FURTHER ASSESSMENT BY THE COALITION ON THE ROAD ACCIDENT FUND AMENDMENT BILL – B64/ 2003

 

I) INTRODUCTION:

At the conclusion of the public hearings relating to the Road Accident Fund Amendment Bill B64/2003, the Coalition on the Road Accident Amendment Bill, would like to make the following comments:

1. Consultative process:

During it’s previous presentation to the Transport Portfolio Committee the Coalition expressed great concern relating to the flawed consultative process prior to the introduction of the said Bill on 16 September . Similarly, the Coalition was concerned about the said Bill being conceived from within the Road Accident Fund, instead of the Department of Transport, after proper wide ranging consultation with all interested parties.

Although the Coalition would like to commend the Transport Portfolio Committee on extending the public hearings relating to the said Bill, and for allowing numerous presentations from diverse interest groups such as the South African Association of Personal Injury Lawyers to Cosatu, The Hospital Association of South Africa to the Quadriplegic Association of South Africa, The Afrox Hospital Group to Public Health Care Providers, such as the GrooteSchuur Hospital, the Coalition is of the opinion that Parliamentary process has highlighted:

      1. The plethora of legal and practical issues at stake which needs careful and detailed consideration.
      2. The need for further in-depth presentations by members of the actuarial and insurance industries, as well as management consultants; to evaluate the sustainability of the proposed amendments, especially considering the absence of comprehensive submissions by the Road Accident Fund in this regard.
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      4. Overwhelming rejection of the said draft bill within the context of a fault-based system of compensation of the victims of road accidents.

    1. MOVING TARGET:
    2. The Coalition wishes to repeat it’s concern about the duration of the period during which the various interested parties could consider the draft amendment bills, and in particular, the lack of certainty in Government’s position relating to the formulation of the various clauses, resulting in different forms of the Bill being introduced respectively on 16 September 2003, 3 October 2003, 13 October 2003, 27 October 2003, 5 November 2003 and 12 November 2003.

    3. SUMMARY OF DIFFICULTIES RELATING TO:
    4. 3.1 The said Bill is ill-founded against the context of a fault and delictual-based system. In any circumstances where an apportionment of a victim of a road accidents claim takes place harsh results will follow for the individual, due to the fact that the cash portion that he will receive on a monthly basis will not be sufficient to allow for:

        1. Access to healthcare of his choice;
        2. Implementation of life style changes, both at home and at work;
        3. Allow for access to legal representation of his choice in pursuing his/her claim against the Road Accident Fund.

3.2 The said Bill does not even represent the findings of the Road Accident Fund Commission which specifically rejected the provisions of the said Bill (See our previous presentation for a detailed summary)

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3.3 The said Bill will not allow for the implementation of the Road Accident Fund Commission’s recommendations at a later date, due to the liabilities of the RAF being extended 40 to 50 years into the future.

3.4 The said Bill does not represent government policy of having adopted the recommendations of the Road Accident Fund Commission, which specifically rejected the contents of the present draft Bill.

      1. The said Bill does not have regard for the process provided by NEDLAC, and the specific decision taken within NEDLAC not to deal with the Road Accident Fund pending the publication of the Road Accident Fund Commission – report, which has to be considered together with the Taylor-report in order to provide for a broadbased social security system for the Republic of South Africa.
      2. The said Bill does not comply with the provisions of the Constitution of the Republic of South Africa insofar as inter alia it prohibits access to health care and legal representation for the poor disenfranchised victim of a road accident, and for as far as the provisions of the said Bill are made RETROSPECTIVELY.

2. CAPACITY AND EFFICIENCY:

The Coalition on the Road Accident Fund Amendment Bill is of the opinion that the crux of objections (other than the legal objections to the Road Accident Fund Amendment Bill), relate to the capacity of the RAF to implement the said proposals and the efficiency of the RAF in dealing with the claims of victims of road accidents. In this regard the Coalition wishes to refer the members of the Transport Portfolio Committee to the

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Road Accident Fund Commission-report and specifically paragraphs 38.31 to 38.39 which reads:

"38.31 A final example of the impact of this Commission on administration of the current scheme concerns Section 17 Undertakings. The RAF was highly critical (some would say callous) and condemnatory about road accident victims who claim compensation in terms of Section 17 Undertakings. When the Commission gave a sympathetic hearing to the concerns expressed by road accident victims, disabled persons and legal representatives, RAF Management was extremely defensive of its own management and administration policies and practices. This was notwithstanding murmurs of dissent that came from within the organisation, and were communicated to the Commission. There has been considerable public debate, much of it initiated by this Commission, concerning implementation of Section 17 Undertakings and substantiated criticism of the Undertakings Department. The Commission now understands that it is intended by RAF Management that former healthcare practitioners will eventually be employed within the Undertakings Department and the consultancy work of CHRIMS indicate the belated acceptance by RAF Management of the importance of healthcare expertise and skill within the Undertakings Department.

 

III) Forensic Auditor’s Report:

 

    1. Reference has already been made to the Forensic Audit Report prepared by Nkonki Sizwe Ntsaluba Inc. The sections relevant to this chapter are chapter 4, dealing with issues of strategic significance; chapter 5, dealing with operational matters which are generic in nature and are meant to promote efficiency and minimise risk across the RAF; and chapter 13, dealing with operational matters which are peculiar to each of the branches. Chapter 6, which deals with information technology, is alluded to throughout this Report.
    2. The consultants reported on the absence of information and the failure to make use of such information as existed:
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      "Computer generated management reports are almost non-existent", "executive management should also have information of the trends of the organisation", "this information should also help to formulate strategic decisions", scheduled monthly management meetings should be held".

    4. They noted the failure of senior management to attend to certain reports that were created and questioned the competency of the executive and senior management to address the findings of the Forensic Audit Report. Serious deficiencies in the claims processing and payment system were noted.
    5. As far as claims receipt and registration was concerned: " The RAF needs adequate segregation of duties between claim validation, initiation, administration, decision-making and claim payment authorisation", "the generic RAF rubber stamp can be altered to suite the applicant", "the consultants could find no controls to ensure that all claims forms received are captured", "there is no independent check on the accuracy of the processing from the source documents" and all members of staff and the general public had easy access to claim documents and to the RAF stamp. The report states "the necessity of the first phase is to address the critical control deficiencies within the manual and application controls currently in use".
    6. As far as payment processes was concerned: " It is possible for one RAF employee to generate an expenditure authorisation" and thereafter to pressurise employees to sign or to forge the signatures of co-workers to documents which would then result in payment being effected. A number of instances were noted where it appeared that payment was made even prior to the file being registered. The high incidence of claim files reported missing is a indication of the lack of physical controls over documentation.
    7. The consultants were concerned about other issues in relation to claims processing and payment. The RAF fails to respond to claims within 120 days "leading to unnecessary litigation and consequent settlements to the detriment of the RAF"; "no proper segregation of duties exists between initiating, administration, decisions making and payment employees"; there is "an undesirable degree of discretion on the part of claims handlers" which is "a direct result of the weaknesses of the management control systems"; the fact that mandate levels for managers and claims handlers differ substantially is cause for concern because large payments can be

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approved without proper supervision; there are inadequate controls to prevent collusion whereby an invalid claim could be assessed and validated by an identified claims handler; the decision on quantum relies solely on the discretion of one or two persons; "there is a lack of supervision of junior claims handlers; claims managers often fail to respond to internal inspection reports".

 

38.38 In respect of their investigations into the Pretoria, Randburg, Cape Town an Durban branches, the consultants concluded that:

"All the Regional Offices have been seriously compromised. Furthermore, the almost complete lack of management control in the Regional Offices is so prevalent and the level of fraud and corruption is so high that a complete overhaul of he RAF systems, procedures and staff is required to urgently address all findings of this investigation".

 

38.39 Concern was expressed over the "unacceptably high level of staff turnover" that resulted in "low levels of experience and expertise". It is therefore possible for staff members to be "easily manipulated by those seniors who have a necessary level of experience and know how to get involved in fraudulent activity without being detected". It was stressed that critical attention should be given to the training of staff members including at managerial level, and it was felt that there was over-emphasis on legal-technical expertise. "

5. The members of the Transport Portfolio Committee are also referred to in paragraphs 38.75 to 38.43 which reads:

"IV) Delusions of Grandeur:

 

38.75 RAF Management perceives the RAF as having two "personalities": "quasi-judicial" (legal) and "public trustees" (financial). Throughout the Status Report 2000 reference is made to the Fund’s "quasi-judicial capacity" as also to the need for the staff of the RAF TO present "as quasi-judicial officers or trustees".

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38.76 These were identified as follows in its submission to the Commission:

a) In respect of its legal personality the Fund is under legislative mandate to deliver compensation. In so doing it performs a "quasi-judicial" function. In discussion, RAF Management referred to the fact that the RAF operates within a monopoly situation that enhances the "quasi-judicial" functions of claims handlers.

b) As regards its financial personality, by reason of the fact that it receives public funds, which it is required to dispense in terms of a specific prescription, "the Fund also acts as trustee" .

38.77 RAF Management concluded that claims handlers performing quasi-judicial functions are required to bring a particular culture and ethos to the organisation and in its capacity as trustee, the Fund has a higher level of responsibility and duty with regard to financial management. Interestingly, RAF Management gave no indication which lesser mortals had less onerous responsibilities or duties.

38.78 There can be no doubt that the RAF is entrusted with the administration of public monies and that its personnel are, in many cases, and on many occasions, required to exercise a discretion and make a decision about the entitlement or otherwise of a claimant to compensation and the extent of such compensation. Nobody would argue that administration of claims for road accident compensation is merely a clerical function requiring paper pushing skills.

38.79 However, to categorise RAF staff as being in a "quasi-judicial" capacity contributes towards the tension between claimants and their representatives on the one hand and claims handling personnel of the RAF on the other. If the RAF perceives its staff to be in a "quasi-judicial" capacity they will understand and present themselves as vested with authority, which entitles them to preside over the make judgements upon claimants who seek compensation from the RAF . That may be an unfortunate by-product of the position occupied by the RAF as the statutory insurer of negligent motorists. It is not, however, an attitude conducive towards facilitation of benefits to persons who are, as of right, entitled them. (OUR EMPHASIS)

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38.80 The views of the general public, the profession and the RAF Board about the RAF’s status and competencies are not quite so smug. As already indicated more than one member of the RAF Board has commented on the absence of "management training or experience in the private sector or at all" and has described the RAF as reflective of "the old style South Africa civil servant career path". The recent High Court litigation of Brancato v The RAF (Case No. 2000/3226(WLD)), Campbell vs The RAF (Case No. 34841/99) and Mouton v The Raf (Case No. 2001/26177 (WLD)) which have been referred to elsewhere in this Report all reflect inefficiency, incapacity and a failure to serve the victims of road accident:

"The extent to which those responsible for administering the Act have frustrated Parliament’s will has been demonstrated in these proceedings. - Spilg AJ. In Mouton vs The Raf"

V) The Ability to Serve the Public:

38.81 Throughout this Report there has been reference to concerns that the RAF has not perceived itself as a service organisation established as a facilitator of assistance and benefits to the victims of road accidents. The statutory limitations within which the organisation currently operates, the heritage of impregnable confidence, bureaucratic indifference and arrogance as well as a lack of appreciation of the need for the organisation to be responsive to changing demands and perceptions have all contributed to this situation.

38.82 The Report has dealt elsewhere with the failure of the RAF to appreciate the need to audit its own policies and practices, take the pulse of the nation on important issues, establish user-friendly facilities for road accident victims, encourage public awareness of its responsibilities, to develop professional competencies to serve carpingly the road using public who pay RAF salaries.

38.83 It is of some interest to observe the extent to which and the manner in which the RAF communicates with the road using public and those who represent that public. The two examples given below have been chosen from a broad

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selection and appear to reflect a paucity of literacy skills, an inability to communicate clearly and an absence of "user friendliness" among RAF staff. (Examples of the most aggressive, unhelpful and arrogant correspondence have not been included because it is thought, or hoped, that aberrant practice they reveal is not encouraged by RAF Management.)

38.84 On 24 May 2001 the following letter was addressed to a driver who was allegedly responsible for a motor vehicle accident in respect of which a claim had been lodged with the RAF. It is notable that the consultant’s name and address are written in Afrikaans but that the letter is written in English. The relevant portions are as follows:

"The abovementioned matter has reference.

According to the information received by us to date, you were the registered owner driver of the vehicle at the time of the accident.

Article 13(1) provides that the owner or driver shall, if reasonably possible, within fourteen days after the occurrence furnish the appointed agent of the Fund, on the prescribed form, with particulars of the occurrence and also the prescribed statements.

Any person who fails to comply with sub-section (1) of Article 13 in terms of Article 13(3) shall be guilty of an offence and liable on conviction to a fine.

In addition, it will assist us if at the same time you confirm time and place of the accident, names and addresses of witnesses and drivers involved and in your view the party responsible for the collision.

Accordingly, we attach hereto the MMF2 report form which should be duly completed, signed and returned to the Fund at your earliest convenience".

38.85 The letter was described by its recipient as "nonsensical". The letter refers to Article 13 but does not mention the relevant Act. The legal threat precedes any request for information. The only request for information purports to be

additional to other information, which was never requested. The requirement to furnish information refers to a non-

 

 

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existent entity, namely "the appointed agent". The MMF2 form was not attached to the letter. It therefore could not be completed.

 

38.86 The letter below was sent on 2 May 2001 (RAF Reference No. 10/191513/17(3)) to the legal representative of a claimant who was obviously seeking compensation arising out of the death of her husband:

"For settlement purposes alone we are willing to increase our offer in regard to general damages to R85 000.00. This is our final offer in this regard. Once cannot put a monetary value on a loved one dying, if you witness the event or not. Each case has got its own merits. Countless people die every day in different circumstances. People get raped and killed and hijacked every day, but unfortunately the Government doesn’t compensate them of their families, even though they pay tax, which should be used for safety and security. We would sympathise with Mrs..... for her great loss, but no amount of money would compensate her. Her husband did not suffer at all, and if looked like he was asleep and there were no scars or blood or open wounds. We do not compensate people whom were not present at the time of the death o their loved ones and their grief and loss is just great as someone who is present. Where does one draw the line? In court? With the new Commission investigating the Road Accident Fund? "

The Coalition on the Road Accident Fund Amendment Bill respectfully submits

that in light of the findings of the Road Accident Fund Commission, the Road

Accident Fund is an organization in crisis which can hardly cope with it’s

present workload.

3. INTERNAL AUDIT REPORT:

The Coalition on the Road Accident Fund Amendment Bill has been placed in possession of an "Annual report to the Audit Committee" prepared the Internal Audit Department of the Road Accident Fund for the financial period April 2002 to March 2003, and which report is dated April 2003. The Coalition is of the opinion that this report is final testimony to fact that the Road Accident Fund has a "lack of a strategic plan and therefore direction for the organization", which has "exposed the Fund to the risk of continuing with operations which have little or no impact on the sustainability of the organization" (See finding no.:1 below).

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5. The Coalition wishes to refer the Transport Portfolio Committee to a summary of the significant Audit findings by the Internal Audit Department namely:

"FINDING 1: RAF STRATEGIC PLAN:

The RAF’s Corporate / Strategic Plan for the new financial period 2003/2004, either has not been reviewed and updated, or the updated plan has not been communicated to Management. As a result, departmental business plans and the 2003/2004 budget may not be aligned to the overall business plan. Lack of a strategic plan and therefore direction for the organization, has exposed the Fund to the risk of continuing with operations which have little or no impact on the sustainability of the organization.

FINDING 2: Organizational Structure:

The CEO may not be able to focus on the direct responsibilities of his office as he occupies two other Executive positions as Claims Executive and Chief Financial Officer. This may result in inappropriate or incorrect decisions, and/or failure to design and implement adequate, effective and efficient systems of internal controls, due to the time constraints.

Finding 3: Departmental Areas of Responsibility:

There are instances where areas of responsibilities have not been properly defined and documented. Human and Financial resources may not be utilized economically or efficiently due to overlap of functions or duplication of work.

Finding 4: ICT Management – Inadequate Segregation of duties:

There is inadequate segregation of duties between the Procurement function and ICT Management in that the two departments are headed by one official. The manager is able to initiate, authorize, and process ICT expenditure and also evaluate tenders. The Information Communications Technology department is of one of the departments that have high budgeted procurement expenditure compared to the other support departments.

Finding 5: Delegation of Authority/Powers:

Authority levels have not been delegated to levels below Executive Management. There is no transparent and efficient system in operation over the process to award mandates in the Claims environment. Senior Management in the Claims departments have unlimited mandates to settle claims. There is no evidence of monitoring controls in place.

Finding 6: Conflict of Interest:

The Executive Forensics Committee was appointed as Senior Manager Forensics, Mr. D Beea, who is the founding member of, and at time of his appointment was the CEO of one of the companies that forensics investigations have been outsourced to (Ikanyeng). Mr Beea was suspended during this financial period for alleged irregularities. He was found not guilty at a disciplinary hearing.

 

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Finding 7: ICT Management – New Salaries Application system:

The implementation of a new Salaries’ application system was abandoned due to disputes between the software vendors and RAF’s technology partner African Legend Technologies, as well as poor systems development and implementation procedures. When the system was abandoned the RAF had incurred costs in excess of R1m. There is no evidence of any legal recourse taken to address this matter.

Finding 8: ICT / Financial Management:

An employee of the RAF’s technology partner African Legend Technologies, who had access to the claims system live environment manipulated the payment process and misappropriated RAF’s Funds, amounting to R38 800.00. this risk was realized due to inadequate systems of internal control over the claims payments process as well as inadequate application controls.

Finding 9: Citrix Server Implementation:

A post implementation review of the new Citrix server, installed at all the RAF’s regional offices and head office, revealed the following user problems:

These problems have a direct negative impact on the ability on daily operations and therefore the Fund’s service delivery.

Finding 10: ICT Security:

The RAF does not have a formal approved ICT Security Policy. In addition, logical access controls are generally poor since programmers have access to the live environment, the claims system allows multiple access by a single user, employees share passwords, "special branch" functions are not properly restricted and monitored.

Finding 11: Disaster Recovery Planning:

The Fund does not have a documented tested disaster recovery plan in place. In addition, there is no remote/ off-site back-up storage facilities. The back-up servers currently reside in the ICT building, Odion Forum.

Finding 12: ICT Recruitment:

RAF’s recruitment procedures were not complied with in the appointment of some ICT personnel. There were no Job Descriptions for these positions, no evidence of interviews records, all employees appointed were from SITA (previous employer of Chief Information Officer).

A Manager (also from SITA-Human Resources) without ICT qualifications or experience was appointed to the position of ICT Security Manager and given a comparatively higher remuneration package. The high premium does not appear to have been linked to any expertise that this official would be bringing to the Fund’s ICT environment. This Manager was subsequently suspended for alleged irregularities.

 

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Finding 13: Fuel Levy Income – Recognition:

The RAF has continued to recognize fuel levies on a cash basis while there is no evidence that prior approval was obtained from the Accounting Standards Board.

The Financial statements 2002,"statement of responsibility by board of directors" states that the financial statements are prepared according to GAAP (accrual accounting), but the accounting policy in the financial statements says that fuel levies are recognized upon receipt of levies from the oil companies.

 

Finding 14: Financial Management – Income and Investments:

The RAF has continued to disinvest its surplus funds, due to actual spending exceeding cash inflows. While an amount in excess of R500 million was disinvested during this financial 2002, 2003 the Fund does not have an approved Investments Policy and procedures in place, as required in terms of the PFMA Treasury Regulations, paragraphs 31, 3.1 and 31, 3.2.

In addition, there is no evidence that exemption has been received from the National Treasury from investing the RAF’s surplus funds with the Corporation for Public Deposits.

Finding 15: Financial Management – Budgeting:

An analysis of the 2002/2003 budget revealed that the systems in place and over the budgeting process are not adequate. Also, there were no monthly management accounts to assist management with monitoring actual expenditures against their departmental budgets.

Finding 16: Financial Management – Procurement

There was a lack of proper monitoring controls or systems over the procurement process and awards of tenders. For example, no written agreement with forensics Corporation’s to which the RAF had outsourced forensic investigations-NCIB and Ikanyeng.

Finding 17: Procurement Processes:

There is no written delegation of authority to employees that are responsible for the procurement process in the Administration and ICT departments. In addition, internal control systems appear inadequate to ensure that all major capital projects are properly evaluated.

Finding 18: Management of Fuel Levy Income:

There is no evidence that the RAF’s contract with the Central Energy Fund regarding the fuel levy income assessment and collection has been reviewed in the 9,5 years since it became effective. The RAF has not raised interest accrued on late fuel levy payments by the oil corporations. In addition, audit certificates are not regular.

Finding 19: Expenditure Management / Capital Projects:

Detailed policies and procedures relating to purchases are not documented and authorized. Processes are not standardized with various practices existing and different documentation being used to support different expenditure items.

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No formal documentary evidence of pre-authorization of expenditure items of significant amounts, for example in excess of R100 00.00. The certificate of signing authorities is incomplete and thus may be invalid.

Finding 20: Overtime Management :

There are instances noted where an employee worked more than 40 hours per month but the indemnity form was not completed, as required in terms of RAF policy. In addition, the organization may be exposed to an increased risk of inappropriately authorized overtime activity, due to poor verification procedures in place.

The overtime expenditure could not be traced to the RAF’s budget. However, a total amount of R5 773 469.35 was incurred on overtime during the 2001/2002 financial year.

Finding 21: HR Recruitment:

There is a lack of adequate documentation evidencing authorization / approval of recruitment of contract as well as permanent employees. There are instances where interview records to support certain appointments made during the year under review could not be made available for audit purposes.

Finding 22: CHRIMS / Health Management Systems project:

 

There is no evidence that a proper cost vs. Benefit analysis was conducted, before the agreement with consultants, Creative Health Risk Management systems (CHRIMS) was formalized at R20,52 million. The ‘medical cost savings’ claimed by CHRIMS were in fact adjustments of costs claimed to BHF rates. Since the claimants would still have recourse to claim the full costs of the treatment they would have incurred, there is arguably no real financial benefit accruing to the Fund. While the contract with CHRIMS has since been terminated at the insistence of the Medical Committee of the Board, there is now a legal dispute.

 

Finding 23: Fast Tracking of Claims Project:

 

It is not clear, subject to a legal opinion, whether the arrangement / scheme entered into with AFCT is a valid agreement in terms of either the RAF Act, 1996, or the Public Finance Management Act, 1999. In terms of the arrangement, the RAF would fast-track the processing of suppliers’ claims lodged by AFCT on behalf of service providers (mainly private hospitals). In addition to the claims being processed and paid by the fast tracking unit in the claims department, the finance department would pay lump sums / bridging finance / interim payments to AFCT to administer these claims.

The total amount of lump sums/bridging finance/interim payments made during the five month period April 2002 to August 2002 was R56 million while approximately R9m was refunded to the RAF. RAF’s net exposure is therefore approximately R47 million.

 

Findings 24 and 25: New Claims Life Cycle Project:

While the budget for the Claims Life Cycle Pilot Project (YASEBETSA) is R32m, Project Management controls have not been adequate. There is no evidence

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In addition, the system of budget controls and management may not be effective. The project has been ICT driven, with the minimal input from the business or user departments. The medical assessment of claims as one of the functions or phases in the claims process has been excluded in the pilot process.

 

Finding 26: Claims Management – ReOpened Files:

The systems in operation over the re-opening of finalized and claims appear to be inadequate. There are no measures put in place to ensure that the requests to retrieve finalized claims files from archives are authorized. Finalized files are re-opened without reasons being provided and/or Management having approved such reasons.

Failure to built-in measures/controls in places within the current claims system to ensure that the re-opening of a finalized claim file is at least restricted to the respective Manager in whose section/department the finalized claim file was processed / handled.

 

Finding 27: Claims Management – Dummy Files:

In instances where claim files cannot be found, either these are lost or simply misplaced, a copy or duplicate of the original claim file is created – termed "dummy file". However, the procedures and guidelines over the creation of dummy files is not standardized within and between the claims regional offices. For example, the authority to create a dummy file rests with a senior claims handler or at some branches only a claims manger can authorize the creation of a dummy file. There is no evidence to indicate that once a dummy file has been created, these are properly monitored. As a result, fraudulent or fictitious payments may not be detected timeously.

 

Finding 28: Claims Management – Fraudulent claims:

Weakness have been identified in the claims computer system; the claims handling process, as well as in the payments process:

 

Finding 29: Claims Management Control /Security over movement of Claim Files:

There are inadequate monitoring controls over the movement of files between departments and within departments. In addition, the security over claims files is inadequate in that they can be found lying all over in the claims department. Claims handlers use individual file tracking registers and this does not allow for continuity.

 

 

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Finding 30: Claims Computer System – Application Controls:

The current claims system application does not take into account basic controls, which should have been programmed into the system. For example, there is no facility to detect incurred ID numbers that are incorrectly captured either due to human error or intentionally; and therefore, the system is unable to detect duplicate claims. Also, there is no capacity to detect prescribed claims at time of registration, nor are there automated controls to monitor that become prescribed before they are settled.

 

Finding 31: Claims Computer System – Utilization:

 

The claims system is underutilized by the claims department mainly due to lack of adequate training with respect to capabilities of the system. There are various modules in the system that are either not used or are not use consistently.

 

Finding 32: Claims Offer System:

The offer system implemented during 2001 / 2002 was not properly planned and designed to meet the needs of the business:

 

Finding 33: East London Branch - Opening:

 

It appears that planning of the establishment of the East London Branch did not address certain critical areas:

 

 

 

 

 

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Finding 34: Mediation and Arbitration Project:

The following weaknesses have been identified in the Mediation and Arbitration Project which was designed as an alternative dispute resolution mechanism in the settlement of claims:

Finding 35: Policies and Procedures:

Policies and procedures provide guidelines and are training tools for the employees in their day to day activities. However, there are key policies and procedures that have not been formalized. "

In conclusion the Transport Portfolio Committee is also referred to a Summary on page 15 of the Internal Audit Report which deals with fruitless and alledged wastefull expenditure totaling an amount of R109 million.

 

6. CONCLUSION:

The Coalition on the Road Accident Fund Amendment Bill respectfully submits that considering the audit report provided, any consideration of amendments to the present Act without a prior overhaul of the management of the Road Accident Fund is premature and ill advised.

 

THE COALITION

18 NOVEMBER 2003