Probe into R1bn irregular tertiary expenditure

THE NATIONAL Student Financial Aid Scheme (NSFAS) wants to conduct an audit on loans granted to students before 2017 after R1 billion in irregular expenditure was detected in the 20182019 financial year.

“In order to assess the irregular expenditure reliably, detailed audits would be required at each institution countrywide,” the scheme said in its annual report tabled in Parliament this week.

This follows a forensic investigation commissioned by the Department of Higher Education which probed 10 tertiary institutions.

The investigation, which covered the periods between 2012 and 2014, found instances of irregular expenditure totalling R47m.

The report is not clear whether or not this amount is the quantification of the full extent of the 10 institutions or the 10% sample referred to.

NSFAS said only the irregular expenditure that had occurred between the 2017 and 2018 academic years had been looked into. The planned audit takes place against the backdrop of a finding by Auditor-General Kimi Makwetu who indicated that he was unable to determine the R1.2bn adjustments made to institutions for bursaries during the year under review.

“I was unable to confirm that the amounts due to institutions were evaluated appropriately,” he said.

Makwetu also said he was unable to determine the adjustments made by the scheme towards bursary expenditure totalling R24.5bn.

He blamed this on the status of the supporting documents which he said he could not be used to confirm the audit.

The scheme’s irregular expenditure has over time ballooned from R3.3bn to R7.6bn and this has been attributed to the excess in bursary amounts paid out to scores of students.

“NSFAS has identified that the estimated amount was inherently incorrect, resulting in the total disbursements to the respective institutions being significantly higher than the stipulated in the contract amount,” it said in its report.

NSFAS also said it had found ways to curb the wasteful expenditure this year through implementing control mechanisms.

Its administrator, Randall Carolissen, said poor financial and operational controls led to massive mis-allocations in the past.

“Every effort has been made to quantify the extent of the impact for inclusion in this year’s financial statements,” he said.

Already, forensic investigators have been appointed to determine whether any of these transactions were fraudulent. These investigations are on-going, Carolissen said.

But Makwetu rejected NSFAS comments, saying effective and appropriate steps were not taken to prevent irregular expenditure.

According to Makwetu, NSFAS also did not reliably estimate its obligations to fund students in the future with the available information at its disposal.

“The entity underestimated the number of years of its funding commitment to students.

“Consequently, contingent liabilities were understated by R 6.3m.”

He said NSFAS contingent liability to fund the students stood at R29.3bn as of March this year.