VUT_Report 2018_Finale

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VAAL UNIVERSITY OF TECHNOLOGYANNUAL REPORT 2018planning accordingly to ensure that the testing of controls is directedat areas where risk has been identified.During 2018 PwC and Indyebo Consulting presented to the Auditand Risk Committee reports to two meetings, and the Committeeplaced reliance on the internal audit function performed.External Audit FunctionThe role of the External Audit service is to provide an opinion onthe financial statements prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and the requirements ofthe Higher Education Act of South Africa. The external auditopinion is based on executing an audit in accordance with thePublic Audit Act of South Africa, the General Notice issued interms thereof, and International Standards on Auditing (ISAs).In accordance with the Public Audit Act of South Africa (PAA),and the General Notice issued in terms thereof, the ExternalAuditors are required to report findings relevant to the reportedperformance against predetermined objectives, compliancewith laws and regulations as well as internal control.ExternalAudit conducts its audits in terms of the risk-based External AuditPlan recommended by Management and approved by the Auditand Risk Committee.At the beginning of 2018 KPMG and Ngubane & Company presentedreports on the outcome of the audits performed. The ExternalAuditors had meetings with Managements and in addition, withthe Chairperson of the Audit and Risk Committee before heresigned. The external audit function has a professionalresponsibility to report Reportable Irregularities, in terms ofSection 45(1) of the Auditing Profession Act, 2005. Non-auditservices in the form of agreed-upon procedures in respect offunding from Department of Higher Education and Trainingand from other donors are performed with approval of theAudit and Risk Committee. After the withdrawal of concurrenceon the appointment of KPMG as external auditors of VUT, theAuditor General, on the 24th April 2018 made a decision toallow KPMG to finalise the audit of the current year only andindicated that audit arrangements for the 2018 financial periodwill be discussed after the completion of the 2017 year’s audits.The Council subsequently appointed Ngubane & Company toaudit the 2018 financial period.Combined AssuranceAlthough there is no formal combined assurance model, allassurance providers have a healthy working relationship. Thisentails continuous sharing and collaboration with the aim ofensuring full coverage.Financial StatementsThe Financial Statements are compiled by Management inaccordance with International Financial Reporting Standards(IFRS) and in the manner required by the Minister of HigherEducation and Training in terms of Section 41 of the HigherEducation Act, 1997 (Act 101 of 1997). An unqualified auditopinion for 2018 was issued by the external auditors.Managing RisksThe VUT Council understands and takes accountability for allrisks that potentially affect the achievement of its strategicpriorities and has delegated the responsibility for overseeing theadequacy and effectiveness of risk management to the Auditand Risk Committee.Risk Management supports Institutional management processesthrough the operational risks identified. Operational risks arelinked to overarching strategic focusses to promote a strategysupporting risk management programme. The University hasembarked on a process of formal risk management, which involvesthe identification of strategic and operational risks, as well asthe rating of these risks and the development of strategiesto assist in the mitigation of risks to an acceptable level. Theobjective, to ensure a more integrated approach tomanaging risks that threaten the organisation is in line with therequirements of King IV. The University is committed to compliancewith the recommendations of the King IV report.The Risk and compliance function, on an ongoing basis, ensuresthe following processes are in place:• Maintenance of risk registers at a corporate level, as well asat academic and support systems levels;• Monitoring compliance to risk mitigation programmes; and• Providing education and training on risk managementthroughout the Institution.The Risk Register, however, is a work in progress which needscontinuous monitoring to ensure effective and efficient controls.The streamlining of the Risk Register and Risk Policy was anextensive exercise and the Audit and Risk Committee played avital and leading role in the process.Financial RisksFinancial and contractual risks are taken with delegatedauthority limits approved by Council. Furthermore, changesto the funding formula, enrolment and throughput targets andstudent debt are areas of risk to which Management applies aconsiderable amount of time. Management has been workingwith the internal auditors to enhance controls across the system.107
VAAL UNIVERSITY OF TECHNOLOGYANNUAL REPORT 2018Identified RisksThe Audit and Risk Committee exercises oversight of themanagement of risks across the University. To achieve this,Management has established the Governance, Risk andCompliance Unit (GRC) which is responsible for the day to daymanagement of risks. The GRC is supported by the EMC’ssubcommittee on Risk Management Committee. The Auditand Risk Committee has considered the 2017 Risk Register andthe measures that are in place. The Committee identified thefollowing high risks for the 2017 academic year:• The unstable enrolments and the resultant effect on theInstitutional funding;• The unfunded satellite Sites of Delivery and the overallfinancial position of the University;• The general decline in Institutional income against increasingexpenditure;• The growth of the University and the general infrastructuredeficit; and• The increase in salary expenditure.The Committee is mindful of the general financial position ofthe Higher Education Sector and is thus appreciative of variousactions undertaken by Management to ensure stability andimprove the situation. The Committee will be working withManagement to monitor and review the situation on an ongoingbasis.General ObservationThe Committee has noted the successes and significantchallenges faced by both Council and Management duringthe 2018 academic year. The Committee has also taken noteof the risks and control deficiencies identified by the auditorsand has directed Management to develop action plans to beimplemented in 2019. The Committee has also notedimprovements reported in other control measures as well asnew policy developments.In overall, the Committee appreciates the difficulties faced bythe sector during 2015/2016 and the subsequent resultantimpact on the system and on the University.PROFESSOR IL RENSBURGADMINISTRATOR108
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VUT_Report 2018_Finale

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