Higher Education & Science Audit Progress Report - March 2024
The Finance Unit's audit findings include material and other issues, showing progress towards completion. Qualification items highlight root causes and corrective actions taken, such as appointing support personnel and enhancing project management. Progress has been made with internships, contract posts, quality assurance, and more. Challenges with skills development funding provisions are addressed for accurate accounting. The report emphasizes the importance of proper systems and processes for financial transparency and compliance.
Higher Education & Science Audit Progress Report - March 2024
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Portfolio Committee for Higher Education, Science and Innovation Audit Action Plan Progress Report 08 March 2024
FINANCE UNIT - AAP 2 Finance Unit has a total of nine (9) findings from the 2022/23 audit. RESPONSIBILITY: CHIEF FINANCIAL OFFICER (CFO) STATUS MATERIAL FINDINGS OTHER FINDINGS TOTAL % COMPLETED 1 1 2 22% IN PROGRESS 3 4 7 78% NOT YET STARTED 0 0 0 0% TOTAL 4 5 9 100% Two findings are completed and seven are marked as in progress. The findings have been classified as "in progress because as much as they were addressed and resolved during the audit except for one relating to provisions, the implementation of corrective actions necessary to prevent recurrence is still in progress. Furthermore, there was a non-compliance paragraph in the audit report relating to material misstatements in the financial statements due to NSF not having an integrated and interfaced system to adequately record the non-exchange transactions.
Qualification items 3 QUALIFICATION ITEMS (as per the Audit report) HIGHLIGHT ROOT CAUSE 1.Project management capacity constraints within CD: SDI 2. Inadequate review of Quarterly Financial Reports leading to approval of expenditure without complete supporting evidence 3. Inadequate collection of underlying source documents during invoice verification 4. Inadequate monitoring of information stored on one-drive (i.e., proactive reviews to confirm completeness) CORRECTIVE ACTIONS 1. Appoint additional project management support personnel on contract basis to assist with review of underlying source documents 2. Provide training of the project management teams 3. Operationalise and capacitate the SDI Quality Assurance function to conduct proactive reviews on validity & completeness of underlying source documents stored on the all Directorate one- drive's. 4. Pilot a Community of Practice (CoP) session with the project management teams through the Quality Assurance function to facilitate knowledge sharing among the directorates e) Appointment of project management consultants to assist with the backlog of all key pm activities and transfer of skills to the project managers. PROGRESS 1. CD: SDI interns have commenced. 2. Project management contract posts were advertised in Aug 23 and shortlisting is yet to start (in progress) 3. Capacitation of the Quality Assurance function underway (in progress) 4. Appointment of PM Consultancy (in progress) 5. The SDI has established OneDrive where quarterly performance Information and Quarterly Financial Information (including underlying documents) are uploaded. 1. A business process that outlines the process of calculation of the provision has been developed. 2. A champion who will coordinate the process has been appointed 3. Each Fund Manager completes a Regional Commitment Schedule (RCS) for every quarter. 4. The Acting Director: FMU reviews the RCS 5. The recalculation of 100% Provision for the 2022/2023 financial year has been concluded. A.Skills Development Funding AGSA was unable to obtain sufficient appropriate audit evidence that skills development funding for the current and previous year has been properly accounted for, as evidence that services had been received could not be provided. 1. Commitment schedule centrally captured and not adequately reviewed. 1. Create a system with ICT that will provide accurate input variables necessary to calculate Provision for Skills Development Expenditure. Create a review function of information. 2. Appoint a champion for this function. 4. A recalculation of 100% Provision for the financial year end 2022/2023. 5. Provide the provision recalculation to internal audit as part of prior year finding follow ups. 6. Incorporate the provision calculation in the RCS for each Fund Manager. B. Provisions (related to SDF) NSF did not have adequate systems in place to account for provisions from skills development funding in accordance to GRAP 19, Provisions, contingent liabilities and contingent assets as the provisions were not calculated correctly.
4 Other findings No. 1 AUDIT FINDING COAF 11 of 2023 Finance Income from Advance Payments- The finance income recognised for the projects was incomplete as it did not account for all interest for the year as per the quarterly reports. CORRECTING ACTIONS 1. Review of schedule 3 Quarterly Financial reports, agreeing it to the Bank Statements. 2. Quarterly completion and review RCS, including the Finance income raised every quarter. 3. Appointing a champion of the Finance Income FMU of to verify interest schedule matches the bank statements and the Commitment schedule. 4. Finance income confirmations done by 31 March 2023 on top 10. PROGRESS STATUS (SUMMARY) 1. The adjustments were made and accepted for the 2022/23 financial year Management Report. However, corrective measures have been taken to avoid future occurrences. 2. There is a champion who maintains the interest workbook and audit file for finance income. 2 CoAF 12 of 2023 - TVET infrastructure - There were differences between the recorded amounts per the Annual Financial Statements and the Quarterly management report 1. Quarterly completion and review RCS, including the TVET Infrastructure raised every quarter. 2. Appointing a champion of the TVET Infrastructure FMU of to verify capital and administrative expenditure on the Commitment Schedule. 3. Reporting template should incorporate a section that differentiates between expenditure that should capitalised as opposed to administrative expenditure. 4. We will explore the possibility of conducting monthly/quarterly reconciliations between NSF and DHET. And the implementation of the Practice note. 1. There is champion who maintains the audit file for TVET infrastructure and ensures the workbook is accurate and there are sufficient supporting documents. 2. A reporting template has been created that indicates the budget, and expenditure for each site and differentiates the administrative and capital expenditures. 3. The NSF Task team has been formed with DHET members so the reconciliations can be implemented and the budget is communicated each year. 4. The adjustments were made and accepted for the 2022/23 financial year Management Report. However, corrective measures have been taken to avoid future occurrences.
5 No. 3 AUDIT FINDING CoAF 13 of 2023- Trade Receivable from Non-exchange discounting and presentation Issue 1- Discounting of Receivables older than 1 year CORRECTING ACTIONS PROGRESS STATUS (SUMMARY) 1. Discounting of the Trade receivables sheet has been incorporated into the CS. 2. The discounting of trade and receivables has been taken into account for the interim financial statements. 3. The adjustments were made and accepted for the 2022/23 financial year Management Report. However, corrective measures have been taken to avoid future occurrences. 1. Revise the policy so it includes the discounting of Trade Receivables. Establish a business process that has timelines and incorporates taking into account principles of GRAP 9. 2. Appoint the champion for this function. Receivables outstanding for more than 12 months were not discounted as per accepted practice and legislation in the public sector. Issue 2: Incorrect Classification Trade Receivables relates to skills development funding. Trade and other receivables from non-exchange transactions were reported in the incorrect period on the age analysis. CoAF 14 of 2023 - Provisions Skills Development Funding 4 1. Create a system with ICT that will provide accurate input variables necessary to calculate Provision for Skills Development Expenditure. Create a review function of information. 2. Revise the Policy so it indicates how a provision will be created where only the first tranche has been paid. 3. Appoint a champion for this function. 4. A recalculation of 100% Provision for the financial year end 2022/2023. 5. Provide the provision recalculation to internal audit as part of prior year finding follow ups. 6. Incorporate the provision calculation in the RCS for each Fund Manager. 1. The recalculation of 2022/23 provisions has been concluded. The workbook will be submitted to Internal Audit for review. The Provision calculation workbook has been incorporated into the master CS. Each fund manager is able be verify the accuracy of it. 2. 5 1. Centralise the filing system on the OneDrive within FMU. 2. Admin assistant needs to be appointed to ensure documents are complete and filed at registry. CoAF-17 of 2023 - Deferred expenditure-Limitation 1. Completed: Files are being saved on the Onedrive. FMs are updating the documents as reports are finalized. Completed: Interns that have been appointed and are assisting with this function. Engagements have commenced with ICT, to automate the Commitment Schedule. Each Fund Manager completes the Regional Commitment Schedule and the Acting Director reviews it. An audit file is maintained by the champion. 2. 6 1. RCS to be completed and reviewed quarterly. 2. Explore peer reviews of information of the RCS. 3. Automated RCS to be developed to feed the master RCS. 4.A recalculation of 100% deffered expenditure for the financial year end 2022/2023. 1. CoAF-18 of 2023 - Deferred expenditure-Differences 2. 3.
6 No. 7 AUDIT FINDING CoAF 22 of 2023- Trade Receivables differences CORRECTING ACTIONS 1. Final report should be made avaialble to update the commitment schedule. 2. Explore peer reviews of information of the RCS. 3. Monitor the debtors so the policy is implemented to recoup state funds. 4. Follow-up outstanding Trade receivables. PROGRESS STATUS 1. Completed: The trade receivables workbook is maintained by each Fund Manager and is continuously being reviewed by the champion and the Acting Director. The workbook will be submitted to Internal Audit for review. 8 1. Projects that are having infastructure related expenditure need to customise the quarterly financial report to classify expenditure on a quarterly basis. 2. Champion needs to be appointed. 1. There s a champion who maintains the audit file for TVET infrastructure and ensures the workbook is accurate and there are sufficient supporting documents. 2. A reporting template has been created that indicates the budget, and expenditure for each site and differentiates the administrative and capital expenditures. CoAF-30 of 2023 - Incorrect classification 9 CoAF 29 of 2023 Consequence management 1. The determination test is underway, the Internal Audit staff will compile a draft report which will be reviewed by the internal audit co-sourced provider, in order to be finalised for submission. 2. The finalised determination test report will be submitted to the Loss Control Function. 3. The Loss Control Function is moving to the Finance Unit and will be positioned within the Financial Management and Administration directorate. 4. The Loss Control Function will submit quarterly reports to the CFO and the report will be accompanied by the updated irregular expenditure ,fruitless and wasteful expenditure registers. 1. The Internal Audit staff is busy with the determination test for the prior year s irregular expenditure. The anticipated completion is the end of February 2024 2. The Loss Control Function has moved to Financial Management and Admin. The first quarterly report will be submitted to the CFO on 30 April 2024.
HR UNIT AAP HR had one finding: Filling of vacancies (Reduction of vacancy rate) RECRUITMENT STATUS RECRUITMENT STATUS JANUARY 24: JANUARY 24: 21% 40% 26% Forty-seven (47) existing vacancies at various stages in the recruitment process. 4% 9% Ten (10) have been approved and twelve (12) at submission stage awaiting approval. Verification Shortlisting Interview Submission Appointed Twenty-five (25) still being processed
STATUS OF SENIOR MANAGEMENT POSTS 14 Senior management posts are being recruited to with following status: NO OF POSTS NAME OF POST DIRECTORATE STATUS Executive Officer (new) EO 1 Submission stage Chief Financial Officer FINANCE 1 Appointed Director: Financial Management and Administration FINANCE 1 Appointed Director: Financial Planning, and Reporting FINANCE 1 Submission stage Director Fund Management (new) FINANCE 1 Interview scheduled Director: Supply Chain Management (new) FINANCE 1 Interview scheduled Chief Director: Skills Development Implementation SDI 1 Shortlisting scheduled Director: Programme Monitoring SDI 1 Shortlisting stage (on hold) Director: Regional SDI - EC SDI 1 Submission stage Director: Regional SDI SDI 1 Being used to pilot QA unit Director: Regional SDI WC/NC SDI 1 Submission stage Director: ICT SIOP 1 Appointed Director: Organisational Performance and Reporting SIOP 1 Submission stage Director: Strategy, Partnerships and Innovation SIOP 1 Submission stage 14 Page 8
POSTS AT VERIFICATION STAGE POSTS AT VERIFICATION STAGE POSTS AT VERIFICATION STAGE NO OF POSTS 1 NO OF POSTS 1 NAME OF POST DIRECTORATE NAME OF POST DIRECTORATE Assistant Director: Supply Chain Management FINANCE Executive Assistant EO OFFICE Deputy Director: Fund Management FINANCE 1 Senior Practitioner/Admin Assistant (CD Office) SDI 1 ASD: Assets and Facilities FINANCE 1 Administrative Assistant (CD office) SDI 1 ASD: Enterprise Document Management FINANCE 1 Assistant Director (LP/MP) SDI 1 Receptionist FINANCE 1 Assistant Director (WC/NC) SDI 1 Administrative Assistant HR 1 Assistant Director (EC/KZN) SDI 2 Practitioner HR 2 Senior Practitioner (Bursaries) SDI 2 TOTAL 19 Assistant Director: ICT Legal Administrative Officer SIOP LEGAL 1 1 Page 9
POSTS AT SHORTLISTING STAGE NAME OF POST DIRECTORATE NO OF POSTS Chief Director: Skills Development Implementation SDI 1 Director: Programme Monitoring (on hold) SDI 1 Director: Regional SDI (QA unit pilot) SDI Deputy Director: Initiation and Evaluation SDI 1 Deputy Director: Financial Planning and Reporting (Treasury) FINANCE 1 4 POSTS AT INTERVIEW STAGE NAME OF POST DIRECTORATE NO OF POSTS Director Fund Management FINANCE 1 Director: Supply Chain Management FINANCE 1 2 Page 10
POSTS AT SUBMISSION STAGE NAME OF POST DIRECTORATE NO OF POSTS Assistant Director: Public Relations and Communication PR & Comms 1 Director: Financial Planning and Reporting FINANCE 1 Assistant Director: Accounting (x2 posts) FINANCE 2 Assistant Director: Revenue FINANCE 1 Deputy Director: Regional SDI WC/NC (advertised 2022) SDI 1 Deputy Director: Regional SDI WC/NC (advertised 2023) SDI 1 Snr Practitioner: Skills Development Implementation (EC & KZN) SDI 1 Director: Regional SDI (EC) SDI 1 Director: Regional SDI (WC/NC) SDI 1 Director: Strategy Partnership and Innovation SIOP 1 Director: Organisational Performance & Reporting SIOP 1 12 Page 11
POSTS OCCUPIED YEAR TO DATE POSTS APPOINTED FROM 1 APRIL 2023 TO DATE NAME OF POST DIRECTORATE NO OF POSTS Director: Financial Management and Administration FINANCE 1 Assistant Director: Initiation and Evaluation SDI 2 Assistant Director: Regional SDI WC SDI 1 Secretary to CD: SIOP SIOP 1 Administrative Assistant LEGAL 1 Assistant Director: Bursaries Monitoring BURSARIES 3 Senior Practitioner: Bursaries BURSARIES 1 10 Page 12
13 TOTAL % STATUS MATERIAL FINDINGS OTHER FINDINGS 80% COMPLETED 4 4 8 20% IN PROGRESS 0 2 2 0 0 0 0% NOT YET STARTED 100% TOTAL 4 4 10 Page 13
14 2022/23 Summary Number of Beneficiaries 77 Percentage 100% Comments QA, OPR and IA identified challenges with protocols for storing and access to evidence. Findings resolved All findings have been resolved and evidence uploaded (COAF 09 and 21) Findings not yet resolved 0 0% The total of 77 beneficiaries are from 18 projects Total 77 100% Finding 8&9: Exceptions from performance information data analysis 2022/23 Non-leaner Summary Approved Memorandum of Agreement (MOU) between DHET and DHA for exchange of data for verification purpose. Process underway to undertake analysis. Will not resolve the PSET Sector duplications which will be undertaken through DHET. Number of findings Percentage Comments All findings have been resolved and evidence uploaded on the AG link. (COAF 1, 3, 4, 5, 20, 26) Findings resolved 32 100% Findings not yet resolved 0 0% Total 32 100% 19 Page 14
15 The SDI unit had 8 findings related to expenditure, prior period SKILLS DEVELOPMENT IMPLEMENTATION UNIT errors and limitations, incorrect classification & reliability of information CoAFs Resolved SDP Responsible Directorate Status CoAF 03 of 2023 - CoAF 03 of 2023 - AOPO-Incorrect classification- DSPPs - Infrastructure & Capacity Building projects OP-2 TVET-3- King Hintsa: TVET-2 Waterberg: OP-2 TVET-3-Northlink: TVET2-Sedibeng: WL-3 Morero Agricultural Academy CC DSPP projects: UV:ID: CPUT Renewable Energy Infrastructure Project: Programme Monitoring supported by SIOP EC & KZN LP & MP WC & NC GP, FS & NW EC & KZN Completed CoAF 09 of 2023 - AOPO reliability findings Completed CoAF 20 of 2023 Programme 3 AOPO reliability Programme Monitoring WC & NC Completed CoAF 21 of 2023 Programme 2 AOPO reliability TVET 2-Sedibeng: WL-2 City of Cape Town: OP-2 TVET-3-Boland: EC Office of the Premier Eastcape Midland TVET: DSPP IOPSA DSPP IOPSA GP, FS & NW WC & NC WC & NC EC & KZN EC & KZN Programme Monitoring Programme Monitoring Completed CoAF 24 of 2023- Exceptions from performance information data analysis CoAF 25 of 2023- Exceptions from performance information data analysis Completed Completed Page 15
16 SKILLS DEVELOPMENT IMPLEMENTATION UNIT CoAFs Remaining Timelines Status CoAF-02 of 2023 - SDF Expenditure Project 15 Feb 24 QA team in process of reviewing information submitted. QA team in process of reviewing information CoAF-06 of 2023 - SDF Expenditure Project 15 Feb 24 COAF 16 of 2023 Skills Development Funding resubmitted after inputs from IA. Feedback to be expenditure provided at next Audit Committee meeting. COAF 28 of 2023 Skills Development Prior 15 Feb 24 Referred to region, partially submitted - year limitation-SDF incomplete documents submitted. Feedback to COAF 28 of 2023 Skills Development Prior year be provided at next Audit Comm limitation-SDF Page 16
SDF Expenditure continued 17 CoAF Remaining Timelines Status COAF 28 of 2023 Skills 15 Feb 24 QA team reviewed and referred to IA directorate. Development Prior year limitation-SDF COAF 28 of 2023 Skills 15 Feb 24 Referred to region, partially submitted - incomplete Development Prior documents submitted. year limitation-SDF 15 Feb 24 QA submitted to IA for review, directorate sourcing additional documents recommended by IA. Feedback to be provided at next Audit Committee meeting. QA submitted to IA for review and referred to 15 Feb 24 directorate with gaps. Information in process of being reviewed by QA team before resubmission to IA. Page 17
