The reoccurrence of inconsistencies or unverifiable financial statements between the National Student Financial Aid Scheme (NSFAS) and tertiary institutions was among issues that led to the entity receiving an adverse audit opinion for its 2022/2023 financial report.
NSFAS embarked on a close out process to ensure amounts were accounted for and budgets utilised accordingly.
However data inconsistencies including claim amounts and student fee statements were identified.
Briefing the Portfolio Committee on Higher Education in Parliament, Auditor-General of South Africa’s (AGSA) Thomas Mamogwe said the qualified amounts in the financial annual report owed to institutions by the entity was R10 billion and R11 billion was owed by institutions to NSFAS.
“Misstatements identified reoccurred, however decreased from the prior year. Another reason for the adverse audit outcome related to information we could not get on accounts called deferred income, this is where NSFAS received funds from pre-funders and needed to split the funds.
“It could not give us the split funds but just gave us one global amount making it a challenge to be able to track and ensure accountability. There was inadequate supporting information available to support the valuation of NSFAS’ wallet, trade payables. This relates to vouchers that were given to students and could not be adequately accounted for. We found that agent-principal contracts were misrepresented,” said Mamogwe.
NSFAS has been dogged by controversy for years and following the controversial direct payment of allowances, a law firm was appointed to investigate allegations of irregularities relating to the appointment of direct payment service providers.
The irregular expenditure balance disclosed in the March 2023 annual report for four financial years was R84 billion however, Mamogwe said the balance was disclaimed as they are unable to verify the completeness and believe this could be more.
He said irregular expenditure incurred related to disbursements made to students, however in the 2022/2023 year it was related to compliance findings.
“A bid adjudication committee was not appropriately constituted for the direct payments tender. This led to a disclosed irregular expenditure of R2.1 million.
“Then there was the office lease tender where a contract was awarded to a bidder based on criteria that were not stipulated in the original invitation for bidding.
“This led to an irregular expenditure of R71 million which was not included in the financial statement.
The entity chose not to include it and we deemed it irregular,” said Mamogwe.
Committee chairperson Tebogo Letsie said the adverse findings were scary to say the least.
“It cannot get lower than this, the financial statements are bad. We now understand why the 2022/2023 report was late. It does not look good.”
In terms of the close out process, NSFAS administrator Freeman Nomvalo told MPS they have established a disbursements unit and recently appointed a disbursement manager to ensure that reconciliations are performed internally on an annual basis.
“We have appointed additional capacity to assist with data validation.
NSFAS will institutionalise the periodic reconciliation process to avoid reliance on service providers and will hold back on payments to institutions. NSFAS has developed a live dashboard to track disbursements against institution claims in real time.
“It has been recently modified and is currently being tested,” said Nomvalo.
Responding to the AG’s audit outcome regarding procurement Nomvalo said they were improving contract management controls.
The entity was also on a mission to improve and enhance ICT systems with 62% of the organisational ICT digital strategy implemented.
“Continuous improvement efforts were prioritised to optimize project performance and maximize the impact on the overall digital strategy implementation,” he added.
Cape Times
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