1. COMPENSATION FUND PRESENTATION TO PORTFOLIO COMMITTEE ON LABOUR 1 NOVEMBER 2005

2. AGENDA  Overview of Annual Report  Report of the Auditor-General for the 2004/05 financial year –Qualifications –Matters of Emphasis  Progress report on the challenges in the Fund

3. ANNUAL REPORT 2004/05  Structure and reporting lines –Compensation Commissioner –Executive Manager: Claims –Chief Financial Officer –Executive Manager: ICT  Legislation –The Compensation for Occupational Injuries and Diseases Act, (Act 130 of 1993 amended by Act 61 of 1997)

4. ANNUAL REPORT 2004/05  Staff –Staff at the Compensation Fund - 672 plus 230 contract workers  Main tasks of the Fund –Registration of employers –Collection of return of earnings –Assessments and collection of moneys –Registration, processing and payment of claims –Payment for medical treatment –Administration of pension account –Investment of Excess funds

5. ANNUAL REPORT 2004/05 ACCOMPLISHMENTS  Development and implementation of new policies –Completed policies  Work Aggravated Asthma  Upper Airway Disorders  Protecting vulnerable workers –4,8% annual inflationary increase to all pensioners –An additional 2% to pensioners injured before 1 April 1991

6. ANNUAL REPORT 2004/05  Processing of claims - April 2004-April 2005 –Compensation to beneficiaries – R604 million –Cost of medical aid – R1,029 billion –Pensions paid – R314 million –Total claims expenditure – R1,95 billion  Regional medical panels –First Regional Medical Panel was set up in the Western Cape

7. ANNUAL REPORT 2004/05  Informing the public –Communication unit was established –COIDA advertisements were run through SABC and radio talks  Challenges –Improve service delivery –Business process re-engineering –Decentralisation of claims system to Provinces –Finalisation of policies under discussion –Development of a strategy to stakeholders

8. ANNUAL REPORT 2004/05  Code of ethics –The Fund is committed to the highest standard of integrity, behaviour and ethics in line with the Public Service Staff Code in dealing with all it’s stakeholders and Government Authorities. –The Management and staff are expected to conduct ethical practises as set out in statutory regulations.

9. AUDIT REPORT  Qualifications: –Accuracy of contribution income –Valuation of assessment debtors  Matters of emphasis: –Material adjustments –General computer controls –Non compliance with treasury regulations –Processing of claims

10. ACCUARACY OF CONTRIBUTION INCOME  System problem – staff were allowed to override 30% warning signal for increased earnings –System amendment requested for overriding, only to be approved by supervisors –Office instruction issued to sensitize staff –Monthly exception reports are followed up by management  Current estimation policy under revision

11. Valuation of assessment debtors  Consequence of over-assessments raised  Clean-up of debtors book –Additional outsourcing to ITC –Restructuring of the debt collection section –Additional contract workers appointed

12. MATERIAL ADJUSTMENTS  All adjustments have been effected in agreement between management and the Auditor-General  No further actions required

13. GENERAL COMPUTER CONTROLS  The Department’s IT partner, Siemens Business Services, has appointed a resource to manage this  A plan with defined timeframes has been done for completion of these issues  IT policies have been drafted – input by the relevant stakeholders is awaited  The drafting of a Disaster Recovery Plan has been outsourced to SITA  An IT security forum is in the process of being established

14. NON-COMPLIANCE WITH TREASURY REGULATIONS  Investment strategy and policy approved by accounting authority  PIC mandate and agreement finalized  Investment committee appointed – first meeting in November 2005  Investment will be monitored as from November 2005 in terms of the PIC mandate

15. PROGRESS REPORT ON CHALLENGES IN THE FUND DISCUSSION POINTS  Background  Claims Processing - turn-around times and back-logs to be reduced  Office automation and electronic processing  Workflow re-engineering and integration of processes  Capacity building across disciplines

16. BACKGROUND  Acting Commissioner appointed in February 2005  Vision, mission and strategy was developed and approved by the Compensation Board  Business plan framework has been put in place to implement the strategy  Process was started to quantify the extent of problems and to focus resources strategically

17. CLAIMS PROCESSING, TURN- AROUND TIME AND BACKLOG  Identification of claims status and extent of backlogs  Independent “millennium” team to deal with backlogs from 2000 and before  Two dedicated teams for backlogs between 2001 and 2003

18. CLAIMS PROCESSING, TURN- AROUND TIME AND BACKLOG  The year by year number of claims received since 2000:

19. CLAIMS PROCESSING, TURN- AROUND TIME AND BACKLOG

22. Office automation and electronic processing  Claims automated process from 22/8/2005  Currently only the basic requirements are met  Benefits: –Cultural change – more transparent and objective claims information and data –Improved processing and compliance issues –Improved Management Information Reports  Investigating “off-the-shelf” system for Medical Section

23. Workflow re-engineering and integration of processes  Dedicated adjudication section established –Adjudicated claims have increased from 8 000 to 20 000 per month  Re-engineering of workflow –Awards and compensation payments have increased 43%  New scanning and indexing system to be tested during November 2005  Pilot to test “off-the-shelf” system for Medical and Compensation sections

24. Workflow re-engineering and integration of processes  Pilot projects will cover the following: –Paper document management system (mail, scanning and indexing) –Electronic document management system –Process of assessing employers –Process of handling claims –Development of electronically generated Management and Information reports –Evaluation of existing policies and procedures

25. Capacity building across disciplines  Project managers with specific skills appointed/to be appointed in the following disciplines: –Business Process Co-ordinating Office – two business and IT process analysts –Medical officer –Legal officer –Human Resources officer –Organisational Development Officer –Financial expert

26. Call centre and telephone system upgrading  Telephone access was very poor  Analysis carried out to identify problem areas  MINI CALL CENTRE to be introduced commencing January 2006 –constant evaluation  Improve internal phone system

27. Litigation against the CF  Two major cases this year  Third case now instituted by LRC  Progress  Third party agent - finalized and working with them weekly  Class action- implementing agreement  New case still assessing policy implications 

28.  Thank you for the time and opportunity to present the Compensation Fund to members of the Portfolio committee