South African Social Security Agency (SASSA) 2009/10 Annual Report with Minister of Social Development
Meeting Summary
The Committee was briefed by the South African Social Security Agency (SASSA) on the Annual Report for 2009/10. Key achievements included increasing the number of social assistance benefits that it paid out, and also that SASSA had reduced its deficit position by almost 50% over last year. SASSA was very clear about the numerous challenges it still faced. These challenges included the migration from a cash based accounting system to an accrual based system. Policy changes that led to the increase in grants were not matched by an increase in funding. It lacked automated business processes. The existing manual system was slow, error prone, and extremely labour intensive. Most notably, the Department of Social Development (DSD) received a qualified audit report from the Auditor General as a result of SASSA’s poor record management and missing critical documentation. SASSA had taken action to remedy these challenges. SASSA had contracted with a service provider to assist with system challenges and transfer much needed skills to SASSA employees. SASSA had reprioritised the 2011/12 budget to fast track automated business processes. Lastly, SASSA would be appointing critical staff to address service delivery challenges.
Members questioned the change in accounting practices and asked why SASSA had not sought qualified staff, or provided training in advance of changing practices. They questioned SASSA's ability to monitor staff performance and whether performance was linked to bonuses and promotions. They asked how long service providers were contracted for and when SASSA expected to be self-sufficient. Members noted that this was not the first time that SASSA had received poor performance reports from the Auditor General. They questioned SASSA on short and long term strategies for turning this situation around for next year. Members questioned SASSA about plans for service delivery model improvements and asked if SASSA had a plan to maintain improvements if the number of grant beneficiaries continued to rise.
SASSA replied that it was making improvements; however, these improvements were being overshadowed by the qualified report from the Auditor General. SASSA noted it was forecasting a surplus for the next reporting period, which they had authority to invest in service delivery improvements.
Meeting report
Briefing by the South African Social Security Agency
The Chairperson welcomed the Minister of Social Development to the meeting.
Mr Coceko Pakade, Acting Chief Executive Officer of SASSA, explained the aim of the presentation was to provide an overview of the performance of the Agency for 2009/10, indicate some of the financial and service delivery challenges and some short and long term measures to address these challenges. He noted as background information that SASSA was grappling with a deficit for the previous year of approximately R839 million and an overdraft of approximately R410 million as of 31 March 2009. SASSA had to maintain a balance between the increasing demand and reducing its deficit. SASSA also had to adopt the accrual basis of accounting during this period. The demand for services from SASSA had increased with over 14 million benefits paid in 2010 up from 3.2 million in 1998. Compounding the efforts in service delivery, staffing levels had not risen, and SASSA was still working on a predominantly manual system of grant application and approval.
Mr Pakade highlighted that SASSA increased the number of social grants by 7.5% over last year. Of these 14 million grants, 10 million were child benefits, 2.5 million were for older persons, and 1.26 million were for people with disabilities. Administering these grants amounted to approximately 4.6 million transactions. The deficit for the year was reduced by half over last year, with irregular expenditures also reduced from R69 million last year to R2.6 million. He showed a slide that provided the growth rates of each grant type between 2007/08 and 2009/10.
Mr Pakade outlined the strategic priorities for 2009/10, which included a customer care-centred benefits administration and management system, improved organisational capacity and a comprehensive and integrated social security administration and management services.
Strategic priority one: Customer care-centred Benefits Administration and Management System
Mr Pakade noted this as SASSA's core business. Key achievements under this priority included: an increase of 1.03 million in grants representing a growth rate of 7.5%. There was a decrease in total disability and war grants, with the decrease in disability grants due to an intensive review and lapsing of temporary disability grants. SASSA implemented the Age Equalisation policy reform and reached 77.4% of its target for the year. Under the expansion of the Child Support Grant (CSG), SASSA reached 69.4% of its target. SASSA's inability to achieve its targets was partially attributed to its inadequate human resources.
Under the Automated Core Business Systems, SASSA target was to develop and implement the following systems: Improved Grant Application System (IGAP), Management Information System (MIS), and ERP. IGAP and MIS were related systems.
Mr Pakade discussed the Improved Grants Payment System, which he described as a strategy to promote electronic payments where the infrastructure existed. The target for implementation in five regions was unrealistic and implementation was limited to one region in Free State. Complete roll out of the IGAP was not achieved due to budgetary constraints. All regions had the MIS module rolled out. The ERP system was also fully implemented.
Mr Pakade noted, in regards to beneficiary maintenance, that 97.9% of beneficiaries were notified of administrative actions prior to the lapsing of grants. The implementation of an internal review mechanism was not implemented in the year under review due to delays in approval of legislation; however, it had since been implemented.
The Comprehensive Payment Management Framework was developed and approved but not fully implemented due to litigation challenges. However, SASSA was working on a long term strategy to improve the payment system in South Africa. Its strategy to promote electronic payments resulted in a 23.4% reduction in cash payments. SASSA continued to improve the Grant Application System.
Mr Pakade discussed the Disability Management Model. The model was created to standardise several different regional systems that SASSA inherited. The model improved the disability assessment process in order to minimise fraud. It was implemented in six regions during the year under review. There elements of the model included: gate keeping, medical assessment, and medical form modules. This model decreased the temporary disability grant application significantly by implementing a three month waiting period before re-application. Medical assessment forms were now serialised in order to reduce fraud.
SASSA implemented Integrated Community Registration Outreach Programmes (ICROP) to move services closer to potential beneficiaries. Only a few elements of the programme were achieved. Notably, all regions had implemented ICROP through participation in the Premier's Outreach Programmes and services were taken closer to potential beneficiaries, especially those in deep rural areas using mobile units. Other critical service delivery initiatives were implemented in some local offices including: enquiry management, queue management, a booking system, and capacity building.
Mr Pakade noted that the Service Delivery Model was developed and should be finalised in 2010/11. This model covered the entire value chain in terms of how SASSA conducted its business. New ICT systems would reflect this model.
Strategic priority two: Improved Organisational Capacity
Mr Pakade highlighted key achievements including improved access to SASSA services. SASSA had invested in infrastructure improvement at various pay points across the country and most local offices and pay points were accessible to beneficiaries. He emphasized that SASSA would be permitted to use future savings to invest further in infrastructure and automated systems.
SASSA's corporate compliance and integrity policy approval was delayed due to internal consultations. However, SASSA implemented the benefits verification elements of the integrity model which yielded the following statistics: 1,994 grant beneficiaries were verified for eligibility and existence, 7,440 grant investigations were conducted, 3,454 people taken to court for grant fraud, and 314 inspections were conducted. Furthermore, after implementing the corporate compliance model, 91 inspections were conducted in six regions. SASSA implemented a litigation strategy that reduced the number of litigation cases from about 15,212 in 2008/09 to 2,735 in the year under review. This strategy translated into a reduction in litigation costs from about R40 million to R20 million.
Addressing human resources management, Mr Pakade said that SASSA had adopted a zero tolerance approach to misconduct, which led to 191 cases finalised with various sanctions imposed. Individual Poor Performance Guidelines were developed to capacitate supervisors. SASSA encouraged a healthy lifestyle and wellness culture by implementing voluntary testing and counselling with 10% staff participation, budgeting and debt management skills training for employees, and health screening programmes to detect and treat diseases.
SASSA implemented a Fraud Management Strategy which resulted in savings of R180.9 million. He also presented additional fraud statistics (see presentation). SASSA's priorities for the future would be in fraud prevention given that the cost of recovering funds was high and often people did not have the ability to pay back the funds.
Mr Pakade skipped ahead to address service delivery challenges. He touched the challenges at service points as the long waits, repeat visits and sleepovers that clients experience. Also, pay points were in poor condition, they lacked basic facilities, and there were still reports of exploitation of beneficiaries by money lenders.
For records management, some of the physical infrastructure did not meet the requirements of the Occupational Health and Safety Act. Many facilities were full to capacity and there were missing files and other critical documentation.
Mr Pakade explained that there were significant backlogs in reviews which resulted in over payments to non-eligible beneficiaries. The requirement to send letters of notification to beneficiaries was very costly. The time-sensitive nature of reviews resulted in staff dedicating their time to the reviews rather than on new applications. SASSA depended on the DSD and Department of Justice which resulted in either paying a grant without a mandate or suspending a payment leaving a vulnerable person without support.
Turning to fraud management challenges again, Mr Pakade noted that the nature of SASSA's business lent itself to be vulnerable to a high risk of fraud and corruption. A lack of interdepartmental collaboration, collusion of staff and a lack of online interfaces had resulted in an environment where fraud flourished. There was also a perceived inability of SASSA to successfully deal with fraud challenges, which resulted in a loss of credibility.
Budget and Expenditures for Social Assistance Transfers for 2009/10
Mr Pakade highlighted that social assistance expenditures for the year amounted to R79 billion with social assistance and social relief of distress (SRD) savings of R1 billion. There were no budget adjustments for 2009 as a result of the savings. He commented that actual SRD expenditures amounted to R165 million. He presented slides that gave the breakdown of budget against expenditures (see presentation).
Mr Pakade addressed the Auditor General's audit report on social grants. There was a qualified opinion from the Auditor General on the Department of Social Development's budget and a disclaimer of opinion on SASSA's budget. Mr Pakade provided detailed background information regarding the methodology that led to this disclaimer of opinion. Other issues which led to this opinion included 545,076 missing files, and 159,302 files that were missing critical documents. There was a non-performance of grant reviews, a lack of accountability on SRD and poor management of grant debtors. He presented a slide that demonstrated progress achieved against these issues. All of the exceptions noted during the audit were receiving attention, with a significant amount already resolved. All outstanding matters would be resolved by 15 March 2011.
Mr Pakade stated that for the year under review, SASSA posted a deficit of R490 million. This was compared to a deficit of R890 million for the previous year. SASSA was projecting a positive balance next year. SASSA's administration budget grew 12% from R4.6 to R5.2 billion between 2008/9 and 2009/10. The Auditor General issued a disclaimer opinion on the administration budget as the Auditor General was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Findings included late submission of financial statements, inadequate filing systems and record keeping and an incorrect / non-application of the accrual basis of accounting.
Mr Pakade reviewed the short term interventions that SASSA had implemented to deal with the audit report’s findings. SASSA had appointed an accounting firm to assist with financial management for a period of one year. SASSA continued to provide its staff with specific training on accrual based accounting principles. SASSA was completing a skills audit on the entire Finance Branch to ensure that they had the necessary skills to fill finance roles. SASSA identified the need for 202 new posts to be filled, some of which had already been advertised. The change to accrual accounting methods was being complemented with an in-house accounting culture change management initiative. SASSA was in dialogue with professional accounting institutes to remain current in accounting practices.
Mr Pakade skipped ahead in the presentation to discuss SASSA's action plan to address its challenges. There would be both short term measures to fix immediate problems and long term measures to ensure a permanent solution. In the short term, SASSA had saved money by renegotiating the costs to companies for the payment of grants. It was also in the process of recouping funds from dormant accounts. In terms of service delivery, SASSA would introduce immediate measures such as a booking system and establishing satellite and mobile services. In the long term, the objective was to fully automate the business process to bring them in line with other high-performing institutions.
In conclusion, Mr Pakade presented summary slides of the short and long term plans. He stated that overall, SASSA performed fairly well during the year under review. SASSA was working tirelessly to remedy the issues noted by the Auditor General, and requested the support of the Committee as it grappled with its many challenges.
Discussion
Ms P Tshwete (ANC) asked if SASSA had finalised the investigations by the end of August 2010 as stated in paragraph 4.1.6 of the SASSA Annual Report. She asked how many people were taken to court for grant fraud and were they paying back any of the money they owed. She also asked if they were members of staff. She asked when payment contracts would be advertised and how would business be conducted between now and when the contracts were awarded.
A member of the Committee asked what was the impact on clients and applicants during the period when there were missing files and documents. She asked if there were solutions in place to address the lack of accountability on the Social Relief of Distress as noted in the Auditor General's report.
A member of the Committee asked if SASSA had enough doctors to complete the necessary reviews on temporary disability grants. An unspent amount of R1 billion was a problem. She asked SASSA to clarify the means testing for the old age grant. She suggested that local leaders be engaged in the dissemination of communications plans of SASSA.
Ms J Masilo (ANC) asked what the timeframe was to fill the critical posts in SASSA. She asked if there was a plan to make people aware of the policies to claim the old age grant. She asked how many mobile trucks SASSA had and when it would start with its outreach programmes.
Ms S Kopane (DA) noted that on slide 18 of the presentation, IGAP implementation was not completed due to insufficient budget allocation, yet on page 28 of the Annual Report it stated that IGAP was delayed due to negotiations with labour unions. She asked for clarity on the discrepancy. She asked if there were any efforts in place to resolve the issue of accountability lines between SASSA and the Department of Social Development as noted in the Auditor General's report.
Ms H Lamoela (DA) asked if SASSA had a strategy to fill its vacant posts in accordance with the requirements outlined in the State of the Nation Address. She noted long-standing difficulties with using the mobile trucks for service delivery. She asked why these trucks were bought, for what purpose, and why were they not currently in use. She asked for a report on the outcomes of investigation into irregular expenditure that was completed in August 2010 to be submitted to the Committee by the end of term. She also asked for a report on the progress so far of SASSA's detailed plan to address the 140 cases of irregular expenditure that were still being investigated. She asked why it took SASSA so long to complete a revision of existing payment contracts, and why the tenders had not yet been advertised. She asked if peer assessments were completed on personnel before bonuses or promotions were awarded. She suggested that if reviews were conducted more regularly, they could have identified skill shortages much sooner. Ms Lamoela noted many of its plans were not implemented as a result of capacity constraints. Given SASSA's high vacancy rate, she asked what its plan was, including time frames, to address its capacity constraints. She asked for clarification on the delay and the impact of having not yet implemented the service delivery plan. She asked for SASSA to explain the process of grant reviews.
Ms Tshwete asked for which year did SASSA appoint an accounting firm to assist with the financial management of the agency.
The Chairperson asked if SASSA would submit its financial statements on time this year. She asked if SASSA would be linking the new service delivery model with the organogram of the organisation. She asked if SASSA would have an improved communication plan in 2011/12 to raise awareness of grants for children and older persons. She asked if the migration of payments from cash to electronic payments was still increasing.
Ms Masilo asked what the percent reduction was in payments of disability grants following SASSA's reviews.
Mr Pakade noted that the concerns regarding the mobile trucks were first raised in a 2008/09 audit that questioned its effectiveness. SASSA made a decision to put the trucks on the road in full working condition. SASSA now had guidelines that covered all aspects of their use including assigning responsibilities for maintenance and operations. Regions had been given the responsibility to use them for outreach programs.
Mr Pakade noted that both public servants and members of the public had been taken to court for fraud. In these cases, SASSA had people sign an acknowledgement of debt. However, the recovery rate was only about 62%. SASSA was in the process of determining which debts were irrecoverable.
Mr Pakade stated that SASSA commissioned an accounting firm for a short time to assist with finalising the financial statements. The second accounting firm that was now working with SASSA was assisting them in achieving long term solutions while staff capacitation was underway. They were appointed in January and started working in February.
The contracting of cash payment providers was a complicated process. SASSA wanted to ensure that they got the "Request for Proposals" correct, and this consultative process was lengthy. Mr Pakade noted that it was near the end of this process.
Mr Pakade noted that when files were missing, the beneficiary continued to receive the benefit. Only when a case of a missing file was suspect did they conduct a thorough review. The results of the review determined whether the grant was continued or not.
Mr Pakade noted that Social Relief of Distress (SRD) was by its own nature susceptible to problems. In the short term, SASSA issued guidelines for the distribution of SRD while it examined a long term strategy.
Mr Pakade noted that the budget for social grants was based on estimates. R1 billion was not a significant variant on a R80 billion budget. Part of SASSA's current efforts to build internal capacity would ensure that those who needed grants would be able to get them. People were aware of the benefits available to them. The problem was that people lacked proper documentation or transportation to register for and collect grants. SASSA's new communications strategy was in progress. They would engage traditional leaders and churches to assist in passing information to its respective memberships. They would also explore 'indigenous ways of communication'.
Mr Pakade addressed the filling of critical posts. They embarked on a program of optimal utilisation of staff. Throughout SASSA they were looking at who was doing what and where and if they were being fully utilised in their job. They would then look at whom they could redeploy to best match an individual's skills with a particular position that required those skills. He estimated the vacancy rate to be between 30 and 35%. They identified approximately 400 critical posts that would be reviewed by the Minister before being filled.
Mr Pakade identified the issue with IGAP. Labour boards felt that those who were involved in grant approvals should not be part of the skills assessment, whereas SASSA's policy was to assess the skill, potential and capacity of everyone against the job evaluation processes to ensure that everyone was qualified to do their jobs. These discussions delayed the implementation of IGAP.
In regards to the accountability lines between SASSA and the Department of Social Development (DSD), Mr Pakade stated that the processing of grant payments was more important than the accountability structure. The issue was that expenditures were recorded on the books of the Department, where the Director General of DSD was ultimately responsible; however, the Department had little operational control of how that money was spent. At the end of the day, oversight was by the CEO of SASSA and SASSA had reviewed its internal accountability structure to ensure it was well understood by those within the Agency.
Mr Pakade noted that the filling of senior posts at SASSA was at an advanced stage. The competency assessments and short lists had been completed.
SASSA's goal through the performance measurement system was to ensure that those who received performance bonuses deserved them.
Mr Pakade explained that the Service Delivery Model was approved. The work was now focused on implementation. Processes were streamlined in line with the IGAP model.
Mr Pakade noted that reviews and backlogs should now be historic information. However, capacity would always be the key. The review process was very labour intensive. Reviews were conducted concurrent to processing new applications.
Mr Pakade confirmed that they would meet the next deadline for submission of financial paperwork.
Mr Pakade again noted that the Service Delivery Model would link business processes from the start to the end. These processes would drive the organisational structure and staffing levels. The processes had now been captured and the organisational review was underway.
A member of the delegation from SASSA spoke to the lack of measurable objectives of the integrity model. The details of her statement were inaudible.
Dr John Marite, General Manager, SASSA stated that every doctor available in both the public and private sector were trained and utilised in completing disability assessments. The backlog was small. In regards to disability assessments, for temporary disability assessments, they would be adding an element of sensitivity to the process. Those that were still very ill at the end of their temporary period would not be called in for a review; rather, they would take the services to them. Services had been standardised across the provinces and in an attempt to reduce fraud, medical assessment forms would be sent from the doctors directly to SASSA and not be carried by the applicants.
The Minister concluded by restating the good work that SASSA had been doing to address the shortcomings identified by the Auditor General. SASSA was a large sophisticated organisation that was responsible for distributing large amounts of money.
The Chairperson adjourned the meeting.
Mr Coceko Pakade, Acting Chief Executive Officer of SASSA, explained the aim of the presentation was to provide an overview of the performance of the Agency for 2009/10, indicate some of the financial and service delivery challenges and some short and long term measures to address these challenges. He noted as background information that SASSA was grappling with a deficit for the previous year of approximately R839 million and an overdraft of approximately R410 million as of 31 March 2009. SASSA had to maintain a balance between the increasing demand and reducing its deficit. SASSA also had to adopt the accrual basis of accounting during this period. The demand for services from SASSA had increased with over 14 million benefits paid in 2010 up from 3.2 million in 1998. Compounding the efforts in service delivery, staffing levels had not risen, and SASSA was still working on a predominantly manual system of grant application and approval.
Mr Pakade highlighted that SASSA increased the number of social grants by 7.5% over last year. Of these 14 million grants, 10 million were child benefits, 2.5 million were for older persons, and 1.26 million were for people with disabilities. Administering these grants amounted to approximately 4.6 million transactions. The deficit for the year was reduced by half over last year, with irregular expenditures also reduced from R69 million last year to R2.6 million. He showed a slide that provided the growth rates of each grant type between 2007/08 and 2009/10.
Mr Pakade outlined the strategic priorities for 2009/10, which included a customer care-centred benefits administration and management system, improved organisational capacity and a comprehensive and integrated social security administration and management services.
Strategic priority one: Customer care-centred Benefits Administration and Management System
Mr Pakade noted this as SASSA's core business. Key achievements under this priority included: an increase of 1.03 million in grants representing a growth rate of 7.5%. There was a decrease in total disability and war grants, with the decrease in disability grants due to an intensive review and lapsing of temporary disability grants. SASSA implemented the Age Equalisation policy reform and reached 77.4% of its target for the year. Under the expansion of the Child Support Grant (CSG), SASSA reached 69.4% of its target. SASSA's inability to achieve its targets was partially attributed to its inadequate human resources.
Under the Automated Core Business Systems, SASSA target was to develop and implement the following systems: Improved Grant Application System (IGAP), Management Information System (MIS), and ERP. IGAP and MIS were related systems.
Mr Pakade discussed the Improved Grants Payment System, which he described as a strategy to promote electronic payments where the infrastructure existed. The target for implementation in five regions was unrealistic and implementation was limited to one region in Free State. Complete roll out of the IGAP was not achieved due to budgetary constraints. All regions had the MIS module rolled out. The ERP system was also fully implemented.
Mr Pakade noted, in regards to beneficiary maintenance, that 97.9% of beneficiaries were notified of administrative actions prior to the lapsing of grants. The implementation of an internal review mechanism was not implemented in the year under review due to delays in approval of legislation; however, it had since been implemented.
The Comprehensive Payment Management Framework was developed and approved but not fully implemented due to litigation challenges. However, SASSA was working on a long term strategy to improve the payment system in South Africa. Its strategy to promote electronic payments resulted in a 23.4% reduction in cash payments. SASSA continued to improve the Grant Application System.
Mr Pakade discussed the Disability Management Model. The model was created to standardise several different regional systems that SASSA inherited. The model improved the disability assessment process in order to minimise fraud. It was implemented in six regions during the year under review. There elements of the model included: gate keeping, medical assessment, and medical form modules. This model decreased the temporary disability grant application significantly by implementing a three month waiting period before re-application. Medical assessment forms were now serialised in order to reduce fraud.
SASSA implemented Integrated Community Registration Outreach Programmes (ICROP) to move services closer to potential beneficiaries. Only a few elements of the programme were achieved. Notably, all regions had implemented ICROP through participation in the Premier's Outreach Programmes and services were taken closer to potential beneficiaries, especially those in deep rural areas using mobile units. Other critical service delivery initiatives were implemented in some local offices including: enquiry management, queue management, a booking system, and capacity building.
Mr Pakade noted that the Service Delivery Model was developed and should be finalised in 2010/11. This model covered the entire value chain in terms of how SASSA conducted its business. New ICT systems would reflect this model.
Strategic priority two: Improved Organisational Capacity
Mr Pakade highlighted key achievements including improved access to SASSA services. SASSA had invested in infrastructure improvement at various pay points across the country and most local offices and pay points were accessible to beneficiaries. He emphasized that SASSA would be permitted to use future savings to invest further in infrastructure and automated systems.
SASSA's corporate compliance and integrity policy approval was delayed due to internal consultations. However, SASSA implemented the benefits verification elements of the integrity model which yielded the following statistics: 1,994 grant beneficiaries were verified for eligibility and existence, 7,440 grant investigations were conducted, 3,454 people taken to court for grant fraud, and 314 inspections were conducted. Furthermore, after implementing the corporate compliance model, 91 inspections were conducted in six regions. SASSA implemented a litigation strategy that reduced the number of litigation cases from about 15,212 in 2008/09 to 2,735 in the year under review. This strategy translated into a reduction in litigation costs from about R40 million to R20 million.
Addressing human resources management, Mr Pakade said that SASSA had adopted a zero tolerance approach to misconduct, which led to 191 cases finalised with various sanctions imposed. Individual Poor Performance Guidelines were developed to capacitate supervisors. SASSA encouraged a healthy lifestyle and wellness culture by implementing voluntary testing and counselling with 10% staff participation, budgeting and debt management skills training for employees, and health screening programmes to detect and treat diseases.
SASSA implemented a Fraud Management Strategy which resulted in savings of R180.9 million. He also presented additional fraud statistics (see presentation). SASSA's priorities for the future would be in fraud prevention given that the cost of recovering funds was high and often people did not have the ability to pay back the funds.
Mr Pakade skipped ahead to address service delivery challenges. He touched the challenges at service points as the long waits, repeat visits and sleepovers that clients experience. Also, pay points were in poor condition, they lacked basic facilities, and there were still reports of exploitation of beneficiaries by money lenders.
For records management, some of the physical infrastructure did not meet the requirements of the Occupational Health and Safety Act. Many facilities were full to capacity and there were missing files and other critical documentation.
Mr Pakade explained that there were significant backlogs in reviews which resulted in over payments to non-eligible beneficiaries. The requirement to send letters of notification to beneficiaries was very costly. The time-sensitive nature of reviews resulted in staff dedicating their time to the reviews rather than on new applications. SASSA depended on the DSD and Department of Justice which resulted in either paying a grant without a mandate or suspending a payment leaving a vulnerable person without support.
Turning to fraud management challenges again, Mr Pakade noted that the nature of SASSA's business lent itself to be vulnerable to a high risk of fraud and corruption. A lack of interdepartmental collaboration, collusion of staff and a lack of online interfaces had resulted in an environment where fraud flourished. There was also a perceived inability of SASSA to successfully deal with fraud challenges, which resulted in a loss of credibility.
Budget and Expenditures for Social Assistance Transfers for 2009/10
Mr Pakade highlighted that social assistance expenditures for the year amounted to R79 billion with social assistance and social relief of distress (SRD) savings of R1 billion. There were no budget adjustments for 2009 as a result of the savings. He commented that actual SRD expenditures amounted to R165 million. He presented slides that gave the breakdown of budget against expenditures (see presentation).
Mr Pakade addressed the Auditor General's audit report on social grants. There was a qualified opinion from the Auditor General on the Department of Social Development's budget and a disclaimer of opinion on SASSA's budget. Mr Pakade provided detailed background information regarding the methodology that led to this disclaimer of opinion. Other issues which led to this opinion included 545,076 missing files, and 159,302 files that were missing critical documents. There was a non-performance of grant reviews, a lack of accountability on SRD and poor management of grant debtors. He presented a slide that demonstrated progress achieved against these issues. All of the exceptions noted during the audit were receiving attention, with a significant amount already resolved. All outstanding matters would be resolved by 15 March 2011.
Mr Pakade stated that for the year under review, SASSA posted a deficit of R490 million. This was compared to a deficit of R890 million for the previous year. SASSA was projecting a positive balance next year. SASSA's administration budget grew 12% from R4.6 to R5.2 billion between 2008/9 and 2009/10. The Auditor General issued a disclaimer opinion on the administration budget as the Auditor General was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Findings included late submission of financial statements, inadequate filing systems and record keeping and an incorrect / non-application of the accrual basis of accounting.
Mr Pakade reviewed the short term interventions that SASSA had implemented to deal with the audit report’s findings. SASSA had appointed an accounting firm to assist with financial management for a period of one year. SASSA continued to provide its staff with specific training on accrual based accounting principles. SASSA was completing a skills audit on the entire Finance Branch to ensure that they had the necessary skills to fill finance roles. SASSA identified the need for 202 new posts to be filled, some of which had already been advertised. The change to accrual accounting methods was being complemented with an in-house accounting culture change management initiative. SASSA was in dialogue with professional accounting institutes to remain current in accounting practices.
Mr Pakade skipped ahead in the presentation to discuss SASSA's action plan to address its challenges. There would be both short term measures to fix immediate problems and long term measures to ensure a permanent solution. In the short term, SASSA had saved money by renegotiating the costs to companies for the payment of grants. It was also in the process of recouping funds from dormant accounts. In terms of service delivery, SASSA would introduce immediate measures such as a booking system and establishing satellite and mobile services. In the long term, the objective was to fully automate the business process to bring them in line with other high-performing institutions.
In conclusion, Mr Pakade presented summary slides of the short and long term plans. He stated that overall, SASSA performed fairly well during the year under review. SASSA was working tirelessly to remedy the issues noted by the Auditor General, and requested the support of the Committee as it grappled with its many challenges.
Discussion
Ms P Tshwete (ANC) asked if SASSA had finalised the investigations by the end of August 2010 as stated in paragraph 4.1.6 of the SASSA Annual Report. She asked how many people were taken to court for grant fraud and were they paying back any of the money they owed. She also asked if they were members of staff. She asked when payment contracts would be advertised and how would business be conducted between now and when the contracts were awarded.
A member of the Committee asked what was the impact on clients and applicants during the period when there were missing files and documents. She asked if there were solutions in place to address the lack of accountability on the Social Relief of Distress as noted in the Auditor General's report.
A member of the Committee asked if SASSA had enough doctors to complete the necessary reviews on temporary disability grants. An unspent amount of R1 billion was a problem. She asked SASSA to clarify the means testing for the old age grant. She suggested that local leaders be engaged in the dissemination of communications plans of SASSA.
Ms J Masilo (ANC) asked what the timeframe was to fill the critical posts in SASSA. She asked if there was a plan to make people aware of the policies to claim the old age grant. She asked how many mobile trucks SASSA had and when it would start with its outreach programmes.
Ms S Kopane (DA) noted that on slide 18 of the presentation, IGAP implementation was not completed due to insufficient budget allocation, yet on page 28 of the Annual Report it stated that IGAP was delayed due to negotiations with labour unions. She asked for clarity on the discrepancy. She asked if there were any efforts in place to resolve the issue of accountability lines between SASSA and the Department of Social Development as noted in the Auditor General's report.
Ms H Lamoela (DA) asked if SASSA had a strategy to fill its vacant posts in accordance with the requirements outlined in the State of the Nation Address. She noted long-standing difficulties with using the mobile trucks for service delivery. She asked why these trucks were bought, for what purpose, and why were they not currently in use. She asked for a report on the outcomes of investigation into irregular expenditure that was completed in August 2010 to be submitted to the Committee by the end of term. She also asked for a report on the progress so far of SASSA's detailed plan to address the 140 cases of irregular expenditure that were still being investigated. She asked why it took SASSA so long to complete a revision of existing payment contracts, and why the tenders had not yet been advertised. She asked if peer assessments were completed on personnel before bonuses or promotions were awarded. She suggested that if reviews were conducted more regularly, they could have identified skill shortages much sooner. Ms Lamoela noted many of its plans were not implemented as a result of capacity constraints. Given SASSA's high vacancy rate, she asked what its plan was, including time frames, to address its capacity constraints. She asked for clarification on the delay and the impact of having not yet implemented the service delivery plan. She asked for SASSA to explain the process of grant reviews.
Ms Tshwete asked for which year did SASSA appoint an accounting firm to assist with the financial management of the agency.
The Chairperson asked if SASSA would submit its financial statements on time this year. She asked if SASSA would be linking the new service delivery model with the organogram of the organisation. She asked if SASSA would have an improved communication plan in 2011/12 to raise awareness of grants for children and older persons. She asked if the migration of payments from cash to electronic payments was still increasing.
Ms Masilo asked what the percent reduction was in payments of disability grants following SASSA's reviews.
Mr Pakade noted that the concerns regarding the mobile trucks were first raised in a 2008/09 audit that questioned its effectiveness. SASSA made a decision to put the trucks on the road in full working condition. SASSA now had guidelines that covered all aspects of their use including assigning responsibilities for maintenance and operations. Regions had been given the responsibility to use them for outreach programs.
Mr Pakade noted that both public servants and members of the public had been taken to court for fraud. In these cases, SASSA had people sign an acknowledgement of debt. However, the recovery rate was only about 62%. SASSA was in the process of determining which debts were irrecoverable.
Mr Pakade stated that SASSA commissioned an accounting firm for a short time to assist with finalising the financial statements. The second accounting firm that was now working with SASSA was assisting them in achieving long term solutions while staff capacitation was underway. They were appointed in January and started working in February.
The contracting of cash payment providers was a complicated process. SASSA wanted to ensure that they got the "Request for Proposals" correct, and this consultative process was lengthy. Mr Pakade noted that it was near the end of this process.
Mr Pakade noted that when files were missing, the beneficiary continued to receive the benefit. Only when a case of a missing file was suspect did they conduct a thorough review. The results of the review determined whether the grant was continued or not.
Mr Pakade noted that Social Relief of Distress (SRD) was by its own nature susceptible to problems. In the short term, SASSA issued guidelines for the distribution of SRD while it examined a long term strategy.
Mr Pakade noted that the budget for social grants was based on estimates. R1 billion was not a significant variant on a R80 billion budget. Part of SASSA's current efforts to build internal capacity would ensure that those who needed grants would be able to get them. People were aware of the benefits available to them. The problem was that people lacked proper documentation or transportation to register for and collect grants. SASSA's new communications strategy was in progress. They would engage traditional leaders and churches to assist in passing information to its respective memberships. They would also explore 'indigenous ways of communication'.
Mr Pakade addressed the filling of critical posts. They embarked on a program of optimal utilisation of staff. Throughout SASSA they were looking at who was doing what and where and if they were being fully utilised in their job. They would then look at whom they could redeploy to best match an individual's skills with a particular position that required those skills. He estimated the vacancy rate to be between 30 and 35%. They identified approximately 400 critical posts that would be reviewed by the Minister before being filled.
Mr Pakade identified the issue with IGAP. Labour boards felt that those who were involved in grant approvals should not be part of the skills assessment, whereas SASSA's policy was to assess the skill, potential and capacity of everyone against the job evaluation processes to ensure that everyone was qualified to do their jobs. These discussions delayed the implementation of IGAP.
In regards to the accountability lines between SASSA and the Department of Social Development (DSD), Mr Pakade stated that the processing of grant payments was more important than the accountability structure. The issue was that expenditures were recorded on the books of the Department, where the Director General of DSD was ultimately responsible; however, the Department had little operational control of how that money was spent. At the end of the day, oversight was by the CEO of SASSA and SASSA had reviewed its internal accountability structure to ensure it was well understood by those within the Agency.
Mr Pakade noted that the filling of senior posts at SASSA was at an advanced stage. The competency assessments and short lists had been completed.
SASSA's goal through the performance measurement system was to ensure that those who received performance bonuses deserved them.
Mr Pakade explained that the Service Delivery Model was approved. The work was now focused on implementation. Processes were streamlined in line with the IGAP model.
Mr Pakade noted that reviews and backlogs should now be historic information. However, capacity would always be the key. The review process was very labour intensive. Reviews were conducted concurrent to processing new applications.
Mr Pakade confirmed that they would meet the next deadline for submission of financial paperwork.
Mr Pakade again noted that the Service Delivery Model would link business processes from the start to the end. These processes would drive the organisational structure and staffing levels. The processes had now been captured and the organisational review was underway.
A member of the delegation from SASSA spoke to the lack of measurable objectives of the integrity model. The details of her statement were inaudible.
Dr John Marite, General Manager, SASSA stated that every doctor available in both the public and private sector were trained and utilised in completing disability assessments. The backlog was small. In regards to disability assessments, for temporary disability assessments, they would be adding an element of sensitivity to the process. Those that were still very ill at the end of their temporary period would not be called in for a review; rather, they would take the services to them. Services had been standardised across the provinces and in an attempt to reduce fraud, medical assessment forms would be sent from the doctors directly to SASSA and not be carried by the applicants.
The Minister concluded by restating the good work that SASSA had been doing to address the shortcomings identified by the Auditor General. SASSA was a large sophisticated organisation that was responsible for distributing large amounts of money.
The Chairperson adjourned the meeting.
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