Govt introduces 'new system' to improve UIF transparency after TERS crisis

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Minister of Employment and Labour Thulas Nxesi.
Minister of Employment and Labour Thulas Nxesi.
  • Minister Thulas Nxesi said his department was working with the Auditor-General to address the Unemployment Insurance Fund's challenges. 
  • Corporate advisory firm FTMG provided the UIF with I-Track, which allows the fund to track the progress of its performance and audit plans online in real-time.
  • UIF commissioner Teboho Maruping said the fund paid some R60 billion in Covid-19 TERS payments, and was making gradual progress in tracking the money and recovering misappropriated funds.
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Thanks to a new digital system from a consulting firm, the Department of Employment and Labour said the UIF will finally be able to trace its transactions to prevent a repeat of the disastrous misappropriations of funds during the pandemic.

Minister of Employment and Labour Thulas Nxesi said told Parliament's Portfolio Committee on Employment and Labour that the department expected it would take a long time to turn things around at the Unemployment Insurance Fund (UIF), "given deep systemic challenges".

Nxesi's meeting with the committee comes after the Auditor-General (AG) uncovered found several irregular payments from the UIF's Temporary Employer-Employee Relief Scheme (TERS) during the Covid-19 pandemic, including undue payments, and fraudulent claims - including from employers. 

The AG's findings prompted a Special Investigating Unit (SIU) probe. Amongst other things, the SIU found At least 6 000 employees in 24 government departments received payments from the UIF TERS.

READ | Thousands of govt employees received fraudulent Covid-19 grants, Parly hears

Nxesi said the department was working with the UIF and the AG to address the fund's challenges. The UIF has not tabled its annual report to Parliament on time due to its current precarious financial position.

"We are working jointly with AG to meet the management of both the funds. We now have major red flags for both the funds given that this late in the year, the annual financial statements have still not been submitted.

"Clearly, the priority for the funds must be to complete and submit these reports, but in turn, this has to be supported by the development of daily and monthly monitoring and reporting that the AG alludes to," said Nxesi.

Nxesi said he had met with the office of the AG and was working with the management of both funds to improve their financial position.

UIF commissioner Teboho Maruping said the fund paid R60 billion in Covid-19 TERS payments and was making gradual progress in recovering misappropriated funds.

"An expectation from the AG is we should be able to account for every cent and indicate that we have tracked each cent to the beneficiary. At the time we accounted for 2019/20, we started the follow the money project and could only confirm R17 billion," said Maruping.

READ | Suspended UIF boss is back, but not yet off the hook, says dept DG

Maruping said the department enlisted FTMG as a service provider and the firm brought in 14 chartered accountants and six junior accountants to assist with the appropriate accounting treatment and interpretation of the Generally Recognised Accounting Practices (GRAP).

"The service provider has given us a technology called I-Track. With the I-Track we are able to capture all of the audit findings online, put in the data, and track the progress of the performance of our audit plans online," Maruping said.

Maruping said the UIF will deploy new technology to manage contributions by March next year. He said the UIF was speaking to companies who were overpaid in TERS benefits to recover the funds, with some companies voluntarily paying the money back.

"We are accounting for the overpayments according to the prescribed accounting treatment to avoid overstating accounts receivable as previously reported by the AGSA. This implies a reduction of the prior years' accounts receivable and retained income balances," he said.

Maruping said the SIU handling R42 million worth of UIF-TERS payments and the unit has already recovered R33 million which will be transferred to the UIF.

Five court cases related to UIF-TERS fraud have resulted in convictions and two have resulted in acquittal. Another 21 cases related to UIF-TERS are currently still before the courts as of August, Maruping said.

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