Kimi Makwetu. Picture: TREVOR SAMSON
Kimi Makwetu. Picture: TREVOR SAMSON

The National Student Financial Aid Scheme (Nsfas) has received a qualified audit from the auditor-general for 2017-2018, highlighting the managerial weaknesses at the troubled institution, which was placed under administration in August.

Nsfas was already battling to cope with a change in its funding model that was introduced in 2016, and then buckled under the strain of the extra demands created on it by president Jacob Zuma’s surprise announcement in December 2017 that students from poor and working-class families would be entitled to free higher education from 2018. Thousands of students have faced delayed payments, prompting protests at tertiary institutions earlier in 2018.

Auditor-General Kimi Makwetu said he had given Nsfas a qualified audit because it had disbursed R503m to students above the amounts stipulated in their loan agreements, and he was unable to determine the correct carrying value of the student loan book, which Nsfas said stood at R10.3bn.

"The Nsfas did not establish adequate controls to maintain complete records of irregular expenditure resulting from disbursements in excess of amounts stipulated in loan and bursary agreements with students. Consequently, I was unable to confirm the amount of the irregular expenditure," Makwetu said in the Nsfas 2017-2018 annual report, tabled in parliament on Monday.

Higher education minister Naledi Pandor appointed Randall Carolissen as Nsfas administrator, following the resignation of

board chair Sizwe Nxasana and board member Themba Mosia in early August

Nxasana said that the correct amounts of money had been paid to students, but Nsfas had been unable to meet the auditor-general’s deadline for getting the paperwork in order. Tens of thousands of students eligible for funding for 2018 had still not signed their loan agreements by the end of July, he said.

Carolissen said the qualified audit reflected weaknesses in Nsfas’s financial controls, and poor communication between it and tertiary education institutions. Nsfas had transferred large tranches of funds to universities without providing them with the details of the intended beneficiaries.

"Nsfas paid R11bn to universities in the first quarter [of 2018], but many could not pass it on to students because they did not have remittances," he said. "Remittances were provided in the past few weeks, and we have unlocked those funds," he said. A further R3bn had been disbursed to institutions, he said.

He said student applications for funding for 2019 were progressing well: Nsfas had received 64,284 applications thus far.