The Committee was briefed by the Deputy Minister of Social Development and the South African Social Security Agency (SASSA) on the SASSA Annual Report 2009/10. Key achievements highlighted during the presentation included increasing the number of social assistance benefits and the fact that SASSA had reduced its deficit position by almost 50% from the previous year. SASSA was also very clear and honest 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. SASSA also noted that it still lacked automated business processes. The existing manual system was slow, error-prone, and extremely labour intensive. Most notably, the Auditor-General had issued a disclaimer in respect of the SASSA accounts, as a result of poor record management and missing critical documentation. SASSA noted the steps that it had taken to remedy these challenges. SASSA had now contracted with a service provider who would be assisting with system challenges and would be expected to transfer much-needed skills in the accrual-based system of accounting to SASSA employees. SASSA had also reprioritised the 2011/12 budget to fast track automated business processes. Lastly, SASSA would be appointing critical staff to address service delivery challenges, and was matching the skills with the posts, and doing away with unfunded posts, and attempting to fill the remainder.
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. 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 its short and long term strategies for turning this situation around for next year. Members also questioned SASSA about its plans for service delivery improvements and asked if SASSA had a plan to maintain improvements if the number of grant beneficiaries continued to rise. They further questioned the position around suspension of grants, and why certain of the targets had not been reached. Members also urged that SASSA must make concerted efforts to visit rural and under-serviced areas. A representative of SASSA briefly outlined the position in regard to the foster care grants, noting that SASSA could not pay out without being in possession of a Court order.
South African Social Security Agency (SASSA) Annual Report 2009/10: Deputy Minister and SASSA briefings
Hon Maria Ntuli, Deputy Minister of Social Development, thanked the Chairperson for the opportunity to present the Annual Report of the South African Social Security Agency (SASSA) for 2009/10. today and introduced the Acting CEO, South African Social Security Agency (SASSA or the Agency) to give the presentation.
Mr Cocako Pakade, Acting Chief Executive Officer, SASSA, explained the aim of the presentation was to provide an overview of the performance of the Agency for 2009/10. This presentation would provide an honest assessment of the challenges SASSA faced.
He gave the background that the demand for services from SASSA had increased, with over 14 million benefits paid to over 8 million beneficiaries. However, despite the increase, staffing levels had not risen to ease service delivery, and SASSA was still working with a predominantly manual system for grant applications and approvals.
Mr Pakade noted that the challenges faced by SASSA must be seen in the context that SASSA was only established in 2006. The first years of operation focused on establishing the head office and regional offices, ensured that policies were in place and service delivery continued. During this period there were policy and legislative changes that increased the number of people eligible for grants. HE briefly outlined the mandate, vision, and mission of the Agency, and reviewed the strategic priorities of the year under review (see presentation).
Strategic Priority 1 related to the Customer care-centred Benefits Administration and Management System. This was SASSA's core business. Key achievements under this priority included over 8 million people receiving over 14 million social assistance grants. These grants included benefits to 10 million children, 2.5 million older persons, and 1.3 million people with disabilities. These figures represented an average growth of 7.5% over the last reporting year. He presented the uptake of grants from 2007 to the present. SASSA had implemented the Age Equalisation policy reform and reached 77.4% of its targets 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 in full was attributed to inadequate human resources.
Mr Pakade discussed the Disability Management Model, which was created to standardise several different regional systems that SASSA had inherited. The model improved the disability assessment process in order to minimise fraud. It was implemented in six regions during the year under review.
Mr Pakade then noted that the Improved Grants Payment System was a strategy to promote electronic payments where infrastructure existed. This system resulted in a 23.4% reduction in cash payments. SASSA was also working on a long term strategy to improve the payment system in South Africa. SASSA continued to improve the Grant Application System. However, he noted that implementation of the Improved Grant Application Programme (IGAP) was limited to one region in Free State. Complete roll out of the IGAP was not achieved owing to budgetary constraints. Mr Pakade stressed that automating the core business systems within SASSA was a priority, and such systems would reduce fraud, facilitate compliance with accrual accounting requirements and achieve savings.
Mr Pakade noted, in regard to beneficiary maintenance, that 97.9% of beneficiaries were notified of administrative actions prior to the lapsing of grants. The administration of lapsing grants was done at the head office in order to reduce delays from regional capacity problems. SASSA implemented Integrated Community Registration Outreach Programmes (ICROP) to move services closer to potential beneficiaries. He noted that all regions had implemented ICROP through participation in the Premier's Outreach Programmes. ICROP resulted in 42 194 additional beneficiaries.
Mr Pakade moved on to Strategic Priority 2, which was Improved Organisational Capacity. He highlighted key achievements, including 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 emphasised that SASSA would be permitted to use future savings to invest further in infrastructure and automated systems.
Mr Pakade highlighted that SASSA had migrated to accrual based accounting, and had implemented a Fraud Management Strategy that resulted in savings of R180.9 million. He also presented additional fraud statistics (see presentation). He noted that SASSA's priorities for the future would lie with fraud prevention, because the cost of recovering funds was high, and often people did not have the ability to pay back the funds.
Mr Pakade turned to the Budget and Expenditure for Social Assistance Transfers for 2009/10. He highlighted that social assistance expenditure 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 expenditure amounted to R165 million, with 13 million beneficiaries paid. He presented slides that gave the breakdown of budget against expenditure.
Mr Mpho Mofokeng, Chief Financial Officer, SASSA stated that in 2009/10, SASSA had a deficit of R490 million, compared to a deficit of R890 million for the previous year. He noted that SASSA was projecting a positive balance for the following year, as a result of its turnaround strategy.
Mr Mofokeng said that the audit report by the Auditor-General for this financial year contained a disclaimer and the Auditor-General (AG) had noted other issues regarding financial administration, reporting and the systems that SASSA used. The principle reasons for the disclaimer were the implementation of the Oracle system for financial management, and the migration from cash to accrual accounting. He stressed that SASSA employees were not familiar with accrual accounting.
Mr Mofokeng reviewed the short term interventions that SASSA implemented. These included a skills audit of employees, recruitment of staff with accrual accounting skills, focused training, and a request to Oracle South Africa to complete a post-implementation audit. He noted that SASSA would review policies and procedures and implement customised system reports to enhance reporting. A Change Control Board was established to facilitate efficient system development. Long term interventions included further business process reengineering. There would also be efforts put in place to professionalise the finance branch, including liaising with auditing firms and professional bodies.
Mr Mofokeng outlined that, overall, the financial administration progress was almost completed except in the area of accounts receivable. He noted that the Auditor General had started an interim audit that was focusing on the 2009/10 findings.
Mr Pakade added that SASSA had addressed the skills gap within the organisation by engaging an accounting firm for the current financial year. The goal was also to ensure a transfer of skills from this firm to SASSA employees during the current financial year.
The Chairperson expressed the Committee's pleasure with the measures put in place to address the challenges raised by the Auditor General. The Committee recognised that SASSA may not be able to address all of the challenges in one year, but would appreciate a report on the substantive improvements when the following year’s report was presented.
Ms B Mncube (ANC, Gauteng) noted that employees hired from government were used to working on a cash basis accounting system, and that there was difficulty getting them to work under the new accrual based accounting system. She asked if SASSA had performance appraisals, or employed people on performance contracts, and whether SASSA was monitoring exactly what the staff recruited were doing.
Ms Mncube noted that some programmes were not begun because of under-staffing, but noted that the employee costs increased. She asked what percentage of the total budget was allocated to employee salaries.
Ms Mncube asked about the nature of the Change Control Board and how was it accountable to the organisation.
Ms Mncube asked if the Service Providers that were contracted by SASSA came with their own personnel, and how far they would help to achieve a transfer of skills and address the issues isolated by the AG. She also asked how long the Service Providers would be with SASSA. Lastly, she asked why documents were not made available to the AG.
Ms M Makgate (ANC, North West) asked when SASSA would fill the 202 vacant posts noted in the presentation. She asked whether there was consistency and compliance by the regional bodies in submitting reports, and what were the challenges isolated where they had not complied.
Ms Makgate noted that SASSA reported that they it not have sufficient funding. She pointed out that it would never have enough funding, but it seemed that resources were not being used where they were needed the most.
Mr W Faber (DA, Northern Cape) commented that similar reports had been given by the Auditor General in respect of previous years, with SASSA making similar responses. He wondered if this situation would continue into the next year. He also commented that it was unacceptable that such a large entity was still working on a manual system. He stated that the Committee must see a viable difference in future reports.
Ms D Rantho (ANC, Eastern Cape) suggested that the Agency must hold regular workshops for their staff on advocacy for grants, to assist in informing people how to apply for grants, and what was available. She noted that SASSA reviewed lapsed grants, but wanted to know if SASSA was working to shorten delays in reissuing grants that had been taken away. She emphasised that SASSA needed to visit localities to present its programmes for those areas.
Mr M De Villiers (DA, Western Cape) noted from the presentation that targets for old age pensions for men were not reached. He asked what SASSA's plan was to address this problem in the current financial year. In regards to IGAT (Improved Grant Application Process), he noted that some regions were not reached and he asked when SASSA would address this situation.
Mr De Villiers noted the capacity constraints mentioned by the AG, and asked about the impact on the budget resulting from the hiring of firms and the appointment of new staff members within SASSA.
Mr De Villiers also noted that dispute mechanisms were not implemented in three regions, and he asked which regions these were, and how SASSA was going to address this situation.
Ms M Moshodi (ANC, Free State) stated that there was an issue with incorrect identification, and an inability to contact representatives from SASSA to correct problems, or lengthy delays in correcting problems.
Mr S Plaatjie (COPE, North West) asked for clarity on what percentage of staff still needed to be skilled. He also asked if staff moving from government to SASSA were subjected to screening processes so that they would meet the requirements of SASSA.
Ms M Boroto (ANC, Mpumalanga) noted that SASSA reported that an increase in grants had a negative impact. She asked if SASSA had a plan for the increase in grants, and if there was also a plan to monitor and evaluate their progress. She stressed that SASSA must fill the personnel gaps with people who were qualified, and asked if they simply received anyone who was transferred.
Ms Boroto urged that SASSA must ensure that it implemented all its policies, and reported directly on the progress of each, rather than moving the targets every year. She asked that SASSA should give priority to rural areas, the elderly and disabled when implementing policies.
The Chairperson thanked Members for not only raising significant issues, but also suggesting solutions to SASSA's challenges.
The Chairperson asked if youth, or a youth programme, was being used to assist in speeding up the application processes.
Ms Mncube was pleased to hear that SASSA was cognisant of the increasing concerns in Gauteng that resulted from an increase in migration to that province.
The Deputy Minister responded to the issue of identification problems by stating that the issue rested with the Home Office. She requested that her Department be given time to work with Department of Home Affairs (DHA) to address the problems of identification and documentation. She also stated that her Department would look into the issue of Social Workers not performing their work properly. She noted that there would be a workshop looking at a comprehensive strategy for a better system of grant payments.
Mr Pakade acknowledged the successes, failures and critical challenges faced by SASSA. At a strategic level, he noted that business was growing, and said that although SASSA did plan for it, staff were overwhelmed by the need to get grants issued.
Mr Pakade agreed with the two main issues that the Auditor General raised. In regard to questions around monitoring and reporting, he said that SASSA had a very effective system of monitoring because of the governance structures that were in place. However, the Auditor General had reported that, because of the problems in SASSA’s financial systems, the reports throughout the year did not comprehensively cover the financial position or performance results of the Agency. The Auditor General concluded that issues of leadership could thus not have been at an acceptable level. Secondly, the Auditor General commented on supervision and monitoring. Mr Pakade stated that SASSA did not have a very strong monitoring and assessment (M&A) unit. Building a strong M&A unit would now be a very high priority at SASSA. He noted that SASSA required more appointments at the supervisory level and had put plans in place to deal with this. With regard to finance staff in particular, Mr Pakade stated that many of these staff only had knowledge of the previous cash-based system of accounting when they joined. SASSA was now looking either at retraining its finance staff in accrual accounting, or recruiting new qualified people from the marketplace.
Mr Pakade noted that the Auditor General's disclaimer and all of the challenges faced by SASSA overshadowed much of the work done by SASSA. He pointed out interesting trends in the Annual Report, such as the significant reduction in the deficit through vigorous renegotiation of payment contracts. The future implementation of a new payment model would realise more savings for SASSA. He stressed that the budgeted amounts in some areas would be reduced for the next fiscal year and that this reduction would be the result of intentional savings.
Mr Pakade stated that SASSA was not expecting a disclaimer from the next Auditor General's report. He noted that the balances from 2006 to 2009 resulted from a restatement in figures that the Auditor General could not identify. He noted that there was not time to audit four years in one, and that that Auditor General requested that these be fixed for the following year. SASSA had a strategy to address this. He highlighted that from 2009 to 2010, SASSA moved from reports of R69 million to R2.5 million for irregular expenditure. These improvements were, however, overshadowed by the final reports.
Mr Pakade stated that the existing staff model for SASSA was unrealistic. Many of the existing posts were unfunded and SASSA would revise the position, and pursue only the filling of vacant funded posts.
Mr Pakade responded to questions about internal 'boards' by stating that they were committees rather than decision-making boards. He stressed that SASSA hired service providers with the specific intention of obtaining a transfer of relevant skills. The service providers were hired because SASSA was struggling with the existing internal capacity in its finance division. SASSA was currently matching individual skills to specific posts. Mr Pakade emphasised that SASSA had a performance management system, and that this was working. In addition to monitoring personnel, monitoring was occurring at a supervisory level, as well as monitoring of service delivery.
Mr Pakade noted that SASSA had made progress in locating missing documents that were not available for the Auditor General. Some files were sitting in the regions during the audit, but had now been moved.
Mr Pakade recognised that SASSA's strategies must be focused on the customer. This included strategies for conditions under which people received their grants. Aside from implementing initiatives at the corporate level, ordinary citizens only saw and felt what they got from the Agency, and SASSA recognised the need to implement procedures that would benefit people at the service delivery end of the chain. He recognised the need also to provide communication tools that would reach the rural communities who did not have access to TV or papers.
The Deputy Minister asked Mr Pakade to address the concerns raised over SASSA offices.
Mr Pakade commented that some of SASSA's traditional offices had been closed for a variety of reasons, including condemnation by the Department of Labour due to poor conditions. SASSA strove to continue to provide services at the local level, by sharing space with other departments. This allowed SASSA to achieve economies of scale, and although there were varying levels of success, it was attempting to share best practices in less successful locations. It hoped to invest savings, in the future, into creating better infrastructure and points of service delivery.
Mr Mofokeng stressed that in the two year period 2006 to 2007 there were no problems with the financial statements. The problems that SASSA currently faced began in 2008 to 2009. He wanted to dispel the suggestion that SASSA had had accounting problems all along.
Mr Mofokeng stated that the compensation of employees, as a percentage of total expenditure, was 29%.
Mr Mofokeng then responded to questions about the service provider. There was only one service provider, contracted for 12 months. SASSA planned to fill the vacant 202 posts, but did not have a time frame to fill them all. The budgetary impact of contracting a service provider and filling new posts was already accounted for in this financial year. By 2011/12, SASSA would have to be self sufficient.
Mr Mofokeng reiterated Mr Pakade’s comment that some of the people who could not be retrained would be moved. The majority of those remaining had already received their training. He emphasised that SASSA staff were already in place when SASSA was created and that their skills were relevant at the time, so the question of screening staff for appropriate skills did not apply. However, the focus was now on training for new systems.
Another representative from SASSA added comments on foster care grants. SASSA must wait for the Court order of foster care before being able to pay the grant. SASSA issued a notice 90 days in advance of expiry of a grant, and it would then be up to the foster parents to obtain a new court order in order to continue to receive grant payments. SASSA was mindful that the problems of timeous response did not always rest with individuals and that there was a shortage of social workers to perform assessments, and a backlog in the courts. SASSA would not suspend grant payments while waiting for applications to be finalised. He urged the Committee to remember, when considering the budget, that estimates of negative planning or underperformance were estimates only. He acknowledged the challenges with pay points, including overcrowding, and reviewed some of the options that SASSA was looking at to address these issues.
The Chairperson asked that SASSA provide a detailed plan, at the next meeting, of its short and long term strategies to turn around the situation.
The meeting was adjourned.
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