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CRITICAL ISSUES IN EFFECTIVE Vaal University of Technology

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					 CRITICAL ISSUES IN EFFECTIVE
 MANAGEMENT OF FINANCES &
HUMAN RESOURCES WORKSHOP

                     (15 May 2007)


   BY: MR. FD TSIEANE
   EXECUTIVE DIRECTOR: FINANCE
BUDGET USAGE


 The 15th of September 2006 was the closing date
 for processing of orders.

 The following are examples of departments /
 sections that utilized less than 50% of their
 budgets :
BUDGET USAGE
 • CAPITAL BUDGET USAGE
   (PERIOD: JANUARY – AUGUST 2006)
             BUDGET        ACTUAL                      BALANCE
DEPARTMENT     R              R          % UTILIZED   AVAILABLE
                                                          R
    A            108,776        6,595       6%             102,181
    B           671,640         9,632        1%            662,008
    C            80,890         16,179      20%               6,711
    D            86,180         4,595       5%              81,585
    E           265,500        51,383       19%             214,117
    F          1,037,849      324,700       315            713,149
    G           300,000              -      0%             300,00
    H           130,000              -      0%             130,000
    I            80,000         8,463       11%             71,537
    J            130,120             -      0%             130,120
BUDGET USAGE
 • OPERATIONAL BUDGET USAGE
   (PERIOD: JANUARY – AUGUST 2006)
             BUDGET         ACTUAL                      BALANCE
DEPARTMENT     R               R          % UTILIZED   AVAILABLE
                                                           R
    A            98,800           7,114      7%              91,686
    B           645,600         79,328       12%            566,272
    C           650,000         199,945      31%            450,055
    D            259,306        39,250       15%            220,056
    E          2,773,009      1,038,015      37%           1,734,994
    F          2,760,568       932,380       34%           1,828,188
    G           3,531,747     1,258,898      36%           2,272,849
    H           360,400         136,502      38%            223,898
    I             41,200         6,308       15%             34,892
    J           202,200          45,199      22%             157,001
BUDGET USAGE

IMPLICATIONS:

 Hindrance of proper cash-flow planning
 Increasing number of accruals, e.g.

              2005                           2006
               R                              R
           11,0 million                   6,7 million


 Purchasing for the sake of utilizing the budget
 Limited storage facility
INTEGRITY / AUTHENTICITY OF
DOCUMENTATION
   Vouching for payments
   Payments will only be made on original tax
   invoices
   Payments will NOT be made if requisitions are
   not supported by the following:
      Copied invoices
      Faxed invoices
      Quotations
      Pro-forma invoices
   You are requested to please adhere to this
   request as original supporting documents are
   required for auditing purposes
MANAGEMENT LETTERS (Example)
Payments made on quotation

  Observation
  The following payments were made on quotation and not invoice.


    Date           Cheque             Supplier                      Services         Amount
  recorded           no.                                                               R
  9-Mar-07        CT 156939      Ton Number               Marketing material – GEP     1,276.80
                                 Plates & Signs           project
  28-Jun-06       CT 150922      Waterplan Pompe          PVC Ball Valves                570.86


  Risk
  Overpayments as the quotation may vary from the invoice.

  Recommendation
  Payments should be made against a valid invoice and not on quotation.

  Management comment
MANAGEMENT LETTERS (Example)
Overstatement of expenses or payments

Observation

   A payment of R3214.80 has been made to Emfuleni Steel for the purchase of Vitemax 5kg based on the quotation,
   however the invoiced amount was R2815.00 as per invoice nr 167245, dated 09.March.2007 and no adjustment
   has been made. The effect of this is overstatement of payments or expenses by R399.80.

Risk

   This practice results in over or understatement of expenses or payments.

Recommendation

   Payments should be made against a valid invoice and not on quotation.
   Were payments are made against order or quotation, adjustment should be made for differences with the invoices

Management comments
SPLITTING OF ORDERS
This is done to avoid the tender process:

 Some methods used:

 Buying the same products, e.g. one week and the
 other a week or month later

 Referring to the Creditor as “Sole Supplier”, e.g.
 payment made for graduations

 Avoidance of Buying Section
INTERNAL & EXTERNAL AUDIT
PURPOSES
INTERNAL AUDITORS: DELOITTE & TOUCHE
 Internal Controls

EXTERNAL AUDITORS: PwC
 Interim Audit
 Final Audit

CHARTERS
 Internal Auditors’ Charter
 Audit Committee Charter
 (standing item in all Audit Committee meetings)
AUDIT COMMITTEE
 Auditors attend all meetings of the Audit Committee
 and are required to table their reports.

Channels of communication

 Report directly to the Audit Committee
 They have access to:

  Chairperson of Council
  Chairperson of Audit Committee
  Vice-Chancellor & Principal
  Deputy Vice-Chancellor: Resources & Planning
  Executive Director: Finance
PROCESS REGARDING MANAGEMENT
LETTERS
               Head of Department


                Finance Directorate


              Deputy Vice-Chancellor:
               Resources & Planning


                 Audit Committee
PROFESSIONAL WAY OF DEALING
WITH AUDITORS
 They should be respected
 They should have access to accounting records
 They should have access to offices, e.g. for asset
 verifications
 They should be given explanations on enquiries
 when and if needed
NB.
 Remember auditors are authorities in their field
 The DoE / Minister does not consider any grant
 payment unless supported by the Audit Report
THANK YOU
                            Workshop:
                   critical issues in effective
                  management of finances and
                        human resources

                          15 May 2007

Vaal University
 of Technology

                                   By:
                            Mr. N Masulubele
                            Director: Finance
INTERNAL & EXTERNAL AUDIT REPORTS
  The Audit Report (management letters) is divided into

 Observation
  A situation that may course a risk, e.g. deviation from the policy,
  insufficient controls or no controls at all

 Risk
  A risk that may be caused by the situation if not corrected

 Root cause

 Recommendation

 Management Comment
  Responses to the recommendation and should include the following:
   The responsible person (Office and incumbent)
   What is done to correct the situation
   Date of implementation
MANAGEMENT LETTER (Example)
      Incomplete Student Files
•   Observation:
    Application forms for the following students are not signed by the Head of Department as
    evidence that the student has been accepted and meet all the relevant requirements as prescribed
    by the University:
                         NUMBER              NAME
                             206073453       Senwedi TM Ms
                             206064284       Sibangani TL Ms

Risk                          206031211       Molungoa MC Ms

   University reputation risk due to registration of students who do not hold valid ID documents and
   do not meet the University’s entry requirements.

Root Cause
• Non-compliance with policies and procedures
• Loss of revenue from students whom have not paid application fees

Recommendation
• Applications should only be considered if certified identification documents and matric
  certificates are provided, and the student has paid an application fee
• The University should also verify matric certificates with the Department of Education
• Students should only be registered if the application form is approved and signed by the Head of
  the Department. Management should monitor controls in place to validate compliance.
MANAGEMENT LETTER (Example)
    Unrestricted access to capture student information on ITS System
Standard Operating Procedure
   Access to the ITS System should to be restricted to authorised personnel.

Finding
   During our review of the access profile, it was noted that access to capture student information onto the ITS System is not
   limited to responsible staff members.

Cause
   Access is not limited to restricted, authorised personnel.

Impact
   Fraudulent changes can be made to the ITS System, resulting in inaccurate and misleading information

Recommendation
        Access to capture should be restricted by management to the responsible personnel.
        A read only access can be given to all matrons, to enable them to compare their floor plans to the ITS System.
        All changes made should be directed to the Rebooking and Welfare Officer.
        All changes should be approved by management.


Management Comment
  The access profiles will be updated with immediate effect.

Responsible Person
   Director: Residence

Implementation Date
   With immediate effect
SALARY CALCULATION AND GENERATION
  The following process of salary calculation is summarized to
  indicate why documentation are required so many days before the
  actual pay date:

  Before the normal monthly salary calculations which takes 7 – 8
  working days can start, the following must be done:

    Part-time claims should have been generated and copied
    Individual adjustments have been done
    Validation of salary data

  The last 3 days is reserved for generation of reports and pay-
  over (transferred to the bank
LAB FEES
DISCUSSION:

 Usage of Lab Fees

  For a specific cost to an individual student that can be
  reliably estimated for each student during a specific
  semester / year

  It is not used to augment consumable material budget

 Impact of Lab Fees on student account

 Determination of Fee
THANK YOU
             VAAL UNIVERSITY OF
             TECHNOLOGY


                 Workshop:
Critical issues in effective management of
     Finances and Human Resources
                15 May 2007
                                          BY:
                                     MR. Y AHMED
                                  DIRECTOR: FINANCE
 PURCHASING PROCEDURES /
 AUTHORITY / DELEGATION
• PROCESS:
    Valid quotation
    Authorized / approved requisition by line manager
    Verification process
    Order
    Good Receive Voucher (GRV)
    Payment

• AUTHORITY:
  Line Manager, etc.
  Personal Requisitions : approval by Line Manager

• DELEGATION:
  Delegated authority as per policy
FINANCIAL REPORTS

                   REPORT                   DATE

 State Guaranteed Loans                   28 February

 NRF Certificate                           15 March

 THRIP Certificate                         31 March

 Student Statistics                        30 April
 Technology Station                         15 May

 Research Output                            31 May

 Audit Report & Annual Report              30 June

 Interest & Redemption (6 monthly)   30 June & 31 December
THANK YOU

				
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