[Note: South African Social Security Agency 2014/15 Annual Report [358MB] email firstname.lastname@example.org]
Representatives from the South African Social Security Agency (SASSA) presented the 2014/15 Annual Report of the Agency. The Agency had received an unqualified opinion, with findings on predetermined objectives and compliance.
The Minister was present for the SASSA's presentation of its report. The Committee members were generally complimentary of the SASSA’s performance, but concerns were expressed about the number of vacant critical posts. SASSA further experienced challenges affecting key positions during the period under review: The Regional Executive Manager of the Northern Cape region retired in March 2015. The Regional Executive Manager of Limpopo was transferred to the Gauteng region in April 2014. This was necessary to ensure the stability of the Gauteng region as it was one of SASSA’s biggest regions. At the end of the financial year, the Agency was in the process of filling several key positions. Another key concern of the Committee, despite the AG's unqualified report, were the comments on flawed supply chain management and consequence management at SASSA in particular, as well as the levels of irregular and wasteful expenditure.
SASSA noted that it was still acting strongly against any corruption and 266 officials were suspended and 53 dismissed as at 31 March 2015. 11 cases were referred to Law Enforcement Agencies and 5 officials were convicted. 94 money-lending cases were reported, implicating 64 suspects who were in possession of 350 SASSA cards and R586 486 in cash. 16 private persons including three officials from the body responsible for payments, who had 280 SASSA cards, were apprehended.
The key priorities for the forthcoming period were outlined and the performance in the 2014/15 against some of these were linked back. The report noted that 16 642 643 social assistance benefits were being paid as at end of the 2015 financial year: 12 329 716 as children’s grants; 3 200 264 as older person’s grants; 1 112 663 disability grants; There was a 4.46% increase in the growth of social grants. A total of 1 299 499 social grants were lapsed between April 2014 to March 2015.
With regard to service delivery 714 outreach programmes inclusive of Mikondzo were conducted and services were provided. This represented a 70% over achievement against the annual target as SASSA was targeting areas highlighted in the UNICEF Report. In terms of improving fraud management, out of 1 328 reported fraud and corruption cases received, 950 were investigated which represented a 72% achievement against the annual target of 60%. The focal areas were grant administration, information and communication technology and supply chain management. A total of 266 officials were suspended and 53 dismissed as at 31 March 2015. 11 cases were referred to Law Enforcement Agencies and five officials were convicted.
The Committee was concerned about the R40m irregular expenditure and pointed out its concern that no disciplinary action was taken against the accounting officer. They wanted to know more about foster care grants, and the Minister gave a detailed explanation on these and the steps being taken to try to ensure that children were properly cared for. Members asked for explanations on the spending for entertainment and transport. Members also wanted explanations for the non compliance with Supply Chain Management processes and failure to advertise.
They were concerned about the high vacancy rate, and also on the disability numbers. Members questioned the matter where SASSA allegedly appointed service providers who were not compliant with the procurement implementation guidelines and particularly questioned the fact that senior management apparently had overruled the Adjudication Committee's recommendations. Members were pleased to note that SASSA was a key driver to reduction of poverty. They asked for more information on the foster care grant and the differences between this and the children's grant. The Minister outlined the work of the committee that she had set up in some detail.
SA Social Security Agency (SASSA): Annual Report 2014/15: Departmental briefing
The Chairperson welcomed the Minister and delegates from SASSA.
Ms Bathabile Dlamini, Minister of Social Development said that it was a pleasure to appear before the Committee. She pointed out that the South African Social Security Agency (SASSA or the Agency) now had now a full time Chief Financial Officer (CFO) which would improve its work. Another very important aspect for SASSA was to be able to identify hot spots of corruption. In the last year, SASSA had dismissed some staff members who were involved in fraudulent activities – it was a sad reflection because they were young, but it was necessary and this represented a move to strike down corruption in the Agency.
Ms Virginia Peterson, Chief Executive Officer, SASSA, presented the SASSA 2014/15 Annual Report, focusing o: Performance Information; Budget and Expenditure 2014/15; and Audit outcomes.
Ms Peterson said that key priorities for 2014/15 to 2018/19, and thus the primary focus of SASSA will be on: reducing income poverty by providing social assistance to eligible individuals; improving service delivery; improving internal efficiency; and institutionalising the social grants payment system within SASSA. The strategic objectives for SASSA for the reporting period were: to ensure that eligible beneficiaries received benefits due to them; to improve the quality of service delivery to its customers; to achieve a fully integrated and automated social assistance service; and to ensure that the Agency was optimally capacitated for excellent service delivery.
Similar aims and objectives applied to the 2014/15 financial year. In relation to the performance against 2014/15 priorities the main objective was to provide social assistance to qualifying/eligible beneficiaries. The target was to reach at least 1.1m new beneficiaries per annum. The total number of applications processed from April 2014 to March 2015 was 1 379 253 (125% of the annual target); of which 1 302 745 (94.5%) were approved; 70 557 (5.1%) were rejected; and 5 951 (0.4%) were outstanding.
The second objective was to provide social assistance to qualifying/eligible beneficiaries. 16 642 643 social assistance benefits were in payment as at the end of this financial year: 12 329 716 were children’s grants; 3 200 264 were older person’s grants; 1 112 663 were disability grants; There was a 4.46% increase in the growth of social grants. 1 299 499 social grants were lapsed between April 2014 to March 2015.
The third objective was to provide Social Relief of Distress (SRD) to families experiencing hardship and who thus required immediate interventions. In this regard 353 678 SRD applications were awarded against the annual target of 160 000, which represented 121% over achievement. Total expenditure stood at R461million. Additional budget was allocated to this programme due to increased demand emanating from disasters, increase in numbers of children with malnutrition and other forms of distress.
The other objective of the Agency was to take service delivery to the people. In this regard 714 outreach programmes, inclusive of Mikondzo, were conducted and services were provided. This represented a 70% over achievement against the annual target. SASSA was particularly targeting the exclusion areas noted in the UNICEF Report.
Ms Peterson said that with regard to the improvement in the payment of social grants, the payment tender was processed in line with the Constitutional Court ruling. There were further court challenges during the implementation process, which led to an amendment of the revised Request for Proposals (RFP) and extension of the bid deadline.
Ms Peterson then outlined the achievements in terms of improving fraud management. Out of 1 328 reported fraud and corruption cases received, 950 were investigated, which represented 72% achievement against the annual target of 60%. The focal areas were grant administration, information and communication technology, and supply chain management.
A total of 266 officials were suspended and 53 were dismissed as at 31 March 2015. 11 cases were referred to Law Enforcement Agencies and five officials were convicted. 94 money-lending cases were reported, implicating 64 suspects who were in possession of 350 SASSA cards and R586 486 in cash. 16 private persons including three Cash Paymaster Services (CPS) officials with 280 SASSA cards were apprehended. A speed-point machine and a laptop linked to two separate robbery incidents at the SASSA offices in KwaZulu Natal (KZN) were recovered. 13 private persons turned state witness.
Two CPS officials were sentenced to 15 years each, 1 was fined R8 000 (R2 000 paid and R6 000 suspended for 5 years), while one CPS official is still on trial. Three SASSA officials were arrested and dismissed and their case was still under investigation, for having created 55 ghost beneficiaries, amounting to R752 460.00.
She noted that 143 litigation cases were handled. These include grant related litigation, labour disputes, contractual claims, motor vehicle accidents and procurement related matters.
Ms Peterson moved on to the HR position. 10 742 posts were filled as at the end of the period under review. 1 953 Appointments; 315 new appointments; 471 contract appointments; 1 055 Expanded Public Works Programme (EPWP) workers and 112 interns were appointed. Of these appointments 356 were internal promotions. 1.1% (117 out of a target of 215) people with disabilities are employed within the agency.
SASSA experienced challenges affecting key positions during the period under review. The Regional Executive Manager of the Northern Cape region retired in March 2015. The Regional Executive Manager of Limpopo was transferred to the Gauteng region in April 2014. This was necessary to ensure the stability of the Gauteng region, as it is one of SASSA’s biggest regions. At the end of the financial year, the Agency was in the process of filling the following key positions: The CFO, CIO, and Regional Executive Managers for Limpopo and Northern Cape. As at 01 April 2015 the agency had 650 vacant funded posts with an estimated salary bill of R 213 million.
She noted that 445 labour relations cases were initiated within prescribed times. The outcomes were summarised as: 195 verbal warning; 100 written warnings; 90 final written warnings; and 60 dismissals.
In terms of improving financial management she reported that 82 % (5 137 out of 6 216) suppliers were paid within 30 days, which resulted in 42% reduction in irregular expenditure.
Mr Tsakeriwa Chauke, Acting Chief Financial Officer: SASSA , reported on the 2014/15 audited financial outcomes. 40% of the budget was attributed to the compensation of employees and 58% was for goods and services. The total budget allocated to the Agency amounted to R6.5m and the total expenditure was R6.2m, which represented 97% money spent. On the compensation of employees a number of vacant funded posts were not filled at financial year-end and that resulted in 4% underspending, that included time delayed savings in filling of posts. These included senior management posts such as the posts of Chief Financial Officer, Chief Information Officer, Regional Executive Manager: Limpopo and NC. Some of the posts were now at various stages of the recruitment process. As at 01 April 2015 the Agency had 650 vacant funded posts with an estimated salary bill of R213 million. On goods and services the under spending was mainly on communication due to the telephone management system efficiencies; and on Cash handling fees, due to the reduced cost of disbursing grant monies. Further cost containment occurred in respect of leases due to offices that were in the process of being occupied; and travel and subsistence, due to spin-offs from cost containment measures.
Mr Chauke said that the Auditor-General (AG) had awarded an unqualified report and found that: SASSA’s financial statements presented fairly the financial position of the Agency as at 31 March 2015, except for a few adjusted misstatements. SASSA’s financial performance and cash flows for the year were in accordance with SA Standards of GRAP, Public Finance Management Act (PFMA) and SASSA Act requirements. There had been a significant improvement on the report on predetermined objectives concerning the usefulness and reliability of the information. On other audit matters, misstatements in terms of operating leases commitments were disclosed. Shortcomings identified had involved the reimbursement of costs (R316 million) incurred towards Cash Paymaster Services in respect of additional resources procured for the re-registration project, and poor turnaround time to finalise financial or possible financial misconduct cases.
Ms Peterson said that the challenges of the Agency included unauthorised deductions, impact of load shedding on connectivity of systems, Social Relief of Distress, where the high demand was resulting in high budget pressures, and the ongoing court challenge around the Payment Tender.
Ms Peterson asked the Committee to note and support SASSA's 2014/15 Annual Performance Report; SASSA financial statements for 2014/15; and challenges and the mitigation strategies that the Agency was implementing.
Ms B Abrahams (ANC) asked why no disciplinary action was taken following the irregular and wasteful expenditure, pointing out that the accounting authority did not take steps to prevent irregular expenditure as required in the Public Finance Management Act (PFMA). The R40m irregular expenditure was a big concern for the Committee
Ms Abrahams asked what the reason was for the cancellation of the Biometrics Education System.
Ms Abrahams noted that there was non-compliance with the supply chain management processes and there was failure to advertise in the Government bulletin, which was a concern.
Ms Abrahams said that the R7m incurred as wasteful and fruitless expenditure was also a concern and the Department should take action in this regard. She asked why no measures were taken .
Ms Abrahams noted that the Agency did not reach the target to develop and implement phase 1 of the solution of the Digital Document Storage System but had finalised the terms of reference - though it was not reflected in the Annual Report. She asked why it was not reflected.
Ms Abrahams noted that in human resource the vacancy rate was very high. Given the high levels of unemployment in South Africa, SASSA really needed to employ people and do internal training for the staff. The dismissal of 55 staff members was very high, but she commended the zero tolerance approach and recommended that SASSA should maintain its vigilance and this approach.
Ms Abrahams said that SASSA”s equity report was very honest and encouraging but it should employ more people with disabilities.
Ms E Wilson (DA) said that although SASSA got an unqualified report, which the DA did appreciate, the AG's report had been “seriously alarming”. There were six key risk areas raised by the AG. The Agency failed on the quality of submission on financial statements, the quality of submitted performance reports, compliance with legislation, there was a concern in human resource management and in Information Technology. Where the Agency did not comply with legislation it failed in the area of the quality of financial statement submitted, failed in the area of unauthorised irregular, wasteful and fruitless expenditure. There was huge concern in the management of procurement contracts, and grave concern in human resources and consequence management, and big concern about the internal audit and audit committee. It therefore became unsurprising that there was irregular expenditure of over R40m and fruitless and wasteful expenditure of R5m. Furthermore, the AG stated that there was a lack of review and monitoring of compliance with applicable legislation and lack of compliance with management, and management did not put controls in place, particularly not reviewing quarterly reports, to ensure that the reports were complete and accurate. These reports were not supported with accurate information, some review systems were not implemented and those implemented were not effective. There were vacancies in key positions. These were but some of the issues raised by the AG yesterday.
Ms Wilson said that another issue that was of huge concern was the matter referred to the National Treasury (NT), in terms of SASSA appointing service providers that were not compliant with the NT’s procurement implementation guidelines. The Committee had received evidence this week that despite the Adjudication Committee’s recommendations on the appointment of the service providers, senior management of the Agency had overruled those recommendations.
Ms Wilson said that all of these things were seriously concerning and highlighted that there was a little bit of underlying tension because potentially the courts and NT would have identified that. This was all pointing back to the senior management of SASSA, for it was such senior management who should be ensuring that all matters were implemented and controls were in place and were monitored properly. The fact that they were reported was of serious concern.
Finally, Ms Wilson thought that the R20 million spent on entertainment was very high and she wanted an explanation with regard to the R23million spent on transport. She noted that the presentation had stated that there was a cost saving on travel, but travel amounted to R122million, which was a high figure of more than R11m a month.
Ms V Mogotsi (ANC) said that last year the World Bank had good story to tell to South Africa in terms of the reduction of poverty, which has gone to 3.6 million people, and it seemed that 1.25 per day were assisted because of the social grants, which was definitely favouring the poor in South Africa. Therefore, SASSA was one of the drivers or motivators in terms of dealing with the issue of poverty in the country. She did, however, want more details on why 5.1% of people were rejected in terms of the social assistance, as outlined on slide 5.
Ms Mogotsi welcomed the social assistance programme done by SASSA, but said that nothing was said about the foster care grant. She asked how the country was doing in terms of the foster care grant, and if the answer was that it was not doing well, she would like to know why, what challenges were being faced and what mechanisms there were to assist with foster care grants, as opposed to the Children's Grant.
The Minister responded that in terms of foster care children the Department had been worried about the incidence of child abuse and children killed, many of whom were in fact victims under foster care. The Department and SASSA did not have the capacity to visit and do substantial follow up because of the shortage of social workers, but it was also not possible to simply leave the situation as it was, deteriorating. She had therefore formed a committee that was going to visit all the provinces, visit foster children randomly, call for submissions from communities and make recommendations as to how to deal with that issue. She noted that it must be borne in mind that all along, the SASSA had been working along the lines of a judgment. In the past, the Department of Social Development would visit the children on a yearly basis and recommend whether the child should continue getting the money or should continue staying with the foster parent. Many foster care grants were cut and the matter was taken to court and the SASSA was now bound by the judgment. The problem was that SASSA did not always know if the grant was actually being used to support the child. The committee that she had formed was also looking into this matter.
The Minister said that she had received a report from an MP about a foster child fostered by a woman, and after her death the husband of that woman had married the foster child and, when she refused to have sex with him, was beaten on a daily basis; Finally the child was removed after the committee had visited.
She also indicated that in the beginning, social workers were complaining that they were not receiving all the details. There were some “ghost foster children” where spot checks to families who were receiving the grants had shown that no children were living with them.
The committee had also assisted the Department in understanding the position of former foster children who, after reaching 18 years old, were still at school or tertiary education, and whose grants were terminated immediately they turned 18 in line with the legislation at the time.
The Minister noted that there were currently 500 000 children under foster care. Some cases took very long to process and it would take a long time to get court orders. Because it was easier to register a child support grant, social workers would prefer to assist families to apply for the child support grant instead of the foster care grant. That was another point that was being considered by the committee. There were around one million orphaned children, but many of those under foster care were not orphans; they had parents but they were unable to look after the children.
There were thus challenges in relation to foster care. The Department had employed some young social workers who were family-finders for foster care children, and more were employed under the EPWP, so the work was being spread. There was much work needing to be done to protect children under foster care.
The Chairperson noted that both employees and communities were not happy that notice was not given to communities when visits were made on foster care families.
The Minister added that another challenge was that children did not want to be separated from each other so the eldest child could be designated as a foster parent.
The Minister said that she noted the points raised by Ms Wilson but wanted to emphasise that SASSA had been given an unqualified audit opinion for the AG. It would always have challenges, but the AG’s office would ensure that the SASSA adhered to good practices. She agreed that there had been matters of emphasis but asked Members to recognise the huge improvement in the way that SASSA was doing the work.
Ms Peterson said that the Agency had the structure to deal with issues of mismanagement and SASSA had a staff complement of almost 10 000 workers. Every single day the Agency was operating offices and going out to service points serving people. It had mobile offices running through the nine provinces. Obviously it was necessary to look at the level of compliance at the SASSA Head Office, but SASSA was also training its staff to do better in financial management and had gone to provinces to look at the process.
The SASSA had pulled back a little when the new Supply Chain Manager came, as it did not want to fall into the same trap it had experienced in the past, and if the case was not clear it did not want to make a decision that could be challenged. There was an ongoing matter now with the Accountant-General and a dispute about the specifications; there were two cases on which SASSA had written to this body in relation to what was and what was not mandatory; it had been more than a year that it had been waiting on a reply.
Ms Peterson said that in relation to ICT and biometrics, SASSA was working with the Reserve Bank to get its standards, which was not an easy matter.
Ms Peterson said that it was clear from the AG's report that there had been improvements although more were needed. The number of matters for correction had reduced compared to last year. Six issues had been concluded. An agreement and correction plan had been drawn with the AG. She added that when she had taken office as CEO of SASSA there had been 13 red areas highlighted on the dashboard, now reduced to one. Therefore, although it was not yet enough, there was improvement; SASSA was aiming for a clean audit. In relation to reporting to National Treasury it was looking for advice and there needed to be a level of technical expertise in order to serve the way that it did. It would continue to build the business case. There were over 100 matters to be dealt with across SASSA's nine regional offices and almost 400 local offices, and it would learn from any mistakes made in the tender process.
Ms H Malgas (ANC) confirmed what the Minister said in terms of the foster grant ; last year a social worker said they were doing door to door reviews of foster grants and the conditions n ward 34, in Port Elizabeth.
The Chairperson thanked the Minister and said the Committee appreciated the type of work the Minister and advisory Members were doing.
Mr Chauke said that the irregular expenditure was not always aligned in the year in which it happened. In the SASSA report there were two categories of irregular expenditure. Firstly, if it was confirmed irregular expenditure, SASSA would have to find a balance to illustrate whether it was “portable”, which meant cases still under review or under investigation. At the end of that investigation it would be confirmed whether there had been irregular expenditure. If confirmed as irregular expenditure in the 2015/16 financial year it will reflect in the books of SASSA at end of year, and may not reflect on the performance of the Agency in that year as it could relate to events from previous years.
Mr Chauke said that when SASSA dealt with irregular, wasteful and fruitless expenditure in the 2014/15 financial year it had set up committees late in the third quarter and fourth quarter. However, cases needed to be investigated. The bulk of the case investigations were not finalised, because there had been a late start in setting up governance structures. Most of the movement in the cases would be seen in the 2015/16 financial year, and these could relate to the previous years. The “Protocol Governance Document within SASSA” would be finalised before the end of December. This document would standardise all the operational structures of the Agency, in terms of what it would regard as key structures that were needed in the region.
The meeting was adjourned.