Auditor-General of SA (Agsa) Tsakani Maluleke has found that four universities have reported achievements on objectives that were not supported by credible and reliable information.

This is according to an Agsa report tabled at the portfolio committee on higher education on 11 October.

The four universities are Tshwane University of Technology (TUT), Sefako Makgatho Health Sciences University (SMU), Sol Plaatje University (SPU) and University of Venda (Univen).

The four obtained unqualified audit outcomes with findings in the 2022/23 financial year, which is one step before a clean audit outcome.

The Agsa report stated that the universities’ reported achievements were not aligned with what was initially planned.

Of South Africa’s 26 public universities, 18 obtained clean audits.

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Maluleke’s office said that audit outcomes for the University of South Africa (Unisa), University of Limpopo, University of Fort Hare and Vaal University of Technology were outstanding.  

Varsities react

TUT spokesperson Phaphama Tshisikhawe said they acknowledged that in several instances there was a misalignment between the evidence provided against some targets and the performance indicators as recorded in the annual performance reports.

“However, management has put in place rigorous quality assurance measures and controls to mitigate the challenges,” Tshisikhawe said.

She said in some cases the misaligned evidence provided was part of the university’s attempt to respond to a dynamic and fast-changing higher education sector environment.

“TUT is in a financially sustainable position with well-established financial policies, internal controls and processes. Therefore, TUT has been consistently receiving unqualified audit opinions. Where weaknesses are identified by both the internal and external auditors, management addresses these weaknesses where it is practical to do so,” she said.

SMU spokesperson Lusani Netshitomboni said their information was neither unreliable nor inaccurate.

“The university used targets that were understood within the sector such as throughput rates, clinical training platform and niche community engagement and development projects,” Netshitomboni said.

Given that the institution had not developed technical indicator descriptors for audit purposes, he said it was difficult for the auditors and management to have the same opinion about the evidence presented.

He said their unqualified audit outcome meant that the auditors were satisfied that the financial statements were presented fairly in all material respects.

SPU spokesperson Qondakele Sompondo said there were no material findings against them from a financial perspective.

“An unqualified audit opinion means that all is in order regarding the financial statements submitted. Therefore, the unqualified report is due to adequate internal controls in the Finance Division of the university,” Sompondo said.

He said the root cause of the findings on predetermined objectives was that the Key Performance Indicators’ owners did not take responsibility for ensuring that the performance that they reported was justifiable and supported by the required documentation.

“The university has since allocated additional resources to the validation of the predetermined performance reported. This includes the appointment of a director for special projects and the conducting of internal audits prior to the commencement of the annual external audit. There has since been an improvement in the number and extent of findings relating to this.”

Univen did not respond to questions despite spokesperson Takalani Dzaga having acknowledged them.

The outstanding audits

University of Limpopo spokesperson Kwena Masha said they were scheduled to submit their audit by 31 October.

“At the end of 2022, the Auditor-General did not concur on the appointed external auditors. The university had to find a way of appointing a different company,” Masha said.

He said it was only in May that they had agreed on a company. They then applied for an extension, which was granted.

“We are now going through the Council approvals to submit as expected.”

Masha said they are also at the tail end of appointing 2023 auditors, meaning the reports will be submitted in time in 2024.

Unisa confirmed on Tuesday, 24 October, that it had not yet tabled its 2022 annual report.

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This, Unisa said, was because the relationship between the university and its previous audit firm was ended at short notice after the 2021 financial year audit.

“This meant that the university had to go to the market to find a replacement audit firm, and this process only concluded in early 2023 when the university Council approved the appointment of the new auditors,” Unisa said.

The appointment process, Unisa said, could, however, not be finalised as it required concurrence by the Agsa, a requirement applicable to all of SA’s public universities.

“This concurrence was delayed as Agsa had requested that certain concerns must first be addressed before it could do so. The issues were subsequently addressed and Agsa granted its concurrence early this month [October].”        

Unisa said the new auditors had begun the 2022 audit in the past week and were expected to finalise it around January.

“The minister of higher education, science and innovation has been duly apprised of these developments and a request was also made for an extension for the submission of the 2022 annual report.” 

University of Fort Hare (UFH) spokesperson JP Roodt said the university had requested an extension from Agsa, which was granted. 

He said they had finalised all the components of the external audit by 30 June as required by the department regulations, except for the audit of investigative matters.

“These investigative matters arose as a result of the university initiating processes as outlined in the specific Presidential Proclamation in relation to the Special Investigating Unit and the UFH, which was published in the Government Gazette in August 2022.”

He said external auditors had to design and execute additional audit procedures to assess the financial impact of these matters on the audited financial statements.

“No one is at fault for this as all stakeholders are discharging their respective responsibilities,” he said.

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For the year ended December 2021, Roodt said, the university obtained an unqualified audit opinion on its financial statements. 

He said they were working with the auditors to resolve the remaining matters stemming from the investigations to avoid a negative impact on the December 2022 audit opinion.   

He said the outstanding audit outcomes had not affected the operations and administration of the university.

Vaal University of Technology (VUT) spokesperson Kediemetse Mokotsi said their annual report was submitted to the department on 22 August. Annual reports were due by 30 June and VUT had requested an extension. DM

AGSA clarifies its report on university audits

Daily Maverick articles contain misrepresentation on audit of public universities 

The articles published by Daily Maverick titled “Eight of SA’s 26 public universities fail to get clean audits” and “University of Venda blames auditors for AG’s negative finding against it”, published on 26 and 30 October, respectively, reflect a misrepresentation of the facts. The articles are based on the presentation by Auditor-General of South Africa (AGSA) on 11 October in Parliament about the audit outcomes of higher education.

In the presentation, which was part of the Budget Review and Recommendations Reports process, the AGSA includes the audits of universities and clearly states that these audits are “not audited by AGSA”. In fact, the AGSA does not audit any of the universities in South Africa, including the University of Venda; each of these institutions appoints its own auditors in line with the Public Audit Act (PAA).

Section 4(3) of the PAA states that the AGSA may audit certain institutions and may also opt not to conduct these audits. The Act further states, in line with section 4(3) and in terms of PAA regulation 4(2), that if the AGSA opts not to conduct the audit of an institution, the institution must, through a public procurement process and in line with its supply chain management policy and procedures, select a registered auditor in private practice that is affiliated to the Independent Regulatory Board for Auditors. 

The AGSA has never audited universities due to resource constraints, however we have been in the process of taking back some of the section 4(3) auditees. AGSA has over the years successfully taken over some state-owned entities and all TVET colleges. We have not taken over the auditing of universities.

Once the appropriate auditors have been selected, the university would seek consent from the AGSA for the appointment of the recommended auditors. If the AGSA grants consent for the appointment of the auditors, the entity can finalise the appointment, and the audit process can commence. 

The appointed auditors will proceed with the audit by gaining an understanding of the business, performing the necessary audit procedures in accordance with the firm’s audit methodology, conclude the audit and issue an audit opinion. This is done independently from the AGSA.

Therefore, the AGSA’s involvement would only include the consideration of the auditors’ appointment or dismissal, including recommending certain conditions that would promote the independence of the auditors.

The presentation to Parliament on the audit outcomes for South African universities was a consolidation of the audit opinions reached by the independent auditors of these universities and did not include findings or conclusions by the AGSA. 

The AGSA continues to take its constitutional mandate very seriously and conduct all its audits in line with the PAA and international auditing standards.