annual report 2008/09 presentation by mr ahmed essop acting ceo 28 october 2009
TRANSCRIPT
Annual Report 2008/09
Presentation by Mr Ahmed EssopActing CEO
28 October 2009
New Board
New Board appointed by Minister – July 2008
• 13 members of Board‒ Chairperson = Mr Sipho Pityana‒ Professor Duma Malaza‒ Adv. Mosotho Petlane‒ Ms Zeona Jacobs‒ Ms Nasima Badsha‒ Mr Brian Gallant‒ Mr Thami Ncokwane‒ Mr Spencer Janari‒ Mr Nathan Johnstone‒ Ms Lynnette Matthews‒ Dr Martin Hall‒ Dr Ngozi Awa‒ Mr Floyd Shivambu
• 5 had been Board members previously; 8 new
• Acknowledge the valuable role played by the Board in steering the organisation during the year
Growth in funding but not in resources
Substantial growth in funds administered by NSFAS
Total Funds Available % increase
2006/07 R1,35 billion 1,58%
2007/08 R1,83 billion 35,56%
2008/09 R2,40 billion 31,15%
NOTE: 2008/09 figure excludes additional R39 million allocated by Minister during the year to assist students who had received an award smaller than what was required to meet their needs.
Growth in student numbers % increase
2006/07 108 417 1,5%
2007/08 125 901 16,1%
2008/09 153 795 22,2%
Growth in funding
Funding for 2008 - 2009
Dept of Education R1,3 billionDept of Education (FETC) R200 millionDept of Education (Funza Lushaka) R180 millionDept of Agriculture R8,3 millionDept of Labour R43,5 millionDept of Social Development(Social Work bursaries) R111,8 millionEastern Cape Provincial Govt R15,9 millionIrish Aid R1,7 millionCommunicare R37 000Nedbank R14,7 million
Administration of Institution Funds R71 million
Reinjection of Student Loan Repayments R447 million
Student Recipient Demographics
NSFAS Students
In comparison with total undergraduate student population
Year Male Female African Coloured White Indian
2006 45% 55% 92.48% 3.46% 2.07% 1.99%
2007 44% 56% 91.82% 4.40% 2.30% 1.48%
2008 46% 54% 91.87% 5.00% 2.16% 0.97%
Year Male Female African Coloured White Indian
2006 44.7% 55.3% 61% 7% 26% 7%
2007 44.4% 55.6% 62% 7% 25% 6%
2008 43.4% 56.6% 63% 7% 24% 6%
Recovered Funds• Amounts collected are increasing
‒ 2006/07: R392,4 million 19% increase from previous year
‒ 2007/08: R479,2 million 22% increase from previous year
‒ 2008/09: R555,7 million 16% increase from previous year
Link to SARS database assists with identification of formally employedrecipients of NSFAS funding. These numbers increase each year.
Under-utilisation of funds available
Full utilisation of funds for students remains a challenge• Unallocated amount
‒ R37 million in General DoE funding (2% of total budget)‒ R11 million for students with disabilities
o Affected by capacity constraints at particular universities and lack of large numbers of disabled students applying to universities
‒ R17,7 million of additional R39 million provided by Minister was not allocated to students
‒ Funds received late in the year; difficult to process at that stage of year
‒ R22,7 million in scarce skills HEI bursaries o Some are difficult for HEIs to allocate fully because bursary
conditions exclude many students
• FET College uptake of 95% is a vast improvement on the 67% of previous year- 5% not used up: DoE allocates budget per College based on courses
offered at each College; utilisation of funds falls within control of DoE
Under-utilisation of funds available
NSFAS measures to restrict under-utilisation
• Unutilised funds are not taken away from students – redistributed to institutions in 2009/10
• Steps taken by NSFAS to restrict under-utilisation– Introduced additional HEI reporting requirements during 2008/09
o Aimed at allowing for reallocation among institutions o BUT not all universities reported accurately so full re-allocation
throughout year not possible
– Future steps: involve VCs more regularly in reporting on utilisation of funds; enforce need for HEIs to send to NSFAS at least 80% of loan agreement forms by September
Organisational Challenges
Organisational structure, systems and processes not adjusted to reflect growth in funding and expanded mandate of NSFAS
This has lead to: • a strain on resources;
• governance shortcomings regarding information systems; and
• shortcomings related to control procedures and processes, and monitoring mechanisms (highlighted by the Auditor-General)
Organisational Challenges
• Organisational Structure and Capacity Issues‒ Inappropriate structure – no separation within operations of
loan management and bursary systems
‒ Inadequate staff capacity, in particular, specialist staff
‒ Inadequate building and infrastructure
• Systems and Process Issues‒ Inappropriate management and information systems for
expanded mandate
‒ Manual loan agreement system inadequate for large volumes of loan and bursary agreements
‒ Propriety-in-house software systems not scalable
Addressing the Organisational Challenges
• Automation and integration of systems to ensure single audit trail between loan application and loan payment to HEIs, incl. transaction controls. ‒ Currently underway using ACCPAC ERP – scalable and
supported technically.
• Introduction of Electronic Loan Agreement system‒ Being piloted with 3 HEIs
• Staff capacity being augemented and detailed review of organisational structure, incl. skills audit, to be undertaken following outcome of Ministerial Review
• Governance review to ensure that NSFAS systems and procedures are in line with regulatory requirements is in process, and development of the following has begun:‒ Fraud Prevention Plan‒ Business Continuity Plan‒ Procurement Policy
NSFAS has yet again received an unqualified audit.
Unqualified audits every year since inception of NSFAS
Auditor-General’s Findings
Audit Findings
• Irregular Expenditure ‒ Board noted A-G’s finding that “irregular expenditure to the amount
of R1 185 600 was incurred as a result of a regulatory breach in terms of the appointment of a consultant”
‒ NSFAS Internal Audit alerted Board in late 2008 to the possible regulatory breach in appointment of consultant to undertake a review of NSFAS business process, with a view to improving the operational efficiency and effectiveness of NSFAS
‒ Audit Committee thus appointed PWC to investigate the possible breach
‒ PWC investigation showed that procurement policy not consistently applied, relevant documentation not in place, and procurement policy not fully aligned with National Treasury guidelines. Recommended that procurement policy should be revised in line with Treasury guidelines.
Auditor-General’s Findings
Audit Findings• Irregular Expenditure cont.
‒ A-G’s report confirmed PWC findings
‒ A-G also found that breach arose because appropriate policies and procedures were not in place
‒ Board considered PWC and A-G findings – found that regulatory breach was due to negligence and no fraudulent intent found.
‒ Board does not condone the expenditure, and has undertaken further enquiry to determine:o appropriate disciplinary action, if any, to be taken against any
officialso whether deliverables in terms of the contract were met
• Contingent Liability– Approval from National Treasury has been received to retain
accumulated surplus
Auditor-General’s Findings
Management Response to Audit Findings re Procurement
• Amendment to Delegations of Authority – spending in excess of R500 000 no longer sub-delegated to CEO
• Centralisation in CFO’s Office of procurement function related to purchases requiring Procurement Committee approval
• Staffing related to procurement function being looked at
• Formal Procurement Committee meetings now being held; proceedings recorded and minuted
• Procurement Committee now to evaluate all appointments of consultants, no matter Rand value
Auditor-General’s Findings
Ministerial Review• Terms of Reference
– Assess NSFAS strengths and shortcomings
– Do Needs Analysis of students (possibility of free undergraduate education for students from poor backgrounds)
– Review Means Test
– Possibility of establishing a student loan bank
– Feasibility of linking student financial aid to priority fields of study and academic performance
– Extending financial aid to not-for-profit private HEIs– Investigate NSFAS blacklisting
– Recommend changes to NSFAS policy, regulations and operational framework
– Recommend changes to NSFAS governance, management, operational capacity and systems
Ministerial Review• Members of Review Committee
– Prof Marcus Balintulo: Vice-Chancellor, Walter Sisulu University (Chairperson of the Committee)
– Dr Pundy Pillay: Economist– Prof Sipho Seepe: President of the South African Institute of Race Relations– Dr David Monyae: DBSA, Researcher– Ms Collette Caine (Finance)– Ms Mahlengi Bhengu: Executive Director: Core Business, Gauteng Provincial
Government– Dr Loveness Kaunda: Director: International Academic Programmes Office at
UCT and former NSFAS Board Member– Mr Steven Smith: Current Audit Committee Chair of NSFAS and member of
the Fundisa Board– Mr Itumeleng Malegye: Provincial Consultant: Public Sector at Alexander
Forbes and presently Ministerial appointee on the Council of Tshwane University of Technology
– Ms Linda Vilakazi-Tselane: Head of Executive Leadership Programme School of Education at WITS University and a member of the Ministerial Task Team on North West University
– Ex-Officio: Dr M Qhobela: Acting Director-General: Higher Education
