Kimi Makwetu. Picture: SUNDAY TIMES
Kimi Makwetu. Picture: SUNDAY TIMES

Auditor-general Kimi Makwetu has, once again, had to issue a disclaimer on the financial statements of the Compensation Fund, which provides compensation for workers injured or made ill at work.

The finances of the fund have been in a disarray for several years with the auditor-general's (AG) report reflecting this again. The report is included in the fund’s annual report for 2017-2018, which was tabled in Parliament this week.

For several years, the fund has been the target of complaints about tardy payments of claims to beneficiaries and medical practitioners alike, but commissioner Vuyo Mafata has embarked on a turnaround strategy to restore the organisation to health. However, the findings of the AG indicate that the strategy has not yet had an impact on financial management.

The fund, which generates income from levies imposed on employers, had revenue of R11.7bn for the year and incurred expenditure of R9.2bn.

The AG said he had been unable to obtain sufficient audit evidence for revenue and receivables "as the entity did not have processes in place to ensure that employers were accurately assessed in terms of the Compensation for Occupational Injuries and Diseases Act of SA.

"Furthermore, management did not maintain proper accounting records and adequate controls over assessment of revenue and debtors. This resulted in revenue being incorrectly recorded and payments received from debtors not being recorded in the correct period for the current and prior years. In addition, the entity could not provide sufficient, appropriate audit evidence to support unallocated receipts."

The AG’s report notes that management did not implement adequate internal controls to maintain records of the benefits claimed. He was also unable to obtain sufficient, appropriate audit evidence for the R12bn provision for outstanding claims because of the lack of effective systems of internal control to maintain proper accounting records.

The AG was also unable to confirm the veracity of the irregular expenditure of R764m, and of the fruitless and wasteful expenditure of R446m. The financial statements made a provision of R5.4bn for impairments for doubtful debts.

Mafata noted in his foreword to the report that the first phase of the turnaround strategy was to stabilise the operations of the fund; focus is now on phase two, which is to eliminate all inefficiencies and bottlenecks.

"The plan has five objectives: improving the system of internal controls within the fund; improving the poor service delivery to all stakeholders; addressing the poor organisational performance; eliminating occurrences of fraud and corruption; and developing the capacity of the fund to deliver on its mandate."

He noted that during the year under review the fund adjudicated 179,689 claims of the 184,100 received. A total of 175,624 claims were adjudicated within 60 working days of receipt. A total of R3.6bn was paid in benefits.

The fund also processed and paid 744,782 of the 751,364 medical invoices received, 699,441 within 60 working days.