The auditor-general has issued an adverse opinion on the National Student Financial Aid Scheme’s (NSFAS) 2023/24 annual report, citing misrepresentation of finances, findings pointing to systemic collapse and an inability to demonstrate how billions of rand in public funds were properly managed or allocated.
In the 2019/20 financial year, irregular expenditure at the entity was more than R25bn, followed by over R32bn in 2020/21, close to R2bn in 2021/22, and R136m in 2022/23.
In the latest report, NSFAS recorded that it had a R84m loss, a substantial portion of which was owing to the funding of students who did not meet specific eligibility criteria, such as the period it takes to complete a course and the requirement that the combined household income must not exceed R350,000 per annum.
“The remaining balance pertains to expenditure incurred because of non-compliance with supply chain management regulations and legislation. The identified irregular expenditure is currently under investigation to determine the extent of non-compliance and to implement corrective measures.”
However, auditor-general Tsakani Maluleke reported that the entity did not present irregular expenditure for the prior year completely. This was because of expenditure of continuing students not meeting academic eligibility due to not having passed the minimum number of courses required being omitted.
“Consequently, irregular expenditure was understated for the prior year. In addition, I was unable to confirm that all irregular expenditure was included…As sufficient appropriate audit evidence was not provided to confirm that students met the applicable eligibility criteria for funding, or that contracts existed.
“I was unable to confirm this by alternative means. Consequently, I was unable to determine whether any further adjustments were necessary to the irregular expenditure for the prior year’s stated R185m,” said Maluleke.
Just a month ago, NSFAS board chairperson Dr Karen Stander tendered her resignation with immediate effect, citing racism, bullying and threats to her family.
Days before stepping down, Stander wrote a detailed letter to higher education minister Buti Manamela, warning that NSFAS was facing serious governance failures and was at risk of collapse.
In addition, higher education institutions did not submit evidence of student study records for some students between the 2017 and 2023 academic years.
— Auditor-general Tsakani Maluleke
NSFAS could not reliably account for funds owed to and by institutions and students, as higher education institutions did not submit the required student records between 2017 and 2023.
“Amounts owing by institutions, amounts due to institutions, amounts due to students and amounts owing by students were materially affected for the current and prior year. There was a consequential impact on bursaries — TVET colleges, bursaries — universities, impairment amounts owing by institutions and students, prepayments to institutions, current and non-current student loans, accumulated surplus, and related disclosure notes.
“In addition, higher education institutions did not submit evidence of student study records for some students between the 2017 and 2023 academic years.”
Consequently, Maluleke said she was unable to determine whether any further adjustments were necessary to amounts owing to institutions, stated at R10.15bn (2023: R9.18bn), amounts due to institutions stated at R11.6bn (2023: R11.14bn), amounts owing by students stated at R2.78bn (2023: R1.4bn) and amounts due to students stated at R1.97bn (2023: R1.54bn) in the financial statements.
She found that NSFAS overstated “unfunded students” by R754m because funded students were incorrectly included. It also failed to test for impairment, overstating assets and accumulated surpluses.
There were two major overstatements in university bursaries — R884m spent on students who didn’t qualify under NSFAS rules and a R845m discrepancy between financial statements and student account records.
Payments through third-party service providers could not be verified due to ongoing litigation — meaning the true size of the problem remains unknown.
In terms of the core business, the disbursing of funds to students within 30 days of receiving registration data, NSFAS stated that it achieved 70% against its 80% target.
However, the AG said she could not determine the validity of this as they could not follow the indicators or verify the methods and processes used to measure this achievement.
“Consequently, the reported achievement might be more or less than reported and was not reliable for determining if the target has been achieved.”
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