5

4%)

Reg

ister

ed 1

96,5

09

Adj

udic

ated

192

,967

(98%

)

Acc

epte

d 12

9,40

5

Adj

udic

atio

n ex

ceed

ed

regi

stra

tion.

Cla

ims

carr

ied

forw

ard

from

pre

viou

s m

onth

s

The

re w

as a

cha

lleng

e

with

new

sys

tem

Res

cue

back

log

proj

ect

team

in p

lace

to d

eal w

ith t

he r

ing

fenc

ed b

ackl

og o

f

clai

ms

until

end

of M

ay

2013

Fund

, mon

itor

and

eval

uate

nin

e pr

ojec

ts

Part

ially

ach

ieve

d

Six

proj

ects

wer

e

iden

tified

and

mon

itore

d

Fund

, mon

itor

and

eval

uate

21

proj

ects

in

all p

rovi

nces

Ach

ieve

d

21 p

roje

cts

wer

e

runn

ing

durin

g qu

arte

r 4

afte

r th

e se

cond

tra

nche

fund

ing

was

rel

ease

d.

The

Fun

d pa

rtic

ipat

ed

in t

hree

wor

ksho

ps a

s

part

of m

onito

ring

and

eval

uatio

n, n

amel

y,

Leth

abon

g Pr

ojec

t in

Del

arey

ville

; Opr

et

Proj

ect

in M

okop

ane

and

Qho

laqh

we

Proj

ect

in V

rede

, Fre

e

Stat

e.

N/A

The

num

ber

of p

roje

cts

to b

e fu

nded

, mon

itore

d

and

eval

uate

d w

as

incr

ease

d as

com

pare

d

to t

he p

revi

ous

year

N/A

Rev

iew

com

pens

atio

n

bene

fits

by e

nd o

f

finan

cial

yea

r

Part

ially

ach

ieve

d

Gaz

ette

issu

ed fo

r

com

men

ts, a

ppro

val

and

impl

emen

tatio

n

Incr

ease

d

com

pens

atio

n be

nefit

s

Ach

ieve

d

Bene

fits

incr

ease

gaze

tte

was

app

rove

d

on t

ime

and

impl

emen

ted

by t

he

due

date

N/A

The

inpu

ts a

nd a

ppro

val

for

com

pens

atio

n

bene

fit in

crea

ses

wer

e

rece

ived

on

time

for

the

finan

cial

yea

r 20

12/1

3

as c

ompa

red

to t

he

prev

ious

fina

ncia

l yea

r

N/A

CO

MPE

NSA

TIO

N

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


% o

f med

ical

cla

ims

final

ised

with

in n

umbe

r of

mon

ths

of r

ecei

ving

an

invo

ice

Not

ach

ieve

d (6

7%)

Out

of 1

,003

,050

med

ical

cla

ims

rece

ived

, 67

0,36

5 w

ere

paid

w

ithin

tw

o m

onth

s at

an

amou

ntR

1,27

7,31

0,46

7

80%

of m

edic

al c

laim

sfin

alise

d w

ithin

tw

om

onth

s of

rec

eivi

ng a

nin

voic

e

Ach

ieve

d (9

3%)

Out

of 9

76,8

44 m

edic

alcl

aim

s re

ceiv

ed, 9

09,1

62w

ere

paid

with

in t

wo

mon

ths

at a

n am

ount

of

R84

4,00

8,32

8.54

N/A

Man

ual r

efer

ral

and

proc

essin

g of

cl

aim

s, in

com

plet

e do

cum

enta

tion

from

clie

nts,

ICM

not

fully

impl

emen

ted.

Staf

f sho

rtag

e.

Enha

nce

or Im

prov

eIC

M s

yste

m

% m

edic

al a

dvic

e on

all

med

ical

cla

ims

prov

ided

with

in s

peci

fied

time

Not

ach

ieve

d

Out

of 1

6,73

5 re

ques

ts

for

med

ical

adv

ice

on

med

ical

cla

ims

rece

ived

, 6,

491

wer

e fin

alise

dw

ithin

20

days

80%

med

ical

adv

ice

on a

ll m

edic

al c

laim

spr

ovid

ed w

ithin

15

days

Not

ach

ieve

d (4

6%)

Out

of 9

,711

req

uest

sfo

r m

edic

al a

dvic

e on

med

ical

cla

ims

rece

ived

,4,

442

wer

e fin

alise

dw

ithin

15

days

1. R

egist

ratio

n an

d ad

judi

catio

n of

bac

klog

cl

aim

s w

ithin

the

Res

cue

Plan

pro

ject

2. A

djud

icat

ion

of P

TSD

fil

es

3. R

evie

w o

f Leg

al fi

les

4. M

anua

l ref

erra

l of

enqu

iries

, cap

turin

g an

d pr

oces

sing

5. S

taff

shor

tage

6. In

com

plet

e in

form

atio

n fr

om

stak

ehol

ders

7. IT

issu

es

Man

ual r

efer

ral

and

proc

essin

g of

clai

ms,

inco

mpl

ete

docu

men

tatio

n fr

omcl

ient

s, IC

M n

ot fu

llyim

plem

ente

d. S

taff

shor

tage

.

The

wor

k pr

oces

ses

have

bee

n su

bmitt

ed t

o IT

to

dire

ct t

he w

ork

acco

rdin

g to

wor

k flo

w

plan

. Inc

reas

e ca

paci

ty.

Part

icip

ate

in a

llst

akeh

olde

r co

nsul

tatio

nm

eetin

gs a

s in

vite

d

Part

ially

ach

ieve

d

The

dra

ft C

OID

Aam

endm

ents

, incl

udin

gth

e ch

apte

r ad

ded

onR

ehab

ilitat

ion

wer

ede

velo

ped

and

will

go t

o N

EDLA

C fo

rst

akeh

olde

r co

nsul

tatio

n

Part

icip

ate

in a

llst

akeh

olde

r co

nsul

tatio

nm

eetin

gs a

s in

vite

d

Part

ially

ach

ieve

d

The

cha

pter

on

Reh

abilit

atio

n ha

s be

en

adde

d to

CO

IDA

amen

dmen

ts a

ndam

endm

ents

Am

endm

ents

pro

cess

is

long

and

can

not

end

in

one

finan

cial

yea

r

N/A

N/A

MED

ICA

L SE

RVIC

ES

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Full

com

plia

nce

and

enfo

rcem

ent

of t

he p

erfo

rman

cem

anag

emen

t po

licy

Part

ially

ach

ieve

d

Ass

essm

ents

:

2011

/201

2 92

.5%

of

asse

ssm

ents

wer

e re

ceiv

ed (

74/9

81 w

ere

outs

tand

ing)

Agr

eem

ents

:

2011

/201

2 91

.6 %

of

agr

eem

ents

wer

e re

ceiv

ed (

85/9

81 w

ere

outs

tand

ing)

100%

com

plia

nce

and

enfo

rcem

ent

of t

he p

erfo

rman

cem

anag

emen

t po

licy

Not

ach

ieve

d

Nat

iona

l tar

get

of 9

5%

achi

eved

2012

/201

3

87%

1st

sem

este

r as

sess

men

ts w

ere

rece

ived

(92

9/96

8)

86%

agr

eem

ents

wer

e re

ceiv

ed (

955/

968)

Non

sub

miss

ion

ofco

mpl

ete

info

rmat

ion

by

busin

ess

units

Non

sub

miss

ion

ofco

mpl

ete

info

rmat

ion

by

busin

ess

units

N/A

% o

f ide

ntifi

ed n

eeds

addr

esse

d as

per

PD

Pal

igne

d w

ith W

SP

Ach

ieve

d

100%

of t

he id

entifi

edtr

aini

ng n

eeds

wer

eac

hiev

ed.

2,60

6 Em

ploy

ees

have

been

tra

ined

dur

ing

2011

/12

Gen

eric

tra

inin

g: 63

2Fu

nctio

nal t

rain

ing:

1,95

9A

BET:

15

82%

of i

dent

ified

nee

dsad

dres

sed

as p

er P

DP

alig

ned

with

WSP

(48

Trai

ning

nee

ds w

ere

iden

tified

)

Ach

ieve

d

117

of t

he id

entifi

ed

trai

ning

nee

ds w

ere

addr

esse

d.

62 (

19 g

ener

ic a

nd 4

3 fu

nctio

nal)

trai

ning

nee

ds

wer

e ad

dres

sed

durin

g 20

12/1

3

609

Empl

oyee

s ha

ve

been

tra

ined

dur

ing

2012

/13:

Gen

eric

tra

inin

g: 27

3

Func

tiona

l tra

inin

g: 33

6

Varie

nce

here

is 3

5%

due

to p

rope

r pl

anni

ng

N/A

N/A

N/A

HU

MA

N R

ESO

UR

CE

MA

NA

GEM

ENT

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Impl

emen

t in

tern

ship

/le

arne

rshi

p pr

ogra

mm

ePa

rtia

lly a

chie

ved

96 In

tern

s w

ere

appo

inte

d du

ring

2011

/12

100

Inte

rns

Ach

ieve

d

111

Inte

rns

wer

eap

poin

ted

into

the

inte

rnsh

ip p

rogr

amm

ePr

oper

pla

nnin

g w

asdo

ne

N/A

N/A

N/A

Empl

oyee

wel

lnes

sst

rate

gy im

plem

ente

dan

nual

ly

Not

ach

ieve

dIm

plem

ent

PILL

AR

2A

chie

ved

10%

of t

he E

HW

P w

as

impl

emen

ted,

mon

thly

G

EMS

visit

s, W

orld

A

ids

day

part

icip

atio

n,

bloo

d do

natio

ns, s

port

s ac

tiviti

es

N/A

Impr

oved

co-

ordi

natio

n of

var

ious

initi

ativ

esN

/A

% v

acan

cy r

ate

mai

ntai

ned

annu

ally

Ach

ieve

d

Tota

l app

rove

d po

sts

711

Tota

l pos

ts fi

lled

686

Tota

l vac

ant

post

s 25

Vaca

ncy

rate

3.3

%

Mai

ntai

n 7%

vac

ancy

rate

Ach

ieve

d

Vaca

ncy

rate

is 2

.25%

as

at 3

1 M

arch

201

3

N/A

N/A

N/A

Elim

inat

e w

ork

plac

edi

scrim

inat

ion

and

soci

al

prej

udic

e an

d ac

hiev

e re

alist

ic t

arge

t

N/A

Con

duct

an

anal

ysis

of e

mpl

oym

ent

polic

ies,

prac

tices

,pr

oced

ures

and

wor

king

env

ironm

ent

to id

entif

y ba

rrie

rs t

oth

e em

ploy

men

t an

dad

vanc

emen

t of

peo

ple

from

des

igna

ted

grou

ps

Ach

ieve

d

EHW

P an

d G

DY

m

eetin

gs w

ere

atte

nded

an

d in

puts

giv

en.

Inpu

ts w

ere

give

n on

Disa

bilit

y Po

licy.

EE t

arge

ts a

re

mon

itore

d.

N/A

N/A

N/A

HU

MA

N R

ESO

UR

CE

MA

NA

GEM

ENT

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Full

com

plia

nce

with

MIS

S by

201

6Pa

rtia

lly a

chie

ved

Acc

ess

cont

rol s

yste

mim

plem

ente

d. R

equi

sitio

n fo

r th

e el

ectr

ic fe

nce

and

Gua

rd H

ouse

sub

mitt

ed

to S

CM

.

Full

impl

emen

tatio

n of

Info

rmat

ion

secu

rity

(ICT

) ac

cord

ing

to M

ISS

Not

ach

ieve

d

Acq

uire

d da

taba

se o

fsu

pplie

rs fr

om S

CM

Writ

ten

subm

issio

n fr

om

the

secu

rity

man

ager

is

awai

ted

to a

ppoi

nt

priv

ate

serv

ice

prov

ider

to

con

duct

vet

ting

inst

ead

of S

SA

Inad

equa

te c

apac

ity t

oco

nduc

t ve

ttin

gR

eque

st t

he in

terv

entio

n of

the

Hea

d of

Sec

urity

in

DoL

% o

f cas

es r

egist

ered

final

ised

with

in a

gree

dtim

e fr

ame

Not

ach

ieve

d (2

8%)

Out

of 4

60 c

ases

rece

ived

, 130

cas

es h

ave

been

fina

lised

100%

of f

raud

and

corr

uptio

n ca

ses

rece

ived

/det

ecte

dfin

alise

d w

ithin

four

mon

ths

Not

ach

ieve

d (6

1%)

Out

of 1

42 c

ases

rece

ived

/det

ecte

d du

ring

in t

his

finan

cial

yea

r, 86

ca

ses

wer

e in

tern

ally

fin

alise

d

Rel

ianc

e on

out

side

inst

itutio

ns t

o ge

tin

form

atio

n. S

ectio

n no

t ca

paci

tate

d to

dea

l with

th

e w

ork

load

. Tar

get

was

rea

listic

ally

hig

h.

Rel

ianc

e on

out

side

inst

itutio

ns t

o ge

tin

form

atio

n. S

ectio

n no

t ca

paci

tate

d to

dea

l with

th

e w

ork

load

. Ta

rget

was

rea

listic

ally

hi

gh.

Esca

late

and

eng

age

the

rele

vant

inst

itutio

ns

on t

he im

port

ance

of

avai

ling

info

rmat

ion.

Im

plem

ent

the

appr

oved

st

ruct

ure.

Targ

et h

as b

een

revi

sed

to b

e ac

cum

ulat

ive

for

the

next

fina

ncia

l yea

r.

Num

ber

of r

iskaw

aren

ess

cam

paig

nco

nduc

ted

N/A

Four

frau

d an

d ris

kaw

aren

ess

sess

ions

cond

ucte

d

Ach

ieve

d

Nin

e se

ssio

ns o

f fra

udan

d ris

k aw

aren

ess

cond

ucte

d

N/A

N/A

N/A

Impl

emen

t en

terp

rise

risk

in a

ccor

danc

ew

ith R

isk M

anag

emen

tFr

amew

ork

Ach

ieve

d

Risk

mon

itorin

g to

okpl

ace

and

repo

rtpr

esen

ted

to R

iskC

omm

ittee

qua

rter

ly

Risk

ass

essm

ent

and

Risk

re

gist

ers

revi

ewed

and

up

date

d an

nual

ly

Ach

ieve

d

Ope

ratio

nal r

iskre

gist

ers

mon

itore

d an

d re

gist

ers

upda

ted

N/A

N/A

N/A

RIS

K M

AN

AG

EMEN

T

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


CO

IDA

am

endm

ent

draf

t su

bmitt

ed t

o LP

& IR

by

2013

and

m

onito

r th

e pr

oces

s fo

r pr

omul

gatio

n by

201

5

Part

ially

ach

ieve

d

Targ

et d

ate

exte

nded

to 3

1 M

arch

201

2 du

e to

the

pre

viou

s de

lays

in

fina

lisin

g th

e dr

aft

amen

dmen

ts

Fina

lise

and

subm

it C

OID

am

endm

ent

draf

t to

LP

& IR

for

furt

her

proc

esse

s

Ach

ieve

d

Fina

l dra

ft am

endm

ents

wer

e su

bmitt

ed t

o th

e LP

& IR

bra

nch

of t

he

DoL

on

31 Ja

nuar

y 20

13

for

furt

her

proc

esse

sing

N/A

N/A

N/A

% o

f app

licat

ion

for

incr

ease

d co

mpe

nsat

ion

final

ised

with

in 6

0 da

ys

of r

ecei

pt

N/A

65%

of A

pplic

atio

n fo

rin

crea

sed

com

pens

atio

nfin

alise

d w

ithin

60

days

of

rec

eipt

Not

ach

ieve

d (1

7%)

App

licat

ions

rec

eive

d: 1

8

App

licat

ions

fina

lised

: 3

Rul

es a

pplic

able

to

sect

ion

appl

icat

ions

prol

ong

the

final

isatio

n.Em

ploy

ers

take

tim

e to

re

spon

d.

N/A

Am

endm

ent

of t

he A

ct

to r

emov

e th

e ap

plic

able

ru

les

% o

f Sec

tion

91ob

ject

ions

fina

lised

with

in 6

0 da

ys fr

om t

he

date

of r

ecei

pt fr

om t

he

Rev

iew

Com

mitt

ee

Not

ach

ieve

d

Rec

eive

d 1,

481

Sect

ion

91 c

ases

, fina

lised

402

65%

obj

ectio

ns fi

nalis

ed

with

in 6

0 da

ys fr

om t

he

date

of r

ecei

pt fr

om t

heR

evie

w C

omm

ittee

Not

ach

ieve

d (1

9%)

Obj

ectio

ns r

ecei

ved:

1,

072

Obj

ectio

ns fi

nalis

ed: 2

00

Lega

l Ser

vice

s is

unde

rsta

ffed,

onl

y fiv

e le

gal o

ffice

rs fo

r al

l Pr

ovin

ces.

Not

eno

ugh

med

ical

of

ficer

s to

ass

ist w

ith

med

ical

opi

nion

s.

Una

vaila

bilit

y of

w

itnes

ses

for

the

Fund

ob

ject

ors.

Del

ays

in r

evie

win

g al

l of

the

files

by

the

Rev

iew

C

omm

ittee

.

Inad

equa

te IT

sys

tem

.

Inad

equa

te c

apac

ity in

Lega

l Ser

vice

sC

apac

itate

Leg

al

Serv

ices

with

mor

e pe

rson

nel

LEG

AL

SERV

ICES

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


% o

f liti

gatio

n ca

ses

reso

lved

with

in d

ays

of

rece

ipt

Part

ially

ach

ieve

d

Rec

eive

d 16

sum

mon

s,6

wer

e fin

alise

d an

d 10

ar

e st

ill ac

tive

litig

atio

n m

atte

rs.

45 C

ourt

app

licat

ions

to

com

pel c

ompl

ianc

e w

ith C

OID

Act

wer

e re

ceiv

ed a

nd o

nly

33

have

bee

n fin

alise

d.

The

rem

aini

ng 1

2 ap

plic

atio

ns a

re a

ctiv

eas

ple

adin

gs a

nd h

ave

been

clo

sed.

95%

of l

itiga

tion

case

sre

solv

ed w

ithin

21

days

Not

ach

ieve

d (3

8%)

Rec

eive

d: 4

8

Fina

lised

: 18

Sect

ions

stil

l pro

vidi

ngin

form

atio

n be

yond

21

days

afte

r re

ques

t.

Opp

onen

ts t

akin

g lo

ng

to r

espo

nd t

o th

e Fu

nd’s

offe

rs.

Opp

onen

ts t

akin

g lo

ng

to r

espo

nd t

o th

e Fu

nd’s

offe

rs.

Mee

ting

was

hel

d w

ithal

l rel

evan

t se

ctio

nsto

pro

pose

way

s of

impr

ovin

g th

e tu

rnar

ound

tim

es fo

r pr

ovisi

on o

f req

uire

d in

form

atio

n.

The

indi

cato

r w

as

revi

sed.

% o

f leg

al a

dvic

e an

dco

ntra

cts

prov

ided

w

ithin

day

s of

rec

eipt

Ach

ieve

d

Lega

l Ser

vice

s dr

afte

dan

d ve

tted

24

cont

ract

s.

7 le

gal o

pini

ons

wer

ere

ques

ted

on t

hein

terp

reta

tion

ofco

ntra

cts

and

CO

IDA

and

Lega

l Ser

vice

spr

ovid

ed a

ll th

ere

ques

ted

lega

l opi

nion

s.

90%

of l

egal

adv

ice

and

cont

ract

s pr

ovid

ed

with

in fi

ve d

ays

of

rece

ipt

Ach

ieve

d

28 r

eque

st fo

r dr

aftin

g of

con

trac

ts r

ecei

ved

from

Sup

ply

Cha

in.

26 c

ontr

acts

dra

fted

with

in fi

ve d

ays

(ach

ieve

d 93

%).

10 r

eque

sts

for

lega

lad

vice

rec

eive

d an

d 9

of w

hich

was

pro

vide

dw

ithin

five

wor

king

day

s (a

chie

ved

90%

).

N/A

N/A

N/A

LEG

AL

SERV

ICES

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Com

mun

icat

ions

stra

tegy

impl

emen

ted

by 2

017

N/A

Run

4 m

edia

adv

erts

Ach

ieve

d

4 M

edia

adv

erts

wer

eru

n

N/A

N/A

N/A

R1

billio

n pe

r an

num

of

the

debt

boo

k as

at

31

Mar

ch 2

011

Ach

ieve

d

Cum

ulat

ive

colle

ctio

nsR

1.2

billio

n fo

r th

e ye

ar

R1

billio

n de

bt

reco

vere

dPa

rtia

lly a

chie

ved

Tota

l rec

eipt

s fo

r th

equ

arte

r w

as R

1.6

billio

n.

How

ever

una

ble

to s

plit

rece

ipts

to

old

debt

bo

ok.

Due

to

syst

emco

nstr

aint

s w

e ar

eun

able

to

extr

act

repo

rts

whi

ch a

lloca

tere

ceip

ts t

o di

ffere

ntpe

riods

acc

urat

ely

Syst

emic

cha

lleng

esIT

is a

ssist

ing

inex

trac

ting

rele

vant

repo

rts

% in

crea

se in

rev

enue

as

com

pare

d to

pre

viou

s ye

ar

Not

ach

ieve

d

Cum

ulat

ive

bala

nces

of

asse

ssm

ents

rai

sed:

R3.

4 bi

llion

vs t

arge

t of

R5

billio

n

5% in

crea

se in

rev

enue

as

com

pare

to

the

prev

ious

yea

r

Ach

ieve

d

Targ

et fo

r qu

arte

r 4:

R

1.39

6 bi

llion

Act

ual: R

3.03

7 bi

llion

Intr

oduc

tion

ROE

web

site

Intr

oduc

tion

ROE

web

site

N/A

Impl

emen

t al

l AG

reco

mm

enda

tions

Part

ially

ach

ieve

d

33%

of A

G

reco

mm

enda

tions

hav

e be

en im

plem

ente

d ou

tof

154

onl

y 51

wer

esu

cces

sful

ly r

esol

ved

and

15%

the

reof

i.e.

23

are

to b

e fo

llow

ed u

p at

ye

ar-e

nd

Impl

emen

t 50

%pr

evio

us y

ears

AG

reco

mm

enda

tions

Impl

emen

t 50

%pr

evio

us y

ears

AG

reco

mm

enda

tions

Not

ach

ieve

d

The

aud

it m

atrix

rece

ived

in M

arch

reco

rded

77/

163

(47%

) fin

ding

s as

res

olve

d.

Thi

s ha

s no

t be

en

verifi

ed b

y In

tern

al A

udit.

The

CFO

’s in

terv

entio

n as

siste

d in

man

agin

g th

e au

dit

mat

rix

Inte

rnal

Aud

it w

illva

lidat

e th

e re

spon

ses

CO

MM

UN

ICAT

ION

S

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E

FIN

AN

CE

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


All

paym

ents

pro

cess

edw

ithin

30

days

of r

ecei

ptof

invo

ice

Part

ially

ach

ieve

d

Cre

dito

rs d

ays:

Com

pens

atio

n 1,

268.

33

days

(no

t ac

hiev

ed)

Pens

ion

34.7

day

s (a

chie

ved)

Med

ical

11.

51 d

ays

(ach

ieve

d)

SCM

9.1

2 da

ys

(ach

ieve

d)

Sund

ry p

aym

ents

proc

esse

d w

ithin

30

days

of r

ecei

pt o

f inv

oice

an

d cl

aim

s pr

oces

sed

with

in 6

0 da

ys o

f rec

eipt

of b

anki

ng d

etai

ls

Part

ially

ach

ieve

d

Proc

urem

ent

Tota

l pay

men

ts:

R18

6,73

6,79

8.89

(8

3.21

%)

Cre

dito

rs:

R37

,673

,772

.21

(16.

79%

)O

ver

30 d

ays

R69

,528

.37

(0.0

003%

)

Med

ical

Tota

l pay

men

tsR

83,9

60,7

85.3

9 (6

6.92

%)

Cre

dito

rs:

R41

,505

,390

.05

(33.

08%

)O

ver

30 d

ays:

R15

,999

,429

.49

(12.

75%

)

Pens

ion

Tota

l Pay

men

ts:

R19

4,34

9,39

7.10

(8

2.77

%)

Cre

dito

rs:

R40

,464

,897

.95

(17.

23%

)O

ver

30 d

ays:

R27

,713

,911

.65

(11.

80%

)

Out

stan

ding

ban

king

deta

ils t

hat

still

need

to b

e su

bmitt

ed b

ybe

nefic

iarie

s an

dca

ptur

ed b

y th

e Fu

nd

Out

stan

ding

ban

king

deta

ils t

hat

still

need

to b

e su

bmitt

ed b

ybe

nefic

iarie

s an

dca

ptur

ed b

y th

e Fu

nd

Unc

laim

ed m

onie

spr

ojec

t is

in p

rogr

ess.

Focu

ssin

g on

red

ucin

gou

tsta

ndin

g cr

edito

rs.

FIN

AN

CE

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


FIN

AN

CE

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E

CA

ATo

tal P

aym

ents

:R

3,73

4,68

6 (7

6.44

%)

Cre

dito

rs:

R1,

150,

776.

78 (

23.5

6%)

Ove

r 30

day

s:R

435,

600.

98 (

8.92

%)

Com

pens

atio

nTo

tal P

aym

ents

:R

104,

167,

738.

62

(25.

65%

)C

redi

tors

:R

302,

003,

142.

91

(74.

35%

)O

ver

30 d

ays:

R29

7,14

0,07

5.18

(7

3.12

%)

Fina

ncia

l rat

iom

aint

aine

d(A

sset

Lia

bilit

y ra

tio)

Ach

ieve

d

The

Ass

et:L

iabi

lity

ratio

at

yea

r-end

was

6:1

2:1

Ass

et: L

iabi

lity

ratio

m

aint

aine

dA

chie

ved

The

Ass

et:L

iabi

lity

ratio

at

yea

r-end

was

4:1

N/A

N/A

N/A


Rec

eive

abo

ve t

he(S

TEF

I) be

nchm

ark

retu

rns

Ach

ieve

d

For

the

Com

pens

atio

n po

rtfo

lio t

he F

und

rece

ived

2.2

6% a

gain

st

the

STEF

I ben

chm

ark

of

2.03

%.

Ach

ieve

d

For

Pens

ion

port

folio

th

e Fu

nd r

ecei

ved

3.35

% a

gain

st t

he

benc

hmar

k of

the

SW

IX

40 o

f 3.1

1%.

Rec

eive

abo

ve t

he(S

TEF

I) be

nchm

ark

retu

rns

Ach

ieve

d

For

the

Com

pens

atio

n po

rtfo

lio t

he F

und

rece

ived

11.

91%

aga

inst

th

e ST

EFI b

ench

mar

k of

11

.30%

.

Ach

ieve

d

For

Pens

ion

port

folio

th

e Fu

nd r

ecei

ved

16.4

4% a

gain

st t

he

benc

hmar

k of

the

SW

IX

40 o

f 15.

96%

.

N/A

N/A

N/A

FIN

AN

CE

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


CF

IT s

trat

egy

deve

lope

d,su

ppor

ting

syst

ems

and

infr

astr

uctu

reim

plem

ente

d

Part

ially

ach

ieve

d

Cap

italis

atio

n of

pens

ions

dev

elop

men

tco

mpl

eted

.Sc

anni

ng a

nd in

dexi

ngco

mpl

eted

and

impl

emen

ted.

SMS

and

emai

lde

velo

pmen

t co

mpl

eted

.C

laim

sta

tus

web

site

com

plet

ed a

ndim

plem

ente

d.D

ata

mig

ratio

nno

t fin

alise

d, d

elay

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perie

nced

.

Inte

grat

ed s

yste

ms

and

infr

astr

uctu

reim

plem

ente

d

Part

ially

ach

ieve

d

The

DoL

had

tak

en a

deci

sion

that

the

re w

illbe

a s

ingl

e, c

entr

alise

dIT

str

ateg

y ac

ross

the

orga

nisa

tion.

The

Fun

dw

ill no

t ha

ve it

s ow

nst

rate

gy.

The

sys

tem

sde

velo

pmen

t w

hich

was

in

pro

gres

s in

clud

ed:

MIS

Lett

ers

of G

ood

Stan

ding

Rem

ittan

ce a

dvic

es

Elec

tron

ic p

orta

l

One

str

ateg

y ac

ross

D

oL –

CF

to b

e in

clud

ed

in it

The

DoL

dec

ision

that

the

re w

ill be

asin

gle,

cen

tral

ised

ITst

rate

gy im

pact

ed o

nth

e ac

hiev

emen

t of

the

ta

rget

The

indi

cato

r w

ill be

revi

sed

in fu

ture

% C

usto

mer

ser

vice

supp

ort

prov

ided

at

all

cust

omer

ser

vice

tou

ch

poin

ts (

phon

e-in

, web

, w

alk-

in)

Part

ially

ach

ieve

d

The

IVR

Cus

tom

ersa

tisfa

ctio

n op

tion

and

the

wal

k-in

cen

tre

selfs

ervi

ce k

iosk

hav

e be

en im

plem

ente

d.

The

cla

im s

tatu

s op

tion

supp

ort

is do

ne v

ia

cont

act

cent

re p

hone

inan

d w

eb m

aste

r em

ail.

ROE

web

sup

port

not

deve

lope

d ye

t, ho

wev

er

the

new

cus

tom

er c

are

syst

em w

eb c

hann

elis

enab

led,

aw

aitin

gth

e de

velo

pmen

t an

din

tegr

atio

n of

sys

tem

s.

70%

Cus

tom

er s

ervi

ce

supp

ort

prov

ided

at

all

cust

omer

ser

vice

tou

ch

poin

ts (

phon

e-in

, web

, w

alk-

in)

Ach

ieve

d

80%

cus

tom

er s

ervi

ceim

plem

ente

d

N/A

N/A

N/A

INFO

RM

ATIO

N A

ND

CO

MM

UN

ICAT

ION

TEC

HN

OLO

GY

AN

D C

ALL

CEN

TR

E

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Ach

ieve

% in

crea

se o

fcu

stom

er s

atisf

actio

nra

ting

on b

asel

ine

Ach

ieve

d

70%

CSI

for

both

cont

act

and

wal

k-in

cent

re a

chie

ved

Det

erm

ine

cust

omer

satis

fact

ion

base

line

Part

ially

ach

ieve

d

Exte

nded

the

cen

tre

to a

ccom

mod

ate

mor

e vi

sitor

s.

Incr

ease

d th

e nu

mbe

r of

su

ppor

t ag

ents

.

Cre

ated

add

ition

al h

elp

desk

to

deal

with

onl

ine

supp

ort

quer

ies.

Lim

ited

cust

omer

info

rmat

ion

and

lack

of w

ritte

n fe

edba

ckto

val

idat

e th

e ra

ting

to b

e ab

le t

o ga

ther

reco

mm

enda

tions

Lim

ited

cust

omer

info

rmat

ion

and

lack

of w

ritte

n fe

edba

ck t

ova

lidat

e th

e ra

ting

Inve

stig

ate

and

impl

emen

t a

solu

tion

to

capt

ure

deta

ils a

nd a

llow

fo

r w

ritte

n fe

edba

ck

Fina

lisat

ion

of a

gove

rnan

ce p

lan

and

impl

emen

tatio

n

Part

ially

ach

ieve

d

Disa

ster

rec

over

y pl

anfo

r ph

ase

I (st

orag

ere

cove

ry h

as b

een

impl

emen

ted)

and

test

ed

Rev

iew

of p

lan

and

stru

ctur

es.

Upd

ate

and

impl

emen

tatio

n.

Part

ially

ach

ieve

d

The

IT g

over

nanc

efr

amew

ork

has

been

appr

oved

at

CF,

but

was

dep

enda

nt o

n th

efin

alisa

tion

of t

he D

oLfr

amew

ork.

Impl

emen

tatio

n ha

sbe

en d

elay

ed a

s th

ere

was

no

IT s

ervi

cepa

rtne

r.

Dep

ende

ncy

on t

heD

oL IT

fram

ewor

k an

d pl

ans

Dep

ende

ncy

on t

heD

oL IT

fram

ewor

k an

d pl

ans

The

DoL

mus

t ap

poin

t a

new

ser

vice

pro

vide

r or

ca

paci

tate

itse

lf

INFO

RM

ATIO

N A

ND

CO

MM

UN

ICAT

ION

TEC

HN

OLO

GY

AN

D C

ALL

CEN

TR

E C

ontin

ued

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Stra

tegi

c Pl

an a

ndA

nnua

l Per

form

ance

Plan

dev

elop

ed in

line

with

the

NT

Fra

mew

ork

for

perfo

rman

cein

form

atio

n

Ach

ieve

d

2012

/17

Stra

tegi

c Pl

anan

d 20

12/1

3 A

nnua

lPe

rform

ance

Pla

ns w

ere

deve

lope

d an

d ap

prov

ed

Coo

rdin

ate

the

deve

lopm

ent

and

appr

oval

of t

he S

trat

egic

Pl

an a

nd A

nnua

l Pe

rform

ance

Pla

n as

per

N

T F

ram

ewor

k

Ach

ieve

d

Stra

tegi

c Pl

an 2

013-

2018

an

d A

nnua

l Per

form

ance

Pl

an 2

013/

14 w

ere

deve

lope

d, a

ppro

ved

and

subm

itted

to

NT

as

requ

ired

N/A

N/A

N/A

Qua

lity,

rele

vant

and

timel

ines

s of

perfo

rman

ce r

epor

tsin

line

with

the

NT

Fram

ewor

k fo

rpe

rform

ance

Info

rmat

ion

Ach

ieve

d

All

perfo

rman

cein

form

atio

n re

port

sw

ere

subm

itted

as

per

the

NT

Fra

mew

ork

Mon

itor

and

eval

uate

orga

nisa

tiona

lpe

rform

ance

to

ensu

re

that

qua

rter

ly, m

id-t

erm

an

d an

nual

rep

orts

ar

e ta

bled

as

per

NT

Fr

amew

ork

Ach

ieve

d

Qua

rter

ly p

erfo

rman

ce

repo

rts

wer

e co

ordi

nate

d an

dsu

bmitt

ed fo

r a

ppro

val.

Ann

ual r

epor

t te

mpl

ate

as p

er N

T F

ram

ewor

k ci

rcul

ated

to

all

part

icip

ants

.

N/A

N/A

N/A

Dev

elop

and

impl

emen

tor

gani

satio

nal w

ide

chan

ge m

anag

emen

tpr

ogra

mm

e by

201

6

Part

ially

ach

ieve

d

Cha

nge

man

agem

ent

stra

tegy

impl

emen

ted

thro

ugh:

Prov

inci

al m

anag

emen

tan

d st

akeh

olde

rs r

oad

show

s co

nduc

ted.

Cal

l cen

tre

chan

gem

anag

emen

t po

ster

s.

Com

mun

icat

ion

oncu

stom

er a

nd e

mpl

oyee

sa

tisfa

ctio

n su

rvey

s.

Dev

elop

and

impl

emen

t 10

% o

rgan

isatio

nal w

ide

chan

ge m

anag

emen

tpr

ogra

mm

e

Not

ach

ieve

d

The

org

anisa

tiona

l wid

ech

ange

man

agem

ent

prog

ram

me

was

deve

lope

d an

d no

tim

plem

ente

d

Insu

ffici

ent

reso

urce

sto

impl

emen

tN

/AN

/A

OR

GA

NIS

ATIO

NA

L EF

FEC

TIV

ENES

S

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


CO

IDA

ser

vice

sde

cent

ralis

ed t

o ni

nepr

ovin

ces

N/A

CO

IDA

ser

vice

sde

cent

ralis

ed t

o tw

opr

ovin

ces)

Not

ach

ieve

d

Four

sta

ff m

embe

rsde

ploy

ed a

nd 1

9se

cond

ed t

o G

aute

ng.

Nin

e st

aff m

embe

rsse

cond

ed t

o W

este

rnC

ape

to a

ssist

inde

liver

ing

CO

IDse

rvic

es.

Infr

astr

uctu

re n

ot r

eady

N/A

Indi

vidu

als

have

been

iden

tified

at

prov

inci

al le

vel t

oor

gani

se in

fras

truc

ture

requ

irem

ents

OR

GA

NIS

ATIO

NA

L EF

FEC

TIV

ENES

S C

ontin

ued

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Co-

ordi

nate

and

mon

itor

the

impl

emen

tatio

nof

all

CF

prio

rity

proj

ects

with

inco

mm

itted

pro

ject

plan

/ sch

edul

e w

ithm

easu

rabl

e ta

rget

san

d bu

dget

as

per

PMBO

K

N/A

Subm

it qu

arte

rlym

onito

ring

repo

rts

Part

ially

ach

ieve

dM

onito

ring

repo

rts

are

subm

itted

to

vario

usco

mm

ittee

s:SA

P en

hanc

emen

t pr

ogre

ss r

epor

tw

as p

rese

nted

to

SAP

Proj

ect

Stee

ring

Com

mitt

ee (

MIS

, Let

ters

of

goo

d st

andi

ng,

rem

ittan

ce w

ere

unde

r de

velo

pmen

t. The

Cla

ims

Reg

istra

tion

Port

al w

as d

evel

oped

an

daw

aitin

g U

AT).

Org

anisa

tiona

l Red

esig

n an

dD

ecen

tral

isatio

nPr

esen

ted

to S

trat

egic

O

pera

tiona

lC

omm

ittee

Lack

of c

apac

ityLa

ck o

f cap

acity

The

new

str

uctu

rew

ill be

app

oint

ed a

ndad

ditio

nal r

esou

rces

will

be a

ppoi

nted

PRO

JEC

T M

AN

AG

EMEN

T O

FFIC

E

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Prep

arat

ion

and

appr

oval

of t

he t

hree

ye

ar r

isk b

ased

inte

rnal

au

dit

plan

and

the

ann

ual

cove

rage

plan

by

the

Aud

itC

omm

ittee

N/A

App

rova

l of t

he t

hree

year

and

ann

ual r

iskba

sed

and

annu

alco

vera

ge in

tern

al a

udit

plan

on

1 A

pril

2012

Ach

ieve

d

Risk

-Bas

ed A

nnua

lA

udit

Plan

dra

fted

and

appr

oved

by

Aud

itC

omm

ittee

N/A

N/A

N/A

Rep

ortin

g of

qua

rter

lyre

port

s to

the

Aud

itSt

eerin

g C

omm

ittee

N/A

Four

qua

rter

ly r

epor

tsto

Aud

it St

eerin

gC

omm

ittee

ann

ually

Ach

ieve

d

Rep

orts

to

Stee

ring

Com

mitt

ee m

eetin

g he

ld o

n 11

Mar

ch 2

013

N/A

N/A

N/A

Rep

ortin

g of

qua

rter

lyre

port

s to

the

Aud

itC

omm

ittee

N/A

Four

qua

rter

ly r

epor

ts

to a

udit

com

mitt

ees

annu

ally

Ach

ieve

d

Rep

orts

to

Aud

itC

omm

ittee

, mee

ting

held

on

19 M

arch

201

3

N/A

N/A

N/A

Dev

elop

and

impl

emen

t in

tern

al a

udit

polic

ies

(qua

lity

assu

ranc

e an

d d

ocum

ent

rete

ntio

npo

licie

s an

d sk

ills t

rans

fer

plan

)

N/A

Full

Impl

emen

tatio

n of

Qua

lity

Ass

uran

ce P

olic

yA

chie

ved

Qua

lity

impr

ovem

ent

surv

eys

per

proj

ect

com

plet

ed (

four

dur

ing

this

quar

ter)

.Q

ualit

y A

sses

smen

t

Rev

iew

Rea

dine

ssA

sses

smen

t by

Nat

iona

lTr

easu

ry.

N/A

N/A

N/A

INT

ERN

AL

AU

DIT

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


Dev

elop

and

impl

emen

t th

e in

tern

al a

udit

met

hodo

logy

N/A

Impl

emen

tatio

nof

the

inte

rnal

aud

itm

etho

dolo

gy

Ach

ieve

d

Met

hodo

logy

fully

impl

emen

ted

and

inco

rpor

ated

into

Aud

it So

ftwar

e (T

eam

mat

e).

Met

hodo

logy

boo

klet

spr

inte

d.

N/A

N/A

N/A

Com

bine

d as

sura

nce

plan

N/A

App

rova

l of a

com

bine

d as

sura

nce

plan

Ach

ieve

d

Com

bine

d as

sura

nce

activ

ities

are

con

tinuo

us

betw

een

Stee

ring

Com

mitt

ee, A

udito

r G

ener

al a

nd R

isk

Man

agem

ent.

The

Com

bine

d A

ssur

ance

Plan

is r

egul

arly

upd

ated

.

N/A

N/A

N/A

INT

ERN

AL

AU

DIT

Con

tinue

d

KEY

PER

FOR

MA

NC

EIN

DIC

ATO

RS

AC

TU

AL

AC

HIE

VEM

ENT

2011

/201

2

PLA

NN

EDTA

RG

ET20

12/2

013

AC

TU

AL

AC

HIE

VEM

ENT

2012

/201

3

DEV

IAT

ION

FRO

M P

LAN

NED

TAR

GET

FO

R20

12/2

013

VAR

IAN

CE

FRO

M20

11/2

012

TO20

12/2

013

CO

MM

ENT

ON

TH

E VA

RIA

NC

E


10. Challenges for the year

10.1. IT System

The Compensation Fund continues to experience challenges around IT systems. The inadequate SAP ICM system, which was implemented in October 2011, did not yield the desired outcomes and resulted in claims processing backlogs. The manual data verification is required before payments can be made, which slows down the payment process and result in backlogs. There is backlog in registration and adjudication of compensation claims and processing of medical invoice, which led to the medical practitioners threatening the Fund with legal action as well as not servicing the COID patients.

In order to resolve the IT system challenges and backlog, the Fund resorted to the option of upfront payments to the six selected medical service providers to circumvent potential litigation resulting from non – payment. This resulted in the Fund making advance payments of R566 million to those service providers.

The Fund engaged EOH to provide a temporary solution to deal with medical invoice backlog. This process allowed the medical services provider to electronically send their invoices directly to EOH to process the invoices. As at 31 March 2013 over 300 000 invoices were paid worth R341 million.

The Fund is now in the process of recovering the advance payments that were paid to the five service providers. An on-line claims portal was developed in order to resolve the challenge of registration and adjudication of compensation claims backlog, this portal will be functional in the first half of the new financial year.

10.2. Staff

Critical positions are vacant resulting in lower level staff expected to assist in performing functions at a higher level.

Through the implementation of the new organisational structure, the positions of Chief Director: Corporate Services, Chief Financial Officer, and Directors: Financial Control and Supply Chain Management were advertised and will be filled in the new financial year. The Fund will continue to enrol management team in Executive Development Programme. The Fund will through its Workplace Skills Plan (WSP) continue to train staff in finance, compensation and medical functions.

10.3. Corporate Governance

The Fund is in the process of amending the COID Act in order to align it with best practices and improve corporate governance. The Fund will be supporting the consultation process until the COID Bill is promulgated.

10.4. Reporting

There is failure by employers to comply with the Act in terms of registering with the Fund and reporting of accidents. The Fund will intensify its marketing and educational campaigns to educate employees, employers and service providers on COIDA.

10.5. AG Opinion

The AG gave the Fund a disclaimer opinion based on the annual financial statements. Based on the challenges outlined above, the management of the Fund will develop a comprehensive action plan to address the disclaimer opinion. The plan will be strictly monitored on quarterly basis and verified by internal audit to ensure that the Fund addresses all the root causes and qualifications.


11. Conclusion

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

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

And lastly, I would like to acknowledge the commitment and unfailing support of the staff and Management in contributing towards the delivery of the mandate of the Fund.

MR SHADRACK MKHONTOCOMPENSATION COMMISSIONER


REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE COMPENSATION FUND REPORT INTRODUCTION1. I was engaged to audit the financial statements of the Compensation Fund set out on pages 118 to 174, which comprise

the statement of financial position as at 31 March 2013, the statement of financial performance, statement of changes in net assets and the cash flow statement for the year then ended, and 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 management did not maintain proper accounting records, journals and adequate controls over assessment revenue and debtors. This has resulted in revenue being incorrectly recorded and payments received from debtors not posted into the correct period for the current and prior years. Consequently, interest and penalties were incorrectly charged based on inaccurate assessment revenue and debtors.

Furthermore, the Fund does not have processes in place to ensure that all employers are registered with the Fund and assessed in terms of COIDA. The entity’s records did not permit the application of adequate alternative auditing procedures regarding revenue and receivables. As a result, I was unable to determine whether any adjustment was necessary relating to:

a) Revenue from non-exchange transactions stated at R8.092 billion (2012: R5.325 billion), b) Receivables from non-exchange transactions stated at R3.735 billion (2012: R2.481 billion).

ALLOwANCE FOR IMPAIRMENT5. I was unable to obtain sufficient appropriate audit evidence for the amount disclosed in the statement of financial

performance for impairment allowance as management did not provide the assessment of impairment in according with Standard of Generally Recognised Accounting Practice (GRAP) 104, Financial Instruments. I could not confirm, by any alternative means, whether any adjustment to the allowance for impairment stated at R1.1148 billion (2012: R566.610 million) in the financial statements was necessary.

RECEIVAbLE FROM ExCHANGE TRANSACTIONS6. The entity did not correctly account for concessionary loans in accordance with GRAP 104, Financial Instruments.

Concessionary loans were incorrectly recognised as receivables from exchange transactions. Consequently receivables from non exchange transactions are understated by R518.691 million and receivables from exchange transactions are overstated by R518.691 million.


bENEFITS PAID AND PAYAbLES FROM ExCHANGE TRANSACTIONS7. I was unable to obtain sufficient appropriate audit evidence that management has correctly accounted for all the claims

and payables for the current and prior year, as management could not provide relevant accounting records. The entity records did not permit the application of adequate alternative auditing procedures regarding benefit claims and payables. I was therefore unable to determine whether any adjustments were required to benefits paid stated at R1.981billion (2012: R2.408 billion) and payables from exchange transactions stated at R938.902 million (2012: R703.838 million).

PROVISION FOR OUTSTANDING CLAIMS8. The entity did not assess and disclose the reduction amount of provisions resulting from payments and measurement

of the estimates in accordance with GRAP 19, Provisions. In addition, I was unable to obtain sufficient appropriate audit evidence for the amounts disclosed as provision for outstanding claims in note 21 to the financial statements. I could not confirm, by any alternative means, whether any adjustment to the provision for outstanding claims to stated at R 6.435 billion (2012: R4.842 billion) in the financial statements was necessary.

CASH AND CASH EqUIVALENTS 9. I was unable to obtain sufficient appropriate audit evidence for all the unreconcilied items for cash and cash equivalents,

as management did not maintain proper accounting records and adequate controls over cash and cash equivalents. The entity records did not permit the application of adequate alternative auditing procedures regarding cash and cash equivalents. Therefore, I was unable to determine whether any adjustment to cash and cash equivalents stated at R1.092 billion (2012: R395.027 million) was necessary.

RELATED PARTY TRANSACTIONS10. I was unable to obtain sufficient appropriate audit evidence regarding related party disclosures as management did

not identify and disclose nature of the related party relationships as well as information about those transactions and outstanding balances in accordance with IPSAS 20, Related party disclosures. The entity’s records did not permit the application of adequate alternative auditing procedures regarding related party transactions. Therefore, I was unable to determine whether any adjustments were required to the related party disclosures.

COMMITMENTS11. I was unable to obtain sufficient appropriate audit evidence for all commitments as management could not provide

approved contracts. The entity did not have an adequate system in place to maintain records of commitments approved and contracted. The entity’s records did not permit the application of adequate alternative auditing procedures regarding commitments. Therefore, I was unable to determine whether any adjustments were required to the commitments disclosed.

IRREGULAR ExPENDITURE 12. 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 prior year as the entity did not maintain proper records and adequate systems of internal controls. The entity records did not permit the application of adequate alternative auditing procedures regarding irregular expenditure. Therefore, I was unable to determine whether any adjustment to the irregular expenditure as stated at R658.467 million (2012: R20.384) million in the financial statements was necessary.

AGGREGATION OF IMMATERIAL UNCORRECTED MISSTATEMENTS13. 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:

• Administration expenses reflected as R424.619 million is overstated by R28.502million

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


• Contingencies reflected as R100.51 milion is overstated by R28.338 million • Statement of change in net assets is misstated by R5.694 million • Fruitless and wasteful expenditure reflected as R15.020 million is understated by R414,000

In addition, I was unable to obtain sufficient appropriate audit evidence and I was unable to confirm the following elements by alternative means.

• Accruals of R29 million as included in the disclosed balance of R93.447 million

As a result, I was unable to determine whether any further adjustments to these elements were necessary.

DISCLAIMER OF OPINION14. 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 MATTERS15. I draw attention to the matters below. My opinion is not modified in respect of these matters.

RESTATEMENT OF CORRESPONDING FIGURES 16. As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2012 have been restated as

a result of an error discovered during 2013 in the financial statements of the Compensation Fund at, and for the year ended, 31 March 2012.

ALLOwANCE FOR IMPAIRMENTS17. As disclosed in the statement of financial performance, material losses to the amount of R1.148 billion were incurred as

a result of an increase in the impairment allowance for irrecoverable debtors.

Report on other legal and regulatory requirements

18. In accordance with the PAA and the General Notice issued in terms thereof, I report the following findings relevant to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

PREDETERMINED ObjECTIVES19. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual

performance report as set out on pages 55 to 71 of the annual report.

20. The reported performance against predetermined objectives was evaluated against the overall criteria of usefulness and reliability. The usefulness of information in the annual performance report relates to whether it is presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance is consistent with the planned objectives. The usefulness of information further relates to whether indicators and targets are measurable (i.e. well defined, verifiable, specific, measurable and time bound) and relevant as required by the National Treasury Framework for managing programme performance information.

The reliability of the information in respect of the selected objectives is assessed to determine whether it adequately

reflects the facts (i.e. whether it is valid, accurate and complete).

21. The material findings are as follows:



Usefulness of information

Measurability

PERFORMANCE TARGETS NOT SPECIFIC 22. The National Treasury Framework for managing programme performance information (FMPPI) requires that performance

targets be specific in clearly identifying the nature and required level of performance. A total of 67% of the targets relevant to strategic objective, 4.1 Compensation Directorate and 4.2 Medical Directorate and strategic objective 4.7 Finance Directorate were not specific in clearly identifying the nature and the required level of performance. This was due to the fact that management was not aware of all the requirements of the FMPPI.

RELIAbILITY OF INFORMATION23. The National Treasury Framework for managing programme performance information (FMPPI) requires that institutions

should 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. I was unable to obtain the information and explanations I considered necessary to satisfy myself as to the reliability of information presented with respect to objective 1 Directorate: Compensation, objective 2 Directorate: Medical services, and objective 7 Chief directorate: Finance. This was due to limitations placed on the scope of my work.

COMPLIANCE wITH LAwS AND REGULATIONS24. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding

financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key applicable laws and regulations as set out in the General Notice issued in terms of the PAA are as follows:

ANNUAL FINANCIAL STATEMENTS25. The accounting authority did not ensure that the fund has and maintains effective, efficient and transparent system of

financial and risk management, and internal controls as required by section 51(1)(a)(i) of the PFMA.

26. The fund did not comply with section 55 (1)(a) and (b) of the PFMA as it did not keep full and proper records of the financial affairs of the fund and did not prepare financial statements in accordance with Generally Recognised Accounting Practices (GRAP). Material misstatements were identified during the audit, some of these were corrected by management and those that were not corrected are included in the basis qualified audit opinion.

ANNUAL REPORT27. The annual report does not include the accounting authority’s report as required by sections 4 (1) (n) and 20(3) of the

COIDA. Without the accounting authority’s report, there is no accountability and it leaves the potential for the annual report to be interpreted without context provided by the accounting authority.

PROCUREMENT AND CONTRACT MANAGEMENT28. Bids were not advertised in at least the Government Tender Bulletin for a minimum period of 21 days before closure as

required by Treasury Regulation 16A6.3(c).

29. Goods and services of a transaction value above R500,000 were procured without inviting competitive bids as required by Treasury Regulation 16A.6.4 and PN 8 of 2007-08.

30. Names of winning bidders were not published on the fund’s website as well as in the Government Tender Bulletin as required by Treasury Regulation 16A6.3(d) and Instruction Note 32.



ExPENDITURE MANAGEMENT31. The accounting authority did not take effective and appropriate steps to prevent irregular as well as fruitless and wasteful

expenditure disclosed in notes 30 and 29 to the financial statements as required by section 51(b)(ii) of the PFMA.

32. Officials did not ensure that payments made were within the delegated authority and negligently failed to exercise their powers or perform their duties as required by section 56(1)(a).

REVENUE MANAGEMENT 33. The accounting authority did not maintain effective and efficient revenue management that provides for identification,

collection, recording and reconciliation of revenue, 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).

34. 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.

35. 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.

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

CLAIMS AND PAYAbLES MANAGEMENT37. The accounting authority did not maintained an effective control environment to accept, adjudicate, and make payments

to the injuries as required by section 22 and 29 of COIDA.

LIAbILITY MANAGEMENT 38. The fund provided loans to its service providers in contravention of the section 68 of the PFMA.

INTERNAL CONTROL39. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance

with laws and regulations. The matters reported below under the fundamentals of internal control are limited to the significant deficiencies that resulted in the basis for disclaimer of opinion, the findings on the annual performance report and the findings on compliance with laws and regulations included in this report.

LEADERSHIP40. Management does not promote a culture of protecting and enhancing the best interest of the entity, which is evident

from the significant backlogs in processing of claims, making significant advance payments to service providers without validation process being performed. Action plans and related commitments to address previously reported root causes were not effectively implemented and monitored. This resulted in the recurrence of numerous findings that were reported in the prior year.

41. 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 consultants to perform functions of some of the staff members in finance, claims processing and debt collection.

FINANCIAL AND PERFORMANCE MANAGEMENT42. Management did not facilitate an adequate filing system to ensure that information was available for audit purposes.

Difficulties were experienced during the audit concerning delays and the availability of information requested for audit.



43. Checks and balances were not effectively implemented 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.

GOVERNANCE44. The fund’s 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.

45. For the past 10 years, the IT environment of the fund was outsourced to an IT service provider through a public private partnership. The agreement came to an end on 30 November 2012 and the fund has not developed and implemented a business continuity plan to minimise the risk of business disruptions.

OTHER REPORTS

INVESTIGATIONS46. 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.

Pretoria31 July 2013



Part G annual financial statements


Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013statement oF FinanCial position as at 31 marCh 2013

2013 Restated 2012

Notes R ‘000 R ‘000

assets

Current assets

Investments 14 11 417 761 10 129 356

Receivables from exchange transactions 15 527 391 91 275

Receivables from non-exchange transactions 16 3 735 422 2 481 862

Cash and cash equivalents 17 1 092 748 395 027

16 773 322 13 097 520

Non-current assets

Investments 14 23 929 937 19 507 387

Investment property 18 8 600 4 542

Property, plant and equipment 20 86 447 86 344

24 024 984 19 598 273

total assets 40 798 306 32 695 793

Liabilities

Current liabilities

Provision for outstanding claims 21 2 239 000 1 291 000

Accruals 23 93 447 107 711

Payables from exchange transactions 24 938 901 703 838

3 271 348 2 102 549

Non-current liabilities

Provision for outstanding claims 21 4 196 000 3 551 000

Capitalised value of pensions 22 9 976 596 12 860 000

14 172 596 16 411 000

total liabilities 17 443 944 18 513 549

Net assets 23 354 362 14 182 244

Reserves

Revaluation reserve 53 945 53 945

Accumulated surplus 23 300 417 14 128 299

total funds and reserves 23 354 362 14 182 244


Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013statement oF FinanCial perFormanCe For the year ended 31 marCh 2013

2013 Restated 2012

Notes R ‘000 R ‘000

Revenue

Revenue from non-exchange transactions 3 8 092 646 5 325 679

Revenue from exchange transactions 4 19 141 16 173

Investment revenue 5 4 121 073 3 112 094

total revenue 12 232 860 8 453 946

expenses

Benefits paid 6 (1 981 792) (2 408 494)

Administration expenses 7 (424 619) (566 188)

employee costs - salaried staff 8 (336 506) (211 973)

Board members fees 9 (577) (416)

Finance costs 12 (130) (1 882)

total expenses (2 743 624) (3 188 953)

other gains/(losses)

Pension actuarial adjustments 22 2 416 000 (2 798 407)

Increase/(decrease) in provision for outstanding claims (1 593 000) 140 833

Fair value adjustments on investment property 19 4 058 1 078

Increase in allowance for impairment of receivables (1 148 508) (566 610)

total other gains/(losses) (321 450) (3 223 106)

surplus for the year 9 167 786 2 041 887


Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013statement oF Changes in net assets as at 31 marCh 2013

PeNsIoN ReseRVe

ReVaLUatIoN ReseRVe

CoMPeNsatIoN ReseRVe

GRaNd totaL ReseRVes

R ‘000 R ‘000 R ‘000 R ‘000

opening balance as previously reported 340 042 51 319 11 745 621 12 136 982

adjustments

Correction of errors - - 749 749

Balance as at 1 april 340 042 51 319 11 746 370 12 137 731

Changes in net assets

surplus for the year - - 2 041 887 2 041 887

Revaluation of property, plant and equipment - 2 626 - 2 626

Capitalised value of pensions transferred from pension reserve

(2 798 407) - 2 798 407 -

Investment income transferred to pension reserve 842 071 - (842 071) -

shortfall transferred from compensation reserve 1 616 294 - (1 616 294) -

total changes (340 042) 2 626 2 381 929 2 044 513

opening balance as previously reported - 53 945 14 133 993 14 187 938

adjustments

Calculation error - - (5 704) (5 704)

Balance as at 1 april - 53 945 14 128 289 14 182 234

Changes in net assets

surplus for the year - - 9 167 786 9 167 786

Capitalised value for pensions (2 000 000) - 2 000 000 -

Investment income transferred to pension reserve 881 420 - (881 420) -

shortfall transferred from compensation reserve 1 118 580 (1 118 580) -

transfer to unclaimed monies - - 4 342 4 342

total changes - - 9 172 128 9 172 128

Balance as at 31 March 2013 - 53 945 23 300 417 23 354 362


Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013Cash Flow statement as at 31 marCh 2013

2013 Restated 2012

Notes R ‘000 R ‘000

Cash flows from operating activities

Receipts

Contributions received 6 422 111 3 795 450

Interest received 2 105 693 1 957 382

Dividends received 106 807 105 719

Rental income received in cash - 756

8 634 611 5 859 307

Payments

employee costs (336 506) (211 973)

Cash payments in respect of claims and other expenditure (1 873 943) (2 186 628)

Finance costs (130) (1 882)

Investment management fees (11 970) (11 060)

(2 222 549) (2 411 543)

Net cash flows from operating activities 25 6 412 062 3 447 764

Cash flows from investing activities

Purchase of property, plant and equipment 20 (3 386) (9 341)

Net change in investments (5 710 955) (3 119 261)

Net cash flows from investing activities (5 714 341) (3 128 602)

Net increase in cash and cash equivalents 697 721 319 162

Cash and cash equivalents at the beginning of the year 395 027 75 865

Cash and cash equivalents at the end of the year 17 1 092 748 395 027


Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013aCCounting poliCies1. 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 no 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 Act.

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 staNdaRd GRAP 1 Presentation of financial statements GRAP 2 Cash flow statements GRAP 3 Accounting policies, changes in accounting estimates and errors GRAP 4 The effects of changes in foreign exchange rates GRAP 5 Borrowing costs GRAP 9 Revenue from exchange transactions GRAP 13 Leases GRAP 14 Events after the reporting date GRAP 16 Investment property GRAP 17 Property, plant and equipment GRAP 18 Segment reporting GRAP 19 Provisions, contingent liabilities and contingent assets GRAP 21 Impairment of non-cash generating assets GRAP 23 Revenue from non-exchange transactions GRAP 24 Presentation of budget information in the financial statements GRAP 26 Impairment of cash-generating assets GRAP 102 Intangible assets GRAP 104 Financial instruments IPsAs 20 Related party disclosures IFRs 7 Financial instruments: disclosures IAS 19 Employee benefits IAs 32 Financial instruments: presentation IAs 39 Financial instruments: recognition and measurement Directive 02 Transitional provisions for adoption of standards of GRAP by public entities, municipal entities and constitutional institutions


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 20 – Related parties this standard requires the establishment of accounting principles for the related parties under common control

No effective date has been determined by the Minister of Finance

GRAP 25 – Employee benefits the standard prescribes the accounting treatment and disclosure for employee benefits. The impact on the financial results and disclosure is considered to be minimal.

Issued by the AsB: November 2009 effective date: 1 April 2013

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


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 are inherent in the formation of estimates. Actual results in the future could differ from these estimates that 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.

Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013aCCounting poliCies


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 the 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.

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 interest, penalties and rent.

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

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, estimated outstanding costs (based on the latest and most reliable information available) and the number of claims registered.



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.

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 the Fund pays fixed contributions into a separate fund and will have no legal or constructive obligation to pay further amounts. Employees contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit in the periods during which services render obligations.

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, administration expenses and 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, 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

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

1.13.1. 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 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 does not depreciate.

1.13.2. 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 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.

Depreciation on other assets is calculated using the straightline 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 the 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 LIFe (YeaRs) Land Indefinite Buildings 50 • Escalators and elevators 12 to 20 Furniture and fixtures 6 to 10 Motor vehicles 5

the residual value, 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 that 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 appraisers, 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 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.

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 generate 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 and 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.

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:• Its value changes in response to the change in a specified interest rate, financial instrument price, commodity 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’)

• It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors

• It is settled at a future date



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:• Cash• The residual interest of another entity• A contractual right to: - Receive cash or another financial asset from another entity - 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:• Deliver cash or another financial asset to another entity• Exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entityInterest 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:• Equity instruments or similar forms of unitised capital• A formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming

part of an entity’s net assets, either before the contribution occurs or at the time of the contribution• A formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in 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:• The entity designates at fair value at initial recognition• Are held for trading

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:• Derivatives• Combined instruments that are designated at fair value• Instruments held for trading

A financial instrument is held for trading if:• It is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term• 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• Non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value

at initial recognition• Financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments

at cost

1.17.1. 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 CateGoRY Loans and other receivables Financial asset measured at amortised cost Receivables 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 value Fair 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 CateGoRY Provision for outstanding claims Financial liability measured at amortised cost Payables from exchange transactions Financial liability measured at amortised cost

1.17.2. 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.

1.17.3. 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.

1.17.4. Subsequent measurement of financial assets and financial liabilities

The entity measures all financial assets and financial liabilities after initial recognition using the following categories:• Financial instruments at fair value• Financial instruments at amortised cost• Financial instruments at cost

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

1.17.5. 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.

1.17.6. Reclassification

The entity does not reclassify a financial instrument while it is issued or held unless it is:• Combined instrument that is required to be measured at fair value• An investment in a residual interest that meets the requirements for reclassification



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.

1.17.7. 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.

1.17.8. 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.

1.17.9. Derecognition of financial assets

The entity derecognises financial assets using trade date accounting.



The entity derecognises a financial asset only when:• The contractual rights to the cash flows from the financial asset expire, are settled or waived• The entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset• The entity, despite having retained some significant risks and rewards of ownership of the financial asset, 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:

- Derecognises the asset - Recognises 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.

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 recognise 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, the associated liability, the revenue and the associated expenses are offset.

1.17.10. 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).

1.17.11. 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 employees who 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. Unclaimed monies

If money owing to an employee or his/her dependant has remained unpaid after 12 months because it has not yet 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 that exceeds 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.

1.20. Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and could 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.

1.21. Irregular expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including:(a) this Act; or(b) the state tender Board Act, 1968 (Act no 86 of 1968), or any regulations made in terms of the Act; or(c) Any provincial legislation providing for procurement procedures in that provincial government.

National treasury practice note no 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires the following (effective from 1 April 2008):• Irregular expenditure that was incurred and identified during the current financial year and for which condonement is

being awaited at year-end must be recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements.

• Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

• Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the National treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the financial statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant programme/expenditure item and be disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register.



2. 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 RIskthe 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 assesses employers and collects the assessments due. the Fund has policies and procedures in place to ensure that assessments are made accurately and followed up timeously, 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 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:

PeRCeNtaGes

FINaNCIaL INstRUMeNt CoMPeNsatIoN PoRtFoLIo PeNsIoN PoRtFoLIo

2013 2012 2013 2012

AAA/AAA 67.32% 65.72% 82.45% 77.94%

AAA/AA1 4.61% 4.96% 2.41% 3.34%

AA/AA2 17.41% 18.12% 11.55% 13.89%

AA/AA3 5.33% 5.29% 2.07% 3.73%

A+/A1 5.33% 5.91% 0.49% 0.59%

A/A2 -% -% 1.03% 0.51%

100.00% 100.00% 100.00% 100.00%

Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013notes to the annual FinanCial statements


CoNCeNtRatIoN oF CRedIt RIskThe 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

2013 2012 2013 2012 2013 2012

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

Capital Market 13,634,444 10,079,823 10,496,279 7,249,626 24,130,723 17,329,449

equity 962,184 782,967 2,711,277 2,430,297 3,673,461 3,213,264

Inflation linked bonds - 1,033,544 - 1,300,469 - 2,334,013

Money markets 6,248,299 5,153,653 939,703 1,288,710 7,188,002 6,442,363

Cash and cash equivalents 115,039 484,700 240,473 106,160 355,512 590,860

trade and other receivables 4,262,813 2,600,012 - - 4,262,813 2,600,012

25,222,779 20,134,699 14,387,732 12,375,262 39,610,511 32,509,961

MoNeY MaRket aNd Cashestablishment of investment limits per issuer for money markets.

Money market instruments are spread across 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 MaRketsestablishment of investment limits per issuer for capital markets.

INSTRUMENTS MAxIMUM LIMIT PER ISSUER Government bonds 0% – 100% other bonds(Corporate, Parastatal etc.) 0% – 20%


2. Risk management


CoLLateRaLThe Minister of Labour has issued licences held in terms of Section 30 of COIDA to carry out the business of the Fund in certain industries 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 and 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 R1.578 million (2012: R1.304 million).

LIqUIdItY RIskThe 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 which is guided.

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

CoMPeNsatIoN INVestMeNt PoRtFoLIo CateGoRY attRIBUtIoN aNaLYsIs asset aLLoCatIoN RaNGes Cash and money market 25% – 35% 30%Capital market 60% – 70% 65%Domestic equity 0% – 5% 5%Attribution analysis on overall performance for the portfolio on overall benchmark

PeNsIoN INVestMeNt PoRtFoLIo CateGoRY attRIBUtIoN aNaLYsIs asset aLLoCatIoN RaNGes Cash and money market 8% – 12% 8%Capital market 67.5% – 77.5% 73%Domestic equity 15% – 20% 19%Attribution analysis on overall performance for the portfolio on overall benchmark

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


2. Risk management


at 31 MaRCh 2013 CaRRYING aMoUNt CoNtRaCtUaL Cash FLows

6 MoNths oR Less

R ‘000 R ‘000 R ‘000

Debtors with credit balance 293,909 293,909 293,909

Compensation/pension/medical liability 593,641 593,641 593,641

trade creditors (procurement creditors) 49,943 49,943 49,943

937,493 937,493 937,493

at 31 MaRCh 2012 CaRRYING aMoUNt CoNtRaCtUaL Cash FLows

6 MoNths oR Less

R ‘000 R ‘000 R ‘000

Debtors with credit balances 330,953 330,953 330,953

Compensation/pension/medical liability 361,699 361,699 361,699

trade creditors (procurement creditors) 10,607 20,607 10,607

703,259 713,259 703,259

MaRket RIskMarket 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 RIskThe Fund holds more than 50% of its financial assets in debt securities (Government Bonds and Public Utility Bonds) and substantial investments in cash, 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 is therefore 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.


2. Risk management


INteRest Rate PRoFILe

CoMPeNsatIoN PoRtFoLIo PeNsIoN PoRtFoLIo

2013 2012 2013 2012

Fixed rate instruments R ‘000 R ‘000 R ‘000 R ‘000

Capital markets 13,634,444 10,080,935 10,496,279 7,251,081

Inflation linked bonds - 1,032,431 - 1,299,014

Money market 6,248,299 3,974,155 939,703 3,392,124

trading cash - - - -

Total fixed rate instruments 19,882,743 15,087,521 11,435,982 11,942,219

Variable rate instruments

Capital markets - 1,962,465 - 171,011

Inflation linked bonds - - - -

Money market - - - -

trading cash 115,643 211,480 240,869 106,160

total variable rate instruments 115,643 2,173,945 240,869 277,171

19,998,386 17,261,466 11,676,851 12,219,390

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 is exposed to interest rate risk through investments in money markets and bonds. the purpose of a 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 equity prices, while for a fixed income portfolio the interest rates that deter-mine 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 are 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 revalued (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 is exposed to interest rate risks through investments in money markets and bonds.


2. Risk management


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 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 2012.

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:


spread in basis points Profit and loss Market value of bonds Profit and loss Market value of bonds

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

200 (1,548,317) 18,334,426 (1,476,069) 9,959,913

150 (1,186,736) 18,696,007 (1,139,415) 10,296,568

100 (808,828) 19,073,915 (782,344) 10,653,639

50 (413,604) 19,469,139 (403,164) 11,032,819

- - 19,882,743 - 11,435,983

(50) 433,124 20,315,868 408,994 11,844,978

(100) 886,967 20,769,740 844,910 12,280,893

(150) 1,362,936 21,245,679 1,314,533 12,750,516

(200) 1,862,362 21,745,106 1,578,911 13,014,894

eqUItY PRICe RIskequity 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 affect the value of equity and equity derivative instruments. Compensation Fund is exposed to equity price risk as a result of its investments in equity instruments and equity derivatives.

this is the risk that arises when the Fund does 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.


2. Risk management


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


2013 2012 2013 2012

R ‘000 R ‘000 R ‘000 R ‘000

Listed equities 962,184 782,967 2,711,277 2,430,297


spread in basis points Profit and loss Market value of bonds Profit and loss Market value of bonds

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

20 194,505 1,167,028 548,139 3,288,836

15 145,879 1,118,402 411,104 3,151,801

10 97,252 1,069,776 274,070 3,014,766

5 48,626 1,021,150 137,034 2,877,731

- - 972,523 - 2,740,697

(5) (48,626) 923,897 (137,035) 2,603,662

(10) (97,252) 875,271 (274,070) 2,466,627

(15) (145,879) 826,945 (411,104) 2,329,592

(20) (194,506) 778,019 (548,139) 2,192,557


2. Risk management


2013 Restated 2012

R ‘000 R ‘000

3. Revenue from non-exchange transactions

Contribution by employer 7,375,337 4,978,266

Interest on late payment of contributions 243,302 255,944

Penalties on late payment of contributions 474,007 91,469

8,092,646 5,325,679

4. Revenue from exchange transactions

Administrative contributions by employers (s88) 18,287 15,359

Miscellaneous revenue 854 814

19,141 16,173

5. Investment revenue

Dividend income: Compensation portfolio 26,327 25,513

Dividend income: Pension portfolio 80,480 80,206

dividend revenue 106,807 105,719

Interest revenue Compensation portfolio 1,304,753 1,189,350

Interest on bank: Compensation portfolio 28,738 10,395

Interest received: Compensation portfolio 1,276,015 1,178,955

Interest revenue Pension portfolio 800,940 768,032

Interest on bank: Pension portfolio 559 141

Interest received: Pension portfolio 800,381 767,891

Fair value gains 1,908,573 1,048,993

Fair value gains: Compensation portfolio 742,330 434,901

Fair value gains: Pension portfolio 1,166,243 614,092

total interest calculated using effective interest rate 4,121,073 3,112,094



2013 Restated 2012

R ‘000 R ‘000

6. Benefits paid

Compensation for permanent disability 109,584 79,519

Compensation for temporary disability 79,534 94,280

Pension capitalised during the year 330,887 382,580

Medical claims 1,501,606 1,882,372

Recoveries from third parties (39,819) (30,257)

1,981,792 2,408,494

7. Administration expenses

Audit fees 7,814 8,192

Reversal of assessments, interest and penalties 19,626 14,692

Consulting and professional fees 103,870 155,917

Depreciation, amortisation and impairments 2,810 2,668

service fee towards public private partnership 67,140 97,371

Lease rentals on operating lease 29,375 27,808

stationery 8,592 6,050

subsidies for accident prevention 5,187 2,899

Repairs and maintenance 6,797 7,406

software expenses 41,896 38,231

travel and subsistence 34,955 24,264

training 2,234 2,882

Compensation related expenses 4,491 6,007

Reimbursement national department 77 118,173

other expenses 72,765 36,948

Investment management fees 11,969 11,060

Venue expenses 4,548 2,719

Assets valued at less than R5,000 473 2,901

424,619 566,188



2013 Restated 2012

R ‘000 R ‘000

8. Employee related costs

Basic 275,183 158,348

Bonus 15,199 8,122

Contributions towards a defined plan 42,534 41,191

Leave pay provision charge 3,590 4,312

336,506 211,973

9. Board members fees

Board members fees 577 416

this is an advisory board and not an executive board. Members claim for traveling expenses and meeting costs incurred.



10. Members’ emoluments

exeCUtIVe 2013

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

Compensation Commissioner 01/05/2007 645 54 264 132 1,095

Director: Medical services 01/02/1999 432 36 195 89 752

Director: Medical Payments 01/01/2010 480 43 119 97 739

Director: Financial Control

01/01/2010 Resignation with effect: 28/02/2013

407 37 187 82 713

Director: Financial Reporting 01/04/2009 445 37 205 91 778

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

Director: support services 01/11/2009 438 37 191 90 756

Director: Human Resources 01/03/2009 445 37 187 91 760

Director: organisational effectiveness

01/03/2009 445 37 201 91 774

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

Director: Internal Audit 01/04/2010 460 45 209 101 815

Principal Legal Administration Officer

01/03/2009 438 37 166 102 743

Chief Director: Human Resource Management

01/03/2013 44 - 18 9 71

5,556 400 2,413 1,154 9,523



exeCUtIVe 2012

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Compensation Commissioner 01/05/2007 622 51 282 126 1,081

Chief Financial Officer 01/10/2009 513 42 238 104 897

Director: Medical services 01/02/1999 682 - - 70 752

Director: Medical Payments 01/01/2010 417 36 192 85 730

Director: Financial Control 01/01/2010 417 34 192 86 729

Director: Financial Reporting 01/04/2009 424 35 196 85 740

Director: Income 01/03/2009 424 - 230 86 740

Director: support services 01/11/2009 417 34 192 85 728

Director: Human Resources 01/03/2009 423 35 308 86 852

Director: organisational effectiveness

01/03/2009 425 35 193 86 739

Director: Compensation 01/01/2011 416 32 223 85 756

Director: Internal Audit 01/04/2010 422 35 323 86 866

Principal Legal Administration Officer

01/03/2009 417 34 256 97 804

6,531 403 2,883 1,167 10,984

2013 Restated 2012

R ‘000 R ‘000

11. Audit fees

Fees 7,814 8,192

12. Finance costs

Interest paid 130 1,882



13. 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).

2013 Restated 2012

R ‘000 R ‘000

14. Investments

Other financial assets

Designated at fair value through profit and loss - 1,165,076

Fair value through profit and loss - held for trading 27,804,184 23,062,166

Loans and receivables 7,543,514 5,409,501

35,347,698 29,636,743

Non-current assets

Designated at fair value through profit and loss - 1,150,653


23,929,937 19,507,387

Current assets

Designated at fair value through profit and loss - 14,423


Loans and receivables 7,543,514 5,409,501

11,417,761 10,129,356

35,347,698 29,636,743



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31 MaRCh 2013 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

CoMPeNsatIoN PoRtFoLIo

Capital markets - 13,634,444 - 13,634,444 13,634,444

equity - 962,184 - 962,184 962,184

Fixed deposits 6,248,299 - - 6,248,299 6,248,299

trading cash 115,039 - - 115,039 115,039

total Compensation Portfolio 6,363,338 14,596,628 - 20,959,966 20,959,966

PeNsIoN PoRtFoLIo

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

total Pension Portfolio 1,180,176 13,207,556 - 14,387,732 14,387,732

total investments on 31 March 2013 7,543,514 27,804,184 - 35,347,698 35,347,698



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31 MaRCh 2012

CoMPeNsatIoN PoRtFoLIo

Capital markets - 11,113,368 - 11,113,368 11,113,368

equity - 782,967 - 782,967 782,967

Derivatives financial instruments - 14,424 - 14,424 14,424

Bills, promissory notes and certificates of deposits

- - 1,165,076 1,165,076 1,165,076

Fixed deposits 3,974,157 - - 3,974,157 3,974,157

trading cash 211,480 - - 211,480 211,480

4,185,637 11,910,759 1,165,076 17,261,472 17,261,472

PeNsIoN PoRtFoLIo

Capital markets - 8,550,096 - 8,550,096 8,550,096

equity - 2,430,299 - 2,430,299 2,430,299

Derivatives financial instruments - - - - -

Bills, promissory notes and certificates of deposits

- 171,013 - 171,013 171,013

Fixed deposits 1,117,699 - - 1,117,699 1,117,699

trading cash 106,165 - - 106,165 106,165

1,223,864 11,151,408 - 12,375,272 12,375,272

total investments on 31 March 2012 5,409,501 23,062,167 1,165,076 29,636,744 29,636,744

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 deRIVatIVesthe fair value of capital market and equity instruments is determined by reference to their quoted closing price at the reporting date.

MoNeY MaRket INstRUMeNtsMoney market instruments (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.



FaIR VaLUe hIeRaRChYThe table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:Level 1 represents those assets that are measured using unadjusted quoted prices for identical assets. Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices).Level 3 applies inputs that are not based on observable market data.

31 MaRCh 2013 Level 1 Level 2 Level 3

R ‘000 R ‘000 R ‘000

Capital market 24,130,723 - -

equity 3,673,461 - -

Derivatives - - -

Money market - 7,188,002 -

27,804,184 7,188,002 -

31 MaRCh 2012 Level 1 Level 2 Level 3

R ‘000 R ‘000 R ‘000

Capital market 19,663,462 - -

equity 3,213,264 - -

Derivative - - 14,423

Money market - 6,427,940 -

22,876,726 6,427,940 14,423

MatURItY sChedULe CoMPeNsatIoN PoRtFoLIo 31 MaRCh 2013

MoNeY MaRket CaPItaL MaRket eqUItY tRadING Cash totaL

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

0 – 3 months 2,741,786 - 962,184 115,039 3,819,009

3 – 12 months 3,506,513 81,054 - - 3,587,567

1 – 3 years - 642,297 - - 642,297

3 – 7 years - 5,053,636 - - 5,053,636

7 – 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



MatURItY sChedULe PeNsIoN PoRtFoLIo 31 MaRCh 2013

MoNeY MaRket CaPItaL MaRket eqUItY tRadING Cash totaL

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

0 – 3 months 255,161 - 2,711,277 240,473 3,206,911

3 – 12 months 684,542 119,732 - - 804,274

1 – 3 years - 188,080 - - 188,080

3 – 7 years - 3,067,345 - - 3,067,345

7 – 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 31 MaRCh 2012

MoNeY MaRket

CaPItaL MaRket

deRIVatIVes eqUItY tRadING Cash

totaL

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

0 – 3 months 2,090,862 52,887 14,424 782,968 211,482 3,152,623

3 – 12 months 3,048,369 51,594 - - - 3,099,963

1 – 3 years - 887,154 - - - 887,154

3 – 7 years - 3,497,455 - - - 3,497,455

7 – 12 years - 3,420,995 - - - 3,420,995

12+ years - 3,203,282 - - - 3,203,282

total at year-end 5,139,231 11,113,367 14,424 782,968 211,482 17,261,472



MatURItY sChedULe PeNsIoN PoRtFoLIo 31 MaRCh 2012

MoNeY MaRket

CaPItaL MaRket

deRIVatIVes eqUItY tRadING Cash

totaL

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

0 – 3 months 412,188 - - 2,430,299 106,162 2,948,649

3 – 12 months 876,527 51,594 - - - 928,121

1 – 3 years - 366,067 - - - 366,067

3 – 7 years - 2,629,078 - - - 2,629,078

7 – 12 years - 3,456,097 - - - 3,456,097

12+ years - 2,047,260 - - - 2,047,260

total at year-end 1,288,715 8,550,096 - 2,430,299 106,162 12,375,272

totaL 6,427,946 19,663,463 14,424 3,213,267 317,644 29,636,744

2013 Restated 2012

R ‘000 R ‘000

15. Receivables from exchange transactions

Advances - 5,978

Advances made to medical services providers 474,671 -

Recoverable medical expenses 8,505 25,813

Duplicate payments to medical service providers 19,983 -

Disallowances 14,701 27,481

PPP reinvestment 831 8,021

Contribution exempted employer 30,018 26,107

Allowance for impairment (31,680) (66,670)

Investment income receivable 31,464 62,700

Unallocated receipts (23,103) -

Creditors with debit balances 184 -

Accrued interest 1,817 1,845

527,391 91,275

tRade aNd otheR ReCeIVaBLes NotesDuring the year under review the Fund agreed to pay six (6) medical service providers an amount totaling R521 million. the reason was that Compensation Fund was unable to process backlogs on medical claims due to the sAP ICM; the system was too slow and dysfunctional.



this resulted in the Fund facing serious litigations from the respective medical service providers due to unpaid claims. In order to mitigate 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 claim the providers will henceforth refund the Fund. As at the 31 March 2013 only R47 million was repaid to the Fund.

there is a project underway to address the backlog with eoH (It solution for the Fund). the Fund envisages that the backlog will be addressed by the 31 August 2013 as by then the Fund would have recovered the outstanding amount of R474 million as disclosed.

2013 Restated 2012

R ‘000 R ‘000

16. Receivables from non-exchange transactions

assessments raised

outstanding balances 8,792,069 5,795,975

Accrual for assessments not raised 947,030 1,519,454

Allowance for impairment (6,003,677) (4,833,530)

third party claims

Allowance for impairment (189,410) (176,061)

outstanding balances 189,410 176,024

3,735,422 2,481,862

17. Cash and cash equivalents

Cash and cash equivalents consist of

Cash on hand 3 3

trading cash 542,325 138,846

Call accounts 550,420 256,178

1,092,748 395,027

18. Investment property

Investment property, fair value amounts 8,600 4,542



oPeNING BaLaNCe

PRIoR YeaR adjUstMeNt

FaIR VaLUe adjUstMeNts

totaL

Reconciliation of investment property 2013 R ‘000 R ‘000 R ‘000 R ‘000

Investment property 4,542 - 4,058 8,600

Reconciliation of investment property 2012

Investment property 3,498 (34) 1,078 4,542

detaILs oF VaLUatIoNthe income capitalisation approach was used to value the land and buildings as at 31 March 2013 by an independent valuer namely Khanyisa Property and management service (2012: JHI Valuers). 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 R854,000 (2012: R814,000). there was no direct expenditure that related to the investment property at Bhisho for the current year.

2013 Restated 2012

R ‘000 R ‘000

19. Fair value adjustments

Investment property (Fair value model) 4,058 1,078

20. Property, plant and equipment

2013 2012

Co

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

Land 21,200 - 21,200 21,200 - 21,200

Buildings 59,982 (983) 58,999 58,100 (31) 58,069

Furniture and fixtures 14,031 (10,955) 3,076 12,884 (9,038) 3,846

Motor vehicles 4,765 (1,593) 3,172 4,406 (1,177) 3,229

totaL 99,978 (13,531) 86,447 96,590 (10,246) 86,344



ReCoNCILIatIoN oF PRoPeRtY, PLaNt aNd eqUIPMeNt 2013

oPeNING BaLaNCe

addItIoNs wRItteN oFF as exPeNses

dePReCIatIoN totaL

R ‘000 R ‘000 R ‘000 R ‘000 R ‘000

Land 21,200 - - - 21,200

Buildings 58,069 1,881 - (951) 58,999

Furniture and fix-tures

3,846 1,147 (473)

(1,441)

3,076

Motor vehicles 3,229 358 - (415) 3,172

totaL 86,344 3,386 (473) (2,810) 86,447

ReCoNCILIatIoN oF PRoPeRtY, PLaNt aNd eqUIPMeNt 2012

oPe

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

Land 15,876 - 5,324 - - - 21,200

Buildings 55,789 5,646 (2,698) (31) - (637) 58,069

Furniture and fixtures

4,336 1,530 - (628) (554) (838) 3,846

Motor vehicles 1,565 2,165 - (406) - (95) 3,229

totaL 77,566 9,341 2,626 (1,065) (554) (1,570) 86,344

ReVaLUatIoNsthe Income Capitalisation approach was used to value the land and buildings on an open market basis and revaluation surplus is included in he 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 revalued independently every three years.

BUILdINGs CoMPRIseCompensation House on Lot 70, 66/R, Prinshof, no 349, JR, Pretoria

2013 Restated 2012

R ‘000 R ‘000

Market value 58,100 58,100



2013 Restated 2012

R ‘000 R ‘000

21. Provision for outstanding claims

Increase/(Decrease) in provision for outstanding claims 1,593,000 (141,000)

Actuarially calculated closing balance 6,435,000 4,842,000

transfer to current liabilities (2,239,000) (1,291,000)

total provision for outstanding claims 4,196,000 3,551,000

21.1. Actuarial assumptions

21.1.1. Compensation claim liability

ChaNGes to the VaLUatIoN Methodthe methodology has been revised this year to allow for the varying effects that have been inherent in the compensation liabilities. this is due to the inherent amount of subjectivity in the previous valuation method, a new methodology was used to value the compensation claims as at 31 March 2013 and on advice given in the peer review as at 31 March 2012.The backlog has escalated since financial year 2007. It was expected that the move to the new system would decrease this backlog, however as has been confirmed by COID and is evident in the data that was received the backlog has worsened in the financial year ending 31 March 2013.

the chain ladder method is only a reliable projection tool if the history of development is stable across accident years and development years. since the settlement rate has changed over the last seven years the chain ladder would prove to be unreliable in predicting future claims.

Berquist and sherman presented a technique, the paid claim development method, for changes in settlement rates that is commonly known as the Berquist-sherman method.

Differences in the approach adopted as at 31 March 2013 are as follows:• A Berquist-Sherman method is used to calculate the compensation claim liability.• Inflation is based on the year of accident as opposed to the year of reporting as benefits are provided based on salary

as at the date of occurrence.• Capitalised pensions are projected separately from the temporary and permanent disability.

MethodoLoGY ChaNGe IN YeaR-eNd The current financial year-end of the Fund is 31 March. This was changed from 28 February in the 2003 financial year. Whilst the claims data provided from 31 March 2005 onwards correspond to the current financial year of the Fund, previous years’ data were in respect of the old financial year (e.g. from 1 March to 28 February). therefore, the claims date for previous years was adjusted in a pro-rata manner to be consistent with the current financial year of the Fund. The adjustment was as per the adjustment that has been used in previous years.



detaILs oF estIMatIoN oF FUtURe CoMPeNsatIoN CLaIMs Adjustment for inflAtion on clAims pAid Claims paid amounts adjusted for inflation based on the year that the accident occurred to the valuation date.

estimAtion of number of clAims pre-2005 Details of the number of claims were only available for claims occurring in the years ending 2005 to 2013. A further history was requested, however at the time that the valuation was conducted, a complete history of data had been received.

Therefore the number of claims prior to financial year 2005 was estimated. This was done by calculating the average claim size per development period over the years in which data was available. The number of claims for each accident year and development year were reversed engineered by using the actual claim amounts and inflation adjusted average claim per development period calculated.

projection of ultimAte clAim numbersFor accident years 1997 to 2006 the ultimate number of claims was projected using a Basic Chain Ladder method. Development was limited to 16 years as the number of claims post 16 years development is very scarce and not statistically reliable to base development patterns on.

Claim numbers for accident year 2007 onwards were estimated as the average number of claims over the whole projection period. the reason for using an average was twofold:• The number of claims is expected to be different to that experienced in years prior to 2007 due to the backlog and

therefore there was not a sufficiently long history to base development patterns on to allow for the new claim number payment pattern from 2007 onwards.

• The data doesn’t show any sign of any trend (upwards or other) in the number of claims over the accident years and due to lack of any other exposure data, it was assumed that there is no basis to allow for an increasing number of ultimate claims that would arise from accident year 2007 onwards.

cAlculAtion of disposAl rAtes The first step in the Berquist-Sherman method is to calculate the disposal rates which are the cumulative claim counts for each accident year and development year divided by the projected ultimate claim counts per accident year calculated in the previous step. the disposal of the last diagonal was selected as the basis for adjusting the number of claims triangle. the advantage of this approach is that the latest diagonal of the claim paid triangle will not change.

cAlculAtion of the Adjusted number of clAim triAnglethese selected disposal rates are then used to calculate the adjusted number of claims triangle by multiplying the disposal rate per development period and ultimate number of claims per accident year to arrive at an adjusted number of claims triangle which is in line with the rate that claims are being settled at in the most recent reporting year.

Adjusting the clAims pAid triAngleRegression analysis is used to approximate the relationship between the claims paid and the number of claims paid in each accident and development year, as suggested by Berquist and Sherman. An exponential curve is fitted between each pair of successive points for cumulative claims paid and the unadjusted cumulative number of claims. the parameters of the exponential curve are estimated using these two successive pairs.

the claims paid triangle is then adjusted using the adjusted number of claims (as calculated above) and the parameters that have been calculated in the regression. this allows for the change in the rate that claims have been paid and adjusts the claims paid triangle to the current rate of settlement.



three methods are used in the adjustment to the claims paid triangle: no adjustment, extrapolation and interpolation. No adjustment will be need for the latest diagonal as the adjusted number of claims triangle has been adjusted to the rate of payment of the current reporting year.

Interpolation is used if the adjusted number of claims falls within the range of any regression in its specific accident year. Extrapolation is used if the adjusted number of claims does not lie within the range of regression in the specific accident year. In these cases the regression with the closest range is used.

projection of future clAimsA Basic Chain ladder is then used based on the adjusted paid triangle to project future claims. these future claims include claims that have occurred and are reported and unreported as at the valuation date.

tAil fActor AdjustmentDue to the limited amount of data in the later payment years, the projection using the Basic Chain Ladder method was limited to 12 years.

A tail factor was calculated from the percentage of actual claims that are paid after 12 years from time of accident based on data received for exporting years 1997 onwards.

There is a definite upward trend in the percentage of claims that are being paid 12 years and onwards after the time of accident in the compensation claims data, as shown in the graph below. In order to calculate the number of claims that would arise after twelve years, a polynomial was fitted to the actual percentage undeveloped after 12 years. The fitted polynomial shows a good fit with a high R squared factor. This fitted polynomial was then used to project the percentage of claims that would be unreported after 12 years development for all accident years.

AllowAnce for deflAtion And discountingFuture claims that have been estimated above are the adjusted for inflation. As previously mentioned claims are paid based on salary as at the time the accident occurred. Therefore future claims are deflated to the year in which the claims arose using actual CPI experienced.

Future claims are also discounted assuming that claims occurred on average halfway during the financial year at a rate of 7.2%. Again a sensitivity test was performed, where an increase in the discounting rate to 8.5% would result in a change in the liability.

21.2.2. Medical expense liability

The current financial year-end of the Fund is 31 March. This was changed from 28 February in the 2003 financial year. Whilst the claims data provided from 31 March 2005 onwards correspond to the current financial year of the Fund, previous years’ data were in respect of the old financial year (i.e. from 1 March to 28 February).

Therefore, the claims data for previous years were adjusted in a pro-rata manner to be consistent with the current financial year of the Fund. the adjustment was as per the adjustment that has been used in previous years. detaILs oF estIMatIoN oF FUtURe MedICaL CLaIMsClaims processed in each of the previous 15 financial years are grouped into a table according to the year of accident or diagnosis of disease (accident year) and the number of years until the claim is processed (development year).

These processed claims are then adjusted for medical claims inflation (using medical inflation statistics published by I-Net



Bridge) from the year of processing until 31 March 2013, assuming that claims occur, on average, halfway through each financial year.

Link ratios were calculated per accident year and development year as follows:(Cumulative claims paid in accident year 2003 and development year 2003i+1)/(Cumulative claims paid in accident year 2003 and development year 2003)

on analysis of the link ratios certain accident year and development years were excluded from the calculation of the development factor as they appeared to have experienced different development compared to other accident years.

In the calculation of the first development factor, accident years 2009 and 2001 were excluded. The reserve estimate would have increased by R47.6 million on an undiscounted basis and by R42.8 million on a discounted basis if these two accident years were included.

For the calculation of the second development factor, accident year 2000 was excluded. Again, this was due to it having a very different experience compared to the other accident years along the same development year. By including this accident year in the calculation of the development factor the reserve would have increased by R11.5 million on an undiscounted basis and by R10.1 million on a discounted basis.

Claims experience in accident year 2012 is inconsistent with the claim levels that have been seen in past accident years within the first year of development. In discussions with COID, it was confirmed that a backlog has occurred within the medical claims. Therefore it is necessary to allow for an increase in the first development pattern to allow for the reduced number of claims that are seen in accident year 2012. It is assumed that had the backlog not occurred, and then the level of claim payment would have been on a similar level to that experienced in previous accident years. A grossing up factor was calculated as follows:(Average of claims paid over the past 15 years in the first development year excluding AY 2000,2001 and 2009)/(Claims paid in AY 2012)

Claims paid in accident years (AY) 2000, 2001 and 2009 were excluded due to the different development that was experienced in the past.

This grossing up factor is then used to gross up the first development factor. It is therefore assumed that the backlog will be corrected within the upcoming year and development will continue as has been seen in the past for the remaining development periods.

the development patterns calculated, allowing for the above adjustments are then applied to the claims paid data to project all future claims per development year.

A tail factor is additionally applied to the results to allow for further run off after 16 years.

Future medical claims inflation was assumed to be 9.2% (9.6% 2012) per annum. This assumption has been determined as the best estimate of future inflation at 31 March 2013 of 6.6%, plus an additional 3%. This assumption is consistent with the approach taken during the previous valuations.

Future claims are then adjusted to allow for future inflation and discounting again assuming that cash flows will occur on average halfway through the financial year.

Discount rates are set at the best estimate of future investment return of 7.2%. As a sensitivity test, increasing this discount rate to 8.5% would result in a 3.4% reduction in the future claims estimated.



2013 Restated 2012

R ‘000 R ‘000

22. Capitalised value of pensions

The amounts recognised in the statement of financial position are as follows:

actuarial calculation

Actuarially calculated opening balance 12,860,000 10,414,873

Increase in capitalised value of pension (467,404) (353,280)

• Pensions capitalised during the year 330,887 382,580

• Pension payments (798,291) (735,860)

Pension actuarial adjustments (2,416,000) 2,798,407

9,976,596 12,860,000

keY assUMPtIoNs UsedIndependent actuarial valuations of the capitalised value of pensions (“CVP”) liability are carried out every year.

expected rate of return on assets 8.75% 9.62%

expected rate of return on reimbursement rights 5.25% 5.50%

Actual return on reimbursement rights 3.33% 4.54%

Best estimate liability 10,443 9,103

Contingency reserves held 3,944 3,272

expense margin 8 8

In order to determine the pensioner liability the present value of all expected future pension payments is calculated. the invoices projecting the current pension being paid at the valuation date, with an implicit allowance for pension increases of 75% of inflation and then discounting these payments using a “best estimate” net discount rate.

the above present value also allows for contingent liabilities to the spouse and/or children of a worker pensioner on his/her subsequent death.

In addition to this basic liability value, explicit contingency reserves are held to cover the possible impact of adverse variations in the experience of the Fund. assUMPtIoNsTo assess the financial position of the Fund, an attempt is made as far as possible to reach realistic long-term assumptions. A number of factors are considered which are interrelated, often to such an extent that individual elements cannot be considered in isolation.

the assumptions, as far as possible, have been selected as being best estimate assumptions, considering the reasonableness



of each assumption as well as their combined impact. Explicit margins have then been calculated and identified to facilitate the prudent management of the Fund.

the valuation basis takes into account the expected long-term experience of the Fund and that of similar funds.

the Actuary’s understanding of “best estimate” is a 50% chance of over-estimating or under-estimating the value of the parameter. The actual long-term cost of the benefits depends on the actual experience of the Fund and not on the assumptions adopted. While the assumptions can affect the timing of the emerging cost in the short term, they have little impact on the long-term cost.

The assumptions are set out and motivated below. The financial assumptions were updated to reflect market conditions as at 31 March 2013. Demographic assumptions (i.e. mortality) are as used in the previous valuation, as at 31 March 2012. investment return AssumptionThe valuation rate of interest is used to discount expected future cash flows. In estimating the future investment return, greater emphasis is placed on the long-term as opposed to the short-term experience of the Fund. It is assumed that the pensions account will earn 8.75% p.a. over the long term, which is derived from fixed interest yields, based on a modified duration of 17 years, at the valuation date. At the previous valuation date 9.62% was assumed.

This interest of 8.75% p.a. is only significant in relation to the assumed rate of pension increases. The assumed pension increase of 5.25% per year has been estimated as 75% of the expected future inflation rate of 7.00%.

the net differential between the investment return and pension increase assumptions is 3.33%, which has been used as the net discount rate for current pensions. the net discount rate at the previous valuation date was 3.91%.

this means that all investment returns in excess of 3.33% are available to provide pension increases, before any surplus in the Fund is considered. Pension increases of 5.25% have been allowed for in the valuation basis by choosing a net discount rate of 3.33%. At the previous valuation date, a pension increase of 5.50% was assumed.

historic pension increAse AssumptionFor pensions in payment as at 31 March 2013, an increase of 6.0% was granted effective 1 April 2013, while the change in annual headline CPI to that date was 5.9%.

mortAlity AssumptionIt was assumed that the mortality of persons in receipt of pensions would be in accordance with the results of the mortality investigation performed for the period from 1 April 2005 to 31 March 2008. Mortality is assumed to be zero for children under the age of 23.

even though we believe the mortality assumption is reasonable, given the date available and our knowledge of the underlying risks, we recommend that more data be collected in future to help identify whether any modifications to the mortality assumptions are necessary. other demogrAphic AssumptionsIt was assumed that, on average, a husband would be 5 years older than his wife and that 90% of worker pensioners will be married.

No details of likely child dependants of workers or percentage disablement of the current pensioners are readily available.



the spouse’s reversion has, therefore, been set at 75%, which is based on an average percentage disablement of 65% and also includes an allowance for pensions payable to eligible children.

In the case of worker pensioners, other dependants and spouses it was assumed that pensions would be payable for life. In addition, it was assumed that 305 of worker pensioners would die as a result of a qualifying injury or disease, therefore resulting in a contingent dependants’ pension being payable. Allowance for this contingent liability is therefore made within the valuation results. children pensionsIn the case of children, the date on which the pension is expected to cease is provided. From this cessation date, the current age of the child is derived by assuming that each child’s pension will cease at the age of 18 years. It was then assumed that 15% of children would receive their pensions until age of 23. expense reverseAn expense reverse to allow for the costs associated with the payment of pensioners by CoID over the lifetimes of all current pensioners was calculated. this has been based on the assumed cost of administering pensioners at R20 per pensioner per month, increasing with inflation over each pensioner’s lifetime. The reverse amounted to R111 million. No such reverse was held in previous valuations. contingency reservesIn addition to the best estimate liability value, explicit contingency reserves are held to cover the possible impact of adverse variations in the experience of the Fund.

these cover a solvency margin to allow for :Fluctuations in underlying assets. this is calculated by reducing the discount rate used to value the pensioner liabilities by 0.5%. the margin amounted to R600 million.

Pension increases closer to 100% of expected future inflation. The pension increase assumption was increased by assuming pensioners will receive increases of 100% of the expected future inflation rate. This decreases the net discount rate used to value the pensioner liabilities to 1.64% and resulted in a contingency reserve of R2.654 million.

Significant differences between the underlying mortality of pensioners and the mortality assumption. This was done by assuming 7.5% lighter mortality than the mortality rates used for the valuation that resulted from the mortality investigation over the period 1 April 2005 to 31 March 2008. the margin required was R445 million.

Fluctuations in the mortality experience of pensioners in receipt of pensions. In particular allowances are made for possible improvements in mortality, which would result in pensions being paid for a longer period of time. the allowance in respect of mortality improvements was determined to be R717 million.therefore the total additional margin requirement was R4.416 million.



23. Accruals

ReCoNCILIatIoN oF aCCRUaLs 2013

oPeNING BaLaNCe

addItIoNs UtILIsed dURING the

YeaR

totaL

R ‘000 R ‘000 R ‘000 R ‘000

Accumulated leave 26,409 3,133 - 29,542

service bonus (13th Cheque) 4,299 4,679 (4,299) 4,679

Accrued expenses 77,003 59,226 (77,003) 59,226

107,711 67,038 (81,302) 93,447

ReCoNCILIatIoN oF aCCRUaLs 2012

oPeNING BaLaNCe

addItIoNs UtILIsed dURING the

YeaR

totaL

R ‘000 R ‘000 R ‘000 R ‘000

Accumulated leave 23,029 3,380 - 26,409

service bonus (13th Cheque) 3,905 394 - 4,299

Accrued expenses 67,572 77,003 (67,572) 77,003

94,506 80,777 (67,572) 107,711

2013 Restated 2012

R ‘000 R ‘000

24. Payables from exchange transactions

Income received in advance 512 -

Debtors with credit balances 293,909 330,953

Compensation, pension and medical creditors control 593,641 361,699

Procurement creditors control 49,943 10,438

Unsettled investments 896 749

938,901 703,838



2013 Restated 2012

R ‘000 R ‘000

25. Cash generated from operations

surplus 9,167,786 2,041,887

adjustments for

Depreciation and amortisation 2,810 2,668

Fair value adjustments (4,058) (1,078)

Pension actuarial adjustment (2,416,000) 2,798,407

Increase in the capitalised value of pensions (467,404) (353,280)

Assets less than R5,000 written-off 473 556

Increase/(Decrease) in the provision for unreported claims 1,593,000 (141,000)

transfer to unclaimed monies 4,342 -

Changes in working capital

Increase/(Decrease) in receivable from exchange transac-tions

(436,116) 1,847

Increase in receivables from non-exchange transactions (1,253,560) (1,056,608)

Payables from exchange transactions 235,053 141,160

Increase/(Decrease) in accruals (14,264) 13,205

6,412,062 3,447,764

26. Contingencies

seCURItIesThe Minister of Labour has issued licences in terms of Section 30 of the Act to carry out the business of the Fund in certain industries, 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 with the Commissioner securities, 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 R 1.578 million (2012: R 1.304 million).The Fund has received approximately 223 (2012: 71) notices of motions and summons and as a result thereof is financially exposed to approximately R 100.51 million (2012: R22.3 million), inclusive of legal costs.



2013 Restated 2012

R ‘000 R ‘000

27. Commitments

oPeRatING Leases - as Lessee (exPeNse)

Minimum lease payments due

Within one year 16,762 5,785

In second to fifth year inclusive 4,755 3,412

Later than five years - -

21,517 9,197

28. Material losses through criminal conduct

During the year under review 142 cases (of which 86 cases have been finalised) related to fraud and other unethical be-haviour were investigated. the actual loss for the year under review was R2,475,304. the Fund recovered R137,639 as at 31 March 2013. In 2012 137 cases out of 208 cases were finalised. The Fund suffered an actual loss of R26,072,981.42 of which R3,138,603.83 was recovered. During the year under review one official was dismissed from the Fund. The Fund envisages recovering this money either from the pension fund (GPAA) in the case of staff who were involved or resort to the courts to recover material amounts from third parties.

29. Fruitless and wasteful expenditure

opening balances 14,890 9,188

Add: Fruitless and wasteful expenditure current year 130 12,109

Less: Amounts condoned - (6,407)

15,020 14,890

Interest charged on overdue accounts by suppliers. the Fund is currently in the process of investigating these incidents that led to the fruitless and wasteful expenditure. the amount of interest paid to suppliers amounts to R130,286.80



2013 Restated 2012

R ‘000 R ‘000

30. Irregular expenditure

opening balance 20,384 31,678

Add: Irregular expenditure current year 658,467 6,504

Less: Amounts condoned - (17,798)

Less: Amounts recoverable (not condoned) (498,315) -

Less: Amounts recovered (41,952) -

138,584 20,384

Analysis of expenditure awaiting condonation per age classification

2013 2012

R ‘000 R ‘000

Current year 138,584 712

Prior years 20,384 17,798

158,968 18,510

Details of irregular expenditure recoverable (not condoned)

A contract extended without an approval by a delegated official 7,953

Goods and services that have been procured without following proper supply chain processes 17,200

Issuance of unsecured interest free advances to services providers 518,295

Duplicate payments to 1,567 medical services providers in respect of the medical claims 21,972

Contract extension exceeded 15% of original contract value 5,203

Payments made to service providers after expiry of their contracts 700

Contracts awarded to service providers without being advertised in the Government Gazette or in the media

54,117

tender awarded without following proper supply chain processes and that management acknowledged that condonement is sought

5,123

siemens paid but the services did not form part of PPP 16,516

tender awarded in contravention of treasury Regulation 16A.6.4 11,388

658,467

For the contract that was extended without an approval of a delegated official, the Fund has instituted an investigation into who granted approval for the extension. The investigation was completed and the Fund will recoup from the official.



For the goods and services that were acquired without following proper supply chain processes, it should be noted that an approval was granted by the Commisioner for the deviation from normal supply chain processes. However management could not justify the urgency of such deviation.

During the year under review the Fund agreed to pay six medical service providers an amount totaling R518 million. the reason being the Fund was unable to process backlogs on medical claims due to sAP ICM, as the system was too slow and dysfunctional. the Fund has instituted a forensic audit to investigate this anomaly.

For the overpayment of R21 million to medical service providers, two officials have been suspended as a result of this anomaly. However the investigations are still continuing.

The Fund is in the process of instituting a thorough investigation to assist the Fund in recouping monies from officials or individuals that are found to be liable.

2013 Restated 2012

R ‘000 R ‘000

31. Prior period errors

the correction of errors resulted in adjustments as follows:

Upon inspection it was found that the amount of the capitalised value was done in the 2012/13 financial year that was not the case:

The effect of the error on the individual line items in the financial statements is as follows:

Increase in benefits paid - 200

Decrease in capitalised value of pensions - (200)

- -

Upon inspection at year-end of 2012/13 the amount that was paid to telkom was not calculated correctly and not accrued for.


Increase in other payable from exchange transactions - (415)

Increase in the line item telephone expenditure - 415

- -

DoL claim not accrued for in 2012/13 financial year.


Decrease in reimbursement national department expenses - (325)

Decrease in the accrual for procurement creditors

- 325

- -



At year-end of 2012/13 an outstanding amount of R7.2 million was not accrued for. the effect of the error on the individual line items in the financial statements is as follows:

Decrease in benefits paid for compensation for permanent - 7,192

disability

Increase in other payable from exchange transactions - (7,192)

- -

At year-end of 2012/13 an outstanding amount of R3.9 million was not accrued for in respect of marketing costs.


Increase in other payable from exchange transactions - (3,956)

Increase in agency costs - 3,956

- -

At year-end of 2012/13 an outstanding amount of R8,000 was under accrued for in respect of advertising costs.



Increase in agency costs - 8

- -

At year-end of 2012/13 an outstanding amount of R5.7 million was under accrued for assets less than R5,000 relating to the data migration process.


Decrease other administrative expenses - (5,723)

Decrease in accruals - 5,723

- -

During the course of the year there was no straight-lining of the lease.



Increase in the lease expense - 31

- -


2013 Restated 2012

R ‘000 R ‘000


At year-end of 2012/13 an outstanding amount of R10,000 was understated in respect of debtor’s receipt.


Decrease in revenue from exchange transactions - 10

Decrease in cash and cash equivalents - (10)

- -

At year-end of 2012/13 an amount of R6,000 relating to fraudulent cheques written off was understated.


Increase in benefits paid - 6

Decrease in receivables – debt written off (BS) - (6)

- -

At year end of 2012/13 depreciation of R351 was understated in the property plant and equipment balance.


Increase in depreciation charge to administrative expenses - 350

Increase in accumulated depreciation - (350)

- -

At year end of 2012/13 asset less than R5,000 were written-off incorrectly.



Decrease in assets less than R5,000 written-off - 9

- -

At year end of 2012/13 furniture and fittings were incorrectly allocated to investment property.


Decrease in investment property - (34)

Increase in furniture and fittings - 34

- -


2013 Restated 2012

R ‘000 R ‘000


At year end of 2012/13 depreciation recognised on property plant and equipment was understated.


Increase in accumulated surplus - (749)

Increase in depreciation expense - 749

- -

PReVIoUsLY RePoRted

adjUstMeNt Restated BaLaNCe

R ‘000 R ‘000 R ‘000

statement of Financial Position

Cash and cash equivalents 395,037 (10) 395,027

Investment property 4,576 (34) 4,542

Property, plant and equipment 86,660 (316) 86,344

Accruals (102,197) (5,514) (107,711)

Payables from exchange transactions (704,009) 170 (703,839)

(319,933) (5,704) 325,637)

statement of Financial Performance

Revenue from non-exchange transactions 4,978,276 (10) 4,978,266

Benefits paid (2,260,283) (148,211) (2,408,494)

Administration expenses (567,117) 928 (566,189)

Decrease in provision for outstanding claims - 140,833 140,833

2,150,876 (6,460) 2,144,416


2013 Restated 2012

R ‘000 R ‘000


oRIGINaL BUdGet

aCtUaL oUtCoMe

VaRIaNCe aCtUaL oUtCoMe as % oF BUdGet

R`000 R`000 R`000

Revenue

Investment Revenue 2 749 066 4 121 073 (1 372 007) 150%

Revenue from non-exchange transactions 4 700 836 8 127 592 (3 426 756) 173%

total revenue 7 449 902 12 248 665 (4 798 763) 164%

expenditure

employee costs (342 596) (336 506) 6 090 102%

Reversal of assessments interest and penalties

- (19 626) (19 626)

Depreciation - (2 810) (2 810)

Finance costs - (130) (130)

Medical claims (3 000 000) (1 501 616) 1 498 384 150%

Compensation claims (1 864 061) (480 187) 1 383 874 174%

other expenditure (665 336) (418 424) 246 912 137%

Provision for outstanding claims (1 593 000) (1 593 000)

Fair value gains 4 058 4 058

Pension actuarial adjustment 2 416 000 2 416 000

Increase in the allowance for impairment on receivables

- (1 148 638) (1 148 638)

total expenditure (5 871 993) (3 080 879) 2 791 114 148%

surplus 1 577 909 9 167 786 (2 007 649) 227%

Capital expenditure 13 000 (3 386) 9 614 35%

Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013statement oF Comparative and aCtual inFormation For the year ended 31 marCh 2013


Revenue from non-exchange transactions

Contributions by employers 7 375 337 4 978 266

Interest on late payment by employers 243 302 255 944

Penalties on late payment by employers 474 007 91 469

3 8 092 646 5 325 679

Benefits Paid

Claims incurred (1 981 792) (2 408 494)

Gross surplus 6 110 854 2 917 185

other income

Administrative contributions by employers (s 88) 18 287 15 359

Miscellaneous revenue 854 814

Dividend revenue 5 106 807 105 719

Interest received 5 4 014 266 3 006 375

Fair value adjustments 19 4 058 1 078

4 144 272 3 129 345

10 255 126 6 046 530

operating expenses (Refer to page 174) 61 298 (3 436 151)

operating surplus 10 316 424 2 610 379

Finance costs (130) (1 882)

Increase in allowance for impairment of receivables (1 148 508) (566 610)

(1 148 638) (568 492)

surplus for the year 9 167 786 2 041 887

Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013detailed inCome statement For the year ended 31 marCh 2013

2013 Restated 2012

R ‘000 R ‘000


operating expenses

Audit fee 11 (7 814) (8 192)

Reversal of assessments, interest and penalties (19 626) (14 692)

Pension actuarial adjustment 2 416 000 (2 798 407)

Consulting and professional fees (100 415) (155 379)

Depreciation, amortisation and impairments (2 810) (2 668)

employee costs (336 506) (211 973)

Compensation related expenses (4 491) (6 007)

Board members’ fees (577) (416)

sundry and incidental expenses (1 593 000) 140 833

other expenses (72 765) (36 948)

Reimbursement Department of Labour (77) (118 173)

Investment management fees (11 969) (11 060)

PPP (67 140) (97 371)

Lease rentals on operating lease (29 375) (27 808)

Legal expenses (3 455) (538)

Assets less than R5,000 (473) (2 901)

Printing and stationery (8 592) (6 050)

Prevention of accidents (5 187) (2 899)

Repairs and maintenance (6 797) (7 406)

software expenses (41 896) (38 231)

travel and subsistence (34 955) (24 264)

training (2 234) (2 882)

Venue expenses (4 548) (2 719)

61 298 (3 436 151)

Compensation Fundannual FinanCial statements For the year ended 31 marCh 2013detailed inCome statement For the year ended 31 marCh 2013

2013 Restated 2012

R ‘000 R ‘000

RP241/2013ISBN: 978-0-621-42122-4

Vision

To be an employer of choice and an internationally reputable provider of compensation for occupational injuries and diseases, rehabilitation and reintegration services.

Mission

· To utilise or leverage automated solutions to provide efficient, quality, client-centric and accessible Compensation Fund services

· To ensure effective rehabilitation and re-integration services, through reputable (proven) programmes

· To ensure financial viability through efficient collections and prudent investments

· To promote job creation initiatives through socially responsible investments

· To develop and retain a competent and content workforce


Annual Report of theCompensation Fundfor the year ended 31 March 2013

Street Address:Compensation HouseCnr Hamilton and Soutpansberg StreetsPretoria

Postal Address:PO Box 955Pretoria0001 Tel: 0860 105 350Fax: 012 326 1570 / 012 357 1772

www.labour.gov.za

Annual R

eport of the Com

pensation Fund for the year ended 31 March 2013


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