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Minister Mildred N OliphantMinister of Labour
Mr Sam MorotobaActing Director-General
Submission of the Compensation Fund Annual ReportMinister of Labour
I have the honour in submitting the Annual Report of the Compensation Fund for the period 1 April 2013 to 31 March 2014.
Mr Sam MorotobaActing Director-General
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Annual Report of the Compensation Fund 2014ii
TABLE OF CONTENTPART A GENERAL INFORMATION 11. COMPENSATION FUND GENERAL INFORMATION 22. LIST OF ABBREVIATIONS/ACRONYMS 33. FOREWORD BY THE ACTING DIRECTOR-GENERAL 44. COMMISSIONER’S OVERVIEW 65. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE
ANNUAL REPORT 96. STRATEGIC OVERVIEW 10
6.1. Vision 106.2. Mission 106.3. Values 106.4. Strategic outcome oriented goals 10
7. LEGISLATIVE AND OTHER MANDATES 137.1. Constitutional mandate 137.2. Legislative mandate 13
8. ORGANISATIONAL STRUCTURE 149. REPORTING FRAMEWORK 1510. MINIMISING CONFLICT OF INTEREST 1511. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES 1512. CODE OF CONDUCT 1613. SOCIAL RESPONSIBILITY 16
PART B PERFORMANCE INFORMATION 171. INTRODUCTION 182. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES 183. OVERVIEW OF COMPENSATION FUND’S PERFORMANCE 18
3.1. Service delivery environment 183.2. Overview of the organisational environment 303.3. Revenue 313.4. Payments 323.5. Capital investment, maintenance and asset management plan 32
4. PERFORMANCE INFORMATION BY PROGRAMME 33
PART C GOVERNANCE 731. INTRODUCTION 742. PARLIAMENTARY COMMITTEES 743. EXECUTIVE AUTHORITY 744. THE COMPENSATION BOARD 745. RISK MANAGEMENT 836. INTERNAL CONTROL 847. INTERNAL AUDIT UNIT AND AUDIT COMMITTEE 858. COMPLIANCE WITH LAWS AND REGULATIONS 879. AUDIT COMMITTEE’S REPORT 8710. REPORT OF THE AUDIT COMMITTEE FOR THE PERIOD 2013/14 90
PART D HUMAN RESOURCE MANAGEMENT 951. INTRODUCTION 962. HUMAN RESOURCE OVERSIGHT STATISTICS 98
PART E FINANCIAL INFORMATION 1051. REPORT OF THE AUDITOR-GENERAL 1062. ANNUAL FINANCIAL STATEMENTS 117
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PART A: GENERAL INFORMATION
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Annual Report of the Compensation Fund 20142
1. COMPENSATION FUND GENERAL INFORMATION
REGISTERED NAME:Compensation Fund
PHYSICAL ADDRESS:Compensation HouseCorner Hamilton and Soutpansberg StreetsPretoria
POSTAL ADDRESS: PO Box 955Pretoria0001
TELEPHONE NUMBER:0860 105 350
FAX NUMBER:012 326 1570 / 012 357 1772
EMAIL ADDRESS: [email protected]
WEBSITE ADDRESS: www.labour.gov.za
EXTERNAL AUDITORS:Auditor General of South Africa (AGSA)
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Annual Report of the Compensation Fund 2014 3
AGSA - Auditor General of South AfricaAPP - Annual Performance PlanBAS - Basic Accounting SystemBCEA - Basic Conditions of Employment Act BUMS - Business Unit Managers (Provincial
Deputy Directors)BUSA - Business Unity South AfricaCCMA - Commission for Conciliation,
Mediation and ArbitrationCC - Compensation CommissionerCF - Compensation FundCRM - Customer Relationship ManagementCS - Corporate Services CFO - Chief Financial OfficerCOO - Chief Operations Officer CIO - Chief Information Officer COIDA - Compensation for Occupational
Injuries and DiseasesDG - Director GeneralDDG - Deputy Director GeneralDEXCOM - Departmental Executive Committee DoL - Department of LabourDPSA - Department of Public Services and
AdministrationDWCP - Decent Work Country Programme EC - Eastern CapeEEA - Employment Equity Act ES - Employment ServicesESSA - Employment Services for South AfricaEPWP - Extended Public Works ProgrammeEXCO - Executive CommitteeFEMA - Federal Employers Mutual AssuranceFS - Free StateGCIS - Government Communication and
Information ServicesHO - Head Office HPCSA - Health Professions Council of South
AfricaHRM - Human Resource Management ICD - Integrated Client DatabaseICM - Integrated Claims ManagementICT - Information and Communication
TechnologyIES - Inspection and Enforcement Services ILO - International Labour Organisation INDS - Integrated National Disability StrategyIVR - Integrated Voice ResponseKZN - KwaZulu-NatalLMIS&P - Labour Market Information and
Statistics
LP - LimpopoLP & IR - Labour Policy and Industrial
RelationsLRA - Labour Relations Act KRA - Key Result AreaMBDC - Medical Billing Document ControlM&E - Monitoring and EvaluationMISS - Minimum Information Security
SystemMOU - Memorandum of UnderstandingMPU - MpumalangaMTSF - Medium-term Strategic Framework MTEF - Medium-term Expenditure
FrameworkNC - Northern CapeNEDLAC - National Economic Development and
Labour CouncilNT - National Treasury ODMWA - Occupational Diseases in Mines and
Works ActOHS - Occupational Health and Safety PD - Permanent DisablementPDP - Personal Development Plan PES - Public Employment Services PFMA - Public Finance Management ActPMO - Project Management OfficePPP - Public Private PartnershipPTSD - Post Traumatic Stress DisorderPWD - People with DisabilitiesQMS - Quality Management SystemRAF - Road Accident FundRMA - Rand Mutual AssuranceRME - Research Monitoring and Evaluation ROE - Return of EarningsSAP - Systems Application and Products in
Data ProcessingSCM - Supply Chain ManagementSDIP - Service Delivery Improvement PlanSEF - Sheltered Employment Factories SMS - Senior Management ServicesSOE - State Owned EnterprisesSP - Strategic PlanSTEFI - Short-term Financial IndexSWOT - Strengths, Weaknesses,
Opportunities and ThreatsTCOID - Technical Committee on
Occupational Injuries and DiseasesTTD - Total Temporary DisablementUIF - Unemployment Insurance FundWC - Western CapeWSP - Work Place Skills Plan
2. LIST OF ABBREVIATIONS/ACRONYMS
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Annual Report of the Compensation Fund 20144
3. FOREWORD BY THE ACTING DIRECTOR- GENERAL
Introduction
The Compensation Fund herewith presents its Annual Report for the 2013/14 financial year in terms of Section 55 (1)(d) of the Public Finance Management Act, No 1 of 1999, (as amended by Act 29 of 1999). The Annual Report sets out how the Fund performed on the achievement of outcomes outlined in the 2013/14 Annual Performance Plan. The Annual Report focuses on information that is collected by the Fund in the course of fulfilling its mandate and implementing government policies. This information is vital in enhancing transparency, accountability and oversight in terms of assessing the value-for-money derived from the Fund’s activities. The information reported in the Annual Report include the actual achievements, financial position and human resources information for the reporting period in relation to the planned targets and budgets as published in the Fund’s Strategic Plan, Annual Performance Plan and budget documents.
High-level overview of the Compensation Fund’s Strategy and its performance
During the year under review, the Fund developed its Annual Performance Plan in order to pursue its objective of providing compensation for disablement caused by occupational injuries or diseases and its vision of being a world-class provider of sustainable compensation for occupational injuries and diseases, rehabilitation and reintegration services.
In improving a high performing workforce, the Compensation Fund recruited a Chief Financial Officer. The process to appoint a Chief Director: Operations Management was also initiated in this financial year.
As directed by the Minister in last year’s budget, the Compensation Fund piloted the Rand Mutual Assurance (RMA) Integrated Claims Management System. The Compensation Fund finalised the process of piloting the RMA Claims Management Processing System to assess its capabilities with the view to determine its functionality. Robust change management and consultations were conducted to keep all stakeholders informed of the pilot project.
Challenges faced by the Compensation Fund
The Fund continues to experience a number of business challenges which have led to an untenable situation resulting in:
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Annual Report of the Compensation Fund 2014 5
The Fund is still experiencing non-compliance by stakeholders. Stakeholders, such as employers, still submit incomplete information and beneficiaries delay to submit the required documents (banking details, medical reports) resulting in non-payment of compensation benefits. The improvement of the electronic and automated employer declarations and claims processing solutions will resolve some of these challenges. The business processes within the Fund will be simplified, through the introduction of the Smart Forms which will also reduce the administrative burden of employers and other stakeholders, to comply and interact with the Fund.
Fraudulent activities are still negatively affecting the finalisation of employer assessments and the debt book continues to increase. This is due to the fraudulent Letters of Good Standing which were issued, in most cases not in accordance with Compensation Fund policy. To improve governance and risk management, the Fund will put improved internal controls and intelligent audit and risk management systems in place.
Medium- to long-term goals of the Compensation Fund
The Fund has commenced with the implementation of the Turnaround and Modernisation Strategy. Some of the critical initiatives to be undertaken as part of the Strategy include the following:
term Strategic Framework 2014 – 2019
Through the Department of Labour (DoL), the Fund will strive to have an agile and well capacitated ICT organisation which is able to support the current operations and the turnaround initiatives. The Fund will come up with an innovative and flexible sourcing model to provide capacity and services “just in time” and “as and when needed”.
Acknowledgements
I wish to extend my sincere appreciation to staff, management, the Board and the Minister for their unwavering support.
Mr Sam MorotobaActing Director-General
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Annual Report of the Compensation Fund 20146
4. COMMISSIONER’S REPORT
During the financial year under review, the Compensation Fund (Fund) made progress in achieving its objectives, the details of which are outlined as follows:
1. Income and investments
1.1. Assessment revenue
The Fund raised R8.1 billion (* R7.9 billion) assessment revenue, as compared to R5.3 billion (* R6.4 billion) in the previous financial year, an increase of 53 % (* 24%). This increase is due to the introduction of the Return of Earnings (ROE) website that was initiated for employers to submit electronically and no longer submit their ROE manually. This project was successful as over 94,000 (ninety four thousand) employers submitted their returns online.
Notwithstanding the challenges of the downtime and the slowness of the website, the Fund amassed revenue returns of over R8.1 billion and of which R6.4 billion (* R7.2 billion) rand was collected from the employers, a decrease (* an increase) of 68% (* 12.5%) from R3.8 billion (* R6.4 billion) that was collected in the preceding year.
1.2. Investment revenue
Due to the massive increase of revenue, the Fund had to investment over R1.6 billion (* R4.7 billion) in cash with the Public Investment Corporation (PIC). The net investment income for both the PIC and ABSA (the Fund’s banker) was R4.1 billion (* R1.7 billion) compared to R3.1 billion (* R4.1 billion) the previous years, denoting a decrease of 32% (* 141%) as a result of fair value adjustment.
Overall the total value of assets has increased by R8.1 billion (* R6.1 billion) from R32.7 billion (* R35.3 billion) to R40.8 billion (* R41.4 billion), a 25% (* 17%) increase.
The total surplus for the year increased (* decreased) by 360% (* 50%) from R2 billion (* R8.1 billion) to R9.2 billion (* R4.1 billion) and the accumulated surplus is R23.4 billion (* R26.4 billion). The Fund is fully funded and is in a sound financial position as at 31 March 2014.
2. Compensation claims
Claims incurred for the year amounted to R2 billion (R2.4 billion: 2012) (* R2.7 billion) (* R1.9 billion: 2013), a decrease of 2% (* an increase of 42%). This is merely attributed to the SAP ICM system which posed serious challenges since its inception in 1 October 2011. There was a marginal increase (*decrease) in processing of permanent disability which moved from R79 million (* R89 million) to R118 million (* R87 million).
In order to address the backlog of processing medical claims, the Fund acquired services of EOH medical solutions to electronically process medical claims. Since this project started in December 2012 over 500 million medical claims were paid.
* Subsequent to the receipt of the audit opinion from the AGSA, it was discovered that some of the figures in the Annual Report were incorrect. The revised figures and text are indicated with an asterisk in brackets, which
represent the figures that should have been in the Annual Report.
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Annual Report of the Compensation Fund 2014 7
3. Budget
During the year under review the Fund spent 98% (* 79%) budget of compensation for employees and 78% (* 41%) of goods and services.
In terms of revenue, the Fund far exceeded its own expectations by 164% (*151%) mark of its target this is really attributable to ROE website.
4. Social security reforms
In an effort to entrench and transform social security in South Africa, the Fund’s board and management undertook a study tour to Germany to familiarise themselves with the mechanisms and requirements for the implementation of a new transformed compensation system in South Africa.
This will support the Fund in its efforts to ensure guaranteed employment, rehabilitation and alternative re-entry programmes in the labour market. The German government is working closely together with the South African government to ensure that the amendments proposed in the Compensation Bill will contribute to the realisation of a better life for all.
5. Challenges
i. In the year under review the Fund was not able to give employers access to information which could assist them to comply.
ii. Due to the current systems the Fund has been using to process and pay claims, the Fund was unable to meet the growing demands of clients. In the same year the Fund was inundated with queries and complaints from workers – who deservedly were unable to access their benefits – and medical service providers – who had resorted to litigation processes in order to have their invoices adjudicated and paid.
iii. It was confirmed that the Fund’s systems and processes are not able to effectively detect and prevent fraud and corrupt activities perpetrated by both officials and service providers.
Despite the Fund’s efforts to communicate it’s services and employee rights to the public, these efforts have been rendered ineffective as a result of these challenges.
6. Achievements
6.1. Umehluko Pilot Project
These challenges did not deter the Fund in achieving its goals. With the support of the Minister of Labour, the Fund successfully piloted a new claims management system called “Umehluko” offered by Rand Mutual Assurance (RMA). RMA is the licensee under COIDA. This system provides for the online submission of accident reports by employers, and medical reports and invoices by medical service providers. It also allows the Fund to electronically adjudicate and pay compensation benefits and refunds to employers.
Employers and medical providers, through this system, can monitor the progress on each claim submitted. We hope that the new system, if successfully implemented, will do away with the challenges of the past.
6.2. Letters of Good Standing
During the year under review the Fund implemented an online system to process Return on Earnings. This system allows all employers that are paid up, to access their Letters of Good Standing on the website. This has enabled prospective businesses to have easy access to documentation required for tender processes by both government and the private sector.
* Subsequent to the receipt of the audit opinion from the AGSA, it was discovered that some of the figures in the Annual Report were incorrect. The revised figures and text are indicated with an asterisk in brackets, which
represent the figures that should have been in the Annual Report.
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Annual Report of the Compensation Fund 20148
6.3. Increased investments
In the same financial year under review, the Fund was able to generate additional reserves in excess of * R4.7 billion through its operations and investment initiatives to such an extent that at the end the financial year the Fund can proudly report reserves to the amount of * R41.4 billion
The Board, in their desire to promote job creation and investment in the South African economy, has set aside R3.8 billion – available through PIC and IDC as institutions of choice – to implement the investment strategy. In addition, the Fund has set aside R500 million, which is equally matched by the UIF, for the provision of government infrastructure. This is in line with government’s commitment to the provision and supply of service delivery infrastructure to the South African population.
6.4. Fraudulent activities
A hotline for the anonymous reporting of fraudulent and corrupt activities has been established. This has led to a decline in fraud and corrupt activities within the Compensation Fund.
7. Conclusion
My sincere appreciation is accorded to the Minister of Labour for her active involvements, encouragement and unwavering support.
I would like to thank the Board who unreservedly contributed to the performance direction of the Fund.
Lastly, to the staff and management, I would like to acknowledge their commitment and unfailing support.
Mr Shadrack MkhontoCompensation Commissioner
* Subsequent to the receipt of the audit opinion from the AGSA, it was discovered that some of the figures in the Annual Report were incorrect. The revised figures and text are indicated with an asterisk in brackets, which
represent the figures that should have been in the Annual Report.
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Annual Report of the Compensation Fund 2014 9
5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT
To the best of my knowledge and belief, I confirm the following:
All information and amounts disclosed in the Annual Report is consistent with the Annual Financial Statements audited by the Auditor General. The Annual Report is complete, accurate and is free from any omissions. The Annual Report has been prepared in accordance with the guidelines for annual report as issued by National Treasury.
The Annual Financial Statements (Part E) have been prepared in accordance with the Generally Recognised Accounting Practice standards applicable to public entities. The Accounting Authority is responsible for the preparation of the Annual Financial Statements and for the judgements made in this information.
The Accounting Authority is responsible for establishing and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the Annual Financial Statements. External auditors are engaged to express an independent opinion on the Annual Financial Statements.
In my opinion, the Annual Report fairly reflects the operations, the performance information, the human resource information and the financial affairs of the entity for the financial year ended 31 March 2014.
Mr Sam MorotobaActing Director-General
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Annual Report of the Compensation Fund 201410
6. STRATEGIC OVERVIEW
6.1. Vision
To be a world-class provider of sustainable compensation for occupational injuries and diseases, rehabilitation and re-integration services.
6.2. Mission
Compensation Fund services
6.3. Values
We shall at all times adhere to or live the Batho Pele Principles.
6.4. Strategic outcome oriented goals
Government has agreed on 12 outcomes as the key focus of its work for the period 2009 to 2014. Each outcome has a limited number of measurable high-impact priority outputs and sub-outputs with targets. These 12 outcomes reflect government’s mandate and link up with the 10 Medium-Term Strategic Framework’s (MTSF’s) priorities. There are two outcomes applicable to the Compensation Fund, which formed the basis of its Strategic Plan. The two outcomes identified for the Compensation Fund were:
inclusive citizenship
Based on the two outcomes discussed above, the Compensation Fund has developed four key strategic outcome oriented goals. These outcome oriented goals are priorities which form the basis of the Compensation Fund’s strategic objectives. The strategic outcomes identified will be the results of the Fund’s performance as viewed by the beneficiaries and will be the consequence of achieving the outputs. The table below indicates the alignment of government outcomes, DoL strategic objectives (KRA’s), CF strategic outcomes and CF strategic objectives.
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Annual Report of the Compensation Fund 2014 11
TABLE 1: THE LINKAGE BETWEEN GOVERNMENT, DoL AND CF STRATEGIC GOALS
GOVERNMENT SERVICE DELIVERY
OUTCOMES
DoL STRATEGIC OBJECTIVES
CF STRATEGIC OUTCOMES
CF STRATEGIC OBJECTIVES
Outcome 4: Decent employment through inclusive economic growth
KRA 3: Protecting vulnerable workers
Participate in government initiatives of creating and sustaining decent employment
Promote policy advocacy
Integration of CF within the comprehensive social security reforms
KRA 5: Strengthening social protection
Improve payment of benefits to the beneficiaries of the Fund
Providing an efficient social safety net
Improve the collection of revenue from employers
Improve financial viability
Outcome 12: An efficient, effective and development oriented public service and an empowered and inclusive citizenship
KRA 8: Strengthening the institutional capacity of the Department
Effective administration of the Fund’s operations
Provide professional, efficient and client orientated human resources
Strengthening corporate governance
Improve corporate support and services
Enhance quality and access to COIDA services and information
TABLE 2: CF STRATEGIC OBJECTIVES AND GOALS FOR 2013 – 2018
STRATEGIC OBJECTIVES STRATEGIC OUTPUTS
Providing an effective social safety net
documentation) within 30 days of receiving an invoice by 2016
Policy Framework by 2014
Provide professional, efficient and client-oriented human resource implementation of Work Skills Development Plan (WSP) by 2016
Wellness Strategy by 2016
a 10% vacancy rate by 2016
2016
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Annual Report of the Compensation Fund 201412
STRATEGIC OBJECTIVES STRATEGIC OUTPUTS
Strengthening corporate governance 2016
(people, process, technology)
annually
Procedures
Integration of the Fund within the comprehensive social security reforms by 2016
five days by 2016
receipt by 2016
Promote policy advocacy
Improve financial viability
financial system to improve payment to 30 days by 2016
Improve corporate support and services March 2013
March 2012
Enhance quality and access to COIDA services and information
information
Fund
in, web, walk-in) by 2016
TABLE 2: CF STRATEGIC OBJECTIVES AND GOALS FOR 2013 – 2018 Continued
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Annual Report of the Compensation Fund 2014 13
7. LEGISLATIVE AND OTHER MANDATES
7.1. Constitutional mandate
The mandate of the Compensation Fund is derived from Section 27 (1)(c) of the Constitution of the Republic of South Africa. In terms of this Act, all South Africans have a right to social security. The Compensation Fund is mandated to provide social security to all injured and diseased employees.
7.2. Legislative mandate
The Compensation Fund is a Public Entity of the Department of Labour. The Fund administers the Compensation for Occupational Injuries and Diseases Act No 130/1993 as amended by the COIDA 61/1997. The main objective of the Act is to provide compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees, or for death resulting from such injuries or diseases, and provide for matters connected therewith.
The Fund generates its revenue from levies paid by employers, which consists mainly of annual assessments paid by registered employers on a basis of a percentage or fixed rate of the annual earnings of their employees. The COID Act, however, makes provision for a minimum assessment to ensure that the assessment is not less than the administration costs incurred.
The operations of the Compensation Fund are also affected by the following legislation:
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Annual Report of the Compensation Fund 201414
8. ORGANISATIONAL STRUCTURE
Compensation Commissioner
Mr Shadrack Mkhonto
Acting Director
Internal Audit
Mr Siphiwe Zwane
Director
Risk Management
Ms Katlego Mocwiri
Acting Chief
Director
Operations
Tselane
Acting Chief
Mr Johnny Modiba
Principal Legal
Vacant
Chief Director
Corporate Services
Mr Tshepo
Mkomatsidi
Director
Human Resource
Management
Ms Thembi Moleko
Director
Medical Payments
Mr AK Pillay
Director
Communication &
Stakeholders
Ms Hlonitshwa Mpaka
Acting Director
Medical Services
Ms Dolly Nkabinde
Director
Organisational Effectiveness
Mr Simon Nkhabelane
Director
Compensation
Mr Basimane Dingaan
Director
Financial Reporting
Mr Pitsi Moloto
Acting Director
Financial Control
Mr Mandla Dlamini
Acting Director
Supply Chain Management
Ms Nozipho Zama
Director
Client Care
Vacant
Director
Income
Ms Ella Ntshabele
Mr Johnny Modiba
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Annual Report of the Compensation Fund 2014 15
9. REPORTING FRAMEWORK
10. MINIMISING CONFLICT OF INTEREST
In terms of Chapter 3 of the Public Service Regulations, 2001, designated employees (i.e. members of the Senior Management Service) are required to disclose their registrable interests to their Executive Authorities by 30 April of each year. During the period under review all members of the Senior Management Service (SMS) in the Fund had declared their financial interest as required. In addition, when the Fund procures Goods and Services, all suppliers are required to complete standard bidding documents that require them to disclose any conflict of interest with the Fund or any relationship the members of the bidding company may have with staff employed by the Fund or the State. This information is reviewed during the bid process and any discrepancies noted are managed accordingly.
11. HEALTH, SAFETY AND ENVIRONMENTAL ISSUES
Occupational Health and Safety is dedicated to ensuring that the business risks (operations) across the organisation are identified, evaluated and managed accordingly, and ensure compliance with the OHS Act of 1993 which is enforced by the Department of Labour, corporate governance and other legislation.
The Fund ensured that training of employees on how to handle unsafe environments, took place. It also promoted health and safety awareness among all employees within the organisation. In addition it established precautionary measures to protect employees and the public against potential hazards.
MINISTER OF LABOUR
COMPENSATION COMMISSIONER
AUDIT COMMITTEE
COMPENSATION BOARD
BOARD SUB-COMMITTEES
DIRECTOR GENERAL: LABOUR
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Annual Report of the Compensation Fund 201416
12. CODE OF CONDUCT
Chapter 2 of the Public Service Regulations, 2001 regulates the conduct of Fund staff. The code of conduct acts as a guideline to employees as to what is expected of them from an ethical point of view, both in their individual conduct and in their relationship with others. The purpose of the code of conduct is to enhance professionalism and assist in ensuring confidence in state institutions. During the reporting period the Fund disseminated a copy of the code of conduct through the internal communication channel. The purpose of this was to inform and sensitise staff members about behaviour that is acceptable in the work environment.
13. SOCIAL RESPONSIBILITY
The mandate between PIC and the Fund was concluded and signed off. Over and above the investment initiatives aimed at sustaining the Fund as a going concern, this mandate gives effect to the investment by the Fund in Social Responsibility activities.
The PIC is currently managing two funds for the Compensation Fund, namely, the Compensation Fund (CC) and The Compensation Pension Fund (CP). The Funds are invested at 5% for SRI for CC and 5% for CP. The status at 30 June 2014 was hat there is a total of R1.8 billion of SRI investments in a due diligence phase. These include:
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PART B: PERFORMANCE INFORMATION
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Annual Report of the Compensation Fund 201418
1. INTRODUCTION
The Accounting Authority is responsible for the preparation of the Fund’s performance information and for the judgements made in this information. Measures have been put in place to provide reasonable assurance on the integrity and reliability of performance information. The performance information has been monitored on a quarterly basis and fairly reflects the performance information of the Fund for the financial year ended 31 March 2014.
2. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES
In accordance with the PAA and the general notice issued in terms thereof, AGSA reported significant findings on the performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation, as well as internal control.
The objective of the AGSA in conducting tests was to identify reportable findings regarding the reliability and usefulness of performance information but not to gather evidence to express assurance on these matters. Accordingly, AGSA did not express an opinion or conclusion on these matters.
Refer to Part E, page 106, for the AGSA Audit Report.
3. OVERVIEW OF THE COMPENSATION FUND’S PERFORMANCE
3.1. Service delivery environment
The Directorate: Compensation Benefits is divided into three sub-directorates, namely, Claims Registration, Exempted Employers and Private Employers. The main functions of the Directorate are to register claims for injured/diseased employees, adjudicate upon liability of a claim and pay compensation. This section of the report will be focusing on the aforementioned areas.
3.1.1. Registration and processing of claims
The Fund registered a total of 310,710 claims during the financial year 2013/2014. 260,253 of these claims were adjudicated (84%).
Adjudication is the process of establishing the Fund’s liability with regards to a claim. The process involves requesting additional information where information is not sufficient to establish the validity of a claim, accepting liability or repudiating a claim. The table below gives a comparison for the last three financial years of the claims registered, claims accepted, claims repudiated and claims with outstanding information. The number of claims registered has increased and the reasons for this may be the improved claims system that was launched in 2011, together with the backlog elimination projects that have been embarked upon and also partly the positive impact of decentralisation.
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Annual Report of the Compensation Fund 2014 19
TABLE 3: COMPARISON OF CLAIMS REGISTERED, ACCEPTED AND REPUDIATED FOR 1 APRIL 2011 TO 31 MARCH 2014
COMPENSATION FUND
PERIOD CLAIMS REGISTERED
CLAIMS ACCEPTED
CLAIMS REPUDIATED
CLAIMS WITH OUTSTANDING INFORMATION
1 April 2012 to 31 March 2012 141,437 110,180 129 31,128
1 April 2012 to 31 March 2013 196,509 129,405 356 63,226
1 April 2013 to 31 March 2014 310,710 260,253 88 50,369
3.1.2. Compensation benefits
During the year under review, a total of 304,234 awards were processed for payment, for different benefits as indicated in the tables below. In some claims, different types of benefits were paid in on one claim.
TABLE 4: PENSION
YEAR AMOUNT CAPITALISED
R
MONTHLY PENSION
PAYMENTSR
2011/12 549,000,702 735,859,691
2012/13 330,887,254 689,407,070
2013/14 420,427,753 789,695,914
TABLE 5: TEMPORARY TOTAL DISABILITY
YEAR AMOUNT PAID DURING THE YEAR
R
2011/12 94,330,529
2012/13 83,618,570
2013/14 69,752,890
TABLE 6: PERMANENT DISABILITY
YEAR AMOUNT PAID DURING THE YEAR
R
2011/12 59,749,160
2012/13 88,701,628
2013/14 87,029,325
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Annual Report of the Compensation Fund 201420
TABLE 7: CONSTANT ATTENDANCE ALLOWANCE
YEAR AMOUNT PAID DURING THE YEAR
R
2011/12 19,719,220
2012/13 13,847,779
2013/14 14,552,688
3.1.3. Benefits improvement
The Compensation Fund Board has reviewed the existing benefits and has made some remarkable increases in the benefits to be paid to injured employees and dependents in the form of lump sums, loss of earnings and monthly pensions. Increases include the following:
- An increase from R26,040 per month to R27,707 per month in respect of the maximum earnings level on which the compensation for temporary total disablement is based
- An increase from R14,584 per month to R15,517 per month in respect of the maximum monthly earnings level on which the compensation for permanent disablement for 30% and less is based
- An increase from R26,040 per month to R27,707 per month in respect of the maximum monthly earnings level on which the compensation for permanent disablement for 31% to 100% is based
- An increase from R3,645 per month to R3 ,878 per month in respect of the minimum earnings level on which compensation for the calculation of temporary total disablement, permanent disablement for 31% to 100% and fatal injuries is based
- An increase from R3.645 per month to R3,878 per month in respect of the minimum earnings level on which compensation for the calculation of permanent disablement for 30% and less is based
- The maximum benefit payable for Partial Dependency increased from R112,527 to R119,729
- The maximum funeral benefit increased from R14,539 to R15,470
- The minimum monthly value for free food increased from R200 to R213 per month and the minimum monthly value in respect of free quarters increased from R89 to R95 per month
- The constant attendance allowance for pensioners who need constant nursing remains at R1,550 per month, in addition to the monthly pension
The adjustment of benefits has been determined on the basis of the actuarial investigations and recommendations by the Compensation Fund Board. The increases are effective from April 2014.
3.1.4. Decentralisation of COIDA Services
The Compensation Fund has decentralised claims processing services to all nine provinces with the aim of being accessible to its stakeholders and to improve claims processing turnaround time. The decentralisation project started in earnest from October 2013 and most of the staff has relocated to the provinces of their choice. HO is supporting them. Challenges of infrastructure, office space, change management, etc. are being addressed by different work streams on the decentralisation project to ensure smooth transition.
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Annual Report of the Compensation Fund 2014 21
TABLE 8: PRODUCTION AND STATISTICS – COMPARISON OF PROVINCIAL DECENTRALISATION STATISTICAL REPORT
2011/12 2012/13 2013/14
PROVINCE REGISTERED REGISTERED REGISTERED
Eastern Cape 24,452 781 1,300
Free State 3,516 699 693
Gauteng, Pretoria 93,407 5,775 11,957
Gauteng, Johanneburg 1,685 5,789 48
KwaZulu-Natal 4,853 2,549 3,530
Limpopo 1,672 478 551
Mpumalanga 3,362 831 1,765
Northern Cape 870 333 275
North West 2,561 853 662
Western Cape 4,906 4,240 4,129
Other (unspecified) 0 4,256 285,800
TOTAL 164,532 196,509 310,710
The above table is the comparison of claims registered in the province in question from 2011/12 until 2013/14. This illustrates the number of claims each province has handled and this depends on the size of the province. The number of claims where the province is unspecified includes claims registered by personnel at head office, while they were awaiting deployment to various provinces. Most staff only relocated after October 2013. Claims were still being registered since the start of the financial year.
ChallengesDecentralisation of COID services is not finalised.
Way forward
3.1.5. Compliance with COIDA: Monitoring of exempted employers and unreported accidents
The Fund has determined Section 88 administrative costs for all government departments, mutual associations and exempted municipalities on claims registered during 2013/14 to the value of R3,456,000.
3.1.6. Contributions to the social security comprehensive reforms
The Compensation Fund is a member of the Inter-departmental Task Team on comprehensive social security reforms. The framework for the comprehensive social security reforms has been developed. The Compensation Fund has made contributions to the Consolidated Government Paper, to the Road Accident Benefits Scheme Bill and to the National Health Insurance.
The Fund participated in the SADC conference on the portability of social security benefits, organised by the Southern Africa Trust in partnership with Food Foundation and Southern Africa Mine Workers Association (SAMA). The objectives of the conference were to, amongst others:
Code of Social Security on portability of social security benefits
compensation and explore collaboration for supporting mineworkers
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Annual Report of the Compensation Fund 201422
TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14
A task team was appointed to chart the way forward in finding mechanisms to support mine workers and their dependents. The task team will commence with its activities in the new financial year.
3.1.7. Prevention of accidents through strengthening of civil society fund
In its quest to advocate policy on injury on duty and occupational health, the Compensation Fund has funded 18 non-profit organisations to train union shop stewards, employees and the communities on the Compensation for Occupational Injuries and Diseases Act as well as on Occupational Health and Safety Act. Of the 18 projects, four projects were running from 2012 while the remaining 14 were approved during 2013 and some only started in April 2014.
The Strengthening Civil Society Fund Committee (SCSF) in the Department is responsible for assessing and approving project proposals from various organisations.
Since all these new projects were only approved in December 2013, most of them started in January 2014 and their reports will be available in the new financial year as they are planned to operate over a period of 12 months.
As part of monitoring and evaluation, the Compensation Fund developed COIDA guidelines as a basis for developing training material to be used by the projects. Spreadsheets for claims enquiries were also developed for all the projects to monitor and evaluate the impact of the training workshops. The Fund participated in training conducted nationwide and in radio interviews with community and national radio stations in five languages.
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Western Cape 1. Swellendam Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
December 2013 and workshops started from January 2014
2. Workers World Media Productions (WWMP)
This project focuses on training community radio stations, local TV stations and the community generally on OHS and COIDA countrywide
Achievements and impact:
and support to the local community based presenters and producers of labour shows
production of educational features in five languages: English, Afrikaans, isiXhosa, isiZulu and Sesotho
SAfm, Cape Town TV, Medica Advice centres in Khayelithsa and Alexander were involved
Western Cape
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Annual Report of the Compensation Fund 2014 23
TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14 Continued
Free State
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Free State 3. Mangaung Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas for 12 months
December 2013, workshops started from January 2014
the 2014 financial year
4. Maokeng Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas for 12 months. To also elect farmworkers safety representatives and establish Health and Safety Committees.
in Kroonstad, Edenville, Bothaville and Wesselsbron, Koppies and Steynsrus
R150,000 was spent with the first tranch
ranch workshops in January 2014
accidents is still rife
5. Qholaqhwe Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
December 2013 and workshops started from January 2014
Farm, Itekeng, Vrede, Clocolan, Bohlokong and Marquard
accidents and illiteracy
Mpumalanga
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Mpumalanga 6. Nkomazi Advice Centre
To advocate COIDA and OHS policies by training shop stewards, NGOs, factory workers and farm workers in rural areas
December 2013 and workshops started from January 2014
the 2014 financial year
7. Leandra Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
December 2013 and workshops started from January 2014
the 2014 financial year
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Annual Report of the Compensation Fund 201424
TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14 Continued
Limpopo
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Limpopo 8. Mamadi Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
December 2013 and workshops started from January 2014
9. Opret Advice Centre To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
OHS workshops in eight villages and farms and 439 workers participated
Ga-Mokaba, Mzobane Ext. 17 and Ext 20, Hospital view, Zone 2 Mahwelereng, Ga- Madiba, Masodi, Mapele Matlou and Mapela (Mzobane 2). The Fund participated in the Mahwelereng training workshop.
tranch.
accidents and illiteracy
North West
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
North West 10. Lethabong Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
tranch, 681 farm workers participated in Rietvlei, Brandvlei, Tarlton, Manharaand, Magaliesburg, Mazista, Kroomdraai, Koedoskop and Thabazimbi.
Challenges:
submitted at the various workshops
inspection and enforcement unit
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Annual Report of the Compensation Fund 2014 25
TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14 Continued
KwaZulu-Natal
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
KwaZulu-Natal 11. Bergville Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
December 2013
training workshops from April 2014
12. University of KZN This project is based in the University of KZN, focusing in the chemical industry which has substantial health and safety risks and hazards.
since 2012
conducted with 333 participants from December 2013 to March 2014
COIDA and OHS was conducted in March 2014 wherein 40 shop stewards from various trade unions attended
tranch to complete its operations
13. Mooi River The Department of Environmental Health has a strong and viable relationship with trade unions through education on OHS and COIDA. The main objective of the project is to develop curricula in OHS and COIDA for the chemical industry using union representatives as pilot subjects for the modules.
December 2013 and to start from April 2014
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Annual Report of the Compensation Fund 201426
3.1.8. Medical Services
The strategic goal of the Medical Services Directorate is to process medical expenses and provide medical advice/opinion on occupational injuries and diseases to all claims processing sub-directorates and monitoring of compliance with COIDA legislation, Chapters 7, 8, Sections 72 to 79.
The Medical Services Directorate consists of two units: Medical Payments and Medical Services, consisting of medical officers and nurses. The Directorate focuses on the following:
TABLE 9: STRENGTHENING CIVIL SOCIETY FUND PROJECTS REPORT FOR 2013/14 Continued
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Northern Cape 14. Sika Sonke Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
December 2013
the 2014 financial year
15. Hope Town Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
December 2013, to start from April 2014
16. Marydale Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in rural areas
December 2013, to start from April 2014
Northern Cape
PROVINCE NAME OF PROJECT MAIN OBJECTIVE PROGRESS AND ACHIEVEMENTS
Eastern Cape 17. Aliwal North Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
in December 2013. Training workshops to commence from April 2014
18. Matatiele Advice Centre
To advocate COIDA and OHS policies by training shop stewards and farm workers in the rural areas
December 2013, workshops started from January 2014
the 2014 financial year
Eastern Cape
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Annual Report of the Compensation Fund 2014 27
3.1.8.1. Medical Services performance
TABLE 10: MEDICAL SERVICES PERFORMANCE
CLAIM TYPE TOTAL RECEIVED
TOTAL PROCESSED
TOTAL DONE IN 10 DAYS
TOTAL CARRIED OVER
Reopening 2,281 1,377 1,064 278
Chronic medications 343 297 255 33
Prosthesis 2,020 1,660 1,016 118
Unschedulled pds 882 401 253 377
Ods 3,479 778 698 39
Complex accounts 247 163 106 51
TOTAL 9,252 4,676 3,392 896
3.1.8.2. Medical payments
During the financial year under review, 1,817,383 medical invoices were received, compared to 1,003,050 in the previous financial year 2012/2013, of which a total of 684,169 medical invoices were approved within 60 days of receipt. The value of approved medical accounts was R2.1 billion compared to R1.5 billion in 2012/2013. The average turnaround time in the current financial year is 38%, compared to the 67% achieved in the last financial year. The percentage of ICM is low because of the new way of uploading electronic files, as we strive for more streamlined and electronic methods of improving the claims processing.
TABLE 11: MEDICAL CLAIMS COMPARISON FOR THE LAST THREE FINANCIAL YEARS
YEAR NUMBER OF PAYMENTS RAND VALUE
2011/12 824,924 R1,882,372,383
2012/13 934,834 R1,501,606,165
2013/14 1,817,383 R2,129,333,441
3.1.8.3. Tariffs for Medical Aid Expenses
The tariffs of fees for medical expenses are revised on an annual basis after consultation with the healthcare service provider associations.
For 2012/2013, the tariff increase approved was 6% whereas in 2013/2014 it is 6.4%.
3.1.9. Legal Services
The objective of Legal Services is to provide legal support and legal administration to the Compensation Fund to ensure compliance with the provisions of the COIDA.
Legal Services is sub-divided into three sub-sections, namely:
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Annual Report of the Compensation Fund 201428
3.1.9.1. Litigation
This section is responsible for management of litigation and contracts with the intent to avoid unnecessary legal proceedings against the Fund and to ensure compliance with the Act.
215 notices of motion, summons and letters of demand were received and 26 have been finalised. The remaining applications are active as pleadings are being exchanged.
3.1.9.2. Third-party
The Third-party section recovers moneys from the third parties, specifically the Road Accident Fund where an employee was involved in a motor vehicle accident whilst on duty in terms of Section 36 of the COIDA. If liability for compensation is accepted, the Fund will pay compensation and recover what it has paid from the Road Accident Fund (RAF).
3.1.9.3. Contracts and legal opinions
The section is responsible for the drafting/vetting of contracts to ensure compliance with the relevant legislations and ensure that Supply Chain procedures have been complied with. It is also responsible for legal advice to avoid unnecessary litigation.
3.1.9.4. Hearings
In terms of Section 91 any person who is affected by the decision of the Director-General relating to a claim for compensation, may lodge an objection against such decision which may be reviewed in terms of Section 90 and or be heard by the Compensation Fund tribunal. The tribunal decisions can only be reviewed and appealed in the High Court.
Section 91 objections:
Of the 1,219 files outstanding, 50 employees were untraceable, 172 require further medical advice and referral, and 577 are already enrolled and due for hearing by the tribunal. In terms of Section 56 employees are entitled to claim increased compensation in the event where an accident was caused by the negligence of the employer or a person deemed to be a supervisor/manager. Such claims are adjudicated in a similar process as Section 91 objections.
Section 56 applications:
Close to R3.4 million was paid to panel members, witnesses, recording firms, etc. for their participation in the hearing processes.
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Annual Report of the Compensation Fund 2014 29
3.1.10. Client Services
3.1.10.1. Implement customer services at customer touch points
The phone-in, walk-in and web-mail support channels were implemented. The benefits will be easily accessible once all systems are integrated and information is available at the touch of a button.
3.1.10.2. Improve customer satisfaction score by 40% of baseline
Customer feedback ratings is 80% for the year.
3.1.11. Communication
During the year under review, the Fund undertook a number of communication initiatives. These were aimed at ensuring that there is a two-way flow of information between the Fund and its stakeholders.
Educational campaigns conducted
Educational and awareness campaigns have been conducted through different media nationally to educate all stakeholders on the Fund’s services, and on their rights and responsibilities. These campaigns were conducted in all the official languages to ensure maximum reach.
Employees educational campaign
The objective of this campaign was to intensify communication, educate employees about their rights and responsibilities and provide information on how to access services from the Fund.
The campaign ran on the following platforms:
audience)
(Sowetan and Daily Sun)
shopping malls)
Beneficiaries’ educational campaign
The objective of this campaign was to educate the Compensation Fund beneficiaries and the public at large on procedures they should follow when lodging claims with the Fund. It also outlined necessary documents that need to be submitted when reporting an occupational injury, diseases or fatality.
The campaign ran on the following platforms:
audience)
buses advertising, commuta radio stations and commuta screens situated at the taxi ranks and train stations)
Cell C)
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Annual Report of the Compensation Fund 201430
Return of Earnings (ROE) campaign
The campaign informed employers about the electronic submission of their Annual Returns and the deadline thereof. The employers were also informed about the newly designed electronic Letter of Good Standing which can be downloaded remotely through the website once they have paid their assessments. Awareness on how to identify the security features of this electronic letter was provided to ensure that employers are not defrauded.
The ROE campaign ran on the following platforms:
Media Relations
During this financial year, the Fund had direct interaction with clients through nationwide community radio talk show programmes where clients had a chance to obtain information directly from the Fund. These programmes were conducted in all the official languages to ensure maximum reach.
Three (3) interviews were coordinated for the Compensation Commissioner and profiled on the following business magazines:
21 media enquiries on Fund related issues were responded to and published on both print and electronic media.
Marketing
The Fund participated in the following events where its services were displayed: Ministerial Imbizos in Khayelitsha and Saldana Bay in November 2013 and March 2014, respectively. In addition, exhibitions were held at conferences in KwaZulu-Natal and Gauteng provinces in September 2013 and March 2014, respectively.
3.2. Overview of the organisational environment
During the year under review, the new organisational structure for the Fund was implemented on the Personnel and Salary Administration (PERSAL) system with effect from 1 April 2013. As part of the implementation of the new structure, a number of newly created positions in the middle and senior management levels were prioritised for advertisement in an endeavour to strengthen capacity. In addition, the Placement Panel which was established towards the end of 2012/13 financial year commenced its work of moving employees from the old to the new organisational structure.
As part of the placement process, directorates were invited to the meetings of the Placement Panel where they presented proposals on the positions to which employees in their components could be placed in line with their competencies. Such proposals for placement took place in relation to posts on the same salary levels. Once the Placement Panel was satisfied that the proposals were in line with the Placement Framework and Procedure for employees of the Department of Labour (SR 12 and below), submissions were prepared for the approval of direct placement.
It must also be noted that the need to deliver medical and compensation activities effectively has resulted in the creation of integrated posts. These posts were subjected to a job evaluation process which resulted in the entry level being salary level 6 for claims processors. It is imperative to note that the majority of employees in the Directorates: Medical and Compensation were employed on salary level 5. This matter coupled with the fact that entry level positions in provinces in these two areas, were salary level 6 created a challenge.
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Annual Report of the Compensation Fund 2014 31
A proposal was made to organised labour through the established Placement Panel that choice forms should be issued to all the employees in the affected directorates, including those on SR5 to, identify the province where they would like to permanently relocate to. This information together with performance assessment results would be utilised to approach the Minister of Labour with a request to upgrade these employees into newly created salary level 6 posts in provinces. However, upon the analysis of the choices made by employees it was realised that with respect to the Gauteng province there were more employees than the number of posts available on SR 6 in particular. In light of the above, it became clear that the submission to the Minister would have to be delayed in order to ensure that all the SR 5 employees affected are upgraded with effect from the same date. Failure to take this approach would have resulted in grievances being lodged as affected employees would have demanded parity.
In order to improve service delivery, the Fund embarked on a consultative process with Directorates to identify challenges impacting on its ability to function effectively. This process identified a number of challenges which had affected the performance of the Fund. Among some of the most critical challenges were inefficient IT systems, turnaround times in the processing of compensation claims, backlogs in processing claims and payments, human capacity constraints, document and records management system, confrontational nature of engagement with trade unions, delays in the implementation of the structure, non-compliance by stakeholders with regards to incomplete information by employers, failure by employers to submit their annual returns, delay and/or non-reporting of accidents and fraudulent activities which were still negatively affecting the finalisation of employer assessments and the debt book which continues to increase. This process culminated in the development of a Turnaround and Modernisation Strategy.
3.3. Revenue
TABLE 12: SUMMARY OF REVENUE GENERATED
2013/14 2012/13
SOURCESOF
REVENUE
ESTIMATE (TARGET)
R’000
REVENUEGENERATED
R’000
VARIANCE(OVER)/UNDERR’000
ESTIMATE (TARGET)
R’000
REVENUEGENERATED
R’000
VARIANCE (OVER)/UNDERR’000
Levies from employers
5,227,207 7,974,596 (2,747,389) 4,781,484 6,428,307 (1,646,823)
Interest 268,741 0 268,741 230,057 224,100 5,957
Penalties 96,042 211,040 (114,998) 169,836 499,594 (329,758)
TOTAL 5,591,990 8,185,636 2,593,646 5,181,377 7,152,001 (1,970,624)
Revenue generated increased by 14% compared to the previous financial year. The reason for the increase in collections, was due to the introduction of the ROE website two years ago. Interest on late payments was not charged for the year under review. Penalties for late submission of annual returns was levied at 10%.
TABLE 13: SUMMARY OF REVENUE COLLECTIONS
2013/14 2012/13
SOURCESOF
REVENUE
DEBT BOOKR’000
REVENUECOLLECTED
R’000
VARIANCE (OVER)/UNDERR’000
DEBT BOOKR’000
REVENUECOLLECTED
R’000
VARIANCE (OVER)/UNDERR’000
Levies from employers
8,805,998 7,249,618 1,556,380 8,839,614 5,786,426 3,053,188
Impairment (8,490,966) - - (6,003,677) - -
TOTAL 315,032 7,249,618 (6,934,586) 2,835,963 5,786,937 (2,950,463)
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Annual Report of the Compensation Fund 201432
The total debt book excludes a provision for assessments raised as compared to the inclusion of provision for assessments not raised of R947 million. The provision for assessment raised is an estimate of assessment not raised as a result of mainly annual returns not submitted by employers or assessed timeously.
The overall debt collection has increased by 25% as compared to the previous financial year. The increase is attributable to the enforcement of the COID Act as well as intensifying debt collection procedures by strengthening the criteria for issuing letters of good standing.
3.4. Payments
TABLE 14: SUMMARY OF EXPENDITURE BY PROGRAMME
2013/14 2012/13
PROGRAMMENAMER’000
BUDGETR’000
ACTUALEXPENDI-
TURER’000
(OVER)/UNDEREXPENDITURE
R’000
BUDGETR’000
ACTUALEXPENDI-
TURER’000
(OVER)/UNDER
EXPENDITURER’000
Administration 2,296,334 727,022 1,569,312 1,007,932 777,496 230,436
Medical Claims 2,700,000 2,129,333 570,667 3,000,000 1,501,606 1,498,394
CompensationClaims
793,969 591,763 202,206 1,864,061 480,187 1,383,874
TOTAL 5,790,303 3,448,118 2,342,185 5,871,993 2,759,299 3,112,704
During the year under review the Fund had a saving of R2.3 million. Most of the savings came from administration to the amount of R1.6 million.
3.5. Capital Investment maintenance and asset management plan
The Fund is required to develop a capital investment and asset management plan. During the period under review, the Fund developed the capital investment and demand plans. The plans will, however, only be implemented in the next financial year.
The upgrade of the Bisho building was completed on 24 March 2014. This involved the creation of offices and replacement of tiles.
There are currently no infrastructure projects in progress. There are also no plans to close down or down-grade any current facilities. However, the Fund plans to lease the current facilities to the Department of Public Works and occupy new buildings in the nexr five years.
Minor operating maintenance were made to the current infrastructure.
There were no major disposals embarked upon during the year under review. Public Private Partnership assets have been taken over from Department of Labour.
Some of the measures taken to ensure that the Fund’s asset register remained up-to-date during the period under review was the performance of monthly reconciliations.
Currently there is no backlog to be addressed during the period under review.
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Annual Report of the Compensation Fund 2014 33
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i dd 33 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201434
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tran
che
fund
ing
was
re
leas
ed. T
he
Fun
d pa
rtic
ipat
ed
in th
ree
wor
ksho
ps a
s pa
rt o
f mon
itorin
g an
d ev
alua
tion,
na
mel
y,
Leth
abon
gP
roje
ct in
D
elar
eyvi
lle;
Opr
et P
roje
ct
in M
okop
ane
and
Qho
laqh
we
Pro
ject
in V
rede
, F
ree
Sta
te.
Fun
d, m
onito
r an
d ev
alua
te 1
2 pr
ojec
ts in
all
prov
ince
s
Ach
ieve
d18
pro
ject
s w
ere
fund
ed,
13 m
onito
red.
E
valu
atio
n fo
r th
e fir
st tr
anch
e w
as p
erfo
rmed
fo
r M
aoke
ng;
Qho
laqh
we;
Opr
et a
nd
Leth
abon
g;U
KZ
N a
nd
Wor
kers
Wor
ld
Med
ia P
rodu
ctio
n co
ntin
ued
from
th
e pr
evio
us y
ear
and
wer
e al
so
eval
uate
d.
N/A
N/A
Mor
e th
an
12 p
ropo
sals
re
ceiv
ed q
ualif
ied
for
fund
ing.
Tw
o of
the
21 p
roje
cts
cont
inue
d fr
om
the
prev
ious
yea
r. T
he p
roje
cts
wer
e on
ly a
ppro
ved
in D
ecem
ber
2013
hen
ce
som
e co
uld
not
com
men
ce in
20
13 w
hile
oth
ers
star
ted
late
.
CO
MP
EN
SA
TIO
N B
EN
EF
ITS
Con
tinue
d
i dd 34 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 35
CO
MP
EN
SA
TIO
N B
EN
EF
ITS
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E A
N E
FF
ICIE
NT
SO
CIA
L S
AF
ET
Y N
ET
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impr
ove
com
pens
atio
nbe
nefit
s
Rev
iew
com
pens
atio
nbe
nefit
s by
end
of
finan
cial
yea
r
Ach
ieve
dB
enef
its in
crea
se
gaze
tte w
as
appr
oved
on
time
and
impl
emen
ted
by th
e du
e da
te
Rev
iew
com
pens
atio
nbe
nefit
s by
end
of
finan
cial
yea
r
No
t A
chie
ved
Onl
y pu
blis
hed
in
Mar
ch 2
014
for
publ
ic c
omm
ents
.T
he fi
nal p
ropo
sal
was
sen
t to
the
Min
iste
r af
ter
26
Apr
il 20
14 fo
r ap
prov
al
Ben
efits
cou
ld
not b
e pu
blis
hed
in D
ecem
ber
for
publ
ic
com
men
ts d
ue to
un
avai
labi
lity
of
actu
aria
l rep
ort
N/A
The
ben
efits
w
ill b
e se
nt
to M
inis
ter
for
appr
oval
afte
r 26
Apr
il, th
e be
nefit
s w
ill b
e pa
id in
May
but
re
tros
pect
ive
from
Apr
il 20
14
i dd 35 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201436
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E A
N E
FF
ICIE
NT
SO
CIA
L S
AF
ET
Y N
ET
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Fin
alis
e 10
0% o
f m
edic
al c
laim
s (v
alid
, acc
urat
e an
d co
mpl
ete
docu
men
tatio
n)fin
alis
ed w
ithin
30
days
of r
ecei
ving
an
invo
ice
by
2016
% o
f med
ical
cl
aim
s fin
alis
ed
with
in n
umbe
r of
mon
ths
of
rece
ivin
g an
in
voic
e
No
t A
chie
ved
(6
7%)
Out
of 1
,003
,050
m
edic
al c
laim
s re
ceiv
ed, 6
70,3
65
wer
e pa
id w
ithin
tw
o m
onth
s at
an
am
ount
of
R1,
277,
310,
467
90%
of m
edic
al
clai
ms
final
ised
w
ithin
two
mon
ths
of r
ecei
ving
an
invo
ice
No
t A
chie
ved
(37%
)O
ut o
f 1,8
71,3
83
med
ical
cla
ims
rece
ived
, 684
,169
w
ere
paid
with
in
two
mon
ths
at a
n am
ount
of
R2,
129,
333,
441
53%
Dup
licat
e an
d un
acce
pted
acco
unts
. Man
ual
proc
essi
ng.
Una
vaila
bilit
y of
do
cum
ents
in
the
syst
em. I
T
chal
leng
e. C
laim
s re
gist
ered
with
pa
rt B
del
ays
adju
dica
tion.
Sys
tem
s up
date
of
pay
men
ts.
Unr
egis
tere
dcl
aim
s. In
corr
ect
calc
ulat
ion
of
turn
arou
nd.
Slo
wne
ss o
f th
e IT
sys
tem
s in
pro
cess
ing
paym
ents
.
30%
New
IT s
yste
m
bein
g pi
lote
d to
add
ress
pr
oces
sing
of
com
pens
atio
ncl
aim
s an
d w
ill b
e de
ploy
ed m
id-
year
.
ME
DIC
AL
SE
RV
ICE
S
i dd 36 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 37
ME
DIC
AL
SE
RV
ICE
S C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E A
N E
FF
ICIE
NT
SO
CIA
L S
AF
ET
Y N
ET
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Pro
vide
med
ical
ad
vice
on
all
med
ical
cla
ims
with
in 2
4 ho
urs
by 2
016
% m
edic
al a
dvic
e on
all
med
ical
cl
aim
s pr
ovid
ed
with
in s
peci
fied
time
No
t A
chie
ved
33%
Out
of 1
3,55
0 re
ques
ts fo
r m
edic
al a
dvic
e on
med
ical
cla
ims
rece
ived
, 4,4
48
wer
e fin
alis
ed
with
in 1
5 da
ys
80%
med
ical
ad
vice
on
all
med
ical
cla
ims
prov
ided
with
in
10 d
ays
No
t A
chie
ved
73%
Out
if 4
,676
re
ques
ts fo
r m
edic
al a
dvic
e on
med
ical
clia
ms
rece
ived
, 3,2
92
wer
e fin
alis
ed
wih
in 1
0 da
ys
7% IT s
yste
m
chal
leng
es.
Ses
sion
doc
tors
no
t app
oint
ed
due
to d
elay
ed
SC
M p
roce
sses
an
d st
aff
shor
tage
.
40%
SC
M to
pro
cess
ap
poin
tmen
t of
sess
ion
doct
ors.
In
crea
se n
umbe
r of
inte
rns
to
capt
ure
mor
e do
cum
ents
whe
n sy
stem
is
wor
king
. D
ecen
tral
isat
ion
and
fillin
g of
all
post
s in
the
new
st
ruct
ure
Dev
elop
a
reha
bilit
atio
nan
d re
inte
grat
ion
polic
y fr
amew
ork
and
part
icip
ate
in c
onsu
ltativ
e pr
oces
ses
by
2014
Sta
keho
lder
cons
ulta
tion
and
wor
ksho
ps
Par
tial
lyA
chie
ved
The
cha
pter
on
reha
bilit
atio
nha
s be
en a
dded
to
CO
IDA
am
endm
ents
Sub
mis
sion
of t
he
draf
t Pol
icy
to th
e M
inis
ter
No
t A
chie
ved
The
Pol
icy
has
not b
een
draf
ted,
on
e of
the
prer
equi
site
s fo
r th
e ne
w P
olic
y is
ben
chm
arki
ng
with
oth
er
coun
trie
s an
d to
alig
n C
OID
A
Sch
edul
e 2
with
th
e A
MA
gui
des
The
Pol
icy
has
not b
een
draf
ted,
on
e of
the
prer
equi
site
s fo
r th
e ne
w P
olic
y is
th
e be
nchm
arki
ng
with
oth
er
coun
trie
s an
d to
alig
n C
OID
A
Sch
edul
e 2
with
th
e A
MA
gui
des
N/A
CF,
RM
A a
nd
FE
MA
med
ical
te
am h
ave
met
to
com
men
ce
disc
ussi
on o
n al
igni
ng S
ched
ule
2 w
ith th
e A
MA
gu
ides
i dd 37 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201438
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
95%
com
plia
nce
with
the
perf
orm
ance
man
agem
ent
syst
em a
nnua
lly
Ful
l com
plia
nce
and
enfo
rcem
ent
of th
e pe
rfor
man
cem
anag
emen
tpo
licy
Ach
ieve
dN
atio
nal T
arge
t of
95%
ach
ieve
d
2012
/13
96%
firs
t se
mes
ter
asse
ssm
ents
wer
e re
ceiv
ed(9
29/9
68)
98.6
5%ag
reem
ents
wer
e re
ceiv
ed
(955
/968
)
95%
com
plia
nce
and
enfo
rcem
ent
of th
e pe
rfor
man
cem
anag
emen
tpo
licy
No
t A
chie
ved
2013
/14
69/9
24 (
7.47
%)
855/
924
(ass
essm
ents
rece
ived
and
fin
alis
ed)
(93%
)
Per
form
ance
asse
ssm
ents
are
st
ill o
utst
andi
ng
due
to n
on-
com
plia
nce
by
prog
ram
mes
N/A
To e
nfor
ce
com
plia
nce
thro
ugh
disc
iplin
ary
actio
n ag
ains
t no
n-co
mpl
ying
prog
ram
mes
(war
ning
lette
rs
issu
ed)
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T
i dd 38 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 39
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impr
ove
com
pete
ncy
leve
ls o
f CF
st
aff b
y 82
%
alig
nmen
t and
im
plem
enta
tion
of w
ork
skill
s de
velo
pmen
t pla
n (W
SP
) by
201
6
% o
f ide
ntifi
ed
need
s ad
dres
sed
as p
er P
DP
al
igne
d w
ith W
SP
Ach
ieve
d11
% o
f the
id
entif
ied
trai
ning
ne
eds
wer
e ad
dres
sed.
Six
(on
e ge
neric
and
fiv
e fu
nctio
nal)
trai
ning
nee
ds
wer
e ad
dres
sed
durin
g 20
12/1
3.31
Em
ploy
ees
have
bee
n tr
aine
d du
ring
Qua
rter
4.
Gen
eric
trai
ning
: 11 F
unct
iona
ltr
aini
ng: 2
0
82%
of i
dent
ified
ne
eds
addr
esse
d as
per
PD
P
alig
ned
with
WS
P(4
8 tr
aini
ng
need
s w
ere
iden
tifie
d)
Ach
ieve
d82
%48
of t
he
iden
tifie
d tr
aini
ng
need
s w
ere
addr
esse
d
N/A
N/A
N/A
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T C
ontin
ued
i dd 39 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201440
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
tin
tern
ship
/le
arne
rshi
ppr
ogra
mm
e
Ach
ieve
d11
1 In
tern
s w
ere
appo
inte
d in
to
the
inte
rnsh
ip
prog
ram
me
100
Inte
rns
No
t A
chie
ved
90 In
tern
s w
ere
empl
oyed
as
at
31 M
arch
201
4 (9
0%)
The
rea
son
why
no
t all
100
inte
rns
wer
e em
ploy
ed,
is th
at 1
0 po
sts
wer
e re
serv
ed
for
the
pilo
t im
plem
enta
tion
of th
e U
meh
luko
sy
stem
, the
pr
ojec
t’s
impl
emen
tatio
ndi
d no
t pro
ceed
as
pla
nned
21 In
tern
sD
raft
Inte
rnsh
ip
Impl
emen
tatio
nP
rogr
amm
e ha
s be
en d
evel
oped
to
gui
de m
ento
rs
and
othe
r ro
le
play
ers
on
the
effe
ctiv
e im
plem
enta
tion
of
the
prog
ram
me.
T
he in
tern
ship
im
plem
enta
tion
prog
ram
me
will
be
impl
emen
ted
in th
e 20
14/1
5 fin
anci
al y
ear.
i dd 40 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 41
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Ach
ieve
a
cond
uciv
ew
orki
ngen
viro
nmen
t by
impl
emen
ting
an e
mpl
oyee
w
elln
ess
stra
tegy
by
201
6
Em
ploy
eew
elln
ess
stra
tegy
im
plem
ente
dan
nual
ly
Ach
ieve
dsi
x re
ferr
als
wer
e re
ferr
ed to
EH
WP
in
Hea
d O
ffice
. All
empl
oyee
s w
ere
assi
sted
and
gi
ven
all p
ossi
ble
feed
back
.
Impl
emen
tP
ILLA
R 3
Ach
ieve
d10
% o
f the
E
HW
P w
as
impl
emen
ted,
mon
thly
GE
MS
vi
sits
, Wor
ld A
ids
day
part
icip
atio
n,
bloo
d do
natio
ns,
spor
ts a
ctiv
ities
The
10%
of
the
EH
WP
pr
ogra
mm
es w
as
not a
chie
ved
due
to c
apac
ity
cons
trai
nts.
EH
WP
is a
new
ly
esta
blis
hed
unit
N/A
The
Fun
d ha
s ad
vert
ised
two
new
ly c
reat
ed
post
s of
Dep
uty
Dire
ctor
and
A
ssis
tant
Dire
ctor
fo
r th
e E
HW
P
in p
roce
ss o
f be
ing
fille
d in
the
2014
/15
finan
cial
ye
ar
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T C
ontin
ued
i dd 41 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201442
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
tre
crui
tmen
tan
d re
tent
ion
stra
tegy
thro
ugh
mai
nten
ance
of
7% v
acan
cy r
ate
by 2
016
% v
acan
cy r
ate
mai
ntai
ned
annu
ally
Ach
ieve
dV
acan
cy r
ate
is
2.25
% a
s at
31
Mar
ch 2
013
Mai
ntai
n 7%
va
canc
y ra
teN
ot
Ach
ieve
dV
acan
cy r
ate
=
24.9
2%To
tal a
ppro
ved
=
690
Tota
l fill
ed =
518
Tota
l vac
ant =
17
2P
rogr
ess
on
adve
rtis
ed p
osts
:66
pos
ts
adve
rtis
ed12
pos
ts fi
lled
101
post
s ar
e va
cant
an
d no
t yet
ad
vert
ised
due
to
res
truc
turin
g an
d pl
acem
ent
proc
ess
in th
e F
und.
60 p
osts
are
in
pro
cess
of
bein
g fil
led
and
the
reas
on fo
r va
rianc
e, is
de
lay
by c
erta
in
dire
ctor
ates
in
final
isin
g th
e re
crui
tmen
tan
d se
lect
ion
proc
esse
s.
Vac
ancy
rat
e of
22
.67%
Per
form
ance
to d
ecre
ase
Com
pens
atio
nF
und
vaca
ncy
rate
has
bee
n es
cala
ted
to s
enio
r m
anag
emen
tle
vel
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T C
ontin
ued
i dd 42 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 43
HU
MA
N R
ES
OU
RC
E M
AN
AG
EM
EN
T C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
VID
E P
RO
FE
SS
ION
AL,
EF
FIC
IEN
T A
ND
CLI
EN
T O
RIE
NTA
TE
D H
UM
AN
RE
SO
UR
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
tE
mpl
oym
ent
Equ
ity P
lan
by
2016
Elim
inat
ew
ork
plac
e di
scrim
inat
ory
and
soci
al
prej
udic
e an
d ac
hiev
e re
alis
tic
EE
targ
ets
Ach
ieve
dE
HW
P &
GD
Y
mee
tings
wer
e at
tend
ed a
nd
inpu
ts g
iven
.In
puts
wer
e gi
ven
on D
isab
ility
P
olic
y.E
E ta
rget
s ar
e m
onito
red.
40%
wom
en
empl
oyed
in S
enio
r M
anag
emen
tS
ervi
ce (
SM
S)
39%
you
th a
nd
3.5%
peo
ple
with
di
sabi
lity
(PW
D)
No
t A
chie
ved
Cur
rent
ly 3
8% o
f S
MS
are
wom
enTo
tal w
omen
= 5
Tota
l men
= 8
Dur
ing
the
perio
d un
der
revi
ew
yout
h ta
rget
s ha
ve b
een
achi
eved
(52
.7%
)
The
Fun
d em
ploy
ed 2
73
yout
h ou
t of
a to
tal o
f 518
em
ploy
ees.
PW
D ta
rget
s ha
ve n
ot b
een
achi
eved
.
The
rea
son
the
targ
ets
wer
e no
t m
et is
that
two
fem
ale
SM
S le
ft th
e F
und,
thus
br
ingi
ng d
own
the
targ
et. T
he F
und
on
ly m
anag
ed
to r
ecru
it on
e fe
mal
e.T
he F
und
had
273
yout
h ou
t of
a to
tal o
f 518
em
ploy
ees.
Thi
s tr
ansl
ates
into
52
.7%
The
Fun
d ut
ilise
s th
e no
rmal
re
crui
tmen
tch
anne
ls to
at
trac
t PW
D.
Thi
s ap
proa
ch
has
prov
en to
be
inef
fect
ive
in
targ
etin
g P
WD
.
Wom
an a
t SM
S
leve
l and
PW
D
targ
ets
have
not
be
en a
chie
ved
The
Fun
d w
ill fo
llow
the
Em
ploy
men
tE
quity
Tar
gets
in
the
fillin
g of
po
sts
whi
ch a
re
earm
arke
d fo
r in
terv
iew
s an
d ap
poin
tmen
tsin
the
2014
/15
finan
cial
yea
r.T
he F
und
will
ha
ve to
est
ablis
h pa
rtne
rshi
ps w
ith
orga
nisa
tions
repr
esen
ting
PW
D in
ord
er
to im
prov
e th
e re
crui
tmen
t of t
his
grou
p.
i dd 43 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201444
ST
RA
TE
GIC
OB
JEC
TIV
E: S
TR
EN
GT
HE
NIN
G C
OR
PO
RA
TE
GO
VE
RN
AN
CE
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Ful
lim
plem
enta
tion
of M
inim
um
Info
rmat
ion
Sec
urity
Sta
ndar
d (M
ISS
) by
201
6
Ful
l com
plia
nce
with
MIS
S b
y 20
16
No
t A
chie
ved
Acq
uire
dda
taba
se o
f su
pplie
rs fr
om
SC
M
Ful
lim
plem
enta
tion
of In
form
atio
n se
curit
y (I
CT
) ac
cord
ing
to
MIS
S
No
t A
chie
ved
Dra
ft C
F S
ecur
ity
Pol
icy
was
re
view
ed b
ut
the
alig
nmen
t to
ICT
pol
icy
has
depe
nden
cy o
n H
Q to
app
oint
an
ITC
Com
mitt
ee
Una
vaila
bilit
y of
S
SA
TS
CM
team
.S
SA
is
resp
onsi
ble
for
impl
emen
ting
secu
re e
mai
ls in
go
vern
men
t, bu
t im
plem
enta
tion
is
still
aw
aite
d.H
Q IC
T
com
mitt
ee to
be
appo
inte
d.
N/A
To e
ngag
e H
Q
Sec
urity
For
um
to s
peed
up
the
proc
ess
to r
evie
w
ICT
Pol
icy
RIS
K M
AN
AG
EM
EN
T
i dd 44 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 45
RIS
K M
AN
AG
EM
EN
T C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E: S
TR
EN
GT
HE
NIN
G C
OR
PO
RA
TE
GO
VE
RN
AN
CE
ST
RA
TE
GIC
G
OA
L/O
UT-
PU
T
KE
Y
PE
RF
OR
MA
NC
EIN
DIC
AT
OR
S
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Fra
udIn
vest
igat
ion
Pre
vent
ion
and
Det
ectio
n S
trat
egy
impl
emen
ted
% fi
nalis
atio
n of
ca
ses
rece
ived
/ de
tect
ed a
nnua
lly
No
t A
chie
ved
(61%
)O
ut o
f 142
ca
ses
rece
ived
/de
tect
ed d
urin
g th
is fi
nanc
ial y
ear,
86 c
ases
wer
e fin
alis
ed in
tern
ally
100
% o
f fra
ud
and
corr
uptio
n ca
ses
rece
ived
/de
tect
ed fi
nalis
ed
with
in fo
ur
mon
ths
No
t A
chie
ved
52%
of 6
0 ca
ses
rece
ived
, 31
case
s w
ere
final
ised
with
in
four
mon
ths
Rel
ianc
eon
out
side
in
stitu
tions
to o
btai
n in
form
atio
n.S
ectio
n no
t ca
paci
tate
d to
de
al w
ith th
e w
ork
load
.Ta
rget
was
un
real
istic
ally
high
.
9% Cou
ld n
ot lo
cate
th
e cl
ient
s as
th
e co
mpa
nies
w
ere
clos
ed.
Wai
ting
for
bank
s to
res
pond
to
subp
oena
s.D
elay
on
rece
ivin
gin
form
atio
nfr
om e
xter
nal
inst
itutio
ns e
.g.
bank
s.H
uman
cap
acity
. N
on-a
vaila
bilit
yof
sta
ff du
e to
fo
rced
leav
e.
Str
engt
hen
exte
rnal
st
akeh
olde
rre
latio
ns.
Str
engt
hen
the
inve
stig
atio
nbu
sine
ss p
roce
ss.
Cap
acita
te th
e in
vest
igat
ion
unit.
E
scal
ate
any
dela
yed
inte
rnal
pr
oces
ses
to
rele
vant
aut
horit
ies
and
stru
ctur
es.
Fol
low
up/
mon
itor
the
impl
emen
tatio
n of
the
inve
stig
atio
n re
com
men
datio
nsby
bus
ines
s un
its.
Num
ber
of r
isk
awar
enes
sca
mpa
ign
cond
ucte
d
Ach
ieve
dN
ine
sess
ions
of
Fra
ud a
nd
Ris
k A
war
enes
s co
nduc
ted
Fou
r F
raud
and
R
isk
Aw
aren
ess
sess
ions
cond
ucte
d
Ach
ieve
dF
our
Fra
ud a
nd
Ris
k A
war
enes
s ca
mpa
igns
cond
ucte
d
N/A
5N
/A
Impl
emen
t an
Ent
erpr
ise
Ris
k M
anag
emen
t(E
RM
) sy
stem
by
201
6
Impl
emen
tE
nter
pris
e R
isk
in a
ccor
danc
e w
ith R
isk
Man
agem
ent
Fra
mew
ork
Ach
ieve
dO
pera
tiona
lris
k re
gist
ers
mon
itore
d an
d re
gist
ers
upda
ted
Ris
k A
sses
smen
t an
d R
isk
regi
ster
sre
view
ed a
nd
upda
ted
annu
ally
Ach
ieve
dR
isk
asse
ssed
an
d al
l Ris
k re
gist
ers
wer
e re
view
ed a
nd
upda
ted
N/A
N/A
N/A
i dd 45 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201446
LEG
AL
SE
RV
ICE
S
ST
RA
TE
GIC
OB
JEC
TIV
E:
INT
EG
RA
TIO
N O
F T
HE
FU
ND
WIT
HIN
TH
E C
OM
PR
EH
EN
SIV
E S
OC
IAL
SE
CU
RIT
Y R
EF
OR
MS
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Sub
mit
CO
ID A
ct
Am
endm
ent d
raft
to L
MP
offi
ce fo
r co
nsul
tatio
n by
20
13 a
nd m
onito
r th
e pr
oces
s of
the
prom
ulga
tion
of
the
Act
by
2015
CO
IDA
A
men
dmen
tdr
aft s
ubm
itted
to
LP
& IR
by
2013
and
mon
itor
the
proc
ess
for
prom
ulga
tion
by
2015
Ach
ieve
dfin
al d
raft
amen
dmen
tsw
ere
subm
itted
to
the
LP&
IR
bran
ch o
f the
DoL
on
31
Janu
ary
2013
for
furt
her
proc
esse
ssin
g
Mon
itor
and
part
icip
ate
in
cons
ulta
tion
proc
ess
with
the
stak
ehol
ders
No
t A
chie
ved
No
cons
ulta
tion
with
stak
ehol
ders
.T
he B
ill w
as
sent
to L
P &
IR
for
furt
her
proc
essi
ng b
ut
was
ret
urne
d fo
r th
e F
und
to r
evie
w th
e G
over
nanc
ech
apte
r.
Fin
al d
raft
retu
rned
from
H
ead
Offi
ce
with
com
men
ts
and
inpu
ts fo
r th
e dr
afte
rs to
co
nsid
er
N/A
The
Fun
d w
ill
revi
ew th
e ch
apte
r on
go
vern
ance
, as
requ
este
d du
ring
Qua
rter
1 2
014.
T
he L
P &
MP
and
pa
rliam
enta
rypr
oces
s ar
e ou
t of
CF
con
trol
.
i dd 46 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 47
ST
RA
TE
GIC
OB
JEC
TIV
E:
INT
EG
RA
TIO
N O
F T
HE
FU
ND
WIT
HIN
TH
E C
OM
PR
EH
EN
SIV
E S
OC
IAL
SE
CU
RIT
Y R
EF
OR
MS
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Res
olve
95%
of
rec
eive
d ap
plic
atio
nsfo
r in
crea
sed
com
pens
atio
nw
here
ther
e is
no
disp
ute
of fa
ct
% o
f app
licat
ion
for
incr
ease
d co
mpe
nsat
ion
final
ised
with
in 6
0 da
ys o
f rec
eipt
No
t A
chie
ved
(1
7%)
App
licat
ions
rece
ived
: 18
App
licat
ions
final
ised
: 3
75%
of
App
licat
ion
for
incr
ease
d co
mpe
nsat
ion
final
ised
with
in 6
0 da
ys o
f rec
eipt
No
t A
chie
ved
(3
1%)
Car
ry-o
ver
91R
ecei
ved
25To
tal 1
16F
inal
ised
40
44%
Impo
ssib
le to
ac
hiev
e as
the
stra
tegy
doe
s no
t com
ply
with
Sec
tion
56
appl
icab
le in
te
rms
of C
OID
A,
ther
efor
e th
e st
rate
gy n
eeds
to
be
revi
ewed
. Lo
ng p
erio
d of
exc
hang
e of
ple
adin
gs.
Em
ploy
ers
do n
ot
alw
ays
resp
ond
on ti
me.
The
ou
tsta
ndin
gca
ses
have
bee
n di
sput
ed a
nd
empl
oyer
s do
not
re
spon
d on
tim
e.
14%
Fill
all
vaca
nt
lega
l pos
ts in
H
ead
Offi
ce a
nd
in th
e pr
ovin
ces
LEG
AL
SE
RV
ICE
S C
ontin
ued
i dd 47 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201448
LEG
AL
SE
RV
ICE
S C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E:
INT
EG
RA
TIO
N O
F T
HE
FU
ND
WIT
HIN
TH
E C
OM
PR
EH
EN
SIV
E S
OC
IAL
SE
CU
RIT
Y R
EF
OR
MS
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Res
olve
95%
of
rec
eive
d ob
ject
ions
that
ha
ve b
een
deci
ded
by
the
Rev
iew
C
omm
ittee
with
in
60 d
ays
by 2
016
% o
f Sec
tion
91 o
bjec
tions
final
ised
with
in
60 d
ays
from
the
date
of r
ecei
pt
from
the
Rev
iew
C
omm
ittee
No
t A
chie
ved
(1
9%)
Obj
ectio
nsre
ceiv
ed 1
,072
Obj
ectio
nsfin
alis
ed 2
00
75%
obj
ectio
nsfin
alis
ed w
ithin
60
day
s fr
om th
e da
te o
f rec
eipt
fr
om th
e R
evie
w
Com
mitt
ee
No
t A
chie
ved
(3
2%)
Car
ry-o
ver
1,07
9R
ecei
ved
709
Tota
l 1,7
88F
inal
ised
569
43%
The
str
ateg
y ne
eds
to b
e re
view
ed. T
his
proc
ess
does
no
t sol
ely
rely
on
the
Fun
d bu
t al
so o
n ot
her
stak
ehol
ders
.R
egul
atio
ns in
th
e ad
judi
catio
n of
cla
ims
need
to
be
form
ulat
ed.
Dep
ende
nce
on
othe
r se
ctio
ns.
Trib
unal
can
on
ly h
ear
a lim
ited
num
ber
of c
ases
per
day
pe
r lo
catio
n.
Con
stitu
enci
esde
laye
dap
poin
tmen
tof
ass
esso
rs
of e
mpl
oyee
/em
ploy
ers.
13%
Fill
all
vaca
nt
lega
l pos
ts a
t H
ead
Offi
ce a
nd
in th
e pr
ovin
ces.
Rec
eive
nom
inat
ions
from
co
nstit
uenc
ies
and
appo
int
asse
ssor
s
i dd 48 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 49
ST
RA
TE
GIC
OB
JEC
TIV
E:
INT
EG
RA
TIO
N O
F T
HE
FU
ND
WIT
HIN
TH
E C
OM
PR
EH
EN
SIV
E S
OC
IAL
SE
CU
RIT
Y R
EF
OR
MS
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Res
olve
95%
of
rece
ived
litig
atio
n ca
ses
whe
re
ther
e is
no
fact
ual
disp
ute
with
in fi
ve
days
by
2016
% o
f liti
gatio
n ca
ses
reso
lved
with
in d
ays
of
rece
ipt
No
t A
chie
ved
(3
8%)
Rec
eive
d 48
Fin
alis
ed 1
8
95%
of l
itiga
tion
case
s re
solv
ed
with
in 1
5 da
ys
No
t A
chie
ved
(1
2%)
Rec
eive
d 21
5F
inal
ised
26
83%
Dep
ende
ncy
on
othe
r se
ctio
ns
(tak
ing
time
to
prov
ide
info
re
quire
d fo
r fin
alis
atio
n of
lit
igat
ion
case
s).
The
re a
re
disp
utes
in
alm
ost a
ll ca
ses
rece
ived
.O
ppon
ents
taki
ng
time
to r
espo
nd
to r
eque
sts
for
outs
tand
ing
info
an
d of
fers
, oth
er
case
s ar
e st
ill
activ
e.C
apac
ity(li
tigat
ion
done
by
one
offi
cial
, w
ho is
als
o re
spon
sibl
e fo
r co
ntra
cts,
lega
l op
inio
ns, a
nd
supp
ly c
hain
pr
oces
s).
26%
Fill
all
vaca
nt
lega
l pos
ts a
t H
ead
Offi
ce a
nd
in th
e pr
ovin
ces.
Str
eam
lined
IT s
yste
ms
to
proc
ess
clai
ms.
LEG
AL
SE
RV
ICE
S C
ontin
ued
i dd 49 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201450
LEG
AL
SE
RV
ICE
S C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
E:
INT
EG
RA
TIO
N O
F T
HE
FU
ND
WIT
HIN
TH
E C
OM
PR
EH
EN
SIV
E S
OC
IAL
SE
CU
RIT
Y R
EF
OR
MS
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
90%
of l
egal
ad
vice
req
uest
s an
d co
ntra
cts
final
ised
with
in
five
days
of
rece
ipt b
y 20
16
% o
f leg
al a
dvic
e an
d co
ntra
cts
prov
ided
with
in
days
of r
ecei
pt
Ach
ieve
d28
req
uest
s fo
r dr
aftin
g of
con
trac
ts
rece
ived
from
CF
su
pply
cha
in.
26 c
ontr
acts
dr
afte
d w
ithin
five
da
ys (
achi
eved
93
%).
10 r
eque
sts
for
lega
l adv
ice
rece
ived
and
ni
ne o
f whi
ch w
as
prov
ided
with
in
five
wor
king
day
s (a
chie
ved
90%
).
90%
of l
egal
ad
vice
and
co
ntra
cts
prov
ided
with
in
five
days
of
rece
ipt
Ach
ieve
dN
/AN
/AN
/A
i dd 50 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 51
ST
RA
TE
GIC
OB
JEC
TIV
E: P
RO
MO
TE
PO
LIC
Y A
DV
OC
AC
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
tC
omm
unic
atio
nS
trat
egy/
Mar
ketin
g by
20
17
Com
mun
icat
ion
stra
tegy
impl
emen
ted
by
2017
Ach
ieve
dF
our
med
ia
adve
rts
wer
e ru
n
Run
thre
e m
edia
ad
vert
sA
chie
ved
Fou
r ed
ucat
iona
l ca
mpa
igns
targ
etin
gem
ploy
ees,
bene
ficia
ries
and
empl
oyer
s w
ere
cond
ucte
d on
di
ffere
nt p
rint a
nd
elec
tron
ic m
edia
N/A
N/A
N/A
CO
MM
UN
ICA
TIO
N
i dd 51 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201452
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Elim
inat
e de
bt
book
of R
5 bi
llion
by
201
6
R1
billi
on p
er
annu
m o
f the
de
bt b
ook
as a
t 31
Mar
ch 2
011
Par
tial
lyA
chie
ved
Tota
l rec
eipt
s fo
r th
e qu
arte
r w
as
R1.
6 bi
llion
. H
owev
er u
nabl
e to
spl
it re
ceip
ts to
ol
d de
bt b
ook.
R1
billi
on d
ebt
reco
vere
dN
ot
Ach
ieve
dE
ven
thou
gh th
e to
tal r
ecei
pts
for
the
year
und
er
revi
ew w
as
R12
,143
bill
ion
(R4.
9 bi
llion
, R
6.06
bill
ion,
R
740
mill
ion
and
R44
3 m
illio
n pe
r Q
uart
er
resp
ectiv
ely)
, the
F
und
is u
nabl
e to
sp
lit r
ecei
pts
to
old
debt
boo
k
N/A
Put
sys
tem
s in
pl
ace
that
will
as
sist
with
the
allo
catio
n of
deb
t co
llect
ed fr
om
empl
oyer
s.In
tens
ifyco
llect
ion
by e
nfor
cing
th
e Le
tter
of
Goo
d S
tand
ing
requ
irem
ents
.
Incr
ease
rev
enue
by
5%
ann
ually
% in
crea
se in
re
venu
e as
co
mpa
red
to
prev
ious
yea
r
Ach
ieve
dTa
rget
for
Qua
rter
4
R1.
396
billi
on
Act
ual R
3.03
7 bi
llion
5% in
crea
se
in r
even
ue a
s co
mpa
red
to th
e pr
evio
us y
ear
Ach
ieve
dT
here
was
a 2
4%
incr
ease
of R
1,54
bi
llion
in r
even
ue
from
the
2012
/13
finan
cial
yea
r to
the
2013
/14
finan
cial
yea
r
Rev
enue
/co
ntrib
utio
ns b
y E
mpl
oyer
for
the
2012
/13
finan
cial
ye
ar w
as R
6.43
bi
llion
, com
pare
d to
R7.
97 b
illio
n re
venu
e/co
ntrib
utio
nsfo
r th
e 20
13/1
4 fin
anci
al a
s pe
r th
e un
audi
ted
finan
cial
stat
emen
ts,
resu
lting
in 5
%
redu
ctio
n in
re
venu
e
N/A
Con
tinue
to in
tens
ify
colle
ctio
nby
enf
orci
ng
the
Lette
r of
G
ood
Sta
ndin
g re
quire
men
ts
FIN
AN
CE
i dd 52 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 53
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Enf
orce
com
plia
nce
of
CO
IDA
thro
ugh
payr
oll a
udits
of
em
ploy
er
decl
arat
ions
App
oint
men
t and
m
anag
emen
t of
payr
oll
N/A
App
oint
Pay
roll
Aud
itors
No
t A
chie
ved
Pay
roll
Aud
itors
w
ere
not
appo
inte
d
Pos
ts h
ave
been
cr
eate
d by
the
Dep
artm
ent o
f La
bour
, on
the
prov
inci
al le
vel,
to
rend
er e
mpl
oyer
pa
yrol
l aud
its fo
r bo
th C
F a
nd U
IF.
The
pay
roll
units
fo
r th
e tw
o F
unds
(C
F a
nd U
IF)
wer
e es
tabl
ishe
d at
pro
vinc
ial
offic
es u
nder
the
ausp
ices
of I
ES
.
N/A
Mot
ivat
e fo
r pa
yrol
l aud
it un
it to
be
esta
blis
hed
and
man
aged
at
CF.
In th
e in
terim
out
sour
ce
the
payr
oll a
udit
func
tion.
FIN
AN
CE
Con
tinue
d
i dd 53 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201454
FIN
AN
CE
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Dev
elop
men
t of
revi
sed
empl
oyer
as
sess
men
tm
odel
Ful
ly fu
nctio
nal
asse
ssm
ent
mod
el
N/A
Dev
elop
men
t of
revi
sed
empl
oyer
as
sess
men
tm
odel
No
t A
chie
ved
Em
ploy
eras
sess
men
tm
odel
not
de
velo
ped
New
ass
essm
ent
mod
el u
nder
ex
plor
atio
n. T
he
deci
sion
on
the
final
ass
essm
ent
mod
el to
be
adop
ted
still
to b
e fin
alis
ed w
ith k
ey
stak
ehol
ders
.S
oftw
are
not
deve
lope
d du
e to
the
need
to
have
wor
k st
udy
and
cons
ulta
tions
w
ith r
elev
ant
stak
ehol
ders
.
N/A
A fo
rmal
bus
ines
s fo
r th
e ad
optio
n of
the
new
as
sess
men
tm
odel
pla
nned
to
be c
ompl
eted
by
Mar
ch 2
015
i dd 54 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 55
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Obt
ain
a cl
ean
audi
t opi
nion
by
2014
Impl
emen
t all
AG
re
com
men
datio
nsN
ot
Ach
ieve
dT
he a
udit
mat
rix
rece
ived
in M
arch
re
cord
ed 7
7/16
3 (4
7%)
findi
ngs
as r
esol
ved.
T
his
has
not
been
ver
ified
by
Inte
rnal
Aud
it.
Impl
emen
t 100
%
prev
ious
yea
rs A
G
reco
mm
enda
tions
No
t A
chie
ved
11%
(22
A
G fi
ndin
g re
com
men
datio
nsou
t of 1
99)
wer
e fu
lly im
plem
ente
d
89% inte
rnal
con
trol
fu
nctio
ns a
t the
F
und
polic
ies
finan
cial
syst
ems
capa
city
to
im
plem
ent
th
e re
com
men
-da
tions
to th
e
findi
ngs.
Thi
s w
as n
ot
achi
eved
due
to c
apac
ity
cons
trai
nts.
Fin
ance
pos
ts
will
be
fille
d as
w
ell a
s so
urci
ng
exte
rnal
capa
city
.
36%
Cap
acita
te a
ll th
e un
its in
tern
ally
w
ith e
xter
nal
reso
urce
s.In
tens
ify th
e ac
tiviti
es o
f au
dit s
teer
ing
com
mitt
ee a
nd
boar
d to
add
ress
si
gnifi
cant
findi
ngs.
FIN
AN
CE
Con
tinue
d
i dd 55 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201456
FIN
AN
CE
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
R-
MA
NC
EIN
DIC
AT
OR
S
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3P
LAN
NE
DTA
RG
ET
20
13/1
4
AC
TU
AL
AC
HIE
VE
ME
NT
20
13/1
4
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impr
ove
effic
ienc
y of
pr
oces
ses
by fu
ll im
plem
enta
tion
of a
n in
tegr
ated
fin
anci
al s
yste
m
to im
prov
e pa
ymen
ts to
30
days
by
2016
All
paym
ents
pr
oces
sed
with
in 3
0 da
ys
of r
ecei
pt o
f in
voic
e
Par
tial
ly A
chie
ved
Pro
cure
men
tTo
tal p
aym
ents
: R
186,
736,
798.
89 (
83.2
1%)
Cre
dito
rs: R
37,6
73,7
72.2
1 (1
6.79
)O
ver
30 d
ays:
R69
,528
.37
(0.0
003%
)M
edic
alTo
tal p
aym
ents
: R
83,9
60,7
85.3
9 (6
6.92
%)
Cre
dito
rs: R
41,5
05,3
90.0
5 (3
3.08
%)
Ove
r 30
day
s:R
15,9
99,4
29.4
9 (1
2.75
%)
Pen
sio
nTo
tal p
aym
ents
:R
194,
349,
397.
10 (
82.7
7%)
Cre
dito
rs:
R40
,464
,897
.95
(17.
23%
)O
ver
30 d
ays:
R27
,713
,911
.65
(11.
80%
)
Sun
dry
paym
ents
proc
esse
dw
ithin
30
days
of
rec
eipt
of
invo
ice
and
clai
ms
proc
esse
dw
ithin
60
days
of
rec
eipt
of
bank
ing
deta
ils
No
t A
chie
ved
Eve
n th
ough
the
tota
l pay
men
ts
for
supp
liers
an
d be
nefit
s fo
r th
e ye
ar u
nder
re
view
has
im
prov
ed, f
rom
R
536
mill
ion
to
R54
2 m
illio
n an
d fr
om R
1.9
billi
on
to R
2.7
billi
on
resp
ectiv
ely,
the
Fun
d is
una
ble
to a
lloca
te
the
paym
ents
an
d de
term
ine
whe
ther
the
paym
ents
wer
e m
ade
with
in 3
0 da
ys o
r 60
day
s re
spec
tivel
y
N/A
Put
sys
tem
s in
pla
ce th
at
will
ass
ist w
ith
the
mon
itorin
g of
sup
plie
r pa
ymen
ts a
nd
clai
m p
aym
ents
to
ens
ure
that
pa
ymen
ts a
re
mad
e w
ithin
the
set n
orm
s an
d st
anda
rds.
Fur
ther
mea
sure
s w
ill in
clud
e ve
rific
atio
n of
ba
nkin
g de
tails
an
d in
tens
ifyin
g ef
fort
s to
dis
burs
e un
clai
med
mon
ies
whi
ch
will
loca
te a
ll be
nefic
iarie
s fo
r pa
ymen
t.
i dd 56 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 57
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T
2013
/14
AC
TU
AL
AC
HIE
VE
ME
NT
20
13/1
4
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impr
ove
asse
t: lia
bilit
y ra
tio to
2:
1 by
201
6
CA
ATo
tal p
aym
ents
:R
3,73
4,68
6 (7
6.44
%)
Cre
dito
rs:
R1,
150,
776.
78(2
3.56
%)
Ove
r 30
day
s:R
435,
600.
98 (
8.92
%)
Co
mp
ensa
tio
nTo
tal p
aym
ents
:R
104,
167,
738.
62(2
5.65
%)
Cre
dito
rs:
R30
2,00
3,14
2.91
(74.
35%
)O
ver
30 d
ays:
R29
7,14
0,07
5.18
(73.
12%
)
Max
imis
ein
vest
men
tre
turn
to a
bove
be
nchm
ark
Fin
anci
al r
atio
m
aint
aine
dA
chie
ved
As
at th
e 28
/02/
2013
th
e ra
tio w
as a
t 4:1
2:1
Fin
anci
al
ratio
mai
ntai
ned
Ach
ieve
dT
he F
und
has
mai
ntai
ned
the
asse
t lia
bilit
y ra
tio o
f 2:1
by
rece
ivin
g 3.
24
N/A
N/A
N/A
FIN
AN
CE
Con
tinue
d
i dd 57 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201458
FIN
AN
CE
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Allo
cate
5%
of
inve
stm
ent f
unds
to
war
ds S
RI
initi
ativ
es
Rec
eive
abo
ve
the
(ST
EF
I)
benc
hmar
kre
turn
s
Ach
ieve
dF
or th
e Q
uart
er 3
th
e F
und
achi
eved
: C
ompe
nsat
ion
port
folio
2.4
3%
agai
nst 2
.15%
Pen
sion
por
tfolio
18
.69%
aga
inst
18
.09%
Rec
eive
abo
ve
the
(ST
EF
I)
benc
hmar
kre
turn
s
Ach
ieve
dT
heC
ompe
nsat
ion
Por
tfolio
for
the
Fun
d: 3
.69%
was
re
ceiv
ed a
gain
st
the
benc
hmar
k of
2.
23%
.T
he P
ensi
on
Por
tfolio
for
the
Fun
d: 5
.80%
was
re
ceiv
ed a
gain
st
the
benc
hmar
k of
5.
62%
.
N/A
N/A
N/A
i dd 58 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 59
ST
RA
TE
GIC
OB
JEC
TIV
E: I
MP
RO
VE
FIN
AN
CIA
L V
IAB
ILIT
Y
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Elim
inat
e de
bt
book
of R
5 bi
llion
by
201
6
5% o
f the
in
vest
men
t fun
ds
to b
e rin
g-fe
nced
in
Soc
ially
R
espo
nsib
leIn
vest
men
ts(S
RI)
N/A
R1.
5 bi
llion
No
t A
chie
ved
No
amou
nt o
f m
oney
has
bee
n rin
g-fe
nced
nor
inve
sted
in
Soc
ially
R
espo
nsib
leIn
vest
men
ts(S
RI)
The
Man
date
/ S
trat
egy
on
SR
I ini
tiativ
es,
spec
ifyin
g th
e ne
ed to
rin
g-fe
nce
and
allo
cate
5%
of
inve
stm
ent f
unds
fo
r S
RI p
roje
cts
was
not
fina
lised
on
tim
e to
fa
cilit
ate
appr
oval
an
d al
loca
tion
of
the
fund
s
N/A
Fac
ilita
te th
e ap
prov
al o
f the
m
anda
te/s
trat
egy.
C
FO
to le
ad in
en
gagi
ng w
ith
PIC
to fa
st tr
ack
impl
emen
tatio
n of
th
e st
rate
gy a
nd
SR
I ini
tiativ
es.
FIN
AN
CE
Con
tinue
d
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Annual Report of the Compensation Fund 201460
INF
OR
MA
TIO
N A
ND
CO
MM
UN
ICA
TIO
N T
EC
HN
OLO
GY
AN
D C
ALL
CE
NT
RE
ST
RA
TE
GIC
OB
JEC
TIV
ES
: IM
PR
OV
E C
OR
PO
RA
TE
SU
PP
OR
T A
ND
SE
RV
ICE
S /
EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
IN-
FO
RM
AT
ION
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
To d
efin
e IT
st
rate
gy a
nd
impl
emen
tsy
stem
s an
d in
fras
truc
ture
to
supp
ort b
usin
ess
goal
s by
Mar
ch
2013
CF
IT s
trat
egy
deve
lope
d,su
ppor
ting
syst
ems
and
infr
astr
uctu
reim
plem
ente
d
Par
tial
lyA
chie
ved
The
DoL
had
ta
ken
a de
cisi
on
that
ther
e w
ill
be a
sin
gle,
ce
ntra
lised
IT
stra
tegy
acr
oss
the
orga
niza
tion.
C
F w
ill n
ot h
ave
its o
wn
stra
tegy
.
The
sys
tem
s de
velo
pmen
tw
hich
was
in
pro
gres
s in
clud
ed:
Sta
ndin
g
advi
ces
port
al
Fin
alis
atio
n of
the
IT s
trat
egy
No
t A
chie
ved
The
IT s
ervi
ce
prov
ider
did
not
ha
ve r
esou
rces
to
del
iver
the
requ
ired
CR
for
data
mig
ratio
n in
ord
er to
im
plem
ent t
he
data
mig
ratio
n.T
he IT
str
ateg
y is
cur
rent
ly u
nder
re
view
to e
nsur
e al
ignm
ent w
ith
the
two
Fun
ds
(UIF
and
CF
) op
erat
ions
and
stru
ctur
es.
Cap
acita
tion
of
CF
CIO
offi
ce.
N/A
The
CF
ICT
st
rate
gy w
ill b
e fin
alis
ed a
nd
appr
oved
by
June
20
14
i dd 60 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 61
INF
OR
MA
TIO
N A
ND
CO
MM
UN
ICA
TIO
N T
EC
HN
OLO
GY
AN
D C
ALL
CE
NT
RE
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
ES
: IM
PR
OV
E C
OR
PO
RA
TE
SU
PP
OR
T A
ND
SE
RV
ICE
S /
EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
IN-
FO
RM
AT
ION
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
t10
0% c
usto
mer
se
rvic
es a
t all
cust
omer
touc
h po
ints
% C
usto
mer
se
rvic
e su
ppor
t pr
ovid
ed a
t all
cust
omer
ser
vice
to
uch
poin
ts
(pho
ne-in
, web
, w
alk-
in)
Ach
ieve
d80
% c
usto
mer
se
rvic
eim
plem
ente
d
80%
Cus
tom
er
serv
ice
supp
ort
prov
ided
at a
ll cu
stom
er s
ervi
ce
touc
h po
ints
(p
hone
-in, w
eb,
wal
k-in
)
Ach
ieve
dP
hone
-insu
ppor
t cha
nnel
im
plem
ente
d90
%W
alk-
in 1
00%
Web
em
ail 8
0%To
tal a
vera
ge
90%
The
IT s
ervi
ce
prov
ider
susp
ensi
on.
Inte
grat
ion
requ
ired
betw
een
ICM
por
tal a
nd
Um
ehlu
ko h
as
not h
appe
ned
beca
use
the
syst
ems
are
in
pilo
t pha
ses
not
fully
laun
ched
N/A
The
res
ults
of t
he
eval
uatio
n w
ill b
e re
leas
ed d
urin
g qu
arte
r 1
2014
an
d pl
anne
d ac
tion
will
be
impl
emen
ted
i dd 61 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201462
INF
OR
MA
TIO
N A
ND
CO
MM
UN
ICA
TIO
N T
EC
HN
OLO
GY
AN
D C
ALL
CE
NT
RE
Con
tinue
d
ST
RA
TE
GIC
OB
JEC
TIV
ES
: IM
PR
OV
E C
OR
PO
RA
TE
SU
PP
OR
T A
ND
SE
RV
ICE
S /
EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
IN-
FO
RM
AT
ION
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impr
ove
call
cent
re c
usto
mer
sa
tisfa
ctio
n by
40
% o
f bas
elin
e
Ach
ieve
%
incr
ease
of
cust
omer
satis
fact
ion
ratin
g on
bas
elin
e
Par
tial
lyA
chie
ved
1. E
xten
ded
the
cent
re to
ac
com
mod
ate
mor
e vi
sito
rs 2
. Inc
reas
ed
the
num
ber
of
supp
ort a
gent
s 3
. Cre
ated
ad
ditio
nal h
elp
desk
to d
eal w
ith
onlin
e su
ppor
t qu
erie
s
Impr
ove
cust
omer
satis
fact
ion
ratin
g by
15%
of
base
line
Ach
ieve
dC
usto
mer
Fee
dbac
kQ
uart
er 4
20
13/1
4: 8
1%B
asel
ine
resu
lts
2012
/13:
40%
Ccu
stom
er s
urve
y co
nduc
ted
in
2012
/13
Ove
rall
annu
al
achi
evem
ent
aver
age
80%
No
devi
atio
n.
The
res
ults
use
d w
ere
take
n fr
om
the
wal
k-in
cen
tre
surv
ey to
ol.
N/A
The
sur
vey
tool
us
ed fo
r th
e cu
rren
t res
ults
is
the
wal
k-in
cen
tre
resu
lts (
PO
E
subm
itted
) th
e re
ason
for
the
varia
nce
is d
ue to
cu
stom
ers
ratin
g ea
ch a
gent
’s
serv
ice
whe
reas
th
e in
itial
sur
vey
was
con
duct
ed
by a
ser
vice
pr
ovid
er b
efor
e C
F c
ould
pro
cure
th
eir
own
tool
i dd 62 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 63
ST
RA
TE
GIC
OB
JEC
TIV
ES
: IM
PR
OV
E C
OR
PO
RA
TE
SU
PP
OR
T A
ND
SE
RV
ICE
S /
EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
IN-
FO
RM
AT
ION
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Fin
alis
atio
n of
go
vern
ance
mea
sure
s an
d po
licie
s w
ithin
the
ICT
env
ironm
ent
by M
arch
201
3
Rev
iew
and
im
plem
enta
tion
of p
lan
and
stru
ctur
es
Par
tial
lyA
chie
ved
The
IT
gove
rnan
cefr
amew
ork
has
been
app
rove
d at
CF,
but
was
de
pend
ant o
n th
e fin
alis
atio
n of
the
DoL
fram
ewor
k.Im
plem
enta
tion
has
been
del
ayed
du
e to
the
absc
ence
of a
n IT
se
rvic
e pa
rtne
r.
Rev
iew
and
de
velo
pmen
t of
ICT
pol
icie
s
Ach
ieve
d10
0% o
f go
vern
ance
pla
ns
impl
emen
ted
N/A
N/A
N/A
INF
OR
MA
TIO
N A
ND
CO
MM
UN
ICA
TIO
N T
EC
HN
OLO
GY
AN
D C
ALL
CE
NT
RE
Con
tinue
d
i dd 63 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201464
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Ann
ual S
trat
egic
pl
anni
ng a
s pe
r N
T F
ram
ewor
k fo
r pe
rfor
man
ce
info
rmat
ion
Str
ateg
ic P
lan
and
Ann
ual
Per
form
ance
Pla
n de
velo
ped
in
line
the
with
the
NT
Fra
mew
ork
for
perf
orm
ance
in
form
atio
n
Ach
ieve
dS
trat
egic
Pla
n 20
13 –
201
8 an
d A
nnua
l P
erfo
rman
ceP
lan
2013
/14
wer
e de
velo
ped,
ap
prov
ed a
nd
subm
itted
to N
T
as r
equi
red
Coo
rdin
ate
the
deve
lopm
ent
and
appr
oval
of
the
Str
ateg
ic
plan
and
Ann
ual
Per
form
ance
plan
as
per
NT
F
ram
ewor
k
Ach
ieve
dS
trat
egic
Pla
n 20
14 –
201
9 an
d A
nnua
l P
erfo
rman
ceP
lan
2014
/15
wer
e de
velo
ped,
ap
prov
ed a
nd
subm
itted
to N
T
as r
equi
red
N/A
N/A
N/A
Ann
ual
orga
nisa
tiona
lpe
rfor
man
cem
anag
emen
t
Qua
lity,
rel
evan
t an
d tim
elin
ess
of p
erfo
rman
ce
repo
rts
in li
ne
with
the
NT
F
ram
ewor
k fo
r P
erfo
rman
ceIn
form
atio
n
Ach
ieve
dQ
uart
erly
Per
form
ance
Rep
orts
wer
e co
ordi
nate
d an
d su
bmitt
ed fo
r ap
prov
al.
Ann
ual R
epor
t te
mpl
ate
as p
er
NT
Fra
mew
ork
circ
ulat
ed to
all
part
icip
ants
.
Mon
itor
and
eval
uate
orga
nisa
tiona
lpe
rfor
man
ceto
ens
ure
that
qu
arte
rly, m
id-
term
and
Ann
ual
Rep
orts
are
ta
bled
as
per
NT
F
ram
ewor
k
Ach
ieve
dQ
uart
erly
Per
form
ance
Rep
orts
wer
e co
ordi
nate
d an
d su
bmitt
ed fo
r ap
prov
al.
Ann
ual R
epor
t te
mpl
ate
as p
er
NT
Fra
mew
ork
circ
ulat
ed to
all
part
icip
ants
.
N/A
N/A
N/A
OR
GA
NIS
AT
ION
AL
EF
FE
CT
IVE
NE
SS
i dd 64 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 65
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Impl
emen
tch
ange
man
agem
ent
prog
ram
me
by
2016
Dev
elop
and
im
plem
ent
orga
nisa
tiona
lw
ide
chan
ge
man
agem
ent
prog
ram
me
by
2016
No
t A
chie
ved
Org
anis
atio
nal
wid
e ch
ange
m
anag
emen
tpr
ogra
mm
e w
as
deve
lope
d an
d no
t im
plem
ente
d
Dev
elop
and
im
plem
ent 4
0%
orga
nisa
tiona
lw
ide
chan
ge
man
agem
ent
prog
ram
me
No
t A
chie
ved
Cha
nge
man
agem
ent
sess
ions
for
Um
ehlu
ko w
ere
held
Lack
of i
nter
nal
capa
city
from
bu
sine
ss to
im
plem
ent
the
chan
ge
man
agem
ent
prog
ram
me
initi
ativ
es
N/A
Cap
acita
te th
e F
und
with
the
rele
vant
exp
ertis
e
Dec
entr
alis
eC
OID
A s
ervi
ces
to n
ine
prov
ince
s by
201
6
CO
IDA
ser
vice
s de
cent
ralis
ed to
ni
e pr
ovin
ces
No
t A
chie
ved
Fou
r st
aff
mem
bers
depl
oyed
and
19
sec
onde
d to
G
aute
ng.
Nin
e st
aff
mem
bers
seco
nded
to
Wes
tern
Cap
e to
ass
ist i
n de
liver
ing
CO
ID
serv
ices
.
CO
IDA
ser
vice
s de
cent
ralis
ed to
tw
o pr
ovin
ces
No
t A
chie
ved
Sta
ff w
ere
not
depl
oyed
to a
ll pr
ovin
ces
Pro
long
edco
nsul
tatio
n w
ith
stak
ehol
ders
N/A
Obt
ain
inte
rven
tion
from
D
epar
tmen
tal
Bar
gain
ing
Cha
mbe
r
OR
GA
NIS
AT
ION
AL
EF
FE
CT
IVE
NE
SS
Con
tinue
d
i dd 65 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201466
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Coo
rdin
ate
and
mon
itor
all p
riorit
y pr
ojec
ts c
urre
ntly
ru
nnin
g in
the
Com
pens
atio
nF
und
Coo
rdin
ate
and
mon
itor
the
impl
emen
tatio
nof
all
CF
prio
rity
proj
ects
with
in
com
mitt
ed p
roje
ct
plan
/sch
edul
ew
ith m
easu
rabl
e ta
rget
s an
d bu
dget
as
per
PM
BO
K
Par
tial
lyA
chie
ved
Mon
itorin
gre
port
s w
ere
subm
itted
to v
ario
us
com
mitt
ees:
SA
P
Enh
ance
men
tP
rogr
ess
repo
rt
was
pre
sent
ed
to S
AP
Pro
ject
S
teer
ing
Com
mitt
ee(M
IS, L
ette
rs o
f G
ood
Sta
ndin
g,
Rem
ittan
cew
ere
unde
r de
velo
pmen
t.T
he c
laim
s re
gist
ratio
n po
rtal
w
as d
evel
oped
an
d aw
aitin
g U
AT
).O
rgan
isat
iona
lre
desi
gn a
nd
dece
ntra
lisat
ion
pres
ente
dto
Str
ateg
ic
Ope
ratio
nal
Com
mitt
ee.
Sub
mit
quar
terly
m
onito
ring
repo
rts
Ach
ieve
dP
roje
ct r
epor
ts
are
pres
ente
d to
IT S
teer
co
and
turn
arou
nd
proj
ects
pro
gres
s co
nsol
idat
ed
N/A
N/A
N/A
PR
OJE
CT
MA
NA
GE
ME
NT
OF
FIC
E
i dd 66 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 67
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Dev
elop
ing
and
exec
utin
g a
risk
base
d in
tern
al
audi
t pla
n w
ith
100%
cov
erag
e an
nual
ly
Pre
para
tion
and
appr
oval
of t
he
thre
e ye
ar r
isk
base
d in
tern
al
audi
t pla
n an
d th
e an
nual
cov
erag
e pl
an b
y th
e A
udit
Com
mitt
ee
Ach
ieve
dR
isk-
base
dan
nual
aud
it pl
an d
rafte
d an
d ap
prov
ed b
y A
udit
Com
mitt
ee
App
rova
l and
im
plem
enta
tion
of th
e th
ree
year
an
d an
nual
ris
k ba
sed
and
annu
al
cove
rage
inte
rnal
au
dit p
lan
on
1 A
pril
2013
100%
com
plet
ion
of th
e an
nual
au
dit p
lan
No
t A
chie
ved
Thr
ee y
ear
and
annu
al r
isk
base
d co
vera
ge in
tern
al
audi
t pla
n is
dr
afte
d
Ach
ieve
d81
% o
f pro
ject
s (2
6 ou
t of 3
2)
plan
ned
in th
e an
nual
aud
it co
vera
ge p
lan
com
plet
ed
Thr
ee y
ear
and
annu
al r
isk
base
d co
vera
ge
inte
rnal
aud
it pl
an p
rese
nted
to
Aud
it C
omm
ittee
an
d am
endm
ents
w
ere
reco
mm
ende
d
Fou
r pr
ojec
ts
wer
e ro
lled
over
to th
e ne
xt
finan
cial
yea
r
Ann
ual p
lan
deve
lope
d an
d ap
prov
ed in
May
The
upd
ated
th
ree
year
ris
k ba
sed
inte
rnal
au
dit a
nd a
nnua
l pl
an d
evel
oped
an
d pr
esen
ted
but w
as n
ot
appr
oved
in
Mar
ch 2
013
due
amen
dmen
ts/
adju
stm
ents
requ
este
d,su
bseq
uent
lyap
prov
ed in
May
20
13.
The
Uni
t als
o re
ceiv
ed s
ome
ad h
oc a
udit
assi
gnm
ents
from
m
anag
emen
t.P
roje
cts
wer
e su
bseq
uent
lyco
mpl
eted
in
Apr
il/M
ay 2
014.
INT
ER
NA
L A
UD
IT
i dd 67 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201468
INT
ER
NA
L A
UD
IT C
ontin
ued
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Rep
ortin
gof
qua
rter
ly
repo
rts
to th
e A
udit
Ste
erin
g C
omm
ittee
Ach
ieve
dR
epor
tssu
bmitt
edto
Ste
erin
g C
omm
ittee
at
mee
ting
held
on
11 M
arch
201
3
Sub
mit
four
qu
arte
rly r
epor
ts
to A
udit
Ste
erin
g C
omm
ittee
san
nual
ly
No
t A
chie
ved
Thr
ee A
udit
Ste
erin
gC
omm
ittee
mee
tings
wer
e he
ld a
nd
quar
terly
rep
orts
w
ere
pres
ente
d
N/A
N/A
The
aud
it pl
an
appr
oved
in M
ay
and
proj
ects
/re
port
s av
aila
ble
from
Jul
y 20
13
Rep
ortin
g of
qu
arte
rly r
epor
ts
to th
e A
udit
Com
mitt
ee
Ach
ieve
dR
epor
tssu
bmitt
ed to
Aud
it C
omm
ittee
at
mee
ting
held
on
19 M
arch
201
3
Sub
mit
four
qu
arte
rlyre
port
s to
aud
it co
mm
ittee
san
nual
ly
Ach
ieve
dF
our
quar
terly
re
port
s w
ere
pres
ente
d to
au
dit c
omm
ittee
s
N/A
N/A
Spe
cial
mee
tings
w
ere
held
ove
r an
d ab
ove
four
qua
rter
ly
mee
tings
Con
form
with
IIA
sta
ndar
ds
by 2
016
(100
%
com
plia
nce)
Dev
elop
and
im
plem
ent
Inte
rnal
Aud
it M
etho
dolo
gy,
Pol
icie
s an
d P
roce
dure
s
% C
onfo
rman
ce
with
IIA
S
tand
ards
,In
tern
al A
udit
Met
hodo
logy
, P
olic
ies
and
proc
edur
esm
anua
ls
N/A
80%
Cus
tom
er
Sat
isfa
ctio
n In
dex
No
t A
chie
ved
Out
of 2
6 au
dits
co
mpl
eted
an
aver
age
of 3
.50%
w
as a
chie
ved
whi
ch e
qual
s 70
% c
lient
sa
tisfa
ctio
n
Impr
ovem
ent o
n m
eetin
g cl
ient
ex
pect
atio
ns
N/A
Six
pro
ject
s w
ere
subs
eque
ntly
com
plet
ed a
fter
year
-end
(M
ay)
henc
e no
t all
surv
eys
wer
e co
mpl
eted
i dd 68 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 69
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
% C
onfo
rman
ce
with
IIA
S
tand
ards
,In
tern
al A
udit
Met
hodo
logy
, P
olic
ies
and
proc
edur
esm
anua
ls
Ach
ieve
dQ
ualit
yim
prov
emen
tsu
rvey
s pe
r pr
ojec
t com
plet
ed
(fou
r du
ring
this
Q
uart
er).
Qua
lity
asse
ssm
ent
revi
ew r
eadi
ness
as
sess
men
tby
Nat
iona
l T
reas
ury.
Gen
eral
conf
orm
ance
asse
ssm
ent b
y th
e N
atio
nal
Tre
asur
y
Ach
ieve
dG
ener
alco
nfor
man
ceas
sess
men
t by
the
Nat
iona
l T
reas
ury
was
is
sued
in M
ay
2013
N/A
N/A
N/A
Str
eam
line
all a
ssur
ance
fu
nctio
ns in
to o
ne
ente
rpris
e-vi
ewby
201
4
Com
bine
das
sura
nce
met
hodo
logy
pla
n an
d re
port
s
Ach
ieve
dM
etho
dolo
gy fu
lly
Impl
emen
ted
and
inco
rpor
ated
into
A
udit
Sof
twar
e (T
eam
mat
e),
Met
hodo
logy
. B
ookl
ets
prin
ted.
App
rove
dco
mbi
ned
assu
ranc
em
etho
dolo
gy a
nd
plan
Ach
ieve
dIn
tern
al A
udit
and
Ris
k M
anag
emen
tC
ombi
ned
Ass
uran
ce M
odel
de
velo
ped
and
pres
ente
d at
E
XC
O
N/A
N/A
N/A
INT
ER
NA
L A
UD
IT C
ontin
ued
i dd 69 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 201470
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Com
bine
das
sura
nce
met
hodo
logy
pla
n an
d re
port
s
Ach
ieve
dC
ombi
ned
assu
ranc
eac
tiviti
es a
re
cont
inuo
usbe
twee
n S
teer
ing
Com
mitt
ee,
Aud
itor-
Gen
eral
and
Ris
k M
anag
emen
t.T
he c
ombi
ned
assu
ranc
e pl
an
is r
egul
arly
up
date
d.
Qua
rter
lym
eetin
gs w
ith
assu
ranc
epr
ovid
ers
Ach
ieve
dC
ontin
uous
mee
tings
with
A
G d
iscu
ssin
g in
tern
al a
udit
scop
e, e
mer
ging
ris
ks, r
isk
man
agem
ent e
tc.
N/A
N/A
N/A
INT
ER
NA
L A
UD
IT C
ontin
ued
i dd 70 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014 71
ST
RA
TE
GIC
OB
JEC
TIV
ES
: EN
HA
NC
E Q
UA
LIT
Y A
ND
AC
CE
SS
TO
CO
IDA
SE
RV
ICE
S A
ND
INF
OR
MA
TIO
N
ST
RA
TE
GIC
G
OA
L/O
UT
PU
TK
EY
P
ER
FO
RM
AN
CE
IND
ICA
TO
RS
AC
TU
AL
AC
HIE
VE
ME
NT
20
12/1
3
PLA
NN
ED
TAR
GE
T 2
013/
14A
CT
UA
L A
CH
IEV
EM
EN
T
2013
/14
DE
VIA
TIO
N
FR
OM
PLA
NN
ED
TA
RG
ET
FO
R
2013
/14
VA
RIA
NC
E
FR
OM
201
2/13
T
O 2
013/
14
CO
MM
EN
T O
N
TH
E V
AR
IAN
CE
Com
bine
das
sura
nce
met
hodo
logy
pla
n an
d re
port
s
Ach
ieve
dT
he c
ombi
ned
assu
ranc
e pl
an is
re
gula
rly u
pdat
ed
Dev
elop
men
tan
d ap
prov
al
of k
ey c
ontr
ol
asse
ssm
ent
met
hodo
logy
and
pl
an
No
t A
chie
ved
Key
con
trol
as
sess
men
tm
etho
dolo
gy/
chec
klis
t was
de
velo
ped
Inte
rnal
con
trol
U
nit w
ill ta
ke o
ver
the
key
cont
rol
asse
ssm
ent
N/A
Key
Con
trol
A
sses
smen
tM
etho
dolo
gydr
afte
d bu
t the
fu
nctio
n w
as
hand
ed o
ver
to
Fin
ance
-Int
erna
lC
ontr
ol. C
ontr
ol
self-
asse
ssm
ents
chec
klis
tsco
mpl
eted
by
man
agem
ent.
Lear
ning
and
G
row
thIm
plem
enta
tion
of IA
T le
arne
rshi
p pr
ogra
mm
e
N/A
App
rova
l and
im
plem
enta
tion
of th
e le
arne
rshi
p pr
ogra
mm
e
Ach
ieve
dT
he IA
T
lear
ners
hip
prog
ram
me
was
im
plem
ente
d in
Ju
ly 2
013
N/A
N/A
N/A
Ach
ieve
trai
ning
hou
rs
of C
ontin
uous
P
rofe
ssio
nal
Dev
elop
men
tP
rogr
amm
e (I
IA
– C
P)
N/A
Ach
ieve
480
tr
aini
ng h
ours
of
Con
tinuo
us
Pro
fess
iona
lD
evel
opm
ent
Pro
gram
me
(IIA
–
CP
)
Ach
ieve
dA
chie
ved
512
trai
ning
hou
rs
of C
ontin
uous
P
rofe
ssio
nal
Dev
elop
men
tP
rogr
amm
e (I
IA
– C
P).
N/A
N/A
N/A
INT
ER
NA
L A
UD
IT C
ontin
ued
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Annual Report of the Compensation Fund 201472
i dd 72 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014
PART C: GOVERNANCE
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Annual Report of the Compensation Fund 201474
1. INTRODUCTION
Corporate governance embodies processes and systems by which public entities are directed, controlled and held accountable. In addition to legislative requirements based on a public entity‘s enabling legislation, and the Companies Act, corporate governance with regard to public entities is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King III Report on Corporate Governance. Parliament, the Executive and the Boards of the public entity are responsible for corporate governance.
2. PARLIAMENTARY COMMITTEES
During the year under review, the Compensation Fund met with the Standing Committee on Public Accounts (SCOPA) and Portfolio Committee mainly on the issue of the Turnaround Strategy. This Strategy was adopted within the Fund, supported by the Minister and adopted by SCOPA and the Portfolio Committee. The Fund is expected to present progress to the two committees as well as the Select Committee on a quarterly basis.
During the year under review, the Compensation Fund presented the performance information and Annual Financial Statements for the 2012/13 financial year and plans for the coming years to the various committees of the national assembly. Furthermore, in an effort to improve the performance of the Fund, a Turnaround Strategy was developed and presented to the Standing Committee on Public Accounts (SCOPA) for noting. As part of the monitoring and evaluation of the Strategy, the Compensation Fund will be providing periodic reports to the committees of the National assembly.
3. EXECUTIVE AUTHORITY REPORTS
The following reports were presented to the Executive Authority during the year under review:i. Progress on the Turnaround Strategyii. AGSA Audit Report 2012/13iii. Performance Information Reportiv. Scoping of the IT environment at the Fund
All the reports were noted and endorsed. The Fund was mandated to report periodically to the Executive Authority on the progress that is being made to implement the initiatives. Furthermore, the Fund will also be providing reports on progress made in the implementation of the recommendations made in the AGSA Audit Report.
4. THE COMPENSATION BOARD
The Compensation Board is established in terms of Section 10 of the Act. The Board gives advice to the Minister on COIDA issues.
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Annual Report of the Compensation Fund 2014 75
4.1. The functions of the Board are as follows:
i. To advise the Minister on the following:
Injuries and Diseases Act
employees, including the adjustments of existing pensions
ii. The Board may at the request of the Director-General advise him regarding the performance of a particular aspects of his functions.
4.2. Board Charter
The following progress was made in complying with the charter:
members. Board members were requested to nominate members to serve on the PTSD panel.
advised to consider adopting 6th edition with regards to the assessment of disability
4.3. Composition of the Board
Section 11 (1) The Board shall comprise of:i. The DG or an officer contemplated in Section 2 (1)(a) or (b) designated by him or her, who shall act as
chairpersonii. Two persons appointed by the Minister, one of whom shall be appointed by the Minister and the other shall
be appointed after consultation with Minister of Healthiii. The Chief Inspector for Occupational Health and Safety or his or her nomineeiv. One person as a member and another as an alternate member appointed by the Minister from a list of the
names of not more than three persons nominated in order of preference by RMAv. One person as a member and another as an alternative member appointed by the Minister from a list of the
name of the three persons nominated in order of preference by FEMA Company Limitedvi. Two persons as members and up to two additional as alternate members appointment by the Minister from
a list of the names of not more than six person nominated in order of preference by the South African Medical and Dental Council
vii. Three persons as members and up to three additional as alternative members appointed by the Minister to represent the interest of the employers’ preference by employer’s organisation
viii. Five persons as members and up to five additional as alternate members to represent the interest of the employee’s preference by employee’s organisation
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Annual Report of the Compensation Fund 201476
TABLE 16: BOARD MEMBERS
NA
ME
& S
UR
NA
ME
DE
SIG
NA
TIO
N (
IN T
ER
M
OF
TH
E P
UB
LIC
EN
TIT
Y
BO
AR
D S
TR
UC
TU
RE
)
DA
TE
OF
A
PP
OIN
TM
EN
T
DA
TE
R
ES
IGN
ED
QU
ALI
FIC
AT
ION
S
AR
EA
OF
EX
PE
RT
ISE
CO
NS
TIT
UE
NC
Y
RE
PR
ES
EN
TE
D
BO
AR
D M
EE
TIN
G
NO
OF
ME
ET
ING
S
AT
TE
ND
ED
OU
TG
OIN
G B
OA
RD
M
EM
BE
R
*Mr M Mngqibisa
Chair-person
1 January 2014
CorporateGovernance
Government Board 9
Mr J Singh Principalmember
2008 MutualAssociation
Board 7 31/12/2013
#1 Ms T Pugh Principalmember
1 January 2014
Health and Safety
MutualAssociation
Board 6
Mr W Shisana Principalmember
2008 EducationalSpecialistdegree(Post-Masters)
Government Board 7 31/12/2013
Mr N Weltman Principalmember
2008 26 June 2013
BCom(Hons), CA (SA)
Business Board
Mr M Majola Principalmember
2008 MBA, MPhil, MCom,PHD
Business Board 5 31/12/2013
#1 Dr B Kistnasamy
Principalmember
1 January 2014
Government Board 8
#1 Mr T Lamati Principalmember
1 January 2014
MBA Health,chemistry, strategicmanagement,financial
Government Board 2
#1 Mr S Tsiane Principalmember
1 January 2014
Labour Board 11
Mr P Magane Principalmember
2008 26 June 2013
Health and Safety Co-orditor
Labour Board
#1 Ms J Bodibe
Principalmember
1 January 2014
OccupationalHealth and Safety, HIV and AIDS policy coordinator
Labour Board 12
#1 Mr S Motloung
Principalmember
1 January 2014
Labour Board 10
Ms B Modise Principalmember
2008 Labour Board 8 31/12/2013
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Annual Report of the Compensation Fund 2014 77
NA
ME
& S
UR
NA
ME
DE
SIG
NA
TIO
N (
IN T
ER
M
OF
TH
E P
UB
LIC
EN
TIT
Y
BO
AR
D S
TR
UC
TU
RE
)
DA
TE
OF
A
PP
OIN
TM
EN
T
DA
TE
R
ES
IGN
ED
QU
ALI
FIC
AT
ION
S
AR
EA
OF
EX
PE
RT
ISE
CO
NS
TIT
UE
NC
Y
RE
PR
ES
EN
TE
D
BO
AR
D M
EE
TIN
G
NO
OF
ME
ET
ING
S
AT
TE
ND
ED
OU
TG
OIN
G B
OA
RD
M
EM
BE
R
Dr T Balfour-Kaipa
Principalmember
2008 MBA HealthAdviser, Chamber of Mines
Business Board 5 31/12/2013
Mr S Deva Alternatemember
2008 Business Board 0 31/12/2013
#1 Mr G Mclontosh
Alternatemember
1 January 2014
Mutualassociation
Board 10
#1 Mr F Xaba Alternatemember
1 January 2014
BA Social WorkBA Hons (IndustrialPsychology)
SeniorManagerAurecon
Business Board 8
#2 Mr A Phala Principal Member
1 January 2014
Labour Board 1
#2 Mr K Cowley
Principal Member
1 January 2014
Mastersin Labour, Labour Law and HR
Business Board 1
#1 Dr C Mbekeni
Principal Member
1 January 2014
MSc (Health Economics),MBCHB
Health Policy Business Board 1
#2 Ms E Kula Alternatemember
1 January 2014
MBA Cooperategovernance;HRmanagement,CorporateFinance
Business Board 1
#1 Mr P Matshidze
PrincipalMember
1 January 2014
MBA,Mastersin Public Health
Health care policy expert
Mutualassociation
Board 1
#1 Mr M Samela
PrincipalMember
1 January 2014
Strategic and Operations
Labour Board 1
#1 Prof N Taukobong
PrincipalMember
1 January 2014
Mastersof Physio-therapy
Government Board 0
Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members
TABLE 16: BOARD MEMBERS Continued
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Annual Report of the Compensation Fund 201478
4.4. Committees of the Board
4.4.1. Assessments and Benefits Committee (ABC)
Mandate of the ABCThe core mandate of the Committee emanates from COIDA and is found in the following sections of the Act:
Functions and responsibilities of the ABCThe Assessments and Benefits Committee will review, investigate, monitor, report and recommend to the Board on matters related to:
recommendations regarding the mandate, including reports on Scheduled Benefits in November and Section 76 benefits payable in February
The table below indicates the number of Assessment and Benefits Committee meetings held, number of members and names of members, as well as the amount of meetings attended by each member.
TABLE 17: ASSESSMENT AND BENEFITS COMMITTEE
NO OF MEETINGS HELD
NO OF MEMBERS
NAMES OF MEMBERS
NO OF MEETINGSATTENDED
12 8
*Chairperson Ms J Bodibe 12
#1 Mr G Mclntosh 7
#1 Mr F Xaba 11
#1 Mr P Stoop 7
#1 Ms T Pugh 1
Term of office ended31 December 2013
Ms B Modise 10
#1 Mr S Motloung 9
#1 Mr S Tsiane 4
Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members
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Annual Report of the Compensation Fund 2014 79
4.4.2. Technical Committee for Occupational Injuries and Diseases (TCOID)
Mandate of the TCOID The core mandate of the committee emanates from COIDA and other legislative frameworks and it includes:
Functions and responsibilities of the TCOIDThe Technical Committee for Occupational Injuries and Diseases reviews, investigates, monitors, reports and makes recommendations to the Board on matters related to policy formulation, such as:
ODMWA and COIDA
assist it in the execution of its mandate
various views with their supporting evidence with a view to facilitating discussions at the Board level
are referenced and the submission dates are documented.
The table below indicates the number of Technical Committee for Occupational Injuries and Diseases meetings held, number of members, name of members and the amount of meetings attended by each member.
TABLE 18: TECHNICAL COMMITTEE FOR OCCUPATIONAL INJURIES AND DISEASES
NO OF MEETINGS HELD
NO OF MEMBERS
NAME OF MEMBERS
NO OF MEETINGSATTENDED
5 11
*Chairperson Mr S Motloung 5
#2 Prof N Taukobong 0
Term of office ended31 December 2013
Mr A Letshele 3
#1 Dr B Kistnasamy 1
#1 Dr C Mbekeni 1
Term of office ended31 December 2013
Dr D Mokoboto 3
#2 Mr A Phala 1
#1 Dr D Kritzinger 5
#1 Ms J Mahlangu 4
#1 Ms J Bodibe 5
Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members
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Annual Report of the Compensation Fund 201480
4.4.3. Investment Committee (IC)
Mandate of the ICThe core mandate of the Committee emanates from:
Duties and responsibilities of the ICSubject to the powers and duties of the Board and the requirements of the Act, the IC will perform the following duties:
i. Depositors Fund
ii. Finance
(without diluting the Audit Committee’s mandate)
opinion and other related matters
The table below indicates the number of Financial and Investment Committee meetings held, the number of members, names of members and the amount of meetings attended by each member.
TABLE 19: INVESTMENT COMMITTEE
NO OF MEETINGS HELD
NO OF MEMBERS
NAMES OF MEMBERS
NO OF MEETINGSATTENDED
7 4
*Chairperson Mr S Tsiane 4
#1 Ms J Bodibe 7
#1 Mr F Xaba 6
Term of service ended31 December 2013
Ms B Modise 7
Mr S Motloung 1
Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members
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Annual Report of the Compensation Fund 2014 81
4.4.4. Strategic and Operational Committee
MandateThe core mandate of the committee emanates from:
Functions and responsibilities of the Strategic and Operational CommitteeThe Strategic and Operational Committee reviews, investigates, monitors, reports and makes recommendations to the Board, including the following functions:
The table below indicates the number of Strategic and Operational Committee meetings held, number of members, and names of members and the amount of meetings attended by each member.
TABLE 20: STRATEGIC AND OPERATIONAL COMMITTEE
NO OF MEETING HELD
NO OF MEMBERS
NAME OF MEMBERS
NO OF MEETINGSATTENDED
4 8
*Chairperson Ms E Kula 1
Term of office ended 31 December 2013
Mr M Majola 3
#1 Mr F Xaba 4
#1 Mr S Motloung 2
#1 Mr P Stoop 3
Term of office ended 31 December 2013
Ms B Modise 3
#1 Mr G Mclntosh 3
#2 Mr M Samela 1
Legend: * Chairperson | #1 Old Board Member re-nominated | #2 New Board Members
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4.5. Remuneration of Board Members
The Compensation Fund shall pay members of the Board the prescribed remuneration and travelling and subsistence allowances. Members not in full-time employment of the state must be paid allowances determined by the Minister. Remuneration of Board members is determined by National Treasury Regulations 20.2.2, at R2,056 per day for Committee members.
TABLE 21: MEMBERS THAT ARE NOT REMUNERATED
NAME ORGANISATION
Mr M Mngqibisa Government
Dr B Kistnasamy Government
Mr J Singh Mutual Association
Ms T Pugh Mutual Association
Mr N Weltman Business
Mr G Mclontosh Mutual Association
Ms J Mahlangu Mutual Association
Dr Dzingwa Government
Mr T Lamati Government
Dr T Balfour-Kaipa Business
Mr S Deva Business
Mr G Mclntosh Mutual Association
Mr P Stoop Mutual Association
Dr D Mokoboto Government
Dr D Kritzinger Mutual Association
Dr C Mbekeni Business
Mr P Matshidze Mutual Association
TABLE 22: MEMBERS THAT ARE REMUNERATED
NAME REMUNERATION OTHERALLOWANCE
OTHERREIMBURSEMENTS
TOTAL
Mr FA Xaba R 141,833.00 R 5,093.21 R 41,223.85 R 188,150.06
Mr SM Motloung R 73,005.30 R 5,093.21 R 15,199.83 R 93,298.34
Ms BM Modise R 114,040.09 0 R 140,751.68 R 254,791.77
Mr SM Tsiane R 54,313.00 0 R 22,824.05 R 77,137.05
Mr A Letshele 0 0 0 0
Mr P Magane 0 0 0 0
Ms JM Bodibe R 157,632.31 R 5,093.21 R 171,597.05 R 334,322.57
Mr WO Shisana R 13,847.00 0 0 R 13,847.00
Mr MC Majola R 17,959.00 0 R 9,955.12 R 27,914.12
Mr KA Cowley R 4,112.00 0 R 1,803.26 R 5,915.26
Mr PA Phala R 8,224.00 0 R 3,166.24 R 11,390.24
Mr MD Samela R 2,056.00 0 R 414.00 R 2,470.00
TOTAL R 587,021.70 R 15,279.63 R 406,935.08 R 1,009,236.41
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5. RISK MANAGEMENT
5.1. Introduction
The Compensation Fund business environment is subject to various inherent risks influenced by both internal and external factors. Managing those risks is an integral part of management’s responsibilities to ensure that all injured and diseased employees in the workplace are provided with social security in a timely manner.
5.2. Governance
The Minister of the Department of Labour is ultimately responsible for the risk management process and system within the Compensation Fund and has appointed the Risk Management Committee (RMC) to assist in discharging these roles and responsibilities. The RMC is mandated to provide strategic direction on how risks should be managed throughout the Fund and advise the Minister, Director-General (DG) and Commissioner accordingly. The Committee is supported by the Directorate: Risk Management (D: RM) in fulfilling its mandate.
5.3. Risk Management Committee
The RMC was appointed in December 2013 and has since convened two meetings during the 2013/14 financial year. The composition of the committee is exhibited in the table below.
TABLE 23: COMPOSITION OF THE RISK MANAGEMENT COMMITTEE
NAME OF MEMBER MEETINGSHELD
MEETINGSATTENDED
DESIGNATION
Mr Luyanda Mangquku 2 2 Independent Chairperson
Mr Khulekani Buthelezi 2 2 Representative of the Audit Committee
Mr Shadrack Mkhonto 2 1 Compensation Commissioner
Miss Katlego Mocwiri 2 1 Director: Risk Management
Mr Twana Makubela 2 2 Deputy Director: Risk Management
Mr Johnny Modiba 2 2 Chief Financial Officer
Mr Tshepo Mokomatsidi 2 2 Chief Director: Corporate Support Services
Ms Kefilwe Tselane 2 2 Acting Chief Director: Operations
Mr Siphiwe Zwane 2 2 Acting Director: Internal Audit
5.3.1. Roles and responsibilities
The RMC has adopted formal Terms of Reference, outlining its roles and responsibilities. The Committee is responsible for reviewing the risk management policy and strategy, the Fund’s risk appetite as well as the fraud prevention plan. The Committee ensures that a risk management methodology is implemented and that risk assessments are performed on a continuous basis to enhance the Fund’s systems and internal control environment. It is the responsibility of the committee to also evaluate the effectiveness and implementation of the fraud prevention plan. The Minister, DG and Commissioner are advised by the Committee on significant issues affecting the Fund, the state of enterprise risk management accompanied by recommendations on how these issues can be addressed.
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5.3.2. Management
Management is accountable to the DG and the Minister for designing, implementing and monitoring the risk management process and integrating it into the Fund’s daily operations.
5.3.3. Management of risks
The Fund has established the ERM unit and has adopted the enterprise-wide risk management approach. The ERM unit is the custodian of the Risk Management Policy, Strategy and Plan, and coordinates the risk management activities throughout the Fund. The Risk Management Policy outlines the Fund’s risk management philosophy and is subject to annual review, with modifications submitted to the RMC for consideration and recommendation to the Compensation Commissioner for approval.
Minimal progress was realised in the management of risks of the Compensation Fund and this can be attributed to insufficient monitoring of risks and the appointment of the RMC late in the year. This has been addressed by the appointment of a new RMC and Director: Risk Management, including the inclusion of risk management responsibilities in senior management’s performance agreements.
5.3.4. Risk management process
Strategic and operational risk assessments were conducted during the year. The risk management process was followed in conducting risk assessments, which entails risk identification, risk analysis and identification of control activities.
5.3.5. Effectiveness of risk management
The Internal Audit Directorate via the Audit Committee is responsible for providing the DG and the Minister with an independent and objective assurance on the effectiveness of risk management process and system. In the current year ERM unit was not audited for effectiveness and is planned for review in the next financial year. Based on the challenges faced by the unit, it is our view that risk management was not effective in the current year.
5.4. Fraud and Corruption Unit
The Fraud and Corruption Unit assists the Fund by investigating potential fraud and possible criminal activities. The Fund has a fraud prevention plan which has been approved by the Commissioner. All suspected fraud or criminal activity is reported to the Fraud and Corruption Unit via an anonymous fraud hotline, walk in or e-mails. The unit investigates the allegations and provides a conclusive report with recommendations for business to act.
6. INTERNAL CONTROL UNIT
Currently, the Fund does not have an established Internal Control Unit. Measures were put in place with effect from October 2013 to establish the Internal Control Unit within the office of the Chief Financial Officer in line with National Treasury. This measure was initiated by the newly appointed Chief Financial Officer as part of improving corporate governance within the Fund.
Consultations were held with internal and external stakeholders, in particular the National Treasury. It is expected that this function will commence fully with operations on 1 April 2015. Currently, the Fund has outsourced the function.
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7. INTERNAL AUDIT UNIT AND AUDIT COMMITTEE
7.1. Internal Audit objectives and key activities
Internal Audit is established In terms of Section 51 (1)(ii) of the Public Finance Management Act (PFMA), read with Treasury Regulations 27.1 and 27.2, the Accounting Authority must ensure that the entity has and maintains a system of Internal Audit under the control and direction of an Audit Committee, complying with and operating in accordance with the regulations and instructions prescribed in terms of Sections 76 and 77 of the PFMA.
The Institute of Internal Auditors defined internal audit as, “the Independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps organisations accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes”.
The primary objective of the Internal Audit function is to evaluate the adequacy and effectiveness of internal controls, test the compliance with the applicable laws, regulations, policies and procedures within the Fund processes.
“Adequacy” is defined as determining whether sufficient, efficient and economical controls are in place to provide reasonable assurance that objectives will be achieved.
“Effectiveness” is defined as determining whether the system of internal control is functioning as intended.
Internal control is understood to mean the processes, actions and procedures aimed at achieving reasonable assurance about the achievement of the following objectives:
7.2. Summary of audit work done
The internal audit function therefore evaluates and contributes to the improvement of governance, risk management and control processes of the Fund. The typical inputs/responsibilities of the Internal Audit function include the main three key pillars:
i. GovernanceThe Internal Audit activity assessed and made appropriate recommendations for improving the governance process in its accomplishment of the following objectives:
and management
ii. Risk ManagementThe Internal Audit function assists the Fund in identifying, evaluating and assessing significant organisational risks and provides assurance as to the effectiveness of related internal controls.
Furthermore, Internal Audit evaluates the risk management process of the Fund for efficiency and effectiveness.
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iii. ControlsThe Internal Audit function assists the organisation in maintaining effective controls by evaluating their adequacy, effectiveness and efficiency and by promoting continuous improvements.
Other internal audit activities may include:
other best practices
guidelines from the SPPIA and other best practices
Internal Audit Section independently executed the following audits based on the risk based annual audit plan and provided practical recommendations to enhance internal controls and to fulfil its legislative mandate.
TABLE 24: AUDITS CONDUCTED
FOCUS AREA TYPE EXTENT
Casual and contract workers Compliance/assurance Ad hoc
ROE Discounts IT Assurance Audit Ad hoc
Mailroom and dispatch Assurance Follow-up
Auxiliary services/Fleet management Assurance Follow-up
Human Resources Compliance/assurance Follow-up
Medical Services Assurance Follow-up
Pensions Assurance Follow-up
Security Services overtime analysis Data analytics/IT audit Planned
Legal Services Compliance/assurance Planned
Third-party claims Assurance/compliance Planned
Revenue and Debtors Assurance Planned
Quarterly Performance Information Performance objectives Planned
IT Security audit IT audit Planned
Exempted employers Assurance Planned
Pensions Data analytics/IT audit Planned
Oracle database review IT audit Planned
Asset management Assurance Planned
AG Audit Matrix validation Assurance/follow-up Planned
Compensation and Claims Data analytics/IT audit Planned
User Account management IT audit Planned
Entity overtime Data analytics/IT audit Planned
Provincial audits (4 provinces) Assurance Planned
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8. COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS
In compliance with laws and regulations, the Fund adheres to the principles of the King III report. Structures and processes were established with appropriate checks and balances to empower directors to perform their legal responsibilities and oversight of compliance with legislation, for example Audit Committee and Risk Committee.
8.1. Fraud and Corruption
The Fraud and Corruption Unit assists the Fund by investigating potential fraud and possible criminal activities.
Fraud Prevention Plan
As required by Section 29.1.1 (e) of the Treasury Regulations prescribed under the Public Finance Management Act, 1999, the Fund has a Fraud and Corruption Prevention Plan to effectively manage the fraud risk to which the Fund is exposed. The Fraud and Corruption Prevention Plan has been approved by the Compensation Commissioner. The Plan comprises of the following components:
During the 2013/14 financial year there was minimal implementation of the Fraud and Corruption Prevention Plan. The anti-fraud and corruption unit conducted four fraud awareness sessions, and the unit only managed to finalise 49% of cases reported.
Mechanisms of reporting fraud and corruption
The Fund has a whistle-blowing policy which encourages employees to disclose any acts of misconduct without fear of any discriminations or reprisals. Any official of the Fund or stakeholder, supplier or service provider who has a reasonable belief that fraud, corruption or unethical behaviour is taking place may report such via the channels provided.
Reporting the cases
Any suspected fraud or corrupt activity is reported to the fraud and corruption unit via an anonymous fraud hotline, walk-in or emails. The unit investigates the allegations and provides a conclusive report with recommendations for business to act.
9. AUDIT COMMITTEE’S REPORT
9.1. Audit Committee objectives and activities
The Audit Committee was established in terms of the PFMA and Treasury Regulations to assist the Executive Authority in fulfilling its oversight responsibility in terms of these statutes. The duties of the Committee are broadly defined in Section 51(1)(a)(ii) of the PFMA and Treasury Regulations.
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9.2. Objectives
To assist the executive and accounting authorities in fulfilling their oversight responsibilities for:
9.3. Audit Committee activities
The responsibilities of the Audit Committee include the financial reporting process, the system of internal control, risk management, the audit process and the monitoring of compliance with laws, regulations and the Fund’s own code of business conduct.
9.4. Internal control
control
and obtain reports on significant findings and recommendations together with management’s responses.
9.5. Internal Audit
risk based three year rolling and annual audit plan
of follow up action required
Internal Audit and the office of the Auditor-General
Code of Ethics of The Institute of Internal Auditors
9.6. External Audit: Auditor-General
Review the effectiveness of the external audit function and specifically do the following:
ordination with internal audit
and control systems in place to prevent and detect fraud, with the external auditor
9.7. Risk Management
on the effectiveness of the process
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9.8. Compliance
of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance
compliance therewith
9.9. Management Accounts and Annual Financial Statements
other users of such information and annually review the Annual Financial Statements and recommend its approval to the Director-General
judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements
known to committee members and reflect appropriate accounting principles
accuracy and the completeness of the information
9.10. Reporting
respect to the quality or integrity of the Fund’s financial statements, the compliance with legal or regulatory requirements and the performance of the internal audit function
the accounting authority
how they were discharged, and any other information required by rules
9.11. Ethics
standards and requirements
9.12. Other responsibilities
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10. REPORT OF THE AUDIT COMMITTEE FOR THE PERIOD 2013/14
Introduction
The Committee is pleased to present its final Annual Report for the financial year ending 31 March 2014. This report is presented in accordance with the requirements of the Public Finance Management Act No 1 of 1999, as amended and the recommendations contained in the third King Report on Governance for South Africa and the King Code of Governance Principles (King III).
Audit Committee responsibility
The Audit Committee reports that it has complied with its responsibilities arising from Sections 51 (1)(a)(ii) and 77 of the Public Finance Management Act read with Treasury Regulation 27.1. The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.
Committee meetings
The Audit Committee of the Compensation Fund comprises of four independent members, who have been instrumental in providing independent advice to the Fund. The term of the current committee commenced in the second semester of the financial year.
TABLE 25: AUDIT COMMITTEE COMPOSITION FOR THE PERIOD 1 APRIL 2013 TO 31 AUGUST 2013
NAME QUALI-FICATIONS
INTERNAL OR EXTERNAL
DATE APPOINTED
ENDED
DATE RESIGNED/CONTRACT
NUMBER OF MEETINGSATTENDED
Mr K Buthelezi ACCA Chairperson(External)
January 2012 August 2013 6/6
Mr M Makhubu CharteredAccountant
Member(External)
January 2012 August 2013 6/6
Mr F Xaba BA Hons (IndustrialPsychology)
Member(External)
January 2012 August 2013 4/6
An induction of the new Audit Committee members was held in November 2013.
TABLE 26: AUDIT COMMITTEE COMPOSITION FOR THE PERIOD 1 OCTOBER 2013 TO 31 MARCH 2014
NAME QUALI-FICATIONS
INTERNAL OR
EXTERNAL
DATE APPOINTED
DATE RESIGNED/CONTRACT
ENDED
NUMBER OF MEETINGSATTENDED
Ms R Kalidass CharteredAccountant
Chairperson(External)
October 2013 N/A 3/3
Mr K Buthelezi ACCA Member(External)
October 2013 N/A 3/3
Mr L Manqguku CharteredAccountant
Member(External)
October 2013 N/A 3/3
Mr C Terhoeven CharteredAccountant
Member(External)
October 2013 N/A 2/3
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Effectiveness of internal controls
The system of internal controls is designed to provide cost-effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed. The system of internal control applied by the Compensation Fund over financial and risk management is ineffective, inefficient and not transparent.
In accordance with the PFMA and the King III Report on Corporate Governance requirements, Internal Audit is required to provide the Audit Committee and management with assurance that the internal controls, governance and risk management processes of the Compensation Fund are appropriate and effective.
This is achieved by means of the risk management, as well as the identification of corrective actions and suggested enhancements to the internal controls and processes. The Risk Management Unit is currently in the process of being capacitated to ensure that risk management is being implemented at both a strategic and operational level within the organisation.
Internal Audit performed periodic independent evaluations of the adequacy and effectiveness of internal controls, financial reporting, performance information and the integrity of information systems and records.
TABLE 27: THE FOLLOWING IS A SUMMARY OF INTERNAL AUDIT WORK COMPLETED DURING THE YEAR UNDER REVIEW
NO FOCUS AREA TYPE TIMING
1 Casual and contract workers Compliance/assurance Ad hoc
2 Project Emerge-Return of Earnings Assurance Ad hoc
3 ROE Discounts IT Assurance audit Ad hoc
4 Mailroom and dispatch Assurance Follow-up
5 Auxiliary services/fleet management Assurance Follow-up
6 Human Resources Compliance/assurance Follow-up
7 Medical Services Assurance Follow-up
8 Pensions Assurance Follow-up
9 Security Services overtime analysis Data analytics Planned
10 Legal Services Compliance/assurance Planned
11 Third-party Claims Assurance/compliance Planned
12 Revenue and Debtors Assurance Planned
13 Quarterly Performance Information Performance objectives Planned
14 IT Security audit IT audit Planned
15 Exempted employers Assurance Planned
16 Pensions Data analytics Planned
17 Oracle database review IT audit Planned
18 Asset management Assurance Planned
19 AG audit matrix validation Assurance Planned
20 Compensation and Claims Data analytics Planned
21 User Account management IT audit Planned
22 Entity overtime Data analytics Planned
23 Provincial audits (four provinces) Assurance Planned
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From the various reports of the internal auditors, the audit report on the Annual Financial Statements and the management letter of the Auditor-General, it was noted that there has been no improvement since the previous financial year. This could be demonstrated by the late submission of the draft Annual Financial Statements to the Audit Committee as well as the inability to prepare reliable financial statements during the course of the financial year.
The Committee remains concerned about the lack of progress on the implementation of management actions to address audit findings, irregularities and reputational risk associated with the Fund.
Significant matters, which have not been adequately resolved, include the following:
Accordingly, we can report that the general system of internal control for the period under review was unfortunately ineffective and inefficient.
However, subsequent to financial year-end, a firm of chartered accountants have been appointed to assist the organisation in taking remedial action to address the root causes of repetitive audit findings and improve the internal control environment. Under the leadership and guidance of the audit committee, management is expected to implement strategies, resolutions and action plans to address the disclaimed audit opinion.
Monthly/Quarterly management report
The Audit Committee is dissatisfied with the content and quality of monthly reports prepared and issued by the Compensation Fund during the year under review.
The Audit Committee will monitor the process and procedures designed and implemented to ensure there is a consistency and improvement in the quality of performance information for the forthcoming financial year and achievement of planned targets.
Evaluation of Financial Statements
The Audit Committee has:
Auditor-General and the Accounting Authority
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Of concern to the Audit Committee, is the number of new findings which have appeared in the 2013/14 audit opinion. The table below depicts the regression over the past three financial years:
TABLE 28: BASIS OF AUDIT OPINION FOR THE COMPENSATION FUND
NO BASIS OF AUDIT OPINION 2011/12 2012/13 2013/14
1 Revenue and receivables from non-exchange transactions (Repeat) x x x
2 Allowance for impairment (Repeat) x x
3 Revenue and receivable from exchange transactions (Repeat) x x
4 Benefits paid and payables from exchange transactions (Repeat) x x x
5 Provision for outstanding claims and decrease in provision for outstanding claims (Repeat)
x x
6 Capitalised value of pensions and pension actuarial adjustments (New)
- x
7 Prior period errors (New) - x
8 Cash and cash equivalents (Repeat) x x
9 Cash flow statement (New) - x
10 Statement of comparison of budget and actual amounts (New) - x
11 Administration expenses (New) - x
12 Investment revenue (New) - x
13 Contingencies (New) - x
14 Commitments (Repeat) x x
15 Irregular expenditure (Repeat) x x
16 Related party transactions (Repeat) x x
17 Aggregation of immaterial uncorrected misstatements (Repeat) x x
Repeatdisclaimer
(59%)
NEW OR REPEAT DISCLAIMER MATTERS
New disclaimer (41%)
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We concur with and accept the Auditor-General of South Africa’s report on the Annual Financial Statements, and are of the opinion that the audited financial statements should be accepted together with the report of the Auditor-General of South Africa.
Auditor-General of South Africa
We have met with the Auditor-General of South Africa to ensure that there are no unresolved issues.
Conclusions
We would like to extend our appreciation to the executive authority, Accounting Authority, management, and internal and external auditors for their efforts being made to address concerns raised by the Audit Committee. We look forward to an improved audit outcome in the 2014/15 financial year.
Ms Rachel KalidassChairperson: Audit Committee
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PART D: HUMAN RESOURCE MANAGEMENT
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1. INTRODUCTION
1.1. The value of human capital in the public entity
Successful organisations world-wide recognise that human resource is a valuable asset to the attainment of strategic objectives. In this context, it has also been established that human resource becomes even more critical in an environment where technology is often used as a means of harnessing growth and development to meet demands that are ever changing. There has also been more emphasis on the employment of persons who have the competence to effectively utilise technology to satisfy the needs of citizenry and clients. In its quest to improve efficiencies, the Compensation Fund took a decision to decentralise its functions to the lowest level possible to ensure that timely and qualitative services are provided.
This approach has highlighted the need to ensure that employees at the coal face are knowledgeable about the business of the Fund and the importance of technology to deliver services. To this end, the Fund has created entry level posts which recognise that services will be provided in an integrated manner and compensated in accordance with the skills set required.
1.2. Overview of HR matters of the public entity
During the year under review, the Compensation Fund implemented a decentralised organisational structure which placed an emphasis on the need to deliver quality services to the lowest level possible. As part of this new organisational structure, a total of 1,334 posts were created with 690 of these at the national level and the remaining 644 distributed proportionally among provinces. In order to ensure that the organisational structure is implemented in such a manner that reflects inclusivity, a placement framework and procedure for employees of the Department of Labour (salary levels 1 – 12) was developed as a guide. This framework required that recognised trade unions in the Department of Labour including the Compensation Fund be afforded an opportunity to participate in the restructuring process by representing the interest of their members.
This was done through the established Placement Panel. For example, the panel concerned itself with the movement of employees from the old to the new organisational structure. In the case of the Fund the process was compounded by the fact that entry level posts which would provide medical and compensation services in an integrated manner were created at salary level 6. It is imperative to note that the majority of employees in the Directorates: Medical Services and Compensation Benefits were employed on salary level 5. This matter, coupled with the fact that the entry level posts in provinces in these two areas was salary level 6, created a challenge.
Furthermore, the management of the Fund realised that if open competition for posts was to be followed, a number of employees may be without posts. As a consequence, a proposal was made to organised labour through the established Placement Panel that choice forms should be issued to all the employees in the affected directorates, including those on SR5, to identify the province where they would like to permanently relocate to. However, upon the analysis of the choices made by employees it was found that with respect to the Gauteng province there were more employees than the number of posts available on SR6 in particular. For example, out of 118 posts on salary level 6, choices made were in excess of 247.
1.3. Set HR priorities for the year under review and the impact of these priorities
In the year under review, the Compensation Fund had prioritised the filling of critical posts in the middle and senior management levels. This was done so that the Compensation Fund would be adequately prepared to respond to demands in its internal and external environments. In addition, importance was also placed on the need to implement the new organisational structure and fast track decentralisation of functions and staff to the lowest level possible in line with the new operating model.
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1.4. Workforce planning framework and key strategies to attract and recruit a skilled and capable workforce
The new organisational structure has created a number of posts at middle and senior management levels. These posts were created with a view to assisting the Compensation Fund to employ persons who were competent and highly skilled, thus contributing to the delivery of its legislative and policy mandates. Some of the strategies followed to source the right skill mix, attributes and knowledge had been the use of print media and public service internal communication. In addition, recruitment agencies were utilised as a means to source candidates with scarce or critical skills in instances where the normal recruitment channels could not yield the desired results.
1.5. Employee performance management framework
The provisions of the policy on performance management system for employees on salary levels 1 – 12 and Chapter 4 of the Senior Management Service Handbook were utilised as instruments to manage performance. During the year under review, a number of challenges were experienced with aspects such as the finalisation of performance assessments for some employees by their supervisors and the timeous conclusion of performance agreements in some cases. As a result of these challenges, the Fund has not been able to comply with the policy directives to the fullest extent.
1.6. Employee wellness programmes
The Employee Health and Wellness Programme play a critical role in the enhancement of employee wellbeing. This programme required organisations to provide the necessary support and referrals as part of the promotion of a conducive and caring workplace. During the year under review, the Compensation Fund participated in a workshop which reviewed the health and wellness management policies and procedures. In addition, a number of health screening sessions were hosted with the Government Employees Medical Scheme (GEMS) where various tests were conducted to assist staff members to monitor their health status on a regular basis so that early and timely intervention, where necessary, could be initiated.
Furthermore, counselling sessions were arranged for staff members who were undergoing decentralisation to various provinces as part of the implementation of the new organisational structure. The reports from this exercise have proved to be useful to both the employees and management in that future restructuring endeavours would be implemented in such a manner that sensitivities surrounding such a process would be taken into consideration.
1.7. Policy development
During the year under review, the Compensation Fund had participated in the review of a number of human resource management policies, such as the resettlement benefits, the death of an employee and health and wellness management.
1.7.1. Highlight achievements
The Compensation Fund successfully implemented the new organisational structure which resulted in the delivery of services being devolved to the lowest level possible. Following the approval of the piloting of the Rand Mutual Assurance (RMA) system for the management and payment of medical and compensation claims, a massive training programme of users and super-users was undertaken. This training intervention ensured that staff members were capacitated and adequately prepared for the pilot and possibly the eventual roll-out of the system.
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In addition, almost 100% of training interventions identified in the Workplace Skills Plan (WSP) was achieved thus resulting in most employees realising their personal development plans. Furthermore, training interventions geared towards the realisation of some units’ performance targets were successfully arranged and undertaken. As part of providing graduates with the work experience and competence necessary for them to find long term and sustainable employment, 90 interns were appointed for a period of one year.
1.7.2. Challenges faced by the public entity
Critical challenges faced by the Fund in the area of human resource management, among others, continued to be the lack of urgency in the filling of critical management posts in areas such as financial management, operations and support services. There have also been capacity constraints as a result of the fact that there has been dearth of skills in the core business as well as support. This situation has thus meant that the Fund was not capacitated with the required levels of competence to respond to the needs of its clients and customers. In areas where there was some level of optimal capacity, employees were not effectively utilised to contribute to sustained and improved delivery. For example, whilst many industries providing medical and compensation services had continued to rely on technological innovations to support operations, the Fund lagged behind as a result of reliance on the manual processing of claims.
1.7.3. Future HR plans/goals
In the next financial year, the Fund will develop guidelines containing norms and standards which would regulate the filling of vacancies so that human resource management functionaries and responsible line managers are aware of their responsibilities in this area. Furthermore, emphasis will be placed on the need to support effective utilisation and management of human resources as a critical and valuable asset in the delivery of services. In the near future, the Fund will conduct an assessment on how to use talent management and succession planning to support employee growth, contentment and productivity. In short, the Fund will look at ways and means to demonstrate that it values its employees as a critical asset.
2. HUMAN RESOURCE OVERSIGHT STATISTICS
The following tables provide key information on the management of human resources. The tables also provide the costs associated with managing and maintaining such human resources. This is done by ensuring that the amounts in this section are linked to the figures disclosed in the Annual Financial Statements. In cases where there are variances, reasons for these differences will be given.
TABLE 29: PERSONNEL COST BY PROGRAMME
PROGRAMME TOTAL EXPENDITURE
FOR THE ENTITY (R’000)
PERSONNEL EXPENDITURE
(R’000)
PERSONNEL EXP AS A % OF
TOTAL EXP (R’000)
NO OF EMPLOYEES
AVERAGE PERSONNEL COST PER EMPLOYEE
(R’000)
CompensationFund
R3,591,182 R343,901 10% 517 R665
TOTAL R3,591,182 R343,901 10% 517 R665
The personnel expenditure accounted for R343,901,000 which represents 10% of the total expenditure of R3,591,182,000 for the Fund. This could be attributed to the fact that a number of high level posts were vacant during the year under review.
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TABLE 30: PERSONNEL COST BY SALARY BAND
LEVEL PERSONNEL EXPENDITURE
(R’000)
% OF PERSONNEL
EXP TO TOTAL PERSONNEL
COST
NO OF EMPLOYEES
AVERAGE PERSONNEL COST PER EMPLOYEE
(R’000)
Top management R6,225 2 3 R2,075
Senior management (SMS)
R14,059 4 7 R2,008
Professionaly qualified (Levels 9 to 12)
R98,482 29 50 R1,970
Skilled(Levels 7 to 8)
R105,716 31 120 R881
Semi-skilled(Levels 4 to 6)
R119,419 34 337 R354
TOTAL AVERAGE R343,901 100 517 R665
The bulk of the employees at the Fund were at lower salary levels as reflected by a total of 337 employees classified as semi-skilled. In this regard, the percentage of personnel expenditure in this category accounted for 34% of personnel expenditure. In order to improve the performance of the Fund there is a need to re-configure this category in future to ensure that there are more skilled employees.
TABLE 31: PERFORMANCE REWARDS
PROGRAMME PERFORMANCEREWARDS
PERSONNEL EXPENDITURE
(R’000)
% OF PERFORMANCE
REWARDS TO TOTAL PERSONNEL COST
Top management 0 0 0%
Senior management (SMS)
0 0 0%
Professionaly qualified (Levels 9 to 12)
6 R180 0.3%
Skilled(Levels 7 to 8)
38 R463 0.8%
Semi-skilled(Levels 4 to 6)
68 R561 0.12%
Unskilled(Levels 1 to 3)
0 0 0%
TOTAL 112 R1,204 0.09%
It is clear from the table above that only 0.09% of performance rewards were paid to staff members below the senior management levels. Of particular importance is the fact that none of the senior managers were paid performance bonuses owing to the state of the organisation.
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Annual Report of the Compensation Fund 2014100
TABLE 32: TRAINING COSTS
PROGRAMME PERSONNEL EXPENDITURE
(R’000)
TRAININGEXPENDITURE
(R’000)
TRAININGEXPENDITURE
AS A % OF PERSONNEL
COST
NO OF EMPLOYEES
TRAINED
AVERAGE TRAININGCOST PER EMPLOYEE
CF R343,901 R2,870 0.8 651* R4,409
TOTAL R343,901 R2,870 0.8 651 R4,409
* Please note that the number of employees during the reporting period was 517. Therefore, the number of 651 employees trained should be understood in the context of the number of training interventions undertaken. Some employees have attended training more than once hence the figure of 651.
During the year under review, the Fund has spent R2,870,000 which represent 0.8% of the personnel costs. It should be noted that the minimum expenditure on training and development should be 1% of personnel expenditure. Given the above, it is clear that the Fund had underspent on training budget by 0.2%. However, it must also be noted that some of the training interventions were conducted in-house resulting in 0.2% under-expenditure on training and development costs.
TABLE 33: EMPLOYMENT AND VACANCIES
PROGRAMME 2012/13NO OF
EMPLOYEES
2013/14APPROVED
POSTS
2013/14NO OF
EMPLOYEES
2013/14VACANCIES
% OF VACANCIES
Office of the Commissioner
3 4 3 1 0.1
Internal Audit 8 13 8 5 0.7
Risk Management 6 18 6 12 1.7
Office of the CFO 0 2 1 1 0.1
Income 128 219 181 38 5.5
Financial Reporting 51 15 8 7 1.0
Financial Control 29 37 24 13 1.8
SCM 72 158 128 30 4.3
CD Corporate Support
1 2 2 0 0
HRM 22 40 25 15 2.1
OE 6 14 4 10 1.4
Communications 1 10 6 4 0.5
ICT 0 10 2 8 1.1
Office of the COO 0 2 0 2 0
Compensation 255 6 5 1 0.1
Medical 109 6 4 2 0.2
Legal Services 4 40 36 4 0.5
Customer Care 0 94 74 20 2.8
Contract staff 289 0 0 0 0
TOTAL 984 690 517 173 24
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Annual Report of the Compensation Fund 2014 101
The analysis of the table above shows that that the vacancy rate for the Fund stood at 24% which is considered very high. It must be noted that the new organisational structure implemented on 1 April 2013, created a number of new posts in all the areas of the organisation. The area mostly affected by the high vacancy rate was the Chief Directorate: Financial Management with 12.6%. This is the area which has benefitted the most from the implementation of the new organisational structure.
TABLE 34: EMPLOYMENT AND VACANCIES PER SALARY BAND
PROGRAMME 2012/13NO OF
EMPLOYEES
2013/14APPROVED
POSTS
2013/14NO OF
EMPLOYEES
2013/14VACANCIES
% OF VACANCIES
Top management 1 4 3 1 25
Senior management (SMS)
12 14 8 6 42.8
Professionaly qualified (Levels 9 to 12)
52 116 50 66 56.8
Skilled(Levels 7 to 8)
277 185 120 65 35
Semi-skilled(Levels 4 to 6)
642 371 336 35 9.4
TOTAL 984 690 517 173 24
The new organisational structure resulted in 150 additional posts being created. Given this high number of posts, the Fund decided to prioritise the filling of critical vacant posts of Assistant Directors and higher. The posts in the middle and senior management levels were only advertised in July 2013. However, due to capacity constraints in the affected components, interviews in most cases could not be finalised on time. In the main, it has taken the Fund on average to fill the posts in excess of the six months required for this purpose.
TABLE 35: EMPLOYMENT CHANGES
SALARY BAND EMPLOYMENT AT BEGINNING OF
PERIOD
APPOINTMENTS TERMINATIONS EMPLOYMENT AT END OF THE
PERIOD
Top management 2 1 0 3
Senior management (SMS)
8 3 2 8
Professionalyqualified(Levels 9 to 12)
45 8 3 50
Skilled(Levels 7 to 8)
124 1 5 120
Semi-skilled(Levels 4 to 6)
349 1 10 336
TOTAL 528 13 20 517
Whilst 13 appointments were made during the reporting period the Fund also experienced 21 terminations of service. This implies that our recruitment and selection processes of new employees was not fast and rigorous enough to counter the effects of terminations of service.
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Annual Report of the Compensation Fund 2014102
TABLE 36: REASONS FOR STAFF LEAVING
REASON NUMBER % OF TOTAL NO OF STAFF LEAVING
Death 6 0.01
Resignation 7 0.01
Dismissal 2 0.003
Retirement 2 0.003
Ill health 0 0
Expiry of contact (Interns) 51 0.09
Other (Transfers out) 5 0.009
TOTAL 22 0.04
The staff turnover for the Fund during the period under review represented a mere 0.04% of the filled 517 posts. As outlined in table above some of the reasons for the turnover have been as a result of death (6), expiry of contract (51) and resignations (7). The overall assessment is that the Compensation Fund has not experienced a turnover rate which could be considered as alarming to require attention during the period under review.
TABLE 37: LABOUR RELATIONS ~ MISCONDUCT AND DISCIPLINARY ACTION
NATURE OF DISCIPLINARY ACTION NUMBER
Verbal warning 0
Written warning 3
Final written warning 7
Dismissal 4
TOTAL 14
The total number of misconduct and disciplinary action of 14 represents 2.7% of the staff in the Fund during the reporting period. This is a demonstration that during the period under review there were less numbers of incidents of misconduct and disciplinary action taken against staff members.
TABLE 38: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR MALES
MALE
AFRICAN COLOURED INDIAN WHITE
LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET
Top management (Levels 15)
1 1 0 0 0 0 0 0
Seniormanagement(Levels 13 to 14)
5 6 0 1 1 0 0 1
Professionalqualified(Levels 9 to 12)
25 49 0 2 0 1 0 5
Skilled(Levels 7 to 8)
28 69 1 4 0 2 1 12
Semi-skilled(Levels 4 to 6)
145 130 2 5 2 5 5 21
Unskilled(Levels 1 to 3)
13 19 0 0 0 0 0 3
TOTAL 217 274 3 12 3 8 6 42
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Annual Report of the Compensation Fund 2014 103
In order to meet the employment equity targets in respect of male employees there is a need to ensure emphasis in the recruitment of all the targeted groups, with the special emphasis on the appointment of Indians, Coloureds and Whites.
TABLE 39: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR FEMALES
FEMALE
AFRICAN COLOURED INDIAN WHITE
LEVELS CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET
Top management (Levels 15)
0 0 0 0 0 0 0 0
Senior management (Levels 13 to 14)
4 7 0 0 0 0 0 1
Professionalqualified(Levels 9 to 12)
22 45 0 1 1 2 3 8
Skilled(Levels 7 to 8)
28 67 8 8 0 2 20 21
Semi-skilled(Levels 4 to 6)
218 140 14 10 0 3 18 24
Unskilled(Levels 1 to 3)
4 10 0 0 0 0 0 2
TOTAL 276 269 22 19 1 7 41 56
In order to meet the employment equity targets in respect of female employees in the Fund, there is a need to reduce the emphasis on the recruitment of African in the semi-skilled category as the Fund is over-represented by more than 64%.
TABLE 40: EQUITY TARGET AND EMPLOYMENT EQUITY STATUS FOR PERSONS WITH DISABILITY
DISABLED STAFF
MALE FEMALE
LEVELS CURRENT TARGET CURRENT TARGET
Top management (Levels 15)
0 0 0 0
Senior management (Levels 13 to 14)
0 0 0 0
Professional qualified (Levels 9 to 12)
0 0 0 0
Skilled(Levels 7 to 8)
0 0 0 0
Semi-skilled(Levels 4 to 6)
1 4 1 1
Unskilled(Levels 1 to 3)
1 8 1 1
TOTAL 2 12 2 2
With regards to Persons with Disability (PWD), there is a need for the Fund to intensify recruitment to ensure that the 3.5% target is met. The analysis of the table clearly shows that the Fund is lagging behind in this area.
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Annual Report of the Compensation Fund 2014104
Finally, the implementation of the new organisational structure has resulted in a number of posts being created. The contributing factor to the major variances between the target and current employment equity status was as result of the fact that during the year under review, the Compensation Fund experienced a 24% vacancy rate. Therefore, in filling these posts in the new year an emphasis will be placed on the need to meet the employment equity targets.
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PART E: FINANCIAL INFORMATION
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Annual Report of the Compensation Fund 2014106
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE COMPENSATION FUND
Report on the financial statements
Introduction1. I was engaged to audit the financial statements of the Compensation Fund set out on pages 118 to 167, which comprise the statement of financial position as at 31 March 2014, the statements of financial performance, statement of changes in net assets, cash flows and the statement of comparison of budget information with actual information for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.
Accounting Authority responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standard of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and Compensation for Occupational Injuries and Diseases Act (Act No.130 of 1993) (COIDA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor-General’s responsibility3. My responsibility is to express an opinion on the financial statements based on conducting the audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Because of the matters described in the basis for disclaimer of opinion paragraphs, however, I was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.
Basis for disclaimer of opinion
Revenue and receivables from non-exchange transactions4. I was unable to obtain sufficient appropriate audit evidence for Revenue from non-exchange transactions and Receivables from non-exchange transactions as the entity did not maintain proper accounting records, journals and adequate controls over assessment revenue and debtors. Furthermore, the entity does not have processes in place to ensure that all employers are registered with the Fund and assessed in terms of COIDA. This had result in revenue being incorrectly recorded and payments received from debtors were not post into the correct period for the current and prior years. Therefore, the interest on outstanding debtors was not charged and penalties were incorrectly charged based on inaccurate assessment revenue and debtors.
In addition to the above, the entity did not recognise revenue received as service in kind in accordance with Standard of Generally Recognised Accounting Practice (GRAP) 23 Revenue from non-exchange transactions in the current year and prior year. The entity’s records did not permit the application of adequate alternative auditing procedures regarding revenue and receivables from non-exchange transactions. Consequently, I was unable to determine whether any adjustment was necessary relating to Revenue from non-exchange transactions of R8.186 billion (2013: R7.152 billion) and Receivables from non-exchange transactions of R1.446 billion (2013: R2.798 billion).
Allowance for impairment5. The entity did not provide appropriate audit evidence for the amount disclosed in the statement of financial performance for impairment allowance and supporting evidence for the assessment of impairment in accordance with GRAP 104 Financial Instruments. Consequently, I could not determine by any alternative means that whether any adjustment to the allowance for impairment stated at R2.266 billion (2013: R1.148 billion) in the financial statements was necessary.
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Revenue and receivable from exchange transactions6. The entity did not correctly classify revenue and receivables from non-exchange transactions in accordance with GRAP 23 Revenue from non-exchange transactions. Receivables from non-exchange transactions were incorrectly classified as Receivable from exchange transactions. Consequently, Receivables from non-exchange transactions were understated by R511.870 million (2013: R517.860 million) and receivables from exchange transactions were overstated by R511.870 million (2013: R517.860), respectively.
Furthermore, I was unable to obtain sufficient appropriate audit evidence as management did not recognise all revenue from exchange transactions in accordance with GRAP 9 Revenue from exchange transactions for the current year and prior year. The entity records did not permit the application of adequate alternative auditing procedures regarding revenue from exchange transactions. Consequently, I was unable to determine whether any adjustments were required to revenue from exchange transactions stated at R10.910 million (2013: R19.141 million) and receivables from exchange transactions stated at R 527.756 million (2013: R524.351 million).
Benefits paid 7. The entity did not have adequate internal controls to maintain records of benefits paid. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate whether management has correctly accounted for all the claims for the current and prior year. Furthermore material differences were identified between the record of benefits paid and the amount disclosed. The entity records did not permit the application of adequate alternative audit procedures regarding benefits paid. As a consequence, I was unable to determine whether any adjustment is required to benefits paid stated at R2.703 billion (2013: R1.979 billion).
Provision for outstanding claims and decrease in provision for outstanding claims8. The entity did not review and assess the provision for outstanding claims at reporting date and adjust to reflect the best estimate in accordance with GRAP 19 Provisions. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate the amounts disclosed as provision for outstanding claims and change in provision for outstanding claims. I could not confirm, by any alternative means, whether any adjustment to the provision for outstanding claims stated at R6.435 billion (2013: R6.435 billion) and decrease in provision for outstanding claims at R nil (2013: R1.593 billion) in the financial statements was necessary.
Capitalised value of pensions and pension actuarial adjustments9. The entity did not review and assess the capitalised value of pensions at reporting date and adjust to reflect the best estimate in accordance with GRAP 19 Provision. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate the amount disclosed as capitalised value of pensions and pension actuarial adjustments. The entity’s records did not permit the application of adequate alternative auditing procedures. I was therefore unable to determine whether any adjustment was required to capitalised value of pensions stated at R9.716 billion and pension actuarial adjustments stated at R2.416 billion in the financial statements was necessary.
Payables from exchange transactions 10. The entity did not have adequate internal controls to maintain records of benefits paid. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate whether management has correctly accounted for all the payables from exchange transactions for the current and prior year. The entity records did not permit the application of adequate alternative audit procedures regarding payables from exchange transactions. As a consequence, I was unable to determine whether any adjustment is required to payables from exchange transactions stated at R888.872 million (2013: R958.894 million).
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Prior period errors11. The entity did not provide adequate records in respect of prior period errors reported. Therefore, I was unable to obtain sufficient appropriate audit evidence to substantiate the amount disclosed as prior period errors. I could not confirm, by any alternative means, whether any the adjustment to the prior period errors stated at R1.019 billion in the financial statements was necessary.
Cash and cash equivalents 12. The entity did not have adequate internal controls to maintain records for reconciling items of cash and cash equivalent. Therefore, I was unable to obtain sufficient appropriate audit evidence for all the un-reconciled items for cash and cash equivalents. The entity’s records did not permit the application of adequate alternative audit procedures regarding cash and cash equivalents. As a consequence I was unable to determine whether any adjustment to cash and cash equivalents stated at R119.720 million (2013: R1.092 billion) was necessary.
Cash flow statement13. The entity did not provide sufficient appropriate audit evidence to substantiate the calculation for presentation of the cash flow statement. Furthermore inaccurate accounting records were used when preparing the cash flow statement. As a consequence, I could not confirm, by any alternative means, whether any adjustment was required to cash flow statement for the year ended.
Statement of comparison of budget and actual amounts14. The entity did not accurately disclose the approved budget amount and present explanation of the material differences between actual amounts and the budget in the financial statements in accordance with GRAP 24 Presentation of Budget Information in Financial Statements. I could not confirm, by any alternative means, whether any adjustment was required to statement of comparison of budget and actual amounts.
Administration expenses15. The entity did not correctly account for expenses in accordance with GRAP 1 Presentation of financial statements for the current and prior year. Consequently, administration expenses is overstated by R134.394 million (2013: R111.834 million) In addition, management did not maintain adequate internal controls and maintain accounting records in respect of administration expenses. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding administration expenses. The entity’s records did not permit the application of adequate alternative audit procedures regarding administration expenses. I was therefore unable to determine whether any adjustment was required to administration expenses stated at R542.307 million.
Investment revenue16. The entity did not accurately account and disclose the investment revenue in note to the financial statements. This had result in investment revenue in the disclosure note to the financial statements understated by R136.340 million. Furthermore material differences were identified between the investment confirmation and the amount disclosed.
Contingencies17. The entity did not maintain adequate internal controls to maintain accounting records in respect of contingencies. As a consequence, I was unable to obtain sufficient appropriate audit evidence for the amount disclosed as contingencies material differences were also identified between the accounting records provided and amount disclosed. The entity’s records did not permit the application of adequate alternative audit procedures regarding contingencies. I was therefore unable to determine whether any adjustment was required to contingencies stated at R288 million.
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Commitments18. The entity did not maintain adequate internal controls to maintain accounting records in respect of commitments. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding commitments approved and contracted. The entity’s records did not permit the application of adequate alternative audit procedures regarding commitments. Therefore, I was unable to determine whether any adjustments were required to the commitments stated at R4.737 million (2013: R21.517 million).
Irregular expenditure 19. The entity did not maintain adequate controls to maintain accounting records in respect of irregular expenditure. As a consequence, I was unable to obtain sufficient appropriate audit evidence relating to the particulars of irregular expenditure in the notes to the financial statements as per section 55(2)(b)(i) of the PFMA for the current and prior year. The entity records did not permit the application of adequate alternative audit procedures regarding irregular expenditure. Therefore, I was unable to determine whether any adjustment to the irregular expenditure as stated at R138.584 million (2013: R138.584 million) in the financial statements was necessary.
Related party transactions20. The entity did not maintain adequate controls to maintain accounting records in respect of related party transactions. As a consequence, I was unable to obtain sufficient appropriate audit evidence regarding related party disclosures. Furthermore management did not identify and disclose nature of the related party relationships, transactions and outstanding balances in accordance with GRAP 20, related party disclosures. The entity’s records did not permit the application of adequate alternative audit procedures regarding related party transactions. Therefore, I was unable to determine whether any adjustments were required to the related party disclosures.
Aggregation of immaterial uncorrected misstatements21. The financial statements as a whole are materially misstated due to the cumulative effect of numerous individually immaterial uncorrected misstatements in amongst others, the following elements making up the statement of financial position, the statement of financial performance and the notes to the financial statements:
In addition, the entity did not provide assessment of residual values, remaining useful life of assets and impairment of assets in accordance with GRAP 17 Property Plant Equipment. Furthermore the entity did not capitalise lease assets in accordance with GRAP 13 Leases. As a consequence, I was unable to obtain sufficient appropriate audit evidence to substantiate amount disclosed as property plant and equipment and to determine whether any further adjustments to property plan and equipment and leases was necessary.
Disclaimer of opinion22. Because of the significance of the matters described in the basis for disclaimer of opinion paragraphs, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, I do not express an opinion on the financial statements.
Emphasis of matters23. I draw attention to the matters below. My opinion is not modified in respect of these matters.
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Restatement of corresponding figures24. As disclosed in note 31 to the financial statements, the corresponding figures for 31 March 2013 have been restated as a result of an errors discovered during year ended 31 March 2014 in the financial statements of the Compensation Fund.
Material losses25. As disclosed in note 28 to the financial statements, material losses to the amount of R3.008 million (2013: R2.894 million) were incurred as a result of criminal conduct.
Impairments26. As disclosed in the statement of financial performance, material losses to the amount of R2.266 billion (2013: R1.148 billion) were incurred as a result of an increase in the impairment allowance for irrecoverable debtors.
Material underspending of the budget27. As disclosed in the statement of comparison of budget and actual amount, the entity has materially underspent the budget on programme: directorate compensation and directorate medical services to the amount of R3.461 billion.
Additional matter 28. I draw attention to the matter below. My opinion is not modified in respect of this matter.
Material inconsistency in the accounting authority report29. Paragraph 1.1, 1.2 and 2 of the accounting authority’s report is inconsistent with the amount disclosed in the financial statements for assessment revenue, investment revenue, investment assets and benefit claims.
Report on other legal and regulatory requirements
30. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.
Predetermined objectives31. I performed procedures to obtain evidence about the usefulness and reliability of the information in the annual performance report for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2014:
32. I evaluated the reported performance information against the overall criteria of usefulness and reliability.
33. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).
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34. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.
35. The material findings in respect of the selected programmes development priorities or objectives are as follows:
Programme 1: Compensation Directorate
Usefulness of reported performance information36. The National Treasury Framework for managing programme performance information (FMPPI) requires that:
total of 67% of the targets relevant to the programme were not specific in clearly identifying the nature and the required level of performance.
targets.
consistently and is easy to understand and use. A total of 67% of the indicators relevant to the programme were not well defined
37. Management did not take corrective action to address previously reported root causes to correct the technical indicator description and management did not adhere to the requirement of the FMPPI.
Reliability of reported performance information38. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. We were unable to obtain the information and explanations we considered necessary to satisfy ourselves as to the reliability of the reported performance information. This was due to limitations placed on the scope of our work due to the auditee’s records not permitting the application of alternative audit procedures.
Programme 2: Medical Directorate
Usefulness of reported performance information39. The National Treasury Framework for managing programme performance information (FMPPI) requires that:
total of 33% of the targets relevant to the programme were not specific in clearly identifying the nature and the required level of performance.
targets.
consistently and is easy to understand and use. A total of 33% of the indicators relevant to the programme were not well defined.
40. Management did not take corrective action to address previously reported root causes to correct the technical indicator description and management did not adhere to the requirement of the FMPPI.
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Reliability of reported performance information 41. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. We were unable to obtain the information and explanations we considered necessary to satisfy ourselves/myself as to the reliability of the reported performance information. This was due to limitations placed on the scope of our work due to the auditee’s records not permitting the application of alternative audit procedures.
Programme 3: Human Resource Management Directorate
Usefulness of reported performance information42. The National Treasury Framework for managing programme performance information (FMPPI) requires that:
total of 60% of the targets relevant to the programme were not specific in clearly identifying the nature and the required level of performance.
targets.
consistently and is easy to understand and use. A total of 20% of the indicators relevant to the programme were not well defined
programme were not time bound.
43. Management did not take corrective action to address previously reported root causes to correct the technical indicator description and management did not adhere to the requirement of the FMPPI.
Reliability of reported performance information44. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Overall, 25% of the targets were not reliable because we were unable to obtain sufficient appropriate audit evidence for 25% of the targets. In addition, 25% of the targets were not accurate and complete when compared to the source information or evidence provided. This was due to the fact that management excluded information from Provinces when reporting on the targets.
Additional matters45. We draw attention to the following matters
Achievement of planned targets 46. Refer to the annual performance report on pages 33 to 72 for information on the achievement of planned targets for the year. This information should be considered in the context of the findings on usefulness and reliability of the reported performance information in paragraphs 36 to 60 of this report.
Adjustment of material misstatements 47. I identified material misstatements in the annual performance report submitted for auditing on the reported performance information of programme 1: Compensation Directorate. As management subsequently corrected only some of the misstatements, I raised material findings on the usefulness and reliability of the reported performance information.
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Compliance with laws and regulations48. I performed procedures to obtain evidence that the entity has complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation as set out in the general notice issued in terms of the PAA are as follows:
Strategic planning and performance management 49. Effective and appropriate risk assessment was not conducted regularly so as to identify emerging risks of the public entity as required by Treasury Regulation 27.2.1.
Financial statements, performance and annual reports 50. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by section 55(1) (a) and (b) of the Public Finance Management Act. Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected and the supporting records could not be provided subsequently, which resulted in the financial statements receiving a disclaimer audit opinion.
51. The accounting authority did not submit quarterly reports on actual and projected revenue and expenditure to the accounting officer of the department of Labour, as required by Treasury Regulation 26.1.1
Procurement and contract management52. Effective and efficient supply chain management system for acquisition of goods and services were not maintained as required by the Treasury Regulation 16A3.1.
53. Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury Regulation 16A6.1.
54. Goods and services of a transaction value above R500 000 were procured without inviting competitive bids, as required by Treasury Regulations 16A6.1. Deviations were approved by the accounting officer even though it was not impractical to invite competitive bids, in contravention of Treasury regulation 16A6.4.
55. Invitations for competitive bidding were not always advertised in at least the government tender bulletin, as required by Treasury Regulations 16A6.3(c).
56. Sufficient appropriate audit evidence could not be obtained that bid adjudication was done by committees which were composed in accordance with the policies of the entity, as required by Treasury Regulations 16A6.2(a), (b) and (c).
57. Contracts were awarded to bidders who did not submit a declaration of past supply chain practices such as fraud, abuse of SCM system and non-performance, which is prescribed in order to comply with Treasury regulation 16A9.2.
58. Contracts and quotations were awarded to suppliers whose tax matters had not been declared by the South African Revenue Services to be in order as required by Treasury Regulations 16A9.1(d) and the Preferential Procurement Regulations.
59. Sufficient appropriate audit evidence could not be obtained that contracts and quotations were awarded to bidders based on points given for criteria that were stipulated in the original invitation for bidding and quotations, as required by SCM regulation Treasury Regulations 16A6.3(a) and Preferential Procurement Regulations.
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60. Sufficient appropriate audit evidence could not be obtained that the preference point system was applied in all procurement of goods and services above R30 000 as required by section 2(a) of the Preferential Procurement Policy Framework Act and Treasury Regulations 16A6.3(b).
Expenditure management61. The accounting authority did not take effective steps to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the Public Finance Management Act.
Revenue management62. Effective and appropriate steps were not taken to collect all money due, as required by section 51(1)(b)(i) of the Public Finance Management Act and Treasury Regulations 31.1.2(a) and 31.1.2(e).
63. Not all employers were correctly assessed or provisionally assessed by the director-general according to a tariff of assessment calculated on the basis of such percentage of the annual earnings of his or her employees as the director-general as required by section 83(1) of the COIDA.
64. Penalties for late submission of return of earnings and penalties for late payment of assessment were not correctly charged as required by sections 83 (6) (b) and 87(1) of COIDA for some of the employers.
65. Interest was not charged on all arrears accounts as required by section 86(2) of COIDA.
Claims and payables management66. The accounting authority did not maintain an effective control environment to accept, adjudicate, and make payments to the injuries as required by section 22 and 29 of COIDA.
Liability management 67. Loan were issued without the approval of the Minister of Finance or an official authorised by the Minister, in contravention of section 66(3)(c) of the Public Finance Management Act.
Consequence management68. Effective and appropriate disciplinary steps were not taken against officials who incurred and permitted irregular expenditure, as required by section 51(1)(e)(iii) of the Public Finance Management Act. This is because instances of Irregular expenditure were not investigated
69. Allegations of failure to comply with the supply chain management system laid against officials and role players in the supply chain management system were not investigated, as required by Treasury Regulation 16A9.1(b).
70. Disciplinary hearings were not held for financial misconduct committed by officials, as required by Treasury Regulation 33.1.1.
71. Disciplinary hearings were not held for confirmed cases of financial misconduct committed by the accounting authority, as required by Treasury Regulation 33.1.3.
Internal control
Leadership72. The commissioner did not hold management accountable for poor service delivery and poor audit outcomes. This resulted in no improvement in key controls over processing of claims, debt collection, non-compliance with legislation and the quality of the financial statement has further regressed.
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73. Management did not exercise oversight responsibility to implement and monitor the new turnaround strategy and its action plan to address previously reported material misstatement as well as internal control deficiencies. This resulted in the recurrence of numerous findings that were reported in the prior years.
74. The entity lack finance leadership and adequate sound management, financial and accounting skills and competencies. Management has not implemented a process to manage poor performance in the fund, resulting in extensive use of external service providers to perform functions of some of the staff members in finance, claims processing and debt collection. In addition management has not implemented a process to manage poor performance and take necessary intervention against employees who fail to meet the expected level of performance and no disciplinary action was taken against employees who committed misconduct.
Financial and performance management75. The information system implemented did not support the entity operation and financial function, in addition manual procedures were not effective to ensure that credible and reliable information is available. As a result, management did not prevent, detect and disclose all the material misstatements to the financial statements, performance information and non-compliance with laws and regulations.
Governance76. The fund risk management assessment was not adequate to ensure that strategic, operational, financial and information technology risks and fraud prevention strategy are adequately identified, addressed and monitored.
77. The audit committee and internal audit department have great concern that there is lack of management ability to monitor the entity’s performance. They have engaged with external auditors and escalated the issues to the commissioner and executive authority with the expectation that management will implement strategies, resolutions and action plans to improve the control environment and performance. However no improvement has been noted.
Other reports
Investigations78. An investigation was conducted by an independent consulting firm on request of the audit committee. The investigation was initiated based on allegations of financial misconduct. The investigation was completed and it was recommended that the entity must institute disciplinary action against certain employees. Disciplinary hearing was not held and no action was taken.
Pretoria31 July 2014
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE COMPENSATION FUND
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Annual Report of the Compensation Fund 2014116
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Annual Report of the Compensation Fund 2014 117
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014
The reports and statements set out below comprise the Annual Financial Statements presented to
parliament:
Index PageStatement of Financial Position 118
Statement of Financial Performance 119
Statement of Changes in Net Assets 120
Cash Flow Statement 121
Statement of Comparison of Budget and Actual Amounts 122
Accounting Policies 124
Notes to the Annual Financial Statements 141
The following supplementary information does not form part of the Annual Financial Statements
and is unaudited:
Detailed Income statement 168
The Annual Financial Statements set out on pages 118 to 169, which have been prepared on the going
concern basis, were approved by the Compensation Fund Board on 31 May 2014 and were signed on its
behalf by:
Mr Shardrack Mkhonto
Compensation Commissioner
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Assets
Current AssetsInvestments 13 13,688,412 11,417,761Inventories 14 2,601 -Receivables from exchange transactions 15 527,756 524,351
Receivables from non-exchange transactions 16 1,445,890 2,797,891Cash and cash equivalents 17 119,720 1,092,748
15,784,379 15,832,751
Non-Current AssetsProperty, plant and equipment 19 84,622 86,447Investments 13 27,735,226 23,929,937Investment property 18 4,900 8,600
27,824,748 24,024,984
Non-Current Assets 27,824,748 24,024,984Current Assets 15,784,379 15,832,751Total Assets 43,609,127 39,857,735
Liabilities
Current LiabilitiesProvision for outstanding claims 20 2,239,000 2,239,000Accruals 22 93,672 113,933Payables from exchange transactions 23 958,894 888,872
3,291,566 3,241,805
Non-Current LiabilitiesProvision for outstanding claims 20 4,196,000 4,196,000Capitalised value of pensions 21 9,716,213 10,085,480
13,912,213 14,281,480Total Liabilities 17,203,779 17,523,285Assets 43,609,127 39,857,735Liabilities (17,203,779) (17,523,285)Net Assets 26,405,348 22,334,450ReservesRevaluation reserve 32 53,945 53,945Accumulated surplus 26,351,403 22,280,505Total Funds and Reserves 26,405,348 22,334,450
2014 2013RESTATED
NOTE(S) R’000 R ‘000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Financial Position as at 31 March 2014
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2014 2013RESTATED
NOTE(S) R’000 R ‘000
Revenue
Revenue from non-exchange transactions 3 8,185,636 7,152,001
Revenue from exchange transactions 4 10,910 19,141
Investment revenue 5 1,735,315 4,121,073
Total revenue 9,931,861 11,292,215
Expenses
Benefits paid 6 (2,703,129) (1,978,843)
Administration expenses 7 (542,307) (536,436)
Employee costs - salaried staff 8 (343,902) (306,905)
Board members fees 9 (1,587) (577)
Loss on disposal of assets (134) -
Finance cost 10 (6) (130)
Total expenses (3,591,065) (2,822,891)
Other gains/losses
Fair value adjustments on Investment property 11 (3,700) 4,058
Pension actuarial adjustments 21 - 2,416,000
Decrease in provision for outstanding claims 20 - (1,593,000)
Increase in allowance for impairment of receivables (2,266,199) (1,148,508)
Total other gains/losses (2,269,899) (321,450)
Profit (loss) for the period from continuing operations 4,070,897 8,147,874
Profit (loss) from discontinued operations - -
Surplus for the year 4,070,897 8,147,874
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Financial Performance as at 31 March 2014
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Opening balance as previously reported 53,945 14,133,993 14,187,938
Adjustments
Prior period errors - (5,704) (5,704)
Balance at 1 April, 2013 as restated 53,945 14,128,289 14,182,234
Changes in net assets
Surplus for the year - 8,147,874 8,147,874
Transfer of unclaimed monies - 4,342 4,342
Total changes - 8,152,216 8,152,216
Balance at 1 April, 2013 as restated 53,945 22,280,506 22,334,451
Changes in net assets
Surplus for the year - 4,070,897 4,070,897
Total changes - 4,070,897 4,070,897
Balance at 31 March 2014 53,945 26,351,403 26,405,348
GRAND TOTALRESERVES
R’000
REVALUATIONRESERVE
R’000
COMPENSATIONRESERVES
R’000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Changes in Net Assets as at 31 March 2014
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Cash flows from operating activities
Receipts
Contributions received 7,278,944 6,422,111
Interest received 2,596,167 2,105,693
Dividends received 148,779 106,807
10,023,890 8,634,611
Payments
Employee costs (332,619) (332,856)
Cash payments in respect of claims and other expenditure (4,568,230) (1,877,723)
Investment management fees (12,876) (11,970)
(4,913,725) (2,222,549)
Total receipts 10,023,890 8,634,611
Total payments (4,913,725) (2,222,549)
Net cash flows from operating activities 24 5,110,165 6,412,062
Cash flows from investing activities
Purchase of property, plant and equipment 19 (7,817) (3,386)
Proceeds from sale of property, plant and equipment 19 564 -
Net change in investments (6,075,940) (5,710,955)
Net cash flows from investing activities (6,083,193) (5,714,341)
Net increase/(decrease) in cash and cash equivalents (973,028) 697,721
Cash and cash equivalents at the beginning of the year 1,092,748 395,027
Cash and cash equivalents at the end of the year 17 119,720 1,092,748
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Cash Flow Statement as at 31 March 2014
2014 2013RESTATED
NOTE(S) R’000 R ‘000
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Revenue from transactions
Contribution by employer 5,227,207 - 5,227,207 7,974,596 2,747,389
Interest on late payment of contribution
268,741 - 268,741 - (268,741) -
Penalties on late payment of contributions
96,042 - 96,042 211,040 114,998
Administrative contributions by employers (s 88)
16,127 - 16,127 3,456 (12,671)
Rental income 143,368 - 143,368 942 (142,426)
Other income from computer equipment
- - - 6,513 6,513
Interest received 3,156,694 - 3,156,694 1,586,536 (1,570,158)
Dividend revenue 111,005 - 111,005 148,779 37,774
Total revenue from transactions
9,019,184 - 9,019,184 9,931,862 913,051
Expenditure
Compensation for permanent disability
(559,869) - (559,869) (87,029) 472,840
Compensation for temporary disability
(218,966) - (218,966) (69,753) 149,213
Pension capitalised during the year
(2,689,000) - (2,689,000) (420,428) 2,268,572
Constant attendance allowance (15,134) - (15,134) (14,553)581
Medical claims (2,700,000) - (2,700,000) (2,129,333) 570,667
Recoveries from third parties - - - 17,967 17,967
Employee cost (430,145) - (430,145) (343,902) 86,243
Board members fees (850) - (850) (1,587) (737)
Depreciation, amortisation and impairments
- - - (8,943) (8,943)
Finance costs (1,512) - (1,512) (6) 1,506
Reversal of assessments, interest and penalties
(586,682) - (586,682) (61,071) 525,611
Repairs and maintenance (17,155) - (17,155) (13,970) 3,185
General expenses (103,867) - (103,867) (67,781) 36,086
ApprovedbudgetR’000
AdjustmentsR’000
Final Budget R’000
Actual amountson comparable
basisR’000
Differencebetween final
budget andactualR’000
ReferenceR’000
Budget on Accrual Basis
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Comparison of Budget and Actual Amounts as at 31 March 2014
Statement of Financial Performance
Revenue
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ApprovedbudgetR’000
AdjustmentsR’000
Final Budget R’000
Actual amountson comparable
basisR’000
Differencebetween final
budget andactualR’000
ReferenceR’000
Audit fees (29,000) - (29,000) (9,160) 19,840
Consulting and professional fees
(646,381) - (646,381) (62,965) 583,416
Compensation related expenses (13,706) - (13,706) (2,419) 11,287
Investment management fee (13,500) - (13,500) (12,876) 624
PPP (150,000) - (150,000) (8,994) 141,006
Lease rentals on operating lease
(43,321) - (43,321) (25,342) 17,979
Legal expenses (10,060) - (10,060) (3,655) 6,405
Assets less than R5,000 (11,080) - (11,080) (789) 10,291
Printing and stationery (17,149) - (17,149) (4,904) 12,245
Prevention of accidents (13,000) - (13,000) (3,254) 9,746
Software expenses (62,619) - (62,619) (67,040) (4,421)
Travel and subsistence (58,669) - (58,669) (48,203) 10,466
Training (14,802) - (14,802) (2,870) 11,932
Venue expenses (11,833) - (11,833) (3,678) 8,155
Interest on late capitalisation of pension
(200,000) - (200,000) (134,394) 65,606
Total expenditure (8,618,300) - (8,618,300) (3,590,932) 5,027,368
Operating surplus 400,884 - 400,884 6,340,930 5,940,046
Loss on disposal of assets and liabilities
- - - (134) (134)
Fair value adjustments - - - (3,700) (3,700)
Increase/(decrease) in allowance for impairment of receivables
- - - (2,266,199) (2,266,199)
- - - (2,270,033) (2,270,033)
400,884 - 400,884 6,340,930 5,940,046
- - - (2,270,033) (2,270,033)
Surplus for the year 400,884 - 400,884 4,070,897 3,670,013
Deficit before taxation 400,884 - 400,884 4,070,897 3,670,013
Taxation - - - - -
Actual Amount on Comparable Basis as Presented in the Budget and Actual Comparative Statement
400,884 - 400,884 4,070,897 3,670,013
Reconciliation
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2014Statement of Comparison of Budget and Actual Amounts as at 31 March 2014
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1. Significant accounting policies
The Compensation Fund (“Fund”) is a National Public Entity listed in Schedule 3A of the Public Finance Management Act (“PFMA”), Act No 1 of 1999 (as amended by Act 29 of 1999). The principle accounting policies applied in the preparation and presentation of these Annual Financial Statements are set out below. These policies have been consistently applied to the years presented, unless otherwise stated.
1.1. Basis of preparation
The Fund’s Annual Financial Statements are prepared in accordance with the Standards of Generally Recognised Accounting Practice (“GRAP”) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with Section 55 of the Public Finance Management.
These Annual Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise.
In terms of Notice 991 and 992 in Government Gazette 28095 of December 2005 and Notice 516 in Government Gazette 31021 of 9 May 2008, the Fund must comply with the requirements of GRAP. Directive 5 details the GRAP Reporting Framework comprising the effective standards of GRAP, interpretations of such standards (“GRAPs”) issued by the ASB, ASB guidelines, ASB directives, and standards and pronouncements of other stand setters, as identified by the ASB on an annual basis. The standards that are effective and relevant to the Fund are listed below:
Title StandardGRAP 1 Presentation of financial statementsGRAP 2 Cash flow statementsGRAP 3 Accounting policies, changes in accounting estimates and errors GRAP 4 The effects of changes in foreign exchange ratesGRAP 5 Borrowing costsGRAP 9 Revenue from exchange transactionsGRAP 12 InventoryGRAP 13 LeasesGRAP 14 Events after the reporting dateGRAP 16 Investment propertyGRAP 17 Property, plant and equipmentGRAP 18 Segment reportingGRAP 19 Provisions, contingent liabilities and contingent assetsGRAP 20 Related partiesGRAP 21 Impairment of non-cash generating assetsGRAP 23 Revenue from non-exchange transactionsGRAP 24 Presentation of budget information in the financial statement GRAP 25 Employee benefitsGRAP 26 Impairment of cash-generating assets GRAP 31 Intangible assetsGRAP 104 Financial instrumentsIFRS 7 Financial instruments: disclosuresIAS 19 Employee benefitsIAS 32 Financial instruments: presentationIAS 39 Financial Instruments: recognition and measurementDirective 02 Transitional provisions for adoption of standards of GRAP by public entities, municipal entities and constitutional institutions.
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Accounting policies for material transactions, events or conditions not covered by the GRAP reporting framework, as detailed above, have been developed in accordance with paragraphs 7, 11 and 12 of GRAP 3 and the hierarchy approved in Directive 5 issued by the ASB.
1.2. Presentation currency
The Annual Financial Statements are presented in South African Rand (“ZAR”), which is the functional currency of the Fund.
1.3. Standards and amendments to standards issued but not effective
The following standards and amendments to standards have been issued but are not effective.
STANDARD SUMMARY AND IMPACT EFFECTIVE DATE
GRAP 105 – Transfer of functions between entities under common control
This standard requires the establishment of accounting principles for the acquirer and transferor in a transfer of functions between entities under common control
No effective date has been determined by the Minister of Finance
GRAP 106 – Transfer of functions between entities not under common control
This standard requires the establishment of accounting principles for the acquirer in a transfer of functions between entities not under common control
No effective date has been determined by the Minister of Finance
GRAP 107 – Mergers This standard requires the establishment of accounting principles for the combined entity and combining entities in a merger
No effective date has been determined by the Minister of Finance
1.4. Rounding
Unless otherwise stated, all financial figures have been rounded to the nearest one thousand Rand (R ‘000).
1.5. Use of estimates and judgement
In preparing the Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the Annual Financial Statements. Estimates and underlying assumptions are reviewed on an ongoing basis, based on historical experience and other factors including expectations. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
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1.5.1. Accrual for assessments not raised
Where assessments have not been raised, the Fund makes an estimate by the assessments revenue due from employers. The estimate is based on the most recent assessment recognised in the previous four years impairment, blocked and inactive employees are not included in the estimate.
1.5.2. Accrual for accumulated leave and service bonus
The Fund opted to treat its provision for leave and service bonus (thirteenth cheque) as an accrual.
The cost of all short-term employee benefits is recognised during the period in which the employee renders related service. Employee entitlements are recognised when they accrue to employees. An accrual is recognised for the estimated liability as a result of services rendered by employees up to the reporting date. Accruals relating to employee benefits include annual leave, capped leave and a thirteenth cheque.
1.6. Recognition of revenue contributions
Assessments are recognised on the accrual basis of accounting, at fair value of the consideration received or receivable and consists of assessments issued to registered employers in terms of the Compensation for Occupational Injuries and Diseases Act, (Act No 130 of 1993).
1.6.1. Revenue from non-exchange transactions
Revenue from non-exchange refers to transactions where the Fund received revenue from employers without directly giving an approximately equal value for exchange. Revenue from non-exchange transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no obligation or condition to repay the amount. Revenue from non-exchange transactions includes assessments, penalties and interest.
Interest is recognised, in surplus or deficit, using the effective interest rate method. Penalties are recognised when raised on the individual accounts.
1.6.2. Revenue from exchange transactions
Revenue from exchange transactions refers to revenue that accrued to the Fund directly or indirectly in return for the services rendered or/and goods sold, the value of which approximates the consideration received or receivable. Revenue from exchange transactions includes rent, services rendered for exempted employers and other revenue that may accrue to the Fund
1.7. Claims incurred
Claims incurred comprise the total estimated cost of claims that have occurred in the year and for which the Fund is responsible, whether or not reported by the end of the year. Claims and loss adjustment expenses are charged to surplus or deficit as incurred, based on the estimated liability for compensation. The Fund does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are calculated based on an estimated average cost per claim for each underwriting year. The incurred but not reported claims (“IBNR”) are based on estimated unreported claims as calculated by the actuaries. The average cost per claim is based on the actual claims paid and awards made, and estimated outstanding costs (based on the latest and most reliable information available), and the number of claims registered.
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1.8. Provision for outstanding claims
Liabilities for unpaid claims are calculated based on a long-term trend of annual claim payments. The long term trend is achieved by grouping claims paid in each of the previous ten financial years according to the year of the accident or diagnosis of the disease and the number of years until a payment is made. The Fund makes an allowance for short-term factors and future claims inflations to project the likely incidence of future claim payments. Furthermore, a ‘tail factor’ is applied to the results to reflect the fact that the claims data contains claim payments in respect of accidents that occurred ten or more years ago.
The average cost per claim is based on the actual claims paid and awards made, estimated outstanding costs (based on the latest and most reliable information available) and the number of claims registered.
1.9. Employee benefits
1.9.1. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.
1.9.2. Defined contribution plans
The Fund makes contributions to a defined contribution plan for employees. All employees are part of the defined contribution plan. A defined contribution plan is a post-employment benefit plan under which a fund pays fixed contributions into a separate Fund and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit in the periods during which services are rendered by employees.
1.10. Liability adequacy test in respect of claims and benefits
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the insurance liabilities. In performing these tests, current best estimates of future cash flows and administration expenses, as well as investment income, are used. Any deficiency is recognised in the surplus/deficit for the year. This is done based on actuarial valuations.
Contracts under which the Fund accepts significant insurance risk from another party (the claimant) by agreeing to compensate the claimant if a specified uncertain future event (the insured event) adversely affects the claimant, are classified as insurance contacts. The Fund accepts insurance risk as it is mandated by legislation to compensate victims of work related accidents for injuries suffered as a result of work related accidents.
1.11. Capitalised value of pensions
Pensions are paid to disabled claimants, and widows and children of deceased workers from work-related accidents or occupational diseases. The capitalised value of pensions (“CVP”) is the present value of future liabilities. The liability is based on assumptions as to future pension increases, mortality, demographics,
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management expenses and investment income, which are reviewed by management on an annual basis for reasonableness. The present value also provides for probable costs payable to the spouse and/or children on subsequent death of the pensioner. In addition to this basic liability value, contingency reserves are held to cover the possible impact of adverse variations of the Compensation Fund. This liability is recalculated at each reporting date, using the assumptions above. Independent actuarial valuations of the CVP are carried out annually and adjusted for any changes in the assumptions. Adjustments to the CVP are included in the surplus or deficit for the year.
1.12. Operating leases – lessee
Leases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating leases. Payments made under operating leases are expensed on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
1.13. Property, plant and equipment
Assets accounted for using the revaluation model
Land and buildings comprise mainly of office buildings. Land and buildings are shown at the revalued amount, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation and impairment losses for buildings. Land and buildings were revalued according to the Income Capitalisation approach. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.
Increases in the carrying amount arising on revaluation of land and buildings are credited to revaluation reserves in the statement of changes in net assets. However, increases shall be recognised in surplus/deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus/deficit. Decreases that offset previous increases of the same asset are charged against other revaluation reserves directly in statements of changes in net assets. All other decreases are charged to the statement of financial performance. Each year the difference between depreciation based on the revalued carrying amount of the asset is charged to the statement of financial performance and depreciation based on the asset’s original cost is transferred from revaluation reserves to accumulated funds.
Land is not depreciated.
Assets accounted for using the cost model
Other items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the assets. Where an item of property, plant and equipment (“PPE”) is acquired at nil or nominal cost (i.e. a non-exchange transaction) the item is recognised initially at its fair value.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.Subsequent costs are included in the assets carrying amount, only when it is probable that future economic benefits associated with the item will flow to the Fund and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of financial performance during the financial period in which they are incurred.
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Depreciation on other assets is calculated using the straight-line method to allocate their cost amounts to their residual values over their estimated useful lives, as follows: property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses except for land which is carried at revalued amount being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The useful lives of items of property, plant and equipment have been assessed as follows:
Item Average useful lifeLand IndefiniteBuildings 50 yearsEscalators and elevators 12 – 20 yearsFurniture and fixtures 6 – 10 yearsMotor vehicles 5 yearsIT equipment 3 years
The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.
Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
Assets less than R5,000/capitalisation threshold (assets of a capital nature but costing less than R5,000/capitalisation threshold per unit) are treated as current payments and not capitalised as assets as determined in the economic reporting format.
1.14. Investment property
Investment property includes land and buildings which comprise mainly of office buildings that are held to earn rentals. The Fund uses the fair value model to account for the investment property. Investment property is initially recognised at cost. Subsequently investment property is measured at its fair value. The fair value of investment property is based on annual valuations by external independent valuers, less subsequent fair value adjustments. Land and buildings were revalued according to the Income Capitalisation approach.
The gains and losses arising from the change in fair value of investment property are included in the surplus or deficit for the year.
Investment properties are derecognised when either they are disposed of.
Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.
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1.15. Impairment of non-financial assets
The carrying amounts of the Fund’s non-financial assets, except for investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.
The Fund’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in surplus or deficit. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the assets in the units on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the statement of financial performance.
1.16. Recognition of investment income
Investment income comprises interest income on funds invested, dividend income, changes in the fair value of financial assets at fair value through surplus or deficit. Interest income is recognised as it accrues in surplus or deficit. Interest income is recognised on a time proportion basis, by reference to the nominal value and the effective interest method. Dividend income is recognised when the shareholders’ rights to receive payment have been established. Realised and unrealised gains and losses arising from changes in the fair value of instruments traded in an active market are recognised in the surplus/deficit in the period in which they arise.
1.17. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
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Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.
A derivative is a financial instrument or other contract with all three of the following characteristics:
price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’)
other types of contracts that would be expected to have a similar response to changes in market factors
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.
A financial asset is:
- receive cash or another financial asset from another entity; or- exchange financial assets or financial liabilities with another entity under conditions that are potentially
favourable to the entity.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
A financial liability is any liability that is a contractual obligation to:
entity.
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Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. Loans payable are financial liabilities, other than short-term payables on normal credit terms.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
A financial asset is past due when a counterparty has failed to make a payment when contractually due.
A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as:
as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or
the net assets of an entity.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.
Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that:
Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.
Financial instruments at fair value comprise financial assets or financial liabilities that are:
- it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or- on initial recognition it is part of a portfolio of identified financial instruments that are managed together and
for which there is evidence of a recent actual pattern of short term profit-taking;
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- non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and
- financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost
Classification
The entity has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:
Class CategoryLoans and other receivables Financial asset measured at amortised costReceivables from exchange transactions Financial asset measured at amortised cost Receivables from non-exchange transactions Financial asset measured at amortised cost Cash and cash equivalents Financial asset measured at fair valueFair value through profit and loss – held for trading Financial asset measured at fair value Designated as at fair value through profit and loss Financial asset measured at fair value
The entity has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:
Class CategoryProvision for outstanding claims Financial liability measured at amortised costPayables from exchange transactions Financial liability measured at amortised cost
Initial recognition
The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument.
The entity recognises financial assets using trade date accounting.
Initial measurement of financial assets and financial liabilities
The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.
The entity measures a financial asset and financial liability initially at its fair value.
Subsequent measurement of financial assets and financial liabilities
The entity measures all financial assets and financial liabilities after initial recognition using the following categories:
All financial assets measured at amortised cost, or cost, are subject to an impairment review.
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Fair value measurement considerations
The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the entity establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, an entity calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.
The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.
Reclassification
The entity does not reclassify a financial instrument while it is issued or held unless it is:
Where the entity cannot reliably measure the fair value of an embedded derivative that has been separated from a host contract that is a financial instrument at a subsequent reporting date, it measures the combined instrument at fair value. This requires a reclassification of the instrument from amortised cost or cost to fair value.
If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the entity reclassifies the investment from fair value to cost. The carrying amount at the date that fair value is no longer available becomes the cost.
If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the entity reclassifies the instrument from cost to fair value.
Gains and losses
A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.
For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.
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Impairment and uncollectibility of financial assets
The entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Financial assets measured at amortised cost:
If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly or by adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.
Financial assets measured at cost:
If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.
Derecognition
Financial assets
The entity derecognises financial assets using trade date accounting.
The entity derecognises a financial asset only when:
asset; or
has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity:- derecognise the asset; and- recognise separately any rights and obligations created or retained in the transfer.
The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.
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If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognise either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset.
If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the entity recognises the new financial asset, financial liability or servicing liability at fair value.
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.
If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.
If a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset, the entity continues to recognise the transferred asset in its entirety and recognises a financial liability for the consideration received. In subsequent periods, the entity recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset.
Financial liabilities
The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.
An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.
The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from non-exchange transactions (taxes and transfers).
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Presentation
Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
Distributions to holders of residual interests are debited by the entity directly to net assets, net of any related income tax benefit [where applicable]. Transaction costs incurred on residual interests is accounted for as a deduction from net assets, net of any related income tax benefit.
A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.
1.18. Key management personnel
Key management personnel are staff that have the authority and responsibility for planning, directing and controlling the activities of the Compensation Fund. Compensation paid to key management personnel is included in the Disclosure Notes.
1.19. Provisions
Provisions are recognised when:
to settle the obligation; and
The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.
Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.
The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.
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Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.
Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.
A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits.
If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 25.
1.20. Unclaimed monies
If money owing to an employee or his/her dependant has remained unpaid after 12 months because it has not been claimed and the person in question has not been traced, the Compensation Commissioner shall effect a notice to be published annually in the Government Gazette with particulars of every unclaimed amount of more than R100. Any person claiming the amount shall be called upon to submit his/her claim to the Commissioner within one month after the date of the notice.
If at the expiration of the said month, no claim has been submitted, or a claim that has been submitted has been rejected by the Compensation Commissioner, the said amount shall be paid into the reserve fund.
1.21. Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.
1.22. Inventories
Inventories are initially measured at cost except where inventories are acquired through a non-exchange transaction, then their costs are their fair value as at the date of acquisition.
Subsequently inventories are measured at the lower of cost and net realisable value.
Inventories are measured at the lower of cost and current replacement cost where they are held for:
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Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs necessary to make the sale, exchange or distribution.
Current replacement cost is the cost the entity incurs to acquire the asset on the reporting date.
The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.
The cost of inventories is assigned using the formula. The same cost formula is used for all inventories having a similar nature and use to the entity.
When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
Change in accounting policy
The entity changed its accounting policy for inventories in 2014. The change in accounting policy is made in accordance with its transitional provision as per Directive 2 of the GRAP Reporting Framework.
According to the transitional provision, the entity is not required to measure inventories for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Inventories. Inventories has accordingly been recognised at provisional amounts, as disclosed in 14. The transitional provision expires on .
In accordance with the transitional provision as per Directive 2 of the GRAP Reporting Framework, where inventories was acquired through a transfer of functions, the entity is not required to measure the inventories for a period of three years from the effective date of the transfer of functions or the effective date of the Standard, whichever is later. The entity acquired a transfer(s) of function in 2014 and inventories has accordingly been recognised at provisional amounts, as disclosed in 14.
Until such time as the measurement period expires and inventories is recognised and measured in accordance with the requirements of the Standard of GRAP on Intangible assets, the entity need not comply with the Standards of GRAP on:
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The exemption from applying the measurement requirements of the Standard of GRAP on Inventories implies that any associated presentation and disclosure requirements need not be complied with for inventories not measured in accordance with the requirements of the Standard of GRAP on Inventories.
1.23. Related parties
The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties.
Key management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.
Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, management in their dealings with the entity.
Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.
1.24. Event after the reporting date
Recognised amounts in the Annual Financial Statements are adjusted to reflect events arising after the reporting date that provide evidence of conditions that existed at the reporting date. Events after the reporting date that are indicative of conditions that arose after the reporting are dealt with by way of a note.
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COMPENSATION PORTFOLIO PENSION PORTFOLIOFINANCIAL INSTRUMENT 2014 2013 2014 2013
AAA/Aaa 65.59 % 67.32 % 68.74 % 82.45 %AAA/Aa1 0.71 % 4.61 % 14.96 % 2.41 %AA/Aa2 2.24 % 17.41 % 14.36 % 11.55 %AA/Aa3 0.63 % 5.33 % 0.21 % 2.07 %A+/A1 0.22 % 5.33 % - 0.49 %A/A2 - - - 1.03 %A-/A3 - - 1.73 % 1.03 %Non-rated 30.61 % - - 1.03 %
100.00 % 100.00 % 100.00 % 100.00 %
2. Risk management
Financial risk management
In terms of Section 18(2) of the Compensation of Occupational Diseases Act (Act no 130 of 1993 (“COIDA”), the Public Investment Corporation (“PIC”) is appointed as the Fund’s Investment Manager. The Fund transfers surplus cash to the PIC to invest in terms of the Fund’s investment strategy and the investment policy of the PIC. All investments and deposits are registered by the PIC in the Fund’s portfolio account.
The Fund is exposed to financial risk through its financial assets and liabilities. The main components of financial risk are:
Credit risk
The Fund has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. The key areas of exposure are amounts due from employers and investment securities. Assessments due are represented by assessments raised on employers. Assessments raised are distributed nationally across different classes of employers in terms of an industrial classification approved by the Director-General as supported by the Compensation for Occupational Injuries and Diseases Act (Act no 130 of 1993).
Account receivables are presented net of allowance for impairment, estimated by the Fund’s management based on prior experience and the current environment. The credit risk with respect to account receivables is limited due to the large number of employers and their distribution across different industries and geographical areas. However, recoveries of outstanding amounts from liquidated and deceased estates carries a higher risk of non-recovery, due to the nature of accounts.
The Act provides the framework wherein the Fund assess employers and collects the assessments due. The Fund has policies and procedures in place to ensure that assessments are made accurately and followed up timely, including issuing of penalties and interest on late payment.
The Fund has an approved credit risk policy, which has been included in the investment mandate given to the Asset manager. The Fund utilises the policy to manage the credit risk limits and exposures by constraining the magnitude and tenor of exposures to counterparties and issuers.
The Fund also uses the DI900 as a guide on limit setting for the Banking institutions. The Compensation Fund only invests in listed instruments that are at least “A”s defined by Fitch IBCA or any recognised credit rating agency. The mandate also permits investment in the following asset classes: cash, money markets, capital markets and domestic equities.
Financial assets exposed to credit risk at year end were as follows:
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Concentration of credit risk
The carrying amount of financial assets (net of impairment losses) represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
COMPENSATION PORTFOLIO
PENSION PORTFOLIO TOTAL
2014 2013 2014 2013 2014 2013
R ‘000 R ‘000 R ‘000 R ‘000 R ‘000 R ‘000
Capital market 17,346,585 13,634,444 10,562,002 10,496,279 27,908,587 24,130,723
Equity 1,202,208 972,523 2,984,691 2,740,697 4,186,899 3,713,220
Money markets 7,414,674 6,248,299 1,444,529 939,703 8,859,203 7,188,002
Cash and cash equivalents
235,671 115,643 233,277 240,869 468,948 356,512
Trade and other receivables
1,445,890 2,797,891 - - 1,445,890 2,797,891
27,645,028 23,768,800 15,224,499 14,417,548 42,869,527 38,186,348
Money market and cash
Establishment of Investment limits per issuer for money markets.
Money market instruments are spread across the South African Banks with a minimum of credit rating of “A” in order to diversify the counterparties exposure.
The limits are guided by DI900 information from the South African Reserve Bank. The limits are as follows:
INSTRUMENTS MAXIMUM LIMIT PER ISSUER
ABSA 0% – 40%
FirstRand 0% – 40%
Investec 0% – 40%
Nedbank 0% – 40%
Standard Bank 0% – 40%
Other Issuers 0% – 40%
Capital markets
Establishment of investment limits per issuer for Capital markets.
INSTRUMENTS MAXIMUM LIMIT PER ISSUER
Government bonds 0% – 100%
Other bonds (Corporate, Parastatal etc.)
0% – 20%
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Collateral
Licences held in terms of Section 30 of COIDA to carry out the business of the Fund in certain industries have been issued by the Minister of Labour to two mutual associations Rand Mutual Association (“RMA”) and Federation of Employers Association (“FEMA”). These mutual associations must deposit securities with the Fund to cover their liabilities. Furthermore national, provincial government departments as well as certain local authorities have been granted exemption from paying the annual assessments and are liable to pay compensation to their injured employees at their workplace. In terms of Section 30 of the Act, these exempted employers are required to deposit securities with the Fund. These securities are equivalent to the capitalised pension of their employees.
If mutual associations or exempted employers fail to meet in full their liabilities, in terms of the Act the Fund may apply such securities to pay their liabilities, and the balance of the liabilities and future liabilities of the employer will have to be paid from the Fund’s reserves. The securities thus controlled by the Fund amounts to R309,3 million (2013 R1,578 million).
Liquidity risk
The Fund is exposed to a daily call on its available cash resources, arising mostly from short-term claims. Liquidity risk is the risk that cash resources or other financial assets are not available to pay claims when due. The Fund ensures that adequate levels of cash are immediately available without incurring penalties. Cash flow reports are prepared daily to ensure that the Fund has sufficient funds to cover all operational expenses. The Fund’s investment mandate is guided by its operational requirements.
The Fund’s asset allocation ranges and attribution analysis on overall performance benchmark as per investment agreement.
Compensation investment portfolio
Pension investment portfolio
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
CategoryAsset allocation
ranges
Attribution analysis on overall performance for the portfolio on overall benchmark
Cash and money market 30% 25% – 35%
Capital market 65% 60% – 70%
Domestic equity 5% 0% – 5%
CategoryAsset allocation
ranges
Attribution analysis on overall performance for the portfolio on overall benchmark
Cash and money market 8% 8% – 12%
Capital market 73% 67.5% – 77.5%
Domestic equity 19% 15% – 20%
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Annual Report of the Compensation Fund 2014144
The following are the contractual maturities of financial liabilities, including interest payments.
AT 31 MARCH 2014 CARRYINGAMOUNT
R ‘000
CONTRACTUAL CASH FLOWS
R ‘000
6 MONTHS OR LESS
R ‘000
Debtors with credit balances 553,844 553,844 553,844
Compensation/pension/medical liability 404,000 404,000 404,000
957,844 957,844 957,844
AT 31 MARCH 2013 CARRYINGAMOUNT
R ‘000
CONTRACTUAL CASH FLOWS
R ‘000
6 MONTHS OR LESS
R ‘000
Debtors with credit balances 445,786 445,786 445,786
Compensation/pension/medical liability 441,675 441,675 441,675
Trade creditors (procurement creditors) 49,943 20,607 10,607
937,404 908,068 898,068
Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Fund’s income or the value of its holding of financial instruments.
Interest rate risk
The Fund holds more than 50% of its financial assets in debt securities (Government Bonds and Public Utility Bonds) and substantial investments in cash and cash equivalents and money market instruments. The return on these instruments, and the market value of debt securities are affected by fluctuations in interest rates.
Excluding the movement in the pensions liability and rebates provision, which is discretionary, the Fund currently covers all claims and benefits from operational cash, and therefore is not dependent on investment income to sustain its operations. The pensions liability is actuarially valued on an annual basis, which is impacted by the future anticipated interest return. Changes in interest rates are managed on behalf of the Fund by the PIC.
Interest rate profileCOMPENSATION PORTFOLIO PENSION PORTFOLIO
Fixed rate instruments 2014 2013 2014 2013
Capital markets 17,346,586 13,634,444 10,562,002 10,496,279
Inflation linked bonds - - - -
Money market 7,411,674 6,248,299 1,444,529 939,703
Trading cash - - - -
Total fixed rate instruments 24,758,260 19,882,743 12,006,531 11,435,982
Variable rate instruments 2014 2013 2014 2013
Inflation linked bonds - - - -
Money market - - - -
Trading cash 235,672 115,643 233,277 240,869
Total variable rate instruments 235,672 115,643 233,277 240,869
24,993,932 19,998,386 12,239,808 11,676,851
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014 145
This risk is the potential financial loss as a result of adverse movements in interest rates that affects the value of bonds and money market instruments. The Compensation Fund has exposure to interest rate risk through investments in money markets and bonds. The purpose of sensitivity analysis is to reveal any vulnerabilities of the portfolio to changes in the value-drivers. For an equities portfolio the driver of value are the equity prices, while for a fixed income portfolio the interest rates that determine the value of the investments are the value-drivers. This type of analysis is forward-looking in nature in that the current holdings of the portfolio at the point in time is used to assess the impact on the portfolio value due to potential changes in the value-drivers. The limitations of the sensitivity analysis are that there are no probabilities attached to the scenarios created as well as the fact that one is using a limited number of scenarios. The investment portfolio sensitivity is evaluated through stress testing the portfolio using the following methodology:
The portfolio is separated into two: equities and fixed income. The stress test is a point in time estimate.
On bonds the yields to maturity is moved by the specified quantum and the bond re-valued (bond pricing formula). The aggregate value of all instruments represents the bond portfolio value and the difference with the base value i.e. the current value represents the gain or loss.
This risk is the potential financial loss as a result of adverse movements in interest rates that affects the value of bonds and money market instruments. The Compensation Fund has exposure to interest rate risk through investments in money markets and bonds.
The sensitivity to interest rate movements is measured by the duration of the fixed interest exposure. Such duration is managed relative to an appropriate benchmark. To manage the duration, the PIC utilises a combination of instruments to get closer to the benchmark duration.
The fixed income asset class is not as volatile as the equity markets, an assumption of this sensitivity analysis is that the interest rates move by 50 basis points at a time. This analysis assumes that all variables remain constant. The analysis is performed on the same basis for 2013.
The effect of changes in interest rates on the fixed income component of the assets under management, which excludes non performing instruments and over the counter structured products are set out in the following tables:
COMPENSATION PORTFOLIO PENSION PORTFOLIO
SPREAD IN BASIS
POINTS
PROFIT AND LOSSR ‘000
MARKET VALUE OF BONDS
R ‘000
PROFIT AND LOSSR ‘000
MARKET VALUE OF BONDS
R ‘000
200 (1,937,188) 22,824,071 (1,461,959) 10,544,571
150 (1,493,570) 23,267,389 (1,130,240) 10,872,290
100 (1,028,486) 23,732,773 (778,075) 11,228,455
50 (540,458) 24,220,802 (403,683) 11,602,847
- - 24,733,381 - 12,001,445
(50) 511,001 25,272,261 419,926 12,426,456
(100) 1,078,086 25,839,346 873,814 12,880,345
(150) 1,675,457 26,436,716 1,359,341 13,365,872
(200) 2,305,384 27,066,644 1,879,504 13,886,135
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014146
3. Revenue from non-exchange transactions
Contribution by employer 7,974,596 6,428,307
Interest on late payment of contributions - 224,100
Penalties on late submission of ROE’s 211,040 499,594
8,185,636 7,152,001
Equity price risk
Equity price risk arises from equity securities held for meeting the Fund’s compensation and pension obligations. This risk is the potential financial loss as a result of movements in the level or volatility of equity prices, which affects the value of equity and equity derivative instruments. The Compensation Fund has an exposure to equity price risk as a result of its investments in equity instruments and equity derivatives.
This is the risk that the Fund will not realise the value if its equity securities, which may impact the Fund’s ability to meet liabilities. The Fund manages this risk by investing in low-risk/no-risk instruments.
Exposure to equity risk
The Fund’s exposure to equity price risk was as follows based on fair value of the equity items:
COMPENSATION PORTFOLIO PENSION PORTFOLIO
2014R ‘000
2013R ‘000
2014R ‘000
2013R ‘000
Listed equities 1,202,258 972,523 29,833,691 2,740,696
COMPENSATION PORTFOLIO PENSION PORTFOLIO
Spread in basis points PROFIT AND LOSSR ‘000
MARKET VALUE OF BONDS
R ‘000
PROFIT AND LOSSR ‘000
MARKET VALUE OF BONDS
R ‘000
(20) (243,180) 972,719 (603,781) 2,415,122
(15) (182,385) 1,033,514 452,835 2,566,068
(10) (121,590) 1,094,309 (301,890) 2,717,013
(5) (60,795) 1,155,104 (150,945) 2,867,958
- 1,215,899 - 3,018,903
5 60,795 1,276,694 150,945 3,169,848
10 121,590 1,337,489 301,890 3,320,793
15 182,385 1,398,284 452,835 3,471,738
20 243,180 1,459,079 603,781 3,622,683
2014 2013RESTATED
R’000 R ‘000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014 147
4. Revenue for exchange transactions
Administrative contributions by employers (s88) 3,456 18,287
Income computer equipment 6,512 -
Rent buildings 942 854
10,910 19,141
5. Investment revenue
Dividend revenue
Dividend income - Compensation portfolio 42,940 26,327
Dividend income - Pension portfolio 105,839 80,480
148,779 106,807
Interest revenue
1,716,407 1,304,753
Interest on bank - Compensation portfolio 27,798 28,738
Interest received - Compensation portfolio 1,688,609 1,276,015
879,760 800,940
Interest on bank - Pension portfolio 1,015 559
Interest received - Pension portfolio 878,745 800,381
Fair value gains (1,009,63 1,908,57
Fair value gains - Compensation portfolio (915,775) 742,330
Fair value gains - Pension portfolio (93,856) 1,166,243
1,586,536 4,014,266
During the year under review the Fund had Bonds selling on the negative hence there was a massive drop on the fair value gains from 2013 to 2014 of R2,917,204. However the bonds have since recovered. All bonds are guaranteed by Government.
6. Benefits paid
Compensation for permanent disability 87,029 88,702
Compensation for temporary disability 69,753 83,619
Pension capitalised during the year 420,428 330,887
Constant attendance allowances 14,553 13,848
Medical claims 2,129,333 1,501,606
Recoveries from third parties (17,967) (39,819)
2,703,129 1,978,843
2014 2013RESTATED
R’000 R ‘000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014148
7. Administration expenses
Audit fees 9,160 7,814
Reversal of assessments, interest and penalties 61,071 19,626
Interest late capitalisation of pension 134,394 111,834
Consulting and professional fees 66,620 103,938
Depreciation, amortisation and impairments 8,943 2,810
Service fee towards public private partnership 8,994 67,140
Lease rentals on operating lease 25,342 29,375
Stationery 4,904 8,592
Subsidies for accident prevention 3,253 5,187
Repairs and maintenance 13,970 6,797
Software expenses 67,040 41,896
Travel and subsistence 48,203 34,953
Training 2,870 2,234
Compensation related expenses 2,419 4,510
Reimbursement national department - 77
Other expenses 67,781 72,663
Investment management fees 12,876 11,969
Venue expenses 3,678 4,548
Assets valued at less than R5,000 789 473
542,307 536,436
8. Employee related costs
Basic 266,790 245,582
Thirteenth cheque 17,843 15,199
Contributions towards a defined plan 47,986 42,534
Leave pay 11,283 3,590
343,902 306,905
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 149
8.1. Members’ emoluments
Executive
2014 DATE OF APPOINT-
MENT
BASICSALARY
R’000
ALLOW-ANCES
R’000
PENSIONCONTRI-
BUTIONSR ‘000
TOTAL R’000
Compensation Commissioner 01/05/2007 736 279 139 1,154
Chief Financial Officer 01/09/2013 391 84 78 553
Director: Medical Services 01/02/1999 510 260 97 867
Director: Medical Payments 01/01/2010 583 88 110 781
Director: Financial Reporting 01/04/2009 512 214 97 823
Director: Income 01/03/2009 468 255 96 819
Director: Communications 01/07/2013 456 73 84 613
Director: Human Resources 01/03/2009 511 199 97 807
Director: Organisational Effectiveness 01/03/2009 507 212 96 815
Director: Compensation 01/01/2011 460 246 94 800
Director: Internal Audit (The Officer resigned on 31/01/2014)
01/04/2010 519 214 97 830
Principal Legal Administration Officer (The officer resigned on 28/02/2014)
01/03/2009 426 148 91 665
Chief Director: Human Resource Management
01/03/2013 605 232 114 951
6,684 2,504 1,290 10,478
2013 DATE OF APPOINT-
MENT
BASICSALARY
R’000
ALLOW-ANCES
R’000
PENSIONCONTRI-
BUTIONSR ‘000
TOTAL R’000
Compensation Commissioner 01/05/2007 699 264 132 1,095
Director: Medical Services 01/02/1999 468 195 89 752
Director: Medical Payments 01/02/1999 523 119 97 739
Director: Financial Reporting 01/04/2009 444 187 82 713
Director: Financial Control 01/01/2010 482 205 91 778
Director: Income 01/03/2009 445 239 91 775
Director: Support Services 01/11/2009 475 191 90 756
Director: Human Resources 01/03/2009 482 187 91 760
Director: Organisational Effectiveness 01/03/2009 482 201 91 774
Director: Compensation 01/01/2011 432 232 88 752
Director: Internal Audit 01/04/2010 505 209 101 815
Principal Legal Administration Officer 01/03/2009 475 166 102 743
Chief Director: Human Resouce Management
01/03/2013 44 18 9 71
5,956 2,413 1,154 9,523
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014150
9. Board members’ fees
Board members’ fees 1,587 577
Non-executive
2014 COMMITTEEFEES
TOTAL
Mr F Xaba 189 189
Mr Cowley, BUSA 6 6
Mr Phala, BUSA 11 11
Ms Samela, MD 2 2
Mr M Majola, BUSA 28 28
Mr S Tsiane, Cosatu 77 77
Mrs J Bodibe, Cosatu 334 334
Ms B Modise, Nactu 255 255
Mr S Motloung, Fedusa 93 93
Mr W Shisana, HPCSA 14 14
1,009 1,009
2013 COMMITTEEFEES
TOTAL
Mr F Xaba 253 253
Mr M Majola, BUSA 35 35
Mr S Tsiane, Cosatu 34 34
Mrs J Bodibe, Cosatu 78 78
Ms B Modise, Nactu 89 89
Mr S Motloung, Fedusa 51 51
Mr W Shisana, HPCSA 25 25
565 565
This is an advisory board and not an executive board. Members claim for travelling expenses and meeting costs incurred. The above figure shows the total amount of remuneration including travelling to and from meetings as well as venue and any other expenses related to the board. The breakdown of payments to individual members is scheduled above.
Emoluments 1,009 565
Venues and facilities for board members 578 12
1,587 577
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 151
10. Finance costs
Interest paid 6 130
11. Fair value adjustments
Investment property (Fair value model) (3,700) 4,058
12. Taxation
The Fund is exempted from normal income tax in terms of Section 21 of the Compensation for Occupational Injuries and Diseases Act, 1993, (Act No 130 of 1993).
13. Investments
Designated at fair value through profit and loss 261,585 -
Fair value through profit and loss - held for trading 32,723,469 27,804,184
Loans and receivables 8,438,584 7,543,514
261,585 -
32,723,469 27,804,184
- -
- -
8,438,584 7,543,514
Total other financial assets 41,423,638 35,347,698
Non-current assets
Designated at fair value through profit and loss 261,585 -
Fair value through profit and loss - held for trading 27,473,641 23,929,937
27,735,226 23,929,937
Current assets
Fair value through profit and loss - held for trading 5,249,828 3,874,247
Loans and receivables 8,438,584 7,543,514
13,688,412 11,417,761
Non-current assets 27,735,226 23,929,937
Current assets 13,688,412 11,417,761
41,423,638 35,347,698
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014152
31 March 2014
Compensationportfolio
LOANS ANDOTHER
RECEIVABLESR ‘000
FAIR VALUETHROUGH
PROFIT ANDLOSS - HELD
FORTRADING
R ‘000
DESIGNATEDAS AT
FAIR VALUETHOUGH
PROFIT ANDLOSSR ‘000
TOTALCARRYING
AMOUNTR ‘000
FAIR VALUER ‘000
Capital markets - 17,346,585 - 17,346,585 17,346,585
Equity - 1,202,208 - 1,202,208 1,202,208
Derivatives - - - - -
Financial instrument bills, promissory notes and certificates of deposits
- - 1,960,783 1,960,783 1,960,783
Fixed deposits 5,453,892 - - 5,453,892 5,453,892
Trading cash 235,671 - - 235,671 235,671
5,689,563 18,548,793 1,960,783 26,199,139 26,199,139
Pension portfolio
LOANS ANDOTHER
RECEIVABLESR ‘000
FAIR VALUETHROUGH
PROFIT ANDLOSS - HELD
FORTRADING
R ‘000
DESIGNATEDAS AT
FAIR VALUETHOUGH
PROFIT ANDLOSSR ‘000
TOTALCARRYING
AMOUNTR ‘000
FAIR VALUER ‘000
Capital markets - 10,562,002 - 10,562,002 10,562,002
Equity - 2,984,691 - 2,984,691 2,984,691
Derivatives - - - - -
Financial instrument bills, promissory notes and certificates of deposits
- - 145,549 145,549 145,549
Fixed deposits 1,298,979 - - 1,298,979 1,298,979
Trading cash 233,278 - - 233,278 233,278
1,532,257 13,546,693 145,549 15,224,499 15,224,499
Total investments on 31 March 2014
7,221,820 32,095,486 2,106,332 41,423,638 41,423,638
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014 153
Compensationportfolio
LOANS ANDOTHER
RECEIVABLESR ‘000
FAIR VALUETHROUGH
PROFIT ANDLOSS - HELD
FORTRADING
R ‘000
DESIGNATEDAS AT
FAIR VALUETHOUGH
PROFIT ANDLOSSR ‘000
TOTALCARRYING
AMOUNTR ‘000
FAIR VALUER ‘000
Capital markets - 13,634,444 - 13,634,444 13,634,444
Equity - 962,184 - 962,184 962,184
Derivatives - - - - -
Financial instrument bills, promissory notes and certificates of deposits
- - - 1,165,076 1,165,076
Fixed deposits 6,248,299 - - 6,248,299 6,248,299
Trading cash 115,039 - - 115,039 115,039
6,363,338 14,596,628 - 20,959,966 20,959,966
31 March 2013
Pension portfolio
LOANS ANDOTHER
RECEIVABLESR ‘000
FAIR VALUETHROUGH
PROFIT ANDLOSS - HELD
FORTRADING
R ‘000
DESIGNATEDAS AT
FAIR VALUETHOUGH
PROFIT ANDLOSSR ‘000
TOTALCARRYING
AMOUNTR ‘000
FAIR VALUER ‘000
Capital markets - 10,496,279 - 10,496,279 10,496,279
Equity - 2,711,277 - 2,711,277 2,711,277
Derivatives - - - - -
Financial instrument bills, promissory notes and certificates of deposits
- - - - -
Fixed deposits 939,703 - - 939,703 939,703
Trading cash 240,473 - - 240,473 240,473
1,180,176 13,207,556 - 14,387,732 14,387,732
Total investments on 31 March 2014
7,543,514 27,804,184 - 35,347,698 35,347,698
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014154
Basis of determining fair value
The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments reflected in the table above:
Capital market, equity instruments and derivatives
The fair value of capital market and equity instruments is determined by reference to their quoted closing price at the reporting date.
Money market instruments
Money market instruments (financial instrument bills, promissory notes and certificates of deposits) are valued by the Money Market Curve. The nominal annual rate of interest compounded continuously is converted to a simple rate for discount securities, and to a NACA, NACS, NACQ or NACM for fixed interest instruments depending on the maturity profile.
MONEYMARKET
R ‘000
CAPITALMARKET
R ‘000
EQUITYR ‘000
TRADINGCASHR ‘000
TOTALR ‘000
0 to 3 months 2,448,342 - 1,202,208 235,671 3,886,221
3 to 12 months 4,966,332 107,147 - - 5,073,479
1 to 3 years - 1,360,798 - - 1,360,798
3 to 7 years - 6,633,273 - - 6,633,273
7 to 12 years - 818,294 - - 818,294
12+ years - 8,427,074 - - 8,427,074
Total at year end
7,414,674 17,346,586 1,202,208 235,671 26,199,139
MONEYMARKET
R ‘000
CAPITALMARKET
R ‘000
DERIVA-TIVESR ‘000
EQUITYR ‘000
TRADINGCASHR ‘000
TOTALR ‘000
0 to 3 months 486,175 - - 2,984,691 233,277 3,704,143
3 to 12 months 958,354 66,216 - - - 1,024,570
1 to 3 years - 634,174 - - - 634,174
3 to 7 years - 2,776,648 - - - 2,776,648
7 to 12 years - 2,911,545 - - - 2,911,545
12+ years - 4,173,419 - - - 4,173,419
Total at year end
1,444,529 10,562,002 - 2,984,691 233,277 15,224,499
TOTAL 8,859,203 27,908,588 - 4,186,899 468,948 41,423,638
Maturity schedule Compensation portfolio as at 31 March 2014
Maturity schedule Pension portfolio as at 31 March 2014
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014 155
MONEYMARKET
R ‘000
CAPITALMARKET
R ‘000
EQUITYR ‘000
TRADINGCASHR ‘000
TOTALR ‘000
0 to 3 months 2,741,786 - 962,184 115,039 3,819,009
3 to 12 months 3,506,513 81,054 - - 3,587,567
1 to 3 years - 642,297 - - 642,297
3 to 7 years - 5,053,636 - - 5,053,636
7 to 12 years - 2,574,726 - - 2,574,726
12+ years - 5,282,731 - - 5,282,731
Total at year end
6,248,299 13,634,444 962,184 115,039 20,959,966
MONEYMARKET
R ‘000
CAPITALMARKET
R ‘000
DERIVA-TIVESR ‘000
EQUITYR ‘000
TRADINGCASHR ‘000
TOTALR ‘000
0 to 3 months 255,161 - - 2,711,277 240,473 3,206,911
3 to 12 months 684,542 119,732 - - - 804,274
1 to 3 years - 188,080 - - - 188,080
3 to 7 years - 3,067,345 - - - 3,067,345
7 to 12 years - 3,466,550 - - - 3,466,550
12+ years - 3,654,572 - - - 3,654,572
Total at year end
939,703 10,496,279 - 2,711,277 240,473 14,387,732
TOTAL 7,188,002 24,130,723 - 3,673,461 355,512 35,347,698
Maturity schedule Compensation portfolio as at 31 March 2013
Maturity schedule Pension portfolio as at 31 March 2013
14. Inventories
Consumable stores 2,601 -
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014156
During the last financial year the Fund agreed to pay five (5) medical service providers an amount totalling R521 million. The reason was that Compensation Fund was unable to process backlogs on medical claims due to the SAP-ICM system being too slow and dysfunctional. A total of R83.7 million has since been repaid and the outstanding amount is R456 million. There was a further advance of R18.2 given which related to the court order under the year under review
This resulted in the Fund facing serious litigations from respective medical service providers due to unpaid claims. In order to mitigate against the litigations the Fund opted for an option of making advance payments to the medical services providers.
It was agreed between the Fund and the medical service providers that as soon as the payments were made on the outstanding claims the providers will hence forth refund the Fund.
16. Receivables from non-exchange transactions assessments raised
Assessments raised
Outstanding balances 8,805,998 8,839,614
Accrual for assessments not raised 947,030 (38,046)
Allowance for impairment (8,490,966) (6,003,677)
Third party claims
Allowance for impairment - (189,410)
Outstanding balances 183,828 189,410
1,445,890 2,797,891
15. Receivables from exchange transactions
Advances 50,903 -
Advances made to medical services providers 456,882 474,671
Recoverable medical expenses 11,338 8,505
Duplicate payments to medical service providers 19,983 19,983
Disallowances 23,167 14,701
PPP re-investment 313 831
Contribution exempted employer 17,016 30,018
Allowance for impairment - (31,680)
Investment income receivable 48,991 31,464
Unallocated receipts (102,090) (26,143)
Creditors with debit balances 964 184
Accrued interest 289 1,817
527,756 524,351
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 157
17. Cash and cash equivalents
Cash and cash equivalents consist of:
Cash on hand 3 3
Trading cash 116,162 542,325
Call accounts 3,555 550,420
119,720 1,092,748
Cash and cash equivalents consist of cash on hand and balances with banks and investments in money market instruments. There are no restrictions placed in the realisation or usability of cash balances.
18. Investment property
2014 2013
COST / VALUATION
COST / VALUATION
Investment property 4,900 8,600
Reconciliation of investment property - 2014
OPENINGBALANCE
FAIR VALUEADJUSTMENTS
TOTAL
Investment property 8,600 (3,700) 4,900
Reconciliation of investment property - 2013
OPENINGBALANCE
FAIR VALUEADJUSTMENTS
TOTAL
Investment property 4,542 4,058 8,600
Details of valuation
The Income Capitalisation approach was used to value the land and buildings as at 28 February 2014 by an independent valuer namely Rhode and Associates (Pty) Ltd (2013: Khanyisa property and management service). This approach considers income and expense data relating to the property being valued and estimates a value through a capitalisation process. A capitalisation rate of 12% has been applied in the cash flow analysis for the Bhisho building. The capitalisation rate is determined by the rate at which similar assets have traded recently. Rental revenue generated by the investment property for the current year amounted to R941,641 (2013: R854,000). There was no direct expenditure that related to the investment property at Bhisho for the current year.
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014158
19. Property, plant and equipment
2014 2013
COST / VALUATION
ACCUMULATEDDEPRECIATION
ANDACCUMULATED
IMPAIRMENT
CARRYINGVALUE
COST / VALUATION
ACCUMULATEDDEPRECIATION
ANDACCUMULATED
IMPAIRMENT
CARRYINGVALUE
Land 21,200 - 21,200 21,200 - 21,200
Buildings 59,982 (1,982) 58,000 59,982 (983) 58,999
Furniture and fixtures
16,095 (13,169) 2,926 14,031 (10,955) 3,076
Motor vehicles 2,953 (873) 2,080 4,765 (1,593) 3,172
IT equipment 6,513 (6,097) 416 - - -
TOTAL 106,743 (22,121) 84,622 99,978 (13,531) 86,447
Reconciliation of property, plant and equipment - 2014
OPENINGBALANCE
R’000
ADDITIONSR’000
DISPOSALSR’000
DEPRECIATIONR’000
TOTALR’000
Land 21,200 - - - 21,200
Buildings 58,999 - - (999) 58,000
Furniture and fixtures
3,076 1,304 - (1,454) 2,926
Motor vehicles 3,172 - (698) (394) 2,080
IT equipment - 6,513 - (6,097) 416
86,447 7,817 (698) (8,944) 84,622
Reconciliation of property, plant and equipment - 2013
OPENINGBALANCE
R’000
ADDITIONSR’000
OTHERCHARGES,
MOVEMENTSR’000
DEPRECIATIONR’000
TOTALR’000
Land 21,200 - - - 21,200
Buildings 58,069 1,881 - (951) 58,999
Furniture and fixtures
3,846 1,147 (473) (1,444) 3,076
Motor vehicles 3,229 358 - (415) 3,172
86,344 3,386 (473) (2,810) 86,447
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
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Annual Report of the Compensation Fund 2014 159
Revaluations
The Income Capitalisation approach was used to value the land and buildings on an open market basis and revaluation surplus is included in the Statement of Changes in Net Assets, as at 31 March 2012 by an independent valuer namely JHI Valuers. This approach considers income and expense data relating to the property being valued and estimates a value through a capitalisation process. The capitalisation rate is determined by the rate at which similar assets have traded recently.
Land and buildings are re-valued independently every 3 years.
Buildings comprise
Property 1Compensation House on Lot 70, 66/R, Prinshof, No 349, JR, Pretoria
Market value 58,100 58,100
20. Provision for outstanding claims
Total provision for outstanding claims 6,435,000 4,842,000
Increase/(Decrease) in provision for outstanding claims - 1,593,000
Actuarially calculated closing balance 6,435,000 6,435,000
Transfer to current liabilities (2,239,000) (2,239,000)
Total provision for outstanding claims 4,196,000 4,196,000
21. Capitalised value of pensions
The amounts recognised in the statement of financial position are as follows:
Carrying value
Actuarially calculated opening balance 10,085,480 12,860,000
Increase in capitalised value of pension (369,267) (467,404)
- Pensions capitalised value of pension 420,428 330,887
- Pension payments (789,695) (689,407)
Pension actuarial adjustments - (2,416,000)
9,716,213 10,085,480
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014160
23. Payables from exchange transactions
Income received in advance - 512
Debtors with credit balances 553,844 445,786
Compensation, pension and medical creditors control 404,000 441,675
Unsettled investments 1,049 896
958,894 888,872
22. Accruals
Reconciliation of accruals - 2014 OPENINGBALANCE
R’000
ADDITIONSR’000
UTILISEDDURING THE
YEARR’000
TOTALR’000
Accumulated leave 29,542 29,825 (50,030) 9,337
Service bonus (thirteenth cheque) 4,679 18,160 (17,413) 5,426
Accrued expenses 79,712 494,387 (495,190) 78,909
113,933 542,372 (562,633) 93,672
Reconciliation of accruals - 2013 OPENINGBALANCE
R’000
ADDITIONSR’000
UTILISEDDURING THE
YEARR’000
TOTALR’000
Accumulated leave 26,409 3,133 - 29,542
Service bonus (thirteenth cheque) 4,299 4,679 (4,299) 4,679
Accrued expenses 87,441 69,274 (77,003) 79,712
118,149 77,086 (81,302) 113,933
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 161
24. Cash generated from operations
Surplus 4,070,897 8,147,874
Adjustments for:
Depreciation and amortisation 8,943 2,810
Gain on sale of assets and liabilities 134 -
Fair value adjustments 3,700 (4,058)
Debt impairment 2,266,199 1,148,508
Pension actuarial adjustment - (2,416,000)
Increase in the capitalised value of pensions (369,266) (358,520)
Assets less than R5,000 written off - 473
Provision for unreported claims - 1,593,000
Transfer to unclaimed monies - 4,342
Changes in working capital
Inventories (2,601) -
Increase in receivable from exchange transactions 28,275 (398,086)
Increase in receivables from non-exchange transactions (945,878) (1,499,525)
Payables from exchange transactions 70,022 234,964
(Decrease)/Increase in accruals (20,260) (43,720)
5,110,165 6,412,062
25. Contingencies
Securities
Licences in terms of Section 30 of the Act to carry out the business of the Fund in certain industries have been issued by the Minister of Labour to two mutual associations. These mutual associations must deposit securities with the Fund to cover its liabilities. Furthermore, certain local authorities have been granted exemption from paying annual assessments and are liable to pay compensation to their injured employees in the workplace. In terms of Section 31 of the Act, these exempted employers are required to deposit securities with the Fund, which are equivalent to the capitalised pensions of their employees.
If a mutual association or an exempted employer fails to meet in full its liabilities, in terms of the Act, the Accounting Authority may apply such securities to pay the liabilities, and the balance of the liabilities and future liabilities of the employer will have to be paid from the reserves. The securities thus controlled by the Fund amounts to R309.3 million (2013: R1,578 million).
The Fund has received approximately 120 (2013: 223) notices of motions and summons and as a result thereof is financially exposed to approximately R288 million (2013: R100 million), inclusive of legal costs.
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014162
27. Related parties
Members: Refer to members’ report note 10Board members: Refer to note 11Department of Labour: The Department of Labour pays the salaries of staff and the Fund reimburses them for the spot percentageEOH: They offer IT solutions to the Compensation Fund
Transactions and balances with national departments of government and state-controlled entities which occur other than in accordance with the operating parameters established are regarded as related parties transactions in accordance with IPSAS 20; related parties disclosure. The Fund is an entity of the Department of Labour. Salaries of the Commissioner, and the officers and employees are remunerated out of the National Revenue Fund, which is reimbursed out of the Fund for the expenditure concerned in terms of Section 2 of COIDA. Expenditure in respect of COIDA related services rendered to the Fund by provincial offices and labour centres of the Department of Labour are also reimbursed to the Department of Labour. The following transactions were recorded relating to transactions with related parties as defined. There is a service that the Fund receives in kind, this is in relation to the services of EOH for the processing of the medical invoices
Related party transactions
Expenditure paid on behalf of and recovered in the financial year from the Department of LabourCompensation of employees 365,064 330,606Goods and services 207,678 69,359Transfers 5,705 6,716Capital expense (PPP unitary fee) 16 53,108
Public Private Partnership
The Compensation Fund entered into a Public Private Partnership Agreement (“PPP Agreement”) with EOH Managed Services (Proprietary) Limited, contract ceded from Siemens Business Services (Proprietary) Limited (“private partner”), on 1 December 2002. The PPP Agreement requires the private partner to provide information technology related infrastructure, services and management support to the Department of Labour, the Unemployment Insurance Fund and the Compensation Fund (“the funds”) for a period of 10 years which ended on 30 November 2012. The contract was later extended until 31 May 2014.
26. Commitments
Operating leases - as lessee (expense)
Minimum lease payments due
- within one year 2,965 16,762
- in second to fifth year inclusive 1,772 4,755
- later than five years - -
4,737 21,517
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 163
Reinvestment fund
The reinvestment fund is a separate bank account for purposes of administering and the separate safekeeping of excess profit, foreign exchange rate savings and service credits. The reinvestment fund may be used during the term of the PPA agreement to fund:
As at 31 March 2014, the balance of the reinvestment fund was:
Compensation Fund 313 305,603
28. Material losses through criminal conduct
Cases - 2014Opening balance - 2013 56 2,894Registered allegations 56 3,302
112 6,196
Finalised 55 3,188Externally - -Internally 55 3,188Previous year - 2013 14 1,830Current year - 2014 41 1,358Recovered 1 1,275Actual loss 11 2,026Potential loss 5 709Referred to law enforcement 11 1,724Write-off 5 414Closing balance - 31 March 2014 57 3,008
Cases - 2013Opening balance - 2012 71 11Registered allegations 71 5,126
142 9,219
Finalised 86 6,324Externally - -Internally 86 6,324Previous year - 2011 33 2,772Current year - 2012 53 3,553Recovered 5 188Actual loss 34 2,475Potential loss 8 1,070Referred to law enforcements 29 1,309Write-off 17 307Closing balance - 31 March 2013 56 2,894
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014164
29. Fruitless and wasteful expenditure
Opening balances 15,020 14,890
Add: Fruitless and wasteful expenditure current year 6 130
15,026 15,020
Interest charged on overdue accounts by suppliers. The Fund is currently in the process of investigating these incidents that led to fruitless and wasteful expenditure. The amount of interest paid to suppliers amount to R6 184.50
The Fund has incurred fruitless and wasteful expenditure during the period under review. A Financial Misconduct Register is in place and 71 cases have been recorded for investigation. A Financial Misconduct Advisory Board has been established and the cases are being investigated.
30. Irregular expenditure
Opening balance 138,584 20,384
Add: Irregular expenditure - current year - 658,467
Less: Amounts recoverable (not condoned) - (498,315)
Less: Amounts recovered - (41,952)
138,584 138,584
Analysis of expenditure awaiting condonation per age classification
Current year - 138,584
Prior years - 20,384
- 158,968
Details of irregular expenditure recoverable (not condoned)
The Fund has incurred fruitless and wasteful expenditure during the period under review. A Financial Misconduct Register is in place and 71 cases have been recorded for investigation. A Financial Misconduct Advisory Board has been established and the cases are being investigated.
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 165
31. Prior period errors
The correction of the errors result in adjustments as follows:
Upon inspection is was found that the amount allocated to travel and subsistence this years was captured in the 2012/13 financial year, and had already been paid.
The effect of the error on the individual line items in the financial statements is as follows:
Decrease in accruals - 1
Decrease in travel and subsistence - (1)
- -
Upon inspection at year end of 2013/14 is was discovered that amount in capitalised value of pension was doubled in the capitalised value of pension account
In the other instance the pension account was used to pay constant attendance allowance was used instead of the CAA account
The effect of the error on the individual line items in the financial statements is as follows:
Decrease in the capitalised value of pension - 2,950
Decrease in constant attendance allowance - (422)
Decrease in the benefits for permanent disability - (2,528)
- -
During the year under review there were open items in the creditors that related to the 2006/7 financial year, the item was written off as it didn’t tie up to any transaction in the bank account. This was migrated from the Axsone system. The creditors were paid using cash focus.
The effect of the error on the individual line items in the financial statements is as follows:
Decrease in the trade and other payables - 89
Decrease in admin expenses - (89)
- -
At year end of 2013/14 there were amounts not accrued for but paid from accrued account. The effect of the error on the individual line items in the financial statements is as follows:
Increase in accruals - 87
Increase in admin expenses - (87)
- -
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014166
During the year under review the Fund charged employers interest and penalties that was due to the employers. The amount needs also to be reversed in the 2012/13 financial as it was also incorrectly posted to this year.
During the year under review the Fund reversed the provision for assessments not raised. The effect of the error on the individual line items in the financial statements is as follows:
Increase in the receivables from non-exchange transactions - 940,571
Decrease in the revenue from non exchange transactions - (940,571)
- -
During the year under review the Fund discovered that the interest lost on late capitalisation of pensions was misallocated back to the capitalised value of pensions instead of it being expensed.
The effect of the error on the individual line items in the financial statements is as follows:
Decrease in capitalised value of pensions - (111,834)
Increase in admin expense - 111,834
- -
At year end of 2013/14 an outstanding amount that was accrued for in the employee costs. The effect of the error on the individual line items in the financial statements is as follows:
Decrease in the employees costs - 29,602
Decrease in accrual - (29,602)
- -
Statement of Financial Position PREVIOUSLYREPORTED
R ‘000
ADJUSTMENTR ‘000
RESTATEDBALANCE
R ‘000
Receivables from non-exchange transactions 3,735,422 (940,572) 2,794,850
Payables from exchange transactions (938,901) 89 (938,812)
Accruals (93,447) 29,457 (63,990)
Capitalised value for pension (9,976,596) (108,884) (10,085,480)
(7,273,522) (1,019,910) (8,293,432)
Statement of Financial Performance PREVIOUSLYREPORTED
R ‘000
ADJUSTMENTR ‘000
RESTATEDBALANCE
R ‘000
Revenue from non-exchange transactions 8,092,646 (940,645) 7,152,001
Employee costs (336,506) 29,602 (306,904)
Benefits paid (1,981,792) 2,950 (1,978,842)
Administrative expenses (424,619) (111,817) (536,436)
5,349,729 (1,019,910) 4,329,819
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014 167
32. Revaluation reserve
The revaluation reserve
Opening balance 53,945 53,945
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Notes to the Annual Financial Statements
2014 2013RESTATED
R’000 R ‘000
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Annual Report of the Compensation Fund 2014168
Revenue from non-exchange transactions
Contribution by employer 7,974,596 6,428,307
Interest on late submission of returns - 224,100
Penalties on the late submission of returns 211,040 499,594
3 8,185,636 7,152,001
Benefits paid
Claims incurred (2,703,129) (1,978,843)
Gross surplus 5,482,507 5,173,158
Other income
Administrative contributions by employers (s 88) 3,456 18,287
Reversal of merit rebate 7,454 854
Dividend revenue 5 148,779 106,807
Interest received 5 1,586,536 4,014,266
Fair value adjustments 11 - 4,058
1,746,225 4,144,272
Expenses (Refer to page 169) (887,930) (20,918)
5,482,507 5,173,158
1,746,225 4,144,272
(887,930) (20,918)
Operating surplus 6,340,802 9,296,512
Finance costs 10 (6) (130)
Fair value adjustments 11 (3,700) -
Increase in allowance for impairment of receivables (2,266,199) (1,148,508)
(2,269,905) (1,148,638)
Profit (loss) before taxation 4,070,897 8,147,874
Taxation - -
Surplus for the year 4,070,897 8,147,874
2014 2013RESTATED
NOTE(S) R’000 R ‘000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Detailed Income Statement
The supplementary information presented does not form part of the annual financial statements and is unaudited
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Annual Report of the Compensation Fund 2014 169
Operating expenses
Audit fee (9,160) (7,814)
Reversal of assessments, interest and penalties (61,071) (19,626)
Pension actuarial adjustment - 2,416,000
Interest late capitalisation of pension (134,394) (111,834)
Consulting and professional fees (62,965) (100,415)
Depreciation, amortisation and impairments (8,943) (2,810)
Employee costs (343,902) (306,905)
Compensation related expenses (2,419) (4,510)
Board members’ fees (1,587) (577)
Reimbursement National Department - (77)
Increase(decrease) in the provision for outstanding claims - (1,593,000)
Other expenses (67,781) (72,663)
Investments management fees (12,876) (11,969)
PPP (8,994) (67,140)
Lease rentals on operating lease (25,342) (29,375)
Legal expenses (3,655) (3,523)
Loss on disposal of assets (134) -
Assets less than R5,000 (789) (473)
Printing and stationery (4,904) (8,592)
Prevention of accidents (3,253) (5,187)
Repairs and maintenance (13,970) (6,797)
Software expenses (67,040) (41,896)
Travel and subsistence (48,203) (34,953)
Training (2,870) (2,234)
Venue expenses (3,678) (4,548)
(887,930) (20,918)
2014 2013RESTATED
NOTE(S) R’000 R ‘000
COMPENSATION FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014Detailed Income Statement
The supplementary information presented does not form part of the annual financial statements and is unaudited
i dd 169 2014/10/14 9 35 AM
Annual Report of the Compensation Fund 2014170
NOTES
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Annual Report of the Compensation Fund 2014 171
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Annual Report of the Compensation Fund 2014172
NOTES
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