CRITICAL ISSUES IN EFFECTIVE MANAGEMENT OF FINANCES & HUMAN RESOURCES WORKSHOP (15 May 2007)

1. CRITICAL ISSUES IN EFFECTIVE MANAGEMENT OF FINANCES & HUMAN RESOURCES WORKSHOP(15 May 2007) BY: MR. FD TSIEANE EXECUTIVE DIRECTOR: FINANCE

2. 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 :

3. BUDGET USAGE • CAPITAL BUDGET USAGE (PERIOD: JANUARY – AUGUST 2006)

4. BUDGET USAGE • OPERATIONAL BUDGET USAGE (PERIOD: JANUARY – AUGUST 2006)

5. BUDGET USAGE IMPLICATIONS: • Hindrance of proper cash-flow planning • Increasing number of accruals, e.g. • Purchasing for the sake of utilizing the budget • Limited storage facility

6. 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

7. MANAGEMENT LETTERS (Example) Payments made on quotation Observation   The following payments were made on quotation and not invoice. 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

8. 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

9. 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

10. 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)

11. 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

12. PROCESS REGARDING MANAGEMENT LETTERS

13. 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

14. THANK YOU

15. Workshop:critical issues in effective management of finances and human resources15 May 2007 Vaal University of Technology By: Mr. N Masulubele Director: Finance

16. 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

17. 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: Risk 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.

18. 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

19. 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

20. 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

21. THANK YOU

22. VAAL UNIVERSITY OF TECHNOLOGY Workshop: Critical issues in effective management of Finances and Human Resources 15 May 2007 BY: MR. Y AHMED DIRECTOR: FINANCE

23. 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

24. FINANCIAL REPORTS

25. THANK YOU