VUT_Report 2018_Finale

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VAAL UNIVERSITY OF TECHNOLOGYANNUAL REPORT 2018SECTIONTHE STATEMENT OF THEFINANCE EXECUTIVE ANDCHAIRPERSON OFFINANCE COMMITTEE1499
VAAL UNIVERSITY OF TECHNOLOGYANNUAL REPORT 2018IntroductionThe overarching responsibility for systematic sustainability atthe Vaal University of Technology (VUT) is the responsibilityof all its stakeholders. It is this fact that makes us adhere to aconsultative process in operations whereby management, staffmembers and students interrelate with each other in key areasaligned to the core business of the University.VUT Management supports and commits consultativeengagements with staff, students and the various external partnersto achieve joint goals in taking education further to promote theprinciples of inclusivity, representativity and transparency. TheUniversity is committed to sound financial management and mostdecisions are measured in financial terms. In addition,control mechanisms include centralized control over assets,procurement and the University’s bank account. Otherfinancial controls involve quarterly reporting to the Finance andInfrastructure Committee of Council, as well as compliance tothe approved Procurement Policy and Procedures.Budgeting ProcessThe aim during the budget process is to ensure throughproper processes and structures that the distribution of Universityresources is aligned, equitable and transparent, thussupporting the core business strategies of the VUT. Managementviews the budget process as a serious and significant annualevent that has vast implications on the business continuity of theInstitution. This process at the VUT is an interactive process wherebydifferent levels of management take ownership of their budgetsand participate actively in compiling the budget for the nextyear, taking into account the trends of the past as well as futuregoals.The Budget Committee (with representatives from Finance,Faculties, Planning unit, Sites of delivery and IT) overseesthe budget process of the University. It recommends thebudget to the Executive Management Committee (EMC) whichin turn makes its recommendations to the Council Finance andInfrastructure Committee (FINCOM). The University Councilfinally approves the budget at the recommendation of theFINCOM.The EMC approved the budget parameters before theBudget Committee started with the budget process. The BudgetCommittee, as mandated by the Executive ManagementCommittee (EMC), ensured that the appropriate allocationswithin the available resources were considered and the Committeeensured that the core business of teaching, learning andresearch improve through the budget provision. The followingparameters were considered:• All contractual increases as per contract agreements;• Provision for new/replacement teaching and instructionalequipment in the academic sector.• New furniture and equipment for new employees only,whilst a provision is made for the replacement of obsoletecapital items of existing employees;• Additional infrastructure provision in terms of the ExecutiveManagement and Finance and Infrastructure Committee’sdecision taken during the year and endorsed by Council;and• Staff cost as a percentage of income.A rigorous process was followed with the participation of thevarious Departments and Faculties in the development of thefinal budget. The allocation of funds is guided by strictmethodology which is premised on prioritizing the objectivesset out in the Annual Performance Plan. The total budgetedexpenses for 2018 exceeded the total income by R39.5million, which is 3% of the total income. Although this ispermissible, Council is concerned and has requested Managementto work on recovery strategies. Council is mindful of the financialsituation in the University sector and it is therefore aware thatsuch interventions or recovery measures may take longer as thesystem improves.Overview of financial resultsThe total income of the University increased by 14.1% toR1,480.7 million (2017: R1,294.6 million) while the totalexpenses increased by 10.7% to a total expenditure of R1,572.2million for the financial year 2018 (2017: R1,419.8 million).Therefore, the deficit for the University’s operations is R6.7 millionfor 2018 (2017: R122.3 million). This is less than the budgeteddeficit of R39.5 due to the effect of IAS19 valuation (provisionfor post-employment liabilities), thanks to the decision that wastaken in 2011. This is not a desirable situation although this isbetter than the previous year. R13.8 million of the deficit is dueto sharply rising student accommodation costs. The achievementof the headcount enrolment target in 2019 and the acquisitionof own student housing will assist in improving the situation infuture. The FTE numbers and management of enrolment needto improve for the institution to optimise the subsidy income.100
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GLOSSARY OF TERMS 1LIST OF ACRONYMS
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VUT_Report 2018_Finale

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