Presentation to the Select Committee on Social Services SASSA 2017/18 Annual Report 6 November 2018.

Presentation to the Select Committee on Social Services SASSA 2017/18 Annual Report
6 November 2018

Presentation Outline Purpose Overview
Programmes Performance Information - Achievements against 2017/18 Strategic Priorities; Budget and Expenditure; Summary of Audit Outcomes; Recommendations.

Purpose The purpose of this presentation is to brief the Select Committee on Social Services on SASSA’s 2017/18 Annual Report. The presentation will focus on: Performance Information; Budget and Expenditure; Audit outcomes; and Recommendations.

Overview SASSA is a Schedule 3A Public Entity established in April 2006 in terms of an Act of Parliament (SASSA Act, ) The objective of SASSA is to act, as the sole agent that will ensure the efficient and effective management, administration and payment of social assistance; and eventually serve as an institution to manage broader social security benefits The social assistance programme and the operation of SASSA are fully funded by government.

Overview

Overview Vision Mission SASSA’s Slogan
“A leader in the delivery of social security services” Mission To administer social security services to eligible children, older persons and people with disabilities. SASSA’s Slogan Paying the right social grant, to the right person, at the right time and place. NJALO!

SASSA’s Strategic Outcome Oriented Goal
NDP OUTCOME RELEVANT TO SASSA Outcome 13: An inclusive and responsive social protection system SUB- OUTCOME (SO) SO4: Deepening social assistance and extending the scope for social security. SASSA STRATEGIC OUTCOME ORIENTED GOAL Expand access to social assistance and creating a platform for future payment of social security benefits. SASSA GOAL STATEMENT To render social assistance to eligible beneficiaries

SASSA 2014-2019 MTSF Priorities
The primary focus of SASSA in the medium term is: Reducing income poverty by providing social assistance to eligible individuals; Improving service delivery; Improving organisational efficiency; Automation of business systems; Institutionalising social grants payment system within SASSA.

Programmes Programme 1: Administration
Sub-programme 1.1: Executive Management Sub-programme 1.2: Corporate Services Sub-programme 1.3: Information and Communication Technology Sub-programme 1.4: Financial Management Programme 2: Benefits Administration and Support Sub-programme 2.1: Benefits Administration Sub-programme 2.2: Payment Administration

SASSA 2017/18 Strategic Objectives
To improve the effectiveness and efficiency of the administration of the social assistance programme; To provide human capital management, facilities and auxiliary services; Effective information and communication technology; Effective financial management; and To uphold good governance.

Programmes Performance

Performance Rating System
For the purpose of this report, the following rating system has been employed: Achieved Target has been fully achieved Partially Achieved Performance between 50% and 99% Some work has been done but target not fully realized Not Achieved Performance is below 50% Very little/no work done, certainly target has missed time frames.

OVERALL 2017/18 PERFORMANCE The 2017/18 Annual Performance Plan had 42 planned targets; Of the total planned targets, 27 (64%) were fully realized/achieved; 11 targets (26%) were partially achieved recording between 50% and 98% performance; and Four (4) targets (10%) recorded below 50% performance 13

PROGRAMME 1: ADMINISTRATION

PROGRAMME PURPOSE To provide leadership, management and support services towards realization of the Agency’s mandate. This programme provides an enabling environment for an effective & efficient administration and payment of social assistance.

SUMMARY OF PROGRAMME 1 PERFORMANCE
The programme had 21 targets planned for the financial year; Of the total planned targets, 13 (62%) were fully realized/achieved; Eight targets were not fully achieved, of which: Four (4) targets (19%) were partially achieved; and Four (4) targets (19%) recorded below 50% performance

Promoting Good Governance
Planned Target Actual achievement Ratin g Reasons for under achievement 30 internal audit reviews conducted on high-risk areas. 28 internal audit reviews were conducted on high risk areas % achievement. The variance is attributed to 2 regional audits which were conducted but could not be finalised pending management’s comments and sign-off. 72 fraud, theft and corruption awareness programmes conducted across the 9 regions. 87 fraud, theft and corruption awareness programmes were conducted across 9 regions reaching more than officials – 121% achievement. Not applicable.

Planned Target Actual achievement Ratin g Reasons for under achievement 70% of reported fraud, theft and corruption cases Investigated. 88% (393 of 446) of reported fraud, theft and corruption cases were investigated. Majority of the cases involved were: CSG: allegations dominated by non-disclosure of income by beneficiaries; OAG: allegations dominated by fraudulent IDs implicating both Foreign Nationals and South Africans; Disability grant issued to people with no disabilities. Not applicable.

Planned Target Actual achievement Rating Reasons for under achievement 100% of fraud, theft and corruption cases investigated (backlog). 93% (317 of 341) of fraud, theft and corruption cases investigated (backlog). Most backlog cases consist of syndicate cases which take a long time to finalise due to complexity of these cases.

Planned Target Actual achievement Rating Reasons for under achievement An updated Strategic Risk Register maintained. Strategic Risk assessment was conducted. The assessment involve identification process, rating and development of mitigation plans. Strategic risk mitigation action plan progress reports were produced and submitted to National Treasury on a quarterly basis together with Performance Information. Not applicable.

Planned Target Actual achievement Ratin g Reasons for under achievement An updated Operational Risk Register maintained (Head Office). Operational Risk assessments were conducted for ICT, Fraud and Compliance, Corporate Services, Communication and Marketing, Internal Audit and Risk Management and Grants Administration. Risk assessments for the following branches were partially completed: Financial management Strategy and Business Development. Operational risk mitigation action plan progress reports were produced for Grants Administration, ICT, Communication and Marketing, and Fraud and Compliance.

Effective Human Resource Management
Planned Target Actual achievement Rating Reasons for under achievement HR Plan reviewed (focusing on the payment systems). HR Plan was reviewed and approved. The review focused on: Business process based on steps in the biometrics; Time and motion studies; and Norms and standard were developed for each activity in biometrics. Not applicable.

Effective Human Resource Management
Planned Target Actual achievement Ratin g Reasons for under achievement Capacity model reviewed (focusing on the payment system). The capacity model was reviewed and approved by the Acting CEO. The model was reviewed to determine the number of posts/staff required at each Local Office based on the standardised and improved business processes. Not applicable. 95% of funded posts filled. 95% of funded posts were filled. SASSA had employees at the end of March These positions include 397 contracts (EPWP -182), interns (39) and other contracts (176).

Improved Organizational Efficiency
Planned Target Actual achievement Rating Reasons for under achievement Co-sourcing of registries in three (MP, LP and NC) regions concluded. Co-Sourcing of registries (beneficiary record management centres) for Mpumalanga, Limpopo and Northern Cape regions were concluded. The following activities were concluded: Refurbishment of office space; Appointment of security company; Appointment of cleaning and sanitation company; and File transfer from regions to the new Warehouses. Not applicable.

Improved Organizational Efficiency - ICT
Planned Target Actual achievement Ratin g Reasons for under achievement Biometric solution for users procured implemented Biometric solution (Identity Access Management (IAM) for users was procured and configured. 72 SOCPEN users were enrolled. In line with the payment transition, the Beneficiaries’ biometric enrolment was also prioritized and the following work was undertaken: The IAM solution contract was varied to accommodate the development of beneficiaries’ biometric enrolment; Biometric enrolment of beneficiaries was piloted in 4 Local Offices. 1 290 officials were trained on beneficiaries biometric enrolment system. Biometric enrolment for beneficiaries was brought forward to 2017/18 from the initial plan to align with the payment transition

Planned Target Actual achievement Rating Reasons for under achievement Implementation of the Governance Risk and Compliance Solution. Business case for ICT Governance Framework developed. Terms of Reference for procurement finalised. SASSA decided to first consider the capability of existing Audit Compliance software (ACL tool) to deal with the requirements for Governance Risk and Compliance for Enterprise Resource Plan.

Planned Target Actual achievement Rating Reasons for under achievement SASSA network connectivity infrastructure upgraded (Head Office, Regional Offices; Records Centres, District Offices and 50 Local Offices). SASSA network connectivity infrastructure was upgraded in the following Offices: Head Office - from 4MB to 20MB; 9 Regional Offices – from 2MB to 10MB; 9 Records Centres – from 1MB to 4MB; 5 District Offices from 512MB to 4MB; and 12 Local Offices from 512KB – 2MB and 1 from 512KB to 1.54MB. This project is dependent on a number of external parties, namely; Telkom, landlords and municipalities. Project is prioritised in the 2018/19 MTEF period.

Planned Target Actual achievement Rating Reasons for under achievement Data service solution procured and implemented Data integration was implemented through collaboration with external parties who also provided infrastructure. In addition, data exchange between SASSA, Departments of Basic Education and of Social Development as well as the NSFAS were implemented, resulting in social grant beneficiaries receiving NSFAS funding in 2017 and were awaiting evaluation in 2018. Not applicable.

Planned Target Actual achievement Ratin g Reasons for under achievement Back scanning solution implemented in 6 (GP, KZN, MP, FS, EC and NC) regional records centres. Back scanning solution was implemented in five regional records centres (GP, KZN, MP, FS and EC). Back Scanning solution for the NC region was implemented in last quarter of 2016/17. files had been scanned at the end of March 2018. Not applicable. Ongoing scanning implemented in fifty (50) local offices. Ongoing scanning solution was tested in four Local offices in Gauteng. All RMC officials were trained in the nine regions. Target is linked to the ICT infrastructure upgrade, and shall be prioritised once capacity of the local offices has been built.

Planned Target Actual achievement Rating Reasons for under achievement Enterprise Business Intelligence Solution implemented in all branches (Finance, Corporate Services, ICT, Strategy and Business Development). Enterprise Business Intelligence Solution implemented for the Finance, Corporate Services and ICT branches. Strategy and Business Development branch is the custodian of reporting and does not have a transactional system, therefore the branch shall be the main user of the system for overall reporting. Not applicable.

Planned Target Actual achievement Rating Reasons for under achievement Web-interface solution procured and configured. Integrated Grants Payment System was procured and configured by South African Post Office as part of the agreement between SAPO/SASSA for the Transitional Payment Project. None Unqualified audit outcome for 2016/17 achieved. SASSA received a qualified audit outcome for the 2016/17 financial year. The basis of the qualification was related to Irregular Expenditure – the Auditor found that SASSA did not have an adequate system for identifying all irregular expenditure.

Effective Financial Management
Planned Target Actual achievement Rating Reasons for under achievement 100% of eligible suppliers paid within 30 days 99.82% (3 948 of 3 955) suppliers were paid within 30 days. Not applicable. 5% of social assistance debts recovered. 40% (R393m of R971 million) of social assistance debts were recovered and written off. R14 million was collected = 1% R379 million (39%) representing write offs for three financial years, i.e. 2015/16, 2016/17 and 2017/18.

BENEFITS ADMINISTRATION AND SUPPORT
PROGRAMME 2: BENEFITS ADMINISTRATION AND SUPPORT

Programme PURPOSE The programme provides effective administration and implementation of the social assistance programme. The programme is responsible for the core business of the South African Social Security Agency.

SUMMARY OF PROGRAMME 2 PERFORMANCE
The programme had 21 targets planned for the financial year; Of the total planned targets, 14 (67%) were fully realized/achieved; and Seven (7) targets (33%) were partially achieved.

Provide Social Assistance to eligible beneficiaries
Planned Target Actual achievement Rating Reasons for under achievement 1 512 000 new social grant applications processed new social grant applications were processed - 141% achievement. Not applicable.

Provide Social Assistance to eligible beneficiaries
Planned Target Actual achievement Rating Reasons for under achievement 17 523 737 social grants in payment including Grant-in-Aid. social grants in payment including Grant-in-Aid % achievement. Attrition and lapsing of temporary awarded grants contributed to non- achievement of this target.

Social Grants Growth - by grant type
2016/17 2017/18 Old Age 3,302,202 3,423,337 War Veteran 176 134 Disability 1,067,176 1,061,866 Grant in Aid 164,349 192,091 Care Dependency 144,952 147,467 Foster Child 440,295 416,016 Child Support 12,081,375 12,269,084 Total 17,200,525 17,509,995 Annual Growth 1.23% 1.80%

Implementation of the Social Assistance Programme
Planned Target Actual achievement Rating Reasons for under achievement SRD applications awarded. Social relief of distress (SRD) applications were awarded - 115% achievement. The SRD awards were awarded in different forms as detailed below: Cash Food parcels – School uniform – Vouchers – Other – 790. The total SRD expenditure for 2017/18 - R546 million. Not applicable.

Planned Target Actual achievement Rating Reasons for under achievement applications for children aged 0-1 processed. applications for children aged 0-1 were processed – 119% achievement. Performance breakdown Not applicable. Region No. of applications processed EC 97 015 FS 35 533 GP KZN LP MP 62 894 NC 17 516 NW 46 366 WC 49 137 Total

Planned Target Actual achievement Ratin g Reasons for under achievement 95% of new social grant applications processed within 10 days. 94% (2 of 2 ) of new social grant applications were processed within 10 days. The enhancements of SOCPEN for the processing of grant applications, through the revised business processes, did affect productivity, as staff had to familiarise themselves with the system changes. Connectivity downtimes due to power outages in some offices also contributed to non-achievement of the target.

Planned Target Actual achievement Ratin g Reasons for under achievement Foster Child Grant reviews processed. Foster Child Grant reviews were processed - 78% achievement Significant dependency on DSD and magistrates for the completion of extended court orders. DSD and DoJ&CD both have considerable resource challenges, impacting on their ability to provide court orders as required.

Reasons for under achievement
Public participation Planned Target Actual achievement Ratin g Reasons for under achievement 600 identified wards having access to social assistance through ICROP. 685 identified wards had access to social assistance through ICROP - 114% achievement. Not applicable.

Public participation Planned Target Actual achievement Ratin g Reasons for under achievement 600 beneficiary education programmes conducted. 544 beneficiary education programmes conducted - 91% achievement. The target is linked to ICROP - however, the calculation methods are different, i.e. ICROP measures the number of wards while beneficiary education measures the number of education sessions

Public participation Planned Target Actual achievement Rating Reasons for under achievement 40 Mikondzo service delivery interventions conducted. 42 Mikondzo service delivery interventions were conducted - 103% achievement. Not applicable.

Public participation Planned Target Actual achievement Ratin g Reasons for under achievement 80% of enquiries resolved within 5 days as per SASSA’s customer care charter. 89% ( of ) enquiries were resolved within 5 days as per SASSA’s customer care charter. Not applicable.

Public participation Planned Target Actual achievement Ratin g Reasons for under achievement 1000 public awareness programmes conducted. 1 841 Public awareness programmes conducted – 184% achievement. Not applicable.

Public participation Planned Target Actual achievement Ratin g Reasons for under achievement 100% of large cash pay points monitored (Paying more than 300 beneficiaries a day). 99.67% (2 393 of 2 401) of large cash pay-points were monitored. Under achievement is attributed to service delivery protests and employee strike actions which were later resolved.

Payment Administration
Planned Target Actual achievement Rating Reasons for under achievement R44 (Average cost of administering social assistance (R/beneficiary per year.) Average cost of administering social assistance for 2017/18 was R34 per beneficiary. This amount has considered the total amount of social grants (benefits) at the end of March 2018. Not applicable. 5.1% (Administration cost as a percentage of social assistance transfers budget.) The administration cost of the social assistance transfer budget was 5% of the total social grants budget.

Planned Target Actual achievement Rating Reasons for under achievement Model for management of Regulation 26A deductions, which covers both existing and new mandates developed and implemented. Model for the management of Regulation 26A which covers both existing and new mandates was developed and approved. SASSA was able to phase out the CPS services in relation to effecting Regulation 26A deductions. A total of beneficiaries had their deductions effected from their grants through Q-Link. active mandates were captured in 2017/18. Not applicable.

Planned Target Actual achievement Ratin g Reasons for under achievement Model for management of Regulation 26A deductions, which covers both existing and new mandates developed and implemented. .

Planned Target Actual achievement Rating Reasons for under achievement SASSA corporate account for the management of social grants set up and operational. The Paymaster-General account in the SA Reserve Bank environment was approved on the 17 October 2017 by National Treasury and is operational. The account has been used since January to process the ACB direct transfers. Not applicable.

Planned Target Actual achievement Rating Reasons for under achievement Current payment service provider (CPS) services phased out. Phase-in and Phase-out plan developed and approved. SASSA was successful in taking over certain services from the service provider (CPS) which include: Direct transfer to banked beneficiaries; Regulation 26A; Biometric enrolment; and Appointment of SAPO. Complexity of the cash payments, however the Constitutional Court granted six months extension of the payment contract for cash payments only.

Planned Target Actual achievement Ratin g Reasons for under achievement Data migrated from CPS to SASSA. Relevant biometric and payment data was received from CPS. The data has been loaded on the SASSA biometric solution (IAM). The process to verify the biometric data received against Socpen was in progress as follows: Total number of both active and inactive beneficiaries: Total number of active beneficiaries: Active beneficiaries with prints: (81.47%). All the ‘green’ data has been shared with SAPO for loading as the information will be used for card swaps. Not applicable.

Planned Target Actual achievement Rating Reasons for under achievement Phasing in new service provider/s for social grant payments. Phase-in and Phase-out plan developed and approved by SASSA EXCO. SASSA signed a Government-to- Government Agreement with SAPO for the payment of social grants with effect from 01 April 2018. In line with the protocol agreement, the new service provider (SAPO) effective date fell in the new financial year – (1 April 2018).

Planned Target Actual achievement Ratin g Reasons for under achievement Quarterly Reports (Affidavits) submitted to the Constitutional Court in Compliance with Constitutional Court Order. Four (4) Quarterly Reports (affidavits) submitted to the Constitutional Court in compliance with Constitutional Court Order. In addition, the Constitutional Court gave two directions in November 2017 (9 & 29 November 2017) which required SASSA to report on a monthly basis on the implementation. Accordingly, SASSA filed affidavits on a monthly basis. Not applicable. Alternative pay point model developed and approved. Model for the alternative pay point model was developed and approved by the CEO. In addition, Provincial Working Groups (WC, FS, and KZN) were established and stakeholder meetings were convened.

2017/18 Annual Expenditure Report

2017/18 Expenditure outcome

Expenditure on programmes

Narrative on the expenditure outcome
Compensation of employees Underspending on the item was 5% due to unfilled posts. The following senior management positions were among the posts not filled by 31 March 2018: Chief Executive Officer (Occupied on an acting capacity), Executive Manager Corporate services, Chief Operations Officer, Regional Executive Managers for Limpopo, Northern Cape, Free State, Mpumalanga and Western Cape regions which are occupied on an acting capacity.

Narrative on the expenditure outcome
Goods and services The significant underspending on goods and services was on: Consultants: The underspending on this item was on the allocation for fraud investigations since the activities have been insourced. Previously the work was contracted to the SAB&T. Communication: Expenditure on the sub-item telephones was lower than projected. This expenditure is mainly driven by the extent of the utilisation of the telephones/cellphones. The telephone management system sets limit on the amount allowed for an official on telephone usage. Travel: The spending was influenced by the cost containment measures.

Auditor-General Report and Comments

Audit outcome for the 2017/18 financial year
Annual Financial Statements (AFS) Financial statements were presented fairly in all respects with no material misstatements However, a qualified audit opinion was received from the AGSA:

Audit outcome for the 2017/18 financial year
Audit of Predetermined Objectives Programme 2: Benefits Administration and Support was selected for the 2017/18 audit. Material finding was raised against one indicator (percentage of enquiries resolved within five days as per SASSA’s customer care charter). The AG found that the reported achievement of 89% is not reliable, as they were unable to obtain sufficient appropriate audit evidence to support reported achievement. Challenges with reporting on the Qualified Indicator Multiple entry points for registering enquiries and disputes in both regions and head office; Inconsistency in reporting between regions and head office – depending on when reports are drawn off the system (system live and detail on reports therefore changes); Lack of clarity between disputes and enquiries; and Duplication of matters captured.

Control Measures put in place to avoid similar finding in future- Predetermined Objectives
Reporting centralised and automated – regions do not draw reports anymore, but use the reports which are drawn and sent by Head Office. Thereafter, the report is placed in the central repository as Portfolio of Evidence (POE) Current system reporting has been corrected – a function was created with drop down menus to classify the matter being dealt with as a dispute or enquiry (not left to user discretion) and reduce the number which go into default “other” category Measurement of time for resolution of enquiries included on the report The System has been adjusted – where an attachment is required, the document must be uploaded, before the user can continue with the process Users’ workshop and training were held

Basis for qualification – Annual Financial Statements
The basis of the qualification is the disclosure note number 31: Irregular Expenditure – “. AGSA found: Included in the condonation amount shown in the irregular expenditure are amounts that were not condoned by the appropriate authority. Irregular expenditure condoned by REMs whilst REMs were involved in procurement process, affected Regions: EC (57) , MP (6), LP (1), NW (1) totalling R ; The AG found that not all irregular expenditure identified was disclosed. transactions which were not included in the Regional registers given to AG on 31 May 2018, were mainly Splitting of bids to avoid sourcing through competitive bid process, mainly affecting KZN; Medical assessments contract (GP), extensions of contract above 15%; Local content and CIDB Act non-compliance.

Summary of Irregular Expenditure

Control Measures put in place to avoid similar finding in future - Irregular Expenditure
Completeness of irregular expenditure register Validated the 2017/18 irregular expenditure registers Review existing contracts as per developed SCM checklist Review transactions incurred for the period 1 April 2018 to 30 September 2018 Implementing electronic financial misconduct register Prevention of irregular expenditure Implemented awareness program Financial misconduct cases elevated in 2018/19 APP Pre-audit of all new contracts Strengthened regional oversight Developed dashboard and audit action plan Prioritise Supply chain management unit capacity Sought guidance from National Treasury on condonation of irregular expenditure

Recommendations It is recommended that the Select Committee on Social Services notes SASSA 2017/18 Annual Performance Report; SASSA financial statements for 2017/18; and The audit outcome.

Thank you 71

Presentation to the Select Committee on Social Services SASSA 2017/18 Annual Report 6 November 2018.

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Presentation to the Select Committee on Social Services SASSA 2017/18 Annual Report 6 November 2018.

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