NSFAS gets an F for lack of credible records
The office of the auditor-general (AG) on Wednesday laid bare the disarray at the National Student Financial Aid Scheme (NSFAS), describing to parliament how the organisation’s failure to supply credible financial statements and performance reports had led to an adverse audit finding for 2021/22, its worst audit outcome in the past five years.
NSFAS is the government’s key agency for providing financial support to eligible students to study at tertiary education institutions and has been dogged by controversy for years. It was placed under administration between 2018 and 2020, and more recently rocked by corruption allegations levelled against former CEO Andile Nongogo and former board chair Ernest Khoza.
Despite its problems, higher education & training minister Blade Nzimande announced in January that it was to take on responsibility of administering a new loan scheme for students, with immediate effect.
The AG’s adverse audit finding for 2021/22 stemmed from NSFAS’s failure to rectify problems flagged in its 2019/20 audit, which identified material differences between the finan
NSFAS HAD NOT DEVELOPED THE ORGANISATIONAL CAPACITY AND SYSTEMS TO MANAGE ITS EXPANSION SINCE 2018
cial records held by tertiary education institutions and the amounts reflected in NSFAS’s books, said Ignatius Fourie, a senior manager with the AGSA.
A project to reconcile these differences was been completed on time. When it was finally submitted, the AG could not verify the reported information, he told MPs on parliament’s portfolio committee on higher education, science & technology.
The AG also identified material misstatements due to the incorrect application of accounting standards and errors in the financial statements for 2021/22. Its assessment of NSFAS’s 2021/22 performance report was equally damning, as it was unable to obtain audit evidence to confirm the organisation’s reported achievements. There were no standard operating procedures or credible plans to address prior audit findings.
NSFAS had not developed the organisational capacity and systems to manage its expansion since 2018, when the government introduced free higher education for students from households with an annual income below R350,000 a year, said the AG in a report presented to the committee.
“Despite the numerous internal control deficiencies raised over the years, NSFAS’s functions and responsibilities were expanded haphazardly, without the weaknesses in its systems, controls, and human resource capacity being properly addressed,” said the report.
“NSFAS was not ready to provide substantial social benefits for so many students, in such
a short period of time,” it said.
NSFAS has yet to finalise bursary and loan applications for the 2024 academic year, which is already under way. Classes began at SA’s 50 technical & vocational education colleges in January, while university lectures commenced this week.
NSFAS acting CEO Masile Ramorwesi said the organisation had received 1.9-million bursary applications by February 12, of which just under 990,000 had been provisionally funded. More than 114,000 applications had been rejected, and 1,213 appeals had been lodged, he said.
Hundreds of thousands of applications were still in progress or awaiting evaluation, most of which were held up because students had yet to provide supporting documentation, he said.
Students who had applied for bursaries but did not meet the financial criteria were automatically enrolled as applicants for loans, he said.
NSFAS had by February 12 received 22,954 loan applications, of which 139 had so far been provisionally funded. The deadline is February 15.
NSFAS chair Lourens van Staden said the government had provided sufficient funding for the loan scheme to support just over 30,000 students.
Nzimande previously said R3.8bn would be available in the first year of the scheme.
Van Staden assured MPs that NSFAS was moving as fast as it could to terminate its controversial contracts with the four service providers that made direct payments to students and tertiary education institutions on its behalf, in line with the recommendations of a report last year by Werksmans Attorneys that concluded the companies had been irregularly appointed. In the future, funds would be disbursed to eligible students and institutions by banks, he said.