1. Presentation to the S. S. Mkhonto 20 October 2009
Compensation Commissioner
20 October 2009

2. The Compensation Fund is a public entity of the Department of Labour
It is responsible to administer the Compensation for Occupational Injuries and Diseases Act (COIDA)
No. 130/1993 as amended by the COIDA 61/1997

3. The Fund provides compensation for disablement caused by occupational injuries or diseases sustained or contracted by workers, or for death resulting from such injuries or diseases
The Fund is financed from levies paid by employers
The revenue consists mainly of annual assessments paid by registered employers on a basis of a percentage or fixed rate of the annual earnings of their workers

4. DIRECTOR-GENERAL : LABOUR COMPENSATION COMMISSIONER
MINISTER OF LABOUR
COMPENSATION BOARD
DIRECTOR-GENERAL : LABOUR
COMPENSATION COMMISSIONER
AUDIT
COMMITTEE
BOARD SUB-COMMITTEES

6. Improve the internal control environment
Timeous production of monthly financial statements
Compliance
Streamline processes to improve performance
Improve governance and eliminate fraud and corruption

7. IMPROVE THE INTERNAL CONTROL ENVIRONMENT
ACTIVITY Appointment of key financial resources to address audit issues
PROGRESS
Appointment of CFO finalised – commenced 5th October 2009
Executive manager posts :
Filling of 2 x Executive Manager posts in process and will be finalised in by end of November 2009
Appointment of managers :
10 manager posts filled
A Service Provider (KPMG) has been co-sourced form 1st October 2009 to provided additional capacity and expert assistance to address AG findings

8. ACTIVITY Clearing of suspense accounts
IMPROVE THE INTERNAL CONTROL ENVIRONMENT
ACTIVITY Clearing of suspense accounts
PROGRESS
An amount of R87m was broken down into payments and receipts.
ABSA as the Fund’s banker, is to assist with the clearing of the unallocated contributions – payments from employers without reference numbers.
ACTIVITY Introduction and monitoring of month end procedures
The finance team now works on monthly closure dates and guidelines have been sent across the organisation to ensure month end procedures are followed.

9. ACTIVITY PROGRESS TIMEOUS PRODUCTION OF MONTHLY FINANCIAL STATEMENTS
Performance of weekly bank reconciliations
PROGRESS
The bank reconciliations are currently being performed on a weekly basis.
All bank reconciliations are signed-off by the Executive Manager
Clearing of debtors with credit balances
R23m has been cleared as at 30 September R15 million is under review and R to be refunded in November 2009.

10. ACTIVITY PROGRESS TIMEOUS PRODUCTION OF MONTHLY FINANCIAL STATEMENTS
Updating the Fixed Asset Register (FAR)
PROGRESS
The FAR project was completed and the fixed asset register finalised. Currently this is being prepared for uploading onto the financial system and will be finalised by 30 November 2009
Finalisation of merit-rebate and payment
A policy on Merit Rebates has been finalised – next step is for review and approval.
R578m of the R844m provided for in the annual report has been identified as payable in the 2009/10 financial year. Payment will be effected once the necessary approvals have been finalised.

11. ACTIVITY PROGRESS COMPLIANCE WITH LEGISLATION
Finalisation of policy and implementation
PROGRESS
Policies on Enforcement of COIDA, Minimum earnings for total temporary disability and Increase of Compensation Benefits (2009) have been finalised and implemented
Finalisation of the computer programming on the financial system
The central repository for bank statements storage has been implemented. The project on banking details and EFT is underway and will be finalised by the end of November.

12. ACTIVITY PROGRESS COMPLIANCE WITH LEGISLATION Execution of payments
The Fund endeavors to make all payments within the prescribed 30 days after the receipt of an invoice, however this is currently not being 100% achieved.
To ensure IFRS Compliance
The Fund currently does not have the requisite resources to ensure compliance. KPMG has been appointed as a service provider to provide assistance with accounting services and ensure that reporting is IFRS compliant.

13. ACTIVITY PROGRESS STREAMLINE PROCESSES TO IMPROVE PERFORMANCE
Complete the back-scanning project and appoint a service provider for scanning and indexing
PROGRESS
A backlog has developed on the scanning of documents. Whilst these documents are for claims already paid, it is difficult to retrieve when required because it is not in an electronic format.
The Fund has approved overtime in order to address the backlog, which has substantially decreased (6.5m to 1.2m) which will be finalised by March 2010.
The Fund also intends to appoint a service provider to assist in finalising this faster.

14. ACTIVITY PROGRESS STREAMLINE PROCESSES TO IMPROVE PERFORMANCE
Finalisation of the financial management project
PROGRESS
The Fund has a project to replace its financial system because of inadequacies with the current system. This project is currently underway and is on track.
The business blueprint and a prototype is currently in development, asset accounting and FICA assessments will be finalised by mid October.
The expected date for implementation is April 2010.

15. ACTIVITY PROGRESS STREAMLINE PROCESSES TO IMPROVE PERFORMANCE
Implementation of an Integrated Claims Management
System
PROGRESS
The Fund has come up with a management intervention to identify a claims processing system for the organisation that would improve turnaround time and efficiencies.
A proof of concept is currently underway to ensure that the system will address the business needs and to identify gaps, training requirements, process changes and change management issues.
Testing has commenced and is expected to be complete by mid December, from January to March a pilot will be run with service providers and if successful, rollout of the system will commence by April 2010.

16. ACTIVITY PROGRESS STREAMLINE PROCESSES TO IMPROVE PERFORMANCE
Decentralisation of claims processing to 4 provinces by 31 March (Limpopo, Free State, KwaZulu- Natal, Eastern Cape)
PROGRESS
This process has commenced from the 1st July 2009 with a pilot in Limpopo . The pilot is providing learnings and identifying gaps and challenges which will be addressed in the rollout process to the other provinces.
The recruitment and selection process is underway for the other provinces and the actual rollout will be completed by December 2009.

17. IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION
ACTIVITY
New draft Model for Assessments
Complete Sensitivity Modelling
Finalise Stakeholders Consultation
Amend legislation
Implementation
PROGRESS
An actuarial review of the assessment rates process has been undertaken and a new methodology of setting assessments has been finalesed.
An actuarial sensitivity modelling analysis is currently underway.and will be finalised by 30 November 2009.
Stakeholder consultation should begin in the new year and implementation is expect in April 2011.

18. ACTIVITY IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION
Review and roll-out of Risk Management Strategy
PROGRESS
The Fund has appointed service providers to assist with resource challenges in the risk management environment. This is already yielding value to the organisation.
The Risk Management Strategy is currently under review and will be completed by November 2009
Implementation of the Risk Management Strategy is planned for March 2010.

19. IMPROVE GOVERNANCE AND ELIMINATE FRAUD AND CORRUPTION
ACTIVITY
Strengthening the internal audit function
PROGRESS
The internal audit function was previously conducted by the Department of Labour’s internal audit section. However, due to a high staff turnaround, this function could no longer be provided.
To ensure that an internal audit function is carried out at the Fund, a service provider was appointed whilst the Fund finalises the process of filling of posts.
The short listing of an Executive Manager: Internal Audit is currently underway with the assistance of the audit committee.
Manager posts have already been advertised and in certain cases interviews conducted.

20. ACTIVITY PROGRESS IMPROVE THE INTERNAL CONTROL ENVIRONMENT
Data cleansing of the debt book
Updating the debtors and accounts payable age analysis
PROGRESS
As indicated KPMG has been appointed to assist the Fund with accounting services. A plan is currently being developed with KPMG to address the aging issues and to rectify the debt book amount.
Appointment of debt collection service provider
Appointment of the service provider is expected to be finalised by end November 2009.

21. oooo

22. Financial year
Claims received
Claims Accepted
Claims repudiated
Payments
2007/8
209830
182831
1444
159951
2008/9
203711
167514
643
140770
Apr 09 – Sept 09
103149
61870 49
31327

24. COMPENSATION BENEFITS PAID UPTO SEPTEMBER OF EACH YEAR
171655
171655
168024
167085

25. MEDICAL PAYMENTS PER QUARTER 2009

26. 2007/08 2008/09 R’000 Contributions revenue 3,889,963 4,513,720
Investment income
1,349,815
2,073,004
Other income
15,669
21,228
Benefits paid
1,298,419
2,929,473
Admin
401,429
433,565
Provisions and Actuarial adjustments
4,270,014
2,073,796
Surplus / deficit
-714,415
1,171,118

27. 2007/08
R’000
2008/09 R’000
Investments
16,655,425
19,959,335
Property, plant and equipment
128,777
127,112
Receivables
928,863
821,912
Cash and Cash equivalents
589,998
655,495
Accumulated Funds
5,385,924
6,532,805
Creditors
181,346
290,524
Provisions and accruals
12,735,793
14,740,525

28. UNCLAIMED MONIES
Of the R6,5 Billion in accumulated funds – R400 million is for unclaimed monies which include cancelled cheques
A notice was published in the Government Gazette volume 529 No of 3 July 2009, to request all beneficiaries of unclaimed monies to come CF to claim their dues. To date no-one has come forward.
The Fund is in the process of developing an awareness campaign around this with the first phase being a month-long radio advert to request beneficiaries to come forward.