The National Education, Health and Allied Workers’ Union (Nehawu) has urged the leadership of the National Students Financial Aid Scheme (NSFAS) to swiftly act on the audit concerns regarding possible financial irregularities.
Allegations of financial irregularities and lack of internal IT controls and sound policies continue to beset the entity, tasked with disbursing millions of rand to students who qualify for free education.
Auditor-General Tsakane Maluleke’s recent report on the audit outcomes of state departments and entities found that NSFAS made payments that were not in line with students’ contracts.
Despite recommendations by the AG’s team, NSFAS had yet to act on the recommendations and recover the money.
“The NSFAS must do what it is mandated to do and address the serious issues raised by the AG.
“We will also co-operate with the probe by the Special Investigating Unit (SIU) and hand over all relevant evidence we have as we have been calling on NSFAS to get its house in order,” said union spokesperson Lwazi Nkolonzi.
The payments were related to tuition fees and allowances from 2017 to 2018 which were found to be more than the maximum amounts stipulated in the written agreements with the students due to ineffective controls.
“In some cases, the amounts in the agreements were incorrect, while in other cases, the disbursed amounts were more than the total cost of study for the students.
“The non-compliance is likely to result in a material financial loss if the overpayments are not recovered from the students and tertiary institutions,” the report said.
Although NSFAS was made aware of the alleged irregularity in 2020 and recommendations made to recover the monies, the entity had yet to take action.
The AG report further noted that the alleged financial loss had yet to be quantified by the NSFAS accounting officer.
“The accounting officer (chief financial officer) did not take appropriate action to resolve the material irregularity,” Maluleke found.
On November 4, Maluleke gave NSFAS nine months to implement the recommendations, which included quantifying the financial loss relating to disbursements above the contract amount.
“The quantification should focus exclusively on loan agreements and should consider the latest available information, including the results of the closeout project.
“Appropriate action should be taken to obtain legal advice on the process to be followed to recover monies and based on the legal advice, the feasibility and cost-effectiveness of recovering the money should be determined,” noted Maluleke.
She also flagged monies not recovered from Technical and Vocational Education and Training colleges (TVET) which were not returned to NSFAS after students deregistered.
As at September 2022, the AG team also found most institutions had not been following the processes for declaring amounts owing to the NSFAS since 2017, and the scheme did not record and collect the money.
“The non-compliance is likely to result in a material financial loss if the debt is not recovered from the institutions.
“Appropriate action should be taken to recover the money owed by tertiary institutions. The recovery process should not be unduly delayed,” the AG further warned, adding that steps should also be taken to implement internal controls to detect monies owed by tertiary institutions.
“The NSFAS did not have up-to-date information on the status of students, resulting in loan recipients who are no longer studying but are continuing to be recognised as students not paying interest on the loans.”
NSFAS said it had implemented a closeout project to recover funds from institutions and the process was nearing completion.
Some members of Parliament raised concerns about how NSFAS lacked plans on how it would handle supply-chain related issues in future following allegations of mismanagement when the entity made a presentation to the portfolio committee on higher education on November 30.
The presentation focused on a review by the new NSFAS board of allegations of maladministration during the 2017/18 financial year.
At that time NSFAS was placed under administration and an administrator, Dr Randall Carolissen, was appointed to lead the organisation from August 2018 until August 2020.
Nehawu submitted allegations to the portfolio committee in September 2020 and based on the “seriousness of the allegations” the committee informed NSFAS of its intention to conduct an inquiry.
However, a new board was appointed in January 2021 and it conducted a review of the organisation and looked into, among other things, the purchase of laptops during Covid-19.
The board review found that the mandate of NSFAS was broad enough to allow NSFAS to procure laptops.
However, no recommendations were made on how to handle this in future.
Nkolonzi said the union did not participate in the review as it was a mockery of the seriousness of the allegations.
“There was no need for a parallel process to the SIU probe. We will only co-operate with the SIU investigation,” he added.
NSFAS also came under attack for its move, which cost millions of rand, to new KPMG offices in the Cape Town central business district.
NSFAS said it was now “disposing” of its own building in Brodie Road, Wynberg, but did not respond to allegations that it would be difficult to sell it due to structural and engineering defects.