1. REPORTING STRUCTURES FOR SASSA PFMA / SASSA ACT / FLOW OF FUNDS Presenter: Brenton Van Vrede | Director, National Treasury | 20 June 2010

2. OUTLINE OF PRESENTATION SASSA ACT PFMA Oversight mechanisms Flow of funds, and issues of dual accountability 2

3. SASSA ACT S 3 Objectives –Ensure effective and efficient management, administration and payment of social assistance. –In future, possibly also other social security benefits. –Render services relating to such payment. S 4 Functions –Administer Social Assistance (ito Social Assistance Act) –Collect, collate and maintain information required for payment of grants. –Establish a fraud mechanism. –Renders services in accordance with an agreement with a relevant authority (for other forms of social security) 3

4. SASSA ACT -CONTINUED S 11 Reporting –each financial year submit an annual report which includes: activities statement of its income and estimated expenditure Additional reports such as the Minister may require. 4

5. PFMA S52 –must submit to the AO for a department designated by the executive authority responsible for that public entity.. and to the relevant treasury A projection of revenue, expenditure and borrowings for that financial year in the prescribed format; and A corporate plan in the prescribed format covering the affairs of that public entity or business enterprise for the following three years and if it has subsidiaries, also the affairs of the subsidiaries S53 –A budget for approval by executive authority. S54 –Information and reports required by relevant Treasury or Auditor General 5

6. PFMA - CONTINUED S55 –Submit financial statement within two months after the end of the financial year To the auditors of the public entity; and the relevant treasury; and –Annual report within five months To the executive authority (with financial statements and Auditors report) table in Parliament through the accounting officer of a department designated by the executive authority. 6

7. ANNUAL REPORT – PFMA S55 (2) Fairly present –The state of affairs of the public entity –Its business –Its financial results –Its performance against predetermined objectives –Its financial position 7

8. OVERSIGHT OVER SASSA SASSA reports directly to the Minister of Social Development –Could be problematic for one person to oversee (due to nature and size of the entity). DSD – public entity oversight unit. SASSA currently experiencing financial difficulties – R1.2bn cumulative unfunded deficit (cumulative over expenditure). –An Oversight Inter Ministerial Task team set up (DSD – NT) Implementation of austerity measures Social grant payment contracts (R1bn a year more than what it should be) Personnel (Agency possibly overstaffed) Board ??? NT, increased reporting from quarterly to monthly in new format to show accruals 8

9. 1 FLOW OF FUNDS – “DUAL ACCOUNTABILITY” Two transfers –~R5.6 billion for administration (i.e. operational costs of the entity) –~R90 billion for Social Grants Administration transfers voted as transfers to Departmental Agencies –Funds flow to SASSA and spent by SASSA. Recorded as Revenue and expenditure audited against revenue received. Social Grants transfers voted as transfers to Households –These are transferred to SASSA, –SASSA pays beneficiaries directly into their bank accounts, or –transfers the funds to payment contractors (various distribution channels). –Not recorded as revenue on SASSA’s books. –Not audited as SASSA expenditure. –Audited as DSD expenditure. –Dilemma: DSD audited on SASSA’s performance

10. 2 FLOW OF FUNDS - CONTINUED Why Transfers to Household: –Ensure that the R90 billion is reflected as a transfer to households (its intent) in the consolidated National Accounts –Social Grants in not revenue for SASSA, thus cannot be voted as a transfer to departmental agencies. –Holding the CEO of SASSA accountable for the “functions of the entity” should not depend on the “flow of funds”, but on a performance agreement – linked to SLA Possible solution –Service Level Agreement – linked to the CEO’s contract –Trust Account?- amend Social Assistance Act to allow for the establishment of a Trust Account under SASSA’s administration. –Government Component (brings the entity closer to the department – but may further compound the issue) –Social Security Department