Embed Size (px)
Citation preview
23-04-21 1
Report on the Guardians Fund
Select Committee on Security and Constitutional Development
23-04-21 2
• The Guardian’s Fund (GF) is a statutory trust established in terms of Chapter V of the
Administration of Estates Act, 1965 (Act 66 of 1965).
• The purpose of the GF is to protect and manage monies of persons deemed to be
legally incapable or lacking the capacity to manage their own affairs as well as
undetermined, unknown or absent heirs and untraceable persons.
• The GF has representation in Six Masters Offices namely Pretoria, Cape Town,
Pietermaritzburg, Grahamstown, Bloemfontein and Kimberley
• Some of the functions are inter alia to
- process inheritance applications and make payments to persons entitled thereto
- invest monies held with the PIC
- Interest calculation in respect of money's received on behalf of beneficiaries
Introduction and background
23-04-21 3
• The governance obligations of the Department demanded that a robust response be
evolved to address the issues plaguing the Fund.
• The Department mobilized resources and expertise and instituted a Project to turn-
around and implement various financial and accounting initiatives to redress the
decline of the financial environment and ensure better accounting for the Fund.
• A multi skilled project team addressed:
- Procedural challenges (staff doing things incorrectly);
- Non-compliance with key legislation and prescripts;
- Errors and accounting backlogs;
- Addressing all processing backlogs; and
- Facilitating the completion of a computer system roll-out.
• The Department has now appointed a permanent Chief Director for the Third
Party Funds and a Director specifically for the Guardians Fund in that Chief
Directorate
The Financial Management Response
23-04-21 4
Audited Outcomes
The Guardians Fund audit report has been consistently Qualified
or Disclaimed from 1993 through to 2006/7 Financial year.
Since then ….
•2009/10 Unqualified Audit report NAQ (No Audit Qualification)
•2008/09 Unqualified Audit report NAQ (No Audit Qualification)
•2007/08 Unqualified Audit report NAQ (No Audit Qualification)
•2006/07 Qualified Audit report (Uncertainty around opening balances)
23-04-21 5
Accounting challenges facing the Guardian's Fund can be ascribed
to the issues listed below:
– Staff Capacity constraints
– Skills Shortage
– Inadequate/antiquated accounting systems
– Evolving financial accounting standards (GAAP)
– Continuous Growth in Fund Size
Accounting Challenges
23-04-21 6
Surpluses over the years
• 2006/07 – R65,1 million• 2007/08 – R107,4 million• 2008/09 – R48,2 million• 2009/10 – R119,1 million
• These surpluses fluctuate as return on investment fluctuate.
• The beneficiaries are however shielded from the fluctuation
Growth in beneficiary receipts and payments
* Data for 2010/11 as at the end of September 2010
Volumes and values of Receipts:
2007/08 2008/09 2009/2010 2010/2011 '000 '000 '000 '000
AmountAt interest 644,752 682,046 982,633 545,051 Commission 15,540 16,384 15,133 8,891 No interest 75,087 49,346 50,797 28,211 Total 735,379 747,776 1,048,563 582,153
VolumeAt interest 13,811 12,330 15,285 11603Commission 13,504 8,588 5,157 3266No interest 4,239 1,650 3,566 437Total 31,554 23,474 24,006 24,006
Volumes and values of payments :
2007/08 2008/09 2009/2010 2010/2011AmountAt interest 522,883 724,264 734,095 393,058Commission 749 2,346 1,143 1,235No interest 32,406 38,869 18,284 27,687Total 556,039 764,481 753,950 421,980
VolumeAt interest 47,306 52,032 52,142 23721Commission 124 211 154 78No interest 385 641 470 234Total 47,815 52,884 52,776 24,033
* Data for 2010/11 as at the end of September 2010
Transaction volumes and Receipts
Total Assets vs. Beneficiary Liabilities
Investments: Public Investment Corporation
2007/08 2008/09 2009/20102010/2011 September
2010
2010/2011 December
2011 ' 000 ' 000 ' 000 ' 000 ' 000
PIC 4,014,348 5,200,411 5,969,155 6,406,486 6,600,728
Of Which 0-3 months 429,624 808,450 865,497 349,513 4,531,567 3-6 months 292,145 961,456 609,259 4,411,487 1,091,068 6-9 months 5,313 232,481 337,033 1,066,857 368,399 9 - 12 months 2,607,522 3,049,176 3,883,163 362,048 419,793 1- 3 years 549,218
In terms of Section 87 of the Administration of estates Act, No.66 of 1965) beneficiary amounts received in the Guardians Funds should be invested with the PIC. All monies except for those required for immediate disbursements are invested with the PIC
23-04-21 13
GUARDIAN’S FUND ACHIEVEMENTS
- Return on investment of 8.5%; - Growth of Fund 15% or R770million in the
last year- Improved Controls and Turnaround times- MOVIT – online verification of fingerprints in
collaboration with Dept of Home Affairs- Unqualified Audit reports- 5 of the 6 Guardians Funds have
complete verified beneficiary detail
23-04-21 14
Service Delivery • The Fund is growing on average at 15% In terms of net-asset
base• The transactions doubled from 2008-2010 due to the age of
majority being reduced from 21 to 18 years• In 2009-2010 The Fund paid out R754m, which is money in
the hands of vulnerable people enabling them to participate in the economy
• Services to the beneficiaries are rendered at no cost to them• Interest rate is higher than most low risk investments• The beneficiaries are cushioned from market fluctuations due
to the conservative investment strategy that we adopted few years ago i.e we invest at 8.5 return and we pay at 7.5% to beneficiaries. The 1% difference between 8.5 and 7.5 goes to reserves till the end of the financial year where after paid over to the National Revenue Fund.
23-04-21 15
Highlights
• The increase in the number of people served daily• Reduction of instances of Fraud: From 1 April 2010
to 31 January 2011 only 13 instances of fraud were discovered while we made more than 52 000 payments (9 in Pmb and 4 Pta)
• ICMS and Guardians Fund System will be integrated to substantially improve Service Delivery
• Online verification of fingerprints (MOVIT) implemented in 3 offices
• The process of finding a suitable Accounting Solution is underway and a final decision on the matter is eminent
