1. PORTFOLIO COMMITTEE MEETING Presentation of CHE Annual Report
for the year
26 October 2016

2. Outline Section 1: Introduction and scene setting
Legislative mandate and context
Audit process and outcome
Reflections
Challenges
Section 2: Performance highlights
Key outputs
Targets not achieved
Reflection and emerging issues
Section 3: Financial performance
Financial statements
AGSA report

3. Section 1 Introduction and Scene Setting
Chairperson of Council
Prof N. Themba Mosia
Represented by Prof John Mubangizi – Chair of HEQC

4. Legislative mandate
Higher Education Act 101 of 1997 (as amended) established CHE as a juristic body & spelt out its mandate.
National Qualifications Act 67 of 2008 declared CHE the Quality Council for Higher Education & outlined its functions in this regard.
Public Finance Management Act 1 of 1999 (as amended) lists CHE as a Schedule 3A public entity: bound to comply with provisions in Chapter 6 of the Act.

5. Context
Conditions of austerity have impacted on range and number of initiatives
Upheaval at universities due to fees protests have led to the postponement of several interventions due to access challenges and re-prioritisation by institutions
Proliferation of programmes from private providers
Budgetary pressures impel levying fees on publics for accreditation processes

6. Audit Process & Outcome
Conducted by auditors from the AG’s Office
Scope of the audit:
financial statements
reported performance information
compliance with specific requirements of key applicable legislation
Process
engagement letter: scope, roles & responsibilities
requested information provided
information tested by auditors

7. Audit Process & Outcome (Continued)
Process (continued)
on-site verification undertaken by auditors
explanations provided to auditors, where required
provisional findings prepared & discussed with management
final management report issued to Council
Outcome of 2015/2016 audit → Unqualified audit report received

8. Reflection on Past Year: Governance
The evaluation found that there was:
regular attendance of meetings
robust engagements in meetings
quality advice to the Minister
meaningful engagement with the higher education sector
Evaluation of CHE
Consultant’s, research and key findings

9. Reflection on Past Year: Strategic Matters
Strategic review and restructuring
Council presided over organisational restructuring process to improve operational effectiveness & efficiency.
Merging of National Reviews & Standards Development Directorates.

10. Challenges Operational capacity.
Legal challenges to CHE/ HEQC decisions and litigation.
Staff turnover at 20%
Attraction & retention of competent staff.

11. Performance Highlights Chief Executive Officer
Section 2
Performance Highlights
Chief Executive Officer
Prof. N Baijnath

12. Key Outputs: Monitoring & Evaluation
VitalStats 2013 (the fourth in the annual series)
Publications
SA higher education reviewed: 20 years of democracy
Reflections
Kagisano No 10
Key Outputs: HEQSF-Alignment
Project completed – one year ahead of schedule

13. Key Outputs: Standards development and National Reviews
National Reviews Framework revised and approved by Council.
Framework for qualification standards in HE − publication
Five standards statements completed:
Bachelor of Social Work
Master of Business Administration (MBA)
Bachelor of Laws (LLB)
Bachelor of Engineering
Diploma in Engineering
LLB review reference group → Review manual & SER template

14. Key Outputs: Database of Learner Achievements
HEQIS had data from 95% of private HEIs in 2015/16.
Key Outputs: HEQSF-Alignment
Project completed – one year ahead of schedule

15. Key Outputs: Institutional Audits
Audit of one institution terminated.
Content Analysis of the Baseline Institutional. Submissions for Phase 1 of the QEP: a report was published.
Three QEP institutional workshops were organised.
QEP student workshop.
Three DCV Forum meetings.
Workshops - PHEIs

16. Key Outputs: Promotion & Capacity Development
Two QA fora were organised and one workshop for professional councils.
National Excellence in Teaching Awards were organised jointly with HELTASA.
Two CHE Electronic Newsletters.
Policies on RPL, CAT and Assessment.
Hosted three African delegations.
Southern African regional QA network: participated in the events & initiatives.

17. Key Outputs: Accreditation
Record numbers of new applications for accreditation were processed → A total of 292 (from 483 submissions) new programmes were accredited.
Majority of applications at NQF levels 7 & 8.
Majority of applications in business, commerce and management sciences & health professions/related clinical sciences.
13 existing programmes were re-accredited.
67 site visits completed.
101 programmes deferred pending improvement plans and site visits.

18. Targets not achieved Submission of institutional reports – QEP.
Finalisation of National Report on the Review of the Bachelor of Social Work programme.
LLB review – site visits and self-evaluation reports.
Advice on own initiative on relevant issues.
National reviews – training of evaluators.

19. Reflection on Performance
Projects are not completed within planned time frames, which impacts negatively on achievement of annual performance targets:
Lack of sufficient capacity in some directorates
Some projects heavily rely on peer experts from the sector who deliver at their own pace
CHE APPs are normally scoped to cover all areas of the legislated mandate, but not in relation to capacity & resources available: mismatch between performance requirements & capacity/resources.
Increasing deficit.

20. Reflection on Performance
Audits and QEP – distinction
Institutional audits back on the agenda

21. Emerging Issues − Operational
Capacity/resource considerations are necessary in scoping APP & setting performance targets.
Identifying priority areas from the ever-increasing demands on CHE would be essential in developing APPs for subsequent years.
Relook at the CHE’s business model.
Resourcing for Optimal Organisation Performance.
Develop a case for increasing level of government funding commensurate with the growing demands on the CHE.
Explore other sources of funding to supplement government funding.

22. Emerging issues − Contextual
Current crisis - CHE view – how are we providing advice?
Future research agenda?

23. Financial performance Chief Financial Officer
Section 3
Financial performance
Chief Financial Officer
Mr Thulaganyo Mothusi

24. Statement of Financial Position as at 31st March 2016
Figures in Rand
Note(s)
2016
2015
Restated*
Assets
Current Assets
Cash and cash equivalents 3
Receivables from exchange transactions 2
Prepayments 4
Non-Current Assets
Property, plant and equipment 5
Intangible assets 6
Total Assets
Liabilities
Current Liabilities
Payables from exchange transactions 7
Provisions 9
Non-Current Liabilities
Unspent conditional grants and receipts 10
Total Liabilities
Net Assets
Reserves
Revaluation reserve
Accumulated surplus
Total Net Assets

25. Statement of financial Performance for the Year Ended 31st March 2016
Figures in Rand
Note(s)
2016
2015
Restated*
Revenue
Exchange revenue
Interest received - investment 11
Non exchange revenue 12
Total revenue
Expenditure
Personnel 13
( )
( )
Depreciation and amortisation
( )
( )
Interest paid -
(990)
Bad debts written off
(7 000)
Repairs and maintenance
( )
( )
Loss on disposal of assets
( )
General expenses 14
( )
( )
Total expenditure
( )
( )
Deficit for the year
( )
( )

26. Reasons for variances on the budget and actual expenditure
Revenue from exchange transactions was higher than budget due to more applications for accreditation being received from private institutions as well as more interest received than anticipated on invested amount.
Revenue from non-exchange transaction is higher than the budget due to a merger between the Programme Standards Developments and National Reviews and now operating at full capacity and also approved surplus from the prior year by National Treasury.
Employee costs under spent due to vacancies and there were some unforeseen delays to fill them during the year under review.
General expenses under spent as a result of late approval of roll over of surplus funds and these funds were therefore not fully utilised by the end of the last quarter.

27. Top ten cost drivers and their percentage contributions of the general expenses
Peer academics contribute 17%.
Legal fees contribute 14%.
Travel costs local contribute 12%.
Printing and Stationery contributes 8%.
Outsourced services include SAQA HEQCIS online system, governance committees minutes taking and payroll services contributes 7%.
Auditors remuneration contribute 6%.
IT expenses include licence fees, computer consumables, contract on support for HEQC online system, contract on support maintenance, contract on system development and contract on website and communication contribute 6%.
Remuneration of Council and Committee members, Recruitment costs and venue and catering contribute 4%.

28. Report of the Auditor General Of South Africa (AGSA)
Unqualified audit report received.
Matters affecting the auditor’s report
Performance targets not specific and measurable.
Performance indicator not time bound.
Performance indicators not verifiable and well defined.
No assessment of useful life and residual values of assets.
Overstatement of commitments.
Other important matters
General expense not paid within 30 days of receipt of invoice.
Quarterly reports not reviewed.
Baseline numbers not set for performance targets expressed as percentage;
User account management process inadequately implemented for Pastel Evolution and HEQC systems.
Functionality included as an assessment criterion.

29. Report of the Auditor General South Africa (AGSA) cont.
Administrative matters
Inconsistency between the planned and reported indicators; and
Performance target not measurable.
A strategic audit action has been developed to address all audit findings identified by the AG and progress is monitored by the Audit and Risk Committee.

30. Recommendation
Portfolio Committee Members to note the Annual Report and its Annual Financial Statements for the year 2015/2016.