Auditor-General flags severe financial oversight issues at banking Seta

The Banking Sector Education and Training Authority (BankSeta), tasked with cultivating a skilled and ethical workforce for South Africa’s crucial financial sector, has released its annual report for the 2024/25 financial year, presenting a paradox of success achieved despite simultaneous mismanagement and waste.

While the organisation reported an overall performance score of 84% – a positive trajectory and an improvement from the previous year’s 80% – this progress sharply contrasts with widespread failures in financial governance and compliance, resulting in millions confirmed lost due to fraud and mismanagement.

The report, submitted in terms of the Public Audit Act and the Public Finance Management Act, confirmed that the entity received an unqualified audit opinion from the Auditor-General of South Africa (AGSA) with concerns noted regarding financial management and the accuracy of performance data. 

Concerns flagged

The AGSA highlighted major breakdowns in internal controls. Specifically, it reported material findings in two crucial areas: expenditure management and performance reporting. 

In terms of expenditure, the AGSA noted that effective steps were not taken to prevent fruitless and wasteful expenditure. Furthermore, regarding performance reporting, the AGSA stated that the public entity did not exercise proper reviews of its Annual Performance Report (APR) to ensure that the reported achievements were supported by reliable information. This specific failure led to the identification of material misstatements within Programme 3 (Learning Programmes and Strategic Partnerships).

Internal oversight mechanisms confirmed the AGSA’s diagnosis of operational fragility. The Audit and Risk Committee (ARC) reviewed findings from both internal and external auditors and agreed that the system of internal controls relating to governance, risk management and control is only partially adequate and partially effective, requiring improvement. 

The ARC formally identified the increase in fruitless and wasteful expenditure and the quality of performance information as key areas of concern necessitating urgent intervention. One critical governance failure noted by the ARC was the slow implementation of risk mitigation actions as well as audit findings originating from both the internal audit and the AGSA. 

Management acknowledged that addressing these issues, particularly the clean audit target, required the preparation of an action plan for the subsequent financial year. 

R23-million squandered in wasteful expenditure

The AGSA noted that effective steps were not taken to prevent fruitless and wasteful expenditure. This failure resulted in BankSeta confirming R23.173-million in fruitless and wasteful expenditure for the period.

This substantial loss was primarily caused by external stakeholders involved in discretionary grant projects who either misrepresented facts about training work completed or failed to use the grants for their intended purposes. Furthermore, R4.253-million of the material losses incurred were directly linked to bank payment fraud resulting from criminal activities. In an ongoing effort to mitigate these losses, BankSeta is actively pursuing the recovery of R4.528-million which was advanced to a service provider who failed to provide evidence that learner stipends were paid. 

The ARC itself acknowledged the gravity of the situation, noting the increase in fruitless and wasteful expenditure as a key area of concern that should be addressed urgently. Furthermore, the committee observed that the system of controls for governance, risk management and control are only partially adequate and partially effective, requiring immediate improvement.

In response to these findings, Seta management committed to implementing additional controls, including improving due diligence on stakeholders applying for discretionary grants and structuring disbursement mechanisms to be performance-based and to include closer monitoring of expenditure and training delivery. Management has also reported these matters to the relevant law enforcement authorities and is implementing measures to recover the lost funds.

Massive underspending and unreliable data concerns

Despite an urgent national mandate to address South Africa’s skills deficit and mass youth unemployment, the report details a failure by BankSeta to deploy its available training budget. The discretionary grant expenditure showed a decline of 20% compared to the previous year. The total discretionary grant underspending amounted to a staggering R520.864-million which is 42% below the budgeted projection for the year.

CEO Eubert Mashabane noted that cash and cash equivalents increased by 13% to R1.185-billion, a position considered “unfavourable” as the entity had planned for higher utilisation of its reserves. The decline in training provision was largely attributed to delays in the evaluation and start dates of increased special projects, as well as the non-utilisation of approved funds by external stakeholders.

Adding to the expenditure concerns, the AGSA identified material misstatements within Programme 3 (Learning Programmes and Strategic Partnerships), leading it to conclude that the performance information in the APR was unreliable

For instance, the reported achievement of employed beneficiaries completing special projects successfully was overstated, with BankSeta claiming 4,331 completions against a target of 2,052, but audit evidence confirmed the actual achievement was 3,433.

Moreover, numerous key performance indicators for high-demand skills development programmes were severely missed, largely affecting workers already within the sector:

• Six hundred and eighty-one unemployed learners were enrolled in internship programmes against a target of 832, a shortfall blamed on the late approval of funding in the final quarter;
• Only 360 workers completed bursaries against a planned 776, a deviation attributed to learners starting late in the previous year; and
• There were only 324 enrolments in worker skills programmes against a planned 809. 

Youth empowerment surge

In contrast to the financial chaos, BankSeta successfully executed several key developmental outcomes aligned with national priorities, particularly increasing access to post-school education and training opportunities for unemployed youth.

The organisation’s focus on the unemployed delivered major wins:

• Learnership completion: The number of unemployed learners successfully completing learnership programmes was nearly double the target, achieving 1,027 completions against a target of 550;
• Special projects: More than triple the number of unemployed beneficiaries than expected successfully completed special projects – 1,081 against a target of only 300;
• Work integrated learning (WIL): Enrolment for TVET students requiring WIL to complete their qualifications exceeded the target by 373 students, reaching 2,173 against 1,800, aided by the approval of additional funding; and
• Bursaries: New bursary entries for workers were exceeded (802 achieved vs 600 planned), and continuing bursaries for unemployed learners reached 885 against a target of 300.

In addition, the Seta actively trained employees in highly specialised, future-focused IT skills, including certification programmes for AWS certified cloud practitioners, ethical hacking and Microsoft Azure.

Aligning future plans with SA’s socioeconomic needs

In future, BankSeta will focus on resolving internal weaknesses, including addressing the slow implementation of audit findings and substantial ongoing delays in new staff recruitment related to job grading challenges. The organisation currently faces 15 permanent vacancies across professional levels.

In response, the board has approved a revised organogram and operating model to strengthen support and implementation capabilities. This plan involves activating an additional regional office in KwaZulu-Natal and establishing satellite offices through partnerships with tertiary institutions such as universities and TVET colleges. 

Mashabane noted that its forthcoming strategic plan (2025–2030) will focus on “inclusive growth and job creation” and address the high cost of living. The plan will also address weaknesses by operationalising a dedicated monitoring and evaluation unit to scale up data-driven decision-making and track learner progression to improve completion rates. DM