Annual Report 2008/09

Presentation to the Select Committee on Social Services

2

Outline of the presentation

The presentation covers the following:

• Part One: Overview;

• Part Two: Achievements against 2008/09 Strategic Priorities;

• Part Three: Budget and Expenditure for 2008/09 (Financials);

• Part Four: Auditor-General Report

3

PART ONE

Overview

4

Mandate

• SASSA derives its mandate from the following Acts:

• The Constitution of the RSA, 1996 (Act No.108 of 1996); “Everyone has the right to have access to : Social Security,

including, if they are unable to support themselves and their dependants, appropriate social assistance”

• Social Assistance Act, 2004 (Act No.13 of 2004); “Everyone has the right to have access to : Social Security,

including, if they are unable to support themselves and their dependants, appropriate social assistance.”

• South African Social Security Agency Act, 2004 (Act No.9 of 2004); One of the key objects of this Act is for SASSA to” act, eventually,

as the sole agent that will ensure the efficient and effective management, administration and payment of social assistance.”

5

SASSA Strategic Intent

To ensure the provision of a comprehensive social security service against vulnerability and poverty

within the constitutional and legislative framework.

Vision

“To provide world-class social

security services”

6

Mission

• To administer quality social security services, cost effectively and timeously using appropriate best practices by:

– Developing and implementing policies, programmes and procedures for an effective and efficient social grants administration system;

– Promotion and protection of human dignity; and– Delivering innovative, cost-effective and efficient

services to individuals, their families and community groups via easy multi-access channels using modern technology.

8

Strategic Priorities

Priorities for the year under review:

• Continuation of the Institutional Reform and Building of the South African Social Security Agency – District and Local Levels;

• Legislation and Policy Implementation on Social Assistance

• Benefit Administration and Payment Service Reforms and Improvements; and

• Fraud Prevention and Detection.

Theme

Paying the right social grant,

to the right person, at the right

time and place. NJALO!

10

PART TWO

Achievements Against 2008/09 Strategic Priorities

PRIORITY 1: INSTITUTIONAL REFORM AND BUILDING OF SASSA

12

Priority 1: Institutional Reform and Building of SASSA

• There has been continuous improvement in most local offices and pay points in terms of access and service provision to beneficiaries;

• Invested in infrastructure improvement at various pay points across country;

Enhancing the integrity of the grant process • Developed an ICT service delivery infrastructure network to

support the grants administration and payment processes• Interfaced with other systems to verify eligibility status i.e.

DHA, Persal, etc;• The first phase (registry module) of the implementation of the

MIS was finalized in all the Regions. • There is now a central Record Management Centre

established for each region

13

Priority 1: Institutional Reform and Building of SASSAImproving organizational capacity• Developed a Code of Conduct and Ethics for SASSA

which was provided to all staff members• Developed protocol guidelines to foster a culture of

professionalism within the context of the Constitution of the Republic of South Africa.

• The contract and litigation management frameworks were developed to promote uniformity in the management and administration of contracts and litigations; and

• The frameworks have resulted in:– reduction in litigation cases against SASSA from 41

505 in 2006/07 to 453 in 2008/09; and – ensured standardization in the management of

contracts across SASSA.

PRIORITY 2: LEGISLATION AND POLICY IMPLEMENTATION ON SOCIAL

ASSISTANCE

15

Priority 2: Legislation and Policy Implementation on Social Assistance

Overall Achievements

• Over 13 million South Africans receive social assistance

benefits

9 million are children;

2.9m are older persons; and

1.28m are people with disabilities

• The number of people receiving grant increased from

12,3m in 2007/08 which represents a growth of 5.2%

17

Grant Uptake for Financial Years 2007/08 and 2008/09

Grant type2007/08 2008/09 Difference

% Growth Rate

Disability Grant 1,408,456 1,286,893 -121,573 -8.6

Old Age 2,229,550 2,390,543 160,993 7.2

War veterans 1,924 1,500 -424 -22.0

Care Dependency 102,292 107,065 4,773 4.7

Child Support 8,189,975 8,765,354 575,379 7.0

Foster Child 454,199 474,759 20,560 4.5

TOTAL 12,386,396 13,026,104 639,708 5.2

Grant in Aid 37,343 46,069 8,726 23.4

• In 2008/09, there was an increase of 639,708 in grants uptake which represents a growth rate of 5.2%

• There is a decrease in the uptake of disability and war veterans grants• The decrease in DG is due to 90% reduction in temporary disability-grant

backlogs

18

New Policy Reforms

• Age Equalisation (Reaching 100% of all men aged 63 and 64 by 31 March 2009)– Implemented phase 1 of the age-equalization for 63

and 64 year old males from 1 July 2008. – In total106,109 males were registered

• Gradual Expansion of CSG – Implemented the extension of the Child Support Grant

(CSG) to children up to the age of 15 from 1 January 2009.

– A total of 30,866 applications were received up until 31 March 2009

19

New Policy Reforms (continued):

• Means Test– Implemented the changes to the means test allowing

more persons access to social assistance with effect from August 2008.

• Alternative identity documents – Implemented Regulation 11(1) allowing persons to apply

for social assistance without a identity document. – the number of applications with alternative identity

documents received at the end of 2008/09 was about 4 000

20

Social Relief of Distress (SRD) Social Relief of Distress (SRD)

• An initial budget of R124 million was allocated to the Agency for 2008/9

• The budget was augmented by R500 million in November 2008, making the total allocation for SRD for the financial year R624m

• Spending at year end of financial year stood at about R650m (104%)

Targets reached• Assistance was in the form of food parcels, cash and school uniforms. • A total of 765 347 people were recipients of SRD as follows:

– A total number of 568 909 food parcels / vouchers were issued;– A total number of 128 746 school uniforms were issued;– Cash payments to 35 679 recipients; and– Other recipients 32 013.

Priority 3: Benefit Administration And Payment

Service Reforms

22

Priority 3: Benefit Administration and Payment Service Reforms

Improved Application Process• Standardised the application and review processes• The average turnaround time for the processing of applications in SASSA

decreased from 21 to 9 days, with the ultimate target being a single day. • Applications in the Piloting of the Improved Grant Application Process

(IGAP) in the FS, are being completed within one day.

Improved Access to Services• Services were taken closer to potential beneficiaries, especially to those

in the rural areas, through the Integrated Community Registration Outreach Programme (ICROP)– Conducted 500 ICROP outreach programmes in all regions– Registered over 133 590 beneficiaries and 80% of those registered

were child support grants• Implemented the Customer Care Charter which places beneficiaries at

the centre of our core activities

23

Priority 3: Benefit Administration and Payment Service Reforms

Improved payment services • Developed contract and vendor management

strategy;• Standardized Service Level Agreements (SLA)

for cash payment services;• Monitored compliance of payment contractors

with SLA;• Implemented monitoring tool to monitor services

by cash contractors which resulted in regions taking corrective measures in improving the payment of grants.

24

Priority 3: Benefit Administration and Payment Service Reforms

Promoting electronic payment as alternative payment method

• 70% of beneficiaries are paid through cash and 30% through electronic payment

• SASSA has embarked on a strategy to promote the use of electronic payment where infrastructure exists

• The migration of grant beneficiaries to electronic payment is proving to be fairly successful

• Already 49.78% of new approved applications opted for ACB (banking services) and Post Bank.

25

Priority 3: Benefit Administration and Payment Service Reforms

Disability Management

• Implemented the Disability Management Model • Standardized disability assessment forms

implemented in all regions; • Trained medical assessors on the new forms; • In total 88 300 medical reviews were conducted

which is more than the 10% targeted for 2008/09 financial year

• Achieved 90% reduction in temporary disability-grant backlogs

Priority 4: Fraud Prevention and Detection

27

Priority 4: Fraud Prevention and Detection

Minimizing fraud

• The Fraud Prevention Strategy was revised and approved

• Regional Fraud Prevention Committees were established to facilitate information and strategy sharing among stakeholders.

• SASSA brought 3,930 new fraud cases to court and 3,605 of the accused were convicted;

• 9,911 fraudsters signed acknowledgement of debt valued at R50,2 million;

28

SIU project targets 2008/09

SASSA Target as per SLA

SIU Target Actual 2008/09

Total cases 3 200 3 500 3 930

Convictions 2 240 2 450 3 605

Disciplinary files prepared 1 000 1 830 4 100

Total OADs 9 069 9 069 9 811

Value of OADs R35,000,000 R35,000,000 R50,249,369

Recommended cancellations

150,000 151,184

Actual savings R200,688,260

29

Priority 4: Fraud Prevention and Detection

Management of Fraud and Error In May 2007 60 000 dormant accounts were identified by two

banks namely Standard and ABSA; In February 2009 the subpoenas were served on the banks; All the banks complied with the subpoena except for Ithala Bank. 39 000 accounts with unclaimed benefits and 250 000 failed

bank accounts where the details of the beneficiary did not match that of the account holder were identified;

The SIU did an analysis of the 39 000 beneficiaries and found that 10% were already deceased, some beneficiaries had non identifiable identity documents and some were listed on CIPRO; and

All the 39 000 beneficiaries are currently under review and will be reported on in the current financial year.

30

SIU Project: Comparative figures

2008/09 2009/10 Cumulative – March 2009

Cumulative – Jan 2010

Total cases to court

3 930 3 072 11 441 14 513

Convictions 3 605 2 740 9 800 12 540

OADs 9 811 6 688 25 999 32 687

Value of OADs R50 249 369 R40 855 364 R140 120 R180 975

Actual recovery

R40 184 276 R61 396 925

31

Fraud statistics per province from March 2005 to Jan 2010

MP GAU LIM KZN WC FS EC NC NW Total

Total cases investigated

7342 5 668 5260 35003 7506 1884 4200 3033 5090 74986

Cases brought before court

1306 2 028 1116 4181 1846 601 1400 586 1449 14513

No. of cases finalized

1253 1 692 890 4104 2141 549 1247 573 1244 13693

No. of Convictions

1109 1665 820 3961 1599 509 1184 502 1191 12540

OADs signed 3985 4041 2749 9875 4661 1435 2187 982 2772 32687

Value of OADs

R19 911

R23 333

R13 266

R60 550

R52 222

R6 866 R14 729

R5 096

R12 002

R18 0975

PVFS R101 377

R78 272

R51 438

R204 039

R98 322

R31 443

R51 294

R22 268

R49 845

R685 298

32

Statistics from each region

Table 6 provide details of the management of fraud and corruption in each of the regions from June 2005 to January 2010;

The most number of AODs (9875) was signed in KZN;

Other regions with a relatively high number of AODs are as follows:Mpumalanga (3985);Gauteng (4014); andWestern Cape (4661).

33

Statistics per category of people

Year 2005/06 2006/07 2007/08 2008/09 2009/10 Total

No. of cases:

- Public Servants

- Others

4 754 20 271

653

8 820

7 244

8 811

10 387

2 592

5 454

51 248

23 738

Cases to court:

- Public Servants

- Other

632 2 469

206

2 433

1 771

2 050

1 880

1 628

1 444

9 212

5 301

Convictions:-Public Servants- Others

355

-

2 050

165

2 215

1 410

1 542

2 063

1 420

1 320

7 582

4 958

Number of OADs:

- Public Servants-Others

2 120 4 512

165

7 571

1 820

5 494

4 317

3 947

2 741

23 644

9 043

Value of OADs:

- Public Servants

- Others

R12,091,848

R26,374,638

R577,623

R41,540,936

R9,285,621

R21,761,263

R28,488,106

R17,875,394

R22,979,970

R119,644m

R61,331m

34

Governance and Administration

• Developed and implemented an annual Internal Audit Coverage Plan, which clearly articulates the areas of focus for the financial year

• Conducted 28 internal audit reviews which included audits that focused on SASSA’s core business and support operations.

• Conducted 25 compliance inspections • The Risk Management Committee continued to be

functional and effective• Developed Risk Management Framework and Risk

register

35

Part III:

Budget and Expenditure for 2008/09

3636

SASSA Administration Budget & Expenditure for 2008/09; 2007/08

Economic C lassification Adjusted

Appropriation Actual

Expenditure %

Spent Variance Adjusted

Appropriation Actual

Expenditure Current Payments 4,472,525 4,938,379 110% (465,854) 4,409,538 4,440,715 - Compensation of Employees 1,339,441 1,339,441 100% - 1,120,930 1,079,723 - Goods and Services 3,133,084 3,597,956 115% (464,872) 3,288,608 3,360,992 of which: - * Handling Fees 1,709,631 2,397,371 140% (687,740) 1,848,727 2,235,491 * Communications 64,803 58,215 90% 6,588 65,465 60,253 * Computer Services 276,080 290,363 105% (14,283) 276,777 267,079 * Lease Payments (Office Accommodation) 185,596 196,985 106% (11,389) 200,096 196,837 * Owned & Leasehold Property 36,211 39,896 110% (3,685) 38,568 40,896 * O&L/P/P: Cleaning Services 29,122 29,829 102% (707) 29,321 30,031 * Travel & Subsistence 116,199 109,114 94% 7,085 117,579 108,922 * Venues & Facilities 14,508 11,794 81% 2,714 15,855 11,340 * Other Goods & Services 700,934 464,389 66% 236,545 696,220 410,143 - Interest & Rent on Land - 517 (517) - - - Payment for Financial Assets - 465 (465) - -

Transfer Payments 17,348 17,324 100% 24 722 1,272 - Provincial & Local Government 24 - 0% 24 106 115 - Departmental Agencies and Accounts 13,269 13,269 100% - - - - Households 4,055 4,055 100% - 616 1,157

Payments for Capital Assets 140,419 75,264 54% 65,155 106,954 108,886 - Machinery & Equipment 93,219 70,214 75% 23,005 104,035 107,848 - Software & Intagible Assets 47,200 5,050 11% 42,150 2,919 1,038

TOTAL EXPENDITURE 4,630,292 5,030,967 109% (400,675) 4,517,214 4,550,873

2008/09 2007/08

373737

SASSA Administration Budget & Expenditure for 2008/09 - Comments

• The Agency spent 109% of its allocated budget for the period under review resulting in R400 million overspending mainly on Goods and Services

• The overspending is attributable to – inadequate Budget on Handling Fees;– the agency’s establishment costs; and – roll out to district and local offices

• Major spending items were on Handling Fees, Lease payments for accommodation, security and cleaning services

• Most of the planned spending on Capital Assets was suspended in view of the financial constraints facing the Agency and in line with the austerity measures implemented across the agency

38

SASSA Administration Budget & Expenditure for 2008/09 – Comments Cont...

• In an effort to address the financial challenges facing the Agency, a request for overdraft was submitted to National Treasury, conditional to the implementation of a cash stabilisation strategy

• National Treasury, in principle, supported the cash stabilisation strategy

• A joint task team made of NT,DSD and SASSA has been established to oversee the implementation of the strategy

39

Total budget allocation administered by SASSA in 2008/09

ADJUSTED BUDGET ALLOCATION

R'000SASSA Administration Budget (SASSA) 4,630

Relief of Distress (DSD) (+R500m) 624Grants Budget Allocation (DSD)Old Age 25,726War Veterans 21

Disability 17,152

Foster Care 3,967

Care Dependency 1,182

Child Support Grant 22,489

SUBTOTAL (-R65m) 70,537

Total Administered by SASSA 75,791

Budget Allocation split

40

Adjustment Estimates: 2008

• As a result of estimated savings in the 2008/09 financial year, driven largely by the lack of adequate administration budget at SASSA, the following additional allocations were approved by MINCOMBUD:

– An additional R500 million allocated to SRD as a result of rising food prices and the recession increasing poverty;

– R65 million was taken away from Social Assistance and shifted to Social Administration to manage the additional beneficiary numbers as a result of the policy decisions announced in January 2008

• Policy Decisions announced in January 2009 to be accommodated within the current allocations:

– Old Age Equalisation to 63; – Extension of the CSG to age 15 as from January 2009, to be

accommodated by the savings in the budget;

41

Adjustment Estimates: 2008/09 (Social Assistance and SRD)

GRANT TYPE ORIGINAL BUDGET

ALLOCATION(R millions)

ADJUSTED BUDGET

ALLOCATION(R millions)

Old Age 25,726 25,726

War Veterans 21 21

Disability 17,152 17,152

Foster Care 3,967 3,967

Care Dependency 1,182 1,182

Child Support Grant 22,554 22,489

SUBTOTAL (-R65m) 70,602 70,537

Relief of Distress (+R500m)

124 624

TOTAL 70,726 70,161

42

Budget Allocation: 2008/09 (SRD with in-year shifts)

Grant Type

ORIGINAL BUDGET

ALLOCATION 2008/09Rands

SHIFTING 1

Rands

SHIFTING 221 JAN 2009

Rands

ADJUSTED ORIGINAL

BUDGET FOR 2008/09Rands

Eastern Cape 23,176,552   -1,000,000 22,176,552

Free State 8,647,344   4,000,000 12,647,344

Gauteng 14,960,256 5,000,000 1,000,000 20,960,256

KwaZulu Natal 27,801,900     27,801,900

Limpopo 15,806,088   -4,500,000 11,306,088

Mpumalanga 8,191,356 -3,000,000 2,000,000 7,191,356

Northern Cape 6,094,860 -2,000,000 -500,000 3,594,860

North West 10,038,480   -1,000,000 9,038,480

Western Cape 9,283,164     9,283,164

Total 124,000,000 - - 124,000,000

43

Adjustments Budget: 2008/09

(SRD with additional shifts)

Grant TypeADDITIONAL ALLOCATION

SHIFTING 320 JAN 2009

SHIFTING 424 MAR 2009

ADJUSTED ADDITIONAL ALLOCATION

ADJUSTED BUDGET FOR

2008/09

Eastern Cape 100,000,000     100,000,000 122,176,552

Free State 34,500,000   5,000,000 39,500,000 52,147,344

Gauteng 62,000,000 -10,000,000   52,000,000 72,960,256

KwaZulu Natal 119,500,000     119,500,000 147,301,900

Limpopo 80,000,000     80,000,000 91,306,088

Mpumalanga 36,500,000     36,500,000 43,691,356

Northern Cape 12,500,000     12,500,000 16,094,860

North West 33,500,000   -5,000,000 28,500,000 37,538,480

Western Cape 21,500,000 10,000,000   31,500,000 40,783,164

Total 500,000,000 - - 500,000,000 624,000,000

44

Expenditure: 2008/09 (Social Assistance and SRD)

GRANT TYPE

ADJUSTED BUDGET

ALLOCATION R millions

EXPENDITURE

R millions

SAVINGS(+)/ DEFICIT (-)

R millions

Old Age 25,726 26,024 -289

War Veterans 21 20 1

Disability 17,152 16,474 678

Foster Care 3,967 3,934 33

Care Dependency 1,182 1,293 -111

Child Support Grant

22,489 22,348 141

SUBTOTAL 70,537 70,093 444

Relief of Distress 624 623 1

TOTAL 71,161 70,716 445

45

Expenditure: 2008/09 (Social Assistance and SRD)

GRANT TYPEACTUAL NUMBER OF

BENEFICIARIES PAID PER GRANT TYPE

Old Age 27,287,417

War Veterans 20,785

Disability 16,617,637

Foster Care 3,637,232

Care Dependency 1,221,417

Child Support Grant 58,006,981

TOTAL 106,791,469

TOTAL numbers for March 2009 12,649,698

46

Expenditure: 2008/09 (SRD Actual Expenditure and commitments)

Region

BAS Expenditure

as at 31-Mar-09

Regional Commitments

 

Total Expenditure

with Commitments

% Spent

 Saving (+) / Deficit (-)

Eastern Cape 122,704,396 2,901,066 125,605,462 103% -3,428,911

Free State 51,778,526 0 51,778,526 99% -4,631,183

Gauteng 98,616,371 16,685,240 98,749,296 135% -42,341,355

KwaZulu Natal 127,400,769 18,038,684 145,439,453 99% 1,862,446

Limpopo 87,581,817 11,674,635 99,256,452 109% -7,950,365

Mpumalanga 43,238,908 2,847,188 46,086,096 105% -2,394,741

Northern Cape 23,294,022 135,477 23,429,499 146% -7,334,639

North West 25,708,395 114,888 25,823,283 69% 16,715,196

Western Cape 42,758,637 14,340 42,772,977 105% -1,989,814

Total 623,081,846 52,411,518 658,941,049 106% -51,493,364

47

Rollover Request for SRD: 2009

• Social Assistance and SRD expenditure highlighted a saving of R445 million.

• Commitments for SRD amounted to R52 million.

• A rollover request for SRD amounting to R52 million was requested to be transferred from the social assistance savings.

• This was fully funded.

50

Comments on Grants and SRD spending

• Social Assistance expenditure for 2008/09 amounted to R70,093 billion.

• Actual SRD expenditure amounted to R623 million, with commitments amounting to R52 million.

• Social Assistance and SRD expenditure highlighted a saving of R445 million.

• The rollover request for R52 million was approved (in full) for SRD, which was funded from the social assistance savings.

• Total adjusted expenditure for SRD amounted to R675 million for 2008/09 financial year.

PART FOUR

AUDITOR GENERAL’S REPORT

SASSA Administration Audit Findings 2009/09

53

Auditor General Report and Comments• The Agency has received unqualified audit report for two

consecutive years• However there are three matters of emphasis for the

2008/09 financial year– Asset Management– Mobile Trucks- Fruitless Expenditure– Irregular Expenditure

• On the grant budget Audit AG raised the following issues– Grant debtors– SRD procurement and irregular expenditure

• Action plans for both Admin and Grant budget have been developed and detailed copies are attached

54

Remedial Actions - Asset Management

• The Agency embarked on a nation wide verification of its physical assets.

• Duplicate assets and dummy bar codes were identified and are in the process of being removed from the asset register.

• Assets without bar codes were labelled and were taken onto the asset register

• Incorrect asset description were identified and corrected on the asset register

• Assets purchased were labeled and taken onto the asset register

• Intangible assets were identified and taken onto the asset register

• Redundant , obsolete and missing assets were identified for disposal and write-off.

55

Remedial Actions - Asset Management Cont...

• The data on the current asset register (BAUD SYSTEM) is being cleaned, re-valued in terms of useful life and migrated onto the Accrual asset register to comply with GRAP standards.

• A consultant has been appointed to assist the Agency with the migration from cash to accrual basis of accounting in an effort to ensure compliance to GRAP standards

• The Asset registers are being decentralized to Regional level.

• The exercise will be completed by 31 March 2010.

56

Remedial Actions - Fruitless Expenditure: Mobile Trucks

• An investigation , based on AG’s report was conducted during August and September 2009 in Free State, KZN, Northern Cape, Mpumalanga and Pretoria (Centurion) on 19 mobile units .

• Expenditure on 10 trucks revealed fruitless expenditure amounting to an estimated cost of R1,229, 479 million was incurred. Losses of assets estimated at an amount of R298 956.00

• The Financial Misconduct Board to rule on disciplinary action to be instituted against responsible officials

• The Agency is in the process of reviewing the use of mobile units

57

Remedial Actions - Irregular Expenditure

• This covers irregular expenditure incurred through procurement related processes by Head Office and the Regions

• The total amount of R69, 718,644.00 was condoned as irregular expenditure in 2008/09.

• This includes expenditure incurred in 2007/08 but condoned during the 2008/09 financial year

• The 2008/09 actual irregular expenditure is 70% less than that incurred during the 2007/08 financial year

• Procurement processes were not followed in the procurement of goods

58

Remedial Actions - Irregular Expenditure

• End users and SCM officials did not understand procurement process.

• An in depth SCM training took place during October 2008 to December 2008 with cost centre managers and SCM practitioners throughout SASSA where processes were outlined in terms of procurement processes and delegations.

• A standardized process is now been followed throughout the SASSA.

• Disciplinary action is being imposed against perpetrators.

59

PART FIVEChallenges and Concluding Remarks on

2008/09 financial year

60

Concluding Remarks• SASSA has made tremendous strides in meeting its

mandate, however, there are still many challenges confronting the Agency. Some of these challenges relate to:Financial constraints;

• Reduction in outreach programme;• Halting infrastructure acquisition; and• Filling of posts

Impact of shared office accommodation – costed infrastructure plan for SASSA to be developed

Full compliance to government prescripts, policies and procedures.

6161