NSFAS Annual Report 2021/22 - Adverse Audit Findings and Resolutions Update
Significant delays affected the compilation of NSFAS Annual Financial Statements for 2021/22, leading to an adverse audit opinion due to material misstatements and limitations in various financial areas. The report highlights issues with amounts owed, receivables, bursaries, cash flows, irregular expenditure, and more. A total of 54 findings were raised during the audit process, with 35 completed and 19 in progress. Efforts are underway to address these challenges and improve financial accountability.
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PORTFOLIO COMMITTEE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, ON HIGHER EDUCATION, SCIENCE & INNOVATION SCIENCE & INNOVATION 14 FEBRUARY 2024 1
ANNUAL REPORT 2021/22 2
ANNUAL REPORT 2021/222 Significant delays were experienced in concluding the compilation of Annual Financial Statements and audit for the 2021/22 financial period. The main reasons for the delay was to allow NSFAS to complete the financial close out process for the academic years 2017 to 2021. Following the implementation of the student-centred model and the 2017 Presidential Pronouncement, NSFAS s technology environment were no longer fully aligned to the revamped processes. NSFAS had in previous periods placed reliance on data received from institutions relating to the amounts it owed and was owed, but subsequently followed a more in-depth reconciliation process. The audit was concluded on 31 July 2023 and the Annual Report for the 2021/22 year was presented to the Minister. The Minister of Higher Education, Science and Innovation subsequently tabled the NSFAS Annual Report 2021/22 in November 2023. 3
ANNUAL REPORT 2021/22 NSFAS ADVERSE AUDIT OPINION WITH FINDINGS FROM AGSA Unqualified with findings 2020-21 Unqualified with findings 2016-17 Qualified with findings 2017-18 Qualified with findings 2018-19 Qualified with findings 2019-20 Adverse audit findings 2021-22 radio 4
ANNUAL REPORT 2021/222 For 2021/22 NSFAS received an adverse audit opinion due to material misstatements and limitations in the following areas: Amounts owing by/due to institutions Receivables from non-exchange Deferred income Bursaries and grants received for student awards Contingent liability: commitment for student funding Cash flows from operating activities Irregular expenditure Prior-year adjustments Going concern Segment information Residual valuation adjustments Prepayments to institutions 5
ANNUAL REPORT 2021/22 ANNUAL REPORT 2021/22 NSFAS ADVERSE AUDIT OPINION WITH FINDINGS FROM AGSA A total of 54 COMAFs was raised in relation to the audit. Status - Not started, In progress, not started, completed Completed Number of findings 35 19 In progress radio 6
ANNUAL REPORT 2021/22 ANNUAL REPORT 2021/22 Implementation Implementation of of the the resolutions resolutions to to the the audit audit findings findings 1. 2. NSFAS has addressed the internal audit findings to the extent that it was able to. External audit findings relate primarily to the areas where NSFAS requires the intervention of the institutions in order to complete the annual financial statements accurately and completely. The external finding deals with the close out processes for academic years 20217 to 2022. Resolutions in this regard in ongoing. NSFAS has engaged with institutions as follows: 3. 4. Date Details Letter outlining the externally driven COP-related results and necessary intervention was sent to all institutions to alert them of 3 July 2023 the findings and means to resolve the findings. FCoS data (Total claim of tuition and NSFAS allowable allowances (in line with funding rules) for NSFAS-funded students after September October 2023 adjustments (top-up and top-downs and credits) at the student level split between sBux/Direct payments and FNB Payments. Total actual payments made by NSFAS Institution radio Full remittances engagements Students funded by other funders not administered by NSFAS for all the COP years Following the engagements held with institutions where AGSA externally driven audit findings were presented, 60 institutions (across Universities and TVETs) elected to resubmit the FCoS Whilst 2 institutions did not attend the engagements (Port Elizabeth College and Sol Plaatjie University).
ANNUAL REPORT 2021/22 ANNUAL REPORT 2021/22 IMPLEMENTATION IMPLEMENTATION OF OF THE THE AUDIT AUDIT FINDINGS FINDINGS Date Details Letters were sent to Institutions, DDG, FAPSA, USAF and SACPO escalating the delays in submissions. September December 2023 December 2023 Sent survey to institutions in an attempt to understand the reasons for the delays and inconsistencies in submissions January 2024 Letters were sent to Institutions, DDG, USAF escalating the delays in submissions. 1. Institutions data submissions are hampering the resolution efforts. As at the point of preparing this presentation, the status of submissions by the institutions are as follows: Files Submitted for 2017-2022 Data issues communicated with the Institution Draft Agreement Sent In progress Files updated (agreement drafted) Partially Submitted ESAYIDI -Oustanding 2018-2021 West Coast - Outstanding 2017 - 2022 Sourth Cape - Outstanding 2019-2022 Tswane North - Oustanding 2020-2022 FCoS outstanding 2017 - 2022 ( non-responsive) NCU/ Vuselela/ Ikhala/ PEC/ South West/ Sedibeng/ Mnambithi/ Umfolozi/ False Bay Grand Total 37 13 15 Files Submitted for 2017-2022 Draft agreement sent UL -Data Issues UJ - Draft Agreement signed by Institution UNISA/VAAL - Recon file in progress by COP team Partially Submitted UCT - Outstanding 2022 (Draft agreement sent for 2017-2021) UWC -Outstanding 2017-2019 and 2021-2022 SU- Outstanding 2017-2020 FCoS outstanding 2017 - 2022 (non-responsive) UFH/SOL/UniVenda Grand Total 20 16 radio 1 1 2 3 1 1 1 3 3 26 5 4 4 1 1 1 1 9 9 8 50
ANNUAL REPORT 2021/22 ANNUAL REPORT 2021/22 IMPLEMENTATION IMPLEMENTATION OF OF THE THE RESOLUTIONS RESOLUTIONS TO TO AUDIT AUDIT FINDINGS FINDINGS Activity Follow up on non- responsive institutions and escalation and Raw data discussion with Financial Aid Officers Data formatting and cleaning Sharing of formatted Data with Institutions for validation and sign-off Receive signed-off data from institutions Proposed timeline Jan 2024 Feb 2024 Feb 2024 Feb 2024 Feb 2024 Updating of the COP files with the signed-off data received from institutions Draft agreements sent to Institutions Review and submission of COP numbers for inclusion in the AFS Update AFS with COP numbers Review of AFS by appointed service provider/ management Implementation of review notes by service provider Submission of AFS to the Board committees for review Submission of final AFS to the AGSA AGSA Audit Audit report date 1 9 Feb 2024 12 -14 Feb 2024 15 -16 Feb 2024 17 -23 Feb 2024 26 Feb 31 March 2024 1 April 2024 20 April 2024 20 April 2024 30 April 2024 1 May 2024 31 July 2024 31 July 2024
ANNUAL REPORT 2022/23 Following the completion of the 2021/22 year, the AGSA has categorised the NSFAS audit findings into internal and external findings. NSFAS immediately sought to resolve identified audit issued. Internal audit findings have been resolved and are currently undergoing NSFAS internal processes to be included in the 2022/23 Annual Financial Statements. External audit findings deal mainly with aspects relating to the close out processes whereby data between institutions and NSFAS is reconciled. NSFAS is in constant communication with institutions in order to resolve these issues. This includes physical workshops run by NSFAS. Institutions were requested to submit student data relating to the final adjusted cost of study (claims information). While some institutions have complied with the request, there are some institutions that have not yet provided the necessary data. This has been escalated through the office of the DDG University branch, Financial Aid Practitioners of South Africa (FAPSA), South African College Principles Organisations (SACPO) and Universities South Africa (USAf). 10
ANNUAL REPORT 2022/23 Progress has been made in this regard, but this has impacted on the submission of the Annual Financial Statements for the 2022/23 period. The AGSA has indicated that due to the NSFAS complexities, the audit may take longer than the anticipated time of 2 months. 11
UPDATE ON THE IMPLEMENTATION OF THE WERKSMANS REPORT 12
IMPLEMENTATION OF WERKSMANS REPORT The NSFAS Board has extended the mandate of Werkmans Attorneys to assume responsibility for advancing the execution of the Werkmans report's recommendations, which include the termination of existing contracts with the four (4) service providers, inter alia, initiating disciplinary proceedings against the implicated NSFAS staff members. Werkmans Attorneys is now in the process of finalising its papers in preparation for filing an application to set aside the appointment of the four (4) service providers. 13
UPDATE ON FUNDING OF STUDENTS FOR THE 2024 ACADEMIC YEAR 14
2024 BURSARY APPLICATIONS NSFAS has received 1 904 209 applications (as of 12 February 2024) and the application closing date was extended to 15February 2024. Of the 1 904 209 applications received: 989 998 are provisionally funded 369 320 are awaiting evaluations 72 574 have been withdrawn by the student 161 492 are in progress 139 928 applications are on the NOT-STARTED status as applicants only created profiles and did not submit applications. 114 198 have been rejected 1 213 appeals have been lodged so far 15
2024 BURSARY APPLICATIONS Breakdown of all funded applicants SASSA Funded applicants 791 405 Non-SASSA Funded Applicants- 198 593 Breakdown of applications received per sector TVET Applications received to date 570 358 University Applications received to date 1 333 851 Funded TVET applicants 230 394 Funded University applicants 759 604 16
2024 LOAN APPLICATIONS NSFAS has received 22 954 loan applications (as of 12 February 2024) and the application closing date remains 15 of February 2024. Of the 22 954 loan applications received: 139 are provisionally funded 12 890 are awaiting evaluations 841 have been withdrawn by the student 30 are in progress 8 345 applications are on the NOT-STARTED status as applicants only created profiles and did not submit applications. NSFAS has rejected 476 loan applications Only 5 appeals have been lodged so far 17
2024 APPLICATIONS SARS CONSENT FORM On 14 December 2023, NSFAS received notice from SARS about the consent form that must be completed and signed by parents, guardians or partners. This has caused a setback for the processing of applications as the organization cannot process applications until it is able to verify the signed consent form. This change enforced system enhancements as well as minor process changes. This requirement has increased the number of applications that will be required to be processed in case management by case workers. To date there is a total of 561 885 that will have to be processed and verified in case management. 18
SARS CONSENT FORM CONTINUED On 18 January 2024, a meeting was convened between the SARS, NSFAS and DHET. It was agreed that: NSFAS will revert to the use of its 2019 SARS Consent Form and fully integrate same into its value chain with effect from 18 January 2024. NSFAS will issue a statement on 18 January 2024 to request all applicants to submit this Consent Form. NSFAS sent bulk SMS's and emails to students to upload the consent form on the portal. 19
TIMELINES FOR COMMUNICATING FUNDING DECISIONS Funding decisions are communicated as and when applications are processed. NSFAS has made budget available for additional resources (100 case workers) to ensure that all applications are processed by no later than the end of February and further processes all 2024 appeals received by no later than the end of April 2024. NSFAS has extended the applications closing date by 2 weeks to be able to allow loan for applications. NSFAS applications will be closing on 15 February 2024. 20
UPDATE ON STATE OF GOVERNANCE AND MANAGEMENT 21
UPDATE ON STATE OF GOVERNANCE AND MANAGEMENT There are well defined processes, guidelines, and standard operating procedures within NSFAS, which serve to uphold transparency, accountability, and alignment with the organization's objectives. These frameworks play a pivotal role in ensuring that decision-making processes are conducted in a transparent and accountable manner. Moreover, they facilitate effective communication channels, enabling the seamless flow of information across the organization. The NSFAS's commitment to governance and management is evident through the establishment of clear roles and responsibilities, which help delineate the scope of individuals' contributions. This, in turn, fosters a sense of accountability and enables effective coordination. Additionally, the organization's strategy is thoughtfully developed and supported by a microstructure that is specifically tailored to realize the strategic objectives. This demonstrates a proactive approach towards achieving organizational 22 goals.
UPDATE ON STATE OF GOVERNANCE AND MANAGEMENT CONT. Efficiency in overseeing and coordinating activities is achieved through processes that encompass the setting of clear objectives, optimal allocation of resources, and the provision of guidance and support to employees. By emphasizing performance monitoring, the organization demonstrates its commitment to ensuring that the efforts of individuals and teams are aligned with the organization's goals. The Board's approval of a performance management policy signifies a concerted effort towards enhancing performance evaluation and improvement within the organization. As this policy undergoes implementation, it is expected to contribute significantly to the overall effectiveness of governance and management practices. The Board has recently filled the position of the COO and is at the final stages to fill the Human Resources Executive as well as the Executive responsible for Strategic Enablement. Senior Manager Communications has been filled. Processes to fill other critical positions of the CEO, CIO, Board Secretary and Chief internal auditor will be initiated in due course. 23
PROGRESS IN THE IMPLEMENTATION OF THE STUDENT ACCOMMODATION PILOT 24
STUDENT ACCOMMODATION PILOT The NSFAS Board of 04 December 2023 decided to increase the pilot to an additional 20 TVET Colleges totaling twenty-three (23) and seventeen (17) Universities in the piloting of the accreditation processes of private student accommodation for the 2024 academic year. Since the announcement in December, NSFAS started engaging institutions individually as well as SAPCO, USAf, SATVETSA, and SAUS from 07 December 2023 until 25 January 2024. The purpose of these engagements was to share both the principles and objectives of the pilot and what is expected from institutions. NATURE OF INTERSECTION It is based on the collaboration and consultation with the individual institutions based on their needs and the capacity available from the NSFAS. In TVETs, out of the total of 40 522 beds registered, 32 272 beds have been accredited and are available for the registered NSFAS-funded students and a 8 250 are still to be accredited. 25
STUDENT ACCOMMODATION PILOT CONT. In Universities, a total of 77 331 beds have been registered, 49 411 beds have been accredited and are available for the registered NSFAS-funded students and 27 926 are still to be accredited. NSFAS appointed Four (4) Solution/ Portal Partners to provide a platform that will assist NSFAS manage the application process, grading, and placement of students in adequate spaces. 39 Accrediting Agents were also appointed in May 2023 through a tender process to assist with the inspection and grading of properties via SCM. Owing to the delays in the onboarding of AAs, incorrect invoices, etc, led to many delays and AAs were on a go-slow. These has recently been resolved. To support the work of the student accommodation unit, the Board established the Ad Hoc Committee on Student Accommodation as a means of responding to the concerns and delays to help with the implementation of the student accommodation programme as well as engaging strategic stakeholders. 26
KZN eThekwini Coastal Majuba Umfolozi eLangeni EASTERN CAPE Port Elizabeth East Cape Midlands Buffalo City KSD King Hintsa PROPOSED TVET COLLEGES LIMPOPO Mopani Vhembe Letaba FREE STATE Motheo MPUMALANGA Gert Sibande Ehlanzeni GAUTENG Central Johannesburg College Ekurhuleni East Ekurhuleni West Tshwane South Tshwane North Sedibeng WESTERN CAPE Northlink 27
PROPOSED UNIVERSITIES EASTERN CAPE KZN University of Zululand DUT MUT UKZN University of Fort Hare Walter Sisulu University Nelson Mandela University LIMPOPO University of Limpopo TUT Campus FREE STATE CUT MPUMALANGA Mpumalanga University GAUTENG NORTHERN CAPE Sol Plaatje University TUT Vaal University of Technology University of Pretoria UJ WESTERN CAPE UWC CPUT 28
MODUS AND PRINCIPLES NSFAS to allowed institutions to first place students at institutionally owned properties. NSFAS to share the list of accredited private accommodation providers with institutions. NSFAS will reserve the right to allocate available places to students up to capacity per institution before they are placed in properties accredited by institutions. Institutions following their accreditation processes will be allowed to place students in those identified and accredited accommodations. NSFAS will NOT assume any role in any accommodation provided for students funded through any other sources. 29
STUDENT ONBOARDING In communicating with institutions, NSFAS clarified that it is not at this point providing the required number of beds the sector/ institution requires. NSFAS agreed with institutions to place students at their owned residences prioritizing FTENs. On 15 January a communique was sent to individual institutions with lists of accredited properties per campus with addresses emphasizing the principles of the pilot. On 24 January, NSFAS further issued a follow-up communique to institutions to submit the list of returning students who have been confirmed funded and qualify for accommodation allowances in terms of criteria. These lists are subjected to the verification process by NSFAS in terms of the progression rule. In the same circular institutions were requested to submit the name of an official that must be given access to the student onboarding portal, to monitor the properties as they are accredited and become available. 30
STUDENT ONBOARDING To date out of 40 institutions the Unit has received lists from 23 institutions which was subjected to the verification. 17 institutions have confirmed that they are still finalizing their lists. Once the data team verifies the list, an email & SMS's are sent to the students to apply on the portal allowing them an opportunity to choose a property. Parallel to this process, the Unit is engaging continuously institutions on the onboarding as some institutions prefer to assist students with onboarding, and once they are in accommodation then they register directly on the portals. To date 11 institutions have placed students to properties, and about 19 institutions will be commencing with the onboarding in the week of 12 February as they were still finalizing their lists. Out of 10 institutions 2 have requested further engagements, 2 have no beds and 6 will start later in the month of February. NSFAS will reserve the right to allocate available places to students up to capacity per institution before they are placed in properties accredited by 31
STUDENT ONBOARDING To date out of 40 institutions NSFAS has received lists from 23 institutions which was subjected to the verification. 17 institutions have confirmed that they are still finalizing their lists. Once the data team verifies the lists, an email & SMSs are sent to the students to apply on the portal allowing them an opportunity to choose a property. To date 11 institutions have placed students in NSFAS accredited properties, and 19 institutions will be commencing with the onboarding in the week of 12 February. Out of 10 institutions, 2 have requested further engagements, 2 have no beds and 6 will start later in the month of February. NSFAS will reserve the right to allocate available places to students up to capacity per institution before they are placed in properties accredited by institutions. Institutions following their accreditation processes will then be allowed to place students in those identified and accredited accommodations. 32
NSFAS SUPPORT NSFAS has deployed staff to assist institutions with the onboarding. Provide accommodation providers (Aps)and students starting 08 January until the end of February 2024. weekly training on application and registering processes for NSFAS and Partners to train the champions provided by institutions on a Train the Trainer NSFAS to give institutions viewing rights of the student portals for all their students. NSFAS to give institutions the day-to-day operating rights as the APs in terms of their premises. 33
INSTITUTIONAL SUPPORT On-time sharing of the list of funded students qualifying for accommodation allowances. Confirmation of the registration data in a requisite template with NSFAS of those students. Collaborating on the onboarding of students by allocation to the accredited accommodation. On-time confirmation of deregistration to be exited from accommodation service provider residence. Confirmation of all disbursements made to students to assist NSFAS in identifying any payment exceptions. 34
CHALLENGES CAPACITY: NSFAS Board approved the Unit structure in October 2023. Delays in the HR recruitment processes. Finalisation of the SOPs coupled with the implementation of the project. ACCREDITING AGENTS: Equitable share of distribution of work. Payment delays of AAs. Allegations reports on corruption and bribery. Blacklisted APs by institutions. 35
CHALLENGES SYSTEMS: Dependency on the NSFAS on-time funding statuses. On-time confirmation of registration. Influx of APs registering on the Portal and requiring immediate inspection and grading. Catching up with the backlog on the registered and accredited APs in the system ONBOARDING: Delays in the verification of the NSFAS-funded students. Late provision of training of staff at institutions on the onboarding processes. Reports of unsatisfactory/ unfit institutional residences. Students wanting change from the allowances and that it should be paid to them and not to institutions or landlords. 36
WAY FORWARD Refocusing the student accommodation project by formulating strategies to utilize Government buildings. Working with the Department of Higher Education and Training to prioritize the building and refurbishment of the institutionally owned residences. 37
THANK YOU 38
