COUNCIL FOR MEDICAL COUNCIL FOR MEDICAL SCHEMESSCHEMES

BUDGET PRESENTATIONBUDGET PRESENTATION

Daniel LehutjoDaniel Lehutjo

Chief Financial OfficerChief Financial Officer

The Council for Medical Schemes is a Schedule 3 public entity The Council for Medical Schemes is a Schedule 3 public entity under the Public Finance Management Act (PFMA) Act 1 of under the Public Finance Management Act (PFMA) Act 1 of 1999. This budget is prepared in terms of section 53 of the 1999. This budget is prepared in terms of section 53 of the Act.Act.

The Act stipulates that the Accounting Authority of a public The Act stipulates that the Accounting Authority of a public entity listed in Schedule 3 which is not a government entity listed in Schedule 3 which is not a government business enterprise must submit to executive authority business enterprise must submit to executive authority responsible for that public entity, at least six months before responsible for that public entity, at least six months before the start of the financial year or another period agreed to the start of the financial year or another period agreed to between the Executive Authority and the public entity, a between the Executive Authority and the public entity, a budget of estimated revenue and expenditure for that budget of estimated revenue and expenditure for that financial year, for approval by the Executive Authority.financial year, for approval by the Executive Authority.

The budget must be submitted to the executive authority The budget must be submitted to the executive authority through the Accounting Officer for the entity designated by through the Accounting Officer for the entity designated by the Executive Authority, who may make recommendations to the Executive Authority, who may make recommendations to the Executive Authority with regard to the approval or the Executive Authority with regard to the approval or amendment of the budget.amendment of the budget.

The accounting authority for such a public entity is responsible for ensuring that the expenditure of that public entity is in accordance with the approved budget.

This Budget was constructed on the basis of the This Budget was constructed on the basis of the operational plans for 2009/10, taking into account operational plans for 2009/10, taking into account the broader strategic objectives of Council. The the broader strategic objectives of Council. The expenditure pattern of last year and the prevalent expenditure pattern of last year and the prevalent economic conditions have been taken into account economic conditions have been taken into account in the development of this budget. As far as it is in the development of this budget. As far as it is feasible the expenditure has been aligned with the feasible the expenditure has been aligned with the timing of the operational plans.timing of the operational plans.

EXPLANATORY NOTES TO THE BUDGET FOR THE EXPLANATORY NOTES TO THE BUDGET FOR THE FINANCIAL YEAR 2009/2010FINANCIAL YEAR 2009/2010

1.1. Appeal BoardAppeal Board– The figure is based on last year’s budget . External expertise are The figure is based on last year’s budget . External expertise are

used on the appeals matters.used on the appeals matters.

2.2. Audit Fees: ExternalAudit Fees: External– This relates to the statutory audit to be undertaken by the Auditor This relates to the statutory audit to be undertaken by the Auditor

General. The figure is based on the actual expenditure of last year.General. The figure is based on the actual expenditure of last year.

3.3. Audit Fees: InternalAudit Fees: Internal – The internal audit work relates to the work performed by our The internal audit work relates to the work performed by our

internal auditors. The figure is based on the coverage plan the internal auditors. The figure is based on the coverage plan the internal auditors have submitted.internal auditors have submitted.

BELOW FOLLOWS EXPLANATORY NOTES TO THE BELOW FOLLOWS EXPLANATORY NOTES TO THE BUDGET ITEMS:BUDGET ITEMS:

4.4. Bank ChargesBank Charges– The budget figure is based on last years actual expenditure.The budget figure is based on last years actual expenditure.

5.5. Cleaning and GardeningCleaning and Gardening– The cleaning service is outsourced and the budget was arrived at on The cleaning service is outsourced and the budget was arrived at on

the basis of the signed contract. The budget has taken into account the basis of the signed contract. The budget has taken into account the growth of the organization.the growth of the organization.

6.6. Consumer EducationConsumer Education– The consumer and education unit is engaged in a variety of The consumer and education unit is engaged in a variety of

consumer awareness programs which include radio slots, exhibition consumer awareness programs which include radio slots, exhibition and shows (Rand Easter Show), publication in consumer magazines.and shows (Rand Easter Show), publication in consumer magazines.

7.7. Computer ExpensesComputer Expenses– This line item entails acquisition computer accessories like backup This line item entails acquisition computer accessories like backup

tapes, toner cartridge, mouse devices, memory sticks, modules for tapes, toner cartridge, mouse devices, memory sticks, modules for upgrades etc.upgrades etc.

8.8. Consultancy FeesConsultancy Fees– The communication unit will require consulting work on the editing The communication unit will require consulting work on the editing

of documents. IT unit requires consulting on the call centre system, of documents. IT unit requires consulting on the call centre system, deployment of new financial returns, sense spot security and deployment of new financial returns, sense spot security and telephone system configuration. The internal finance unit uses telephone system configuration. The internal finance unit uses consultants on accounting packages from time to time.consultants on accounting packages from time to time.

9.9. Courier and PostageCourier and Postage– Postage and courier services are required to send accreditation Postage and courier services are required to send accreditation

certificates to brokers in the main. We also use postage and courier certificates to brokers in the main. We also use postage and courier services for administration purposes; e.g. sending documents for services for administration purposes; e.g. sending documents for meetings and correspondences in general. The figure was adjusted for meetings and correspondences in general. The figure was adjusted for inflation in relationinflation in relation

10.10. Council CommitteesCouncil Committees– This covers the travel and accommodation of Council members and This covers the travel and accommodation of Council members and

sub-committee members attending Council meetings. It is expected sub-committee members attending Council meetings. It is expected that expenditure will be in line with the activities of Council.that expenditure will be in line with the activities of Council.

11.11. Council Members' Fees Council Members' Fees – The budget has been prepared to match the activities of Council and The budget has been prepared to match the activities of Council and

its Committee during the year under consideration.its Committee during the year under consideration.

12.12. DepreciationDepreciation– The Depreciation is based on the value of existing assets and the The Depreciation is based on the value of existing assets and the

possible acquisitions during the year.possible acquisitions during the year.

13.13. Employee Wellness ProgrammeEmployee Wellness Programme– This line item covers for the well being of staff of Council in the form This line item covers for the well being of staff of Council in the form

of providing subsidy to health activities as well as counseling of providing subsidy to health activities as well as counseling sessions.sessions.

14.14. External StorageExternal Storage– Council has a contract with Metro file to store documents off site. Council has a contract with Metro file to store documents off site.

Old documents are always taken off site to facilitate proper filling.Old documents are always taken off site to facilitate proper filling.

15.15. Employee BenefitsEmployee Benefits– This is cover for employees in respect of accidental death and This is cover for employees in respect of accidental death and

disability. It is based on the actual earnings from one year to the disability. It is based on the actual earnings from one year to the other and has been negotiated to coincide with our financial year.other and has been negotiated to coincide with our financial year.

16.16. HRD /Organisational StrategyHRD /Organisational Strategy– The project on talent management and succession planning will be The project on talent management and succession planning will be

undertaken this year. undertaken this year.

17.17. InsuranceInsurance– This is the insurance for office contents and is budgeted on the basis This is the insurance for office contents and is budgeted on the basis

of the value of assets in existence in Council. of the value of assets in existence in Council.

18.18. Internet ExpensesInternet Expenses– Internet services are provided by internet Solutions and we have a Internet services are provided by internet Solutions and we have a

Service Level Agreement with them.Service Level Agreement with them.

19.19. Investigations Investigations – This relates to investigations commissioned by Council to enforce This relates to investigations commissioned by Council to enforce

compliance. The estimates is based on past experiences. The unit compliance. The estimates is based on past experiences. The unit also has a full staff compliment to meet the requirements of the also has a full staff compliment to meet the requirements of the investigations.investigations.

20.20. Legal FeesLegal Fees– The legal matters are unpredictable. The estimate is based on pas The legal matters are unpredictable. The estimate is based on pas

experiences and in a budget review process attention in normally experiences and in a budget review process attention in normally paid to this line item.paid to this line item.

21.21. Media and PromotionMedia and Promotion– The budget covers for the printing of the annual report as well as the The budget covers for the printing of the annual report as well as the

publication of the quarterly journal (CMS news). The unit has also publication of the quarterly journal (CMS news). The unit has also planned the road shows for the annual report.planned the road shows for the annual report.

22.22. Operational PlanningOperational Planning– This relates to a planning session by all staff members in preparation This relates to a planning session by all staff members in preparation

for the year ahead. The sessions are organized differently every year for the year ahead. The sessions are organized differently every year to allow for flexibility in travel and accommodation.to allow for flexibility in travel and accommodation.

23.23. PrintingPrinting– The budget has been adjusted to take care of printing reports from The budget has been adjusted to take care of printing reports from

research projects from the research unit as well as the printing or the research projects from the research unit as well as the printing or the operational plans for the organization by the IT unit.operational plans for the organization by the IT unit.

24.24. Recruitment and ReallocationRecruitment and Reallocation– Recruitment budget is made available in the event of a vacancy arises. Recruitment budget is made available in the event of a vacancy arises.

Advertising costs have gone up. In some instances we recruit some Advertising costs have gone up. In some instances we recruit some positions through agencies and their charges are based on the total positions through agencies and their charges are based on the total cost to company for the year. Where senior positions are involved the cost to company for the year. Where senior positions are involved the costs are a bit steep.costs are a bit steep.

25.25. Registration & Accreditation CostsRegistration & Accreditation Costs– The work on the accreditation of administrators has been The work on the accreditation of administrators has been

internalized. The budget is intended to accommodate on site internalized. The budget is intended to accommodate on site consultation with administrators.consultation with administrators.

26.26. RentRent– The rent is budgeted on the basis of the lease agreement. The rent The rent is budgeted on the basis of the lease agreement. The rent

escalates at 7% p.a. in May of each year. escalates at 7% p.a. in May of each year.

27.27. Rental CopiersRental Copiers– This is budgeted for on the basis of a service level agreement.This is budgeted for on the basis of a service level agreement.

28.28. Rental Other AssetsRental Other Assets– This is in terms of the signed contract for the provision of cold This is in terms of the signed contract for the provision of cold

refreshing water.refreshing water.

29.29. Repairs and MaintenanceRepairs and Maintenance– This covers general repairs for the building and maintenance in This covers general repairs for the building and maintenance in

respect of the air conditioners, UPS, generators, call centre system respect of the air conditioners, UPS, generators, call centre system etc.etc.

30.30. Research CostsResearch Costs– The Research unit will be engaged in the following research projects:The Research unit will be engaged in the following research projects:– An assessment of coverage of non-PMB conditionsAn assessment of coverage of non-PMB conditions– PMB costingPMB costing– Annual Statutory ReturnsAnnual Statutory Returns– Improving Data qualityImproving Data quality– Improvement of Complaints DatabaseImprovement of Complaints Database– Monitoring of ICD 10 implementationMonitoring of ICD 10 implementation

31.31. Knowledge ManagementKnowledge Management– The information centre manages the Access to Information Act and The information centre manages the Access to Information Act and

maintains the library of Council. The information centre uses three maintains the library of Council. The information centre uses three systems (EBSCO, Sabinet and Butterworths database) to maintain systems (EBSCO, Sabinet and Butterworths database) to maintain electronic journals. electronic journals.

32.32. SalariesSalaries– Salaries are budgeted for on a total cost to company approach. Salaries are budgeted for on a total cost to company approach.

Salaries have increased on average by 9%. Salaries have increased on average by 9%.

33.33. Security Computers and buildingSecurity Computers and building– Security in respect of computers relates to the firewalls and Security in respect of computers relates to the firewalls and

encryption systems to prevent hacking. The access to the building encryption systems to prevent hacking. The access to the building is also protected through a security system. The budget is based on is also protected through a security system. The budget is based on the contract with respective service providers. the contract with respective service providers.

34.34. Staff TrainingStaff Training – This line item covers for staff development and training. It also This line item covers for staff development and training. It also

caters for attendance of conferences and workshops. A training caters for attendance of conferences and workshops. A training plan was developed by the HR unit which was used to cost this line plan was developed by the HR unit which was used to cost this line item.item.

35.35. StationeryStationery– The budget is based on last years' expenditure patterns and is The budget is based on last years' expenditure patterns and is

adjusted for inflation. We have also increased the budget in line adjusted for inflation. We have also increased the budget in line with the growth of the organisation.with the growth of the organisation.

36.36. Strategic PlanningStrategic Planning– This is the planning session of Council every year in November.This is the planning session of Council every year in November.

37.37. SubscriptionsSubscriptions– This relates to subscription to professional bodies by staff.This relates to subscription to professional bodies by staff.

38.38. Telephone and FaxTelephone and Fax– This is based on last years' figure and adjusted for inflation. This is based on last years' figure and adjusted for inflation.

Efficiency measures have been put in place to monitor the use of Efficiency measures have been put in place to monitor the use of telephone and faxes and have proven to be effective.telephone and faxes and have proven to be effective.

39.39. TravelTravel– Travel is mainly associated with the operational activities the Travel is mainly associated with the operational activities the

various units engage in. The accreditation unit staff members are various units engage in. The accreditation unit staff members are expected to travel frequently to visit administrators to evaluate the expected to travel frequently to visit administrators to evaluate the work started on the accreditation of administrators which is now work started on the accreditation of administrators which is now performed in house. performed in house.

40.40. Trustee trainingTrustee training– The budget has been increased by inflation on last year's actual The budget has been increased by inflation on last year's actual

expenditure.expenditure.

41.41. Water and ElectricityWater and Electricity– This expenditure projection is based on last year’s pattern and has This expenditure projection is based on last year’s pattern and has

been adjusted for inflation. The usage level in the organization been adjusted for inflation. The usage level in the organization drives this expenditure pattern.drives this expenditure pattern.

42.42. Website Design and DevelopmentWebsite Design and Development– It is envisaged that the website will be redesigned during this It is envisaged that the website will be redesigned during this

financial year.financial year.

THANK YOU THANK YOU