Higher Education Portfolio Audit Outcomes; DHET, SAQA, QCTO & CHE 2022/23 Annual Reports

Meeting report

Chairperson's opening remarks

The Chairperson expressed concern about the absence of the Minister and the Deputy Minister, stating that the executive members' presence was crucial for discussions regarding the Department's performance. She noted that Wednesdays were Cabinet meeting days, but suggested that colleagues should have made an effort to ensure at least one of the two executive Members was present.

She emphasised the Committee's concern about not receiving the annual performance report of the National Student Financial Aid Scheme (NSFAS) for 2021/22, as well as the absence of the 2022/23 report. These reports were essential for their oversight work, and she urged the Department to address this issue. She mentioned that the Minister had been discussing the delay with the Speaker, and NSFAS had provided some updates on their progress. However, since the reports had not been tabled, the Auditor-General (AG) could not brief the Committee.

The Chairperson conveyed her genuine concern about the performance of the higher education sector, and anticipated observations and recommendations from the AG. She encouraged the Committee to focus on the critical areas discussed in the past.

She then outlined the day's agenda, starting with the AG's presentation, followed by a discussion on the matters arising from it. She emphasised the importance of the AG's report in guiding the discussion. Afterwards, the Committee would hear from the Department of Higher Education and Training (DHET), led by the Director-General, Dr Nkosinathi Sishi. After a short lunch break, the Committee would continue with presentations from the Council on Higher Education (CHE), the South African Qualifications Authority (SAQA), and the Quality Council for Trades and Occupations (QCTO).

AGSA on DHET portfolio audit outcomes

Overview

Ms Zamahlangu Mditshwa, Senior Audit Manager, Auditor-General of South Africa (AGSA), said the overall audit outcomes within the portfolio had shown a consistent lack of change over the years. This persistent status quo could be attributed to several factors, with one of the key issues being the inadequate integration and coordination between the project’s operations unit and the finance units within the entities. A lack of synergy between these units had impeded the streamlined collation and reporting of data which, if rectified, could lead to notable improvements in the quality of financial statements and performance reports.

Over preceding years, concerns had been voiced regarding the deficiencies in financial controls, project management, and insufficient project monitoring within the portfolio. These issues continued to hinder the progress of the entities within the portfolio. The call for the implementation of stronger controls to address these challenges remained crucial. There was a pressing need to enhance and empower the project units, ensuring robust project management and monitoring controls were established.

In the 2022/23 financial year, of the 28 entities (with two outstanding audits) in the portfolio, along with the Department, the audit outcomes were distributed as follows: 42% (11 entities) received an unqualified opinion with no findings, 23% (six entities) were unqualified with findings, and 35% (nine entities) were qualified.

There was a positive development in the 2022/23 financial year as 11 Sector Education and Training Authorities (SETAs) achieved clean audit outcomes, indicating an improvement compared to the previous year, when only seven had done so. Six entities had maintained an unqualified audit opinion with no findings, and this accomplishment was praised. Additionally, five entities had improved their audit outcomes, transitioning from unqualified with findings to unqualified with no findings.

However, there was a concern as five auditees had regressed and received qualified opinions with findings in the current period, while four entities remained unchanged with qualified opinions. The report emphasised the importance of education and skills development in addressing unemployment and the skills gaps in South Africa, highlighting the critical role SETAs play in empowering citizens with employable skills.

The report also provided further details on the entities within the portfolio that had received qualified audit opinions, citing specific issues and challenges contributing to these outcomes.

The following auditees had regressed to qualified audit opinions.

Banking Sector Education and Training Authority (BANKSETA):

Issue: Payables from non-exchange transactions.

Specifics: An amount of R11 852 594 included in note seven, related to project grant payable -- discretionary, had been found to be materially misstated and did not align with the underlying records. This discrepancy led to overstatements in project grant payables, discretionary grant expenditure, understatement in commitments (note 18), and impacted the surplus for the period and the accumulated surplus.

Reason for qualification: Inadequate accounting for skills development projects due to poor project monitoring. Inadequate reviews of project accruals and a lack of supporting evidence led to material differences in the financial statements.

Health and Welfare Sector Education and Training Authority (HWSETA)

Issue: Grants payable.

Specifics: Grants payables were not recognised in compliance with generally recognised accounting principles (GRAP) 1 (presentation of financial statements). Incorrect balances of service providers were included in grants payable. The audit could not fully assess the extent of this misstatement, making it impractical to do so. Furthermore, there was insufficient appropriate evidence available for grants payable, as the supporting evidence was unavailable due to issues with record keeping.

Reason for qualification: Inadequate recognition of grants payable was due to improper balances of service providers and issues with record keeping, making it challenging to determine the necessary adjustments.

Issue: Discretionary grant reserve commitments.

Specifics: Material misstatements and incorrect accounting of discretionary grant reserve commitments, as per GRAP 1, were observed and disclosed in note 23. Unexplained differences were found between the amounts in the underlying schedules and those disclosed in note 23 of the financial statements. The disclosure also included contracts that had already expired, causing an overstatement of the discretionary reserve commitments.

Reason for qualification: Insufficient collaboration between the project Department and finance Department in the entity had resulted in incorrect accounting for grants payable and commitments related to skills development projects. Inaccurate balances for grants payables, the inclusion of expired contracts in the commitments, and missing supporting documentation for recorded grants payable, were key contributors to the regression in the entity. Inadequate project management was also identified as a factor in the regression.

Transport Sector Education Training Authority (TETA):

Issue: Skills development grants payable – discretionary.

Specifics: Skills development grants payable (discretionary) were not recognised in accordance with GRAP 1 (presentation of financial statements). Adequate records of project expenditure not yet paid at year-end were not maintained. The full extent of the misstatement on skills development grants payable (discretionary) and related discretionary grants, project expenses and commitments had been impractical to determine. Consequently, it was not possible to ascertain if any adjustments regarding skills development grants payable (discretionary) of R4 388 000 disclosed in note 15, discretionary grants and project expenses of R657 263 000 disclosed in note six, and commitments of R818 574 000 disclosed in note 22 to the financial statements, were necessary. This also impacted the surplus for the period and the accumulated surplus in the financial statements.

Reason for qualification: There was a regression in the audit outcomes from an unqualified opinion in the prior year to a qualified opinion in the current year. The qualification areas were attributed to the lack of adequate controls over the monitoring of project expenditure, especially concerning invoices and deliverables that were not properly accounted for in the accounting records due to incomplete verification processes. Moreover, there was a lack of adequate record-keeping for capturing invoices when received by providers and for follow-up on unpaid invoices. The principles of matching expenditure incurred for services received or training during the year were not adhered to.

Education, Training and Development Practices Sector Education and Training Authority (ETDP):

Issue: Project accruals (discretionary).

Specifics: Project accruals (discretionary) were not recognised in accordance with GRAP 1 (presentation of financial statements). Adequate records of project expenditure not yet paid at year-end were not maintained. It was impossible to determine the full extent of the misstatement on project accruals and related discretionary grants and commitments, as it was impractical to do so. Consequently, it was not possible to ascertain whether any adjustments relating to project accruals (discretionary) of R194 948 000 disclosed in note 14, discretionary grants and project expenditure of R569 941 000 disclosed in note six, and commitments of R198 450 000 disclosed in note 19 to the financial statements, were necessary. This also impacted the surplus for the period and the accumulated surplus in the financial statements.

Reason for qualification: Similar to TETA, there had been a regression in the audit outcomes from an unqualified opinion with no material misstatements in the prior year, to a qualified opinion in the current year. The qualification areas stemmed from the lack of adequate controls over the monitoring of project expenditure, where invoices and deliverables received were not accounted for in the accounting records due to the inadequate maintenance of an invoice register. Provincial offices adopted inconsistent processes in maintaining the registers, primarily recording invoices received that met the deliverable criteria, while invoices that did not meet the criteria, even though services were rendered, were not recorded in the invoice register and were not accounted for in the accounting records.

Manufacturing Education and Related Services Sector Training Authority (MERSETA):

Issue: Discretionary reserve commitments -- contractual.

Specifics: The discretionary grant reserve commitments disclosed in note 20.1 were materially misstated and not correctly accounted for, as required by GRAP 1. The entity had omitted the expenditure and accruals associated with the discretionary grant commitments, resulting in a misstatement of the commitment balance. The full extent of the misstatement on grants and transfers payable, employer grants, and expenses was impractical to determine. This led to a misstatement of the discretionary reserve commitments amounting to R4 575 115 000 (compared to R4 060 017 000) in the financial statements.

Reason for qualification: There was a regression in the audit outcomes from an unqualified opinion with findings in the prior year, to a qualified opinion in the current year. The reasons for this regression were mainly due to the entity's inadequate monitoring of project progress, a lack of coordination between the projects function and finance to ensure that all projects were properly accounted for in the financial statements, and the absence of sufficient controls to prepare adequate, complete, and accurate financial statements in accordance with GRAP.

The following auditees remained with qualified audit opinions:

Insurance Sector Education and Training Authority (INSETA)

Payables from exchange and non-exchange transactions:

The public entity did not account for payables from exchange transactions in accordance with GRAP 1 (presentation of financial statements). Project creditors were incorrectly accounted for as trade payables disclosed in note seven to the financial statements. Consequently, trade payables stated as a balance were overstated, and project creditors stated at a balance in note 8 to the financial statements were understated by the same amount.

Commitments: The public entity did not account for commitments in accordance with GRAP 1, Presentation of financial statements, as discretionary grant contracts awarded in the prior year, were cancelled without sufficient appropriate audit evidence. Consequently, the discretionary grant commitments' corresponding figure was understated in note 25 and annexure A to the financial statements.

In addition, the restatement included recognition of discretionary expenditure payments relating to the prior year in the commitment schedule, but not in the corresponding figures for discretionary grant expenditure stated in note 20 to the financial statements. AGSA was unable to obtain sufficient appropriate evidence that the discretionary expenditure was correctly accounted for, as supporting evidence was not provided for the recorded transactions.

Reason for qualification: The entity had maintained a qualified opinion for both the current and previous years. The entity implemented a new finance system at the beginning of the financial year without a conventional parallel run, and transactions entered during this transition were manually captured on to the new system when it became live. The lack of adequate controls over the system implementation resulted in some expenditure not being captured on the system, particularly for administration expenditure, further impacting the payables balance.

Delays in implementing the new Enterprise Resource Planning (ERP) system negatively impacted the entity's business operations, affecting the preparation and credibility of the financial statements submitted for audit. Additionally, INSETA had failed to obtain the levy payments schedule from the Department to determine the amounts owed to employers and disclose this appropriately.

(See attached for full review)

Ms Mditshwa's report conveyed several key points and recommendations regarding financial management, education, technical and vocational education and training (TVET) colleges, and NSFAS.

She said investigations should identify the officials or institutions responsible for material irregularities (MIs). The investigations must also focus on implementing strong internal controls and processes to prevent the recurrence of MIs. Consequence management was vital in addressing these irregularities, and there should be fines in place for institutions responsible for them, given the potential loss of funds. The main message concerning MIs was the importance of identifying responsible parties and holding them accountable.

Regarding financial management, she noted that there were qualification areas within entities, specifically in commitment payables and expenditure. The report discussed the internal control deficiencies that had led to these qualifications. The report also emphasised the surpluses in the sector, pointing out that alignment between reserves and actual commitments was crucial to ensure efficient utilisation and budgeting. The Department was encouraged to examine this alignment more closely.

The report covered legislative matters, stating that National Treasury's communication on surplus retention diverged from the Public Finance Management Act (PFMA). Discussions were ongoing between the Department, National Treasury and the AG to resolve this discrepancy.

Regarding non-compliance with legislation, 14 entities were found to have material non-compliance related to the quality of financial statements and insufficient consequence management. Irregular expenditure, especially in procurement and payments, was a concern.

The report highlighted changes in disclosing irregular, fruitless, and wasteful expenditure, which now appeared in the annual report rather than in the financial statements. Irregular expenditure for the year amounted to R1.7 billion, with the top contributors listed.

Accumulated irregular expenditure was a significant concern, totalling R6.6 billion. Improved consequence management and compliance were essential to prevent the accumulation of irregular expenses.

Supply chain management issues were discussed, with only one entity found to have material non-compliance. The impact of not following procurement processes, such as competitive bidding, was highlighted.

The report mentioned an amendment to disclosure principles, emphasising that the oversight bodies would need to refer to the annual report to get a full picture of irregular, fruitless and wasteful expenditure.

Ms Mditshwa noted gradual improvements in audit outcomes at TVET colleges, with most now receiving unqualified opinions with no findings, or unqualified with findings. However, there were 17 colleges with qualified or adverse opinions, emphasising the need for audit committees to enhance financial statement reviews and capacity building in the finance units.

Areas of qualification included property, plant and equipment, expenditure, asset management, and the submission of annual financial statements on time. Ms Mditshwa recommended continued efforts to improve the quality of financial statements.

The report discussed the duplication of efforts and leakages in skills development funding, urging the sector to focus on bridging the gap between what the colleges cover and what the market needs. Collaboration among quality assurance entities was encouraged to optimise resource utilisation.

Lastly, the report examined the academic focus and the mismatch between courses enrolled in TVET colleges and those funded by NSFAS. It suggested that NSFAS should focus on bridging this gap, ensuring their funding aligned with educational priorities and market demand.

She noted a misalignment between the focus of TVET colleges and the high-demand occupations, emphasising the need for better correlation. The employment status of students who completed their qualifications in 2022 was analysed, revealing a significant unemployment rate among qualified individuals. The report suggested that there was a considerable pool of unemployed individuals with qualifications, contributing to the country's high unemployment rate.

Ms Mditshwa underlined a lack of integration and coordination within the portfolio, highlighting the need for better cooperation among different branches and entities. The Department was seen as the key player in driving this coordination, and the report suggested ways in which it could enhance its role.

The report focused on academic alignment, suggesting that the Department should encourage direct relationships between the quality assurance entities and the field of studies prioritised by TVET colleges. This alignment was crucial for ensuring that the skills being taught matched the needs of the market.

In terms of reporting, the report stressed coordinated reporting among the portfolio's different entities, with performance contracts of the leadership anchored in the principles of collaboration and coordination. This approach aimed to ensure that the portfolio's goals were being achieved.

Ms Mditshwa recommended that the Portfolio Committee evaluate explanations from the entities regarding their service delivery performance and follow up on the progress made in addressing prior audit outcomes related to performance information. She also highlighted the importance of investigating the circumstances that lead to under or over-expenditure of an entity's budget, and the impact on service delivery. Consequence management for irregular expenditure and fruitless expenditure was a critical area for scrutiny.

She also mentioned the future focus areas, including assessing the efficacy of the quality assurance bodies and the completion rates of students with access to government funding.

The report then briefly touched on the audit outcomes of Section 3 universities, noting that there was not much movement in these outcomes. The concern was the universities that still had outstanding audits, mainly due to issues like conflicts of interest and material spending.

Ms Mditshwa concluded her presentation by expressing the hope that the implementation of the recommendations could lead to a reduction in the unemployment rate, as the DHET's functioning directly impacted the employability of students.

Discussion

Ms C King (DA) first expressed gratitude to the AGSA for the informative content. She raised several concerns regarding the TVET and SETA sectors, pointing out that many SETAs had requested extensions, and some still had qualified audit opinions.

She found it troubling that there had been recent issues concerning possible collusion in the awarding of contracts, particularly in the cases of NSFAS and service SETAs. She requested more detailed information on these contracts, including those linked to the Coinvest Africa saga and the biometric systems associated with the services SETA. She was keen to understand how these issues had been addressed.

She also touched on the impact of ongoing Special Investigating Unit (SIU) investigations on the timely submission of audit reports. She inquired whether the senior auditor manager had encountered similar challenges.

She also mentioned the matter of board appointments at various SETAs, emphasising that the Minister was responsible for these appointments. She asked if the DHET had been in communication with the AG regarding irregular appointments, and whether any corrective actions had been taken.

Ms King highlighted that certain institutions had not fully implemented some of the recommendations made by the AG in the previous year. This indicated a lack of consequence management and project management. She suggested that the qualifications and competence of individuals in key positions within these entities should be scrutinised.

She reiterated the Committee's longstanding concerns about the need for better coordination and integration between different funding bodies like the SETAs, NSFAS, and the National Skills Fund (NSF). This was particularly important to address issues such as double-dipping, and to ensure that investigations were conducted for irregularities in funding recipients.

The Chairperson requested that the focus should be on seeking clarity from the AG at this moment. She suggested that comments on the sector, as a whole, could be incorporated into future discussions related to annual performance plans (APPs) and various entities. The Chairperson aimed to ensure the meeting stayed within its timeframe, and urged Members to provide their inputs on the AG's presentation.

Mr M Shikwambana (EFF) raised concerns about entities' lack of remedial action in response to audit opinions from the Auditor-General (AG), especially in the context of the SETAs. He cited the example of the Transport Education and Training Authority (TETA), which had received a qualified audit report and mentioned allegations of corruption, mismanagement of funds, and misuse of powers by the management.

He emphasised the need for transparency and accountability regarding what actions were being taken after audit opinions were issued. He sought clarification from the AG on whether the AG's department conducted follow-ups to ensure that recommended actions were implemented, and, if not, what the next steps were to promote accountability and remedial action.

 

Dr W Boshoff (VF+) raised questions about the potential integration of the multitude of entities in the sector, particularly the SETAs, into a more streamlined structure like an industrial board. He expressed concerns about the inefficiencies and disparities in the management of these entities, and suggested that such integration could potentially address issues like high unemployment and skills shortages. He sought to understand the management perspective and the potential advantages and feasibility of such integration.

 

Ms D Sibiya (ANC) expressed concerns about the issue of duplication of funding, where a student received funding from multiple SETAs. She also raised questions about how it was possible for a student to have an invalid identity document (ID) number, wondering whether it was due to human error when entering ID numbers, or if there might be corruption involved. She sought suggestions from the AGSA on what should be done to address this situation, as it appeared to her that there might be corruption at play.

Mr T Letsie (ANC) began by referencing a past issue where there had been a misunderstanding between NSFAS and the AGSA, and wanted to understand why the AG sometimes refused to allow certain entities to make corrections after the audit. He also inquired about the interest generated from the R12 billion cash surplus reserves mentioned in the report.

He asked about the number of unqualified entities and highlighted that some were repeat offenders, like the Construction SETA and Services SETA. He sought to understand the reasons behind these entities' recurring issues, and whether the audit action plans were sufficient.

He also questioned why the Department had not achieved 52 of its planned targets, and what could have been done differently to avoid this. He also inquired about consequence management at the NSF, particularly concerning overpayments and duplicate unit standards.

Mr Letsie noted improvements in some of the TVET colleges' audit outcomes, but urged others to learn from their success. He suggested directing the remaining questions to specific entities and the Department for further clarity.

AGSA's responses

Ms Mditshwa addressed Ms King's questions and comments. Regarding the tabling of annual reports due to SIU investigations, she explained that there had not been a specific communication on the reasons for not tabling, but the AG had not received any formal reasons for this. She said that the only entity that had not tabled their annual report was NSFAS, and the AG had finalised the audit report. The Department or DG may provide more information during their response regarding this.

She also discussed the appointments of board members and irregular expenditure due to incorrect appointments, noting that there had been no direct communication regarding remedial actions, but the irregular expenditure had been classified as such. Consequence management had been lacking, resulting in irregular expenditure remaining on the books. Ms King's concerns were related to the lack of consequence management in this area.

Ms Mditshwa said that the AG had communicated the need to capacitate project units and improve coordination between different departments within entities to ensure proper project management and financial reporting, but more work needed to be done in this area.

Regarding Mr Shikwambana’ s question about what happens after the AG issues an audit report, she explained that the AG reviewed the action plans as part of their processes to ensure their adequacy in addressing the recommendations made to the entities. After finalising the audit reports, they communicate the outcomes to oversight bodies, starting with the Department and the Minister, and rely on these bodies to hold the entities accountable for implementing their recommendations.

Responding to Dr Boshoff's question about integration, she clarified that the AG suggested the integration of systems, rather than integrated entities. The goal was to eliminate inefficiencies and avoid duplications by having an integrated system that ensured entities did not fund the same students or encounter the same issues.

Ms Mditshwa addressed Ms Sibiya's concern about invalid IDs and the duplication of funding. The AG emphasises the need for accountability, especially for leakages and irregularities. Consequence management should include investigations and holding relevant individuals accountable to prevent such issues from recurring.

Regarding Mr Letsie’ s question about corrections to financial statements and the auditing process, she explained that there was a process for allowing corrections to financial statements, and the auditing standards and internal control systems needed to be followed. The decision to allow corrections depended on the entity's demonstration of an adequate process for making the correction.

Regarding reserves, Ms Mditshwa said there had been an accumulation of funds in the SETA space. However, the AG had not conducted an analysis of the interest generated by these reserves. She highlighted the need for the Department to analyse the alignment between the funds and the commitments.

Ms Mditshwa discussed repeat offenders among entities and the need for addressing qualification areas. She mentioned that some entities, like the Construction SETA, were making progress but needed more time to address certain issues. Finally, she recommended that the Committee engage with the entities to understand why they did not achieve certain targets, as this could impact service delivery.

She said that AGSA had given the accounting authority until 31 October to implement consequence management based on the AG's recommendations regarding consequence management at the NSF. They would assess the situation after receiving the report from the NSF.

DHET 2022/23 Annual Report (financial and non-financial performance)

Dr Nkosinathi Sishi, Director-General (DG), DHET, started his presentation by apologising for any potential intermittent disturbances, as he was calling from Namibia, where he was involved in state visit preparations. He commended the AGSA for their collaboration in changing the organisational culture, resulting in improved compliance and accountability within the Department and its entities. He asked for five minutes to make remarks on behalf of the Minister and Deputy Minister.

He highlighted the Department's commitment to presenting its annual performance report for the 2022/23 financial year. Despite facing significant socioeconomic challenges and austerity measures proposed by National Treasury, the DHET's focus on strategic outcomes remained steadfast.

The Department had adjusted enrolment plans for universities and colleges for the 2023-2025 academic years to change the size and shape of the post-school education and training system, aiming to increase college enrolments.

He provided an overview of the Department's progress and achievements in areas like student funding, university capacity development, skills provision in community education and training (CET) colleges, university campus feasibility studies, and establishing centres of specialisation. He emphasised the importance of building a strong post-school education and training system, and thanked the Portfolio Committee for their support.

Dr Sishi noted that the AG's report had identified challenges in various systems, including information communication technology (ICT), and stressed the need for the Department to establish institutional systems to address these challenges. He also mentioned ongoing monitoring of the NSFAS to ensure good governance.

He reaffirmed the Department's commitment to addressing the AG's recommendations. He mentioned their readiness to present a GARP analysis report on information technology for the entire post-school education and training system, to improve efficiency and effectiveness in administration.

Dr Sishi provided an overview of the presentation, touching on the Department's vision, mission, five-year strategic planning, outcomes, and achievements against those outcomes. The presentation also covered programme performance against annual targets and financial performance.

The DHET aimed for an integrated and coordinated system, and they had a clear strategy for the post-school education and training sector, which had been shared with the Auditor-General. He emphasised the importance of strategic leadership, appropriate steering mechanisms, effective oversight and monitoring, funding strategic areas, and support services in teaching and learning.

Dr Sishi highlighted the Department's efforts in expanding access to post-school education and training opportunities and infrastructure development, such as new campuses and universities under construction. He concluded by reaffirming their commitment to providing quality education and training, and thanked the Committee for its support.

Performance overview

The DHET had 111 annual targets. Of these, 59 (53%) were successfully achieved, while 52 remained unattained. Over half (52%) of the unmet targets pertained to institutional-level objectives.

Programme Three (University education) recorded the highest success rate, with 64% of targets achieved, while Programme Five (Skills development) reported the lowest achievement, at 42%.

The Department had maintained a vacancy rate of below 10% (9.4%), which had improved to 8.8% in the first quarter of 2023/24. Moreover, it had resolved 80% of disciplinary cases within the stipulated 90 days.

The Department processed payment of 99.7% of valid invoices within 30 days, with an improvement to 100% in the first quarter of 2023/24. Notably, it had received an unqualified audit opinion on its financial statements from the AG, with no findings.

Strategic planning, including the Ministerial Enrolment Planning Statement and developing a sustainable funding model, had been undertaken. These initiatives aligned with government's strategic priorities and infrastructure master plans of universities. The Student Funding Implementation Framework was also submitted, incorporating Cabinet recommendations.

The DHET bursary guidelines for 2022 were updated and approved, ensuring funding for over 556 000 university students through NSFAS. However, funding support for TVET college students (226 063) fell short of the planned target (329 554).

The Department had actively placed over 10 000 TVET graduates within industry and government departments. It was on track to achieve its goal of placing 20 000 graduates by March 2024.

Enrolments had increased at both TVET (589 083) and community education and training (CET) (143 031) colleges during the year. The skills strategy for the economic reconstruction and recovery programme was being implemented, with a focus on priority sectors.

Significant progress has been made in filling New Generation of Academics Programme (nGAP) posts at universities, with 772 lecturers appointed on a permanent basis. A substantial number (188) of these lecturers had obtained their PhDs.

The Audit Committee had voiced satisfaction with the financial statements, but raised concerns about performance information reporting, internal control system weaknesses, and the untimely implementation of action plans. In addition, concerns were noted about the Department's organisational structure.

Each branch had developed an audit action plan in September 2023 to address control deficiencies based on the audit findings. These plans covered the areas raised in the audit report and other audit queries. Progress would be monitored and reported to the Minister, the Director-General and the Audit Committee. All actions were expected to be completed by 31 January 2024.

Despite challenges in spending, the Department's operations had not been negatively impacted. Measures were implemented to prevent both overspending and material underspending. Due to economic factors, there may be added financial pressures in the 2023/24 reporting period, but measures were being undertaken to mitigate them.

The Department continued to experience significant pressure in managing the additional responsibilities and functions associated with the TVET and CET sectors.

(See attached documents for detailed information)

Discussion

The Chairperson began by acknowledging the progress made by the DHET. She expressed a desire for future presentations to include tables comparing targets and achievements for clarity. She welcomed various achievements, but sought information on a sustainable funding model for CET colleges, and whether it would be part of the comprehensive student funding model. She also inquired about the status of the comprehensive student funding model report, and whether it would be ready or presented to Cabinet by 30 October.

 

She highlighted concerns about CET enrolments, emphasising the need for a balanced enrolment plan across the provinces. She requested updates on the private sector's involvement in providing work-based learning opportunities.

She sought information on when the nGAP program had started, and said there was a need for increased infrastructure development not only in KwaZulu-Natal (KZN), but in all the provinces.

Mr Shikwambana raised a series of questions related to the Transport Education and Training Authority (TETA). He inquired about TETA's funding of tertiary studies in the current academic year, seeking information on the number of students funded by it and the fields of study they were pursuing. He requested insights into TETA's audit report, which he acknowledged as a qualified audit report from the AG. He wanted to know the actions taken in response to the audit findings and questioned the absence of action, requesting clarification on the reasons behind this. He expressed interest in the international trips undertaken by TETA's senior management, the benefits derived from these trips, the average cost associated with them, and their alignment with TETA's mandate and government objectives.

Ms King, while appreciating the presentation, expressed concerns regarding the DHET's achievements concerning its key performance indicators (KPIs). She noted that despite a substantial amount of funds having been spent, there was a perceived imbalance between expenditure and actual achievements.

She highlighted the exorbitant expenses in the "travel and subsistence" category and expressed concern about the sustainability of the Department's organogram. She also sought clarification on whether the organogram had been reviewed.

She welcomed the announcement that the comprehensive funding model would be presented to Cabinet in October but inquired if the presentation would be made available to the Committee for input. She also asked if the comprehensive funding model would be implemented in the 2024 academic year.

Ms King raised concerns about the absence of NSFAS's audit report for two consecutive years and requested clarity on the reasons behind this omission. She also inquired about the Department's oversight mechanisms to ensure the implementation of audit action plans in various entities to prevent recurring issues.

Concerning the Council for Scientific and Industrial Research (CSIR) buildings, she questioned whether the DHET had engaged in consultations with the Department of Science and Innovation (DSI) and sought to understand their plans regarding the deteriorating state of the CSIR infrastructure.

She was concerned about the mismatch between funding programmes and enrolments funded by NSFAS, particularly in the TVET colleges. She stressed the need for a review to direct funding towards niche fields of study in high-demand sectors like ICT, artificial intelligence (AI), science, technology, engineering and mathematics (STEM), and agriculture.

Finally, she raised concerns about the issue of "double dipping," whereby students receive multiple sources of funding from different SETAs, NSFAS, Funza Lushaka, etc., and called for a thorough analysis and investigation into the matter to ensure the fair distribution of funds.

Mr K Pillay (ANC) expressed appreciation for the report and presentation and congratulated the Department on its achievements. He emphasised the importance of acknowledging the progress and strides made by the Department.

His main queries revolved around the Department's efforts to share best practices among various entities and SETAs, to assist them to achieve similar success. He also inquired about any critical vacancies that may remain unfilled, seeking clarification on this matter from the Director-General.

Mr S Ngcobo (DA) raised concerns and questions related to Programme 6 (Community Education and Training) within the Department. He expressed concern about the Department's inability to achieve its annual enrolment targets for CET colleges since implementing the medium-term strategic framework (MTEF). He highlighted specific instances where enrolment targets were significantly below expectations. He emphasised that over three million illiterate people in South Africa could benefit from CET colleges, and the Department's inability to meet targets was a serious concern.

He asked whether the Department had an infrastructure development plan for CET colleges and inquired about the CET sector's capacity to execute its functions. This question was in the context of the Department attributing the failure to meet enrolment targets to a lack of adequate infrastructure for teaching and learning in CET colleges.

Mr Ngcobo acknowledged that the Department had exceeded the target for offering new programmes or qualifications in CET colleges. He asked whether these new programmes were offered in all CET colleges, how many students were taking these programmes, and whether CET colleges had qualified and competent lecturers to teach them. He also sought clarification on whether these programmes were funded by SETAs or were ministerially funded, and whether the funding model, if it involved the SETAs, was sustainable.

He addressed the issue of compliance with the policy on the conduct and management of examinations and assessments, noting that 100% compliance had not been achieved. He questioned whether the Department's regional offices conducted monitoring of examination readiness at CET college examination centres, and if these offices were capable of addressing non-compliance issues at these centres.

Mr Letsie, in his address, brought up several significant concerns and questions that required attention and clarification.

Firstly, he commended the Department for achieving a clean audit on their financials, recognising the positive strides made in this regard. However, he expressed his concerns regarding the Department's financial performance compared to the targeted achievements. He pointed out that while the Department had spent almost 100% of its budget, the performance regarding set targets was at approximately 50%. This substantial difference raised questions about the budget allocation, whether certain targets lacked financial implications, and why some targets were overachieved while others were underachieved. He called for an explanation to understand these discrepancies.

He emphasised the necessity for the Department to provide detailed information about unachieved targets. He sought explanations for the challenges that led to these shortfalls, and wanted to know the measures being taken to address them. He stressed the importance of setting realistic and achievable targets in the annual performance plans to avoid such discrepancies in the future.

Another pressing issue he raised was related to what he termed "double dipping" among students, where students benefited from multiple sources, such as SETAs, NSFAS, and Funza Lushaka. He expressed concern about the lack of aligned systems that could detect these anomalies. He proposed the development of a central system for SETAs to prevent such issues. He also highlighted concerns regarding the enrolment of deceased individuals and students over 65, suggesting that these anomalies may be due to fraud or system failures. Clarification and investigation into these issues were deemed necessary.

Mr Letsie pointed out the lack of consequence management and internal controls identified by the AG. To address this, he recommended implementing proper reporting systems, monthly or quarterly uploads, and consequences for entities that did not adhere to the established guidelines. These measures would help track the performance of different entities and ensure that public funds were managed effectively.

Finally, he called for the establishment of a more efficient reporting and monitoring framework. This framework would help to hold entities accountable and ensure that targets were met in a timely manner, addressing the issue of annual target achievement cycles. He highlighted the need for transparency and attention to detail to avoid the stress and frustration felt by the Committee Members involved in the Department's performance processes.

The Chairperson expressed concern about the declining trend in target achievement, despite increasing the number of targets each year. She pointed out that the Department had achieved 80% of its targets in the 2019-2020 period, which had decreased to 54% in the 2022/2023 period. She stressed that this decline was worrying, even though the Department had received an unqualified audit opinion.

She highlighted the consistent pattern of the Department spending almost its entire budget while not achieving the expected targets. This budget-performance discrepancy raised concerns, indicating the need for a closer look at fund allocation and usage.

The Chairperson emphasised the critical issue of data and integration within the education sector, pointing to the lack of integrated planning and implementation. She noted that this had led to various problems, including duplicated funds and difficulties in the disbursement of student allowances. She acknowledged the Department's efforts to address these challenges in the 2022/23 performance plans, and encouraged continued work on improving data integration.

She also addressed the problem of over-enrolment in some institutions, particularly due to the growing number of applications. She emphasised the need for better planning for the start of the academic year, more infrastructure, and work-based learning opportunities to accommodate the increasing number of students, especially in TVETs. This growing demand for education underscored the importance of strengthening the education ecosystem to meet these needs.

To conclude, the Chairperson stressed the need for the Department to address these challenges and make necessary improvements in preparation for the 2024 academic year. She acknowledged the progress made, but highlighted the importance of ongoing efforts to enhance the education system and its performance.

DHET's responses

Dr Sishi said DHET officials would address the questions sincerely and with integrity, acknowledging that some systemic issues might require more detailed written responses. He said various officials from the Department were present to provide detailed responses to specific questions.

He acknowledged the concerns about underperformance, and assured the Committee that they were working hard to meet their objectives, even amid budget cuts. He highlighted the importance of compliments, and thanked the Committee for their support and encouragement.

He noted that the consequences of management were a top priority, and reported on investigations and actions taken against those implicated in irregular expenditure. This led to some officials getting suspended and fired. He emphasised the commitment to follow up on material irregularities and tighten service level agreements (SLAs) with the CEOs of the various SETAs.

He concluded by stating that the achievements presented were a result of collective efforts and the hard work of the Department, with a focus on the greater public good. He indicated that other officials would provide specific responses to the questions raised. The responses would include building the CSIR, the audit action plan by the CFO, and addressing the questions related to NSFAS and the organogram. He clarified that the intention was not to defend, but to show the challenges they were facing and how they intended to address them with the Committee's support.

Ms Thembisa Futshane, Deputy Director-General (DG): Community Education and Training, DHET, tackled the issue of the community college sustainable funding model, stressing that this model had been devised to replace the previous funding model, which was not suitable for the unique needs of community colleges. She reassured the Committee that efforts were underway to incorporate this sustainable funding model into the overarching system funding model. She acknowledged the problem of an inaccurate baseline for enrolments, which was a carryover from when colleges migrated from provincial departments to the national level. Despite their attempts to rectify it, the baseline remained unchanged, affecting their ability to meet enrolment targets. She also mentioned that disciplinary actions were taken against principals who played a role in the erroneous reporting.

Ms Futshane stressed the necessity for expanded infrastructure, and discussed the challenges facing college lecturers, who presently worked only a few hours each day. Increasing enrolments would necessitate additional funding from National Treasury, which was a current constraint. She noted that the funding received from the NSF and the CET had been a valuable contribution to their efforts.

She delved into the Department's strategies for improving infrastructure, promoting distance learning, and facilitating online learning. She also addressed questions regarding the qualifications offered by community colleges, explaining that programmes were tailored to the specific needs of individual colleges within their communities.

She shared success stories of graduates from community colleges, demonstrating the positive impact of these programmes in providing sustainable livelihoods. Finally, she confirmed that regional managers oversee the proper conduct of exams in community colleges, ensuring compliance and maintaining educational quality.

One of the notable challenges related to exams was the migration process that occurred just last year. This migration had a significant impact, particularly when it came to infrastructure issues, specifically the storage of question papers. This issue was a substantial challenge for the community colleges. However, the good news was that they were actively addressing this matter. The Department had received support from TVET colleges and provincial education departments in their efforts to overcome this challenge.

Ms Lulama Mbobo, DDG: Corporate Services, DHET, responded to two questions. The first question pertained to the progress of the organisational review process, particularly concerning the realignment of the Department's structure with the White Paper on Post-School Education and Training, the National Plan on Post-School Education, and the Department's current strategic plan. She explained that the structure, approved in 2019, was not fully aligned with these documents. Consultants had finalised and submitted reports on this issue. To address concerns about the structure exceeding the current budget, they were in the process of reviewing and trimming it down. By the end of November, the DHET aimed to complete this review. The proposed structure also placed emphasis on monitoring, evaluation, and compliance capacity, aiming to enhance governance and compliance monitoring functions.

The second question related to the quality of buildings and facilities, with concerns raised about their suitability. Ms Mbobo clarified that the DPWI was responsible for evaluating the facilities offered to the Department. The DHET relied on the DPWI's assessment to determine whether the Department could use the facilities. It had its own professional team visiting the sites, and had not found reasons for concern regarding the quality of the facilities provided by the CSIR.

Dr Sishi asked for the Department to be allowed to provide some of the responses in writing, and asked the CFO to cover some questions that he had delegated to him.

Mr Lucian Kearns, Chief Financial Officer (CFO), DHET, provided an overview of the action plan developed in response to the findings of the audit. This action plan was comprehensive and extended beyond the annual report, encompassing findings that may not have been included in the report but had been identified by the AG.

The plan included details on the findings, identifying root causes, proposed management actions, and whether the finding was new or a repeat. The plan was a collaborative effort involving input from all the branches within the Department. Mr Kearns emphasised the importance of accurately identifying the root cause, as this was crucial for defining the management actions. The goal was to finalise all actions by the end of January 2024.

In addition to addressing audit findings within the Department, the plan also extended to entities and SETAs, ensuring they were assisted in addressing issues. Collaboration was ongoing with these entities to resolve challenges. "Operation Committee on Findings" had been established to deal with the findings.

Mr Kearns touched upon the issue of achieving targets and the financial aspect, noting that not all targets were financially related. He highlighted the need for consistency in measuring performance and managing budgets, given the budget cuts and the need to reprioritise projects. He also recognised the challenge of striving to meet targets while managing financial constraints.

Dr Marcia Socikwa, DDG: University Education, DHET, discussed the challenges related to the annual report, with a particular focus on the closeout report. The closeout report involved reconciling the amounts that institutions owed to NSFAS and the amounts that NSFAS owed to the institutions, dating back to 2017. Errors in the system have contributed to these challenges. She said that the reconciliation process had now been completed, and the Auditor-General (AG) had reviewed their report. They were currently working on the layout of the annual report for submission.

Ms Socikwa also briefly mentioned that the DG cluster had approved the submission of the student funding model to the Cabinet. However, she did not provide further details on this topic.

The Chairperson expressed the importance of the entire sector in contributing to skills development in the country. She emphasised the need to meet targets, be intentional about their work, and take action to strengthen the sector. She added that written responses would be required within seven working days.

Council on Higher Education 2022/23 Annual Report

Ms Vuyokazi Memani-Sedile, Chairperson, Council on Higher Education (CHE), began her statement by outlining the organisation's mandates.

The first mandate had been conferred by the Higher Education Act No. 101 of 1997. It included advising the Minister on higher education matters, arranging and coordinating conferences in line with the mandate, promoting quality assurance in higher education, auditing quality assurance mechanisms in higher education institutions, accrediting programmes, publishing information on higher education, including reports on its state, and promoting access to higher education institutions. The CHE also performs any other functions designated by the Higher Education Act, the National Qualifications Framework (NQF) Act, or the Minister through the notice in the Gazette.

The second mandate was conferred by the National Qualifications Framework Act of 2008, which tasks the CHE with developing and managing the Higher Education Qualifications Sub-Framework (HEQSF). Under this mandate, the CHE develops and implements policies and criteria linked to the HEQSF, recommends higher education qualifications to the South African Qualifications Authority (SAQA) for registration on the NQF, maintains a database of all learners and achievements, submits this data for recording, takes responsibility for quality assurance related to the HEQSF, conducts commissions and publishes research relevant to its further development, and advises the Minister and informs the public about the HEQSF.

Further, the CHE had incorporated an additional mandate related to sectoral oversight of transformation, following a request from Minister Blade Nzimande in 2021. This mandate entails the development of a systematic framework for reporting and monitoring transformation indicators within the higher education sector. A transformation monitoring framework had been developed, submitted to the Minister, and incorporated into all the work conducted by the CHE. The aim was to emphasise the importance of transformation within the sector and ensure it was effectively addressed.

The presentation highlighted that, overall, the CHE achieved 98% of targets for the year under review.

No irregular expenditure was incurred.

Fruitless and wasteful expenditure was incurred to the value of R20 220.00. This expenditure relates to flights and shuttle services for staff that were not utilised.

The entity achieved a clean audit.

(See attached for full details)

Ms Memani-Sedile said the CHE faced several challenges and funding needs to effectively carry out its responsibilities. The current budget allocated to the CHE was inadequate for the organisation to fulfil its responsibilities effectively and maintain a sufficient number of staff for its operations.

The required cost of employment (CoE) to goods and services budget ratio limited the ability to employ staff in permanent positions. This resulted in a heavy reliance on service-level contracts, contracted staff, and peer academics, especially in critical areas like information technology (IT).

The CHE required additional resources to support its transformation oversight function, which was essential in addressing equity and access issues in higher education.

Conflicts and confusion within the sector arise from disagreements with certain professional bodies over mandates, which need resolution for smooth operations.

The persistent challenge of fraudulent qualification offerings by bogus institutions remained a concern, necessitating proactive measures.

The CHE was well-prepared to introduce further aspects of the new Quality Assurance Framework in 2024.

It was hosting a conference scheduled for 28 February to 1 March 2024, with the theme "Deepening the Discourse on Academic Freedom, Institutional Autonomy, and Public Accountability in South African Higher Education."

The budgetary constraints experienced by the CHE could be attributed to several factors:

• The CHE's workload and mandate had expanded, particularly with the growth of the higher education sector and the emergence of the private higher education sector.
• The need to include public and private higher education colleges under the quality assurance oversight of the CHE had added to its workload.
• Over the years, the CHE had been assigned additional mandates, including responsibility for managing the HEQSF as a quality council, and the new transformation oversight mandate.
• Investment in digital technologies was crucial to enhance the CHE's effectiveness in the context of the Fourth Industrial Revolution (4IR).

A well-structured organisational framework was necessary to align with the work to be conducted, especially in the context of introducing the new quality assurance framework.

Additional funding was imperative to manage the increased scope of work, progress in digital transformation, and ensure the organisational structure was fit-for-purpose and aligned with the tasks at hand. These funding requirements were crucial for the CHE to continue fulfilling its mission and adapting to the evolving landscape of higher education in South Africa.

South African Qualifications Authority 2022/23 annual report

Prof Peliwe Lolwana, Chairperson, SAQA, introduced the organisation's delegation, and told the Committee that the entity had achieved a clean audit. An important aspect of its work had been an extensive review of the National Qualifications Framework (NQF), and a review of the role of the professional bodies. A focus would be placed on playing a more strategic role in the education environment.

Ms Nadia Starr, Chief Executive Officer, SAQA, led the delegation's presentation of the annual report.

Qualifications and learners:

In the realm of qualifications and learners, SAQA has achieved notable milestones:

It had processed a total of 1 510 qualifications, marking significant progress in this area.

The organisation registered 294 qualifications on the NQF, enhancing the framework's comprehensiveness.

SAQA impressively loaded 659 307 learners on to the National Learner Records Database (NLRD), contributing to comprehensive learner data.

It facilitated over 120 000 learners in achieving recognition of prior learning (RPL), promoting educational advancement.

Professional designations and records:

SAQA registered or re-registered 90 professional designations, showcasing its commitment to professional standards. The organisation verified over 86 000 national achievement records, ensuring accuracy and reliability.

It issued 5 831 verification letters, enhancing the credibility of qualifications and achievements. It successfully verified and recognised 13 826 foreign qualification achievements and 11 515 foreign qualification recognitions, promoting international recognition.

Cases and initiatives:

SAQA handled 8 888 cases of misrepresented qualifications, reinforcing the integrity of qualifications.

The organisation actively participated in more than nine initiatives to promote the South African NQF both nationally and internationally, highlighting its commitment to quality assurance and recognition.

Programme performance:

The entity had achieved 20 of its 23 performance targets.

Audit outcomes:

SAQA achieved a clean audit for the 2022/23 financial year, marking a notable improvement from unqualified to clean audit status. Importantly, there were no incidents of irregular, fruitless, or wasteful expenditure, and the annual financial statements, annual performance information, and compliance with legislation revealed no significant audit findings. The organisation's internal controls demonstrated no deficiencies, and the SAQA team was dedicated to maintaining a clean audit outcome in the future. Overall, SAQA had achieved 87.5% of its targets, up from 80% in the previous financial year, showcasing a positive trajectory in its performance and accountability.

(See attached document for details)

Quality Council for Trades and Occupations 2022/23 annual report

Mr Themba Dlamini, Chairperson, QCTO, introduced the entity's delegation, and, in his opening remarks, drew attention to the organisations funding needs, especially in view of its expanding mandate concerning the work being done with TVET and CET colleges. He handed over to Mr Vijayen Naidoo, CEO, to lead the presentation.

Programme 1: Administration

In Programme 1, the main goal was to provide essential support and leadership to ensure the effective functioning of the QCTO. Three of the four targets were achieved during the reporting period. However, the programme faced some challenges, notably delays in project completion due to issues like re-advertisement of tenders and cancellations. To address these shortcomings in performance, the QCTO planned to increase the deregistration and re-registration of historically registered qualifications, focus on developing and reviewing occupational qualifications, automating the skills programme application process, and continue advocacy workshops to communicate requirements and address stakeholder needs.

Programme 2: Occupational qualifications management, assessment, and certification

Programme 2 was crucial for developing and registering occupational qualifications and skills programmes of the occupational qualifications sub-framework (OQSF). The report highlighted several significant achievements, including the development of numerous qualifications and skills programmes, a substantial increase in the number of occupational qualifications registered on the NQF, and a surge in the number of certificates issued. The QCTO demonstrated its commitment to quality assurance and progress in this programme, achieving all ten of its targets.

Programme 3: Occupational qualifications' quality assurance

This programme focuses on establishing and maintaining quality standards for accreditation and assessment within the OQSF. The QCTO accomplished 11 of the 12 targets, demonstrating a strong commitment to quality assurance. Notable achievements included processing a large number of accreditation applications, especially for occupational qualifications and skills programmes, and monitoring the uptake of these qualifications by various educational institutions. To address areas of underperformance, the QCTO planned to maintain close communication with accredited skills development providers, strengthen relationships with quality partners and stakeholders, and continue efforts to improve learner achievement data collection.

Programme 4: Research and analysis

Programme four was designed to uphold QCTO standards for quality assurance through research, monitoring, evaluation, and analysis. It had successfully completed indicators 4.1.1 and 4.1.2 and published a benchmarking report comparing the OQSF with international frameworks. This indicated a commitment to research and analysis to maintain and improve quality assurance.

Surplus

National Treasury had approved the carryover of an accumulated surplus for the QCTO to use as a deposit toward the purchase of an office building. This strategic financial move was aligned with their aim to reduce rental costs and improve overall financial stability.

(See attached document for full presentation)

Discussion

The Chairperson began by emphasising the critical role of the education and training sector in contributing to skills development and the economy. She stressed the importance of collectively meeting targets, addressing capacity issues, and ensuring that intentions were aligned with actions.

She discussed the challenges SAQA faced regarding verifying qualifications, particularly international ones. She acknowledged its approach to steadily strengthening systems, rather than a "big bang" approach, and suggested that SAQA ensure the basics were working effectively before progressing further. She also raised a concern about whether SAQA had engaged with the Global Convention on the Recognition of Qualifications in Higher Education. She highlighted the importance of SAQA's role in this context.

The Chairperson also noted the funding challenges experienced by all the entities that had presented – the CHE, SAQA and QCTO -- and expressed concern about funding constraints across the board and its impact.

She commended the CHE for achieving a clean audit and recovering funds lost due to fruitless and wasteful expenditure. She appreciated CHE's efforts in this regard.

Ms Sibiya began by expressing her appreciation for the CHE, SAQA and QCTO presentations. She said the work of these entities was highly valued, and noted that members should not experience stress when presenting to the Committee. She also extended congratulations to the CHE on its 25th anniversary.

Ms Sibiya raised concerns about the budget allocation to the CHE, highlighting that it was insufficient for their operations. She suggested exploring possibilities for obtaining additional funds, either from the Department or through parliamentary processes, stressing that the CHE should receive the necessary funding since they had shown responsibility with their financial resources.

Regarding SAQA, she sought clarification on the timeline for filling the staff positions mentioned in the presentation, especially if they had not been filled yet.

She commended the QCTO's performance in achieving all ten targets in Programme 2, and expressed her appreciation for the achievements in Programme 4 on its research work. She praised the QCTO for their exceptional work and encouraged them to maintain their high standards.

Ms King referred to SAQA's mention of the Minister not yet signing the amended National Qualifications Framework into law. She inquired whether it had received any feedback from the Department of Higher Education regarding the President's signature on the legislation. She also sought to understand the potential consequences for SAQA if the National Qualifications Framework (NQF) was not signed into law, and how it might impact SAQA's activities in the next financial year.

Mr Pillay asked about the unspent funds mentioned in the presentation, specifically the amount of R19 786 000. He asked whether this amount had been allocated for the cost of a building, and if it was originally budgeted for in this manner. He also inquired about the reasons behind the unspent budgets.

He mentioned the issue of verification of qualifications and its link to delays in work permits and visas. He asked about the plan to expedite these processes and the potential collaboration between SAQA and the Department of Home Affairs (DHA) to streamline the verification of foreign qualifications. He also questioned the causes of delays in verifying qualifications for South Africans, and the strategies in place to address these issues.

Mr Letsie began by expressing his appreciation for the CHE, SAQA and QCTO presentations, acknowledging that dealing with these entities did not cause much stress to the Committee, and commended their work.

He congratulated the QCTO on achieving a clean audit for the seventh consecutive year, highlighting the importance of using public funds correctly and in compliance with standards. He also encouraged the QCTO to address gender balance in its senior management. He acknowledged that its full potential was constrained by its funding model. He asked about alternative funding models and how it had managed a budget shortfall of nearly R67 million for the 2022/23 financial year.

He questioned the reasons behind the decrease in national verifications for foreign qualifications by SAQA and the impact of their turnaround time on this process. He recommended digitising and improving the turnaround strategy for verifications.

Mr Letsie called for more detailed programme reporting by SAQA to enhance transparency and help the Committee to better understand its challenges. He also inquired about the impact of new austerity measures on SAQA by National Treasury, and their challenges in filling vacancies.

He praised the CHE for celebrating its 25th anniversary, and asked about its progress in implementing the transformation monitoring framework and any potential challenges in publishing the HEQSF research report.

He commended the CHE for its upcoming conference with the theme of academic freedom, institutional autonomy and public accountability. He recommended that it undertake a research study on the capacity of the higher education landscape. He concluded by reiterating the Committee's appreciation for the entities' work.

The Chairperson expressed her gratitude to all Members for their comments, questions and recommendations. She mentioned that the Director-General (DG) had had to excuse himself because he was busy with the President’s visit to Namibia. However, some Deputy Directors-General (DDGs) and Chief Directors were still present to address any questions that might arise.

She acknowledged the prevalent concern about budgeting, and emphasised the need for increased funding in the sector. The entities had demonstrated their ability to use their allocated resources effectively and requested additional funding and various funding interventions. Nevertheless, she expressed concern about underspending, and noted that the entities had highlighted factors contributing to this issue.

Responses from CHE, SAQA and QTCO

CHE

Ms Memani-Sedile expressed appreciation for the well-wishes on CHE's 25th anniversary. She had hoped Committee Members could attend the celebration, but understood there were pressing matters.

She addressed the question about the HEQSF, and said that Dr Green would provide clarification on this. She also noted the comments about conducting a study on the capacity of the higher education system, which she indicated they would consider.

Dr Whitfield Green, CEO, CHE, said that the delay in finalising the review of the HEQSF was not a significant issue at this point. He explained that the current HEQSF still effectively ensured the quality of qualifications offered in higher education. The review, when completed, would improve the current system by addressing new challenges and imperatives. He also mentioned that, coincidentally, the NQF was under review, and the outcomes of that review might impact the HEQSF positively.

Dr Green then discussed the development of the transformation oversight and monitoring framework. He highlighted that it was a work in progress, and a sector-based task team was assisting in its development, including defining the indicators and data collection methods. They planned to have a draft framework for consultation by the end of the current financial year.

Regarding the variance in the compensation of employees (COE) budget, Dr Green explained that it was mainly due to the time it took to fill vacant positions when someone left. They aimed to fill positions swiftly, but certain posts may take more time, especially when finding the right candidate was essential. He appreciated the suggestion for a research topic related to the capacity of the higher education system and its ability to meet the demand for education through a differentiated approach.

Mr Thulanganyo Mothusi, Chief Financial Officer, CHE, explained that he did not have much to add regarding the budget variances, as it was already well covered. He clarified that the variances resulted from unforeseen delays in filling positions. When employees left in the middle of the financial year, it took time to initiate the recruitment process. Management recognised the need to act promptly upon receiving resignation letters, with an emphasis on advertising the vacant positions early. However, the human resources (HR) procedures for filling these positions were often time-consuming. In some cases, interview panels had found that initial candidates were not suitable, leading to additional rounds of interviews. This process accumulated the variances in the budget.

SAQA

Prof Lolwana addressed the question regarding what was wrong with the NQF. She said that on the surface, there was nothing inherently wrong with the NQF, because the dedicated staff were working hard to fulfil their responsibilities. However, when looking at the bigger picture, the evolution of the entities in this space (SAQA, CHE and Umalusi) occurred for varied reasons at different times, causing different aspects of the educational system to shift over time. Legislative changes and allocating specific roles to these entities required SAQA to reassess its strategic role in the system.

Professor Lolwana questioned the significance of being solely focused on tasks like registering qualifications, verifying qualifications, evaluating foreign qualifications, and more, which, in her view, might not contribute substantially to improving the quality of education and the overall education and training system. She said there was a need to identify and define the strategic role that SAQA could play in the system to create a more meaningful impact. She also invited Members of the Portfolio Committee to participate in a future discussion on this topic, highlighting the importance of these entities in adding significant value to the system's growth and development.

Ms Starr thanked the Members for their positive comments and appreciation for the hard work of SAQA's staff. She stressed the need for SAQA to reposition itself, given that the South African NQF would soon reach 50 years.

Regarding the global convention rectification, she explained that this move had brought SAQA into a global conversation. They were actively participating in working with other countries to provide efficient foreign qualification evaluation services. They worked with other qualification authorities to understand different systems and recognise foreign qualifications more robustly. The global convention simplified this process, making it more efficient.

She addressed the issue of staff vacancies, mentioning that SAQA had faced new positions created after a redesign, which had contributed to delays in filling these roles. However, they had now successfully filled these positions and had a fully constituted executive and senior management team, which was a significant achievement for SAQA.

Ms Starr also discussed the concerns about cost containment, and gave an assurance that cost consciousness had always been a part of SAQA's operations.

In response to Ms King's question about the delay in the President declaring the NQF Act, she explained that the DHET and SAQA had been actively conceptualising the required regulations to align with the new legislative regime. They had been working on these aspects even before the legislation was formally implemented.

On the topic of the verification of qualifications and the relationship with the DHA, Ms Starr highlighted that automation and bilateral agreements would help streamline these processes. They were focusing on high-volume countries to prioritise efficient authentication services.

She also discussed the decrease in foreign qualification verifications between 2019 and 2023, attributing it to the reduction in staff in that unit. However, they implemented automation and recruited additional skills to improve efficiency. The scarcity of critical skills had contributed to a decreased need for foreign qualifications.

In terms of international qualifications, there had been a decrease from 2022 to 2023, but she mentioned their efforts to engage in big projects and partnerships to increase the number of qualifications evaluated. The process was significantly faster for national qualifications when the information was already in their database.

Ms Starr acknowledged the Committee's recommendations about presenting programme information in different ways, and said they would consider these suggestions.

Mr Innocent Gumbochuma, Chief Financial Officer, SAQA, addressed the surplus they had achieved, explaining that it was essentially extra revenue generated due to increased business activity. He pointed out that their budgeting had been conservative, and as more funds came in, they had ended up reporting a surplus. He emphasised their cautious approach to cost management and budget monitoring, acknowledging their history of retrenchment. They aimed to maintain a balanced budget and avoid overspending. He expressed the entity's preference for being cautious with their budgets rather than facing financial difficulties later. Overall, he appreciated the questions from the Committee and assured them of their commitment to responsible budget management and adapting to industry trends.

QCTO

Mr Dlamini addressed two critical points raised by Mr Letsie. First, he discussed the topic of transformation within the management structure. He said they had been working on gender mainstreaming and implementing a succession planning policy. They were in the process of identifying suitable candidates within the organisation, particularly capable female candidates, to ensure a smooth transition when the current CEO leaves.

Secondly, he spoke about the alternative funding model. He noted that significant progress had been made in terms of the ownership of the building, which was in the final stages of conclusion. Once SAQA owned the building, it would serve as a revenue-generating platform. The building was attractive and could accommodate various clients, allowing for income generation. Additionally, they explored international engagement and potential donor funding opportunities, ensuring they adhered to National Treasury rules and the PFMA. Corporate social investment and responsibility were also under consideration, with a focus on organisations related to education. Establishing relationships with these organisations would provide the basis for issuing certificates for tax benefits.

Mr Naidoo began by expressing gratitude for the comments and appreciation of the entities' work, particularly focusing on QCTO's efforts.

In response to funding-related queries, he discussed the potential increase in the QCTO's grant from 0.5% to 1%, which had received positive support, especially from business and labour. He noted that while the outlook was promising, legal challenges could still pose a threat. Should this funding increase not materialise, the QCTO was exploring alternative funding sources. They may introduce charges for services rendered, such as accreditation fees and quality assurance services. The QCTO's current funding model relied on annual allocations that could fluctuate significantly, making it unstable.

Addressing concerns about gender balance within the organisation, he reported that they were making improvements. Presently, they have a 56% female staff complement, with ongoing efforts to enhance female representation in management positions.

Mr Naidoo provided insights into the practice of SETAs, including line items for quality assurance. Most SETAs had introduced this line item as part of an agreement made in 2018 and 2019, and the allocations remained subject to fluctuations.

International engagements have significantly impacted QCTO's work. They had been learning from and collaborating with Germany and Switzerland, especially in the context of the changing world of work, technology, and skills development. He noted that international engagements had not incurred significant costs for the QCTO.

Clarifying queries about the 118 skills programmes, Mr Naidoo said that these programmes were newly developed under the OQSF. However, the QCTO was also managing older skills programmes historically registered under the SETAs, and the SETAs were still issuing certificates for those programmes. This clarified the situation regarding the issuance of certificates.

Mr Naidoo said the CFO would answer why one tender had been cancelled and why other means were not pursued as an alternative.

Mr Khathutshelo Maposa, CFO, clarified the situation regarding the cancelled tender. He explained that the tender was indeed advertised, but during the evaluation process, it became evident that none of the respondents met the required minimum requirements. Consequently, the tender was categorised as non-responsive. He acknowledged that this situation could lead to time loss, potentially affecting the achievement of related key performance indicators (KPIs). To address this setback, measures have been put in place. Specifically, they planned to re-advertise the tender in the fourth quarter, aiming to make up for any time lost and ensure the timely accomplishment of the related KPIs.

Closing remarks

The Chairperson thanked Mr Naidoo, Mr Dlamini, and all the chairpersons and CEOs for their time and engagement in the meeting. She inquired if there were any inputs from the AGSA and the DHET.

A representative from AGSA indicated that there were no further inputs from the AGSA.

Mr Reineth Mgiba, Director: Strategic Planning, DHET, began by expressing his gratitude on behalf of the Department, its leadership and entities, for the opportunity to present their annual reports for the 2022/23 year. He especially appreciated the Committee's willingness to engage and its recognition of pockets of excellence within the sector.

He acknowledged Mr Letsie's positive remarks, and commented that it was fulfilling to hear that the entities had not posed challenges but rather offered solutions to challenges in the sector. He commended the Committee for advocating on behalf of the sector to secure additional funding, and acknowledged their support in that regard.

Addressing the budget constraints, he voiced concern over the shortage of funding, which was impacting the entire sector. He appreciated the Committee's support in pushing for additional funding to improve service delivery, and urged them to continue advocating for more resources.

He thanked the Members for their comments, guidance and recommendations during the presentations. He assured the Committee that the Department would take note of the recommendations and work with the AGSA and entities to improve performance. Their primary goal was to enhance the Department's performance, benefiting the people of South Africa.

He shared the positive news that the President had signed the proclamation for the NQF Amendment Act on 12 September. The proclamation was scheduled to be published on 13 October, enabling the amendment to take effect. This development marked a significant step forward for the country.

Chairperson's closing remarks

In her closing remarks, the Chairperson extended her gratitude to the CEOs, chairpersons of various boards and CFOs of the entities for their dedicated participation in the meeting. She commended the entities for achieving clean audits, recognising their efforts to account for the issues, particularly noting the concern about SAQA's underspending of R43.6 million, and the CHE’s R4.7 million. While acknowledging the budgetary constraints and performance challenges, she emphasised that clean audits should have a meaningful and impactful effect on the lives of South Africans.

She reiterated the importance of focusing on the ground impact, highlighting that the Committee constantly evaluated the entities' performance and progress. She acknowledged Mr Mgiba’ s sentiments on behalf of the DHET, and encouraged the entities to continue their work despite challenges, assuring them of the Committee's support.

The Chairperson concluded by reaffirming the Committee's commitment to advocating for the support and interventions needed by the entities, particularly during the budgetary processes.

The meeting was adjourned.