Adverse Audit Findings Lay NSFAS Challenges Bare. The National Student Financial Aid Scheme (NSFAS) has encountered a tumultuous year marked by financial distress and adverse audit outcomes. Auditor-General Tsakani Maluleke recently disclosed a troubling financial state, issuing an adverse audit opinion for the fiscal year 2021/22. This revelation has sparked a series of repercussions, including a review of payment practices, the suspension of the CEO, and the departure of senior staff.
Adverse Audit Opinion
An adverse audit opinion indicates serious concerns about NSFAS financial health, revealing material misstatements in its financial statements. Maluleke’s findings underscored the scheme’s failure to reliably present assets and liabilities related to higher education institutions, violating Generally Recognised Accounting Practice (GRAP) standards. The financial statements, consequently, fail to accurately depict NSFAS financial position.
Concerns About Accuracy and Oversight
The audit raised concerns about the accuracy of cost-of-study records and the validation of amounts owed by and to institutions. Maluleke highlighted the absence of adequate audit evidence regarding the accounting for unfunded students, emphasizing the failure to consider historic loss experiences and disclose commitments to funding returning students, as required by GRAP.
Irregular Expenditure
Irregular expenditure faced scrutiny, with the auditor unable to confirm signed contracts between NSFAS and students, leading to uncertainties about reported irregular expenses. Maluleke attributed these financial challenges to a lack of effective measures to prevent irregular expenditure. The disclosed value in the financial statements was deemed incomplete, reflecting only part of the irregular expenditure incurred.
Acknowledging Lapses and Defending Efforts
NSFAS Board Chairperson Ernest Khosa acknowledged governance, ethical, and resource allocation lapses within the organization. Khosa defended the board’s efforts to address challenges from NSFAS period under administration, emphasizing improvements in governance and stability within the entity.
Delays and Justifications
Significant delays in compiling Annual Financial Statements (AFS) and the audit for the 2021/22 financial period were attributed to the reconciliation process between NSFAS and institutions. Despite concluding the audit in July 2023, NSFAS cited the need for additional time to include remediations for identified findings. The 2022/23 audit is set to commence in 2024, with the AFS submission scheduled for January 2024.
Conclusion
As NSFAS grapples with adverse audit findings, governance challenges, and delayed submissions, the road ahead involves concerted efforts to address financial mismanagement, strengthen oversight, and rebuild trust. The forthcoming audits and reports will play a crucial role in determining NSFAS path toward financial stability and its ability to fulfill its vital role in supporting students’ education.
