2017/18 ANNUAL REPORTnsfas.org.za/content/reports/AnnualReport2018.pdf · 2018-10-01 · 2 NSFAS...

2017/18 ANNUAL REPORT

years of funding Higher Education

“Education is the most powerful weapon which you can use to change the world.”

- Nelson Mandela

Performance highlights

200,339(2017: 225,557)students assisted at 50 Technical and Vocational Education and Training (TVET) Colleges

260,002(2017: 225,950)students assisted at 26 public universities

R14,1bn

R2,0bn(2017: R2,1bn)for TVET colleges

R12,1bn(2017: R10,3bn)for Universities

DISBURSED IN STUDENT FINANCIAL AID AS FOLLOWS:(2017: R12,4bn)

R85,9bn(2017: R72,2bn)disbursed since inception

R3,4bn(2017: R2,9bn)converted to bursaries based on student performance

R10,1bn(2017: R8.0bn)in convertible loans

R3,9bn(2017: R3,5bn)recognised as the social benefit component after bursary conversion

R512,8m(2017: R392.4m)in loan recoveries was collected. 30.7% increase compared to 2017

R2,0bn(2017: R2,3bn)100% bursaries for univeristy students

R35,6bn(2017: R29,8bn)nominal value of loan balances

R10,3bn(2017: R9,4bn)carrying value of loan balances

NSFAS ANNUAL REPORT 2017/18 v

Table of contents

i. General Information 2

AGENERAL

INFORMATION

ii. Abbreviations 3

iii. Statement by the Executive Authority 4

iv. Foreword by the Chairperson 6

v. Overview by the Executive Officer 8

1. About NSFAS 15

2. Mandate 15

3. NSFAS value chain 15

4. Strategic framework 17

5. Legislative and other mandates 18

6. Organisational structure 19

Statement of Responsibility for Performance Information 22 BPERFORMANCE

INFORMATION

1. Service delivery environment 23

2. Key policy development and legislative changes 25

3. Strategic outcome oriented goals 26

4. Performance information by programme objective 28

5. Strategies to overcoming areas of under-performance 38

6. Changes to planned targets 39

7. Performance indicator per budget 41

8. Revenue collection 41

1. Introduction 44 CGOVERNANCE

2. Committees of Parliament 44

3. Executive Authority 45

4. Board Secretary 45

5. The Accounting Authority/The Board 46

6. Report of the Audit and Risk Committee 54

7. Internal Audit and Audit Committees 58

8. Compliance with Laws and Regulation 58

9. Fraud and Corruption 59

10. Minimising Conflict of Interest 59

11. Code of Conduct 59

12. Health, Safety and Environmental Issues 60

1. Introduction 64 DHUMAN RESOURCES

AND ADMINISTRATION

2. Human Resources Oversight Statistics 64

Statements of responsibility and approval for financial reporting 73 EFINANCIAL

INFORMATION

Report of the Auditor-General to Parliament on the National Student Financial Aid Scheme (NSFAS)

74

Financial Statements 81

NSFAS ANNUAL REPORT 2017/18 NSFAS ANNUAL REPORT 2017/18vi vii

Back Row (from left to right): Mr Thabo Moloja; Mr Yonke Twani; Mr Yershen Pillay; Ms Julia De Bruyn; Mr Nathan Johnstone (appointed by the Board as external member and Audit Risk Committee Chairperson); Mr Lumko Mtimde; Ms Rose Keanly; Mr Andre Zeeman; Prof Themba Mosia; Ms Thandi Lewin; Ms Pearl Whittle; and Mr Zirk Jourbert.

Front Row (from left to right): Ms Nafisa Mayat; Ms Sibongile Masinga; Mr Sizwe Nxasana (Chairperson); Ms Mary Bomela; and Mr Steven Zwane (CEO).

*Prof Neil Garrod (Absent during photoshoot)

Board Members

A“NSFAS was the invisible parent who paid for my studies at university. I became a top achieving student in my faculty and later on reached out to millions of disadvantaged young people through my TV job, and empowered them with information, thanks to NSFAS”- Aaron Moloisi

“I do not think that NSFAS fully realises the powerful impact

it has on the lives of disadvantaged

students who come from poor familiesand backgrounds,”

- Morris Masutha

GeneralInformation

NSFAS ANNUAL REPORT 2017/18 NSFAS ANNUAL REPORT 2017/182 3

General information

Bankers FNB Corporate Bank (Cape Town) a division of FirstRand Bank LimitedStandard Bank of South Africa LimitedAbsa Bank Limited a subsidiary of Barclays Africa Group Limited

Auditors Auditor-General of South Africa

Website Address www.nsfas.org.za

Postal address Private Bag X1PlumsteadCape Town7801

Business address 2nd Floor House VincentWynberg Mews10 Brodie RoadCape Town7800

Registered office 18 - 20 Court RoadWynbergCape Town7800

Nature of business and principal activities

The nature of the activities of the entity is to provide financial assistance in the form of loans or bursaries to eligible students at public higher education institutions and Technical and Vocational Education and Training (TVET) colleges, to administer such loans and bursaries, and to recover the loans from the students once they are employed and earning in excess of R30,000 per annum. Following the announcement of the new bursary funding programme by the former President of South Africa in December 2017, financial assistance to all eligible students is now in the form of bursaries from the 2018 academic year.

Country of incorporation and domicile

Republic of South Africa

Abbreviations

AGSA Auditor - General of South AfricaAIP Audit Improvement PlanAOPO Audit of Predetermined ObjectivesAPP Annual Performance PlanASB Accounting Standards BoardASISA Association for Savings and Investment South AfricaBBBEE Broad-Based Black Economic EmpowermentCAMS Corporate Access Management ServicesCFO Chief Financial OfficerCGICTAS Corporate Governance of Information and Communications Technology Assessment StandardsCIO Chief Information OfficerCRO Chief Risk OfficerCOO Chief Operating OfficerDBE Department of Basic EducationDHET Department of Higher Education and TrainingDMV Department of Military VeteransECPG Eastern Cape Provincial GovernmentEEA Employment Equity ActEES Employement Engagement SurveyEO Executive OfficerESS Employee Self-ServiceETDP Education, Training and Development PracticesEXMA Executive ManagementFRM Funder Relationship ManagementFTENs First Time Entering StudentsGM General ManagerGRAP General Recognised Accounting PracticesHR Human ResourcesICT Information and Communication TechnologyIT Information TechnologyKPI Key Performance IndicatorLAF Loan Agreement FormLRA Labour Relations ActMEC Member of the Executive CouncilMTEF Medium Term Expenditure FrameworkNA Notional Allowance

NCA National Credit ActNCR National Credit RegulatorNCOP National Council of ProvincesNCV National Certificate (Vocational)NBA NSFAS Bursary AgreementNDP National Development PlanNSDS National Skills Development StrategyNSF National Skills FundNSFAS National Student Financial Aid SchemeOHSA Occupational Health and Safety ActPACS Payment and Collection ServicesPAIA Promotion of Access to Information ActPAJA Promotion of Administrative Justice ActPCHET Portfolio Committee on Higher Education and TrainingPDO Predetermined ObjectivesPFMA Public Finance Management ActPIC Public Investment CorporationPPPFA Preferential Procurement Policy Framework ActSAICA South African Institute of Chartered AccountantsSAMSA South African Maritime Safety AuthoritySARS South Africa Revenue ServiceSCER Select Committee on Education and RecreationSCM Supply Chain ManagementSCOPA Standing Committee on Public AccountsSETA Sector Education and Training AuthoritySOP Schedule of ParticularsTEFSA Tertiary Education Fund of South AfricaTOM Target Operating ModelTR Treasury RegulationsTVET Technical and Vocational Education and Training

i ii

NSFAS ANNUAL REPORT 2017/18 5NSFAS ANNUAL REPORT 2017/184

Statement by the Executive Authority

The National Student Financial Aid Scheme (NSFAS) is Government’s key institution for supporting poor and working-class students to access higher education opportunities. It is, therefore, my pleasure to present the NSFAS Annual Report on the activities during the financial year of 2017/18.

This report is linked directly to the performance of my Department of Higher Education and Training and represents our achievements, as part of the continued efforts to build an expanded Post-School Education and Training system, articulated in the Strategic Plan and 2017/18 Annual Performance Plan. One of the strategic goal statement of my department is to improve the capacity of the Post-School Education and Training system through funding interventions and infrastructure development by 31 March 2020. If the government is to deliver the 2020 vision, this means that there has to be work done alongside with NSFAS to enable a number of key policy shifts introduced in December 2017.

On 16 December 2017, the former President Jacob Zuma announced that government would be phasing in “fully subsidised free higher education and training for poor and working-class South Africans”.

This will be implemented from 2018 through the provision of full bursaries for tuition and study materials to qualifying South African students at public TVET colleges and universities, and subsidised accommodation or transport capped at specific levels for those who qualify.

In the 2018 academic year, all registered

university students from South African households with gross annual incomes of R350 000 or less will qualify and receive bursaries. The new policy will be phased in over a period of five years starting with first-time entry students in 2018. For returning existing NSFAS funded university students, in 2018 and going forward, their loans will be converted into full bursaries.

NSFAS will continue to manage and administer bursaries for the poor and working class South African students at university and TVET colleges through the new student-centred model. For 2018/19, funds for loans and bursaries amounting to R14,901 billion have been allocated for the 2018/19 financial year. This allocation includes the R4,581 billion provided by National Treasury for bursaries for first-time entry students in 2018. What this means is that in 2018 the DHET Bursary will only be introduced for new First Time Entry students (FTEN) into undergraduate studies at public higher education institutions. Over the five year period from 2018 through to 2022 the scheme will be phased in to cover all years of study in undergraduate qualifications. In 2018 the FTEN students will benefit fully from the new bursary and these funded students will benefit from the bursary for the duration of their academic programme. Each year going

forward the next group of FTEN students will benefit. Within five years students in all years of undergraduate study will benefit from the bursary.

Due to significant additional funding made available through the fiscus during the 2017/18 financial year, following the Presidential announcement, NSFAS saw a significant increase in students supported. The announcement by the President followed a period that was characterised by debates on what was to be done with the rising cost of higher education in South Africa. This followed the #FeesMustFall campaign of 2015, which spread across the system. The policy decision communicated by the President to address funding challenges in higher education is proof that education remains an apex priority of Government’s pro-poor policies. This is a central pillar in the fight to rid the country of the enduring and debilitating socio-economic legacy of apartheid colonialism, and its resultant

triple challenge of the discrimination based on race, gender and class-based poverty, inequality and unemployment.

This policy decision entails extending and strengthening the government’s support for poor students to enter public universities, and Technical and Vocational Education and Training (TVET) colleges to include the working classes.The phasing in of this policy will ensure the sustainability of Government financial resources whilst simultaneously ensuring that improved access to post-school education and training for students is guaranteed. This approach allows Government to gradually phase in fully subsidised free higher education for eligible poor and working-class students’ year-on-year in a fiscally sustainable manner.

In line with Government’s commitment to opening up access to opportunities for students in the post-school education and training system, the Department remains committed to the egalitarian principles of equality, fairness, justice and diversity. We believe that this will go a long way in the fight against the perennial challenge of skills deficit that has bedevilled the country since the dawn of our democracy. This investment in our youth will result in the production of a youthful workforce

armed with relevant skills critical for our endeavour as a country to create inclusive economic growth.

As the Government, we continue to rise to meet the challenges of our time. My Department has over the years been monitoring NSFAS in its implementation of the student-centred model, and I can say that with regard to the 2018 academic year applications, NSFAS had faced serious administration challenges. It has been our hope that NSFAS would have built enough capacity and skill to enable the organisation to build a direct relationship with students from the initial application phase to the completion of their studies and will increase efficiencies regarding the administration of the new DHET Bursary Scheme. However, the advent of the 2018 academic year saw many challenges with regard to the continued implementation of the new system and the Department together with Universities South Africa (USAf) worked closely with NSFAS to mitigate the risks associated with the implementation of the system. Many poor and working-class students were negatively affected by these challenges and many complaints and individual cases were reported.

The Department will closely monitor the closure of 2017 and 2018 outstanding

matters and ensure detailed examination of the underlying issues and work towards ensuring that the system is more effectively implemented during the 2019 academic year. There will be a support provided from the Department, together with University South Africa (USAf); and South African College Principals Organisation (SACPO) to ensure the stability of the system as it is largely dependent on an effective and efficient funding mechanism for poor and working-class students in accessing public higher education and succeeding in their studies.

We are reminded of what our first democratic President, uTata Nelson Mandela, once said on the importance of education:

Mrs GNM Pandor, MPMinister of Higher Education and Training

iii

“Education is the most powerful weapon which you can use to change the world.”

NSFAS ANNUAL REPORT 2017/18 7

Foreword by the Chairperson

The 2017/18 financial year can easily be classified as one of the most eventful years in the history of higher education and training funding as the National Student Financial Aid Scheme went through two major transitions; moving from a student loan and bursary administering organisation to a fully subsidised government funding provider under the Department of Higher Education and Training (DHET) Bursary Scheme and shifting from servicing 18 to 76 institutions through the full implementation of the student-centred model. The implementation of this model whose aim was to turn NSFAS into an organisation that places the needs of the students and the various stakeholders at the heart of its operations, proved to be a difficult task for the organisation.These major events were a clear indication that 2017/18 was never going to be business as usual, given that we had to deal with new issues coming with servicing the entire public higher institutions sector; find solutions to shortage of human resources to deal with the increasing demands and change approach midway as we sought to make fee-free policy possible.

For the NSFAS leadership, the Board and the department; these two events represented a VUCA (volatile, uncertain, complex and ambiguous) state that was becoming increasingly complicated to navigate. The focus on making sure that we can service 76 institutions and fee-free education meant that we had to reprioritise focus away from other critical business imperatives.

As a precautionary measure, efforts were made to deal with high pressure coming from the aforementioned transitions, through the deployment of the National

Youth Development Agency (NYDA), to provide easy access to learners applying for funding, especially those living in rural areas without access to the necessary resources, as well as employing scores of unemployed graduates across the country as Student Support Officers to assist with NSFAS 2018 applications at different application centres in various provinces.

However, the entity achieved performance targets for only one out of the seven performance objectives (14.3%), which is a significant decline from the 57.1% achieved in the prior year. After migrating all institutions to the student-centred model at the beginning of the 2017 academic year, previously undetected issues in the disbursement process became increasingly difficult to manage. The entity did not meet its performance targets for Strategic Objective 4, which is to improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions and this had a huge negative impact on institutions and our students.

Following the directive by the former President Jacob Zuma of fee-free higher education, the change of policy also imbedded challenges such as manual processing, dependency on institutions for data, lack of human capacity and poor alignment with stakeholders. As an organisation we had to relook at not only our mandate but our strategic plan and annual performance plan mid financial year. The announcement came during the time when the organisation was reviewing its applications process for the up-coming year and this meant that we had to amongst other things expand our funding pool to accommodate students who qualified under the new criteria.

Despite the significant challenges faced by the organisation, NSFAS continued to put operational systems, processes and people in place to enable it to execute its mandate as required by the NSFAS Act 56 of 1999. The 100% bursary allocation for TVET Colleges increased from R2.437 billion in 2017 to R5.164 billion in 2018 representing a 112% allocation increase. University allocations increased from R9.849 billion to R14.901 billion in 2018 representing a 51% increase.

For the 2017 academic year, NSFAS funded 460 341 students, with 200 339 at the 50 TVET colleges and 260 002 students at 26 public universities. Whilst this year, NSFAS managed to fund over half a million (500 000) students, of which 299 000 were in Universities and 266 000 at TVET colleges. Over 420 611 applications were received, 359 000 being First Time Entrants (FTENs), and 52 000 being Senior Students.

Close to 9 000 students (Category 2) that had not applied during the opening window of the online application process, had to be accommodated at the beginning of the academic year through assisted capture driven through institutions, from students who needed funding for the 2018 academic year.

Given the continued demand from students and institutions for additional funding for deserving students and with the student funding competing with other social services in a depressed economy, we have started to make great strides towards navigating the organisation towards this promise and are confident that we will overcome our challenges through building leadership bench strength; increasing capacity and building critical capabilities that will take us to the next level; instituting the colleagues recognition programmes. Working towards a steady 2018/2019

academic period, it is however important to also build a FIT for purpose institution, making the lives of students easier through a customer centric delivery model, as well as fostering strong and effective partnerships with our key role players.

I therefore wish to take this opportunity to convey my sincere gratitude to the current leadership, Department of Higher Education and Training under the incredible guidance of Minister Naledi Pandor, the former Minister of Higher Education and Training, Prof Hlengiwe Mkhize, for her leadership during the early stages of introducing free higher education policies. My extended words of appreciation also go to the NSFAS Board, our broader stakeholder community (universities, students, SETAs, TVETs, private donors), USAf, SACPO, FAPSA, ISFAP and USFAS. The management led by the Executive Officer Mr. Steven

Zwane, for their hands-on- approach and unmeasurable support to the Board, NSFAS staff for their patience in dealing with the ongoing transition of the organisation whilst remaining reliable, committed, ethical, and true to the spirit of serving the nation.

Finally, I would also like to thank the Finance Ministry and National Treasury, for the continued financial support to advancing our education system, the Portfolio Committee on Higher Education and Training and Members of Parliament; for their oversight and steadfast mandate to bringing and realising access and success to education for the poor and working-class.

Sizwe NxasanaChairperson

NSFAS ANNUAL REPORT 2017/186

iv


Overview by the Executive Officer

This has been another significant year for the entity, following the government’s new bursary programme for students at public higher education institutions that was announced in December 2017. Operationally, the entity has encountered a number of technical issues which resulted in delays in the disbursement of funds to students and institutions.

There has also been a regression in the audit outcome from an unqualified opinion with findings in the prior year to a qualified audit opinion with findings in the current year, as a result of payments made in excess of contract amounts. I will provide further details on the matter that resulted in the audit qualification in this report.

Funding for student financial aidThe Grants for Student Financial Aid allocation increased by 14% to R14.1 billion from R13.8 billion in the prior year. This was mainly due to an increase of R1.9 billion in the DHET allocation from the prior year. Grants for student awards revenue increased by 19.8% from R11.6 billion in the prior year to R13.9 billion

in the current year after the accounting adjustments in terms of GRAP 23 Revenue from non-exchange transactions. It should be noted that additional funding following the new bursary programme announced in December 2017 will be reported in the following financial year.

The graph below illustrates the Grants for Student Financial Aid allocation for the 2017/18 financial year.

Graph 1: Grants received for student financial aid allocation

Graph 2: Disbursements to institutions

* Other grants revenue relates to funding from SETAs, Other Government Departments and Institutions’ own funding (universities).

NSFAS has seen a significant increase in Grants for Student Financial Aid in the last three years, mainly driven by government’s increased investment in higher education funding. DHET’s allocation to NSFAS increased by 79.4% from R6.6 billion in the 2015/16 financial year to R11.8 billion in the current financial year.

DBE is the second largest contributor to student funding followed by NSF. Funding from DBE has remained at about the same levels over the last three years, whilst funding from NSF has shown a small decline. Other funding includes contributions from SETAs, other South African Government Departments and

Universities. Other funding has declined by 49.8% from R1 billion in the 2015/16 financial year to R0.5 billion in the current financial year.

Disbursements of student financial aidDisbursements of financial aid to students and institutions increased to R14.1 billion from R12.4 billion in the prior year, an increase of 13.8%. Universities received R12.1 billion or 85.8% of the financial aid while TVET colleges received R 2.0 billion or 14.2% of the financial aid.

The graph below illustrates the increase in funding to institutions over the last three years:

Over the period 2015/16 to 2017/18, funding to universities increased by 68.1% while the number of university students receiving financial aid increased by 45.3% from 178 961 students to 260 002 students.

Funding to TVET colleges remained at the same levels, while the number of students funded decreased by 15.1% from 235 988 to 200 339 over the same period. The decrease in the number of

TVET students funded was due to delays in the disbursement of financial aid to the colleges.

Other R1,0bn R0,8bn R0,5bn

NSF R0,7bn R0,8bn R0,7bn

DBE R1,0bn R1,0bn R1,1bn

DHET R6,6bn R9,9bn R11,8bn

v

R0,0bnFY 2016

23%

19%14%

77%

81%86%

R9,3bn

FY 2017

R12,4bn

FY 2018

R14,1bn

R2,0bn

R4,0bn

R6,0bn

R8,0bn

R10,0bn

R12,0bn

R14,0bn

R16,0bn

Universities TVETs

R7,2bn

R10,3bnR12,1bn

R2,1bn

R2,1bnR2,0bn

R0,0bnFY 2016

31%

19%16%

69%

81%84%

R9,3bn

FY 2017

R12,4bn

FY 2018

R14,1bn

R2,0bn

R4,0bn

R6,0bn

R8,0bn

R10,0bn

R12,0bn

R14,0bn

R16,0bn

DHET

DHET DHET


Student loansAs disclosed in note 6 to the financial statements, the nominal value of outstanding student loans as at 31 March 2018 was R35.6 billion (2016/17: R29.8 billion) while the carrying value after actuarial valuation was R10.3 billion (2016/17: R9.4 billion). After valuation adjustments the carrying value of student loans is approximately 28.9% of the nominal value.

Valuation adjustments include the impact of:• Interest on outstanding loans that is charged at 80% of repo rate which is a substantial discount to the market rates• Interest not charged on the outstanding balance while a student is studying and for another year after graduation or exit

from university• No fixed repayment terms. Loans are only payable when a beneficiary is working and earning above R30 000 per annum• Non-repayment of outstanding loans due to unemployment, mortality, disability and other factors

A total of R10.1 billion in new loans was awarded in the 2017/8 financial year (2016/7: R8 billion). After bursary conversion and the valuation adjustments, the net carrying value of the new loans amounts to R1.6 billion or 15.8% of the loans awarded (2016/7: R1.9 billion or 23.7% of the loans awarded).

The bursary and valuation adjustments include:• The 40% conversion bursary and the 100% final year conversion bursary• The discounted interest rate and interest holiday• No fixed repayment terms

The graph below provides a comparison of the net carrying value of net new loans recognised, conversion bursaries and valuation adjustment.

Graph 3: Analysis of new loans

RecoveriesStudents who receive loan funding from NSFAS are required to repay their loans when they secure employment and are earning at least R30 000 per annum. As per the Board approved recoveries strategy, the entity employs debt collectors to contact debtors to make repayment arrangements.

The Annual Performance Plan (APP) target to increase collections by 50% was not achieved, with the entity collecting R512.8m, an increase of 30.7% from the previous financial year.

The entity has noted a stagnation in the public-sector collections as it is proving to be increasingly difficult to collect

from the remaining debtors since the implementation of the recoveries strategy in the 2015/16 financial year. Furthermore, there was a considerable delay in the finalisation of the appointment of a panel of External Debt Collectors (EDCs) to service the private sector debt. The appointment was finalised in the last quarter of the year.

Audit outcomeAs disclosed in note 36 to the financial statements, the entity made payments to students in excess of contract amounts which resulted in the entity incurring irregular expenditure. The external auditors were unable to verify the extent of payments made in excess of contract

amounts resulting in a qualification of the audit opinion.

For the instances identified, NSFAS disbursed the correct amount claimed by institutions per the registration templates for the 2017 academic year, but did

not update the contracts to reflect the revised funding requirements. NSFAS should have and will issue addendums to the contracts for the affected students to reflect the correct funding required.

Cash balancesAs disclosed in note 8 to the financial statements, the entity held cash balances of R3.7 billion (2016/17: R3.9 billion) at the end of the year comprised of recovered funds R112.5 million (2016/17: R389.6 million) and unspent funds of R3.5 billion (2016:17 R3.4 billion) held on behalf of donors and funders.

The reasons for funding received but not disbursed to institutions and students by end of year include:• Delays in the finalisation of funding decisions by NSFAS• Challenges experienced with submission of registration data and integration of NSFAS systems with universities and

colleges• Students not signing contracts or not signing contracts timely

The cash balances correspond to the deferred income balances of R3.6 billion (2016:17 R3.6 billion) which represents unspent funds from donors and funders.

R0,0bnFY 2018 FY 2017

R2,0bn

R4,0bn

R6,0bn

R8,0bn

R10,0bn

R12,0bn

Conversion bursaries, R4,6bn Conversion

bursaries, R2,6bn

Valuation adjustment, R3,9bn

Valuation adjustment, R3,5bn

Net loan, R1,6bn Net loan, R1,9bn


Steven ZwaneExecutive Officer

Contingent liabilityIn the student-centred model, NSFAS commits to fund students for the term of study provided they meet the progression requirements. In terms of GRAP 19, NSFAS has disclosed a contingent liability for the commitment to fund students in the future in note 27 to the financial statements. The contingent liability has increased

by 38.2% from R25.1 billion in the prior year to R34.7 billion in the current year due to the migration of students to the student-centred model. Students entering university for the first time (First time entrants) are now funded for the cost of study from the 2018 financial year while continuing students are funded up to a

maximum of R83 600 (DHET General funding), following the implementation of the new bursary programme. This has resulted in a significant increase in NSFAS funding liability as reflected by the increase in the contingent liability.

PrepaymentsAs at 31 March 2018, NSFAS made upfront payment amounting to R3.6 billion compared to R1.4 billion in prior year to institutions mainly to cover the initial registration fees for the 2018 academic year. Universities received R2.6 billion of the upfront payments, whilst TVET colleges received R929.5 million.

Supply Chain ManagementThe entity has implemented SCM processes and systems as required by the PFMA, Treasury Regulations and SCM legislation. The processes include

properly constituted bid committees and training of officials that are members of the respective committees. The entity is pleased to report that there were no audit

matters relating to SCM in the current year and the prior year.

Organisational sustainabilityThe entity is dependent on DHET for continued funding of operations. DHET contributed 84% of the student funding in the last financial year.

Funds recovered from NSFAS debtors were reinjected into the funding of new

students. Recovered funds reinjected for the funding of new students amounted to R385.3 million (2016/17: R366.5 million). Following the implementation of the new bursary programme, which will be phased in over a period of five years, recoveries will decline. This will

make the entity completely dependent on donors for new funding.

Looking aheadNSFAS debt - In announcing the new bursary program, the former President of South Africa indicated that the issue of NSFAS debt would be dealt with after a due diligence exercise that was to be completed by National Treasury, the Department of Higher Education and Training and the Department of Planning, Monitoring and Evaluation. It is expected that the due diligence exercise will be completed by 31 August 2018. As disclosed in the accounting policy to

the financial statements 1.2 Significant judgements and sources of estimation uncertainty – impact of the new bursary program on the valuation of the loan book, management determined that it would be appropriate to value the loan book assuming collections will continue into the future.

Increased funding – DHET funding to NSFAS will increase by R45 billion over the 2018/19 MTEF period. The additional

funding will allow NSFAS to fund an increased number of students for both TVETs and Universities. DHET will be performing a review of NSFAS systems and processes with a view to identify the issues that has resulted in delays with funding decisions and the subsequent disbursement of funds to institutions and students, and improve efficiencies going forward.

NSFAS ANNUAL REPORT 2017/18 15

With NSFAS’ implementation of the student-centred model, the entity has initiated a business re design that focuses on a lifecycle approach embedded within a new value chain. This value chain recognises that deliberate efforts must be made to cultivate relationships

with prospective beneficiaries and stakeholders, as a way of providing the youth with a life line out of poverty (solicit). It emphasises the need to develop a process for evaluating and establishing a transactional relationship with these beneficiaries and stakeholders

over time (on board), by providing a range of products and services that meet the operational requirements of the NSFAS mandate (solution). Honouring our commitment to deliver these products and services to stakeholders and beneficiaries (fulfill) is a critical requirement for NSFAS

3

1

2

NSFAS value chain

HONORABLE MINISTER OFHIGHER EDUCATION AND TRAINING,

MS. NALEDI PANDORI am pleased to submit the Annual Report of the National

Student Financial Aid Scheme for the period 1 April 2017 to31 March 2018.

Sizwe NxasanaBoard Chairperson

About NSFAS

THE NATIONAL STUDENT FINANCIAL AID SCHEME (NSFAS) WAS ESTABLISHED IN TERMS OF THE NATIONAL STUDENT FINANCIAL AID SCHEME ACT (ACT 56 OF 1999)It is responsible for providing loans and bursaries to eligible students at all public universities, Technical and Vocational Education and Training (TVET) colleges throughout the country. Further mandates of the entity include the recovery of past student loans and raising funds for student bursaries. In addition to managing funds granted by the Department of Higher Education and Training (DHET), NSFAS administers funding on behalf of the Department of Basic Education and the Department of Social Development amongst others.

With the new policy on student funding in higher education introduced in December 2017, NSFAS has a mandate of implementing the new DHET Bursary Scheme that will be phased in over a period of five years by government for the provision of subsidised higher education.

NSFAS is responsible for:

• providing loans and bursaries to eligible students;• developing criteria and conditions for the granting of bursaries to eligible students in consultation with the Minister of

Higher Education and Training;• raising funds;• recovering past loans;• maintaining and analysing a database and undertaking research for the better utilisation of financial resources;• advising the Minister on matters relating to student financial aid; and• undertaking other functions assigned to it by the NSFAS Act or by the Minister.

Mandate


4

NSFAS’s mandate within key current policy frameworksThe National Development Plan (NDP) provides the policy framework within which NSFAS developed its strategic plan, with the understanding that in the expansion of the enrolment in post-school institutions, NSFAS will continue to ensure that all students who qualify for funding will access the required financial support for tuition, accommodation,

books and other related costs. As the Department of Higher Education and Training (DHET) finalises the review of their policy framework for NSFAS within higher education, in alignment with both the Education White Paper 3 and the White Paper on Post-School Education and Training, this may necessitate a re-alignment of these goals. The NDP is

further realised through the commitments made by government in respect to the Medium Term Strategic Framework (MTSF) for 2014 – 2019. The MTSF sets targets on the achievement of the NDP goals over a five year period for each of the 14 outcomes.

VALUE CHAIN OF THE STUDENT FUNDING MODEL

4.1 VisionA model public entity that provides financial aid to all eligible public university and Technical and Vocational Education and Training (TVET) college students from poor and working class families.

4.2 MissionTo transform NSFAS into an efficient and effective provider of financial aid to students from poor and working class families in a sustainable manner that promotes access to, and success in, higher and further education and training, in pursuit of South Africa’s national and human resource development goals.

The mission statement is made up of three distinct elements, which describe why NSFAS exists and the impact on the constituency:

• NSFAS exists to provide financial aid to eligible students at public TVET colleges and public universities;• NSFAS identifies eligible students, provides bursaries and collects past student loan repayments to replenish the funds

available for future generations of students; and,• NSFAS supports access to, and success in, higher education and training for students from poor and working class

families who would otherwise not be able to afford to study

4.3 Values

VALUES FOCUSING ON INTERNAL STAKEHOLDERS

INTEGRITY We act with integrity towards all stakeholders, and support clients that uphold the same values.

ACCOUNTABILITY We take responsibility for our actions that drive performance management.

RESPECT We treat all our staff members with respect and fairness.

INNOVATION We strive to innovate in communicating with and serving students.

VALUES FOCUSING ON EXTERNAL STAKEHOLDERS

ACCESSIBILITY We create an environment that allows efficient, effective and direct access to NSFAS and the funding it provides to eligible students.

TRANSPARENCY We are open and honest with all students and stakeholders.

AFFORDABILITY We offer affordable solutions for students to study at public universities and TVET colleges.

RELIABILITY We honour our commitments and strive to deliver on our mandate.

AUTHENTICITY We protect our students and stakeholders by offering quality services and information.

to be able to meet the expectations of these stakeholders and beneficiaries, against a set of defined standards and through multiple channels for communication (maintain and service). In order for NSFAS to remain ahead, the entity needs to be able to give evidence of the progress that is being made, the outputs that have been achieved, by providing insight into and informing the development of plans that are in execution, through both lead and lag indicators (monitor, evaluate and report).

3 NSFAS value chain (continued) Strategic framework


EXECUTIVE OFFICE

BOARD

MINISTER

Executive OfficerOFFICE OF THE EO

* GM: Corporate Services Steven Zwane*

Sizwe Nxasana (Chairperson)

Naledi Pandor ,MP(Executive Authority)

(Accounting Authority)

(Executive Management)

Organisational structure

ChiefOperations

OfficeChief Financial

OfficeChief

InformationOffice

Chief Risk Office

Human Resources Executive

6

POLICY MANDATESa) The National Skills Development Strategy III The key driver of this strategy is improving the effectiveness

and efficiency of the skills development system. This strategy represents an explicit commitment to encouraging the linking of skills development to career paths, career development and promoting sustainable employment as well as in-work progression.

b) National Development Plan - 2030 The National Development Plan (NDP) - 2030 provides the

policy framework within which NSFAS has developed its strategic plan. It details the challenges that the country is facing as well as the strategic choices that must be made to create a better life for all South Africans.

CONSTITUTIONAL MANDATEThe Bill of Rights states in Section 29; Education, everyone has the right: a. to a basic education, including adult basic education; andb. to further education, which the state, through reasonable

measures, must make progressively available and accessible.

NSFAS contributes to the attainment of the rights described in Section 29 by providing financial aid to students from poor and working-class families. NSFAS enables these students to access post-school education, thereby redressing the results of past racially discriminatory laws and practices.

OTHER LEGISLATIVE MANDATESIn addition to the NSFAS Act (Act 56 of 1999), legislations and regulations applicable to NSFAS include the following:

• Basic Conditions of Employment Act (Act 75 of 1997)• Employment Equity Act (Act 55 of 1998)• Education Laws Amendment Act (Act 15 of 2011)• Further Education and Training Act (Act 98 of 1998)• Higher Education Act (Act 101 of 1997)• Labour Relations Act (Act 66 of 1995)• National Credit Act (Act 34 of 2005)• National Education Policy Act (Act 27 of1996)• National Qualifications Framework Act (Act 67 of 2008)• National Environmental Management

Act (Act 107 of 1998) amended 2003

• Occupational Health and Safety Act (Act 85 of 1993)• Preferential Procurement Policy Framework Act (Act 5 of 2000)• Promotion of Access to Information Act (Act 2 of 2000)• Promotion of Administrative Justice Act (Act 3 of 2000)• Protection of Personal Information Act (Act 4 of 2013)• Public Finance Management Act (Act 1 of 1999)• Skills Development Act (Act 97 of 1998)• Skills Development Levies Act (Act 9 of 1999)• National Treasury Regulations• SETA Grant Regulations

5 Legislative and other mandates

B“Without NSFAS I would not have been here today. It was not easy for people to give you large sums of money because they are not sure if you will put the money to good use or not. I was doing well in my studies and with each year passed, I was guaranteed NSFAS funding. I knew I was always covered”.- Lesego Shoroma

“I continue to learn every day. Going forward I would like to give

back to the community by teaching young people Maths and

Science, because I am passionate about black

empowerment in general”.- Molatelo Madibana

Performance Information

NSFAS Annual Report 2017/18 NSFAS Annual Report 2017/1822 23

Statement of responsibility for performance information

To the best of our knowledge and belief, we confirm the following:

All information and amounts disclosed in this annual report are consistent with the annual financial statements audited by the Auditor-General of South Africa. The annual report is complete, accurate, and free from any omissions. The annual report has been prepared in accordance with guidelines of annual reports as issued by National Treasury. The accounting authority is responsible for the preparation of the annual performance report and the judgements made in this information. The accounting authority is responsible for establishing, and implementing a system of internal controls, which has been designed to provide reasonable assurance on the integrity and reliability of the performance information, and the human resources information. In our opinion, the annual report fairly reflects accurate facts on operations, performance information, human resource information, governance and the financial affairs of NSFAS for the financial year under review.

Yours faithfully,



Service delivery environment

1.1 Performance overviewThe annual performance report is based on the strategic objectives and the performance indicators as set out in the 2015/16 to 2019/20 Strategic Plan, the

2017-18 Annual Performance Plan and the addendum to the 2017/18 Annual Performance Plan. The Strategic Plan and the Annual Performance Plan outlines

the seven (7) strategic objectives and fourteen (14) performance indicators of the entity.

The overall performance of the entity is summarised in the graph below:

The entity achieved the performance target for only 1 out of 14 key performance indicators (7.1%), which is a significant decline from the 53.8% achieved in the prior year. The entity did not meet its performance targets for Strategic Objective 4 - Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions and this had a huge negative impact on institutions and students. After migrating all institutions to the student-centred model at the beginning of the 2017 academic year, previously undetected issues in the disbursement process became increasingly difficult to manage with the increased volume of transactions that needed to be processed.Strategic Objective 3 - Improve the

efficiency of the application, evaluation and funding of students, which is a new objective was not achieved due to a combination of internal and external factors. Internal factors include a decision taken by the entity to extend the time allowed to students to submit outstanding additional documents as well as inadequate capacity to capture manual applications. The new bursary programme by the Former President of South Africa in December 2017, resulted in a delay in the finalisation of the funding decisions as the entity needed to reconfigure processes and funding criteria to align with the presidential pronouncement. In the current year, the entity missed its collections target by 13.6% whereas in the prior year the collections target was

exceeded by 37% (Strategic Objective 2). Collections from the public sector, which were the key driver of the outperformance in the prior year stagnated in the current year despite a number of efforts made to increase collections. The failure to meet the collections target was also due to the delay in the appointment of External Debt Collectors to service the private sector debt.

The net increase in funding raised for students (Strategic Objective 1) was R8.6 million. As with the prior year, there has been a continued decrease in funding received from SETAs but this was offset by funding raised from new funders.

1

Graph 1: Performance summary

2018 201720172018

ACHIEVED NOT ACHIEVED

6

13

3

6

1

4 7

1

KEY PERFORMANCE INDICATORSOBJECTIVES


With respect to Strategic Objective 7 – undertake research for the better utilisation of financial resources the entity produced 3 research reports during the period. However, the entity could not account for these reports for the year under review as the research was not performed according to an approved research plan.

The following are some of the performance highlights for the year under review:

1.2 Organisational environment Over the past financial year, NSFAS has been on a journey through a series of highs and lows, with some significant successes and some equally significant challenges thrown into light. A focus on building bench strength at executive and senior management level has resulted in several new appointments within the NSFAS leadership team. Their mandate was to prioritise the re-definition and baselining of core operational plans for the Programme 2018 against the Board strategy, the President’s announcement on the new bursary programme, and a revised value chain and strategic and performance reporting framework.

At a functional level, technical and operational focus in the last quarter of the financial year was on ensuring the wrap-up and conclusion of the 2017 academic year, and the preparation and execution of the funding cycle for the 2018 academic year. This has been further burdened by the failure of various technical systems in 2016/17, which resulted in data, system and process deficiencies being carried forward to the 2017/18 financial year.

To mitigate many of these challenges, NSFAS has worked closely with the DHET and its funder community, the

university sector through Universities South Africa (USAf) and the college sector through the South African College Principals Organisation (SACPO). Ensuring common understanding of the key issues, and alignment on strategies to monitor, implement and communicate our responsiveness has been a critical focus of these strategic engagements.

It must be noted though that despite these many challenges, as an organisation NSFAS remains resolute in its commitment to continue to serve the students and the institutions, through manual work-around while trying to build systems on the go.

Amount collected Amounts due to institutions

Provisional funding decisionsAmounts due to students

R512.8m 97.0% of allowancesof loans

of applicationsof allowances 82.0%92.0%

was collected from debtors(Strategic Objective 2), a 30.7% increase from 2017.

per LAF/SOPs accepted by 30 November 2017were paid to institutions by 31 December 2017.(Strategic Objective 4)

received by 30 November 2017 had beencommunicated by 31 January 2018.(Strategic Objective 3)

per LAF/SOPs accepted by 30 November 2017were paid to students by 31 December 2017.(Strategic Objective 4)

1.1 Performance overview (continued)

Key policy developmentand legislative changes

Revision of legislative and other mandatesOf significant consequence to the post-school education and training sector and NSFAS in particular has been the policy shifts related to the introduction of the new bursary programme for the poor and working class youth. Following student protests in 2015 about the rising costs of higher education and the effects of high fee increases on students accessing and succeeding in higher education, the President appointed the Heher Commission to investigate the

feasibility of fee-free higher education and training and to investigate the funding of higher education and training. This funding is to be inclusive of standardised allowances for all university students. However, this policy differentiated clearly between the criteria and conditions for first time applicants and those for students registering at a university that have prior registration (s) at university level. This complexity increased the administrative requirements, the reporting

requirements, volume of applications and funding decisions that have to be made and implemented within a month to accommodate the new academic year. As such, these changes will continue to impact on NSFAS’ operations and its scale until such time as the system and the sector have stabilised and business processes optimised so that students are funded on time.

2


PROGRAMME/GOAL 1

AdministrationIn terms of the technical indicator description, the target for KPI 5.1 Audit Opinion of the AGSA relates to the audit outcome of the previous financial year. Although the entity achieved an unqualified audit opinion on the financial statements, the entity has not achieved the performance target of a clean audit. Furthermore, Strategic Objective 6 which was achieved in prior financial years was not achieved in the current year due to several changes in leadership, job uncertainty and the impact of the fee free education pronouncement on the operations of the entity.

PROGRAMME/GOAL 2

Student-centred financial aidThe entity met performance targets for 1 out of the 5 performance objectives for Programme 2: Strategic Objective 1 - Increase in funding (Rand value) raised for financial aid for qualifying students. The entity experienced significant challenges with processing of registration data and integration of its systems with institutions after the migration of all institutions to the student-centred model at the beginning of the 2017 academic year. This was compounded by a number of process and system defects, which surfaced with the increased volume of transactions processed. Consequently, the entity has not met its performance targets for Strategic Objective 3 - Improve the efficiency of the application, evaluation and funding of students and Strategic Objective 4 - Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions. Actual collections (Strategic Objective 2) fell short of target by 20.4% while in the prior year the entity exceeded its collections target by 37%. It should however be noted that recovered funds have increased by 29.6% compared to the prior year due to the continued implementation of the board approved recoveries strategy.

Strategic outcome oriented goals

PROGRAMME/GOAL 1 PROGRAMME/GOAL 2

STRATEGIC OUTCOME ORIENTED GOALS

AN EFFICIENT AND EFFECTIVE PUBLIC ENTITY IN PROVIDING STUDENT FINANCIAL AID

INCREASED ACCESS TO HIGHER EDUCATION AND IMPROVED STUDENT FINANCIAL AID ENVIRONMENT

Goal Statement To implement effective and efficient processes and operations to ensure that stakeholder objectives are achieved.

To Increase access to funding for eligible students by raising funds, maximising loan recoveries and creating a student-centred loans and bursaries model through improved communication support for students and a central application process.

Outcomes • Robust systems, processes and controls

• Effective and efficient governance structures

• Productive and engaged employees

• Increased funding • Improved recoveries • Financial support extended to more

students• Improved stakeholder communications

and relations• Client service management

Strategic objectives 5. Improve financial, performance management and IT governance audit outcomes per financial year.

6. Strive for an improved organisational culture of high performance and high productivity by improving employee engagement.

1. Increase in funding (Rand value) raised for financial aid for qualifying students

2. Increase the amount of money recovered (Rand value) from NSFAS debtors

3. Improve the efficiency of the application, evaluation and funding of students

4. Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions

7. Improve service level to customers and stakeholders through monitoring customer satisfaction and taking corrective action where necessary (not applicable for 2017/18)

8. Undertake research for the better utilisation of financial resources

Performance Indicator NSFAS receives a clean audit report annually.

• Increased total number of student loans and bursaries

• Augmented capital available for disbursement

3


Performance information by programme

4

PROGRAMME 1

4.1 Administration

Improve and maintain financial, performance management and IT governance audit outcomes

PERFORMANCE INDICATOR ACTUAL ACHIEVEMENT 2014/15

ACTUAL ACHIEVEMENT 2015/16

ACTUALACHIEVEMENT 2016/17

PLANNED TARGET 2017/18


DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2017/18

COMMENT ON DEVIATIONS

5.1 Audit Opinion of the AGSA. Unqualified audit with findings

Not Achieved

Unqualified auditwith findings

Not Achieved

Unqualified auditwith findings

Not Achieved

Clean Audit Unqualified audit with findings

Not Achieved

(100.0%) The KPI relates to the audit outcome of the previous financial year.

Financial statements - Material misstatements were identified on the contingent liability disclosure (due to data quality issues and differences in assumptions between management and external auditors) and misstatements on the loan book value due to final reporting issues.

Material findings on the performance report related to the usefulness of two performance indicators that were identified during the audit process.

5.2 Status level for CGICTAS achieved.

New indicator Achieved CGICTA S LEVEL 3 – Full compliance

Achieved

CGICTAS LEVEL 3 and Level 4 Achieved

Achieved

Maintain CGICTAS Level 4 – Continuous Improvement

CGICTAS LEVEL 1 Achieved

Not Achieved

(100.0%) Based on previous reviews, the entity believed that CGITCAS Level 3 compliance would be achieved. The current year review however, indicated that the entity is actually on level 1 compliance.

Strive for an improved organisational culture of high performance and high productivity by improvingemployee engagement








6. Percentage Employee engagement index

Employee Engagement measured to determine baseline

Not Achieved

Employee Engagement index of 71%

Achieved

Employee engagement index of 70%

Achieved



Not Achieved

(100.0%) The underperformance was due to multiple changes in Leadership during the year, which exacerbated employee change fatigue. This has resulted in increased job uncertainty.

Objective 5

Objective 6

ACHIEVED

NOT ACHIEVED

29


PROGRAMME 2

4.2 Student-centred financial aidKey performance indicators, planned targets and actual achievements

Increase in funding (Rand value) raised for financial aid for qualifying students








1.1 Amount of funds (Rand value) raised from new funders.

R69.5m

Achieved

R18.6m

Achieved

R104.0m

Achieved

R11.0m R56.6m

Achieved

+R45.6m New funding received from 3 funders exceeded the amounts planned.

1.2 Increase in amount of funds (Rand value) raised from current funders.

New indicator R2.4bn

Achieved

R114.9m decrease compared to prior year

Not Achieved

R13.0m R48m decrease compared to prior year

Not Achieved

(R61.0m) There was a continued decrease in the funding received from the SETAs.

Increase the amount of money recovered (Rand value) from NSFAS debtors








2. Amount of money recovered (Rand value) from NSFAS debtors.

R247.6m

Not Achieved

R227.8m

Not Achieved

R392.4m

Achieved

50% growth on2016/17 actualPerformance (R392.4m).

Target for 2017/18 - R588.5m

29.6% growth on 2016/17 actual performance (R392.4m).

R512.8m was recovered from debtors.

Not Achieved

(20.4%)

(R75.7m)

The under-performance was due to:• Delay in the appointment of the

EDCs panel to collect outstanding debt from the private sector due to capacity constraints with the BEC and the large numbers of tenders that needed to be evaluated

• Stagnation in collections from the public sector as it becomes increasingly difficult to collect from the remaining debtors

• Uncertainty on collections from aged debt at the beginning of the year

• Expected employer settlements that did not take place

Objective 1

Objective 2

ACHIEVED

NOT ACHIEVED


Improve the efficiency of the application, evaluation and funding of students (new strategic objective)



ACTUALACHIEVEMENT2016/17





3.1 Percentage of all manual applications received by 30 November and captured by 31 December each year (new performance indicator).

New indicator New indicator New indicator 100% 62.0%

Not Achieved

(38.0%) There were boxes left behind uncaptured at the NYDA offices, which were discovered towards the end of December. Some capturing work was outsourced to an external service provider, but some applications boxes were not captured. NSFAS ended up requesting the applications back from the service provider and captured them internally in the Contact Centre and Loans and Bursaries service units.

3.2 Percentage of all applications received by 30 November and evaluated by 31 December each year (new performance indicator).


Not Achieved

(22.0%) There were a number of performance issues with the Case Management module, which delayed the finalisation of the evaluation process by the target dates.These included:• Module taking long to open and

close, and record approvals• Module taking long to open and

close documents• Problems accessing documents

3.3 Percentage of all applications received by 30 November for, which provisional funding decisions are communicated to applicants by 31 January each year (new performance indicator).

New indicator New indicator New indicator 100 % 82.0%

Not Achieved

(18.0%) The evaluation of certain applications was not finalised by due date as a result of incomplete documentation submitted by applicants (evaluation of 19 268 applications had not been completed by 31 January due to outstanding documents). The entity took a decision to allow the applicants more time to submit outstanding documents in order not to disadvantage the applicants. This in turn caused delays with the verification of income with third parties (28 201 applications had outstanding income verification by 31 January 2018).

PROGRAMME 2

4.2 Student-centred financial aidObjective 3

ACHIEVED

NOT ACHIEVED


Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions








4.1 Percentage of students for, which the first instalment of amounts due to the institution is paid to the institution within 30 days from LAF/SOP acceptance date.

New indicator 98.5%

Achieved

99.4%

Achieved

98.0% 73.0%

Not Achieved

(25.0%) The target was not achieved due to poor response of ICT systems and operational failures leading to additional and significant rework by the disbursement business area. These previously undetected behaviours became apparent with the significant increase in file sizes being processed as a result of the increase in student funding being handled through the systems for 2017.

4.2 Percentage of students for, which the first instalment of allowances due to students (where NSFAS disburses directly to students) is paid to the student within 10 days of LAF/SOP acceptance date.

New indicator 94.2%

Achieved

40.8%

Not Achieved

98.0% 71.0%

Not Achieved

(27.0%) The target was not achieved due to:• A large number of top up

adjustments were processed that required sBux accounts to be created manually, these introduced delays in payment

• Flaws in system logic/processes coupled with manual manipulation of data from business users have severely impacted on the integrity of data housed in the master NSFAS databases

4.3 Percentage of amounts due to institutions in respect of LAF/SOP accepted, which are paid to institutions by 31 December each year (new performance indicator).


Not Achieved

(3.0%) Issues related to the delays with disbursements as detailed in KPI 4.1 resulted to delays of disbursements to institutions.

4.4 Percentage of allowances due to students in respect of LAF/SOPs accepted (where NSFAS disburses directly to students), which are paid to students by 31 December each year (new performance indicator).


Not Achieved

(8.0%) Issues related to the delays with disbursements as detailed in KPI 4.2 resulted in delays of disbursements of allowances to students.

PROGRAMME 2


ACHIEVED

NOT ACHIEVED


Undertake research for the better utilisation of financial resources





ACTUALACHIEVEMENT2017/18



7. Number of reports on researchor data analytics produced.

New indicator 5 Research Reports produced.

Achieved

4 Research Reports produced

Achieved

4 Research Reports produced

There were three research reports produced but were not approved by EXMA within the 2017/18 financial year.

Not Achieved

(100.0%) Although the entity produced the following research reports during the year, these could not be included under current year performance as the reports were not prepared in terms of an approved research plan. • Policy Briefing Paper

#1 2017/18 - Targeting Strategies through means testing

• Research Report #2 2017/18 - TVET Allocation and allowances mode – Reviewing the input variables and allocation model

• Research Report #3 2017/18 – NSFAS Factsheet 2017/18 - Milestones 1991 to 2017

In addition to this, two research reports were not approved by EXMA within the financial year .

PROGRAMME 2


ACHIEVED

NOT ACHIEVED


Changes to planned targets

6.1 Performance objectives and key performance indicators added

STRATEGIC OBJECTIVE KEY PERFORMANCE INDICATOR MOTIVATION FOR AMENDMENT

3. Improve the efficiency of the application, evaluation and funding of students (new Strategic Objective).

The following key performance indicators were drafted for the Strategic Objective 3 (new) “Improve the efficiency of the application, evaluation and funding of students”:

3.1 Percentage of all manual applications received by 30 November and captured by 31 December each year.

Align the annual performance plan with the business model.

STRATEGIC OBJECTIVE KEY PERFORMANCE INDICATOR MOTIVATION FOR AMENDMENT

3.2 Percentage of all applications received by 30 November and evaluated by 31 December each year.

3.3 Percentage of all applications received by 30 November for, which provisional funding decisions are communicated to applicants by 31 January each year.

3.4 Design and implement processes to record the date on, which registration data is received from institutions.

3.5 Percentage of LAF/SOPs generated within 30 days of receipt of registration data from institutions.

3.6 Number of institutions where NFSAS disburses allowances directly to students.

4. Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions (existing strategic objective).

4.3 Percentage of amounts due to institutions in respect of LAF/SOPs accepted, which are paid to institutions by 31 December each year.

4.4 Percentage of allowances due to students in respect of LAF/SOPs accepted (where NSFAS disburses directly to students), which are paid to students by 31 December each year.


6

The rollout of the student-centred model to all institutions at the beginning of the 2017 academic year resulted in misalignment between the business model and the annual performance plan. Accordingly, the annual performance plan was amended for the following:

• Remove performance objectives and key performance indicators linked to the previous business model• Add new performance objectives and key performance indicators appropriate for current business model• Revise and improve performance targets• Amend KPIs to address prior year audit finding• Reclassification of Strategic Objectives within apporiate program delivery goals

Strategies to overcome areas ofunder-performance

The measures put in place to address areas of under-performance of the entity include the following:

STRATEGIC OBJECTIVE 2 - The appointment of External Debt Collectors to service the public sector was finalised in January 2018. The entity has seen increased collections in the last quarter of the year. However, the increased collections were not sufficient for the entity to meet its performance target for the year. The increased collections for the last quarter of the 2017/18 financial has put the entity in a strong position to meet the performance target for the following year.

STRATEGIC OBJECTIVE 3 - Given that this was a new strategic objective for the current year, the entity did not have the benefit of prior year experience in setting the targets for the KPIs developed. The performance targets for the 2018/19 year were subsequently revised to maintain the correct balance between what is achievable and stretch factors. Furthermore, it should be noted that the entity has made significant improvements to its systems and processes for the receipt and evaluation of projections which should greatly improve the ability of the entity to meet the targets set in the new financial year.

STRATEGIC OBJECTIVE 4 - Management acknowledges that the 2017 academic year has not been an easy year for institutions and our students due to the challenges that the entity experienced in disbursing funds. This was the result of NSFAS system defects which increased the effort required to process payments to institutions, as well as inadequate systems and human resources capacity. Inadequate planning for capacity required by both systems and human resources was made worse by the migration of remaining institutions to the student-centred model at the beginning of the 2017 academic year.

The following corrective measures have and/or are being implemented to improve the performance of the entity going forward:

• A disbursement improvement project was initiated to fix defects and improve the overall performance functionality of disbursement systems. The work planned had been completed by the end of the year.

• Workshops and training have been conducted with institutions and suppliers to improve the efficiency of data exchange between institutions and NSFAS

• Notional allowances have been implemented using a phased in approach for First Time Entrants. Notional allowances will reduce the dependency on institutions to submit registration costs before disbursement can be processed.

• Additional appointments have been finalised in the Operations team

STRATEGIC OBJECTIVE 5 - An audit improvement plan was prepared following the finalisation of the 2016/17 audit and the implementation of the corrective action plan has been monitored throughout the year. The corrective action implemented included performing additional reconciliations on material account balances and engaging service providers to review the Annual Performance Plan prior to submission to the executive authority and to assist with the financial statement close process.

STRATEGIC OBJECTIVE 6 - Executive management has planned several workshops and engagement sessions with staff to review the results of the survey and confirm remedial actions to improve employee engagement.

STRATEGIC OBJECTIVE 7 - Capacity issues in the research service unit were addressed post year end and a research plan for the 2018/19 will be finalised by the end of Quarter 2.

5


Performance indicator per budget

2016/17 2017/18

PROGRAMME BUDGET ACTUAL EXPENDITURE

OVER EXPENDITURE

BUDGET ACTUAL EXPENDITURE

UNDER EXPENDITURE

R’000 R’000 R’000 R’000 R’000 R’000

Administration 158,512 145,008 13,504 205,360 182,476 22,884

Student-Centred Financial Aid 14,722,502 7,396,067 7,326,435 10,192,254 7,452,465 2,739,789

AFS reconciling items

Depreciation and Amortisation and write offs

29,329 3,498,063 (3,468,734) 3,225,833 5,067,333 (1,841,500)

Capex 13,963 8,119 5,772 14,315 6,801 7,514

TOTAL 14,924,306 11,047,329 3,876,977 13,637,762 12,709,075 928,687

Note 1 - These items include debt write off expenses, which are not part of the administration budget as well as adjustments related to the accounting treatment of student loans in terms of GRAP 23.

7

6.4 Amendments to targetsSTRATEGIC OBJECTIVE KEY PERFORMANC

INDICATORPREVIOUS TARGET

PROPOSED TARGET

MOTIVATION FOR AMENDMENT

1. Increase in funding (Rand value) raised for financial aid for qualifying students.

1.2 Increase in amount of funds (Rand value) raised from current funders.

R106.0m R13.0m Target was not achievable.

6.5 ReclassificationStrategic Objective 7 - Undertake research for the better utilisation of financial resources was reclassified from Programme 1: Administration to Programme 2: Student-Centred Financial Aid as this was considered to be more appropriate.

6.3 Strategic objectives and key performance indicators removed

STRATEGIC OBJECTIVE KEY PERFORMANCEINDICATOR

MOTIVATION FORAMENDMENT

3. Increase the percentage of students on Student-Centred Model.

3.1 Percentage of students migrated to new Student-Centred Model (cumulative).


4. Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions.

4.3 Percentage of claims paid to institutions outside of the student-centred model by due date.


5. Improve and maintain financial, performance management and IT governance audit outcomes.

5.2 Audit Report of the AGSA (Other legal and regulatory requirements).

This was to address prior year audit findings.

6.2 Amendments to key performance indicatorsSTRATEGIC OBJECTIVE NEW KEY PERFORMANCE INDICATOR

DESCRIPTIONPREVIOUS KEY PERFORMANCE INDICATOR DESCRIPTION

MOTIVATION FOR AMENDMENT

4. Improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions.

4.1 Percentage of students for, which the first instalment of amounts due to the institution is paid to the institution within 30 days from LAF/SOP acceptance date.

4.2 Percentage of students for, which the first instalment of allowances due to students (where NSFAS disburses directly to students) is paid to the student within 10 days of LAF/SOP acceptance date.

4.1 Percentage of students in the student-centred model paid tuition and residence fees within 30 days

4.2 Percentage of students in the student - centred model paid allowances within 10 days

Address prior year audit findings.

5. Improve and maintain financial, performance management and IT governance audit outcomes.

5.1 Audit Opinion of the AGSA. 5.1 Audit Opinion of the AGSA (Financial).

Address prior year’s findings.

2016/17 2017/18

RECOVERIES MONIES ESTIMATE ACTUALAMOUNT

COLLECTED

OVER COLLECTION

ESTIMATE ACTUALAMOUNT

COLLECTED

UNDER COLLECTION

R’m R’m R’m R’m R’m R’m

Recoveries monies 284.8 392.4 107.6 588.5 512.8 (75.7)

TOTAL 284.8 392.4 107.6 588.5 512.8 (75.7)

Revenue collection

Refer to Strategic Objective 2 on page 30.

8

C Governance


Introduction

Committees of Parliament

NSFAS corporate governance embodies the processes and systems by which it is directed, controlled and held to account.In addition to the legislative requirements in the NSFAS Act (Act 56 of 1999), corporate governance is applied through the Public Finance Management Act (PFMA) (Act 1 of 1999) and incorporates the principles contained in the King Code of Governance Principles of South Africa, 2009.

Parliament exercises its role through evaluating the performance of the public entity by interrogating the annual financial statements and other relevant documents, which have to be tabled as well as any

other documents tabled from time to time.The Committees of Parliament exercises oversight over the service delivery performance of the entity and, as such, review the non-financial information

contained in the annual report of public entity and is concerned with services delivery and enhancing economic growth.

There are three committees of Parliament of the Republic of South Africa through which NSFAS accounts:

a) The Parliamentary Portfolio Committee on Higher Education and Training (PCHET) in the National Assembly;b) The Select Committee on Education and Recreation (SCER), in the National Council of Provinces (NCOP); andc) The Standing Committee on Public Accounts (SCOPA) in the National Assembly.

During the year under review, NSFAS attended four meetings at the invitation of the Committees to present its Annual Report, Annual Performance Plan, Strategic Plan, and present its readiness for the 2018 academic year.

Key issues that were raised by the Committees were the introduction of the new student-centred model, erroneous disbursement of allowances, mismanagement of funds and student protests over registration fees and

allowances. Additionally, it was agreed that strengthening relationships between NSFAS and institutions is of paramount importance to ensure that the above mentioned issues are mitigated.

1

2

Executive Authority

The Executive Authority’s responsibility is to provide for the establishment, governance and funding of public higher education institutions, as well as exercising oversight in terms of the PFMA.Reports were submitted to the Executive Authority throughout the year and regular engagements took place on the utilisation of funds by universities and colleges. Interventions in the system to address issues such as the shortage of funding for

loans at particular universities, or the provision of allowances to students at colleges resulted from these reports and engagements.

Board Secretary

The Executive Officer is designated as the secretary to the Board in terms of the NSFAS Act. The Executive Officer is assisted by the Board Committee Officer in carrying out these duties.

3

4


5.2 Composition of the Board

The Accounting Authority/The Board

5.1 Role and the responsibilities of the BoardThe Board of Directors is the accounting authority of the public entity. The Board constitutes a fundamental base for the application of corporate governance principles in the public entity. NSFAS is headed by and controlled by an effective and efficient Board, comprising of the appropriate mix of executive and non-executive directors representing the necessary skills to strategically guide the entity. The majority of the members are

non-executive to ensure independence and objectivity in decision-making. The Board has the absolute responsibility for the performance of the public entity and is fully accountable to the public entity for such performance. It gives a strategic direction to the public entity; It holds absolute responsibility for the performance of the public entity; It retains full and effective control over the public

entity; It has to ensure that the public entity complies with applicable laws, regulations and governance policy; It has unrestricted access to information of the public entity; It formulates, monitors, reviews corporate strategy, major plans of action, risk policy, annual budgets and business plans; It ensures that the shareholder’s performance objectives are achieved; amongst others.

5

NO NAME 31-May-17 28-Jul-17 17-Aug-17 18-Sep-17 20-Nov-17 24-Jan-18 16-Mar-18

1Sizwe Nxasana, Mr (Chairperson)

ü ü ü ü ü ü ü

2 Andre Zeeman, Mr ü ü ü ü ü ü ü

3 Jaco Van Schoor, Mr ü ü ü n/a n/a ü ü

4 Julia De Bruyn, Ms ü ü Apology ü ü ü ü

5 Lumko Mtimde, Mr Apology Apology ü Apology ü Apology ü

6 Mary Bomela, Ms ü ü ü ü Apology ü ü

7 Nafisa Mayat, Ms ü ü ü Apology ü Apology ü

8 Neil Garrod, Prof ü ü ü ü ü ü Apology

9 Pearl Whittle, Ms ü ü ü ü ü ü ü

10 Rose Keanley, Ms ü Apology ü ü ü ü ü

11 Sibongile Masinga, Ms ü ü ü ü ü ü ü

12 Thabo Moloja, Mr n/a n/a n/a ü ü ü ü

13 Thandi Lewin, Ms n/a n/a n/a n/a n/a n/a ü

14 Themba Mosia, Prof ü Apology ü ü ü ü ü

15 Lerato Nage, Mr (Act EO) ü ü ü n/a n/a n/a n/a

16 Steve Zwane, Mr (EO) n/a n/a n/a ü ü ü ü

17 Yeshern Pillay, Mr n/a n/a n/a Apology ü ü ü

18 Yonke Twani, Mr n/a n/a n/a ü ü ü ü

19 Zirk Joubert, Mr n/a n/a n/a ü ü ü ü

20Lessing Labuschagne, Prof (by invitation)

n/a n/a n/a ü n/a n/a

21Nathan Johnstone, Mr(by invitation)

ü n/a n/a ü ü n/a

22Rob Dorrington, Prof(by invitation)

ü n/a n/a Apology n/a n/a

23Shai Makgoba, Mr(by invitation)

ü n/a n/a ü n/a n/a

24Theuns Tredoux, Mr(by invitation)

ü n/a n/a ü n/a n/a

5.3 Board meetings attendance

n/a - Not Applicable

The composition of the Board, in terms of NSFAS Act Section 5(1) subject to subsection (4), is as follows:

a) 13 members appointed by the Minister of whom:i) One member must be employed by the Department of Higher Education and Training;ii) One member must be nominated by the Minister of Finance;iii) One member must be designated by the Minister as Chairperson of the Board; andiv) Three members must be nominated by national organisations representing students;

b) Not more than four members who may be co-opted by the board; andc) The Executive Officer contemplated in section 9(1) of the NSFAS Act, who is the secretary.

During the financial year under review a new Executive Officer was appointed and assumed the role of secretary of the board.

The NSFAS Act requires the Board to establish a minimum of two Board Committees: the Executive Committee and the Finance Committee. In order to attend to its duties effectively, the Board has established three other committees: the Audit and Risk Committee, Human Resources and Remuneration Committee and the Information and Communications Technology Committee. The Board has been graded, for remuneration purposes, as Sub-category B1 of the service benefit packages for office bearers of certain statutory and other institutions by the National Treasury Central Evaluation Committee.


NO NAME 24-Apr-17 21-Jul-17 23-Oct-17 20-Dec-17

1 Sizwe Nxasana, Mr (Chairperson) ü ü ü ü

2 Julia De Bruyn, Ms n/a n/a n/a ü

3 Jaco Van Schoor, Mr ü ü ü n/a

4 Pearl Whittle, Ms ü ü ü ü

5 Sibongile Masinga, Ms ü ü ü ü

6 Thabo Moloja, Mr n/a n/a n/a ü

7 Mary Bomela, Ms (by invitation) n/a n/a n/a ü

8 Nathan Johnstone, Mr (by invitation) ü ü ü ü

9 Lumko Mtimde, Mr (by invitation) n/a n/a n/a ü

NO NAME 24-Apr-17 21-Jul-17 23-Oct-17 24-Jan-18

1 Julia De Bruyn, Ms (Acting Chairperson) ü ü ü ü

2 Jaco Van Schoor, Mr ü ü n/a n/a

3 Neil Garrod, Prof ü ü ü ü

4 Pearl Whittle, Ms ü ü ü ü

5 Sizwe Nxasana, Mr ü ü ü ü

6 Thabo Moloja, Mr n/a n/a ü ü

7 Zirk Joubert, Mr n/a n/a n/a ü

8 Nathan Johnstone, Mr (by invitation) ü ü ü ü

9 Mary Bomela, Ms (by invitation) n/a n/a n/a ü

10 Sibongile Masinga, Ms (by invitation) ü ü ü ü

5.4 Executive Committee meetings attendance

5.5 Finance Committee meetings attendance

NO NAME 21-Apr-17 20-Jul-17 20-Oct-17 25-Jan-18

1 Nathan Johnstone, Mr (Chairperson) ü ü ü ü

2 Andre Zeeman, Mr ü ü ü ü

3 Rob Dorrington, Prof ü ü Apology ü

4 Rose Keanly, Ms n/a n/a n/a ü

5 Shai Makgoba, Mr ü ü Apology Apology

6 Theuns Tredoux, Mr Apology ü ü ü

7 Zirk Joubert, Mr n/a n/a n/a ü

8 Sizwe Nxasana, Mr (by invitation) ü ü Apology ü

9 Thabo Moloja, Mr (by invitation) n/a n/a ü n/a

5.6 Audit and Risk Committee meetings attendance


No Name 22-May-17 20-Jul-17 01-Sep-17 19-Sep-17

1 Nathan Johnstone, Mr (Chairperson/ARC) ü ü ü ü

2 Andre Zeeman, Mr (ARC) ü ü ü ü

3 Jaco Van Schoor, Mr (Chairperson/ Fincom) Apology Apology Apology n/a

4 Julia De Bruyn, Ms (Acting Chairperson Fincom) ü ü ü ü

5 Neil Garrod, Mr (Fincom) ü ü Apology ü

6 Pearl Whittle, Ms (Fincom) ü ü Apology ü7 Rob Dorrington, Prof (ARC) ü ü Apology Apology

8 Rose Keanly, Ms (ARC) n/a n/a n/a n/a

9 Shai Makgoba, Mr (ARC) ü ü ü ü

10 Sizwe Nxasana, Mr (Fincom) ü ü Apology ü

11 Thabo Moloja, Mr (Fincom) n/a n/a n/a n/a

12 Theuns Tredoux, Mr (ARC) ü ü ü ü

13 Zirk Joubert, Mr (ARC) n/a n/a n/a n/a

14 Mary Bomela, Ms (ICT Chairperson by invitation) n/a n/a Apology Apology

15 Sibongile Masinga, Ms (HR Remco Chairperson by invitation)

n/a n/a Apology ü

5.7 Joint meetings of the Audit and Risk, and Finance Committees meetings attendance

No Name 04-May-17 12-Jul-17 06-Nov-17 16-Feb-18

1 Sibongile Masinga, Ms (Chairperson) ü ü ü ü

2 Amanda Glaeser, Ms ü ü Apology ü

3 Lumko Mtimde, Mr ü ü ü ü

4 Nafisa Mayat, Ms ü ü ü ü

5 Yershen Pillay, Mr n/a n/a n/a Apology

6 Yonke Twani, Mr n/a n/a n/a ü

5.8 Human Resources and Remuneration Committee meetings attendance

NO NAME 08-May-17 08-Sep-17 06-Nov-17 12-Feb-18

1 Mary Bomela, Ms (Chairperson) ü ü ü ü

2 Gwen Baumgart, Ms n/a n/a n/a ü

3 Lessing Labuschagne, Prof ü ü ü ü

4 Lumko Mtimde, Mr n/a n/a n/a ü

5 Sibongile Masinga, Ms Apology ü ü ü

6 Themba Mosia, Prof ü ü ü ü

7 Rose Keanly, Ms n/a n/a n/a ü

8 Thabo Moloja, Mr (by invitation) n/a n/a ü n/a

5.9 Information and Communications Technology Committee meetings attendance


5.10 Board appointments

2016

2015

2017

(NSFAS BOARD MEMBERS APPOINTED DURING THE YEAR UP TO 31 MARCH 2018)

Sizwe Nxasana (Chairperson) | 1 August 2015

Steven Zwane (Executive Officer) | 1 September 2017

Lerato Nage | 16 February 2017(Acting Executive Officer)

Term ended31 August 2017

Mary Bomela | 29 July 2016 (co-opted)

Rose Keanly | 29 July 2016 (co-opted)

Prof. Neil Garrod | 24 June 2015

Julia De Bruyn | 17 August 2017

Yershen Pillay | 17 August 2017

Thabo Moloja | 17 August 2017

Yonke Twani | 17 August 2017

Sibongile Masinga | 24 June 2015

Prof. Themba Mosia | 24 June 2015

Lumko Mtimde | 24 June 2015

Andre Zeeman | 31 May 2016 (co-opted)

Nafisa Mayat | 24 June 2015

Zirk Joubert | 17 August 2017

Thandi Lewin | 1 February 2018

Jaco Van Schoor | 24 June 2015 Resigned 20 January 2018

5.11 Board expenses

FEES RETIREMENT FUND

CONTRIBUTIONS

MEDICAL CONTRIBUTIONS

EXPENSES TOTAL PACKAGE TOTAL PACKAGE

2018 2017

Board expensesMeeting fees 822 - - - 822 889

Travel and accommodation - - - 1,223 1,223 1,298

822 - - 1,223 2,045 2,187

* Red arrow is New Appointments from March 31, 2017


Report of the Audit and Risk Committee(FOR THE YEAR ENDED 31 MARCH 2018)

6

The Audit and Risk Committee presents its report on the financial year ended 31 March 2018.

The Audit and Risk Committee is an independent statutory committee appointed by the NSFAS Board. In addition to its statutory responsibilities, further duties have been delegated to the Committee by the Board. This reports deals with the Committee’s duties and responsibilities.

The NSFAS Board appointed Ms Rose Keanly and Mr Zirk Joubert, both members of the Board, as additional members of the Audit and Risk Committee on 20 November 2017.

6.1 Terms of referenceThe committee has adopted appropriate formal terms of reference as its Audit and Risk Committee Charter; regulated its affairs in compliance with this charter; and has discharged all of its responsibilities as contained therein. The Board, on 28 November 2016, approved amendments to the Charter with regard to its reporting responsibilities in accordance with National Treasury Regulations. The Board approved a further amendment to the Charter on 20 November 2017 to align it to the applicable King Report on Corporate Governance for South Africa.

6.2 Roles and responsibilitiesSTATUTORY DUTIESThe Committee’s role and responsibilities include the statutory duties set out in sections 76(4) (d) and 77 of the Public Finance Management Act (Act 1 of 1999), as amended, and sections 3.1 and 27.1 of the Treasury Regulations issued in terms of that Act, and further responsibilities assigned to it by the Board.

The Committee has conducted its affairs in accordance with its Charter and has substantively discharged the responsibilities outlined therein.

EXTERNAL AUDITORIn terms of the PFMA, the external auditor is the Auditor-General. The Committee, in consultation with Executive Management, agreed to the Audit Strategy and Plan, and the budgeted audit fees for the 2017/18 financial year. The Auditor-General was not asked to provide any non-audit services.

FINANCIAL STATEMENTS AND ACCOUNTING POLICIES AND PRACTICESThe Committee reviewed the accounting policies and practices and the Financial Statements of the entity and was satisfied with their appropriateness and compliance with the effective Standards of Generally Recognised Accounting Practice (GRAP). No concerns or complaints in relation to the reporting practices of the entity were reported to the Committee. The Committee reviewed

and discussed the Audited Financial Statements, to be included in the Annual Report, with the Auditor-General and Executive Management; reviewed the Auditor-General’s Management Report and management’s responses thereto; reviewed changes in accounting practices and policies where applicable; considered the entity’s compliance with legal and regulatory provisions; and reviewed

significant adjustments resulting from the external audit. The Committee concurs with and accepts the Auditor-General’s report on the Annual Financial Statements, and is of the opinion that the audited Annual Financial Statements should be accepted and read together with the Management Report of the Auditor-General.

INTERNAL CONTROLThe Committee oversaw the process by which Internal Audit reviewed and assessed the adequacy and effectiveness of the entity’s system of internal control. Internal Audit has reported that certain material deficiencies in the system of internal control were identified, in particular with regard to the disbursement process. On 11 July 2018, after the end of the 2017/18 financial year, Internal Audit issued management with a letter of notification of potential material non-compliance to laws and regulations (NOCLAR), in particular Section 51 of the PFMA. NOCLAR sets out a framework to guide auditors and other professional accountants in what actions to take in

the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations or NOCLAR, committed by a client or employer. The standard applies to all professional accountants, including auditors, other professional accountants in public practice, and professional accountants in organizations, including those in businesses, government, education, and the not-for-profit sector. It addresses breaches of laws and regulations that deal with matters such as fraud, corruption and bribery, money laundering, tax payments, financial products and services, environmental protection, and public health and safety

The Committee agrees with the Internal Audit findings and recommendations and has been mandated by the Board to oversee the development and implementation of a management plan to remediate the critical internal control findings within a period of no less than six to eight weeks commencing on 26 July 2018. Internal Audit will assist the Committee with testing the compensating controls through follow up reviews. In order to ensure effective oversight of the process, the Committee has scheduled additional meetings during the implementation period and will report to the Board on progress on a regular basis.

6.3 Duties assigned by the BoardIn addition to the statutory duties of the Committee reported on above, the Board assigned additional functions for the Committee to perform in terms of its Charter. These functions include the oversight of risk management, internal audit, management of performance information and information technology risk.


RISK MANAGEMENTThe Board assigned the oversight of the risk management function to the Committee. The Committee reviewed the risk management process, the effectiveness of risk management activities, the key risks facing the entity and responses to address them. The Committee fulfilled its oversight role regarding financial reporting risks, internal financial controls, fraud and information technology risks as they relate to the financial report.

Subsequent to the appointment of a new internal audit service provider from 1 September 2017, the Committee received reports on internal governance in respect of risk management and agrees with the assessment that enterprise risk management is immature with very weak first and second lines of defence. These concerns became evident during the first six months of the financial year with very slow, if any progress, on risk management activities across the

entity. The Committee has agreed that immediate action must be taken to strengthen the lines of defence in order to ensure substantive compliance with Section 51 of the PFMA. This will be dealt with as part of the process implemented to address the issues identified in the NOCLAR notification letter.

INTERNAL AUDITErnst & Young Services (Pty) Ltd. was appointed to provide internal audit services for a three-year term commencing on 1 September 2017. The Committee approved the Internal Audit Charter, the three-year rolling Internal Audit Strategy and the Internal Audit Plan and budget for the year commencing on 1 September 2017.

The Committee ensured that the internal audit function was independent and had the necessary resources, standing and authority to enable it to discharge its duties. Furthermore, the Committee

oversaw co-operation between the internal and external auditors and served as the link between the Board and these functions.

The internal audit team reported to the Committee. It reviewed and provided assurance on the adequacy of the internal control environment across all of NSFAS’s operations. The head of the internal audit team had direct access to the Committee, through its Chairman. The head of the internal audit team attended all Committee meetings.

Although the committee recognises the skills and capacity provided by an outsourced external audit function, the challenge is to ensure that the capacity of the entity will be progressively increased to ensure that that over the long-term the entity will be in position to fulfil this responsibility internally.

The Committee will assess the performance of the Internal Audit function on conclusion of the first year of the engagement.

MANAGEMENT OF PERFORMANCE INFORMATIONThe Committee has noted the improvement in the usefulness and reliability of the key performance indicators in the Annual Performance Plan for the 2017/18 financial year, as reflected by the reduction of findings raised by the Auditor-General in this regard.

The Committee has further noted the findings of the internal audit reviews

of pre-determined objectives and the recommendations for improvement in key areas, including the collation and submission of supporting documentation in respect of actual performance.

The Committee has reviewed the entity’s audited annual performance information and is satisfied that it fairly presents the performance of the entity for the

year under review. Having noted the very significant decline in the entity’s performance compared to the prior financial year, the Committee will strengthen oversight over performance management, performance information management and consequence management.

INFORMATION TECHNOLOGYThe Committee is assisted by the Information and Communications Technology (ICT) Committee of the Board in relation to the ICT processes and controls necessary to mitigate risk and ensure reliable financial and other reporting. Furthermore, the Audit and Risk Committee has been assisted by the ICT Committee in terms of the oversight of information technology risk.

Assurance in this regard is provided by the internal audit function which presents review reports on key aspects of the control environment to both the ICT and Audit and Risk Committees.

6.4 SustainabilityThe entity’s funding is principally dependent on medium-term expenditure grants from the Department of Higher Education and Training and there is no reason to believe that the Department will discontinue or significantly curtail the funding provided in the foreseeable future. This is a significant consideration in terms of the entity’s commitment to funding qualifying students for the

duration of their studies, provided they meet the academic and financial eligibility conditions for continued funding.

The Committee has noted that the Department of Higher Education and Training (DHET) and National Treasury are undertaking a due diligence exercise on the outstanding debt in the NSFAS loan book following the December 2017

Presidential fee-free announcement of the increased eligibility threshold for NSFAS funding, as well as the change to a full bursary scheme. A policy decision that the loan book debt should be written off will have a significant negative impact on the entity’s ability to supplement the medium-term expenditure grant with loan recoveries.

6.5 Expertise and experience of the Chief Financial Officer and the finance functionThe Committee is satisfied that the Chief Financial Officer had the appropriate expertise and experience to exercise the function effectively. The Chief Financial Officer also acted as Executive Officer from 16 February 2017 to 31 August 2017 following the resignation of the incumbent.

The Committee is satisfied with the appropriateness of the expertise, adequacy of resources of the finance function and the experience of the senior members of management responsible for the finance function.


The Audit and Risk Committee is assisted by the Information and Communications Technology (ICT) Committee of the Board in relation to the ICT processes and controls necessary to mitigate risk and ensure reliable financial and other reporting. Assurance in this regard is

provided by the internal audit function, which presents review reports on key aspects of the control environment to both the ICT and Audit and Risk Committees on a regular basis. The committee is satisfied that NSFAS information technology controls are appropriate to support the

integrity of the financial reports. This is based on the continuous interaction with the ICT Committee, management, independent assurance providers and external audit.

NSFAS is required to comply with the following laws and regulations:

• Public Finance Management Act (Act 1 of 1999)• NSFAS Act (Act 56 of 1999)• National Credit Act (Act 34 of 2005)• Treasury regulations for departments, trading entities, constitutional institutions and public entities

Internal Audit and Audit Committees

Compliance with laws and regulation

7

8

NSFAS embarked on a campaign to educate funded students on ways to prevent fraud in their funding processes. The fraud prevention campaign was necessitated by regular media reports on fraudulent practices involving some of the funded students. Fraud can happen in various stages of the NSFAS funding cycle, and it is critical that students are

aware of prospective pitfalls so that they can avoid them. NSFAS has a Vuvuzela fraud hotline that has been created for students and members of the public to report fraudulent activities that may be seen taking place in the NSFAS funding system. These practices may take place at university campuses, TVET college campuses, NSFAS offices, by students

or individuals, by stores that work with NSFAS allowances, or any organisation. The Vuvuzela fraud hotline to call to report fraud cases is 0800 203 900. Alternatively, you can send a Please Call Me message to 072 595 9139. You can also send an email to [email protected], or fax to email number 086 726 1681. For more info: www.thehotline.co.za.

Fraud and corruption

Minimising conflict of interest

NSFAS developed a Code of Conduct and enforced it in the previous financial year. The Code provides details of the processes to follow after breach of the Code. During the year under review, there was a total of 11 cases where the code of conduct was breached and these led to disciplinary actions; five Verbal warnings, two written warnings, one final written warning and three dismissals.

No cases of conflict of interest were reported during the year under review. However, there has been efforts by Management to continue to minimise conflict of interest by introducing new processes were implemented in supply chain management. The SCM policy

was approved by the Board during the 2017-18 financial year, which also deals with conflict of interest matters. As part of the new Policy, all the SCM role players (which includes all SCM staff, bid specification committee members, bid evaluation committee members

and bid adjudication committee members) declare their interest prior to performing their duties for the specified procurement requirements. The declaration is performed through the completion of the declaration of interest form.

Code of conduct

9

10

11

NSFAS Annual Report 2017/1860

12.1 OFFICE SPACE REFURBISHMENT The main building has been renovated to improve general health and safety in the entire workspace:

• The building is now equipped with fresh air conditioning infrastructure to improve the general ventilation in the building• Clear walk ways with visible signage were installed to assist and guide employees in easily identifying fire escape

pathways during building evacuations• All newly installed furniture in the building takes into consideration office ergonomics and is practical to the requirements

needed by each employee to complete their roles• Toilet facilities have been upgraded in the main building to cater for staff members with disabilities

12.2 A NEW OCCUPATIONAL HEALTH AND SAFETY COMMITTEE• A new Occupational Health and Safety Committee has been formed to accommodate all the office changes and increasing

number of employees• Additional First Aiders and Fire Marshal’s have also been appointed to manage all occupational health and safety related

incidents and building evacuations

12.3 HYGIENE EQUIPMENT• The entire office space is equipped with waterless hygiene equipment to service staff members in a bid to adhere to the

call of water conservation by municipalities in the Western Cape• Water storage tanks have also been installed in the main building to service the toilet infrastructures during water shortages

12.4 INCIDENTS AND ACCIDENTThere were no major incidents or injuries on duty reported during this financial year.

12.5 HEALTH AND SAFETY MEETINGSFormal health and safety committee meetings are held once per quarter or as and when the need arises to address health and safety issues in the workplace.

12.6 HEALTH AND SAFETY FILE The organisational health and safety file continues to be kept up to date.

Health, safety and environmental issues

12

D“There is a lot of medical education needed in our poor communities and I am happy to be doing that. I do not just treat patients and refer them, I speak to them on a personal level, in their language, and you will be amazed how well they react after you have explained to them something they didn’t understand.”- Ntombizdwa Dube

Human Resources & Administration

“NSFAS set a foundation for my

success by giving me the opportunity to

achieve the things I have achieved so far.

NSFAS has given me a life of possibilities,”

- Veronica Motloutsi


Introduction

Human resources oversight statistics

During the 2017/18 financial year, NSFAS underwent significant changes and challenges as it grew its business operations. During this period it became clear that the Human Resources function needed representation at a strategic level. On this basis, the Human Resources and Remuneration Committee motivated for the Board to approve the creation of a Human

Resources Executive role responsible for developing and overseeing the implementation of a Human Resources strategy to better align HR policies, practices and initiatives to the organisation’s strategic and operational plans. The HR Executive, Vuyokazi Dwane, was appointed on 1 December 2017 (Refer to the Organisaitonal Structure).

2.1 HR achievements and challenges

2.1.1 RECRUITMENT AND SELECTIONThe primary focus was linked to ensuring that the organisation is capacitated in terms of approved requirements. To this end significant progress was made in the appointment processes of positions that were required by the business.

During this year, NSFAS was capacitated with staff across the country as part of the 2018 student bursary application process. The support was rendered at various NYDA regional and local facilities as part of the drive to make NSFAS visible within urban and rural areas.

2.1.2 EMPLOYEE RELATIONSNSFAS experienced some labour challenges during the year, which ultimately resulted in the four-day strike by the NSFAS Bargaining Unit employees, representing approximately 50% of our workforce, during the month of February. Many of the challenges related to disputes of interest regarding job evaluation, salary negotiations and performance incentives.

2.1.3 EMPLOYEE AND MANAGEMENT SELF-SERVICE ROLLOUTAs part of our programme of continuous improvements in HR, we have begun the process of configuring an Employee and Management HR Self-Service. The system configuration was completed during the reporting year, with a go-live date of April 2018.

1

2

2.2 Organisational development achievements and challenges

2.2.1 LEARNING AND DEVELOPMENTIn a quest to reposition the organisation’s Learning and Development function, a Soft Skills training needs analysis and related training (e.g. Customer Sevice) was conducted. Employees also participated in other critical strategic skills training including leadership, digitisation, technology and data management. These learning programmes are part of the BANKSETA critical skills list.

2.2.2 EMPLOYEE ENGAGEMENT SURVEYThe annual Employment Engagement Survey (EES) results showed a decrease in overall employee engagement. This appeared to be reflective of the high Executive turnover for the financial year. Despite this, (or perhaps because of it) the biggest EES improvement since 2017 is employee confidence in the new executive leadership’s ability to guide the organisation. Furthermore, there was a significant improvement in employee perceptions of Performance Management.

2.2.3 PERFORMANCE MANAGEMENTGiven existing Performance Management challenges, NSFAS developed a new approach to Performance Management, and introduced the Balanced Scorecard concept in the organisation. Extensive training was conducted, and a partnership (seeking to ensure success of performance management) was forged between NSFAS and NEHAWU.

2.2.4 TALENT MANAGEMENTIn accordance with the approved Talent Management Framework, Talent Management Assessments were conducted on all Senior Managers. This resulted in the drafting of Senior Management Talent Profiles. These are currently used to guide and inform internal senior management movement. The plan is to conduct Talent Profiles for all employees on levels 11 and above during 2018/19 financial year. This will allow the organisation to populate Talent Pools for all Middle and Senior Management.

2.2.5 EMPLOYMENT EQUITYThe NSFAS Board approved a new 3-year Employment Equity Plan, with a new Employment Equity and Disability Policy. This allowed the organisation to engage in targeted recruitment, which resulted in Employment Equity targets been met for those classified as blacks (males and females) at all occupational levels except in the semi-skilled/ discretionary levels. Similarly, targets were met for all those classified as coloureds (males and females), except in the semi-skilled/disecretionary and senior management levels. Targets for those classified as indian females were met only in the middle management/professionally qualified level, while targets for those classified as indian males were met in the middle management/professionally qualified and semi-skilled/discretionary levels. Targets for those classified as whites (males and females) were met at all levels except the semi-skilled/discretionary levels. In accordance with the approved Employment Equity Plan, a Diversity Management Training Programme was also implemented. Despite a concerted drive to have all employees complete the EEA1 form, Disability targets were not met.


2.2.6 ORGANISATION DESIGNDuring the period under review, the development of a fit-for-purpose organisation structure has been a key area of focus for the organisation. The efforts of the human resources leadership team have been to translate organisational requirements and human capacity requirements into appropriate organisation structures that have been consulted with each executive. This work continues as the Target Operating Model (TOM) is being defined and will undergo a process of refinement and finalisation once the TOM has been approved by the Board.

2.2.7 HUMAN RESOURCE OVERSIGHT STATISTICSThe organisation made use of staff in the approved structure, as well as additional staff required as part of operationalisation of the transformation programme. Variances in the offset between total posts, number of employees and total vacancies are due to utilisation of such staff in addition to the approved structure.

2.3 Personnel costsProgramme Total

Expenditure for entity

Personnel expenditure

Personnel expenditure as a

% of total

No. of employees Average personnel cost

per employee

Administration 289,882,000 149,111,059 51.4% 396 376,745

2.4 Personnel costs by salary bandLevel Personnel Expenditure Personnel

expenditure as a % of total

No. of employees Average personnel cost per employee

Top Management 6,159,311 4.1% 5 1,231,862

Senior Management 30,415,334 20.4% 33 921,677

Professional/Middle Management 27,477,485 18.4% 40 686,937

Skilled 29,144,272 19.5% 61 477,775

Semi-skilled 55,128,532 37.0% 250 220,514

Unskilled 865,961 0.6% 7 123,709

Other (Provisions) 4,285,157 0.0% - -

Total 153,396,216 100.0% 396 376,745

2.5 Employment and vacancies Programme 2017/18

Approved posts2017/18

No. of employees2017/18

No. of vacancies% of vacancies

Top Management 5 1 1 20.0%

Senior Management 54 33 21 38.9%

Professional/Middle Management 70 40 30 42.9%

Skilled 99 61 38 38.4%

Semi-skilled 229 250 0 0.0%

Unskilled 7 7 0 0.0%

Total 464 392 90 19.4%

The percentages of vacancies are mostly as a result of available budget, in that vacancies were prioritised based on available budget. Senior management recruitment strategies included open adverts in the media, sourcing via recruiters, and headhunting initiatives. Current vacancies in this category are receiving high priority as part of the recruitment and selection strategy.

2.6 Employment changes 2018Level Employment at

beginning of periodAppointments Terminations Employment at end

of period

Top Management 3 3 1 5

Senior Management 24 12 8 28

Professional/Middle Management 34 12 8 38

Skilled 54 12 9 57

Semi-skilled 279 313 331 261

Unskilled 5 2 - 7

Total 399 354 357 396

2017Top Management 5 - 2 3

Senior Management 23 10 9 24

Professional/Middle Management 31 11 8 34

Skilled 52 10 8 54

Semi-skilled 142 171 34 279

Unskilled 5 - - 5

Total 258 202 61 399

NSFAS ANNUAL REPORT 2017/1868

Nature of disciplinary action Number

Verbal warnings 5

Written warnings 2

Final written warnings 1

Dismissal 3

Total 11

2.7 Reasons for leavingReason Number % of total number of staff leaving

Death 1 0.3%

Resignation 34 9.5%

Dismissal 3 0.8%

Retirement - -

Ill-health - -

Expiry of contract 313 87.7%

Absconded 1 0.3%

Permanently employed 5 1.4%

Total 357 100%

MISCONDUCT AND DISCIPLINARY ACTION

2.8 Labour relations

E“There is no peace greater than knowing that your tuition fees are being paid. NSFAS was the last hope I had, so I made sure I did not play with the opportunity,”- Ndivhuwo Mabaya

Financial Information

“I was funded by NSFAS for my whole qualification and that is what made me pay my loan back without

wasting time. I wanted other disadvantaged

young people to get the same assistance I got,”

- Andile Mayisela


Index

The reports and statements set out below comprise the Annual Financial Statements presented to Parliament:

INDEX PAGE

NSFAS Board's Statement of Responsibility and Approval 73

Report of the Auditor-General 74 - 80

Report of the Board members 81 - 90

Statement of Financial Position 91

Statement of Financial Performance 92

Statement of Changes in Net Assets 93

Statement of Cash Flow 94

Statements of Comparison of Budget and Actual Amounts 95 - 97

Accounting Policies 98 - 113

Notes to the Annual Financial Statements 114 - 156

NSFAS Board’s statement of responsibility and approval

The NSFAS Board is required by the National Student Financial Aid Scheme Act (Act 56 of 1999), as amended and the Public Finance Management Act (Act 1 of 1999), as amended, to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the Board to ensure that the annual financial statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flow for the period then ended. The Auditor-General of South Africa was engaged to express an independent opinion on the annual financial statements and was given unrestricted access to all financial records and related data.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The NSFAS Board acknowledges that it is ultimately responsible for the system of internal financial control established

by the entity and places considerable importance on maintaining a strong control environment. To enable the NSFAS Board to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the entity and all employees are required to maintain the highest ethical standards to ensure that the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

Based on the Audit and Risk Committee’s consideration of information and explanations provided by management, the Board is of the opinion that the entity’s system of internal controls provides a reasonable basis for the preparation of reliable financial statements.

The Board has reviewed the entity’s cash flow forecast for the year to 31 March 2019 and, in the light of this review and the current financial position, it is satisfied that the entity has, or has access to, adequate resources to continue in operational existence for the foreseeable future.

The entity is dependent on the Department of Higher Education and Training (DHET) for continued funding of operations. The annual financial statements are prepared on the basis that the entity is a going concern and that the DHET has neither the intention nor the need to liquidate or curtail materially the scale of the entity.

Although the Board is primarily responsible for the financial affairs of the entity, it is supported by the entity’s internal audit function in assessing the adequacy of controls.

The annual financial statements set out on pages 73 to 156, which have been prepared on the going concern basis, were approved by the Board on 31 July 2018 for submission to the Auditor-General of South Africa and were signed on its behalf by:






Report on the audit of the financial statements Report on the audit of the financial statements

Qualified opinion1. I have audited the financial statements of the National Student Financial Aid Scheme (NSFAS) set out on page 91 to

153, which comprise, the statement of financial position as at 31 March 2018, the statement of financial performance, statement of changes in net assets, statement of cash flow and the statement of comparison of budget and actual amounts for the year then ended, as well as the notes to the financial statements, including a summary of significant accounting policies.

In my opinion, except for the possible effects of the matters described in the basis for qualified opinion section of this Auditor-General’s report, the financial statements present fairly, in all material respects, the financial position of the NSFAS as at 31 March 2018, and its financial performance and cash flow for the year then ended in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999).

Basis for qualified opinionSTUDENT LOANS2. The NSFAS disbursed a projected amount of R503,34 million to students above the amount stipulated in the loan

agreements, which did not meet the definition of an asset in accordance with GRAP 1 Presentation of financial statements. I was unable to obtain sufficient appropriate audit evidence to determine the correct carrying value of the student loan book stated at R10,31 billion, as disclosed in note 6 to the financial statements. Consequently, I was also unable to determine the impact of the actuarial valuation on the social benefit component, impairment adjustments and carrying value of the student loan book.

IRREGULAR EXPENDITURE3. Section 55(2)(b)(i) of the PFMA requires the NSFAS to include particulars of irregular expenditure in the notes to the

financial statements. 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. I was not able to obtain sufficient appropriate audit evidence to confirm the amount of irregular expenditure to be disclosed by alternative means. Consequently, I was unable to confirm the amount of the irregular expenditure, disclosed in note 36 to the financial statements.

Context for the opinion4. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those

standards are further described in the Auditor-General’s responsibilities for the audit of the financial statements section of this auditor’s report.

Context for the opinion (continued)

5. I am independent of the public entity in accordance with the International Ethics Standards Board for Accountants’ Code of ethics for professional accountants (IESBA code) and the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.

6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified opinion.

Emphasis of matters7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

SIGNIFICANT UNCERTAINTIES8. With reference to note 27 to the financial statements, the public entity has entered into contractual commitments to fund

students for the duration of their qualification, as part of the student-centred model. These commitments resulted in a contingent liability of R34,67 billion at 31 March 2018 (2017: R25, 10 billion) being disclosed in the financial statements as the entity would need to fund the students for the duration of their studies, subject to them meeting the promotion requirements.

MATERIAL FAIR VALUE AND IMPAIRMENT ADJUSTMENTS9. As disclosed in note 6 to the financial statements, the public entity had student loan receivables with a nominal value of

R35,64 billion as at the 31 March 2018 (2017: R29,81 billion), which are reflected in the financial statements as R10,31 billion (2017: R9,36 billion), after cumulative fair value and impairment adjustments of R25,34 billion (2017: R20,45 billion).

RESTATEMENT OF CORRESPONDING FIGURES10. As disclosed in note 34 to the financial statements, the corresponding figures for 31 March 2017 have been restated as

a result of an error in the financial statements of the public entity at, and for the year ended, 31 March 2018.

Other matter11. I draw attention to the matter below. My opinion is not modified in respect of this matter.

UNAUDITED SUPPLEMENTARY SCHEDULES12. The supplementary information set out on pages 154 to 156 does not form part of the financial statements and is

presented as additional information. I have not audited these schedules and accordingly, I do not express an opinion thereon.


Responsibilities of the accounting authority for the financial statements13. The NSFAS board, which constitutes the accounting authority, is responsible for the preparation and fair presentation of

the financial statements in accordance with the SA standards of GRAP and the requirements of the PFMA, and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

14. In preparing the financial statements, the accounting authority is responsible for assessing the NSFAS’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the accounting authority either intends to liquidate the public entity or to cease operations, or has no realistic alternative but to do so.

Auditor-General’s responsibilities for the audit of the financial statements15. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

16. A further description of my responsibilities for the audit of the financial statements is included in the annexure to this auditor’s report.

Report on the audit of the annual performance report introduction and scope17. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued

in terms thereof, I have a responsibility to report material findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report. I performed procedures to identify findings but not to gather evidence to express assurance.

18. My procedures address the reported performance information, which must be based on the approved performance planning documents of the public entity. I have not evaluated the completeness and appropriateness of the performance indicators/measures included in the planning documents. My procedures also did not extend to any disclosures or assertions relating to planned performance strategies and information in respect of future periods that may be included as part of the reported performance information. Accordingly, my findings do not extend to these matters.

Report on the audit of the annual performance report introduction and scope (continued)

19. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following selected programme presented in the annual performance report of the public entity for the year ended 31 March 2018:

20. I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

21. The material finding in respect of the reliability of the selected programme is as follows:

2.1.1 Programme 2 - Student-centred financial aid Percentage of all manual applications received by 30 November and captured by 31 December each year- KPI 3.1

22. Management erroneously included on line applications in the schedules submitted for auditing for KPI 3.1 and the resultant overstatement could not be rectified by management.

Other matters23. I draw attention to the matters below.

ACHIEVEMENT OF PLANNED TARGETS24. Refer to the annual performance report on pages 30 to 37 for information on the achievement of planned targets for the

year and explanations provided for the underachievement of a significant number of targets. This information should be considered in the context of the material finding expressed on the reliability of the reported performance information in paragraph 22 of this report.

ADJUSTMENT OF MATERIAL MISSTATEMENTS25. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements

were on the reported performance information of programme 2 - student-centred financial aid. As management subsequently corrected only some of the misstatements, I raised material findings on the reliability of the reported performance information. Those that were not corrected are reported above.

[Programmes/ objectives/ development priorities] Pages in the annual performance report

Programme 2 - Student-centred financial aid 30 - 37





Report on the audit of compliance with legislation

Introduction and scope (continued)

26. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the compliance of the public entity with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance.

27. The material findings on compliance with specific matters in key legislations are as follows:

ASSET MANAGEMENT28. Funds were invested with banking institutions that are not approved by the National Treasury, as required by treasury

regulation 31.3.3

FINANCIAL STATEMENTS29. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting

framework as required by section 55(1)(b) of the PFMA. Material misstatement of deferred income identified by the auditors in the submitted financial statements were corrected, but the uncorrected material misstatements resulted in the financial statements receiving a qualified audit opinion.

EXPENDITURE MANAGEMENT30. Effective steps were not taken to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the PFMA. The full

extent of the irregular expenditure could not be confirmed as indicated in the basis for qualification paragraph.

OTHER INFORMATION31. The accounting authority is responsible for the other information. The other information comprises the information

included in the annual report, which includes the executive officer’s report and the audit committee’s report. The other information does not include the financial statements, the auditor’s report and those selected programmes presented in the annual performance report that have been specifically reported in this auditor’s report.

32. My opinion on the financial statements and findings on the reported performance information and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

33. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements and the selected programmes presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

INTERNAL CONTROL DEFICIENCIES34. I considered internal control relevant to my audit of the financial statements, reported performance information and

compliance with applicable legislation; however, my objective was not to express any form of assurance on it. The matters reported below are limited to the significant internal control deficiencies that resulted in the basis for the qualified opinion, the findings on the annual performance report and the findings on compliance with legislation included in this report.

LEADERSHIP35. Leadership did not exercise sufficient oversight responsibility regarding financial reporting and compliance as well as

related internal controls through ensuring that disbursements are not made above the loan and bursary agreement amounts.

FINANCIAL AND PERFORMANCE MANAGEMENT36. Effective systems of internal controls and the monitoring thereof were not properly implemented for the administration of

student loans and bursaries, which led to an overspending on loan and bursary agreements in non-compliance with the NSFAS Act, resulting in material misstatement of the recorded student loans receivable balance and irregular expenditure in the financial statements.

37. Management did not prepare regular, accurate and complete performance reports that are supported by reliable schedules and source documentation.

38. Management did not monitor compliance with the PFMA and the treasury regulations thereby ensuring that unused funds were only invested with banking institutions approved by the National Treasury.

39. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my audit of the financial statements, and the procedures performed on reported performance information for selected programmes and on the public entity’s compliance with respect to the selected subject matters.

Cape Town31 July 2018





1. General reviewMAIN BUSINESS AND OPERATIONS

The National Student Financial Aid Scheme is a statutory entity established in terms of the National Student Financial Aid Scheme Act (Act 56 of 1999) as amended.

PERFORMANCE HIGHLIGHTS

– 200,339 (2017: 225,557) students assisted at 50 Technical and Vocational Education and Training (TVET) Colleges – 260,002 (2017: 225,950) students assisted at 26 public universities – R14,118,415,352 (2017: R12,411,023,914) disbursed in student financial aid as follows:

– R2,012,107,916 (2017: R2,106,267,265) to TVET colleges (100% bursaries) – R12,106,307,436 (2017: R10,304,756,649) to Universaties as follows:

– R2,000,317,997 (2017: R2,298,876,780) 100% bursaries – R10,105,989,439 (2017: R8,005,879,869) in convertible loans and R3,375,614,172 (2017: R2,920,136,220) converted

to bursaries based on student performance – R3,903,282,000 (2017: R3,534,597,000) recognised as the social benefit component after bursary conversion – R85,861,048,000 (2017: R72,208,511,707) disbursed since inception – Nominal value of loan balances: R35,643,762,000 (2017: R29,810,775,000) – Carrying value of loan balances: R10,308,311,000 (2017: R9,362,023,000) – R512,764,003 (2017: R392,400,990) in loan repayments collected

The activities of the Scheme for the accounting period under review are clearly reflected in the annual financial statements. Theresults are summarised below:

Results (Figures in Rands) 2018 2017

New grants for student loans and bursaries* 13,989,421,000 11,615,454,000

Total loans and bursaries awarded 13,174,992,645 12,411,023,914

Operational expenses (289,882,000) (227,001,000)

Administration expenses to awards ratio (%) 2.12 1.83

University bursaries** 5,375,932,000 5,219,013,000

TVET Colleges 100% bursaries*** 2,012,108,000 2,106,267,000

Percentage of courses passed**** 84% 81%

The NSFAS Board submits its report for the year ended 31 March 2018.

Report of the Board membersAnnexure - Auditor-General's responsibility for the audit

Financial statements2. In addition to my responsibility for the audit of the financial statements as described in this auditor’s report, I also:

• identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the public entity’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board, which constitutes the accounting authority

• conclude on the appropriateness of the board, which constitutes the accounting authority use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the NSFAS’ ability to continue as a going concern. If I conclude that a material uncertainty exists, J am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause a public entity to cease continuing as a going concern

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

Communication with those charged with governance3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

4. I also confirm to the accounting authority that I have complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and, where applicable, related safeguards.


* During the period under review grants were received from the South African government via the Department of Higher Education and Training, the Department of Basic Education, the Department of Agriculture Forestry and Fisheries, the Department of Defence and Military Veterans, the National Skills Fund, the Department of Justice, the Department of Social Development, Kwazulu Natal Premiere office, Gauteng Gambling Board, Agriculture SETA, Bank SETA, Chemical Industries and Training authority, Fiber Processing and Manufacturing SETA, Food and Beverage SETA, Health and Welfare SETA, Manufacturing Engineering and Related services SETA, Safety and Security SETA, Services SETA, Transport Education Training Authority SETA, Wholesale and Retail SETA and various other donors.

** Final Year Programme loans are converted to a 100% bursary if the student meets the academic requirements for graduation. Up to 40% of all other loans may be converted to a bursary based on academic performance. Certain funding categories provide 100% bursaries for university students.

*** Bursaries awarded to TVET College students less credit balances due to NSFAS.

**** This is not an indication of the graduation rate for NSFAS beneficiaries, but of the number of courses/modules passed.

2. Going concernThe annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future

operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

3. BoardThe members of the entity during the year and up to the date of this report are as follows:

Sizwe Nxasana (Chairperson) Appointed 01 August 2015

Steven Zwane (Executive Officer) Appointed 01 September 2017

Lerato Nage (Acting Executive Officer) 16 February 2017 to 31 August 2017

Mary Bomela Co-opted 29 July 2016

Julia De Bruyn Appointed 01 August 2013, Re-appointed 17 August 2017

Prof. Neil Garrod Appointed 24 June 2015

Nathan Johnstone Re-appointed 16 April 2013, Term ended 16 April 2017

Zirk Joubert Appointed 17 August 2017

Rose Keanly Co-opted 29 July 2016

Thandi Lewin Appointed 1 February 2018

Sibongile Masinga Appointed 24 June 2011, Re-appointed 24 June 2015

Nafisa Mayat Appointed 24 June 2015

Thabo Moloja Appointed 16 April 2013, Re-appointed 17 August 2017

Prof. Themba Mosia Appointed 24 June 2011, Re-appointed 24 June 2015

Lumko Mtimde Appointed 24 June 2015

Yershen Pillay Appointed 16 April 2013, Re-appointed 17 August 2017

Jaco Van Schoor Appointed 24 June 2015, Resigned 20 January 2018

Yonke Twani Appointed 17 August 2017

Pearl Whittle Appointed 1 November 2013, Term ended 1 February 2018

Andre Zeeman Co-opted 31 May 2016

4. Corporate governanceThe Board exercises effective control over the entity, its plans and strategy and acknowledges its responsibilities as to strategy, compliance with internal policies, external laws and regulations, effective risk management and performance measurement, transparency and effective communication both internally and externally by the entity in accordance with the NSFAS Act as amended.

In order to ensure the effective exercise of its functions in terms of the Act, the Board has established committees comprising Board members as well as co-opted experts who are not members of the Board, where required. The Executive and Finance Committees are established in terms of the NSFAS Act, as amended. The Audit and Risk Committee is established in terms of the Public Finance Management Act, as

amended. The Board has also established the Human Resources and Remuneration Committee and the Information and Communication Technology Committee. Meetings of Board committees are held in accordance with approved terms of reference. The Executive Officer is the secretary to the board in terms of section 91(b) of the NSFAS Act, and is assisted in this function by the board committee officer.

Report of the Board members Report of the Board members

1. General review (continued)

The NSFAS Board submits its report for the year ended 31 March 2018.The NSFAS Board submits its report for the year ended 31 March 2018.


5. Board expenses, Executive and Senior Managers' emolumentsFigures in Rand thousand

Fees Retirement fund contributions

Medical contributions

Expenses Total package 2018

Total package 2017

Board expenses

Meeting fees* 822 - - - 822 889

Travel and accommodation - - - 1,223 1,223 1,298

822 - - 1,223 2,045 2,187

* Board meeting fees per board member 2018 Fees 2018 Expenses 2018 Total

Mary Bomela 76 63 139

Julia De Bruyn - 69 69

Prof. Neil Garrod 67 176 243

Nathan Johnstone 137 132 269

Zirk Joubert - 25 25

Rose Keanly 24 - 24

Sibongile Masinga 156 160 316

Nafisa Mayat 48 119 167

Thabo Moloja 59 78 137

Prof. Themba Mosia 48 67 115

Lumko Mtimde 57 85 142

Sizwe Nxasana - 125 125

Yershen Pillay 15 20 35

Yonke Twani 23 74 97

Jaco Van Schoor 40 21 61

Andre Zeeman 72 9 81

822 1,223 2,045

Salary or fee

Retirement fund contributions

Medical contributions

Other Total package 2018

Total package 2017

Executive Managers - a

Executive Officer - b - - - - - 1,922

Executive Officer (Acting) - c 816 - 8 9 833 145

Executive Officer - d 1,519 73 48 485 2,125 -

Chief Financial Officer - e 1,086 - 12 12 1,110 1,522

Chief Financial Officer (Acting) - f 616 - 30 7 653 -

Chief Information Officer - g 351 40 - 98 489 1,862

Chief Information Officer - h 741 - - 155 896 -

Human Resources Executive - i 560 - - 145 705 -

5,689 113 98 911 6,811 5,451

a Executive Managers include: Chief Risk Officer - Pavashini Naidoo Appointed: 01 March 2016 (seconded from the banking sector, NSFAS does not incur any costs) Chief Operating Officer (Acting) - Victor Rambaub Msulwa Daca (Executive Officer) resigned on 31 March 2017, on leave from 1 February 2017.c Lerato Nage - Acting from 16 February 2017 to 31 August 2017.d Steven Zwane (Executive Officer) appointed 1 September 2017.e Lerato Nage Chief Financial Officerf Morgan Nhiwatiwa Chief Financial Officer Acting from 1 March 2017 - 31 August 2017g Richard Mackinnon-Little: Chief Information Officer resigned 30 June 2017h Ashveer Rajcoomar: Chief Information Officer appointed 1 November 2017i Vuyokazi Dwane (HR Executive) appointed 1 December 2017

5. Board expenses, Executive and Senior Managers' emoluments (continued)

Report of the Board members Report of the Board membersThe NSFAS Board submits its report for the year ended 31 March 2018.The NSFAS Board submits its report for the year ended 31 March 2018.


6. Effectiveness of internal controlsBased on the Audit and Risk Committee’s consideration of information and explanations provided by management, the Board is of the opinion that the entity’s system of internal controls provides a reasonable basis for the preparation of reliable financial statements.

7. Nature of activitiesNSFAS is mandated to provide financial assistance in the form of loans and bursaries to eligible students at public higher education institutions. NSFAS also disburses bursaries to students at Technical and Vocational Education and Training (TVET) colleges.

The activities include administration of student loans and bursaries and the recovery of loans from students once they are employed and earning in excess of R30,000 per annum. Up to 40% of a student loan awarded in a particular year can be converted into a bursary dependent upon the number of courses a student

passes in that year. From the 2011 to the 2017 academic year, students who qualify for DHET Final Year Programme funding have 100% of their loan converted to a bursary where the requirements for graduation have been met.

REPAYMENT OF STUDENT LOANSThe repayment of student loans is dependent upon the employment and income level of the debtor. For the year under review, the NSFAS interest rate on student loans was pegged at 80% of the

South African Reserve Bank Repurchase Rate, as at 1 April 2017, and was fixed for the year at 5.6%. This is consistent with the way in, which the interest rate was determined in the prior year. The rate

at, which interest is charged on student loans and non-market repayment terms contributes to the material impairment losses and social benefit component on the valuation of the loan book.

NEW BURSARY PROGRAMMEOn the 16th of December 2017, the former President Zuma announced a new bursary funding programme for students from poor and working-class families whose gross combined family household income is up to a maximum of R350 000 per annum from the 2018 academic year studying at public

higher education institutions. This new programme would be phased in over a period of five (5) years. Prior to the new bursary programme announcement, the financial criteria to receive bursary funding from NSFAS, for both first time entrant (FTE) and continuing students, was a gross household annual income

of up to R122 000. Under the new programme, the criterion was amended to a gross annual household income of up to R350 000 in order to give effect to the President’s announcement.

8. Assumption set used in the loan valuation modelNSFAS is required, by the Standards of Generally Recognised Accounting Practice (GRAP), to determine the fair value of student loans on an annual basis for financial reporting purposes. The assumptions used in the valuation model are based on an analysis of the NSFAS loan book history data and other relevant sources of information.

The primary assumptions in the valuation of the loan book that are not directly driven by market variables and where

judgement is required reflect the progression of the student from receiving a loan, to exiting the university to commencing payment and then the pattern of payment once payment has commenced. The assumptions are set with reference to the actual experience of the entity over time.

Assumption setting history:31 March 2017: The model assumptions were reassessed for the 2017 valuation exercise to take into account the experience from 1 January 2016 to 28 February 2017. As a result, the “Old” interest rule (where interest accrued from the date of issue of the loan) and “New” interest rule (where interest accrues from one year after the date of exit of the student) assumptions have been combined into a single assumption to improve computational efficiency and recognise the increasing volume of the “New” interest rule data taken into account in the assumption setting exercise.

31 March 2018: The model assumptions were reassessed for the 2018 valuation exercise to take into account the experience up to 28 February 2018 in respect of the progress of debtors to exit from studies and thereafter to commencing repayment of loans. The improved collection levels have improved the outlook in respect of early loans but have not yet impacted later loans and this experience is reflected in the valuation results.

9. Contingent liability for student loans and bursariesThe new student centered model allows students registered at both universities and TVET colleges to apply directly to NSFAS for loans and bursaries rather than through the respective institutions. Students who are eligible at being registered at an institution have loans and bursaries approved for the duration of their studies, subject to their meeting the promotion requirements and the entity continuing to receive

funding from the government. This contractual commitment by the entity to fund students for the duration of their studies has resulted in a contingent liability of R34,669,486,741 (2017: R25,103,733,043) being disclosed in note 27 as the future obligation in respect of these students.

10. Payments in excess of contract amountsAs disclosed in note 36, the entity made payments to students and institutions, in excess of contract amounts amounting to R284,705,536. This resulted in the entity incurring irregular expenditure.



11. Supply chain managementDuring the 2017 - 2018 financial year, the Board approved the write-off of irrecoverable irregular expenditure incurred by the entity during the period 2009 - 2010 to 2011 - 2012 amounting to R55,628,558 following an investigation completed by internal audit and an assessment performed by the SCM unit.

The irregular expenditure was written off as irrecoverable at the Board meeting held on 24 November 2017 in accordance with the National Treasury Irregular Expenditure Guidelines. Further information in relation to this can be found in Note 36 to the financial statements.

The following actions were implemented by the entity to prevent the re-occurrence of irregular expenditure:

• Training of all SCM staff on a regular basis on legislative requirements and updates• Re-assessment of the delegation of authority framework• Review and update of the SCM policy• Design of SCM process flows, standard operating procedures and related evaluation checklists in accordance with key

legislative prescripts and related requirements• Strict control over deviations from procurement processes• Ensuring that the composition of the bid committees (evaluation and adjudication) are appropriate

12. Student awards and repaymentsACADEMIC YEARS

2017 2016 TO DATE

Student awards by institution category

Rand value Number of students^



Universities 12,106,307,436 260,002 10,304,756,649 225,950 72,186,723,256 1,343,212

TVET colleges 2,012,107,916 200,339 2,106,267,265 225,557 13,997,592,489 1,054,051

Other institutions* - - - - 141,611,314 1,986

14,118,415,352 460,341 12,411,023,914 451,507 86,325,927,059 2,399,249

^ The difference between the number of students awards by institution category and by funder is due to the fact that students may be funded from more than one funder category.

FINANCIAL YEARS

Repayments 2018 2017 1992 - 2018

Loans recovered 726,093,735 544,825,839 6,465,543,609

Less Credit Balances*** (213,329,732) (152,424,849) (1,223,211,253)

Net recoveries received** 512,764,003 392,400,990 5,242,332,356

Since its inception in 1991, the entity has awarded to students approximately R86,325,927,059 (2017: R72,208,511,707) in loans and bursaries. For the year under review, NSFAS assisted 460,341 students with 592,749 awards. Loan repayments, excluding donor settlements and credit balances on fee accounts, were at a monthly average of R42.7 million (2017: R32.7 million).

* These are awards designated by certain funders for students/learners at specific agricultural colleges and/or schools, the National Institute for Higher Education, and other colleges.

** The net amount recovered from debtors of R512,764,003 was 13% below collections target of R588,559,292 and 25% below the actual target of R686,000,000.

*** Credit balances on student fee accounts returned by institutions are applied to reduce the original loan capital.

12. Student awards and repayments (continued)



Academic years

2017 2016

Rand value Number ofstudents ^


Department of Higher Education and Training

General allocation 9,669,105,151 224,491 6,526,663,994 160,309

Final year programme 40,713,353 899 1,007,613,382 22,461

Teacher allocation 1,507,727 27 118,180,871 3,097

Students with disabilities 37,999,515 765 58,626,161 1,022

Historic debt 157,333,623 6,311 - -

National Skills Fund 576,679,358 11,639 769,109,612 15,748

SAICA partnership - Thuthuka Fund 21,820,656 443 42,614,265 865

TVET Bursaries 2,012,107,916 200,339 2,105,354,495 225,536

Department of Basic Education

Funza Lushaka teacher bursaries 1,091,737,945 14,899 1,012,506,525 14,136

Sector Education and Training Authorities 52,485,134 1,108 93,724,753 2,172

Other funding categories* 456,924,974 11,797 676,629,856 19,243

14,118,415,352 472,718 12,411,023,914 464,589

^ The difference between the number of students awards by institution category and by funder is due to the fact that students may be funded from more than one funder category.

* Other funding categories include funds from KwaZulu Natal Provincial Government, private donors and institution recovered monies.

12. Student awards and repayments (continued)

Report of the Board members Statement of Financial Position

2018 2017

Amounts in Rand thousand Note(s) Restated

ASSETS

Current Assets

Trade and other receivables (non-exchange) 4 5,163 12,214

Prepayments to institutions (exchange) 5 3,559,187 1,402,971

Student loans (exchange) - short term 6 754,248 686,751

Amounts owing by institutions (exchange) short term 7 456,968 438,200

Cash and cash equivalents 8 3,671,317 3,897,284

Amounts owing by other funders 33 82,274 21,476

8,529,157 6,458,896

Non-Current Assets

Property, plant and equipment 2 15,427 15,827

Intangible assets 3 25,165 32,779

Student loans (exchange) - long term 6 9,554,063 8,675,272

Amounts owing by institutions (exchange) - long term 7 20,927 19,639

Amounts owing by other funders 33 5,234 27,038

9,620,816 8,770,555

Total Assets 18,149,973 15,229,451

LIABILITIES

Current Liabilities

Provisions 9 27,235 31,919

Amounts due to institutions (non-exchange) 10 162,465 459,607

Deferred income 11 3,639,337 3,568,542

Trade and other payables (exchange transactions) 12 187,803 96,793

4,016,840 4,156,861

Total Liabilities 4,016,840 4,156,861

Net Assets 14,133,133 11,072,590

Net Assets

Capital fund 14,133,133 11,072,590

Total Net Assets 14,133,133 11,072,590

The NSFAS Board submits its report for the year ended 31 March 2018. Annual Financial Statements for the year ended 31 March 2018


Statement of Financial Performance

2018 2017

Amounts in Rand thousand Note(s) Restated

Revenue

Administration fees (exchange) 13 25,209 20,408

Administration grants (non-exchange) 13 225,974 177,118

Grants received for student awards (non-exchange) 14 13,989,421 11,615,454

Interest revenue (exchange) 22 1,475,784 1,123,621

Commission Revenue - SBux (exchange) 23 3,803 2,798

Unallocated debtors receipts (non-exchange) 20 2,427 94

Other income (exchange) 41 4,868 27,569

Total revenue 15,727,486 12,967,062

Expenditure

Personnel costs 15 (149,111) (123,332)

Asset management fees 21 (270) -

Depreciation and amortisation 2 & 3 (14,812) (11,206)

Irrecoverable debts written-off 16 (77,624) (72,813)

Bursaries - Other funding sources (5,375,932) (5,219,013)

Bursaries - TVET Colleges funding source (2,012,108) (2,106,267)

General Expenses (92,313) (58,336)

Consulting and professional fees 24 (26,731) (24,403)

Audit fees 17 (6,645) (9,724)

Total Operational expenditure (7,755,546) (7,625,094)

Operating surplus 7,971,940 5,341,968

Impairment loss - Amounts owing by other funders 39 (17,062) (4,291)

Social benefit component on student loans issued 6 (3,903,282) (3,534,597)

Model adjustments 30 (991,053) 155,346

Impairment loss - Amounts owing by institutions (exchange) - long term 40 - (30,502)

Other losses (4,911,397) (3,414,044)

Surplus for the year 38 3,060,543 1,927,924

Statement of Changes in Net Assets

Amounts in Rand thousand Capital fund Total reserves Accumulated surplus/(deficit)

Total net assets

Opening balance as previously reported 9,089,785 9,089,785 - 9,089,785

Prior period error correction (refer note 34) 54,882 54,882 - 54,882

BALANCE AT 01 APRIL 2016 - RESTATED 9,144,667 9,144,667 - 9,144,667

Surplus for the year - - 1,927,924 1,927,924

Transfer to capital fund 1,927,924 1,927,924 (1,927,924) -

BALANCE AT 01 APRIL 2017 - RESTATED 11,072,590 11,072,590 - 11,072,590

Surplus for the year - - 3,060,543 3,060,543

Transfer of capital fund 3,060,543 3,060,543 (3,060,543) -

BALANCE AT 31 MARCH 2018 14,133,133 14,133,133 - 14,133,133

Annual Financial Statements for the year ended 31 March 2018Annual Financial Statements for the year ended 31 March 2018


Statement of Cash Flow

2018 2017

Amounts in Rand thousand Note(s) R’000 R’000

CASH FLOW FROM OPERATING ACTIVITIES

Receipts

Grants for capital fund and administration costs 14,421,599 14,714,885

Student loan repayments - capital 512,764 392,401

Amounts due from institutions received - 342,914

Amounts owing by other funders received - 74,737

14,934,363 15,524,937

Payments

For student awards (15,129,290) (12,756,212)

To employees and suppliers (254,631) (253,167)

Amounts due to institutions paid (297,142) -

(15,681,063) (13,009,379)

Net cash (outflow)/ inflow from operating activities 18 (746,700) 2,515,558

Cash flow from investing activities

Purchase of property, plant and equipment 2 (6,801) (8,191)

Interest income 527,535 477,004

Net cash flow from investing activities 520,734 468,813

Net (decrease)/ increase in cash and cash equivalents (225,967) 2,984,372

Cash and cash equivalents at the beginning of the year 3,897,284 912,912

Cash and cash equivalents at the end of the year 8 3,671,317 3,897,284

Statements of Comparison of Budget and Actual Amounts

Amounts in Rand thousand Approved budget

Adjustments Final Budget Actual amounts on comparable

basis

Difference between final

budget and actual

Reference

STATEMENT OF FINANCIAL PERFORMANCE

Revenue

Administration fees (exchange) 23,543 - 23,543 25,209 1,666

Administration grants (non-exchange) 225,974 24,341 250,315 225,974 (24,341) 37.2

Commission Revenue - SBux (exchange) - - - 3,803 3,803 37.1

Interest revenue (exchange) 839,952 339,850 1,179,802 1,475,784 295,982 37.2/37.3

Grants received for student awards (non-exchange)

15,316,898 - 15,316,898 13,989,421 (1,327,477) 37.4

Unallocated debtors - - - 2,427 2,427 37.1

Other income (exchange) - - - 4,868 4,868 37.1

Total revenue 16,406,367 364,191 16,770,558 15,727,486 (1,043,072)

Expenditure

Personnel costs (151,958) (4,711) (156,669) (149,111) 7,558 37.2/37.5

Asset management fees (exchange) - - - (270) (270) 37.1

Depreciation and amortisation (30,545) 15,000 (15,545) (14,812) 733 37.2

Irrecoverable debts written off - - - (77,624) (77,624) 37.1

Bursaries - Other funding sources (7,670,016) - (7,670,016) (5,375,932) 2,294,084 37.6

Bursaries - DHET TVETColleges funding source

(2,437,620) - (2,437,620) (2,012,108) 425,512 37.7

General Expenses (73,526) (22,708) (96,234) (92,313) 3,921 37.2

Consulting and professional fees (15,331) (14,927) (30,258) (26,731) 3,527 37.2

Audit fees (8,701) - (8,701) (6,645) 2,056 37.8

Total expenditure (10,387,697) (27,346) (10,415,043) (7,755,546) 2,659,497

Surplus 6,018,670 336,845 6,355,515 7,971,940 1,616,425

Impairment loss - Amounts owing by other funders non-current

- - - (17,062) (17,062) 37.1

Social benefit component on student loans issued

(3,357,867) - (3,357,867) (3,903,282) (545,415) 37.9

Model adjustments 147,579 - 147,579 (991,053) (1,138,632) 37.9

Other losses (3,210,288) - (3,210,288) (4,911,397) (1,701,109)

Surplus for the year 2,808,382 336,845 3,145,227 3,060,543 (84,684)

Annual Financial Statements for the year ended 31 March 2018



Amounts in Rand thousand

Approved budget


basis


budget and actual

Reference

STATEMENT OF FINANCIAL POSITION

ASSETS

Current Assets

Amounts owing by other funders 22,017 (1,614) 20,403 82,274 61,871 37.10

Trade and other receivables(non-exchange)

- 12,825 12,825 5,163 (7,662) 37.2/37.11

Prepayments to institutions (exchange) 1,613,417 - 1,613,417 3,559,187 1,945,770 37.11

Student loans (exchange) - short term 505,132 215,957 721,089 754,248 33,159 37.2/37.12

Amounts owing by institutions (exchange) short term

381,505 (11,211) 370,294 456,968 86,674 37.13

Cash and cash equivalents 1,054,413 3,232,599 4,287,012 3,671,317 (615,695) 37.2/37.15

3,576,484 3,448,556 7,025,040 8,529,157 1,504,117

Non-Current Assets

Property, plant and equipment 14,459 - 14,459 15,427 968

Intangible assets 9,104 - 9,104 25,165 16,061 37.16

Student loans (exchange) - long term 11,812,339 - 11,812,339 9,554,063 (2,258,276) 37.12

Amounts owing by institutions (exchange) - long term

40,626 - 40,626 20,927 (19,699) 37.17

Amounts owing by other funders 22,292 - 22,292 5,234 (17,058) 37.18

11,898,820 - 11,898,820 9,620,816 (2,278,004)

Total Assets 15,475,304 3,448,556 18,923,860 18,149,973 (773,887)

LIABILITIES

Current Liabilities

Trade and other payables(exchange transactions)

61,028 (11,271) 49,757 187,803 138,046 37.19

Provisions 67,012 (36,690) 30,322 27,235 (3,087) 37.2/37.20

Amounts due to institutions (non-exchange)Deferred income

128,654

910,517

353,931

2,692,633

482,585

3,603,150

162,465

3,639,337

(320,120)

36,187

37.2/37.14

1,167,211 2,998,603 4,165,814 4,016,840 (148,974)

Total Liabilities 1,167,211 2,998,603 4,165,814 4,016,840 (148,974)

Net Assets 14,308,093 449,953 14,758,046 14,133,133 (624,913)

NET ASSETS

Reserves

Capital fund 14,308,093 449,953 14,758,046 14,133,133 (624,913)

Amounts in Rand thousand

Approved budget


basis


budget and actual

Reference

Cash Flow StatementCASH FLOW FROM OPERATING ACTIVITIES

Receipts

Grants for capital fund and administration costs

13,237,844 1,859,517 15,097,361 14,421,599 (675,762) 37.21

Student loan repayment - capital 518,873 - 518,873 512,764 (6,109)

13,756,717 1,859,517 15,616,234 14,934,363 (681,871)

Payments

For student awards (15,014,422) - (15,014,422) (15,129,290) (114,868)

To employees and suppliers (228,038) - (228,038) (254,631) (26,593)

Amounts due to institutions paid (881,830) - (881,830) (297,142) 584,688 37.1/37.22

(16,124,290) - (16,124,290) (15,681,063) 443,227

Net cash flow from operating activities (2,367,573) 1,859,517 (508,056) (746,700) (238,644)

Cash flow from investing activities

Purchase of property, plant and - equipment - Normal Operations

(3,829) - (3,829) (6,801) (2,972) 37.23

Purchase of other intangible assets - Normal Operations

(5,026) - (5,026) - 5,026 37.22

Interest Income 314,288 - 314,288 527,535 213,247 37.2/37.24

Net cash flow from investing activities 305,433 - 305,433 520,734 215,301

Net increase/(decrease) in cash and cash equivalents

(2,062,140) 1,859,517 (202,623) (225,967) (23,343)

Cash and cash equivalents at the beginning of the year

3,897,284 - 3,897,284 3,897,284 -

Cash and cash equivalents at the end of the year

1,835,144 1,859,517 3,694,661 3,671,317 (23,343)



Annual Financial Statements for the year ended 31 March 2018Annual Financial Statements for the year ended 31 March 2018


1. Presentation of annual financial statementsThe National Student Financial Aid Scheme is a statutory body established by the National Student Financial Aid Scheme Act (No. 56 of 1999) as amended, and a Schedule 3A public

entity in terms of the Public Finance Management Act (No. 1 of 1999) as amended.

1.1 Basis of accountingBASIS OF PREPARATIONThe annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention except for financial instruments measured at fair value unless specified otherwise. They are presented in South African Rand, which is the functional currency of the entity, and prepared on a going concern basis.

All financial information presented in Rand are rounded to the nearest thousand (R’000), unless otherwise stated. This is indicated on each page with financial information.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP.

The accounting policies applied are consistent with those used to present the previous year’s financial statements, unless explicitly stated. The details of any changes in accounting policies are explained in the relevant policy.

The statement of cash flow has been prepared in accordance with the direct method. The amount and nature of any restrictions on cash balances are disclosed.

COMPARATIVE INFORMATIONWhen the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identified in the current year, the correction is made

retrospectively as far as is practicable, and the prior year comparatives are restated accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable, and the prior year comparatives are restated accordingly.

GRAP STANDARDS ISSUED BUT NOT YET EFFECTIVEThe following GRAP Standards have been issued but are not yet effective and have not been early adopted by the entity:

GRAP 32 Service Concession Arrangements: GrantorThis Standard is to prescribe the accounting for service concession arrangements by the grantor, a public sector entity. No significant impact is expected as the entity does not participate in such business transactions.

GRAP 34 Separate Financial StatementsThe objective of this Standard is to prescribe the accounting and disclosure requirements for investments in controlled entities, joint ventures and associates when an entity prepares separate financial statements. No impact is expected as the entity does not have controlled entities, joint ventures and/or associates.

Accounting Policies

GRAP 35 Consolidated Financial StatementsThe objective of this Standard is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. No impact is expected as the entity does not control any other entities.

GRAP 36 Investments in Associates and Joint VenturesThe objective of this Standard is to prescribe the accounting for investments in associates and joint ventures and to set out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. No impact is expected as the entity does not participate in such business transactions.

GRAP 37 Joint ArrangementsThe objective of this Standard is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (i.e. joint arrangements). No impact is expected as the entity does not participate in such business transactions.

GRAP 38 Disclosure of Interests in Other EntitiesThe objective of this Standard is to require an entity to disclose information that enables users of its financial statements to evaluate the nature of, and risks associated with, its interests in controlled entities, unconsolidated controlled entities, joint arrangements and associates, and structured entities that are not consolidated; and the effects of those interests on its financial position, financial performance and cash flow.

No significant impact is expected as the entity does not participate in such business transactions.

GRAP 108 Statutory ReceivablesThis Standard is to prescribe accounting requirements for the recognition, measurement, presentation and disclosure of statutory receivables. Preliminary investigations indicate that the impact on the financial statements will be minimal.

GRAP 109 Accounting by Principals and AgentsThe objective of this Standard is to outline principles to be used by an entity to assess whether it is party to a principal-agent arrangement, and whether it is a principal or an agent in undertaking transactions in terms of such an arrangement. No significant impact is expected as the entity does not participate in such business transactions.

GRAP 110 Living and Non-living ResourcesThe objective of this Standard is to prescribe the recognition, measurement, presentation and disclosure requirements for living resources; and disclosure requirements for non-living resources. No impact is expected as the entity does not participate in such business transactions.

Accounting Policies

1.1 Basis of accounting (continued)

Annual Financial Statements for the year ended 31 March 2018 Annual Financial Statements for the year ended 31 March 2018


1.1 Basis of accounting (continued)

STANDARDS EARLY ADOPTEDThe entity has chosen to early adopt the following standard and interpretations:

GRAP 20 Related Party DisclosureThe voluntary early adoption of GRAP 20: Related party disclosure, which will become effective beginning of or after April 2019 is to provide reliable and more relevant information to the end user of these financial statements. (GRAP 12, 31 (b).

The objective of this Standard is to ensure that a reporting entity’s financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and surplus or deficit may have been affected by the existence of related parties and by transactions and outstanding balances with such parties. The impact of adopting this standard is disclosed in note 28.

1.2 Significant judgements and sources of estimation uncertaintyIn preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material to the annual financial statements.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in, which the estimates are revised and in any future periods affected.

Information about assumptions and estimation uncertainties that may have a significant risk of resulting in a material adjustment within the next financial year includes:

INITIAL RECOGNITION OF STUDENT LOANS AT FAIR VALUEStudent loans are recognised initially at fair value plus any directly attributable transaction costs.

Market and client specific actuarial assumptions are used in the estimate of the fair value of the student loans at initial recognition.

Subsequent to initial recognition, student loans are measured at amortised cost using the effective interest method, less any impairment allowances.

NSFAS has been granting loans since 1991 and therefore has a detailed repayment profile for its debtor database in terms of historic loss experience.

NSFAS loans have no fixed repayment terms and the debt is only due and payable one year after exit from the higher education system and if the student is employed and earning more than R30,000 per annum.

The following parameters have been applied effective 1999:

• Transition from being a registered student to graduation or exit does not exceed 10 years• Period to first repayment is based on a 15 year analysis of commencement of repayment by students

• Graduates and students who exited for other reasons are assessed independently• The cash flow or repayment profile is calculated as a percentage of the outstanding balance at each month• The interest rate used to discount the projected cash flow is referenced to long term government bond yields as a proxy

for the risk free rate• The mortality of borrowers has been included in forecasting the cash-flow profile of the loans• Assumptions regarding future mortality experience in South Africa are set, based on published South African actuarial

information• Although the entity does write-off loans in the event of permanent disability and death, this has not been included in the

valuation model as the impact is not considered material• The contingency relating to the awarding of the student loans for a full qualification of study rather than on an academic

year basis

DEFERRED INCOMEThe entity has a number of fund administration agreements with donors. The entity believes that the transferor could enforce a requirement to return

the asset or unspent monies in the event that the funds are not used for the intended purposes. The entity also believes that the transferor would enforce

the stipulation in the agreements in the event of a breach. The stipulations in the agreement therefore meet the definition of a condition.

CONTINGENT LIABILITIESThe entity has a number of fund administration agreements with donors, which include the under mentioned clause:

“The entity will retain all funds recovered from all institution borrowers from time to time, in order to re-lend these funds to further institution borrowers selected by the institution from time to time in the manner contemplated in the agreement, or to refund the funds to the institution

at the request of the institution.” The entity believes that the recovered funds should as a result of the above clause be treated as a contingent liability for funding.

The new student-centred operating model makes it possible for students, who previously had to apply at institutions, to apply directly to NSFAS for loans and bursaries. Students who are eligible have loans and bursaries approved for the

duration of their studies, subject to their meeting the promotion requirements (and continued funding from DHET), rather than being required to reapply for funding for each subsequent academic year.

The entity believes that the contractual commitment due to fund students for the duration of their studies should be treated as a contingent liability.

BUDGET INFORMATIONVariances of 15% or more between budget and actual amounts are regarded as material. All material differences are explained in the notes to the annual financial statements.

INITIAL RECOGNITION OF STUDENT LOANS AT FAIR VALUE (continued)

1.2 Significant judgements and sources of estimation uncertainty (continued)

Accounting Policies Accounting PoliciesAnnual Financial Statements for the year ended 31 March 2018 Annual Financial Statements for the year ended 31 March 2018


STUDENT LOANS IMPAIRMENTThe student loans offered by the entity are impaired on the basis of mortality, actual transition from student state and changes in payment experience. Mortality is assessed on an annual basis on those deaths assumed to have occurred, but not yet recognised and is included in impairment.

The entity writes-off certain loans when they are deemed to be uncollectable.

The entity writes-off a student loan and any related allowances for impairment losses, when the entity determines

that the loan is uncollectable. This determination is made after notification of the death or permanent disability of the borrower. A list of identity numbers is verified against the Department of Home Affairs database on an annual basis for verification of borrowers that are deceased. For disability, medical certification is required. The individual loans are then written off on approval by the Board.

The entity considers evidence of impairment for loans and receivables at both a specific asset and collective

level. All individually significant loans and receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that may have been incurred but not yet identified. Loans and receivables, such as the student loans offered by the entity that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

DEPRECIATIONProperty, plant and equipment, except for land, is depreciated on the straight line basis over their expected useful lives to their estimated residual value.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where appropriate, the term of the

relevant lease, and are recognised in the Statement of Financial Position.

AMORTISATIONAmortisation is provided to write down the intangible assets, on a straight line basis, to their residual values.

BURSARIES AND CREDITSStudent loans offered by the entity are reduced by credit balances returned by institutions and a bursary conversion based on the rules applicable to that loan. In instances where Institutions have not confirmed the credits due to

NSFAS, an estimate is made of the credit amount based on historical information using the total historical credit as a percentage of the total loan amount. In instances where Institutions have not confirmed the subjects enrolled and

subjects passed in order for a bursary conversion to be done, an estimate of the bursary amount has been calculated based on historical pass rates.

IMPACT OF THE NEW BURSARY FUNDING PROGRAMME ON THE VALUATION OF THE LOAN BOOKOn the 16th of December 2017, Former President Zuma announced a new bursary funding programme for students from poor and working-class families whose gross combined family household income is up

to a maximum of R350 000 per annum from the 2018 academic year studying at public higher education institutions. This bursary funding programme would be phased in over a period of five (5)

years. The announcement was silent regarding the current debt owed to the NSFAS. The DHET subsequently clarified that the issue of NSFAS previous debt will be dealt with after a due diligence


exercise has been completed by the DHET in consultation with the Department of Planning, Monitoring and Evaluation and the National Treasury.

This process is scheduled to be completed by end of August 2018. As disclosed in the accounting policies, the fair value of student loans on initial recognition is estimated by using an

actuarial discounted cash flow model. The pronouncement has resulted in significant uncertainty on whether NSFAS would be able to continue with collections post 31 August 2018.

Management determined that it would be appropriate to value the entire loan book assuming collections will continue into the future based on the following:

• All debt remains payable per current terms (loan agreement forms ) and NSFAS Act;• The impact of the due diligence exercise is an unknown at this stage; and• There is currently not enough information to change assumptions about the future and therefore prior year assumptions

are the most reliable information

1.3 Property, plant and equipmentINITIAL RECOGNITIONProperty, plant and equipment are tangible non-current assets that are held for use in the production or supply of goods or services, or for administrative purposes, and are expected to be used during more than one period.

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits or service potential associated with the item will flow to the entity; and• the cost of the item can be measured reliably

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

INITIAL MEASUREMENTProperty, plant and equipment is initially measured at cost at the acquisition date.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost. The cost also includes

the necessary costs of dismantling and removing the asset and restoring the site on, which it is located.Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is

recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is de-recognised. Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition. Where an item of property, plant and equipment is acquired




in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets,

the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable,

its deemed cost is the carrying amount of the asset(s) given up.

SUBSEQUENT MEASUREMENT – COST MODELProperty, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

DEPRECIATIONProperty, plant and equipment, except for land, is depreciated on the straight line basis over their expected useful lives to their estimated residual value.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful lifeLand IndefiniteBuildings 50 yearsFurniture and equipment 5 yearsMotor vehicles 5 YearsIT equipment 3 Years

The residual value, the useful life of an asset and the depreciation method are reviewed annually and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance.

IMPAIRMENTAll NSFAS’s items of property, plant and equipment are considered to be non-cash generating assets as no commercial return is generated from these assets.

The carrying amounts of assets are reviewed at each reporting date to determine whether there is an indication of impairment. If there is an indication that an asset may be impaired, its recoverable service amount is estimated. The estimated recoverable service amount is the higher of the asset’s fair value less cost to sell and its value in use. When the recoverable service amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. The

reduction is an impairment loss.The value in use is determined through depreciated replacement cost, restoration cost approach or service units approach. The decision to the approach to use is dependent on the nature of the identified impairment.

The impairment loss is recognised immediately in the Statement of Financial Performance. After the recognition of an impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value if any, on a systematic basis over its remaining useful life.

An impairment loss recognised in prior periods for an asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss and is recognised in the Statement of Financial Performance. The increased carrying amount attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in the prior periods.

1.3 Property, plant and equipment (continued)

DE-RECOGNITIONItems of property, plant and equipment are de-recognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the de-recognition of an item of property, plant and equipment is included in surplus or deficit when the item is de-recognised. The gain or loss arising from the de-

recognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.4 Intangible assetsINITIAL RECOGNITIONAn asset is identified as an intangible asset when it:

• is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability; or

• arises from contractual rights or other legal rights, regardless of whether those rights are transferable or separate from the entity or from other rights and obligations

An intangible asset is recognised when:

• it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and

• the cost or fair value of the asset can be measured reliably

Intangible assets are initially recognised at cost.

Where an intangible asset is acquired through a non-exchange transaction, the cost shall be its fair value as at the date of acquisition.

SUBSEQUENT MEASUREMENTIntangible assets are carried at cost less any accumulated amortisation and any impairment losses.

AMORTISATIONAmortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Item Useful lifeComputer software, internally generated 3 yearsComputer software, other 3 - 8 years

Intangible assets are considered to have finite useful lives. The depreciable amount of an intangible asset with a finite useful life is allocated on a systematic basis

over its useful life. Amortisation begins when the asset is available for use and ceases at the earlier of the date on, which the asset is classified as held for sale,

or included in a disposal group that is classified as held for sale, and the date on, which the asset is de-recognised.

1.3 Property, plant and equipment (continued)



COMPUTER SOFTWAREExpenditure on internally developed software is recognised as an asset when the entity is able to demonstrate its intention and ability to complete the development and use the software in a manner that will generate future economic benefits, and can reliably measure the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable to developing the software and capitalised borrowing costs, and are amortised over its useful life.

Internally developed software is stated at capitalised cost less accumulated amortisation and impairment. Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is recognised in the Statement of Financial Performance on a straight line basis over the estimated useful life of the software, from the date that it is available for use since this most

closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate and any changes are recognised as a change in accounting estimate in the Statement of Financial Performance.

IMPAIRMENTThe Phoenix loan and bursaries management system is considered to be a cash generating asset as a commercial return is expected from the use thereof. All other items of intangible assets are considered to be non-cash generating assets as no commercial return is expected from these.

The entity tests intangible assets with finite useful lives for impairment where there is an indication that an asset may be impaired. An assessment of whether there is an indication of possible impairment is performed at each reporting date. Where the carrying amount of an item of an intangible asset is greater

than the estimated recoverable service amount, it is written down immediately to its recoverable service amount and an impairment loss is charged to the Statement of Financial Performance.

DE-RECOGNITIONIntangible assets are de-recognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the

asset. The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between the sales proceeds and the

carrying value and is recognised in the Statement of Financial Performance.

1.5 Financial instrumentsCLASSIFICATIONThe entity classifies financial assets and financial liabilities into the following categories:

• Financial assets measured at amortised cost• Fair value financial assets• Financial liabilities measured at amortised cost

Classification depends on the purpose for, which the financial instruments were obtained/incurred and takes place at initial recognition.

1.4 Intangible assets (continued)

(I) NON-DERIVATIVE FINANCIAL ASSETSThe entity initially recognises financial assets on the trade date, which is the date on which the entity becomes a party to the contractual provisions of the instrument.

The entity de-recognises financial assets using trade date accounting. The entity de-recognises a financial asset when the contractual rights to the cash flow from the asset expire, are settled or waived, or it transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or the entity, despite having retained significant risks and rewards of ownership of the financial asset has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on transfer. Newly created rights and obligations shall be measured at their fair values at the date of de-recognition.

On de-recognition of a financial asset, the difference between the carrying amount of

the asset and the consideration received, including any new asset obtained less any new liability assumed, is recognised in the surplus or deficit.

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the entity has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial assets measured at amortised costFinancial assets comprise cash and cash equivalents, trade and other receivables, amounts owing by institutions and student loans.

Cash and cash equivalents comprise cash balances, call deposits with original maturities of three months or less.

Financial assets are non-derivative financial assets with fixed or determinable payments, excluding those that the

entity designates at fair value on initial recognition, or are held for trading that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition financial assets are measured at amortised cost using the effective interest rate method, less any impairment.

Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost. Fixed deposits that mature within three months after reporting date are recognised as cash equivalents.

The fair value of trade and other receivables is estimated as the present value of future cash flow, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

(II) NON-DERIVATIVE FINANCIAL LIABILITIESFinancial liabilities are recognised initially on the trade date at, which the entity becomes a party to the contractual provisions of the instrument.

The entity de-recognises a financial liability when its contractual obligations are discharged or cancelled or expire or waived. The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-

cash assets transferred or liabilities assumed, shall be recognised in surplus or deficit.

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the entity has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Fair value, which is determined, is calculated based on the present value of future principal and interest cash flow, discounted at the market rate of interest at the reporting date.

Trade and other payablesFinancial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest rate method

1.5 Financial instruments (continued)



Impairment of financial assetsAt each reporting date the entity assesses whether there is objective evidence that financial assets not carried at fair value are impaired. A financial asset or a group of financial assets is/are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset(s), and that the loss event has an impact on the future cash flow of the asset(s) that can be estimated reliably.

Objective evidence that financial assets are impaired can include significant financial difficulty of the borrower or issuer, default or delinquency by a borrower, restructuring of a loan or advance by the entity on terms that the entity would not otherwise consider, indications that a borrower or issuer will enter bankruptcy or other observable data relating to a entity or assets such as adverse changes in the payment status of borrowers or issuers in the entity, or economic conditions that correlate with defaults in the entity.

The student loans offered by the entity are impaired on the basis of mortality, actual transition from student state and changes in payment experience. Mortality is assessed on an annual basis on those deaths assumed to have occurred, but not yet recognised and is included in impairment.

The entity writes-off certain loans when they are deemed to be uncollectable.

The entity writes-off a student loan and any related allowances for impairment losses, when the entity determines that the loan is uncollectable. This determination

is made after notification of the death or permanent disability of the borrower. A list of identity numbers is sent to the Department of Home Affairs on an annual basis for verification of borrowers that are deceased. For disability, medical certification is required. The individual loans are then written off on approval by the Board.

The entity considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that may have been incurred but not yet identified. Loans and receivables, such as the student loans offered by the entity that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flow discounted at the asset’s original effective interest rate. Impairment losses are recognised in the Statement of Financial Performance and reflected in an allowance account against loans and advances. Interest on impaired assets continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed in the Statement of Financial Performance.

The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date that the impairment is reversed.

Student loansThe student loans offered by the entity are unique within the market. The primary focus of these loans is not profit generation, but rather to provide affordable financing for university students from low income households. The loans have no fixed repayment terms and the debt is only due and payable one year after exit and if student has become employed, and earning more than R30,000 per annum. Repayments are calculated on a sliding scale based on the debtor’s annual salary.

In prior years, a student could apply for a new loan for each year of study, which if granted, resulted in the student having multiple loans payable. From the 2017 academic year, students who qualify for funding will have funding approved for the entire qualification. Funding for subsequent years is dependent on students meeting promotional requirements.

Student loans are recognised initially at fair value at inception. The fair value of the loans on initial recognition is estimated by using an actuarial discounted cash flow model, which includes assumptions that are supported by observable market inputs and others that are based on historical loan repayment data. The subsequent value is calculated based on amortised cost using the original effective yield of the loans, adjusted for impairment.


A valuation model has been developed for, and in consultation with, the entity by actuaries. The model estimates the fair value at initial recognition as well as the ongoing amortised cost by estimating a cash flow profile for broadly homogenous groups of loans. The student loans are separated into smaller groups with similar characteristics such as age of loan, loan number and the gender and age of the borrower. The fair value of these homogenous groups is calculated individually and then combined to calculate the aggregated value of the portfolio.

The key assumption parameters used in the discounting model are listed in the use of estimates and judgement note 1.2 above.

Social benefit component of student loansA concessionary loan is a loan granted to or received by an entity on terms that are not market related. The primary focus of student loans is not profit generation, but rather to provide affordable financing for students from low income households studying in institutions of higher learning. As a result, these loans are granted on

terms that are not market related. On initial recognition, the entity analyses these loans into their component parts and accounts for each component separately. The entity accounts for the component that is a social benefit in surplus or deficit. The component of the loan that is a social benefit is determined as the difference between the fair value of the loan and the expected loan proceeds to be paid. Subsequent to initial recognition, the entity measures the loan component at amortised cost using the effective interest rate method less impairment losses.

1.6 LeasesA lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

OPERATING LEASES - LESSEEOperating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

1.7 Employee benefitsSHORT-TERM EMPLOYEE BENEFITSShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

An accrual is recognised for the amount expected to be paid under short-term cash benefits if the entity has a present legal or constructive obligation to pay this amount

as a result of past service provided by the employee, and the obligation can be estimated reliably. The cost of all short term employee benefits is recognised during the period in, which the employee renders the related service.

The liability for employee entitlements to wages, salaries and annual leave

represents the amount, which the entity has a present obligation to pay as a result of employees’ services provided to the Statement of Financial Position date. The liability has been calculated at undiscounted amounts based on current wage and salary rates.

DEFINED CONTRIBUTION PLANSPayments to defined contribution retirement benefit plans are charged as an expense as they fall due.




1.8 Provisions and contingenciesProvisions are recognised when:

• the entity has a present obligation as a result of a past event;• it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle

the obligation; and• a reliable estimate can be made of the obligation

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits

or service potential will be required, to settle the obligation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 27.

1.9 Revenue from exchange transactionsExchange transactions are defined as transactions where the entity receives assets or services, or has liabilities extinguished, and directly gives

approximately equal value to the other entity in exchange. Interest on student loans and interest on investments, administration fees, other income and

commission revenue are classified as revenue from exchange transactions.

MEASUREMENTRevenue is measured at the fair value of the consideration received or receivable.

UNCONDITIONAL GRANTS, TRANSFERS AND DONATIONS RECEIVEDUnconditional grants, transfers and donations received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset.

SERVICES IN KINDThe revenue for services in kind are recognised when:

• the amount of revenue can be measured reliably;• it is probable that the economic benefits or service potential associated with the transaction will flow to the entity;• the stage of completion of the transaction at the reporting date can be measured reliably; and• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably• the revenue is significant to the operations and/or service delivery objectives

The entity recognises assets donated that are significant to operations/service delivery objectives, when it is probable that future economic benefits or service potential will flow to the entity and the fair value of the asset can be measured reliably.

INTEREST REVENUEFinance income comprises interest on funds invested and interest income on student loans.Finance income is recognised using the effective interest method over the estimated life of the financial asset.

IRRECOVERABLE DEBTS RECOVEREDAmounts received after student loans have been written-off as irrecoverable debts are recorded as other income.

ADMINISTRATION FEES AND SBUX COMMISSION REVENUERevenue is recognised on the accrual basis in accordance with the substance of the relevant agreements and measured at fair value of the consideration receivable.

1.10 Revenue from non-exchange transactionsNon-exchange transactions are defined as transactions where the entity receives value from another entity without directly giving approximately equal value in exchange. Revenue from non-exchange

transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to repay the amount. Administration grants and

Grants received for student loans and bursaries are considered to be revenue from non-exchange transactions.

MEASUREMENTRevenue is measured at the fair value of the consideration received or receivable.

CONDITIONAL GRANTSConditional grants are classified as deferred income until such time as the conditions attached to the grant are met. Once the conditions have been met the

liability is transferred to revenue. The liability is transferred to revenue as and when the conditions attached to the grant are met. Grants without any

conditions attached are recognised as revenue when the asset is recognised.

1.11 Translation of foreign currenciesFOREIGN CURRENCY TRANSACTIONSA foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount to the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

At each reporting date:

• foreign currency monetary items are translated using the closing rate; and• non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange

rate at the date of the transaction

1.9 Revenue from exchange transactions (continued)



1.12 PrepaymentsPayments are made to institutions during January, February and March of each year for initial student registration fees.

The academic year for institutions runs from 1 January to 31 December and is therefore different to the NSFAS financial reporting year, which runs from

1 April to 31 March. Amounts paid to institutions by NSFAS during the period, 1 January to 31 March 2018, are classified as prepayments as they relate to the 2018/2019 financial year.

Prepayments are classified as a financial asset.

Prepayments are initially measured at the value of funds disbursed to institutions and subsequently measured at the same value.

1.13 Budget informationThe annual budget figures have been prepared in accordance with the applicable GRAP standards, and are consistent with the accounting policies adopted by the Board for the preparation of these financial statements. The amounts are presented as a separate additional financial statement, named the

Statement of Comparison of Budget and Actual amounts. Explanatory comments are provided in the notes to the annual financial statements, firstly stating reasons for overall growth or decline in the budget, and, secondly, motivating overspending or under spending on line items. The annual budget figures included

in the financial statements are for the Entity. These figures are those approved by the Board both at the beginning and during the year.

The preparation of budget information, which is performed on an accrual basis is the same as the accounting records.

1.14 Related partiesThe entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties.

Management are those persons responsible for planning, directing

and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.

Close members of the family of a person in key management are considered to be those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

1.15 ReservesCAPITAL FUND RESERVEThe reserve comprises accumulated surpluses

The Statement of Financial Performance shows a surplus arising from how NSFAS accounts for its revenue in terms of GRAP 23 and the related expense. While NSFAS accounts for the total transfers received as revenue, only a portion of the disbursements (100% conversion bursaries and valuation adjustments) is recognised as expenses. The surplus in the Statement of Financial Performance is not represented by cash and is not available for normal operations. A transfer is therefore made from the accumulated surplus to the capital fund each year.

1.16 Irregular expenditureIrregular expenditure is expenditure that is contrary to the Public Finance Management Act (Act No. 1 of 1999 as amended) or is in contravention of the Entity’s supply chain management policy. Irregular expenditure excludes unauthorised expenditure. Irregular expenditure is accounted for as expenditure in the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.

1.17 Fruitless and wasteful expenditureFruitless expenditure means expenditure, which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.



Notes to the Annual Financial Statements

2. Property, plant and equipment2018 2017

Cost Accumulated depreciation

Carrying value

Cost Accumulated depreciation

Carrying value

Land* 770 - 770 770 - 770

Buildings 4,047 (1,144) 2,903 4,047 (1,063) 2,984

Furniture and fixtures 7,508 (4,917) 2,591 5,638 (4,343) 1,295

Motor vehicles 294 (188) 106 294 (153) 141

IT equipment 39,587 (30,530) 9,057 34,684 (24,047) 10,637

Total 52,206 (36,779) 15,427 45,433 (29,606) 15,827

Amounts in Rand thousand 2018 2017

Reconciliation of property, plant and equipment - 2018Opening balance Additions Disposals Depreciation Total

Land* 770 - - - 770

Buildings 2,984 - - (81) 2,903

Furniture and fixtures 1,295 1,889 (2) (591) 2,591

Motor vehicles 141 - - (35) 106

IT equipment 10,637 4,912 - (6,492) 9,057

15,827 6,801 (2) (7,199) 15,427

Reconciliation of property, plant and equipment - 2017Opening balance Additions Depreciation Total

Land* 770 - - 770

Buildings 3,065 - (81) 2,984

Furniture and fixtures 974 737 (416) 1,295

Motor vehicles - 175 (34) 141

IT equipment 8,953 7,279 (5,595) 10,637

13,762 8,191 (6,126) 15,827

* Land and buildings comprise erf numbers 66447, 66458, 66459, 66460 and 66461 in Wynberg, Cape Town.


Pledged as securityAs at the reporting date, NSFAS had no property, plant and equipment pledged as security.

Other informationProperty, plant and equipment fully depreciated and still in use (Cost)

Furniture and equipment 3,707 3,242

IT hardware 18,705 18,692

Motor Vehicles 119 119

22,531 22,053

3. Intangible assets2018 2017

Cost Accumulated amortisation

Carrying value

Cost Accumulated amortisation

Carrying value

Computer software 81,695 (56,530) 25,165 81,695 (48,916) 32,779

Reconciliation of intangible assets - 2017Opening balance Amortisation Total

Computer software 37,858 (5,079) 32,779

Reconciliation of intangible assets - 2018Opening balance Additions Amortisation Total

Computer software 32,779 - (7,614) 25,165

Intangible assets fully amortised and still in use (Cost)Computer software 23,513 21,401

Notes to the Annual Financial StatementsAnnual Financial Statements for the year ended 31 March 2018

2. Property, plant and equipment (continued)



4. Trade and other receivables (non-exchange)sBux - Commission receivable* 8 9,301

Prepayments for goods and services 5,155 2,913

5,163 12,214

* sBux - Commission receivable relates to commission earned on transactions for the sBux voucher system used to disburse allowances to students funded by NSFAS through the implementation of the new student-centred model.

Amounts outstanding for less than 12 months, due not impaired.

5. Prepayments to institutions (exchange)Prepayments to institutions for initial student registration fees 3,559,187 1,402,971

6. Student loans (exchange) - long termSTUDENT LOAN NOMINAL VALUEThe nominal balance is the total obligations that borrowers have including loan principal and interest. The change in nominal value from year to year reflects the net growth of the portfolio through new lending less repayments, bursary conversions and other adjustments such as irrecoverable debt written-off due to death and permanent disability. The nominal balance is the basis for the calculation of the ‘Student loan Carrying Value’ as reflected in the Statement of Financial Position.



6. Student loans (exchange) - long term (continued)

Student Loan Carrying ValueCarrying value reconciliation:

Opening balance 9,368,497 7,178,249

New loans 5,526,962 5,402,968

Interest 948,249 752,955

Repayments (512,764) (392,401)

Social benefit component (3,903,282) (3,534,597)

Impairment adjustments** (1,117,704) (38,676)

10,309,958 9,368,498

Unallocated debtor receipts (1,647) (6,475)

Carrying value 10,308,311 9,362,023

Short term* 754,248 686,751

Long term 9,554,063 8,675,272

10,308,311 9,362,023

The relationship between the Nominal Value and the Carrying Value is as follows:

Nominal value 35,643,762 29,810,775

Less accumulated valuation and impairment adjustments (25,335,451) (20,448,752)

Carrying value 10,308,311 9,362,023

* The short term portion of the student loan is measured as the expected cash flow for the next twelve months based on the amortised cost calculation.

** The collections for the year have continued to show an upward trend but in aggregate below the projections suggested by the model. Collections post the new bursary programme education announcement have also continued to increase.

The impact on the loan book valuation of the current year collection experience was as follows:

• There was very little impact on the transition from student to exit• There was a significant impact on the transition from exit to paying, which resulted in an impairment of the loan book to

the amount of R1,117,704,000

The impairment adjustments of R1,117,704,000 (2017: 38,676,000) differ to the model adjustments disclosed in the Statement of Financial Performance by R126,651,000 (2017: R194,022,000) due to the cumulative nature of the valuation adjustments.




7. Amounts owing by institutions (exchange)Credit balances on student fee accounts due by institutions.Amounts owing by institutions - Short term* 456,968 438,200

Amounts owing by institutions - Long term** 20,927 19,639

477,895 457,839

* Amounts outstanding for less than 12 months, due and not impaired.** Amounts outstanding for more than 12 months, overdue and not impaired.

* During the period under review the entity invested part of the available cash balances in domestic highly liquid fixed income instruments per NSFAS's investment policy. Interest earned on call accounts ranged from 6% to 7.72%, while interest earned on short term investments ranged from 7.01% to 8.04%.

RESTRICTIONS ON THE USE OF CASH BALANCESCash and cash equivalents include R112,512,331 (2017: R389,583,975) recovered funds that NSFAS holds for re-injection into student loans. A further R3,466,505,433 is held by NSFAS on behalf of funders for allocation by the entity on instruction by the funder and represents unspent grants and interest thereon. A further amount of R29,883,935 is committed for the redemption of sBux vouchers. The balance of R64,419,065, comprises operational funds attributed to administration grants and fees.

8. Cash and cash equivalentsCash and cash equivalents consist of:

Bank balances 2,325 2,552

Call accounts 2,297,794 3,894,732

Short term - Investments (Money market accounts)* 1,371,198 -

3,671,317 3,897,284



Provision for credit balances to be refunded* 27,235 31,919

Opening balance 31,919 59,883

Amount paid as refunds** (61) (512)

Reversal of provisions (4,623) (27,452)

Closing balance*** 27,235 31,919

Provision for credit balances to be refunded comprises:

Credit balances still owing from original 2011 credit provision* 9,130 11,212

Credit balances from normal operations 18,105 20,707

Total 27,235 31,919

9. Provisions

* During the 2010 Ministerial Review it was discovered that the NSFAS Loan and Bursaries Management System had not applied the legal principle of in duplum to accrue interest on student loans in compliance with the National Credit Act. As a result, some loan accounts have been overpaid and therefore effectively have credit balances. It was also discovered during the 2010 audit that the loan management system had since inception been applying repayments incorrectly against student debt, by applying the student repayments against the outstanding capital balance first, rather than accrued interest. The Board resolved that where students have been advantaged, NSFAS will not attempt to recover the additional interest, as this was an error on NSFAS's part. However, where students have been charged interest in excess of in duplum, every attempt should be made to trace the respective account holders and to refund the credit balances.

** This amount represents refunds paid in the current (and prior) periods in respect of historical debtors (as above).

*** The balance of R27,235,000 has been matched to service providers records and refunds to the debtors will be processed through the service provider in the new year. An amount of R4,623,000 could not be matched by the service provider and has therefore been reversed to income.




10. Amounts due to institutions (non-exchange)

12. Trade and other payables (exchange transactions)

11. Deferred incomeUnspent portions of conditional grants including interest received, which represents a real liability.

Payments due to institutions for student loans and bursaries awarded.Amounts due to institutions 162,465 459,607

These amounts are held in segregated investment accounts until utilised.Grants received in advance 121,952 586,221

Deferred income 3,517,385 2,982,321

3,639,337 3,568,542

Trade payables 31,686 21,740

Accruals 9,270 10,089

Accrued leave pay due to employees 5,289 5,473

Accrued bonuses due to employees 2,493 6,034

Other payables 27,391 3,598

Operating lease liability 632 63

sBux - Commission payable 129 391

Unallocated receipts* 110,913 49,405

187,803 96,793

* Unallocated receipts relates to amounts refunded by institutions to NSFAS when students cancel registration and the student detail has not been submitted to NSFAS.



13. Administration fees and grants

14. Grants received for student awards (non-exchange)

Administration fees (exchange)Administration Fees - Sector Education and Training Authorities 5,079 2,697

Administration Fees - National Institute for Humanities and Social Sciences 1,289 -

Administration Fees - Department of Agriculture Forestry and Fisheries 943 725

Administration Fees - National Skills Fund 13,811 16,986

Administration Fees - Department of Defence and Military Veterans 1,000 -

Administration Fees - Department of Social Development 3,087 -

25,209 20,408

Administration grants (non-exchange)Administration Grant: Department of Higher Education and Training 225,974 177,118

Department of Higher Education and Training* 11,786,913 11,100,627

National Skills Fund 690,551 885,816

Department of Basic Education 1,095,792 1,050,886

Other South African government departments 181,089 310,170

Universities 126,741 239,987

SETA funding 143,270 93,276

Deferred income movement (34,935) (2,065,308)

13,989,421 11,615,454

* Includes grants to provide for loans and bursaries for students studying at Technical and Vocational Education Training Colleges and Universities, received from the Department of Higher Education and Training.




15. Personnel costs

16. Irrecoverable debts written-off

Salaries 94,164 75,471

Movement in leave provision (183) 3,757

Employee Benefits - other 55,130 44,104

149,111 123,332

Other employee benefits include Medical and Pension Fund contributions, Disability and all other costs.

The entity operates a defined contribution retirement plan for all employees.

Debt write-off - Student Loan 77,624 72,813

Reconcilliation of debtors write-off balancesLess than R50 debtor balance write-off 36 27

Deceased debtors write-off* 77,533 72,786

Disabled debtors** 55 -

Total 77,624 72,813

* NSFAS policy states that once a debtor has been confirmed as deceased by the Department of Home Affairs, the outstanding debt will be written off. During the current year, the loan book was matched to the Department of Home Affairs database and 2,470 (2017: 2,439) debtors were confirmed as deceased and outstanding balances to the value of R77,533,025 (2017: R72,785,579) were written off.

** Disabled debtors are written off once NSFAS receives proof from a medical practitioner that the debtor has a permanent disability.



17. Audit feesExternal audit fees* 4,663 4,440

Internal audit fees and other services** 1,982 5,284

6,645 9,724

*External audit feesFees for 2015/16 audit - 3,262

Fees for 2016/17 audit 3,668 1,178

Fees for 2017/18 audit 995 -

Total 4,663 4,440

**Internal audit fees and other servicesFees for 2017/18 internal audit 1,561 -

Fees for 2016/17 internal audit 420 3,869

Fees for 2016/17 Approved variations - 500

Fees for 2015/16 internal audit - 915

1,981 5,284




18. Cash generated (utilised) from operations

Surplus for the year 3,060,543 1,927,924

Adjustments for:Depreciation and amortisation 14,812 11,206

Model adjustments 991,053 38,676

Social benefit component on student loans* 3,903,282 3,534,597

Net interest income (1,475,784) (1,123,621)

Movements in provisions (4,684) (27,964)

Commission revenue - Sbux (3,803) (2,798)

Other income (4,868) (27,569)

Changes in working capital:Trade and other receivables (non-exchange) 7,051 (5,997)

Prepayments to institutions (exchange) (2,156,216) 267,396

Student loans (exchange) - short term (5,526,962) (5,402,968)

Amounts owing by institutions (exchange) short term (18,768) (192,659)

Student loans receipts 512,764 392,401

Trade and other payables (exchange transactions) 91,012 41,438

Unallocated debtor receipts written back (2,427) (94)

Amounts due to institutions (non-exchange) (297,142) 342,914

Deferred income 198,057 2,742,676

Amounts (owing)/ due by other funders (34,620) -

(746,700) 2,515,558

* Refer to note 6.



19. Operating lease (asset)/liability

20. Unallocated debtors receipts (non-exchange)

21. Asset management fee

Operating lease payments represent rental payable for the leasing of office space in Wynberg Mews. Below are the terms of the new lease agreement:• A new lease agreement for the 1st and 2nd Floor, Wynberg Mews was entered into for the period 1st March 2017 until

28 February 2022• No contingent rent is payable on both rental agreements• A new lease agreement for printers was entered into for the period 1st April 2018 until 31st March 2021, with an extention

clause for up to 24 months. This agreement replaced the previous lease agreement for the printers, which came to an end 31 March 2018

Unallocated debtor receipts (Historical) 2,427 94

Amounts received by the entity without a valid reference to loan accounts or not yet allocated at year end to individual loan accounts, are recorded in the annual financial statements against student loans. Every attempt is made to establish the identity of the depositor with the

relevant bank. When these unidentified amounts have been outstanding for more than five (5) years, they are written-off to income. In the event that debtors subsequently claim and prove amounts, which had previously been deposited by them, the amounts will at that stage

be set-off against the students loan account as a payment and reflected as an expense in the financial statements. The amount written back to income is R2,426,847 (2017: R93,989).

Asset management fee 270 -

Fees relating to services provided by asset managers for the period.




22. Interest revenue (exchange)Interest on student loans 948,249 752,954

Interest on funds invested* 527,535 370,667

1,475,784 1,123,621

Interest on funds invested relates to the following categories:By funding source:

Administration grants and fees 15,293 7,443

Donor funds 428,449 303,477

Recovered funds 83,793 59,747

527,535 370,667

By investment type:

Call accounts 410,993 370,595

Asset managers 76,350 -

Corporation for Public Deposits 40,192 72

527,535 370,667



23. Commission revenue - sBux (exchange)

24. Consulting and professional fees

25. Taxation

Commission Revenue - sBux* 3,803 2,798

* The entity implemented a mobile payment solution (sBux) for the disbursement of allowances to students registered at institutions included in the first phase of the new student-centred operating model. Commission is payable by accredited merchants for student transactions on their food and learning materials allowances at no cost to the students. The commission is shared equally between NSFAS and Celbux, the provider of the mobile payments platform. The commission disclosed is the amount payable to NSFAS.

Consultancy Fees - ICT 18,405 15,960

Consultancy Fees: Finance 3,478 1,645

Other professional fees 3,758 4,904

Legal expenses 1,090 1,894

26,731 24,403

The entity has obtained income tax exemption from the Commissioner for the South African Revenue Services under Section 10(1)(cA)(i) of the Income Tax Act, 1962 as amended. This exemption is applicable from the date on, which the entity was established.




26. Commitments

Authorised expenditureThe entity had commitments for the following items as at 31 March 2018:

IT equipment 18,891 10,041

Consulting and other services* 59,942 30,747

78,833 40,788

* The increase from prior period is due to multi-year contracts awarded during the period.

Operating leases - as lessee (expense)Minimum lease payments due*

- within one year 3,915 5,328

- in second to fifth year inclusive 12,966 16,371

16,881 21,699

Refer to note 19.

* The minimum lease payments is a result of two lease agreements of the office space and the printers.


Amounts in Rand thousand 2018 2017 Amounts in Rand thousand 2018 2017

27. ContingenciesCONTINGENT LIABILITIES: FINANCIAL STRUCTURENSFAS holds a Corporate Access Management Services/ Payment and Collections Services agreement (CAMS/PACS) with the corporate bankers that facilitates electronic payments and debit order processing. The Payments and Collections Services agreement that facilitates debit order deductions from debtors requires a settlement facility of R8,000,000 (2017: R8,000,000). A 10% notional risk is effected on the debtors facility in the event of unpaid collections.

NSFAS has entered into agreements with various donors and educational institutions to fund students. The arrangement is that institutions will advance loans to students on NSFAS loan agreement forms. NSFAS then accounts for these loans as part of the NSFAS loan book. These arrangements do not include any transfer of cash between NSFAS and the universities. Any recoveries against this portion of the book are then re-injected to fund

future generations of students. This arrangement is in line with the NSFAS mandate of increasing the pool of funds available to students. The total amount of institution recoveries that is available to fund future students as at the reporting date is R101,644,186 (2017: R69,261,978). As a result there is a possibility that in future more universities might request to be paid back money from the recoveries.

STUDENT FUNDINGThe new student centered model makes it possible for students registered at both the Universities and TVET colleges to apply directly to NSFAS for loans and bursaries rather than through their respective institutions. Students who

are eligible have loans and bursaries approved for the duration of their studies, subject to their meeting the promotion requirements, rather than being required to reapply for funding for each subsequent academic year.

This possible contractual commitment by the entity to fund students for the duration of their studies, if they meet the promotion requirements, has resulted in an estimated contingent liability of R34,669,486,741 (2017: R25,103,733,043).



RELATIONSHIPSBoard Members Refer to the Report of the Board members

Executive Authority (Minister of Higher Education and Training) Dr. Bonginkosi Emmanual Nzimande: 1 April 2017 – 17 October 2017Prof. Hlengiwe Mkhize: 17 October 2017 – 26 February 2018Ms Grace Naledi Mandisa Pandor: 26 February 2018

Controlling Entity Department of Higher Education and Training

Other Government Departments (National) Department of Agriculture, Forestry and FisheriesDepartment of LabourDepartment of Social DevelopmentDepartment of Basic EducationDepartment of Defence and Military VeteransDepartment of Justice and Constitutional Development

Public Entities (that transacted with NSFAS during the reporting period and had balances)

Agricultural Sector Education and Training AuthorityBank Sector Education and Training AuthorityChemical Industries Education and Training AuthorityConstruction Education and Training AuthorityCulture Art Tourism Hospitality Sport Sector Education and Training AuthorityEducation Training and Development Practices Sector Education Training AuthorityFiber Processing and Manufacturing Sector Education and Training AuthorityFinancial and Accounting Services Sector Education and Training AuthorityFood and Beverage Sector Education and Training AuthorityHealth and Welfare Sector Education and Training AuthorityLocal Government Education and Training AuthorityManufacturing Engineering and Related Services Sector Education and Training AuthorityMining Qualifications AuthorityMedia Information and Communication Technologies SectorEducation and Training AuthorityNational Skills FundNational Institute for Humanities and Social SciencesSafety and Security Sector Education and Training AuthorityServices Sector Education and Training AuthorityEnergy and Water Sector Education and Training AuthorityTransport Education and Training AuthorityWholesale and Retail Sector Education and Training Authority

TVET Colleges Boland CollegeBuffalo City CollegeCapricorn College for TVET

28. Related parties


TVET Colleges (Continued) Central Johannesburg CollegeCoastal KZN TVET CollegeCollege of Cape Town for TVETEast Cape MidlandsEhlazeni TVET CollegeEkurhuleni East College for TVETEkurhuleni West College for TVETElangeni College for TVETEsayidi TVET CollegeFalse Bay College for TVETFlavius Mareka TVET CollegeGert Sibande TVET CollegeGoldfields TVET CollegeIkhala Public Further Education and Training CollegeIngwe Public TVET CollegeKing HINTSA Public TVET CollegeKing Sabata Dalindyebo TVET CollegeLephalale TVET CollegeLetaba TVET CollegeLovedale Public TVET CollegeMajuba College for TVETMaluti TVET CollegeMnambithi TVET CollegeMopani South East TVET CollegeMotheo TVET CollegeMthashana TVET CollegeNkangala TVET CollegeNorthern Cape Rural TVET CollegeNorthern Cape Urban TVET CollegeNorthlink CollegeOrbit TVET CollegePort Elizabeth CollegeSedibeng College for TVETSekhukhune TVET CollegeSouth Cape CollegeSouth West Gauteng CollegeTaletso TVET CollegeThekwini TVET CollegeTshwane North College for TVETTshwane South College for TVETUmfolozi College for TVETUmgungundlovu TVET CollegeVhembe TVET CollegeVuselela TVET CollegeWaterberg TVET CollegeWest Coast CollegeWestern College for TVET

28. Related parties (continued)




Transactions between NSFAS and the listed entities are consistent with a normal operating relationship and arm’s length transaction have been omitted from presentation. This is a result of early adoption of GRAP 20 Related party disclosure as noted in the accounting policy.

29. Board members' and key management emolumentsKEY MANAGEMENT

2018Basic salary Employer

contributionsOther Total

Executive Officer - d 1,519 121 485 2,125

Chief Financial Officer - e 1,086 12 12 1,110

Executive Officer (Acting) - c 816 8 9 833

Chief Information Officer - g 351 40 98 489

Chief Information Officer - h 741 - 155 896

Chief Financial Officer (Acting) - f 616 30 7 653

Human Resources Executive - i 560 - 145 705

Senior Managers - j 3,157 196 105 3,458

8,846 407 1,016 10,269

2017Basic salary Employer

contributionsOther Total

Executive Officer - b 1,868 54 - 1,922

Chief Financial Officer - e 1,490 32 - 1,522

Executive Officer (Acting) - c 141 4 - 145

Chief Information Officer - g 1,654 208 - 1,862

Senior Managers 1,257 106 - 1,363

6,410 404 - 6,814



2018Emoluments Total

Travel costs 1,223 1,223

Board meeting fees* 822 822

2,045 2,045

2017Emoluments Total

Travel costs 1,298 1,298

Board meeting fees* 889 889

2,187 2,187

a Executive Managers include: Chief Risk Officer - Pavashini Naidoo Appointed: 01 March 2016 (seconded from the banking sector, NSFAS does not incur any costs)b Msulwa Daca resigned on 31 March 2017, on leave from 1 February 2017.c Lerato Nage - Acting from 16 February 2017 to 31 August 2017.d Steven Zwane appointed 1 September 2017.e Lerato Nage Chief Financial Officerf Morgan Nhiwatiwa Chief Financial Officer Acting from 1 March 2017 - 31 August 2017g Richard Mackinnon-Little: Chief Information Officer resigned 30 June 2017h Ashveer Rajcoomar: Chief Information Officer appointed 1 November 2017i Vuyokazi Dwane appointed 1 December 2017j Includes the following Senior Managers (who report directly to the executive officer): Communication Executive officer office Business Enablement Planning and Performance

29. Board members' and key management emoluments (continued)

BOARD MEMBERS EMOLUMENTS



28. Related parties (continued)


29. Board members' and key management emoluments (continued)

* Board meeting fees per board member 2018 Fees 2018 Expenses

Mary Bomela 76 63

Julia De Bruyn - 69

Prof. Neil Garrod 67 176

Nathan Johnston 137 132

Zirk Joubert - 25

Rose Keanley 24 -

Sibongile Masinga 156 160

Nafisa Mayat 48 119

Thabo Moloja 59 78

Prof. Themba Mosia 48 67

Lumko Mtimde 57 85

Sizwe Nxasana - 125

Yershen Pillay 15 20

Yonke Twani 23 74

Jaco Van Schoor 40 21

Andre Zeeman 72 9

822 1,223



30. Debtors loan book movements (non-exchange)ASSUMPTION SET USED IN THE LOAN VALUATION MODEL:For the 31 March 2018 valuation it was considered appropriate to update the valuation assumptions with data up to the 31 December 2017 in order to recognize the development of the book and the impact of management actions over time.

MODEL ADJUSTMENTSThe model adjustment in the current year assumptions has been updated and adjusted to take into account:• reassessment of the assumptions based on data up to 28 February 2018• truncation of payments after 300 months

As a result of the impact of changes in assumptions, model adjustments, change in the repo rate and experience adjustments, a net difference in value of the student portfolio of R991,053,000 (2017: R155,346,367) was recorded.

The table below shows the impact of the change in assumptions and model adjustments per loan year of issue:

Year of issue of student loan1991 - 2001 (6,963) 17,741

2002 - 2007 (104,312) 135,299

2008 (40,249) 40,530

2009 (45,701) 45,970

2010 (57,857) 34,393

2011 (70,633) 32,375

2012 (92,321) 34,401

2013 (103,282) 15,473

2014 (101,896) (18,175)

2015 (104,397) (68,015)

2016 (135,653) (116,854)

2017 (127,789) 2,208

(991,053) 155,346




30. Debtors loan book movements (non-exchange) (continued)

In order to enable the user of the financial statements to have a sense of the potential impact of changes to certain assumptions in the model, the following sensitivity analysis has been performed:

SENSITIVITY TO CHANGE IN TRANSITION FROM EXIT TO PAYERThe assumption for the transition from debtor to payer is key to the determination of the value of the loans. The table below considers the impact of a level change in the transition from exit to paying percentages by 10% at each duration since exit.

2018Carrying value +10% change Impact -10% change Impact

Student 5,857,885 6,443,673 10.0% 5,272,096 -10.0%

Non-payer 3,613,112 4,135,704 14.46% 3,136,935 -13.18%

Payer 838,960 838,960 0.0% 838,960 0.0%

10,309,957 11,418,337 -10.61% 9,247,991 11.14%

2017Carrying value +10% change Impact -10% change Impact

Student 4,620,660 4,158,593 -10.0% 5,082,725 10.0%

Non-payer 4,084,781 3,552,406 -13.03% 4,667,113 14.26%

Payer 663,057 663,057 0.0% 663,057 0.0%

9,368,498 8,374,056 -10.61% 10,412,895 11.14%



30. Debtors loan book movements (non-exchange) (continued)

SENSITIVITY TO CHANGE IN THE PAYMENT PROFILEThe payment profile reflects an average expected level of recovery at each month since payment commenced. Since there is no clear contractual relationship between the loan value and the payment amount, the history of aggregate experience of payments as a percentage of outstanding value has been used to set these assumptions.

The table below shows the impact of a 10% reduction in the payment profiles.

2018Carrying value -10% change Impact

Student 5,857,885 5,703,142 -2.64%

Non-payers 3,613,112 3,533,507 -2.20%

Payers 838,960 798,163 -4.86%

10,309,957 10,034,812 -2.49%

2017Carrying value -10% change Impact

Student 4,620,660 4,508,662 -2.42%

Non-payers 4,084,781 3,996,204 -2.17%

Payers 663,057 630,563 -4.9%

9,368,498 9,135,429 -2.49%

IMPAIRMENT LOSSThe expected future cash flow anticipated to arise from the loan book are reassessed each year. They take into account the status of the individual loans in the loan book and the adjusted assumptions based on an analysis of the historic experience of the loans. As the data related to the loan book changes with the passage of time, the value of the loan book will be reassessed and the cumulative impairment adjusted accordingly.




31. Risk managementFINANCIAL RISK MANAGEMENTThe entity manages its net assets to ensure that it will be able to continue as a going concern, while meeting its overall objectives. The strategy was consistent with that applied in prior years. Funding is obtained primarily from grants received for student awards.

The entity has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk

This note presents information about the entity’s exposure to each of the above risks. Further quantitative disclosures are included throughout these financial statements.

The Board has overall responsibility for the establishment and oversight of the entity’s risk management framework.

The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the entity’s risk management policies.

The entity’s risk management policies are established to identify and analyse the risks faced by the entity, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the entity’s activities. The entity, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in, which all employees understand their roles and obligations. The entity’s Audit and Risk Committee oversees how management monitors compliance with the entity’s risk management policies and procedures, and reviews the adequacy

of the risk management framework in relation to the risks faced by the entity. The entity’s Audit and Risk Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of, which are reported to the Audit and Risk Committee.

There are no externally imposed capital requirements.

There have been no changes to what the entity manages as capital, the strategy for capital maintenance or externally imposed capital requirements from the previous year. The entity has invested all recovered surplus funds with the Corporation For Public Deposits of the South African Reserve Bank. The other surplus funds were invested with fixed income managers.

LIQUIDITY RISKLiquidity risk is the risk that the entity will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk is considered medium due to the entity’s conservative funding structure and its own cash generation. Management monitors rolling forecasts of the entity’s cash and cash equivalents on the basis of the expected cash flow.

NSFAS engages with the Department of Higher Education and Training on a continuous basis to ensure that it has the cash flow to meet the expected payments to universities as they fall due.

FAIR VALUEThe carrying value of financial instruments approximates fair value, due to the short term nature of the receivables and payables.


Maturity analysis of financial liabilitiesAt 31 March 2018 Less than 1 month 1 - 3 months 3 months to 1 year Total

Accounts payable* 180,021 - - 180,021

Amounts due to institutions 162,465 - - 162,465

342,486 - - 342,486

At 31 March 2017 Less than 1 month 1 - 3 months 3 months to 1 year Total

Accounts payable* 85,286 - - 85,286

Amounts due to institutions 459,607 - - 459,607

544,893 - - 544,893

* These balances exclude Accrued leave pay and Accrued bonuses due to employees as these are not financial liabilities.

MARKET RISKMarket risk is the risk that changes in market prices, such as interest rates, that will affect the entity's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The entity is exposed to one primary type of market risk, namely interest rate risk.

INTEREST RATE RISKInterest rate risk refers to the impact on future cash flow from student loans. Interest rate risk on other financial assets is not significant as the investment profile is conservative in nature. Interest rate risk on student loans is managed principally through linking interest charged on outstanding student loans to the Repurchase rate, as determined by the South African Reserve Bank from time to time.

FAIR VALUE (continued)

31. Risk management (continued)


Amounts in Rand thousand 2018 2017Amounts in Rand thousand 2018 2017


INTEREST RATE RISK PROFILEAt the reporting date the interest rate profile of the entity's interest-bearing financial instruments was

Variable rate instrumentsStudent loans 10,308,311 9,362,023

Other variable rate instruments 3,671,317 3,897,284

13,979,628 13,259,307

VALUATION SENSITIVITY ANALYSIS FOR VARIABLE RATE INTEREST INSTRUMENTSA change of 100 basis points in interest rates at the reporting date would have (increased)/decreased deficit or surplus by R36,713,207 (2017: R38,972,836). This analysis assumes that all other variables remain constant.

VALUATION SENSITIVITY ANALYSIS FOR STUDENT LOANSA change of 100 basis points in interest rates at the reporting date would have increased/(decreased) surplus or deficit by the amounts shown below. This analysis assumes that all other variables remain constant.

2018Student loans

100 basis points increase 20,856 0.20%

100 basis points decrease (30,838) -0.30%

2017Student loans

100 basis points increase 19,009 0.20%

100 basis points decrease (27,125) -0.29%




CREDIT RISKCredit risk is the risk of financial loss to the entity if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the entity’s receivables from student loans. This risk is mitigated by the loan terms, which make the loans due and payable only in the event of a borrower becoming employed and having an income above a predetermined threshold level. Fair value financial assets, loans and receivables and cash and cash equivalents are

exposed to credit risk. The initial day-one loss adjustment is therefore not considered to be a reflection of credit risk, but actually represents the social benefit element of the loans.

The maximum credit risk exposure is: R14,550,194,000 (2017: R13,777,874,000), which is the total of all assets excluding prepayments, property, plant and equipment and intangible assets.

The entity limits its exposure to credit risk on loans advanced as a result of implementing legislative policy. The granting of student loans is governed by well established criteria, including a national means test, which is updated on an annual basis. Internal systems are regularly enhanced to ensure constant improvement in the entity’s loan recovery strategy.

ALLOWANCES FOR IMPAIRMENTThe entity establishes an allowance for impairment that represents its estimate of incurred losses in respect of its assets. A collective loss is established for groups of similar assets in respect of losses that may have been incurred but not yet identified, on an individual basis. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets and in the case of the student loan portfolio based on the mortality over the following year.

The impairment is calculated as the difference between the expected cash flow profile and the experienced payment, transitions from the student state and mortality.

CREDIT QUALITY OF STUDENT LOANSGRAP 104 - Financial Instruments requires the disclosure of:

• Credit quality of financial assets that are neither past due nor impaired• Credit quality of financial assets that are past due but not impaired

All student loans are collectively impaired on the basis of mortality, actual transition from student state and changes in payment. Accordingly no additional disclosures are required in respect of the credit quality of student loans.

WRITE-OFF POLICYThe entity writes off a student loan and any related allowances for impairment losses, when the entity determines that the loan is uncollectable. This determination is made after verification of the notification of the death or permanent disability of the debtor. A list of identity numbers is

verified against the Department of Home Affairs database on a quarterly basis for verification of deceased debtors while medical certification of permanent disability is required. The specific loans are then written off on approval by the Board. During the financial year under review

the entity wrote off debts amounting to R77,624,145 (2017: R72,812,664) after verification of deceased and permanently disabled debtors in respect of whom the required notification had been received.




LOANS AND OTHER RECEIVABLES AND CASH AND CASH EQUIVALENTSThe entity only deposits cash with major banks with high quality credit standing (P-2 short term local currency credit rating) and limits exposure to any one counter party. Consequently, the entity does not consider there to be any significant exposure to credit risk.

PORTFOLIO STATUSThe entity’s exposure to credit risk is influenced mainly by the number of loans issued to the borrowers. The fifth loan to a single borrower is considered more risky than their first loan as the previous loans need to be repaid before the first payment occurs on the fifth loan. As a result the loan payments are expected to be received later and there is also a greater chance of the borrower passing away before completing the repayment of the

loan. The demographics of the NSFAS’s student base is also considered as this has an influence on credit risk, that is age and gender are factors that influence the expected mortality of the borrowers. There is no significant exposure to a single student. Geographically there is no concentration of credit risk.

The portfolio has been segregated in the table below to indicate the composition

of the portfolio by loan number. The repayment experience is higher on the initial loans than on the later loans.

Loan number Number of loans Transaction value Percentage of total value

1 783,573 13,625,547,518 38%

2 529,849 10,513,094,837 29%

3 333,215 6,759,304,651 19%

4 166,862 3,247,608,084 9%

5+ 85,964 1,498,206,768 4%

1,899,463 35,643,761,858 100%

The portfolio has been segregated to indicate the number of loans that were settled over the last year as well as the number of loans that are currently being

paid and the ones not being paid. Where the loans are not being paid this is not due to a credit event but due to the loans not being due and payable as a result of the

borrower being unemployed or earning below the repayment threshold.

Loans in force Currently paying Not currently paying

Student 810,577 - 810,577

Drop-out 441,336 45,598 395,738

Graduate 647,550 100,288 547,262

1,899,463 145,886 1,753,577



PRICE RISKThe entity’s other financial assets are low risk investments. Therefore, fair value or future cash flow as a result of market price changes is immaterial.

The Fair Value movements would increase/decrease as a result of gains or losses on securities designated at fair value. All financial instruments are

classified at amortised cost except for investments designated at fair value.

32. Financial assets by categoryThe accounting policies for financial instruments have been applied to the line items below:

2018Loans and receivables Total

Trade and other receivables 5,163 5,163

Cash and cash equivalents 3,671,317 3,671,317

Student loans (exchange) 10,308,311 10,308,311

Amounts owing by other institutions (exchange) 477,895 477,895

Amounts owing by other funders 87,508 87,508

14,550,194 14,550,194

2017Loans and receivables Total

Trade and other receivables 12,214 12,214

Cash and cash equivalents 3,897,284 3,897,284

Student loans (exchange) 9,362,023 9,362,023

Amounts owing by other institutions (exchange) 457,839 457,839

Amounts owing by other funders 48,514 48,514

13,777,874 13,777,874



Amounts in Rand thousandAmounts in Rand thousand


33. Amounts owing by other funders

34. Prior period errors

Amounts owing by other funders - Non-current* 5,234 27,038

Amounts owing by other funders - Current** 82,274 21,476

87,508 48,514

Amounts owing by other funders relates to various funders who owe NSFAS for payments made on their behalf and amounts due for memorandum of agreements signed.

* Amounts outstanding for more than 12 months, overdue but not impaired.** Amounts outstanding for less than 12 months, due and not impaired.

The Comparative figures have been restated for the following prior period errors that were identified by the entity during the year.

Amounts owing by institutions (exchange), refer note 7, was understated in prior years. This was as a result of unallocated receipts (credits) from institutions, which were not correctly set off against the related bursary expenditure.

2017As previously reported Correction of errors Restated


Amounts owing by institution (Exchange) - Current* 363,512 25,283 388,795

STATEMENT OF CHANGES IN NET ASSETS

Capital fund** (11,151,960) (25,283) (11,177,243)

* The amount disclosed in the Statement of Financial Position is R438,200,000 and includes a reclassification adjustment of R49,405,000 as detailed in note 35.



As previously reported Correction of errors Restated


Intangible Assets 459 32,320 32,779

STATEMENT OF CHANGES IN NET ASSETS

Capital Fund** (11,151,960) (29,599) (11,181,559)


Depreciation and amortisation 9,874 (2,720) 7,154

Surplus for the year 2,062,175 2,720 2,064,895

** The amount disclosed in the Statement of Net Assets is R11,209,562,000 and includes a prior period error as detailed above.

Historic Debt FundingThe entity reallocated unutilised Historic Debt funding to the funding of First Time Entrants in the prior year without obtaining written approval from National Treasury. As a result deferred income in the prior year was understated while revenue was overstated. The financial statement line items have been restated as follows:

As previously reported Correction of errors Restated


Deferred income 3,431,571 136,971 3,568,542


Grants received for student awards 11,752,426 (136,971) 11,615,454

The impact of correcting the errors on the suplus for the period was as follows:

Surplus for period* 2,062,175 (134,251) 1,927,924

34. Prior period errors (continued)



Intangible assets (note 3)Were understated in prior years due to the useful life of the assets not being reviewed and revised annually as required by GRAP17. The useful life of the intangible assets has been revised to 8 years.


36. Irregular expenditureOpening balance 74,470 74,396

Add: Irregular Expenditure - current year - 74

Sub Total: - 74

Other areas of non-compliance - -

Payments in excess of contract amounts 284,706 -

Three quotations not obtained - 74

Subtotal other areas non-compliance - 74

Less: Amounts written off (55,629) -

Closing balance 303,547 74,470

During the 2017-18 financial year, the Board approved the write off of irrecoverable irregular expenditure incurred by the entity during the period 2009-10 to 2011-2012 amounting to R55,628,558 following an investigation completed by internal audit.

The internal audit investigation was completed during the financial year 2012-13 and established the following:

• The irregular expenditure pertained to a combination of the competitive procurement process not being adhered to at all times; valid tax clearance certificates not being obtained from the appointed service providers, and the supplier declaration of interest forms (SBD 4 form) not being completed

Unallocated receipts from instituitions have been reclassified from amounts owing by institution to trade and other payables. Comparative figures have been restated as follows:

35. Reclassification adjustment

2017As previously reported Correction of errors Restated


Amounts owing by institution (Exchange) - Current* 363,512 49,405 412,917

Trade and other payables (47,388) (49,405) (96,793)

* The amount disclosed in the Statement of Financial Position is R438,200,000 and includes a reclassification adjustment of R25,283,000 as detailed in note 34.



• The irregular expenditure had been incurred due to a lack of formal policies and procedures in place to manage the procurement process in line with regulatory requirements. NSFAS had further experienced a significant number of vacancies within the executive and senior management teams during the respective period

• There was an absence of the SCM policy during the respective period, and therefore disciplinary action was not the most appropriate course of action as officials were following the SCM processes that they had been accustomed to. It should be noted that value for money was achieved in all cases

Following the internal audit investigation the entity wrote to National Treasury on 28 March 2012 for condonation of the irregular expenditure. National Treasury responded on 16 August 2012 and indicated that the request for condonation was denied on the basis that the reasons were not justifiable and that National Treasury does not condone deviations from the competitive bidding process.

The SCM unit then prepared a report for the write off irregular expenditure for items that National Treasury did not

condone and a report for condonation of irregular expenditure pertaining to deviations from the competitive bidding process taking into account the outcome of the investigation by internal audit, the feedback as received by National Treasury, and the irregular expenditure guidelines.

In terms of paragraph 29 of the National Treasury Irregular Expenditure Guidelines the accounting authority can write off irregular expenditure as irrecoverable when National Treasury did not condone

the irregular expenditure and there was no person found to be liable in law for the irregular expenditure. In terms of paragraph 35 of the National Treasury Irregular Expenditure Guidelines the accounting authority is the relevant authority to condone irregular expenditure when it relates to deviations from procurement processes.

The accounting authority accordingly wrote off the irregular expenditure incurred as irrecoverable incurred on this basis on 24 November 2017.

PAYMENTS IN EXCESS OF CONTRACT AMOUNTS In the student-centred model, students only need to apply for funding once. When funding is approved, NSFAS estimates the total funding required for the duration of study using data submitted by institutions. Students are required to sign a contract which indicates the total amount awarded for the duration of study.

Every year, NSFAS receives registration data from institutions which indicates the funding required for that academic year. NSFAS will then transfer funds to institutions in line with what is claimed by each institution for that academic year. In the 2017 academic year, NSFAS migrated all institutions to the student-

centred model. This meant that those students previously not on the student-centred model were required to sign contracts for funding with NSFAS for the first time. During this process contract amounts for several students were incorrectly generated. In some instances, NSFAS has identified that the estimated contract amount was inherently incorrect; resulting in the total disbursements to the respective institutions for the particular students being significantly higher than the stipulated contract amount.

In other instances, the original estimate, based on information available to NSFAS at the time, turned out to be lower than the total disbursement required to meet

the obligation of the respective student in terms of their actual registration. Management’s best estimate of the extent of payments in excess of contract amounts for both loans and bursaries was R284,705,536. The auditors have determined that the projected extent of payments in excess of contract amounts on student loans to be R504,000,000 in respect of student loans and R223,000,000 in respect of bursary expenditure. NSFAS should have instituted and will in the current financial year, measures to correct the incorrect contract amounts in a legally compliant manner. In both the above instances, the over-disbursements have been classified and disclosed as irregular expenditure.

36. Irregular expenditure (continued)



Legislation requires the entity to submit a budget for the Minister's approval in August each year.The variances arose due to refinements performed by NSFAS on the initial approved budget. All changes to the initial approved budget were approved by the Accounting Authority.

Note 37.1:The following are not budgeted for:

• Commission Revenue - sBux• Unallocated Debtors Receipts• Asset management fees• Other income• Irrecoverable debts written off• Impairment loss - Amounts owing by other funders non-current• Valuation adjustment

Note 37.2: Adjustments

STATEMENT OF FINANCIAL PERFORMANCEAdministration grants - Entity obtained approval to retain surplus from the 2016/17 financial year. The surplus was added to the administration grant.Interest revenue - A budget adjustment based on the audited outcome of the prior financial year.Personnel costs - Additional budget allocations were made available from the approved retained surplus from the 2016/17 financial year.Depreciation and amortisation - A budget adjustment based on the audited outcome of the prior financial year.General Expenses - Additional budget allocations were made available from the approved retained surplus from the 2016/17 financial year.Consulting and professional fees - Additional budget allocations were made available from the approved retained surplus from the 2016/17 financial year.

STATEMENT OF FINANCIAL POSITIONThere was a budget adjustment based on the audited outcome of the prior financial year, which applies to the following line items in the Statement of Financial Position:

• Trade and other receivables• Student loans (short term)• Trade and other payables• Provisions• Amounts due to institutions Deferred income• Cash and cash equivalents - A budget adjustment based on the audited outcome of the prior financial year and taking

into account the growth rate of organisational capacity

37. Budget information


STATEMENT OF CASH FLOWGrants for capital fund and administration costs - An adjustment based on a revised allocation from DHET.

STATEMENT OF FINANCIAL PERFORMANCENote 37.3: Interest revenue (exchange):Interest revenue relates to interest earned on funds invested and interest on outstanding student loans. Interest on funds invested was higher than budget due to the increase in recovered funds and interest on donor funds was higher than budget due to an increase in the donor funds received and under utilisation of allocations by institutions.

Note 37.4: Grants received for student awards (non-exchange):Deferred income movement is not budgeted for and the movement is R499 million. The remaining variance is due to decreased funding received from National Skills Fund, other South African government departments and Universities.

Note 37.5: Personnel costsThe underspending is mainly due to variances in the ICT and operations departments, which was vacant for bulk of the financial year. In the other departments, sourcing for the key vacancies commenced but candidates did not accept the offers extended.

Note 37.6: Bursaries - Other funding sourcesBursaries from other funding sources consist mainly of DHET University funding and funding from all other donors. The variance is due to under utilisation of 2017 funding allocation.

Note 37.7: Bursaries - DHET TVET Colleges funding sourceDisbursements to colleges were lower than budgeted due to issues experienced with the submission and processing of registration data from colleges. This resulted in an underspending of the TVET allocation.

Note 37.8: Audit feesA new internal service provider was appointed during the year. The underspending is due to planned internal audit work for 2017/18, which has not been completed.

Note 37.9: Model adjustments and social benefit of student loans raisedIt is not possible to provide an accurate estimate of the model adjustments and the social benefit of student loans issued. Actual results will differ due to recoveries achieved and other adjustments that need to be made to the model.

STATEMENT OF FINANCIAL POSITIONNote 37.10: Amounts owing by other funders (short-term)Funding from one of the funders was confirmed just before year end. The variance is due to the receivable that was raised for the revenue due.


37. Budget information (continued)



Note 37.11: Trade and other receivables (non-exchange)Trade and other receivables was higher than expected due to an increase in prepaid computer services and the increase in sBux commission receivable.

Note 37.11: Prepayments to institutions (exchange)There was a substantial increase in allocations following the fee-free education announcement. This resulted in a significant increase in the upfront payments, which are based on a percentage of allocations each year.

Note 37.12: Student loans (exchange) long-term and short-termStudent loans were lower than budget due to:• Actual disbursements to students were lower than budget• Recoveries for the year were lower than budget

Note 37.13: Amounts owing by institutions (exchange) short termEstimates of amounts due by institutions were reassessed based on actual experience. This has resulted in amounts accrued during the current year being lower compared to budget.

Note 37.14: Amounts due to institutions (non-exchange)Variance is due to the timing difference between disbursements and payments to institutions at year end.

Note 37.15: Cash and cash equivalentsThere was significant progress made in the last quarter of the year in disbursing outstanding 2017 payments. This resulted in the cash balances being lower than the revised budget amount.

Note 37.16: Intangible assetsIntangible assets was lower than budget due to planned acquisitions not being on schedule.

Note 37.17: Amounts owing by institutions (exchange) - long termAmounts due from institutions were lower than budget due to the budget not being updated in line with expectations.

Note 37.18: Amounts owing by other funders (long-term)The variance is due to long outstanding funds from the Sector Education and Training Authorities of prior year outcomes being impaired during the current period.

Note 37.19: Trade and other payables (exchange transactions)The variance is mainly due to the impact of credit balances reclassified from receivables to payables.



38. Analysis of surplusOperationalAdministration grants 225,974 177,118

Administration fees 25,209 20,408

Interest received 1,475,784 1,123,621

Other income 4,868 27,569

sBux -Commission revenue 3,803 2,798

Unallocated debtors receipts 2,427 94

Less: Administration and investment costs (289,884) (227,001)

Sub-Total 1,448,181 1,124,607

Note 37.20: ProvisionsThe provision for credit balances is lower than budget due to the write back of provisions to income after various attempts made to contact the debtors proved unsuccessful.

STATEMENT OF CASH FLOWNote 37.21: Grants for capital fund and administration costsThe variance is due to decreased funding allocation received from National Skills Fund, other South African government departments and Universities.

Note 37.22: Amounts due to institutions paidThere was a substantial increase in allocations following the new bursary funding programme. This resulted in the significant upfront payments, which is based on a percentage of allocations each year.

Note 37.23: Purchase of Property, plant and equipment - Normal OperationsThe purchase of equipment was higher due to additional hardware requirements based on organisational capacity growth.

Note 37.24: Interest incomeInterest on funds invested was higher than expected due to the increase in recovered funds and interest on donor funds was higher than expected due to a decrease in funds expected to be disbursed.



Amounts in Rand thousand 2018 2017Amounts in Rand thousand 2018 2017


39. Impairment loss (Amounts owing by other funder - non-current)

Impairment loss - Amounts owing by other funder - non-current (17,060) (4,291)

During the period amounts owing by other funders were impaired with an amount of R17,060,056 (2017: R4,290,678) due to these amounts being long outstanding with no expected recovery from the funders.

* Grants received for student awards are reflected after the deferred income movement amount of R34,934,931 (2017: R2,065,308,089) has been netted off.

Bursaries comprise of:

• 100% to Technical and Vocational Education and Training students• Final year 100% bursary of university students who meet the requirements for graduation• 40% bursary conversion to university students who receive loan funding• 100% bursary funding for student with disabilities• University and other students eligible for National Skills Fund, Funza Lushaka and other categories of Bursary funding

receiving 100% bursary funding

CapitalGrants received for student awards* 13,989,421 11,615,454

Bursaries (7,388,040) (7,325,280)

Irrecoverable debts (77,624) (72,813)

Social benefit component on student loans (3,903,282) (3,534,597)

Model Adjustments (991,053) 155,346

Impairment - Amounts owing by other funders (17,060) (4,291)

Impairment loss - Amounts owing by institutions (exchange) - long term - (30,502)

Sub-Total 1,612,362 803,317

Total 3,060,543 1,927,924

38. Analysis of surplus (continued)



40. Impairment loss (Amounts owing by institutions (exchange) - long term)

41. Other income (exchange)

During the period amounts due by institutions were impaired with an amount of Rnil (2017: R30,502,190) due to amount being outstanding for more than a three year period.

Reversal of provision* 4,623 27,452

Insurance receipts - 97

Donations - 20

Recovered funds 245 -

4,868 27,569

*Refer to note 9.

42. Service-in-kind revenue (non-exchange)EMPLOYEE RELATED COSTSNSFAS received seconded employees from various banks at no cost to NSFAS during the year. The positions that were filled with seconded resources were as follows: Chief Risk Officer, Chief Operations Officer, Recoveries specialist, Head of Business enablement and two business analysts.




1. GRANTS RECEIVED FOR STUDENT AWARDS (EXPRESSED INRAND THOUSAND)

Grants received for student awardsChemical industries and training authority 4,275 -

Department of Agriculture, Forestry and Fisheries 18,862 14,495

Department of Basic Education - Funza Lushaka Teacher Bursaries** 1,095,792 1,050,886

Department of Defence and Military Veterans 33,325 -

Department of Higher Education and Training 9,349,293 8,779,084

Department of Higher Education and Training - TVET Colleges* 2,437,620 2,321,543

Department of Social Development 120,402 290,780

Eastern Cape Provincial Government - 2,983

Kwa-Zulu Natal Provincial Government 8,000 -

Gauteng Gambling Board 500 1,912

National Skills Fund 690,551 885,816

Agriculture SETA 1,425 -

Bank SETA 4,937 -

Culture, Arts, Tourism, Hospitality, Sports SETA - 15,665

Fibre Processing and Manufacturing SETA 19,000 -

Fibre Processing and Manufacturing SETA discretionary 7,000 -

Financial and Accounting Services SETA - 9,500

Food and Beverage SETA 3,529 -

Health and Welfare SETA 74,322 28,305

Manufacturing Engineering and Related Services SETA 1,900 -

Safety and Security SETA 1,250 -

Services SETA 19,419 -

Transport Education Training Authority SETA 4,213 1,841

Wholesale and Retail SETA 2,000 37,964

13,897,615 13,440,774

* Bursaries for training at Technical and Vocational Educational and Training Colleges.** Bursaries for teacher training at Universities.

Supplementary InformationAnnual Financial Statements for the year ended 31 March 2018


Capital grants from universitiesUniversity of Cape Town 60,026 29,926

University of the Free State 5,454 5,378

University of Johannesburg - 23,783

Nelson Mandela Metropolitan University 12,257 43,299

University of Pretoria 18,371 45,000

Rhodes University 25,543 34,155

University of South Africa 5,089 112,246

126,740 293,787

1. GRANTS RECEIVED FOR STUDENT AWARDS (EXPRESSED INRAND THOUSAND) (continued)



The supplementary information presented does not form part of the annual financial statements and is unaudited

NSFAS Annual Report 2017/18156

2. OPERATIONAL EXPENSES (EXPRESSED IN RAND THOUSAND)Advertising 2,793 1,578

Assessment rates & municipal charges 557 470

Audit fees - external 4,663 4,440

Audit fees - internal & other 1,982 5,284

Media costs 218 228

Bank charges 584 419

Business development services 3,758 4,904

Cleaning 324 17

Collection costs 11,615 6,387

Commission paid 5,192 3,685

Compliance - National Credit Regulator 330 275

Computer expenses 2,952 1,284

Computer services 8,943 13,073

Consulting and professional fees 3,478 1,645

Electricity 1,134 847

Insurance 452 377

Lease rentals on operating lease 5,631 4,117

Legal expenses 1,090 1,894

Management Consultants 18,405 15,960

Motor vehicle expenses 15 11

Office expenses 474 515

Placement fees 1,846 1,258

Printing and stationery 389 359

Promotions 2,004 371

Renovation costs 3,097 518

Repairs and maintenance 1,997 606

Security services 810 604

Storage and scanning (outsourced) 3,223 2,772

Subscriptions and membership fees 111 248

Telephone and fax 6,219 3,397

Training 1,976 706

Travel and subsistence 29,428 13,318

Water - 42

Workshops - 855

125,690 92,464



2017/18 ANNUAL REPORTnsfas.org.za/content/reports/AnnualReport2018.pdf · 2018-10-01 · 2 NSFAS...

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Transcript of 2017/18 ANNUAL REPORTnsfas.org.za/content/reports/AnnualReport2018.pdf · 2018-10-01 · 2 NSFAS...