Auditor-General’s Report on Provinicial Department Social Grants: Department response

Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
13 February 2002
AUDITOR-GENERAL’S REPORT ON PROVINICIAL DEPARTMENT SOCIAL GRANTS: DEPARTMENT RESPONSE

Chairperson:  Mr E Saloojee

Documents handed out:
Input on report of the Auditor-General (See Appendix)
Auditor-General’s Report on findings identified during audit of social grants at provincial departments. (Document awaited)

SUMMARY
Government policies and legislation discrepancies with regard to the provision of social services were discussed. The main issues raised by the Committee were foreign foster parents and the progress of the Law Commission on child protection. Time lags and overpayment to tenders by the Department of Social Development was also mentioned.

MINUTES
The Chairperson introduced three delegates form the Social Development Department: Mr Makiwane,Deputy Director-General; Mr Jehoma, Chief Director of Grant System Administration and Mr Mdlankomo, Director of Grants Information System.

Mr Makiwane explained the Social Pension System (SOCPEN) and the reason for the Departmental review. SOCPEN was a national interface system that coordinated with the provincial government to provide social grants to beneficiaries. The system had been reviewed in the light of the Auditor-General’s report (see Appendix 1) on the findings of the audit of SOCPEN.

Mr Jehoma presented the Department’s response to the Auditor-General’s report (see Appendix 2). However, he focused only on the “most significant weaknesses”.

Administrative Issues
- To overcome the problem of incomplete and invalid data, the Department had been re-registering its database entries into valid RSA identity numbers and training staff to identify incomplete and invalid data entries.
- The Department had employed an advanced notice system to beneficiaries for temporary disability grant. The system avoids a programmed cancellation of disability grants and has been in place since February 1 2002 .
- SOCPEN has no integrated interface to other financial systems. The Department would have to formulate a cost analysis of such an interface especially if it had to be a real-time one. However, Mr Jehoma said that the Department was developing a replacement system for SOCPEN and that tenders had been invited to develop an integrated system that would connect with other departments and financial interfaces.
 - All official languages will be generated into the SOCPEN system to enhance communication between the Department and new beneficiaries.
- The Department has taken upon itself to undertake quality assurance of SOCPEN in order to dynamically deal with regulation changes that affect the system.
- The  SOCPEN training programme was revised to meet the National Qualifications Framework for standardised system procedures.
- In order to minimise fraudulent application, the Department is employing human resources to verify applicants’ information. Mr Jehoma indicated that such verification was not enough and that the  Department was contemplating a systems in-built verification of information. This problem also applies to falsified medical reports.
- Non-citizens foster parents can now apply for social grants.
-The Department has amended its application requirements for child support grant because the means test was incorrectly applied. It has also amended the regulation of disability assessment for the purpose of applying for a grant.
- National standards of financial management will be applied to avoid non-compliance with sound financial management.

Systems Issues
- The Department was still negotiating with different banks and other service delivery organisations for beneficiaries to receive money through them. This also required the Department to review beneficiaries who would receive money through such institutions.
-The Department will look into the issue of Post Office electronic reconciliation and report in the next financial year and will make it a priority.
- In the event of social relief application, the Department will ensure and verify if the applicant receives social assistance. This procedure was implemented on  February 1 2002 .

Discussion
Ms Tshivhase asked what happened if two people had the same name, surname and date of birth.

Mr Jehoma said that it would only be a problem if two people had the same identification number and that it was the Department of Home Affairs’ responsibility to solve such a problem.

Ms Gandhi (ANC) asked for an explanation of how a non-citizen foster parent could be allowed child support grant when legislation does not allow non-citizens to foster children.

Mr Jehoma said that the Department’s amendment to the policy was for the protection of children and that such issues will be dealt with when the Law Commission produces a report on child care in June 2002.

The Chairperson was concerned about the actual date of the report and expressed the urgency for the report. The house seconded the Chairperson.

Mr Jehoma reminded the house that during the media briefing the previous day Minister (Mr Skweyiya) also expressed impatience about the report.

Ms Kalyan (DP) asked how far the Department intervened in the delivery inefficiency of the Department of Home Affairs. She gave an example to substantiate her question. Ms Mashe asked a similar question later on.

 Mr Jehoma said that the Department was not involved in the actual delivery and that the best they could do was to support the provincial departments. He however, mentioned that it was legally binding that the Department offered social relief but that ultimately the delivery lay within provinces.

The Chairperson commented that both the Department of Social Development and the Department of Home Affairs needed to join the house and discuss joint problems.

One member added that the Department of Foreign Affairs also should be invited because there were non-citizens who benefited from social grants.

Mr Da Camara (DP) asked if the Department had looked at broader interface system with banks and other financial institutions. Would the new system be part of SETA?

Mr Jehoma said that the Department was looking into developing a broader system but one that is not real time for banks. The Department is still working closely with SETA. SETA was involved in the planning of finding a tender to develop the new system.

Mr van Jaarsveld (NNP) asked how the Department paid tenders if they were overspending on tenders. The Chairperson asked a similar question later on.

Mr Jehoma said that it was not an issue of overpayment but reconciliation. Tenders were required to repay the Department if they did not use all the money but departmental collection was difficult.

Mr Da Camara asked if the Department was negotiating with the bank that promised cheaper product for social grant beneficiaries.

Mr Jehoma said that the bank had not fulfilled its promise yet and that one bank has such products in the Eastern Cape but still felt they were costly to consumers. Coosing a delivery organisation was a cost analysis exercise. The entire amount using third party tenders was about one billion and that it was twenty five percent less expensive to use banks. Moreover the Department was prepared to negotiate with banks on how to spread the cost of delivering the money such that the beneficiaries do not incur the cost of the delivery.

The Chairperson asked for time frames of the Department’s promises.

The time frames were six months for both the transformation of the SOCPEN  and negotiations with the banks. The Department promised a briefing on progress later towards June 2002.

Ms Gandhi commented that the Department also needed to protect deductions on social grants before they were received by beneficiaries. She said that there was a need for a strategy for rural people to access banks.

Ms Tshivase asked the delegates for the appropriate department that could give relief to a disabled household whose house burnt down.

The house and the delegates agreed that such phenomena was outside the scope of the Department and had no idea of any department that would comprehend and give relief to such occurrences.

Ms Gandhi asked if there were new regulations for applying means test for child grant and also wanted to know whose means test was needed.

Mr Jehoma said that there was no new regulation and the means test applies to the care giver and not necessarily the parents.

Ms Ghandhi expressed her dissatisfaction about discrepancies between regulation and policy. She was seconded by most members.

The meeting was adjourned.

Appendix:
INPUT ON REPORT OF THE AUDITOR·GENERAL
The Office of the Auditor-General conducted a computer audit of the SOCPEN application controls and the final report was submitted during May 2000.
The most significant weaknesses in the SOCPEN environment were:

Administrative issues
· Incomplete and invalid data as well as computer generated identity numbers
The Department of Social Development has embarked on an awareness and training programme at all levels within the DoSD to ensure that data captured onto the SOCPEN system is correct and accurate

The SOCPEN system provides provinces with exception reports that reflect these cases. Every effort is currently being made by provincial departments of social development to convert these numbers to valid RSA identity numbers. No new numbers are allocated in this fashion.

· No programmed cancellation of temporary disability grants
The decision not to cancel was to ensure administrative justice are ensured and proper validation processes are put in place. With effect from 1 February 2002 when amendments to the Regulations to the Social Assistance Act was implemented, the SOCPEN system was enhanced to notify beneficiaries of temporary disability grant in advance of the expiry of their grants, which will automatically be expired by the system on the date of expiry.

· No electronic interface to financial systems
The DoSD is in the process of designing and developing a new social grants system to replace the SOCPEN system. One of the requirements of the new system is that it should interface with the financial systems used by the provincial departments of social development. Tenders have been invited for the development of an interface between the SOCPEN system and provincial financial systems

· Communication with new beneficiaries
With effect from 1 February 2002 the majority of communication with beneficiaries will be effected through the SOCPEN system. System generated communication will be done in all official languages.

· Regulation changes
Change control procedures are strictly followed to ensure that proposed regulation changes are done in accordance with the system development life cycle. Functional specifications are drafted and approved and sufficient time is provided for development, testing, training and implementation, even if this means that system changes are implemented after the regulations became effective.

· Standardised working procedures
The SOCPEN training programme was revised lo meet NQF standards to ensure that SOCPEN users use standardised system procedures. The DoSD has embarked on a project whereby norms and standards for social security service delivery (including standardised forms and administrative procedures) will be implemented in al provinces.

· Verification of applicant information
The DoSD has extended its structure to incorporate a Monitoring and Evaluation directorate. This section will be responsible for the implementation of measures to ensure that information is verified and that fraud and corruption is limited.

· Falsified medical reports
The assessment of disability and the provision of medical reports is an issue that was addressed in the amended regulations. The DoSD and provincial departments are working towards a new assessment methodology that aims to curb fraud and corruption in this area.

· Rejection of non-RSA citizen foster parents
The SOCPEN validations were amended to accept these beneficiaries. The means test for foster child grants has been incorporated in the SOCPEN system

· Means test incorrectly applied for csg
The amended regulations aligned the csg means test with the means test applicable to other child-related grants. This removes some of the confusion around issues such as household expenses. An applicant's involvement in development programmes is not a requirement for qualifying for a csg any longer.

· Inefficient administrative procedures allowed granting of disability grants without completion of forms
The amended regulations and new approach to the assessment of disability for the purpose of applying for a grant for a disabled person intend to remove the delays in applications for these grants.
 
· Non-compliance with delegations which allowed large amounts to be authorised by a Deputy Director
National norms and standards have been recommended in this respect to ensure sound financial management.

Systems issues
· The lack of validity and completeness checks on paypoint numbers and applicants' claim information
This problem has been rectified and the SOCPEN system now validates the paypoint number against the beneficiaries' personal information.

· Agreement with ACB
The DoSD will in the near future, as part of the project on the development of norms and standards, revisit Service Level Agreements with all service delivery organisations. Negotiations with the banking sector are under way.

· Limited control over review process (ACB)
A review policy has been implemented on 1 December 2001 to ensure that beneficiaries who receive their benefits through a financial institution are reviewed regularly

· Reconciliation of Post Office data
Post Office reconciliations and reports in this regard have been identified as a priority and will be addressed in the next financial year. The Post Office is in the process of transforming their manual payment system to an electronic system, which is a first step in the direction of earlier reconciliation.

· Social Relief of Distress
This module was enhanced and implemented on 1 February 2002. Due to the fact that it is not a requirement that an identity number be produced upon first application, the system cannot validate that the applicant is already in receipt of social relief.  However, the system will, if a valid id number is entered, validate whether the applicant is in receipt of social assistance. Applications captured have to be verified by a second official.