NSFAS explains how it accumulated irregular expenditure

Students who have been given money for courses  that did not qualify to be  funded by the National Student Financial Aid Scheme (NSFAS), contributed to the scheme’s R7.5bn irregular expenditure for the 2018/19 financial year. 

The irregular expenditure was also as a result of the students who qualified but were given funds in excess of their loans.   

On Thursday  the scheme announced that it will investigate the root cause of the irregular expenditure.

NSFAS administrator Dr Randall Carollisen said the financial aid scheme is declaring cumulative irregular expenditure of R7.5bn after reviewing data sets from prior years.

“In the previous financial year, the cumulative irregular expenditure was only R303.5m. It is important to understand that the cumulative figures to March 2019 and the restatement of cumulative figures to March 2018 result from the determination that the extent of the primary contributors also related to previous years,” Carollisen said.

He said the primary contributors of the R7.5bn are  R1.2bn disbursement in excess of contracts amounts. With implementation of the student-centred model, students are only requested to sign once for the duration of the qualification.

“The amounts reflected on a number of these contracts were generated incorrectly by the system in the prior year’s audit qualification and at the time the scheme could not adequately quantity the extent of disbursement in excess of contractual amounts,” Carollisen said.

Another contributing factor is the R2bn shifting and use of earmarked historic debt funds . According to Carollisen, in the prior year the auditor-general found that NSFAS had utilised funds earmarked for historic debt (2013-15) without obtaining appropriate approval from National Treasury. And lastly, the R4.3bn disbursement with respect to non-compliance with laws and regulations (NOCLAR) which was due to the lack of controls over the entire disbursement value chain.

Carollisen said the scheme is investigating the root cause of these contraventions and will take appropriate steps in terms of the National Treasury Frameworks on irregular expenditure.