South Africa: Auditor-General slates NSFAS for irregular expenditure

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Takalani Sioga

The National Student Financial Aid scheme (NSFAS) annual report released in September showed that the student fund overpaid students by R503.4 million in the 2017/2018 financial year.

The report also shows that another R303.5 million was captured as irregular expenditure .

One of the reasons advanced by NSFAS for the overpayment is that the original estimate of student fees, based on information available to NSFAS at the time, turned out to be lower than the total disbursement required to meet the obligations of the respective students.

The student funding scheme then topped up the initial amount without first making the affected students sign new contracts which would reflect the correct amount. This resulted in the auditor-general, Kimi Makwetu, giving the financially struggling scheme a qualified audit report.

Makwetu found that the “NSFAS leadership did not exercise sufficient oversight responsibility regarding financial reporting and compliance. This includes related internal controls through ensuring that disbursements are not made above the loan and bursary agreement amounts.

“Effective systems of internal controls and the monitoring thereof were not properly implemented for the administration of student loans and bursaries.

“This led to an overspending on loan and bursary agreements in non-compliance with the NSFAS Act, resulting in material misstatement of the recorded student loans receivable balance and irregular expenditure in the financial statements,” the report stated.

Makwetu further found that NSFAS management did not prepare regular, accurate and complete performance reports that were supported by reliable schedules and source documentation.

NSFAS spokesperson Kagisho Mamabolo said they were contacting affected students to sign addendum contracts to reflect the correct funding the scheme had paid to them.

“We are currently engaging with students and institutions to make sure that students who received top-up money sign new contracts which reflect the additional money they received,” said Mamabolo.

Wits University chief financial officer Prakash Desai said that Wits students who are funded by NSFAS were not affected.

“Students overpayment by NSFAS is not an issue at Wits at the moment. I’m sure if NSFAS finds that there are students who need to sign addendums contracts it will engage with the university and students,” Desai added.

This year NSFAS funded 200 339 students at 50 Technical and Vocational Education and Training colleges and 260 002 students were assisted at 26 public universities at a total cost of R14. 1 billion so far.

Minister of higher education and training Naledi Pandor reported in May that the department had allocated R20.5 billion to NSFAS for the 2018/2019 financial year.

NSFAS said this year the scheme had managed to recover R512.8 million from students it had previously loaned money to. This was before former president Jacob Zuma’s announcement that changed NSFAS loans to bursaries. The funds recovered were a 30.7% increase on 2017’s R392.4 million figure.

Karen Moloisi, a third-year BSc biodiversity student, said NSFAS needed to hire competent people who knew what they were doing.

“For the past couple of years NSFAS has been losing a lot of money due to irregular expenditure. It needs to hire competent people in management who will put a stop to this,” she said.

NSFAS wouldn’t give an explanation for the irregular expenditure, save to say they had started internal processes to make sure that all transactions were recorded accordingly.
“We have strengthened our internal audit division with the aim to get unqualified audit in the 2018/2019 financial year. The current leadership is exercising sufficient oversight and making sure that we are compliant,” Mamabolo said.

In 2017 NSFAS was rocked by a scandal after it emerged that a Walter Sisulu University student had received R14 million from the scheme. Sibongile Mani went on to splurge R818 469 on luxury items for herself and her friends.

None of this was NSFAS’s fault, according to Mamabolo. “We gave the university money based on the records we had at that time and the university hired a third party to pay students their allowances every month. This happened under the watch of the third party which was responsible to pay students their allowances.”

However, when representatives of the “third party”, cash service IntelliMali, appeared before parliament in September 2017, they denied that the error emanated from their side.

News24 reported that chief executive officer Michael Ansell “told MPs their systems showed that the right transaction of R1400 was made to Mani on the date in question, and there was no ‘oversight, error or negligence’ on their part.”

Mani was charged with theft of the amount she had spent by the time the error was discovered. She has appeared in court several times this year. Her next appearance is on October 25.

Wits Vuvuzela

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