Office of the Compensation Commissioner 5 N ovember 2014 PRESENTATION TO THE PORTFOLIO COMMITTEE.

Office of the Compensation Commissioner

5 November 2014

PRESENTATION TO THE PORTFOLIO COMMITTEE

Table of Content

1. Programme Overview & Objective

2. Vision, Mission and Values

3. Umehluko and Decentralization of CF services

4. Financial matters

5. ICT matters

6. Human Resource Management matters

7. Compensation Commissioner’s priority programmes to Turnaround the Compensation Fund

3

Programme Overview & Objective

• The Compensation Fund is a public entity of the Department of Labour as per schedule 3A of the PFMA

• The Fund administers the Compensation for Occupational Injuries and Diseases Act no. 130/1993 as amended.

• 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.

OUR VISION, MISSION AND VALUES

• Our Vision

• To be a world class provider of sustainable compensation for occupational injuries and diseases, rehabilitation and reintegration services

• Our Mission

• To provide efficient, quality, client-centric and accessible COID services

• To sustain financial viability

• To ensure an organisation which takes care of the needs of its staff for effective service delivery

• Our Values

• We shall at all times adhere to and live the Batho Pele Principles

Operations: Umehluko and Decentralization

Implementing the Umehluko claims processing system and Decentralisation

• Key priorities for Operations Management is implementation of Umehluko and decentralization of CF services

• Reviewing of roles to align to Umehluko and cross training (multiskilling) has started; as from 22 October 2014 19 staff were trained on compensation claims while others were trained on medical payments.

• Super users have been dispersed to conduct training to different Labour Centres as per the new training needs (Free State, Eastern Cape, Western Cape)

• Medical Invoices are submitted electronically through the switching houses, 14 switching houses are on board

Statistical information on Umehluko system for the period 04 August 2014- 31 October 2014

Month Medical Invoices

Captured

Medical Batches

Invoices Loaded for processing

Invoices deleted

from batches as duplicates

Invoices processed

from Switch Batch

PD Award Captured

Medical Reports

Captured

History Claim

Imports Requested

Payment requests

generated

Total for August 16696 47016 1587 24264 12 9138 58548 5015Total for September 122858 254033 103230 239715 26 31244 103409 76426Total for October 90596 180207 89018 157164 133 47185 117496 40502Grand Total 230150 481256 193835 421143 171 87567 279453 121943

Month Compensation Paid

Medical Paid Pension Paid

Total for August R 98,005.00 R 6,809,141.64 R 67,616,796.87

Total for September R 184,881.19 R 183,887,895.96 R 69,610,801.91

Total for October R 2,263,834.48 R 94,709,367.16 R 69,381,440.88

Grand Total R 2,546,720.67 R 285,406,404.76 R 206,609,039.66

Electronic items deleted prior to being captured

R 624,179,902.26

The above table indicates progress to date on capturing and processing of compensation benefits, medical payments and pensions on Umehluko


The above table indicates activity on Umehluko systems. The table indicates gradual increase on the activity within the system


• Provincial structures were handed over to provinces in July 2014, the recruitment process is driven from the Provincial Offices with CF Head Office being part of the panel

• Most officials have now reached their chosen Labour Centres except where there are challenges with office space i.e. Rustenburg Northwest and Gauteng

• Provincial Offices are currently recruiting for the ASD and DD positions for the Labour Centres.


• The Fund has decentralised its core operational functions to all provinces.

• People have now been placed at all 9 provinces, recently the process for transferring Gauteng staff was done.

ENGAGEMENT WITH PROVINCES ON THE PROVINCIAL STRUCTURES

1. Improvement on the provincial structures

As part of continuous improvement initiative, the Compensation Fund has started engaging provinces with a view of correcting the structure. Provincial engagement has already started and the first province that was visited was Western Cape. Among the issues which were discussed with the provinces are the following: -

1.1 Shifting of the Processing site

A number of requests were received from the provinces to shift the location of some of the labour centres due to infrastructure challenges. This includes, for example, the shifting of George Labour Centre to Knysna. The Fund is currently gathering facts to determine whether there should be a change the location or the manner in which the structures are configured.

ENGAGEMENT WITH PROVINCES ON THE PROVINCIAL STRUCTURES (Cont)

1.2 Shifting of Legal Admin posts

In terms of the approved structure, some of the functions such as the Legal Admin Officers are centralised at the Provincial Office level so that work can be distributed equally and to be able to service all the processing centres within the provinces. The Compensation Fund will be nvestigating the possibility of detaching the COID structures from the Provincial Office to the Labour Centre level.

1.3 Vacant ASD: COID

The old vacant ASD: COID post was identified as one of the discrepancies in the structure. The post was erroneously omitted, meaning it was not abolished when the new structure was implemented. The post was replaced by a new post of ASD: COID on the newly created CF structure, hence the post must be abolished. A submission has been sent to the Minister to approve the abolishing of obsolete posts of ASD: COID. The provinces were requested to compile a submission requesting CF (OE) to abolish all identified obsolete posts within the province relevant to CF.

ENGAGEMENT WITH PROVINCES ON THE PROVINCIAL STRUCTURES (Cont)

1.4 Vacancy Rate/ Staff Establishment

Compensation Fund has implemented the new organisational structure in April 2013 and employees have been placed laterally. Compensation Fund has handed the structure to the provinces for further implementation. Provinces have started with the recruitment and selection of the new vacant positions. The Department of Labour has appointed a task team in an effort to accelerate the implementation of the structures and to reduce the vacancy rate within the Department. The purpose of the Task Team is also to address discrepancies identified on the provincial structure. Effort are underway to assist provinces to fill the vacancies.


Key Challenges Acton Plan

Impact of the Umehluko system not yet realised in the Provincial Offices/Labour Centres

CF Head to conduct refresher training to provinces on the new processes and systems for the next six monthsProvincial Offices to finalise the appointment of COIDA dedicated management staff in this financial yearCF to finalise the report structure and workflow on the new system to align to each Provincial Office before the end of November 2014

Slow rate of authorisation of payments on captured and validated invoices coming through the switching houses

Review the roles and assign the roles according to knowledge and skillsRefresher training and other interventions for officials who are not performing

Financial matters

Chief Directorate Communication | 2011.00.00

# Programme

Mapping of Negative Opinions

Rank Total Findings

Total Findings Resolved

Total Findings Outstanding

1. Mapping of Matters Affecting the AGSA Report 93 6 87

2. Mapping of Other Housekeeping Matters 224 26 198

Total 317 32 285

Matter of Disclaimer Matter of emphasis Other Matters

December 2014 March 2015 31 March 16 & 17Short termShort term Medium termMedium term Long termLong term

Mapping of AGSA Findings High Level (2013/14)


# Description Focus areas


Total Opinions Rank Short Tem

Medium Term

Long Term

1. Income, Revenue Assessment 17 - 17 -

2. Expenditure, Accruals and Payables 16 14 2 -

3. Financial Reporting 18 15 3 -

4. Supply Chain Management 19 15 4 -

5. Compensation and Pensions 1 1 - -

6. Medical Claims 6 5 1 -

8. Risk Management 2 1 1 -

9. Board Secretariat 1 1 - -

10. Strategic Planning Monitoring and Evaluation (AOPO) 7 6 1 -

11. Legal 1 1 - -

12. Office of the CFO 5 4 1 -

Total 93 63 30 -

Matter of Disclaimer Matter of emphasis Other Major matters


Note: Compilation of AGSA Audit Action Plan on findings Completed and approved by EXCO and Commissioner.

Overall Mapping of Matters Affecting the AGSA Report (2013/14)


# Programme


Rank Total Findings



1. Income, Revenue Assessment 17 1 16

2. Expenditure, Accruals and Payables 16 1 15

3. Financial Reporting 18 2 16

4. Supply Chain Management 19 1 18

5. Compensation and Pensions 1 0 1

6. Medical Claims 6 0 6

7. Risk Management 2 1 1

8. Board Secretariat 1 0 1

9. Strategic Planning Monitoring and Evaluation (AOPO) 7 0 7

10. Office of The Chief Financial Officer (Internal Control) 5 0 5

11. Legal 1 0 1

Total 93 6 87

Matter of Disclaimer Matter of emphasis Other Major matters


Note: Compilation of AGSA Audit Action Plan on findings Completed and approved by EXCO and Commissioner.

Mapping of Matters Affecting the AGSA Report (2013/14)


# Programme


Rank Total Findings



1. Income, Revenue Assessment 25 3 22

2. Expenditure, Accruals and Payables 46 4 42

3. Financial Reporting 21 2 19

4. Supply Chain Management 25 2 23

5. Compensation and Pensions 5 1 4

6. Medical Claims 7 1 6

7. Risk Management 3 1 2

8. Board Secretariat 1 0 1

9. Strategic Planning Monitoring and Evaluation (AOPO) 7 0 7

10. Office of The Chief Financial Officer (Internal Control) 6 0 6

11. Legal 4 0 4



Note: Compilation of AGSA Audit Action Plan on findings Completed and approved by EXCO and Commissioner

Mapping of Matters of Emphasis and other Matters (2013/14)


# Programme


Rank Total Findings



12. Internal Audit 1 1 0

13. Human Resources 20 0 20

14. Office of the Commissioner 2 0 2

15. Information Technology 5 0 5

16. Provinces – Western Cape, KwaZulu Natal and Gauteng 46 11 35

Total 224 26 198



Note: Compilation of AGSA Audit Action Plan on findings Completed and approved by EXCO and Commissioner

Mapping of Matters of Emphasis and other Matters Cont.(2013/14)

Details : Revenue and Receivables

Revenue and Receivables from non-exchange transactions

Lack of maintenance of accounting records, journals and adequate control over assessment revenue and debtors.

Inadequate process of registration of all employers in terms of COIDA.

Interest and penalties not charged on outstanding debtors. Lack of recognition of service received in kind.

Allowance for Impairment

Lack of supporting documentations for impairment.

Revenue and Receivables from Exchange

Revenue and receivables incorrectly classified from non-exchange transactions

Root Causes/Reasons – Disclaimer matters (2013/14)

Details : FINANCIAL REPORTING

Capitalised value of pensions actuarial adjustment

Lack of review and assessment of capitalised value of pensions and pension actuarial adjustment.

Prior period errors Lack of adequate records in respect of prior period errors reported.

Statement of comparison of budget and actual amounts

Approved budget not accurately disclosed and presented with explanation of the material differences between actual and budget.

Cash flow statement Lack of adequate audit evidence to substantiate the calculation for cash flow statement.

Investment revenue Investment revenue not accurately disclosed in the financial statements.


Details : FINANCIAL REPORTING Ctnd…

Contingencies Lack of adequate audit evidence and maintenance of accounting records in respect of contingencies.

Commitments Lack of adequate audit evidence and maintenance of accounting records in respect of Commitments.

Irregular expenditure

Lack of adequate audit evidence and maintenance of accounting records in respect of irregular expenditure.

Related party transactions

Lack of adequate audit evidence and maintenance of accounting records in respect of related party transactions.

Aggregation of immaterial uncorrected misstatements

Material misstated of financial statements for employee related expenses and accruals


Details : EXPENDITURE & CLAIMS MANAGEMENT

Benefits Paid Lack of adequate and effective internal controls to maintain records of benefits paid.

Material differences identified between the records of benefits paid and the amount disclosed in the financial statements.

Administration Expenses

Inadequate controls to maintain accounting records in respect of administration costs.

Provisions Lack of review and assessment of the provision for outstanding claims.


Payables from Exchange Transactions

Lack of adequate internal controls to maintain records of benefits paid. Lack of adequate internal controls to maintain records for reconciling items of

cash and cash equivalents.

25

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Revenue and Receivables

December 2014 Sept 2015 31 March 16 & 17

Area Details & Timeline Progress

Revenue and Receivables from non Exchange Transaction

To benchmark with SABC, CIPC and UIF for revenue completeness

Review of policies management for revenue and receivables from non exchange transaction

To engage National Treasury for Assistance in change of standard on recognition of revenue.

To develop document management system to ensure that documents are easily available.

Management conducted research on open market, e.g. UIF, CIPC in order to address completeness of employer registration records. This has been done. Final reports due to be signed off.

Policies developed in draft format.

Meeting took place with NT. Plan drafted for implementation.

Contract signed with service provider for smart forms and registration of employers. Completed Revenue from exchange was remapped to non-exchange transaction on the updated AFS

26

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Revenue and Receivables Ctnd…



Revenue and Receivables from non Exchange Transaction

GRAP 23 to be applied systematically to all services considered as social responsibility to the public.

To engage with DOL IT Department for global system assistance (extent and quantification)

To complete IT business reengineering in process for more accurate information within revenue section. – assumption used in the calculation of allowance for impairment

The issue of lack of recognition of service received in kind is completed. Final draft policy developed, due for further consultations and approval.

Management is in the process of re-engineering IT function and related business processes to accommodate the interest and penalties not charged on outstanding debtors, impairment allowances etc..

Assessment Model on assessment rate structure is currently under review. Presented to key internal and external stakeholders.

27

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Revenue and Receivables Ctnd…



Allowance for Impairment

To develop document management system to ensure that documents are easily available.

Contract signed with the service provider of smart form solution and registration of employers.

Business case approved for a document management system implementation in CF. TOR developed. Due for advertisement and appointment.

Revenue and Receivables from Exchange Transaction

On the job training on interpretation of GRAP 104. Transaction to be treated as a non-exchange transaction.

Training needs identified for training to finance staff, this include application of GRAP standards. On the job training in progress.

28

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Financial Reporting


Area Details & Timeline ProgressCapitalised Value of Pension and Pension Actuarial Adjustment

To discuss with the actuarial to review the timing of the actuarial valuation

Management still in the process of analysing the provision for actuarial valuation of pensions based on the COIDA due to material variation from 2013 and 2014. Agreed review date is February 2015.

Prior Period Errors

Management to develop audit action plan in respect of prior period errors reported.

Completed prior year adjustments were processed on the AFS. Due to be verified by AGSA and Internal Audit.

Met with AGSA and NT to resolve the prior period timelines and approach.

Statement of Comparison of Budget and Actual Amounts

Approved budget will be disclosed and presented with explanations.

Adjustment related to prior year approved budget was done with explanation on the updated financial statements.

Monthly budget and expenditure reporting framework developed.

29 December 2014 Sept 2015 31 March 16 & 17


Cash Flow Statement

To ensure that cash flow principles are consistently applied from one year to the other.

Cash flow principles were subsequently applied subsequent to 31 March 2014.

Investment revenue

Management to ensure that the Investments disclosure in AFS is properly done.

Financial statements updated subsequent to 31 March 2014.

Contingencies Management to update the contingencies liability schedule with all finalised outcomes of cases

Financial statements updated. Schedules introduced subsequent to 31 March 2014. Coordination between Legal and Finance section in progress.

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Financial Reporting Ctnd…..


Area Details & Timeline ProgressContingencies Management to update the

contingencies liability schedule with all finalised outcomes of cases

Financial statements updated. Schedules introduced subsequent to 31 March 2014. Coordination between Legal and Finance section in progress.

Commitments Management to send a memo for communication of all commitments within the Fund

Financial statements updated. Coordination between SCM and Financial Reporting on Commitments established.

Irregular expenditures

Management to develop and updated the register and ensure that investigations are conducted.

Financial Statements updated subsequent to 31/03/2014. FINMAB and TOR approved. Updated TOR due to be approved. 26 cases out of 51 are in progress of being investigated, 8 cases completed. Investigations not commenced with 17 cases. 8 Cases presented to FINMAB for final decision. Register has been developed and updated on financial misconduct cases.



Area Details & Timeline ProgressRelated party transactions

A register and procedures shouldbe developed and maintained.To identify all related party on monthly basis

A communication was sent out instructing the Directors to report on monthly basis on all related party transactions. AFS subsequently updated. Related party policy due to be developed.

Benefit Paid & Administrative Expenses

Management to develop an effective filing system to ensure that information is filed in an easily retrievable manner so it can be submitted to the AG without significant delay.

Contract signed with service provider for document management system

Management is in process of developing a document movement register.

Due to destroy old documents as approved by archivist.

Provision for Outstanding Claims

Management to perform risk assessment in order to evaluate the control deficiency and develop mitigation control for the purposes of addressing the claims management

Umehloku (claim management system) has been implemented within the Fund (04/08/2014).Fund is currently seeking a technical opinion with regards to alignment business process to Accounting Standards and other pronouncements (GRAP 19 on provision and so to apply the specific requirements for the provision of outstanding claims.



Area Details & Timeline ProgressPayable for exchange transaction

Management to develop an effective filing system to ensure that information is filed in an easily retrievable manner so it can be submitted to the AG without significant delay.

Contract signed with service provider for smart forms and online forms. Memo approved on document management system, due to advertise the project.

Management is in process of developing a document movement register.

Due to destroy old documents as approved by archivist.

Cash and cash equivalents

To develop and maintain financial discipline and daily, weekly and monthly reconciliation so to enhance the internal control process and their implementation thereon.

The Fund is doing weekly reconciliations but have challenges (system application and training) in clearing reconciling items. Intervention meeting held on clearing suspense accounts. Implementation plan developed and approved. To be monitored monthly.

High Level Plans to Address Audit OpinionsMatters of Disclaimer: Expenditure Ctnd…

Human Resources Management matters

Human Resources Management matters

VACANCY REPORT AS AT 31 OCTOBER 2014

31-Oct-14SUMMARY ON VACANT POSTS AT THE COMPENSATION FUND

SALARY LEVELCOMMISSIONE

RS OFFICEINTERNAL

AUDITRISK MNGT

CD: CORPORATE

SUPPORT

CD: FINANC

E

CD: OPERATIO

NS TOTAL13 0 1 0 0 0 0 1 11 0 0 2 6 2 4 149 0 4 0 7 8 4 238 0 0 1 5 7 14 277 0 0 0 2 37 2 416 0 0 0 6 0 0 65 0 0 0 0 0 0 04 0 0 0 0 0 0 03 0 0 0 0 0 0 0

TOTAL 0 5 3 26 54 24 112

TOTAL APPROVED POSTS 690TOTAL FILLED POSTS 578TOTAL VACANT POSTS 112VACANCY RATE PERCENTAGE 16.20%

DETAILED REPORT ON DISCIPLINARY CASES

NUMBER OF EMPLOYEES

NATURE OF MISCONDUCT SANCTION

1 Security Breach and Absenteeism Dismissal

1 Intimidation and participation in an unlawful industrial action

Disciplinary inquiry yet to be finalised

2 Holding illegal meetings Disciplinary inquiry yet to be finalised

3 Participation in an unlawful industrial action Final Written Warning, Intention to issue FWW and FWW with 3 months suspension without pay

1 Insubordination and dereliction of duties Awaiting sanction

165 Participation in an unlawful industrial action Awaiting the issuing of FWW

1 Abuse of sick leave Written warning

3 Excessive Absenteeism Awaiting sanction, 2 months suspension without pay and WW

DETAILED REPORT ON DISCIPLINARY CASES (Cont)

NUMBER OF EMPLOYEES

NATURE OF MISCONDUCT SANCTION

1 Gross negligence Submission regarding sanction awaiting approval

1 Soliciting bribery Dismissal

1 Negligence Submission regarding sanction awaiting approval

1 Soliciting bribery Submission regarding sanction awaiting approval

1 Forgery of signatures FWW with 3 months suspension without pay

1 Soliciting bribery Disciplinary inquiry to be held in November 2014

1 Forgery of signatures and soliciting bribery Disciplinary inquiry underway

TRAINING AND DEVELOPMENT INTERVENTIONS

LEARNING INITIATIVES FROM 01 APRIL 2014 TO DATE

Short Courses

Functional Training Generic Training

Number of Officials trained

594

258

Internship

Compensation Fund (HQ) Provinces

Number of appointed Interns

99

13

Bursaries

CF DoL

Number of approved bursaries

39

39

Skills Audit Project

The Terms of Reference and the Submission were signed and approved for sourcing of the Service Provider. The documents have been submitted to SCM for further processing.

REPORT ON PERFORMANCE MANAGEMENT FOR 2013/2014

• Action taken against non-performers:

There were in total, 32 officials reported to be under/non performers within the CD: FM (13) and CD: Ops (19) for the 2013/14 performance year.

The majority of these cases did not warrant any disciplinary action because they were mainly about personal problems, lack of skills, staff misplacement, lack of time management, health challenges, family responsibilities, and temporary incapacity leave among others. Above these, there is an investigation underway on for an official who is suspected to be conducting private activities that are not work related.

• Action taken against transgressors of the Policy:

Due to lack of cooperation resulting in non-submission of performance management documents on time, letters requesting reasons why disciplinary action should not be initiated were issued against two officials Chief Directorates: Operations and Financial Management. in this regard, the process of investigation will be initiated once an Investigating Officer has been appointed.

ICT Services

ICT Progress report• PM Focus appointed to draft viability of CF independence from DOL

– First report – Second 15 November due to delay on finalizing the report.– Implementation plan due December 2014

• Refresh of Laptops completed.(312)• Internet based services

– Self service for users – Umheluko went live on 1/4/2014 with first transaction on 4/8/2014 – ROE website well established– Letter of Good Standing enhanced

• Storage space increased (20tb)whilst the tender for new storage is being finalized

• Dependency on SAP services reduced: Umehluko implementation• Dependency on COBOL services reduced: Umehluko implementation• Dol Architecture Board operational• Appointment of Dimension Data.

Challenges• Delay on appointment of CF BRM by DoL.• Move of the DOL UIF Datacenter• Delay finalization of SITA / DOL ability to

deploy full Disaster Recovery for CF services• Finalization of the DOL IT Governance

structures• Ability to translate data into reliable

information• Inefficient SAP services –EOH• Delay on DoL Storage Tender

Plans• CF Initatives• Modernization project by partnering with Interfile• Revamp of the CF web site with Corporate Communications• Establishment of a Business Intelligence Competency Center (BICC)• Upgrades for Umehluko

– Database Failover with double the processing power– Bug fixes – RMA has deployed a new release that includes scanning / document

management• DOL Initiatives

– Deployment of System Center to monitor the data center servers– Fixing of the DOL SAP landscape– New Storage platform– Handover by SAP AG to Dimension Data for SAP Services

Compensation Commissioner’s Priorities

• 3.1. Umehluko

This project is aimed at electronically processing claims and improving the turnaround time of processing.

Fast-track the Reviewal of roles and responsibilities for all employees

Improve payment turnaround time

Provide efficient, effective, extensive and quality training to both internal and external stakeholders.

• 3.2. Improve Revenue Management

Fast track the process of revising assessment model

Improve Debt management and collection rate

Create capacity to conduct payroll audit

Online registration

Compensation Commissioner’s Priorities

• 3.3. AGSA Action Plan to deal with findings

Implementation plan

Timelines

Preventative measures

• 3.4. Organisational review/business processes and re-engineering

Reviewal of business processes

Organisational restructuring

Relationship with provinces

Improve performance management

• A Turnaround Steering Committee has been established consisting of Programme Managers to run, guide and monitor the optimal implementation of a revised turnaround strategy.

• These four critical projects have been prioritised and aligned to our day-to-day operations in the Fund.

Conclusion

Office of the Compensation Commissioner 5 N ovember 2014 PRESENTATION TO THE PORTFOLIO COMMITTEE.

Documents

umehluko slide

compensation fund slide

compensation claims

decentralization slide

umehluko system

implementation of umehluko

board slide

medical batches invoices