NSFAS Challenges Unveiled Adverse Audit Findings. The National Student Financial Aid Scheme (NSFAS) faces significant challenges, particularly in its financial management, as revealed by the recent adverse audit findings for the fiscal year 2021/22.
Adverse Audit Opinion
Auditor-General Tsakani Maluleke disclosed that NSFAS received an adverse audit opinion, indicating material misstatements in its financial statements. This extends beyond specific amounts and poses a substantial concern for the overall accuracy of the financial records.
Financial Statement Irregularities
Maluleke’s findings prompted a review of NSFAS’s direct payment of student allowances, leading to the suspension of CEO Andile Nongogo and resignations of senior staff. The organization failed to reliably present assets and liabilities in line with Generally Recognised Accounting Practice (GRAP) standards, violating financial reporting norms.
Unreliable Cost-of-Study Records
The auditor expressed concerns about the inability to validate cost-of-study records for all institutions, leading to uncertainties regarding the accuracy of amounts owed by and to institutions.
Lack of Audit Evidence
Maluleke highlighted the lack of appropriate audit evidence concerning the accounting for unfunded students and the impairment of their balances. NSFAS did not disclose its commitment to funding eligible returning students, as required by GRAP.
Irregular Expenditure Scrutiny
Irregular expenditure came under scrutiny, with the auditor unable to confirm signed contracts between NSFAS and students for payments made. This raised uncertainties about the accuracy of reported irregular expenditure.
Governance and Ethical Lapses
NSFAS’s financial challenges were attributed to governance, ethical, and resource allocation lapses. Board chairperson Ernest Khosa acknowledged these lapses but defended the board’s efforts to improve governance and stability.
Delayed Financial Reporting
Significant delays were experienced in concluding the Annual Financial Statements (AFS) and the audit for the 2021/22 financial period. NSFAS attributed the delay to the reconciliation process between NSFAS and institutions for the academic years 2017 to 2021.
Future Actions and Expectations
While the 2021/22 audit concluded in July 2023, NSFAS requested a delay in submitting the AFS to include remediations for identified findings. The 2022/23 AFS is expected to be submitted to the Auditor-General of South Africa (AGSA) in January 2024, with the audit commencing thereafter. The Annual Report for the 2022/23 financial year is anticipated to be concluded by July 2024.