Auditor General Junias Kandjeke has once again poured scorn on the books of the Namibia Students Financial Assistance Fund for the financial year ended March 2020, but the fund has refuted some of the concerns.
NSFAF once again got an adverse audit opinion from the attorney general. An adverse opinion is a professional opinion made by an auditor indicating that a company's financial statements are misrepresented, misstated, and do not accurately reflect its financial performance and health.
The auditor general highlighted an unexplained amount of about N$184 million in a report tabled in parliament last week.
Kandjeke said N$164 905 459, from note 13 of the annual financial statement for cash generated from operations, differ from the amount in the cash flow statement of N$18 990 324.
"The amount of N$164 905 459 is the total amount for cash and cash equivalent at year-end. This resulted in an unexplained difference of N$183 895 784," he explained.
He further indicated the recoveries on loans amounting to N$3 627 619 are observed recorded as revenue straight from the bank statements which are not complying with IFRS 15 and the accrual basis of accounting.
The auditor general further indicated that his observation shows that loans in the fund's financial statements were not treated according to paragraph 8.2 of its financial policy, which states that loans due for repayment are maintained in the books as matured study loans.
"Funds disbursed as student loans without a suspension period (study duration) are recorded as loans in the accounting records of the fund as mature student loans when they become due for payment," stated Kandjeke.
He, therefore, said the improper recording of student loans resulted in the absence of interest being charged on student loans due.
The auditor general further stated that the reasonableness for the estimation of legal fees amounting to N$10 million could not be recalculated for accuracy.
"The evidence provided was not sufficient to determine how the fund calculated the amount utilised of N$3.4 million and estimation of addition amounting to N$8.7 million," he emphasised.
The report further shows that the student loans amounting to N$4 billion in 2019 were disclosed in the fund's annual financial statements, however, the amounts for student loans and impairment could not be verified since the fund could not provide a loan book for audit purposes.
The auditors also pointed out the 23 875 students' fund payments made without invoices, as a concern.
"It was observed that a total number of 23 875 payments were made for tuition and non-tuition of students studying at the IUM, NIMT, NUST and Unam amounting to N$358 million, however, no corresponding invoices for these payments could be found from the invoices provided. These students' payments could include valid payments which could not be accurately matched due to inadequate data quality," read the report.
Another concern indicated was the payment of more than the awarded amounts, it is reported that 9 898 students were all paid more than the amounts stipulated in the fees schedule, the payments have amounted to N$123 million.
"During the comparison of student fund payment made for tuition fees versus awards, it was observed that the fund made payments to 25 095 students studying at various institutions amounting to N$517 million, however, due to deficiencies in the current awards database, no matching records could be found," says the report.
The report indicated that NSFAF processed payments to seven bank accounts of different embassies for purpose of student fund payment. But the fund gave no assurance that no payment was made through any of the seven accounts for the year under review.
"However, when scrutinising the journals file, it was observed that a payment instruction amounting to 8 369 euros was sent to the bank in favour of the embassy in Cuba for stipends on 21 May 2021," said Kandjeke.
He charged that the fund must evaluate the overall presentation, structure and content of the financial statement including the disclosures and whether the financial statements represent the underlying transaction and events in a manner that achieves fair presentation.
Meanwhile, NSFAF acting CEO Kennedy Kandume dismissed some of the concerns raised by the attorney general, saying payments without invoices were not true because all payments are done with invoices.
"This is not true but because the auditors have their deadlines, the invoices were submitted after the deadlines that is why the report stipulates that there were no invoices," he said.
Kandume further explained during the period under review, the fund was converting a manual database to electronic and the process was incomplete during auditing.
"We now have a loan book. By the time of auditing, the book was incomplete and the auditors are correct to opine that," he said.
While on the notion that payments were made more than the awarded amount, Kandume said because of the policy of paying 100% tuition fees, the fund often have to pay more than the agreed amount as universities make changes to their tuition fees after NSFAF agreed with beneficiaries and the fund has to pay more based on the invoices received other than what is on the awards letter.
"We had a very successful meeting with the auditors and we have discussed all those issues. It was a learning experience and we now know how to deal with the auditors on the way forward," he added.