Annual Report 2014/15

Transcription

1 Annual Report 2014/15

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3 Annual Report 2014/15

4 CONTENTS: PART A 5 General Information 6 List of Acronyms 7 Chairperson s Message 9 CEO s Overview The year in perspective 12 Statement of Responsibility and Confirmation of Accuracy 15 Strategic Overview 16 Legislative Mandates 17 Strategic Imperatives 18 Strategic Goals and Objectives 19 Organisational Structure 21 PART B 23 Performance by Programme 24 Advice to the Minister 24 Monitoring of the State of Higher Education 25 Higher Education Performance Indicators 25 Review of the State of Higher Education Research Projects 25 Private Higher Education Management Information System 26 Publications 27 Conferences 27 HEQSF Alignment and Linked Alignment Project 27 Standards Development 28 HEQCIS 29 Institutional Audits 29 Quality Enhancement 30 Programme Accreditation 31 National Reviews 34 Quality Promotion and Capacity Development 35 Human Resources 37 Administration and Finance 41 Overview of the CHE s Performance 43 2

5 PART C: GOVERNANCE 53 Portfolio Committee on Higher Education and Training 54 Executive Authority 54 The Accounting Authority 54 Governance Structure 55 Committees and Sub-committees 60 Remuneration of Council Members 64 Risk Management 64 Materiality Framework 64 Internal Audit 65 Auditors 65 Compliance with Laws and Regulations 65 Audit Report Matters in the Previous Year 65 Fraud and Corruption 65 Subsequent Events 65 Minimising Conflict of Interest 65 Code of Conduct 66 Health, Safety and Environmental Issues 66 Social Responsibility 66 Audit Committee Report 66 Council Members 67 A PART D: HUMAN RESOURCE MANAGEMENT 73 Overview 74 Human Resources Oversight Statistics 74 PART E: ANNUAL FINANCIAL STATEMENTS 79 3

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7 Part A: General Information

8 GENERAL INFORMATION Registered Name: Council on Higher Education Physical Address: 1 Quintin Brand Street Persequor Technopark Pretoria 0020 Postal Address: P O Box 94 Persequor Park 0020 South Africa Telephone Number Fax Number ceo@che.ac.za Web External Auditors: Auditor-General South Africa Bank: Standard Bank, Brooklyn Branch, Fehrsen Street, Brooklyn, Tshwane 6

9 LIST OF ACRONYMS ASB Accounting Standards Board APP Annual Performance Plan ARC Audit and Risk Committee BSW Bachelor of Social Work CEO Chief Executive Officer CFO Chief Financial Officer CESM Classification of Educational Subject Matter CHE Council on Higher Education DHET Department of Higher Education and Training ENE Estimates of National Expenditure EXCO Executive Committee GAAP Generally Accepted Accounting Practice GRAP Generally Recognised Accounting Practice HELTASA Higher Education Learning and Teaching Association of South Africa HEMIS Higher Education Management Information System HEQC Higher Education Quality Committee HEQCIS Higher Education Quality Committee Information System HEQSF Higher Education Qualifications Sub-Framework HR Human Resources HRRC Human Resources and Remuneration Committee IAC Independent Actuaries and Consultants IAS International Accounting Standards IASB International Accounting Standards Board IFRS International Financial Reporting Standards LLB Bachelor of Laws MBA Master of Business Administration MEC Monitoring and Evaluation Committee MTEF Medium Term Expenditure Framework NIHSS National Institute for the Humanities and Social Sciences NBT National Benchmark Test NLRD National Learners Records Database NQF National Qualifications Framework Act 67 of 2008 NRF National Research Foundation PAA Public Audit Act of South Africa, Act 25 of 2004 PFMA Public Finance Management Act 1 of South Africa, Act 1 of 1999 PPPFA Preferential Procurement Policy Framework Act QCTO Quality Council for Trades and Occupations QEP Quality Enhancement Project A 7

10 SAHEPSC SAQA SARS SASCOC SRC UIF UMALUSI VAT South African Higher Education Platform in Sport Coaching South African Qualifications Authority South African Revenue Services South African Sports Confederation and Olympic Committee Students Representative Council Unemployment Insurance Fund Council for Quality Assurance in General and Further Education and Training Value Added Tax 8

11 CHAIRPERSON S MESSAGE The Council on Higher Education remains a key player, in partnership with other stakeholders, in shaping the higher education system in South Africa. I have been honoured to steer the work of the Council in the 2014/15 financial year, and to oversee the induction of new members of Council appointed in December 2014 by the Minister. It is gratifying to have been working with Council members with vast experience and expertise in higher education and other sectors. In order to fulfil our fiduciary duties and ensure that there is good governance at the CHE, Council underwent an independent external evaluation of its performance, the results of which were pleasing to see. It was evident from the results that the CHE takes its role very seriously. Regular attendance of meetings, robust engagements in meetings, the quality of advice to the Minister and interactions in the higher education sector in various forms characterised the work of the CHE in the 2014/15 financial year. I am pleased to report that in this period, the administrative, financial and governance systems of the organisation continued on a sound footing already laid in previous years which enabled the work of the CHE to grow and develop as it implemented a range of new and exciting projects as outlined in this Annual Report. Although the projects are exciting and relevant to the development of the higher education system, there were a few challenges that affected the progress in some of the research projects. The time it takes to complete some of the projects is a challenge faced by Council. The CHE depends to a large extent on the expertise and willingness of peers in the sector to contribute to the work of the entity. There are instances where there are inordinate delays in completing the projects, and consequently an overlap into the next financial year. A The improvement of quality in teaching and learning has been at the centre of many of the CHE s projects. The first phase of the Quality Enhancement Project which was implemented in this financial year focused the attention of public universities, and to a lesser extent, private higher education institutions on improving four key aspects that underpin good teaching and learning and hence student success. The CHE is concerned about low throughput rates and is cognisant of a range of interventions put in place by institutions of higher learning together with the Department of Higher Education and Training through the Teaching and Development Grants to address this challenge. The CHE played a crucial role in these interventions through HELTASA, particularly in recognizing excellence in teaching at universities in this country. One of the legislative requirements for the CHE is to conduct institutional audits through its permanent Committee, the Higher Education Quality Committee (HEQC). In the 2014/15 financial year there was also extensive engagement with those institutions still busy implementing the recommendations of their institutional quality audits. The Improvement Plans are closely monitored, and some of the universities that encountered governance and management challenges were assisted to focus on their Improvement Plans in 2014/15. The challenge faced by Council was the closure of the first cycle of audits at some universities for various reasons. 9

12 A robust accreditation system of the CHE has enabled the processing of 427 new applications, the accreditation of 324 programmes and 36 site visits across the country. In addition to this, a total of 53 programmes were re-accredited. As a result of the rigour involved in accrediting academic programmes, the CHE encountered legal challenges from higher education providers who had their accreditation withdrawn in the financial year 2014/15. As the custodian of quality assurance mechanisms, the CHE continues to preserve the integrity of the system by ensuring that our qualifications are beyond reproach. The legal challenges that purport variations and/or deviations from the well-considered criteria to assess the quality of provisioning at some private higher education institutions put a strain on the human and financial resources of the CHE. Council is, however, resolute that quality of teaching and learning shall not be compromised by legal threats and actions. In the year under review there were structural re-arrangements within the Council on Higher Education. The National Reviews Directorate was merged with the Standards Development Directorate to enhance interactions and synergies in setting standards and reviewing certain professional programmes. The Capacity Development and Quality Promotion Unit was housed within the office of the Chief Executive Officer to pull together projects across the organisation and maximise our output. The accreditation system, the national reviews, the quality promotion activities and the alignment of qualifications with the Higher Education Qualifications Sub-Framework (HEQSF) all contributed to the HEQC s sharper focus on bringing about improvements in the quality of teaching and learning and in the offerings of our higher education system. The strategic direction signalled in the 2014 workshop of Council to strengthen the CHE s relationship with other stakeholders, notably the Department of Higher Education and Training, other Quality Councils, institutions of higher learning and the Portfolio Committee on Higher Education and Training was aimed at enhancing the visibility and impact of the CHE as it executes its quality assurance functions, and provides advice to address the key challenges in the higher education system. This is still work in progress that overlaps into the 2015/16 financial year, but certainly one of the medium to long term goals of the CHE to increase its visibility and impact nationally and internationally. This strategic direction has been reiterated by the new Council. The level of engagement of the CHE with higher education institutions has, however, increased through its quality enhancement and promotion activities and through ongoing consultation processes regarding the CHE s proposal for undergraduate curriculum reform. The latter informed the CHE s comprehensive and proactive advice to the Minister to introduce an extended and flexible curriculum structure in undergraduate qualifications to address the major challenge of poor throughput and graduation rates in higher education. Advice on a number of policy-related matters was also provided in this period. As indicated above, one of the medium to long term goals is to increase the visibility and impact of the Council on Higher Education and playing a crucial role in the implementation of the plan to be crafted for the post school education and training sector. Adequate funding for the CHE to deliver on its mandate, within the shortest possible time, form part of the medium to long term goals of the entity. Roll-over funds from projects are not sustainable. The Council s relationships and work with the South African Qualifications Authority, the 10

13 Council for Quality Assurance in General and Further Education, and the Quality Council for Trades and Occupations have continued to be strengthened, and the priorities related to the NQF identified by the Minister for 2014/15 were advanced significantly, particularly through the near-completion of the HEQSF-alignment project. International linkages were also pursued through ongoing collaboration with other quality agencies in the Southern African region, with the Scottish Quality Assurance Agency, with a number of international projects and through participation in conferences and a number of international speakers at the CHE s events. A The CHE improved the rate at which it retained its staff through various human resources strategic interventions, and I am pleased to report that there is a stable work force dedicated to deliver on the mandate of Council. Attracting and retaining staff with superior intellectual capabilities remains a challenge that we hope can be mitigated by providing competitive remuneration and benefits in the medium to long term. The outcome of the audit by the Auditor-General of South Africa attests to compliance with legal requirements of the Public Finance Management Act. I would like to express my appreciation to the Audit and Risk Committee together with the management and staff for working hard and ensuring that the CHE had a clean audit in 2014/2015. In conclusion, I would like to thank all our partners who supported the work of the CHE in various ways in 2014/15. Higher education is confronted by many challenges, some of which if not addressed in a collaborative manner could reverse all the gains we have realised since the dawn of democracy. Diminishing resources and an expanded mandate of the post- school education and training system begs of all role players to do more with less. As I thank the Portfolio Committee on Higher Education and Training for the oversight role and support in resourcing the CHE in 2014/15, I commit the CHE to fulfil its mandate and utilise the scarce resources which we hope will improve in the next financial year. Thanks to the Minister,the Deputy Minister, Director-General and all the staff of the Department of Higher Education and Training for their support during the 2014/15 financial year. Professor N. Themba Mosia Chairperson 11

14 CHIEF EXECUTIVE OFFICER S OVERVIEW The Year in Perspective The past year has seen the CHE focusing on the implementation of the plans and projects that characterise its activities as both an advisory body on higher education matters, and as a Quality Council. The execution of its quality assurance and quality promotion functions have taken centre stage, while the CHE s contribution to the policy discourse on higher education has been strengthened through its research and information dissemination activities. One of the most pressing challenges of higher education, the enduring problem of poor throughput rates, has been on the CHE s radar for some time. That less than half of the students taking diploma and degree programmes currently graduate, even allowing for extra years to do so, is an unsustainable situation, costly both in human and subsidy terms. Such a challenge requires an imaginative and bold response at a system level to turn it around. A CHE Task Team put forward a proposal based on extensive research for reform in the undergraduate curriculum structure in 2013, and, after extensive consultation, further research and refinement of the proposal, the CHE submitted advice on this matter to the Minister in December A comprehensive review of the higher education system, undertaken by a number of working groups, continued to be worked on and refined for publication in the next financial year; it has the potential to lead to further advice to the Minister. In the year under review, advice and comment was also provided on a number of policy matters at the Minister s request. The CHE continued to provide audited data on the higher education system through a third and expanded edition of the successful publication VitalStats, and carried out work on a number of other research projects which are designed to reach fruition and publication in the next financial year. The Quality Enhancement Project (QEP), which was launched in 2014, gained traction in both the public and private higher education institutions as it entered into the first major phase of implementation. The aim of the QEP is to contribute to enhancing learning and teaching in order to improve student success, which is understood as increasing the number of graduates with attributes that are personally, professionally and socially valuable. The work of the Directorate has been enhanced by the active involvement of Deputy Vice- Chancellors (DVCs) Academic of the universities both within their institutions in their preparation of submissions on their current activities in four areas that underpin teaching and learning, and nationally, in assisting with the design and oversight of a number of collaborative learning opportunities. Their support is essential to making the QEP a success. The 2014/15 year also saw the major project of aligning all or so existing qualifications in higher education with the Higher Education Qualifications Sub-Framework (HEQSF) reach a point of near-completion. Apart from the ongoing process of accrediting new programmes as they are developed to replace those that do not align with the HEQSF, 12

15 which will form part of the routine accreditation process at the CHE going forward, all existing programmes have been evaluated and aligned with the HEQSF. This process has facilitated an intensive rationalising and reorganising of offerings in higher education to promote quality, coherence and articulation within the sector. A milestone was reached in this year with the development of the first five draft qualification standards to be piloted for curriculum development, accreditation and national reviews. The functions of developing standards and the carrying out of national reviews were amalgamated in order to ensure that national reviews are carried out in relation to standards developed and agreed to within academic groupings. The National Review of Social Work was completed, and ongoing monitoring of the implementation of accreditation conditions will be part of the work of the CHE for some time. A national review of the LLB qualification was launched as the next major project in this regard. A In terms of the overall financial performance of the CHE, the 2014/15 year continued some of the healthy developments noted in 2013/14 and less under-expenditure than in previous years; at 17% it is, however, still short of the target of 5%. There was ongoing focus on governance and accounting policy reviews and enhancements in order to ensure compliance with the applicable guidelines from National Treasury, Accounting Standards and best practices. Further, there was enhancement of current procedures and processes to address internal control deficiencies, identified by both the internal and external auditors, in finance and supply chain which included the development of both month and year-end close processes. By the introduction of Goods Receipt Vouchers transactions are now recognised in the correct period as they are expensed immediately when the goods or services are delivered or rendered. The CHE ended the 2014/15 financial year with an audited surplus of R after adjusting for non-cash items relating to depreciation and bad debts written off amounting to R A request for roll-over of funds was submitted to National Treasury for approval. A consolidated strategic audit action plan was developed and implemented and this resulted in 13 audit findings from the internal auditors and 22 audit findings from external auditors being addressed. Efforts were made to continue enhancing internal controls and procedures to ensure an excellent audit outcome which indeed was the case, as the CHE achieved a clean audit for 2014/15. As is evidenced in the financial data, with an average of 90% of posts filled throughout the year all existing Directorates were appropriately staffed and carrying out all their functions, while an intensified focus on quality promotion and policy development was facilitated through the appointment of a new Director in this area. The implementation of a new flexible remuneration framework for senior staff, approved by the Minister of Higher Education and Training and the Minister of Finance, assisted in achieving stability in staffing at that level and ensured continuity and progression in the work of the CHE. 13

16 We are grateful to the members of the outgoing Council for exercising keen oversight of the work of the CHE and for providing input on its strategic direction. The HEQC has continued to demonstrate its commitment to improving quality through its careful consideration of quality matters and sensible decision-making. Our thanks go to four members whose terms of office came to an end in this period for their dedication and wise input: Professor Narend Baijnath, Dr. Felicity Coughlan, Mr. Thami Ledwaba and Ms. Kuselwa Marala. A special word of gratitude is extended to Professor Yunus Ballim, whose term similarly came to an end, for chairing the Committee in a manner that was both thoughtful and decisive. After five successful years at the helm of the CHE, Mr Ahmed Essop decided not to pursue a second term in the Chief Executive Officer s post. He has left a legacy of good governance, sound principles applied in policy-making, and an organisation that has both consolidated and extended its important role in higher education. Our appreciation is extended to him for his strong leadership, his wise counsel, his extensive support to the Directors of the CHE as they carried out their programmes and projects, for his insights and for his somewhat acerbic sense of humour. Finally, the CHE s Directors and staff are commended for their hard work and commitment to ensuring that the CHE s advice and quality assurance functions are professionally carried out in the furtherance of the long-term health of South Africa s higher education system. Denyse Webbstock (Dr) Acting Chief Executive Officer 14

17 STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY To the best of our knowledge and belief, we confirm the following: A All information and amounts disclosed in the annual report are consistent with the annual financial statements audited by the Auditor-General. The annual report is complete, accurate and is free from any omissions. The annual report has been prepared in accordance with the annual report guidelines as issued by National Treasury. The Annual Financial Statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board applicable to the Council. The accounting authority is responsible for the preparation of the annual financial statements and for the judgements made in this information. The accounting authority is responsible for establishing, and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements. The external auditors are engaged to express an independent opinion on the annual financial statements. In our opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the entity for the financial year ended 31 March Prof N. Themba Mosia Dr Denyse Webbstock Chairperson Acting Chief Executive Officer 31 July July

18 STRATEGIC OVERVIEW Vision The CHE as an independent statutory body strives to be an organisation nationally and internationally recognised for the quality of its intellectual contribution to and its impact on the development of the South African higher education system through its core functions of advising the Minister of Higher Education and Training, monitoring trends in the higher education system and assuring and promoting the quality of higher education. Mission The mission of the CHE is to contribute to the development of a transformed, equitable, high quality higher education system capable of responding to the intellectual, ethical and human resource challenges of a democratic society based on social justice principles which operates in a global context. Values In pursuit of its vision and mission the CHE is committed to and guided by the following values: Independence Transformation Integrity Public Accountability 16

19 LEGISLATIVE MANDATE The CHE is a statutory body established under the Higher Education Act (Act 101 of 1997), as amended, and is the Quality Council for Higher Education in terms of the National Qualifications Framework Act (Act 67 of 2008). As a statutory body, the CHE is a Schedule 3A National Public Entity in terms of the Public Finance Management Act (Act 29 of 1999) and the applicable Treasury Regulations. A Higher Education Act In terms of the Higher Education Act, the mandate of the CHE includes the following: To provide advice to the Minister of Higher Education and Training on all higher education matters on request and proactively. To promote quality and quality assurance in higher education through its permanent committee, the HEQC, including auditing the quality assurance mechanisms of, and accrediting programmes offered by, higher education institutions. To monitor the state of higher education and publishing information regarding developments in higher education on a regular basis, including arranging and coordinating conferences on higher education issues. National Qualifications Framework Act In terms of the National Qualifications Framework Act, as the Quality Council for Higher Education the CHE s mandate includes the following: To develop and manage the qualifications sub-framework for higher education, namely, the Higher Education Qualifications Sub-Framework (HEQSF), including ensuring the relevance and currency of qualifications. To advise the Minister of Higher Education on matters relating to the HEQSF. To develop and implement policy and criteria for the development, registration and publication of qualifications, as well as for assessment, recognition of prior learning and credit accumulation and transfer in the context of the policy and criteria developed by the South African Qualifications Authority (SAQA). To contribute to the development of level descriptors and to ensure their relevance. To maintain a database of learner achievements in higher education and to submit the data to the National Learners Records Database, which SAQA maintains. To conduct and publish research, which facilitates the development and implementation of the sub-framework. To inform the public of the sub-framework. 17

20 STRATEGIC IMPERATIVES The CHE, in interpreting and giving effect to its mandate, has adopted five strategic imperatives, which inform the development of its strategic goals and objectives: To contribute to informing and influencing the public debate on the policy framework for the transformation of the higher education system. To contribute to developing the role of the quality assurance system as a steering tool in conjunction with planning and funding to enhance the quality of higher education and to enable the achievement of national policy goals and objectives. To contribute to ensuring the currency and relevance of the Higher Education Qualifications Sub-Framework to meet the human resource and knowledge needs of South Africa, including the development and maintenance of standards to enhance the quality of higher education. To contribute to building the intellectual capability of the CHE. To contribute to the development of an enabling and effective organisational climate. 18

21 STRATEGIC GOALS AND OBJECTIVES The strategic imperatives have been translated into four strategic goals and eleven linked strategic objectives, which inform the CHE s strategic plan for and the framework for the CHE s Annual Performance Plan (APP). These are outlined below: A Goal One To contribute to informing and influencing the public debate on the policy framework for the transformation of the higher education system and to become a recognised centre for information and policy analysis on higher education. Objective One To provide advice to the Minister of Higher Education and Training on all higher education matters on request and on the CHE s own initiative. Objective Two Goal Two To monitor the state of higher education, including publishing information and convening conferences, seminars and workshops on developments in higher education. To contribute to the development of qualification standards to ensure the relevance, comparability and currency of qualifications. Objective Three To develop and manage the HEQSF, including the articulation of qualifications between the three sub-frameworks, namely, the HEQSF, the General and Further Education and Training Qualifications Sub-Framework and the Trades and Occupations Qualifications Sub-Framework. Objective Four To develop and implement policy, criteria and standards for higher education qualifications to inform and guide the development, registration and publication of qualifications. Objective Five To maintain a database of learner achievements in higher education and to submit the data to the National Learners Records Database (NLRD), which is maintained by SAQA. 19

22 Goal Three To promote quality and quality assurance in higher education, including enhancing the quality of higher education. Objective Six To audit the quality assurance mechanisms of higher education institutions. Objective Seven To accredit new programmes submitted by public and private higher education institutions and to re-accredit existing programmes offered by private higher education institutions. Objective Eight To undertake national reviews of existing programmes in specific subject fields and qualification levels offered by public and private higher education institutions. Objective Nine Goal Four To promote quality and to develop capacity and understanding of the role of quality assurance in improving quality in higher education at both the systemic and institutional levels. To ensure the efficient and effective provision of corporate services administrative, financial, technical and professional, to support the discharge of the core mandate of the CHE. Objective Ten To ensure the development of human resources management environment that enables staff to develop their full potential. Objective Eleven To ensure that financial, administration and supply chain management is compliant with the requirements of the PFMA, relevant Treasury regulations and laws. Objective Twelve To ensure effective governance and compliance of ICT with statutory requirements. 20

23 ORGANISATIONAL STRUCTURE Council Structure Council A Human Resources and Remuneration Committee Audit and Risk Committee Executive Committee Higher Education Quality Committee Monitoring and Evaluation Committee Management Structure Council Chief Executive Officer Denyse Webbstock (Acting) Corporate Services Vuyo Matsam Chief Financial Officer Thulaganyo Mothusi Monitoring and Evaluation Genevieve Simpson (Acting) Programme Accreditation Kethamonie Naidoo Institutional Audits Diane Grayson National Standards and Reviews Olivia Mokgatle Quality Assurance and Promotion Co-ordination Amani Saidi 21

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25 Part B: Performance Information

26 PERFORMANCE INFORMATION BY PROGRAMME Strategic Goal One To contribute to informing and influencing the public debate on the policy framework for the transformation of the higher education system and to become a recognised centre for information and policy analysis on higher education. Objective One To provide advice to the Minister of Higher Education and Training on all higher education matters on request and on the CHE s own initiative. Advice to the Minister The CHE has a dual advisory function; providing advice at the request of the Minister of Higher Education and Training and providing advice on its own initiative in response to critical issues and challenges identified by the Council that impact on the higher education system. In the year under review, the Council provided the Minister with advice and comment at his request on the following: Draft Policy on the Policy and Procedures for Measurement of Research Outputs of Public Higher Education Institutions. Draft Articulation Policy. In addition, the Council provided the Minister with advice on its own initiative on the Reform of the Undergraduate Curriculum. This advice was based on the report of the Task Team established by the Council to investigate the desirability and feasibility of restructuring the duration of the current three- and four-year undergraduate diplomas and degrees, as a mechanism for both enhancing academic success and for enabling students to engage with the changing role of knowledge in contributing to social and economic development in the 21st century. In finalising its advice, the Council took into account the responses received as part of the consultation process on the Task Team report from higher education institutions and other stakeholders. Objective Two To monitor the state of higher education, including publishing information and convening conferences, seminars and workshops on developments in higher education. 24

27 Monitoring of the State of Higher Education The CHE is responsible for monitoring and interpreting trends and progress towards achieving national policy goals and objectives in higher education. Higher Education Performance Indicators VitalStats 2012, the third in the annual series of VitalStats booklets to provide audited data on key aspects of the public higher education system, was published in December It provides student and staff data in public higher education for the period 2007 to 2012, including cohort data for the 2007 student intake, and, for the first time, cohort data on postgraduate qualifications. It has also been expanded to include data on higher education funding and research. Review of the State of Higher Education B A review of the state of higher education to mark the first two decades of democracy was launched in Eight working groups were formed to identify and engage with the key challenges in the main focus areas to be covered by the review, namely: Context Regulation; Management and governance; Teaching and Learning; Research; Community engagement; Academic staffing; and Funding. The various chapters of the review are being finalised and, after engagement with Council, will be published. Research Projects Restructuring the Undergraduate Curriculum This project has been completed and advice has been provided to the Minister as reported above. Student Governance in Public Higher Education Institutions This project, which was initiated in the light of the ongoing unrest and disputes relating to different aspects of student governance in public higher education institutions, is making steady progress. It focuses on the participation of student political organisations in Student Representative Council (SRC) elections, as well as the role, function and structure of SRCs in higher education institutions. The empirical research, including interviews with SRC members and Deans of Students at 8 institutions across the country was undertaken in 2013 and is 25

28 currently being analysed. The findings have fed into the 20-year review of higher education discussed above. Governance and Management in Public Higher Education The research on governance and management challenges in higher education, which focuses on the size, composition and role of Councils, including comparative international experience on codes of conduct for Councils, has been completed. A draft discussion document, which proposes a new institutional governance model in relation to the size, composition, role and modus operandi of Councils of public higher education institutions, is being finalised. Reflections on Academic Leadership in South Africa The role of academic leadership has become increasingly important in the context of the changing nature of higher education world-wide in terms of the pressures for access, the impact of new technologies and funding constraints. In South Africa there is the added complexity of the transformation imperative and the inequities of the past. It is against this background that a project on reflections on academic leadership was initiated with the aim of publishing a book on the reflections of a selected group of retired senior leaders in higher education sharing their insights, knowledge and experience for the benefit of current and future leaders in higher education. Nine contributions have been received and the book is being prepared for publication in mid Placement Mechanisms A background paper on placement mechanisms and practices, such as the National Benchmark Test, in public higher education institutions has been prepared to inform further research. Placement mechanisms are particularly important in the context of the CHE Task Team s Report, A proposal for undergraduate curriculum reform in South Africa: the case for a flexible curriculum structure, which suggests extending degree and diploma study by 120 credits as the norm, with flexible options depending on students levels of preparedness. The CHE will review whether further research is required based on the Minister s response to its advice on the Task Team s proposals. Private Higher Education Management Information System The development of the framework for a private higher education management information system that would facilitate the monitoring of trends in private higher education and enable comparative analysis with the public higher education system was completed at the end of The framework was developed jointly with DHET, SAQA and representatives of private providers. The development of the system software for the framework has been completed and is in the testing phase. It is anticipated that it will go online in the course of

29 Publications The following publications were produced in the year under review: Distance Higher Education Programmes in a Digital Era: Good Practice Guide was published in August. This is the outcome of a project initiated in 2012 to assist programme evaluators and designers in interpreting and applying the HEQC accreditation criteria to distance education programmes. VitalStats: Public Higher Education 2012 was published in December It provides public higher education student and staff data for the period 2007 to 2012, including cohort data for the 2007 student intake, and for the first time, cohort data on postgraduate qualifications. It has been expanded to include data on higher education funding and research. Conferences B An Information and Communications Technology (ICT) colloquium, Moving the Teaching and Learning System in South African Higher Education into the Digitally-Mediated Era took place in October It was attended by approximately 100 delegates from public universities, private institutions and regulatory bodies. The purpose of the Colloquium was to engage with the latest trends and developments in ICT in higher education. Strategic Goal Two To contribute to the development of qualification standards to ensure the relevance, comparability and currency of qualifications. Objective Three To develop and manage the HEQSF, including the articulation of qualifications between the three sub-frameworks, namely, the HEQSF, the General and Further Education and Training Qualifications Sub-Framework and the Trades and Occupations Qualifications Sub-Framework. Higher Education Qualifications Sub-Framework (HEQSF) Alignment Project The purpose of the alignment project is to align existing programmes and qualifications offered by public and private institutions of higher education with the requirements of the revised HEQSF. The alignment of Category A programmes, that is, programmes that required minimal change, was completed in the 2013/14 financial year. The Accreditation Directorate received 1268 applications for Category B HEQSF-alignment during the 2014/15 financial year. Category B programmes are those programmes that require less than 50% changes to the curricula in order for them to be aligned with the requirements of the HEQSF. Of these submissions, all have been evaluated and reviewed and 27

30 all recommendations were tabled at the HEQC meeting of 11 March The outcomes of this meeting have been communicated to the institutions and relevant stakeholders. In addition, a total of Category C programmes were tabled at the HEQC meeting of 11 March 2015 for noting. Category C programmes are those that require more than a 50% change to the curricula in order to align with the requirements of the HEQSF and therefore will be taught-out. The outcomes of this meeting have been communicated to the institutions and relevant stakeholders. Further to the release of the outcomes of approved Category A programmes in July 2014, the Accreditation Directorate received applications for title changes to 261 approved programmes from 15 institutions. The recommendations of these applications were tabled at the HEQC Meeting of 11 March 2015, and the outcomes of this meeting have been communicated to the institutions and relevant stakeholders. As previously reported, the alignment process has been beneficial, as it has enabled higher education institutions to rationalise their offerings, including removing outdated and discontinued programmes from their records. Objective Four To develop and implement policy, criteria and standards for higher education qualifications to inform and guide the development, registration and publication of qualifications. Standards Development The development of pilot qualification standards has been completed and draft standards statements are ready for public comment for the following qualifications: Bachelor of Social Work. Master of Business Administration (MBA). Bachelor of Laws (LLB). Bachelor of Engineering. Bachelor of Science in Engineering. Diploma in Engineering. The Framework for Qualification Standards in Higher Education will be reviewed in the light of experience gained during the pilot phase. This will be done during the first quarter of 2015/16. The scope of standards development will be expanded to include other fields of study and qualification types. Tentative approaches have been made with the Pharmacy Council with regard to developing qualification standards for the Higher and Advanced Certificates in Pharmacy, and with the South African Council of Quantity Surveying Practitioners (SACQSP) to develop standards in the field of quantity surveying. 28

31 Objective Five To maintain a database of learner achievements in higher education and to submit the data to the National Learners Records Database (NLRD), which is maintained by SAQA. HEQCIS There was continued progress in collecting data on student enrolment and achievement data in private higher education through the Higher Education Quality Committee Information System (HEQCIS), which has been developed in conjunction with SAQA. The number of unique, currently registered private providers that have submitted at least one data load increased from 114 of 116 (98%) in the previous financial year to 113 of 114 (99%) in this financial year. Within the December 2014 cycle, 88% of all unique private higher education institutions each successfully submitted at least one full data load. B Strategic Goal Three To promote quality and quality assurance in higher education, including enhancing the quality of higher education. Objective Six To audit the quality assurance mechanisms of higher education institutions. Institutional Audits Although the first cycle of institutional audits was completed in mid-2011, there is ongoing monitoring of those institutions that are still in the process of implementing the recommendations flowing from their institutional audit reports. The monitoring of the institutional audits is the responsibility of the Institutional Audits Committee, which is a subcommittee of the HEQC. In the year under review, the Institutional Audits Committee comprised the following members: Prof Usuf Chikte, Chairperson, Executive Head, Department of Interdisciplinary Health Sciences, Stellenbosch University Prof Rocky Ralebipi-Simela, CEO and National Librarian, National Library of South Africa Prof Nan Yeld, Director University Teaching and Learning Development, Department of Higher Education and Training Prof Bennie Anderson, Chief Executive Officer, Da Vinci Institute Prof Xikombiso Mbhenyane, Professor and Head of Human Nutrition Division, Stellenbosch University Ms Judy Favish, Director, Institutional Planning, University of Cape Town Prof Renuka Vithal, Deputy Vice-Chancellor Teaching and Learning, University of KwaZulu- Natal Prof Tinyiko Maluleke, Professor of African Spirituality and Culture, University of Pretoria 29

32 Audits Closed University of South Africa University of Venda Progress Reports (still under consideration) Mangosuthu University of Technology North-West University University of Zululand Walter Sisulu University Quality Enhancement In the year under review, the main focus was on the implementation of the Quality Enhancement Project (QEP), which was launched in February 2014 and which focuses on enhancing learning and teaching, specifically, student success, which is conceptualised as increasing the number of graduates with attributes that are personally, professionally and socially valuable. In September 2014, all public universities (barring the two universities that opened in 2014) produced institutional submissions in which they provided baseline information about how they were engaging with the four focus areas for Phase 1 of the QEP, namely, enhancing academics as teaching, enhancing student support and development, enhancing the learning environment and enhancing course and programme enrolment management. A content analysis of the 23 institutional submissions was finalised and published in May As part of the QEP, the Deputy Vice-Chancellors for Teaching and Learning, or DVCs Academic from all universities have been asked to be co-leaders of the project. At a meeting of DVCs on 5 November 2014 they agreed to constitute the QEP DVC Forum, to be coordinated and facilitated by the CHE. The main purpose of the forum is to provide reflection and guidance on the QEP process and to action issues that arise from the QEP that need to be addressed at a national level. For some issues the DVCs may initiate actions, while other issues may be referred to other stakeholders, such as HESA or the DHET. Two QEP institutional workshops were held in March 2015, each one attended by participants from approximately half the public universities to, discuss good practices related to each focus area, suggest how good practices could be more widely adopted, adapted and improved, share challenges, generate ideas for addressing common challenges, propose concrete steps that can be taken to bring about improvements, identify opportunities for collaboration and begin to identify elements of what could become codes of good practice. The facilitators reports and the recommendations arising from the workshops will form the basis for a publication in the new financial year as a further step in the QEP process. A voluntary participation process in the QEP was initiated for the private providers. In June 2014, 30

33 58 private providers submitted baseline information, and a further 11 did so in November Thus more than half the private providers completed a submission. A workshop for participating institutions was held on 28 October 2014, the focus of which was QEP Focus Area 1: Enhancing academics as teachers. The workshop was attended by 67 participants from 38 institutions. Two further workshops will be held for participating private providers in August 2015 on Focus Area 2: Enhancing student support and development and Focus Area 3: Enhancing the learning environment respectively. Objective Seven To accredit new programmes submitted by public and private higher education institutions and to re-accredit existing programmes offered by private higher education institutions. Programme Accreditation B The programme accreditation function is facilitated by the Accreditation Committee, which is a sub-committee of the HEQC and in 2014/15 comprised of the following members: Dr Felicity Coughlan, Chairperson, Director and Head, The Independent Institute of Education Dr Rolf Becker, Executive Director, South African Council for Natural Scientific Professions Ms Gloria Castrillón, Director, Quality Assurance and Regulatory Affairs, Milpark Business School Mr Colin Daniels, Associate Dean, Faculty of Informatics and Design, Cape Peninsula University of Technology Prof Sabiha Essack, Dean, Faculty of Health Sciences, University of KwaZulu-Natal Prof Marvin Kambuwa, Principal, Regent Business School Prof Wendy Kilfoil, Director, Department for Education Innovation, University of Pretoria Prof Lesley le Grange, Vice-Dean, Research, University of Stellenbosch Prof Gugu Moche, Executive Dean, College of Science, Engineering and Technology, University of South Africa Prof Relebohile Moletsane, Professor and JL Dube Chair in Rural Education, University of KwaZulu-Natal Mr Vincent Morta, Director, Quality Assurance and Management Information Systems, Institutional Planning Office, University of the Western Cape Ms Nicolene Murdoch, Executive Director, Teaching, Learning and Quality Assurance, Monash South Africa Prof Martin Oosthuizen, Deputy Vice-Chancellor, Teaching and Learning, North-West University Dr Shaheeda Essack, Deputy Director, Private Higher Education, DHET Dr Whitfield Green, Acting Chief Director, Teaching and Learning Development, DHET Ms Jean Skene, Director, Higher Education, Management Information Systems, DHET 31

34 Accreditation of New Programmes Submissions for the accreditation of programmes are received and evaluated on an ongoing basis throughout the year and therefore applications submitted in one financial year may only receive an HEQC outcome in the following financial year. There were 427 applications submitted for accreditation of new programmes in 2014/15. These applications are disaggregated per NQF level in Table 1 and per CESM category in Table 2 below. In the same period, 2014/15, the HEQC approved a total of 324 outcomes which included applications for the accreditation of new programmes, representations and deferrals related to both accreditation and re-accreditation. It should be noted that this includes some programmes submitted in the previous financial year and processed in the current financial year. This is reflected in Table 3 below. Of the 324 outcomes, 231 programmes were accredited (with or without conditions, or deferred) and 93 programmes were not accredited. Poorly designed curricula and unsatisfactory teaching and learning approaches were among the most common reasons for programmes not being accredited. The majority of applications submitted were for programmes at National Qualifications Framework (NQF) levels 7 and 8, as indicated below in Table 1. Table 1: New applications for programme accreditation per NQF level Level 5 Level 6 Level 7 Level 8 Level 9 Level 10 TOTAL Number of Applications Similarly, as in the previous year, the majority of the applications for programme accreditation were in business, commerce and management sciences, health care and health sciences, education, visual and performing arts, and computer sciences, as shown in Table 2 below. 32

35 Table 2: New applications for programme accreditation per CESM category CESM Category Number of applications Agriculture, Agricultural Operations and Related Sciences 5 Architecture and the Built Environment 5 Visual and Performing Arts 17 Business, Economics and Management Studies 97 Communication, Journalism and Related Studies 2 Computer and Information Sciences 19 Education 104 Engineering 14 B Health Professions and Related Clinical Sciences 82 Family Ecology and Consumer Sciences 2 Languages, Linguistics and Literature 0 Law 7 Life Sciences 8 Physical Sciences 8 Mathematics and Statistics 0 Military Sciences 0 Philosophy, Religion and Theology 23 Psychology 4 Public Management and Services 17 Social Sciences 13 Total 427 Table 3: HEQC Decisions and outcomes for accreditation Item Total number of applications for new / relocated site of delivery Programmes accredited / accredited with conditions / deferred TOTAL Programmes not accredited 93 Total number of applications for new / relocated site of delivery 36 Total number of sites of delivery visited 36 33

36 Re-accreditation of Private Higher Education Institutions On an annual basis the programmes of private higher education institutions, which are due for re-registration with the Department of Higher Education and Training, need to be reaccredited. In 2014/15, as indicated in Table 4 below, 51 programmes for re-accreditation were tabled at an HEQC meeting. There were 12 programmes that were not aligned to the HEQSF and the accreditation of these programmes was extended to allow them to be taught out. There were 29 programmes that were re-accredited and 10 that were not re-accredited. Table 4: HEQC Decisions and outcomes for re-accreditation Item TOTAL Total number of programmes for re-accreditation 53 Programmes re-accredited 29 Programmes not re-accredited 10 Programmes with accreditation status extended 12 Programmes deferred pending additional information 2 Objective Eight To undertake national reviews of existing programmes in specific subject fields and qualification levels offered by public and private higher education institutions. National Reviews National reviews focus on the re-accreditation of existing programmes with a view to improving programme quality. The national reviews function is facilitated by the National Reviews Committee, which is a sub-committee of the HEQC and comprises the following members: Prof Theo Andrew, Chairperson, Executive Dean: Faculty of Engineering and the Built Environment, Durban University of Technology Prof Jean Baxen, Dean: Education, University of the Witwatersrand Prof Dhiro Gihwala, Dean, Faculty of Health Sciences, Cape Peninsula University of Technology Prof Ken Harley, Emeritus Professor, University of KwaZulu-Natal (resigned In October 2014) Ms Kuselwa Marala, Academic Administration, Registrar s Office, Cape Peninsula University of Technology Dr Matete Madiba, Director: Student Affairs, University of Pretoria Dr Paul Steyn, Academic Head, Akademia Konkordia Prof Völker Wedekind, Deputy Dean, Continuing Education, University of KwaZulu-Natal 34

37 In the year under review the main focus was on finalising the National Reviews Committee s (NRC) findings and recommendations regarding the national review of the Bachelor of Social Work (BSW). The recommendations were approved by the HEQC in November 2014 following representations submitted by institutions. Of the BSW programmes from 16 institutions that were reviewed; 3 were Accredited; 8 Accredited with Conditions; and 5 were put on Notice of Withdrawal of Accreditation. Institutions accredited with conditions and those on notice of withdrawal of accreditation are required to put measures in place to address the conditions set out in their respective reports as follows: Short-term conditions should be addressed within 90 days, but no longer than 6 months of receipt of the report. Long-term conditions require an Improvement Plan (IP) with clear targets, milestones and timeframes to facilitate the implementation of the IP. The deadline for the submission of IPs was 31 March B Institutions on notice of withdrawal of accreditation were required to submit an Improvement Plan (IP) by 31 March 2015 taking into consideration all the recommendations and conditions stipulated in the report, for evaluation by the HEQC. The final stage in the national review process is the publication of a national report addressing the findings, strengths, shortcomings and concerns from the review. A draft report on the The State of the Provision of the Bachelor of Social Work in South Africa was prepared and is in the process of finalisation. In addition, in this period, there was ongoing monitoring related to the previous review of teacher education programmes, which should be closed in the course of Preparations for the launch of the Bachelor of Laws (LLB) national review in April 2015 were finalised. Objective Nine To promote quality and to develop capacity and understanding of the role of quality assurance in improving quality in higher education at both the systemic and institutional levels. Quality Promotion and Capacity Development In the year under review, the appointment of a Director: Quality Assurance Promotion and Co-ordination, facilitated the development of quality promotion activities, which had been undertaken on an ad hoc basis in prior years because of a lack of capacity. In this regard, the Directorate has co-ordinated the development of two projects: The role of the Higher Education Quality Committee (HEQC) and (Statutory) Professional Councils in Programme Accreditation. 35

38 In response to concerns raised by public higher education institutions regarding the role of the (statutory) professional councils in programme accreditation, a background paper was developed and discussed at a joint workshop with the DHET, HESA and the statutory professional councils in June A small working group was subsequently established to develop draft guidelines on the roles of the HEQC and professional bodies and to develop a national framework that transcends the separate regulatory frameworks of the statutory professional councils. It met in September 2014 and March The latter meeting developed principles that will anchor the required national framework whose purpose is to clarify the roles of the different parties. A draft framework is planned to be discussed by the working group at its meeting in September Continuing Education Courses A project on short courses to develop a framework and guidelines for good practice to ensure that short-courses offered by higher education institutions meet minimum standards was initiated in late As a first step, a questionnaire-based survey of public and private institutions to collect baseline data about the nature, quantity, quality assurance and management of short courses was undertaken and a background report prepared. The latter will inform the next phase of the project, which is to develop a framework and guidelines for good practice for the quality assurance, governance and management of short courses across the higher education sector. It is anticipated that that the framework and guidelines will be finalised in the latter half of Further capacity development activities There were two quality assurance forums convened, the purpose of which is to exchange information on quality assurance issues and developments; one for statutory professional bodies in June 2014, and a combined forum for public and private higher education institutions in February Furthermore, the CHE participated in the Awards Committee for the sixth CHE-HELTASA (Higher Education Learning and Teaching Association of Southern Africa) National Excellence in Teaching and Learning Awards, which were announced in November 2014 at the annual HELTASA conference. Name Category of Award Institution Lindsay Clowes National Excellence in Teaching University of the Western Cape Ian Malcom-Rijsdijk National Excellence in Teaching University of Cape Town Simon Mukwembi National Excellence in Teaching University of KwaZulu-Natal June Pym Sunitha Srinivas Leadership in Excellent Teaching Leadership in Excellent Teaching University of Cape Town Rhodes University 36

39 Name Category of Award Institution Sibusiso Mdletshe Commendation University of Johannesburg Ismail Nabbi Commendation Mangosuthu University of Technology Robert Pattman Commendation University of Stellenbosch Herman Viviers Commendation North-West University Thea de Wet Commendation University of Johannesburg Regional network In July the CEO attended a Southern African Sub-Regional Conference on Quality Assurance in Higher Education, which was hosted by the Zimbabwe Council for Higher Education. The purpose of the workshop was to work towards establishing a regional network, which was accepted in principle. The Conference appointed a Task Team to formalise the establishment of sub-regional quality assurance network for Southern Africa, which consists of the CEOs of higher education quality assurance bodies of Botswana, Lesotho and Namibia, South Africa and Zimbabwe. The Task Team met in December 2014 in Windhoek, Namibia and agreed to develop a draft Constitution, which was circulated to higher education quality agencies in the SADC region for comment in January B It is expected that the regional network body will be officially launched as the next Southern African Sub-Regional Conference on Quality in Higher Education which will be held in Botswana in October The CHE is actively participating in this regional initiative. Strategic Goal Four To ensure the efficient and effective provision of corporate services administrative, financial, technical and professional, to support the discharge of the core mandate of the CHE. Objective Ten To ensure the development of a human resources management environment that enables staff to develop their full potential. Human Resources The Human Resources function continued to make progress in operationalising and giving effect to one of the CHE s key strategic imperatives, namely, to build the CHE s intellectual capability and to ensure that the CHE has the human capacity and capability to execute its mandate and strategy. The human resources function is overseen by the Human Resources and Remuneration Committee, which is a sub-committee of Council. 37

40 The focus on ensuring that the CHE has appropriate human capacity and capability has been given effect through a range of interventions in the year under review that are outlined below. Staff Turnover, Recruitment and Retention The CHE s approved structure provides for 51 positions and 46 of these are filled. The process of replacing the CEO has been delayed owing to the appointment of the new Council in December However, attempts are underway to finalise this process in the near future. In the interim, Dr Denyse Webbstock has been appointed as Acting CEO effective from 1 March There has been an increase in staff turnover from 10.86% in 2013/14 to 21.73% in 2014/15 (this includes expiry of contracts and a dismissal) but the staff retention rate is 90%. Nevertheless, staff retention remains a challenge for the CHE. This is largely due to the small size of the organisation which limits the opportunities for career progression for mid-level staff. The new Attraction and Retention Framework was implemented during the year under review after a comprehensive and consultative process, and this should contribute to facilitating the recruitment and retention of senior staff in the organisation, which to date has been a major risk and challenge. This will promote stability at the senior levels so that the CHE can successfully carry out its functions. CHE Competency Framework The CHE introduced and adopted a new Competency Framework. This was important to ensure that the organisation achieves its objective of professionalising the CHE. The Competency Framework will assist in ensuring consistency in performance throughout the organisation and help to drive and support all Human Resources initiatives. In developing the Competency Framework, emphasis was placed on the core and process competencies that employees would be expected to possess, rather than the functional/technical competencies essential to a specific directorate or a specific job. The Competency Framework includes five core competencies that communicate what is expected of CHE employees. It also includes five process competencies that assist in driving the decisions around the core competencies, and provide focus on how these core competencies are to be successfully achieved. This framework seeks to establish a shared understanding of the critical success factors of performance for employees. It will inform the recruitment and selection process, performance management and the identification of development needs of employees in the CHE. The Competency Framework has emerged from an extensive process of interviews, desktop studies and analysis. Interviews were held with the CEO and Directors for the purpose of gathering information regarding the CHE s strategy, competencies and possible pitfalls. The 38

41 review further included an analysis of existing Key Performance Areas and Key Performance Indicators of respective Directorates. The adoption and implementation of the CHE Competency Framework has necessitated changes in some of the Human Resource policies and processes to align them with the Framework, e.g. the development of comprehensive Job Descriptions for all positions at the CHE and the review of naming conventions (Job Titles) to align them better with the functions of employees and general usage in the sector. The Recruitment and Selection Policy has since been reviewed and all managers involved in the recruitment of employees were trained in competency-based interviewing processes. The Council s Human Resources and Remuneration Committee played a significant oversight role in the development and implementation of this framework. Staff Training and Development B In line with the CHE s Staff Training and Development Policy, the provision of focused training programmes to address skills gaps within the organisation remains a priority. In the past year, 30 training programmes covering office management, finance administration and management, health and safety, information technology and qualitative research methods were attended by members of staff. However, it has not been possible to implement the full training plan as work pressures have had an impact on the availability of staff for training events. In addition, personal career development through pursuing formal qualifications is encouraged, and seven staff members received bursaries. Employee Wellness Programme The Wellness Programme continues to yield positive results for the CHE. During the year under review the following has taken place: EAP Referrals A number of employees were either self-referred or referred by the employer to the Employee Assistance Programme for counselling sessions with Counselling Psychologists, an Occupational Therapist, Wellness Expert and Ergonomist. Wellness Day A Wellness Day took place on 30 January 2015 with the theme Drive Towards Life. The objective was to enhance and continue motivating employees regarding the importance of managing a holistic balance between work and life. Activities included an industrial theatre, motivational speakers, a laughter workshop, corporate massages, ergonomic advice and counselling, fun exercises and general coaching and counselling. 39

42 Wellness Awareness Weekly wellness snippets and information articles on different wellness aspects e.g. stress management, nutrition, productivity and ergonomic tips, fatigue management etc. are circulated amongst staff via the CHE intranet to reinforce wellness. Sick Leave Days and Costs The annual average sick leave days per employee have declined from 8.5 since the implementation of the programme in July 2013 to 4.78 at the end of the financial year, and an associated reduction in the cost of sick leave days from R to R This is significantly lower than the national normative rates that range from 6.16 and 8.5 for organisations employing less than 50 and more than 50 employees, respectively. The challenge going forward is to measure changes in employee productivity related to the programme. Plans are underway to include this measurement in the new financial year. Performance Management The Performance Management process for the financial year was concluded on 31 March 2015 and bonus awards were paid out to deserving employees. The Performance Moderation Committee meeting held on 20 March 2015 noted that the CHE had reached a point of stability, with all directorates staffed and carrying out their functions. The organisational and individual employee performance has significantly improved over the last few years. The organisation is embracing performance excellence as a core element of the CHE culture. All directorates performed well above average. In individual cases of underperformance, plans have been put in place to address these cases accordingly. A total of forty-one (41) out of forty-six (46) employees participated in the process and a total of R was paid out to deserving employees on 30 March Future Human Resources plans/goals The CHE will continue to develop and revise policies focused on developing the critical leadership competencies required in this sector. Plans are underway to implement an organisation-wide cultural diversity intervention that will entail revisiting the CHE s vision, mission and values to embed an organisational culture that embraces high performance, diversity, collaboration, teamwork and integrity. Objective Eleven To ensure that financial, administration and supply chain management is compliant with the requirements of the PFMA, relevant Treasury regulations and laws. 40

43 Administration and Finance In the financial year under review, there was ongoing focus on governance and accounting policy reviews and enhancements in order to ensure compliance with the applicable guidelines from National Treasury, Accounting Standards and best practices. Further, there was ongoing enhancement of current procedures and processes to address internal control deficiencies, identified by both the internal and external auditors, in finance and supply chain which included the development of both month and year-end close processes. By the introduction of Goods Receipt Vouchers transactions are now recognised in the correct period as they are expensed immediately when the goods or services are delivered or rendered. Summary of financial information B 2014/ /14 Sources of Revenue Estimate Actual Amount Collected (Over)/ Under expenditure Estimate Actual Amount Collected (Over)/ Under expenditure R 000 R 000 R 000 R 000 R 000 R 000 DHET Rollover Funds Deferred Income Recognised (Standards Development) (938) (882) Accreditation Investment TOTAL

44 2014/ /14 Programme/ Directorate Name Estimates Actual (Over)/ Under expenditure Estimates Actual (Over)/ Under expenditure Administration Goods and Services R 000 R 000 R 000 R 000 R 000 R (16%) Personnel (7%) Quality Promotion and Capacity Development Goods and Services (8%) Personnel % Monitoring and Evaluation Goods and Services % Personnel (49%) Programme Accreditation Goods and Services % Personnel % National Reviews Goods and Services % Personnel % Institutional Audits Goods and Services (22%) Personnel % Standards Development Goods and Services % Personnel % TOTAL % Objective Twelve To ensure effective governance and compliance of ICT with statutory requirements. Information and Communication Technology (ICT) is playing an ever-increasing role as a strategic enabler of service delivery. The Department of Public Service and Administration, in collaboration with the Government Information Technology Officer Council (GITOC), developed a policy framework for the Corporate Governance of ICT. A three-year implementation guideline was also developed to support all departments/ public entities. Phases 1 and 2 were to be implemented by March 2014 and March 2015 respectively. (i) (ii) All entities were also to include this in the Annual Performance Plan for 2015/16 with a description and indicator of how it will be monitored. The CHE included Compliance with the Corporate Governance of ICT Framework of the D.P.S.A as its Strategic Objective

45 OVERVIEW OF THE CHE s PERFORMANCE Strategic Objective Programme Performance Indicator Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments Advising the Minister on any aspect of higher education in line with the Higher Education Act (Act No 101 of 1997), as amended Advise the Minister at his request or on own initiative Number of responses to requests for advice within the timeframe requested 100% 5 100% 100% 2 Target achieved. The number of responses cannot be predetermined as it is dependent on the number of requests received from the Minister. i) Advice on DHET s Policy and Procedures for Measurement of Research Outputs of Public Higher Education Institutions. ii) Comment on the Report of the Ministerial Committee on Articulation. Number of pieces of advice on own initiative on issues identified as relevant flowing from the activities of the CHE Target achieved. Advice provided: i) Reform of the undergraduate curriculum. ii) Advice on Unaccredited Programmes offered by Public and Private Higher Education Institutions. B 43

46 Strategic Objective Monitoring the state of higher education Programme Performance Indicator Research Projects Production of performance indicators report (on-going project) Projects in progress Dissemination of research findings Number of publications Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments Target achieved. Performance indicators to assess the state of the higher education system. VitalStats 2012 publication and website data updated Target achieved. These projects are long-term projects which will run throughout the year and some will straddle financial years. The cumulative total will remain constant at 4. i) Undergraduate Diploma and Degree Structure ii) Review of the State of Higher Education: iii) Reflections on Academic Leadership iv) Governance Challenges in Public Higher Education Target achieved. Publication of research reports. i) Distance Education in a Digital Age ii) VitalStats

47 Strategic Objective Development and management of the HEQSF * Programme Performance Indicator Alignment of existing programmes with the HEQSF Percentage of programmes with an HEQC outcome, as per HEQC minutes. Annual Cumulative Output 2013/2014 0% Category B Annual Target as per Strategic Plan % of Submissions for Category B Annual Cumulative Output Comments 100% Target exceeded. It should be noted that the target was set at 80% to take into account the time-lag between the receipt of applications and a final decision being made by the HEQC. *The Higher Education Qualifications Framework (HEQF was promulgated in October 2007 (Government Gazette No of 5 October 2007). Given the CHE s expanded mandate as the Quality Council for Higher Education in terms of the National Qualifications Framework Act of 2008 (Act No 67 of 2008), the CHE initiated a review of the HEQF in October As determined by the Minister of Higher Education and Training the name of the HEQF was amended to the Higher Education Qualifications Sub-Framework (HEQSF) and the Framework was published as policy of the Council on Higher Education by SAQA in Government Gazette No , Notice 549, 2 August 2013). This gazette was recalled and it was re-gazetted by the CHE on 17 October 2014, No programmes were processed. 816 Approved 400 Deferred 52 Not aligned Institutions may submit representations. B 45

48 Strategic Objective Development, registration and publication of qualifications NLRD Database Auditing institutional quality assurance mechanisms Programme Performance Indicator Development of qualifications standards Development of templates for qualification types (QT) and field/ subject specific standards (FS) Development of pilot standards Collecting data from private institutions Number of private providers that will be contributing to the HEQCIS database Analyse and approve institutional improvement plans and progress reports based on recommendations made in audit report Monitoring of progress reports Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments n/a 2 0 It was not possible to undertake consultation as the pilots are still in progress as reported below. 0 4 (4QTV; 4FS) 5 5 draft pilot standards have been approved by the HEQC for sending out to higher education institutions for comment. i) Bachelor of Social Work ii) Master of Business Administration iii) Bachelor of Laws iv) Bachelor of Engineering v) Diploma in Engineering 98% 80% 99% 114 private providers uploaded information Target achieved. 100% 3 audits were closed and 6 continue to be monitored. 100% monitoring of all progress reports received 100% 2 audits were closed and 4 institutions continue to be monitored. Target achieved. It is anticipated that the 4 remaining audits reports will be closed in the 2015/16 financial year. 46

49 Strategic Objective Programme Performance Indicator Implement institutional quality enhancement framework. Institutional Quality enhancement framework implemented. Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments n/a 100% 100% Target achieved. Strategic Objective Six in the current strategic plan states: To audit the quality assurance mechanisms of higher education institutions. Work had commenced in 2011/12 on the development of a framework for the second cycle of audits which would have run between 2013 and In 2012 a decision was taken by the Higher Education Quality Committee (HEQC) and Council rather than run a second cycle audit on the same lines as the first cycle audits a Quality Enhancement Project would be implemented. In the first phase of this project Teaching and Learning would be the main focus. 100% refers to planned activities: QEP workshop for students held. QEP update reports received from 23 public HEIs. Voluntary online submissions received from 58 private HEIs. Institutional submissions received from 23 public higher education institutions (HEIs) QEP Inkundla held for representatives from public HEIs QEP workshop held for representatives from participating private HEIs DVCs forum held for DVCs academic and teaching and learning from public HEIs 2 QEP workshops held in March B 47

50 Strategic Objective Institutional programme accreditation and reaccreditation Programme Performance Indicator Annual Cumulative Output 2013/2014 Accreditation of new programmes submitted by public and private higher education institutions Percentage of new programmes with an approved HEQC outcome tabled within 6 months of submission for public universities and within 6 months of release from Finance after payment has been processed, as per HEQC minutes. 93% 398 decisions Percentage of new / additional sites of delivery processed including site visits with an approved HEQC outcome tabled within 6 months of submission for public universities and within 6 months of release from Finance after payment has been processed, as per HEQC minutes. 100% 75 sites Annual Target as per Strategic Plan % of applications received 75% of applications received Annual Cumulative Output % 324 programmes 100 % 36 site visits Comments Target achieved The number of applications received varies annually. The percentage is calculated as the number of decisions taken by the HEQC (excluding deferrals) in relation to the number of recommendations from the Accreditation Committee tabled at the HEQC. It should be noted that following discussions after the 2012/13 audit, the target was changed to 75% to take into account the time-lag between the receipt of applications and a final decision made by the HEQC. Target exceeded. The target set was 75% as it is not always possible to complete site visits from the time requested within a specific financial year. Site visits were undertaken for accreditation and re-accreditation purposes. 48

51 Strategic Objective Programme Performance Indicator Re-accreditation of programmes offered by private higher education institutions Percentage of programmes with an approved HEQC outcome tabled within 18 months after payment has been processed. National Reviews, i.e. reaccreditation of programmes in specific fields and qualification level Development and implementation of national reviews: Bachelor of Social Work (BSW) Development and implementation of national reviews: Bachelor of Laws (LLB) Finalisation of National Report of Bachelor of Social Work programme Establish criteria for review. Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments 100% 82 decisions 75% 49% 53 programmes The target was changed to 75% to take into account the time-lag between the receipt of applications and a final decision made by the HEQC. The target reached was lower as a large number of applications were deferred by the Accreditation Committee (AC) pending site visits. Where an institution had not been visited in the past five years, the AC recommended deferrals to verify the quality arrangements reported on. This has increased the scrutiny on the quality of higher education programmes. The percentage is calculated as number of decisions taken by the HEQC (excluding deferrals) in relation to the number of recommendations from the Accreditation Committee tabled at the HEQC. n/a 1 0 Draft report has been presented to the HEQC. The report will be finalised early in 2015/16. n/a 1 0 Currently under discussion with the Deans of Law. B 49

52 Strategic Objective Quality promotion and capacity building Human Resources Management Programme Performance Indicator Training of evaluators for programme accreditation and re-accreditation Number of training workshops for evaluators, discipline groups/ report writing Quality assurance forums for public and private institutions and professional bodies Number of forums Skills Development Plan Development and implementation of the Skills Plan Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments Target exceeded due to an increase in accreditation applications and need to train and retrain evaluators and recommendation writers. It also included end-user training for Institutional Administrators for the HEQSF-Category B and the 2014 reaccreditation processes Instead of holding separate QA Fora each for public and private institutions respectively, one was held combining both public and private institutions. The combined QA Forum also ran for 2 days, 17 and 18 March 2015 which is double the normal time for a separate Forum. The combined QA Forum therefore achieved the same (if not more) outcomes as would have been expected from two separate QA Fora, one each for public and private institutions respectively. A separate forum was held for professional bodies. 50% 30 training interventions 100% Implementation of the plan 68% 53 Training events Due to the number of training interventions per employee, the accumulated total number of employees trained is 107 (this is made up of 35, 23, 19, 30 employees trained in Q1, Q2, Q3 and Q4, respectively). Total number of employees at the CHE is approximately 46 and 51 were trained (including terminations). It was not been possible to implement the full training plan due to the unavailability of staff due to work pressures. 50

53 trategic Objective Programme Performance Indicator Recruitment and retention strategy Filling of all vacant positions, including reduced turnaround time maximum three months Achieve organisational growth and sustainability Functioning performance management system Employment Equity Implementation of employment equity (EE) strategy and plan Contracts Management Supplier performance assessment Annual Cumulative Output 2013/2014 Annual Target as per Strategic Plan Annual Cumulative Output Comments 87% 95% of vacancies filled 90% During the year under review, there were changes to the CHE organisational structure. These were due to a merger of two directorates (namely Standard Development and National Reviews). The total staff complement (approved posts) subsequently changed from 53 to 51 by end of March *The Council agreed that 1 post should not be filled until dictated by operational requirements (Institutional Audits Directorate). *It should be noted that at the end of March posts were filled. *This represents 90% of the posts filled at the end of the financial year based on 51 post structure. 100% 100% of performance agreements signed 100% Target achieved. 21.5% 25% implementation of the EE plan 22% During the year under review there were 10 employment equity candidates appointed (22%). There has been an improvement in the number of males appointed during the year. The recruitment of people with disabilities remains a challenge. 100% 60% 133% Target exceeded. A larger number of supplier performance assessments were completed than initially planned. B 51

54 52

55 Part C: Governance

56 PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING The Annual Performance Plan and MTEF Budget for 2014/ /2017 was presented to the Portfolio Committee on Higher Education and Training in the National Assembly on 2 July The Annual Report for the 2013/14 financial year was presented to the Portfolio Committee on Higher Education in the National Assembly on 16 October In both cases, the presentations were well-received and there were no major issues of concern raised regarding the discharge of the CHE s mandate by the portfolio committee. Executive Authority There was no meeting between the Minister of Higher Education and Training and the Council in the year under review. The Accounting Authority Mandates and Objectives of the Council on Higher Education The CHE is established as a juristic person in terms of section 4 of the Higher Education Act (Act 101 of 1997), as amended, and as the Quality Council for Higher Education in terms of section 25 and 27 of the National Qualifications Act (Act 67 of 2008). In summary, the main areas of work of the CHE are: To provide advice to the Minister of Higher Education and Training on all higher education matters, at the Minister s request and at its own initiative; To develop and implement a system of quality assurance for all higher education institutions, including private providers of higher education, which includes programme accreditation, institutional audits, national reviews, and capacity development and quality promotion; To develop and manage the Higher Education Qualifications Sub-Framework (HEQSF) and the development of higher education qualifications; To monitor the state of the higher education system in relation to national policy goals and international trends; To contribute to the development of higher education through facilitating intellectual engagement on key issues in partnership with relevant stakeholders. Roles and Responsibilities The CHE is a public entity listed under Schedule 3A of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended. In this regard, the Council fulfils the role of the 54

57 Accounting Authority in terms of section 49 of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended. As the Accounting Authority, the Council adheres to principles of good governance, financial and performance management and acts in a fiduciary capacity. Its responsibilities include: Effective, efficient and transparent systems of financial and risk management and internal control, internal audit and procurement; Effective and appropriate steps to collect revenue due, prevent irregular, fruitless and wasteful expenditure, losses from criminal conduct and expenditure as a result of noncompliance with operational policies; Management, including safeguarding, of the assets, liabilities, revenue and expenditure of the CHE; Compliance with applicable legislation and regulations; and An effective and appropriate disciplinary system for failure to comply with the PFMA and the internal control system. Governance Structure The Council comprises a Chairperson appointed for five (5) years and thirteen (13) ordinary Council members appointed by the Minister of Higher Education and Training for a period of four (4) years following a public nomination process. Eight (8) non-voting members are appointed by the Minister from nominations respectively by the Director-General of the Department of Higher Education and Training, the Provincial Heads of Education, the Director-General of the Department of Science and Technology, the Director-General of the Department of Labour, the National Research Foundation and the Chief Executive Officers of the South African Qualifications Authority (SAQA), the General and Further Education and Training Quality Assurance Council (Umalusi) and the Quality Council for Trades and Occupations (QCTO), in their official capacities. Three members can be co-opted by the Council. C The term of office of the Council ended on 14 December 2014, except for the Chairperson whose term of office ends on 14 July The Minister appointed a new Council with effect from 15 December 2014 for a four-year term. The members of the previous and the new Council are outlined below. 55

58 COUNCIL 1 April December 2014 Name Designation Appointed in own right Appointed Number of meetings attended Prof Themba Mosia Prof Yunus Ballim Dr Yvonne Dladla Prof Magda Fourie- Malherbe Ms Malebo Ledwaba Dr Nyambeni Luruli Dr Bandile Masuku Dr Letticia Moja Prof Shireen Motala Ms Dora Ndaba Mr Edmund Nxumalo Dr Zilungile Sosibo Chairperson Member Vice Principal, Student Affairs and Residence Affairs and Accommodation, University of Pretoria University of the Witwatersrand Fees (in rands) July of Reappointed December 2010 Member Consultant Reappointed May 2013 Member Member Member Member Member Member University of Stellenbosch, Centre for Higher and Adult Education, Department of Curriculum Studies, Faculty of Education Lecturer, Waterberg Further Education and Training College Principal Scientist, Sasol Polymers, PTC Chris Hani Baragwanath Hospital, Gauteng Department of Health Rob Ferreira Hospital, Mpumalanga Department of Health Director: Postgraduate Centre for Education and Innovation, University of Johannesburg Reappointed December 2010 December 2010 December 2010 Reappointed May 2013 Reappointed May 2013 December 2010 Member Consultant December 2010 Member Consultant December 2010 Member Head of Department, Further Education and Training, Cape Peninsula University of Technology December of 3 NR 0 of of of of of of of of of of

59 COUNCIL 1 April December 2014 Name Designation Appointed in own right Appointed Number of meetings attended Prof Beverley Thaver Dr Molapo Qhobela Prof Sophie Mogotlane Member Co-opted Member Co-opted Member Non-voting members Ms Joyce Mashabela Mr Joe Samuels Dr Diane Parker Dr Thomas Auf der Heyde Dr Mafu Rakometsi Dr Albert van Jaarsveld Represented by Andrew Kaniki QCTO SAQA DHET DST Umalusi NRF Faculty of Education, University of the Western Cape Vice-Principal Institutional Development, University of South Africa. Consultant Representing organisation Chief Executive Officer, Quality Council for Trades and Occupations Chief Executive Officer, South African Qualifications Authority Acting Deputy Director General, Department of Higher Education and Training Deputy Director General: Human Capital and Knowledge Systems, Department of Science and Technology Chief Executive Officer, the Council for Quality Assurance in General and Further Education and Training (Umalusi) President and Chief Executive Officer National Research Foundation December 2010 October 2012 October 2012 Fees (in rands) 3 of of of n/a 3 of 3 NR n/a 3 of 3 NR n/a 1 of 3 NR n/a 2 of 3 NR n/a 3 of 3 NR n/a 1 of 3 NR C 57

60 COUNCIL 15 December March 2015 Name Designation Appointed in own Appointed Number of Fees right meetings (in attended rands) Prof Themba Mosia Chairperson Vice Principal, Student Affairs and Residence Affairs and Accommodation, University of Pretoria July of 1 0 Mr Luzuko Buku Member Secretary General SASCO 15 December of Prof Christiaan de Beer Member University of Pretoria 15 December of Prof André Keet Member Director Institute for Reconciliation and Social Justice, University of the Free State 15 December of Mr Casper Kruger Member Chief Executive Officer False Bay TVET College 15 December of 1 NR Dr Pamela Maseko Member Lecturer Rhodes University 15 December of Dr Bandile Masuku Member Chris Hani Baragwanath Hospital, Gauteng Department of Health Reappointed May of Prof Shireen Motala Member Director: Postgraduate Centre for Education and Innovation, University of Johannesburg. December of Ms Nombulelo Nxesi Member Chief Executive Officer Education, Training and Development Practices (ETDP) SETA 15 December of 1 NR Dr Kimberley Porteus Member Executive Director, Nelson Mandela Institution for Education and Rural Development 15 December of Prof Selby Ripinga Member Independent Consultant 15 December of

61 COUNCIL 15 December March 2015 Name Designation Appointed in own Appointed Number of Fees right meetings (in attended rands) Prof Ratnamala Singh Member Independent Consultant 15 December of Prof Beverley Thaver Member Faculty of Education, University of the Western Cape December of Prof Mvuyo Tom Member Vice-Chancellor University of Fort Hare 15 December of Dr Molapo Qhobela Co-opted Member Vice-Principal Institutional Development, University of South Africa October of 1 NR Prof Sophie Mogotlane Co-opted Member Independent Consultant October of Non-voting members Representing organisation Ms Joyce Mashabela QCTO Chief Executive Officer, Quality Council for Trades and Occupations n/a 1 of 1 NR C Mr Joe Samuels SAQA Chief Executive Officer, South African Qualifications Authority Dr Diane Parker DHET Deputy Director General, Department of Higher Education and Training Representative DST Deputy Director General: Human Capital and Knowledge Systems, Department of Science and Technology n/a 1 of 1 NR n/a 1 of 1 NR n/a 0 of 1 NR Dr Mafu Rakometsi Umalusi Chief Executive Officer, the Council for Quality Assurance in General and Further Education and Training (Umalusi) n/a 1 of 1 NR Representative NRF President and Chief Executive Officer National Research Foundation n/a 0 of 1 NR 59

62 The details of Council members, including their qualifications, areas of expertise and directorships/membership of other organisations are listed in the table on page 38. Committees and Sub-Committees Permanent Committee The Council has one (1) permanent committee, the Higher Education Quality Committee (HEQC) established in terms of section 7 (3) of the Higher Education Act. The HEQC has executive responsibility in terms of section 5 (1) (c) of the Higher Education Act and the NQF Act for quality promotion and quality assurance in higher education, specifically to: promote quality in higher education audit the quality assurance mechanisms of higher education institutions accredit programmes of higher education. The term of office of the HEQC ends on 31 March The Council in the interest of continuity has re-appointed 8 members who are eligible to serve a second term from 1 April 2015 to 31 March HIGHER EDUCATION QUALITY COMMITTEE (HEQC) Name Designation Appointed in own right Appointed Resigned Number of meetings attended Fees (in rands) Prof Yunus Ballim Chairperson University of the Witwatersrand April 2012 December of 5 0 Prof Theo Andrew Member Executive Dean: Faculty of Engineering and the Built Environment, Durban University of Technology April 2012 (Reappointed for second term) 6 of Prof Narend Baijnath Member Pro Vice- Chancellor, University of South Africa April 2012 March 2015 Completed two terms 3 of Prof Usuf Chikte Member Executive Head: Interdisciplinary Health Sciences, University of Stellenbosch. April 2012 (Reappointed for second term) 7 of Dr Felicity Coughlan Member Director and Head: The Independent Institute of Education April 2012 March 2015 Completed two terms 5 of

63 HIGHER EDUCATION QUALITY COMMITTEE (HEQC) Name Designation Appointed in own right Dr Andrew Kaniki Mr Thamsanqa Ledwaba Ms Kuselwa Marala Prof John Mubangizi Ms Nicolene Murdoch Prof Nthabiseng Ogude Prof Martin Oosthuizen Member Co-opted member Member Member Member Member Member Executive Director: Knowledge Management and Strategy, National Research Foundation Independent Consultant Director: Academic Administration, Cape Peninsula University of Technology. Deputy Vice- Chancellor and Head of the College of Law and Management Studies, University of KwaZulu-Natal Executive Director Teaching, Learning and Quality Assurance, Monash University, South Africa. Vice- Chancellor, Tshwane University of Technology Deputy Vice Chancellor: Teaching and Learning, North- West University Appointed Resigned Number of meetings attended April 2012 (Reappointed for second term) April 2012 April 2012 April 2012 (Reappointed for second term) April 2012 (Reappointed for second term) April 2012 (Reappointed for second term) April 2012 (Reappointed for second term) March 2015 Completed two terms March 2015 Completed two terms Fees (in rands) 2 of 7 NR 7 of of of of of of C 61

64 HIGHER EDUCATION QUALITY COMMITTEE (HEQC) Name Designation Appointed in own right Appointed Resigned Number of meetings attended Fees (in rands) Prof Rocky Ralebipi- Simela Member Regional Director: University of South Africa, Limpopo Region April 2012 (Reappointed for second term) 4 of 7 NR Dr Diane Parker Ex-officio Member Deputy Director General: Universities, DHET 6 of 7 NR Sub-committees The Council has four (4) sub-committees, namely: Executive Committee (EXCO) established in terms of section 13 of the Higher Education Act; Audit and Risk Committee (ARC); Human Resources and Remuneration Committee (HRRC); Monitoring and Evaluation Committee (MEC). The members of sub-committees are appointed for the specific knowledge and skills relating to the work the sub-committees. The Council and its sub-committees, including its permanent committee responsible for quality assurance, the HEQC, have functioned effectively in terms of the CHE s statutory mandate and adherence to principles of good governance. 62

65 EXECUTIVE COMMITTEE Members Designation Appointed Resigned Number of meetings attended Prof Themba Mosia Prof Yunus Ballim Dr Bandile Masuku Dr Letticia Moja Dr Diane Parker Fees (in rands) Chairperson July of Council Member Council Member Council Member Council Member Re-appointed June 2011 Re-appointed June 2011 Re-appointed June 2011 Acting-Chair until July 2013 Re-appointed June of 2 NR - 2 of of of 2 NR Members Designation Appointed in own right Dr Doeke Tromp Mr Malson Chilenge Mr Joe Samuels Prof Quintus Vorster Ms Vuyo Memani- Sedile Chairperson Expert Member Council Representative Expert Member Expert Member AUDIT AND RISK COMMITTEE Independent Consultant Independent Consultant Chief Executive Officer, SAQA Director Finance, University of Pretoria Executive Director: Finance, UNISA Appointed Resigned Number of meetings attended Re-appointed June 2011 Chairperson from September 2013 Fees (in rands) - 5 of April of March of 5 NR May of May of C 63

66 HUMAN RESOURCES AND REMUNERATION COMMITTEE Members Designation Appointed in own right Appointed Resigned Number of meetings attended Fees (in rands) Dr Yvonne Dladla Chairperson June of Ms Jennie Browning Expert Member Independent Consultant June of Ms Tina Georgoulakis Expert Member Independent Consultant August of Ms Dora Ndaba Council Member June of Mr Edmund Nxumalo Council Member August of MONITORING ANAND EVALUATION COMMITTEE Members Designation Appointed in own right Appointed Resigned No of meetings attended Fees (in rands) Dr Nyambeni Luruli Prof Shireen Motala Mr Edmund Nxumalo Prof Beverley Thaver Council Member Council Member Council Member Council Member June of 2 0 June of 2 0 June of 2 0 June of 2 0 Remuneration of Council Members Members of Council and its permanent and sub-committees who are not CHE employees or government officials qualify for daily allowances for services rendered to the CHE in accordance with the Treasury Regulations and Directives. Risk Management The CHE has reviewed its risk profile during the course of the year to consider the extent to which potential events may have an impact on the achievement of the organisation s objectives. Emerging events were assessed from two perspectives likelihood and impact and a number of risks, predominantly on a strategic level, were identified and weighed. Materiality Framework As required by the Treasury Regulations, the Council has developed a materiality and significance framework appropriate to its size and circumstances. 64

67 Internal Audit The internal audit function is contracted out as the Council does not consider it appropriate to establish an in-house internal audit function due to the nature and size of the CHE. However, the ARC is responsible for monitoring the internal audit function and for evaluating the effectiveness of the internal controls in place, including recommending improvements to Council where appropriate. Auditors As required by the PFMA, the external auditor of the CHE is the Auditor-General of South Africa. Compliance with laws and regulations The ARC is responsible for monitoring compliance with applicable laws and regulations regarding financial matters and management and other related matters. Audit Report Matters in the Previous Year A consolidated strategic audit action plan was developed and implemented and this resulted in 13 audit findings from the internal auditors and 22 audit findings from external auditors being addressed. Supply Chain Management C There were no unsolicited bids. Fraud and Corruption The CHE has policies in place on fraud prevention, detection and reporting. No cases of fraud occurred during the year under review. However, the Council was made aware of fraud, which occurred in the 2007/08 financial year as a result of information provided by SARS in November This was reported to the South African Police Services and a criminal case was opened on 14 March An investigation is currently being conducted. Subsequent events The Council is aware of one subsequent event arising after the end of the financial year which is disclosed in note 25 of the Financial Statements. Minimising Conflict of Interest Council and sub-committee members are required to declare any conflict of interest for the record at the beginning of each Council or sub-committee meeting. 65

68 Code of Conduct There is a code of conduct in place for staff but not Council and sub-committees members. The Council recognises that this is a shortcoming and is committed to developing a Code of Conduct for members going forward. Health, Safety and Environmental Issues The CHE regards the health and safety of its employees and people affected by the organisation s operations to be of vital importance. The CHE s primary objective is therefore to achieve and maintain the highest practicable level of health and safety control. In line with this and in fulfilment of the requirements stipulated in the Occupational and Safety Act, 1993 (Act No. 85 of 1993), the CHE has established a Health and Safety Committee that monitors the health and safety of employees in the work environment and identifies potential health and safety threats that require addressing. The CHE is also cognisant of the need to ensure that the work environment is environmentally sustainable. In this regard, efforts have been made to ensure that lights and other appliances are switched off appropriately at the end of the working day and paper is recycled. The Council is, however, aware that the actions taken to date are limited and require further development. Social Responsibility The CHE has been involved in two corporate social responsibility initiatives during the year under review. These are: Cell C s Take a Girl Child to Work initiative held on 29 May The CHE hosted 14 girls as part of the programme that aims to inspire girls and expose them to the world of work. Nelson Mandela Day initiative held on 18 July The CHE staff spent the day at an orphanage, Dimponyana Tsa Lapeng in Olievenhoutbosch, Centurion painting the home. The CHE has undertaken to adopt the home and will continue to provide support where possible, on an ongoing basis. Audit and Risk Committee Report See page 82, in Part E, for the full report. 66

69 Council Members (Appointed by the Minister of Higher Education and Training) Name Designation Other CHE committees Qualification Area of Expertise Directorships / Council Memberships Prof Themba Mosia Chairperson EXCO PhD Medical education Governance Quality assurance Management Leadership NSFAS Prof Yunus Ballim Member EXCO HEQC - Chairperson PhD Civil engineering education Higher education leadership and management None Mr Buku Luzuko Member Master of Social Sciences Higher Education Media Management and Studies Public Relations Urban Studies None Prof Christiaan de Beer Member LL.D Higher Education None Dr Yvonne Dladla Member HRRC - Chairperson PhD Sociology and Social Work Organisational development Social policy administration Human resource management Research Productivity management Strategy development and Implementation Thebe Tourism Group (Pty) Ltd Thebe Foundation Kelly Group (Pty) Ltd YD Consulting (Pty) Ltd. YAME Unique Crafts (Pty) Ltd Prof Magda Fourie- Malherbe Member PhD Higher Education management and leadership. Teaching and learning, student success Umalusi C 67

70 Name Designation Other CHE committees Qualification Area of Expertise Directorships / Council Memberships Prof André Keet Member PhD Education Management, Law and Policy. Higher Education Transformation Social Justice, Social Cohesion and Reconciliation. Human Rights and Human Rights Education. Chair of Board, Centre for Education Rights and Transformation, University of Johannesburg Council Member, INSETA Committee Member, Centre for Education Law and Policy, University of Pretoria EECA Consulting, Shareholder Council Member, Stellenbosch University Mr Casper Kruger Member BEd Education Management Technical, vocational education and training Trustee, Access Trust. Board Member, SA Society of Co-operative Education (SASCE) representing the national South African College Principals Organisation. Ms Malebo Ledwaba Member BTech Management Management Quality assurance None Dr Nyambeni Luruli Member MEC PhD (Polymer Science) Analytical chemistry Polymer science Polymer conversion Student training None Dr Pamela Maseko Member PhD Sociolinguistics and sociology of language Language Policy and Planning in Education (Focus on African context) None Dr Bandile Masuku Member EXCO Fellow of the College of Obstetrics and Gynaecology (FCOG) Communications Policy development Community work Medical skills Leadership Tshwane University of Technology 68

71 Name Designation Other CHE committees Qualification Area of Expertise Directorships / Council Memberships Dr Letticia Moja Member EXCO MMed Health professions education and training Management of health profession s training Medical education None Prof Shireen Motala Member MEC PhD Higher education policy None Ms Dora Ndaba Member HRRC BTech Transport and Logistics Business and economy Industrial relations Research and marketing Water Research Commission National Regulator for Compulsory Specifications Agricultural Research Council Ms Nombulelo Nxesi Member Masters in Business Leadership Strategy and leadership Governance Policy analysis None Mr Edmund Nxumalo Member MEC HRRC Masters Public Administration Quality assurance Skills development training Human resource management Human resource development Technology Demonstration Centre Tshwane South College Dr Kimberley Porteus Member Doctor of Philosophy, Education Pedagogical innovation in higher education Teacher professional development Relationship between higher education and rural community development None Prof Simeon Ripinga Member D.Ed Leadership and Governance Teaching and Student Learning Academic Training and Development Managing Director ThinkSuccess Pty Ltd C 69

72 Name Designation Other CHE committees Qualification Area of Expertise Directorships / Council Memberships Prof Ratnamala Singh Member D.Phil Philosophy International and Comparative Higher Education Policy Quality Assurance Higher Education and Society Science Policy None Dr Zilungile Sosibo Member PhD (Adult Education) Teacher education (T&L) Curriculum development Research Umalusi Prof Beverley Thaver Member MEC PhD (Education) Higher education None Dr Mvuyo Tom Member M.Fam Med Strategic Leadership and Governance Public Policy Development and Management Director Nelson Mandela Institute Director Fore Hare Trading Solutions Masibumbane Development Organisation Trustee Fort Hare Foundation Trustee Senzwa Family Trust Prof Sophie Mogotlane Co-opted member PhD Community health Research None Dr Molapo Qhobela Co-opted member PhD Higher education Governance Planning Trustee Cradle of Human Kind Director South African Actuaries Development Programme Trustee UNISA Foundation Dr Edmund Zingu Co-opted member HEQC PhD (Physics) Physics Education None 70

73 Name Designation Other CHE committees Qualification Area of Expertise Directorships / Council Memberships Non-Voting Dr Thomas Auf der Heyde (DST) Department of Science and Technology PhD (Chemistry) Higher education and science and technology management and policy Africa Institute of South Africa Mr Ahmed Essop CHE - CEO Masters in International Development Education Higher education Umalusi SAQA QCTO Old Mutual Education Trust Ms Joyce Mashabela (QCTO) Quality Council for Trades and Occupations MA Education and administration Umalusi SAQA QCTO Dr Diane Parker (DHET) Department of Higher Education and Training EXCO HEQC PhD Teacher education Higher education Mathematics education Peta Source cc (50% partnership) Dr Mafu Rakometsi (Umalusi) Mr Joe Samuels (SAQA) Umalusi PhD General and further education and training curriculum and examinations South African Qualifications Authority ARC MPhil Adult education Continuing education policy Qualifications Quality assurance Umalusi Council SAQA QCTO Helderberg College Council SAQA QCTO Umalusi Dr Albert van Jaarsveld (NRF) National Research Foundation PhD Zoology Angelfish Investments 334 (Dormant) C 71

74 72

75 Part D: Human Resource Management

76 OVERVIEW For an overview of the human resources section please see page 37 Part B. Human Resources Oversight Statistics Personnel cost by programme Directorate Total Expenditure for the entity Personnel Expenditure Personnel expenditure as a % of total expenditure Number of employees Average personnel cost per employee (R 000) (R 000) (R 000) (R 000) Administration* % Monitoring and Evaluation Programme Accreditation National Standards and Reviews % % % Institutional Audits % TOTAL % * Administration refers to Corporate Services, the Chief Executive Officer s office and Quality Promotion and Capacity Development Personnel cost by salary band Level Personnel Expenditure % of personnel expenditure to total personnel cost Number of employees Average personnel cost per employee (R 000) Top Management % 0 0 Senior Management % Professional qualified % Skilled % Unskilled 276 1% TOTAL %

77 Performance Rewards Level Performance rewards Personnel Expenditure % of performance rewards to total personnel cost Top Management % Senior Management % Professional qualified % Skilled % Unskilled % TOTAL % Training Costs Directorate Personnel Expenditure Training Expenditure Training Expenditure as a % of personnel cost Number of employees trained Average training cost per employee (R 000) (R 000) Administration* % Monitoring and Evaluation Programme Accreditation National Standards and Reviews % % % 5 6 Institutional Audits % 5 13 TOTAL % * Administration refers to Corporate Services, the Chief Executive Officer s office and Quality Promotion and Capacity Development # excludes accommodation and travelling D 75

78 Employment and vacancies Directorate 2013/2014 Number of Employees 2014/2015 Approved posts 2014/2015 Number of Employees 2014/2015 Vacancies % of vacancies Administration* % Monitoring and Evaluation Programme Accreditation **National Standards and Reviews % % Institutional Audits % TOTAL % * Administration refers to Corporate Services, the Chief Executive Officer s office and Quality Promotion and Capacity Development ** Due to the merging of two directorates, one position was removed the organisational structure Employment and vacancies (continued) Level 2013/2014 Number of Employees 2014/2015 Approved Posts 2014/2015 Number of Employees 2014/2015 Vacancies % of Vacancies Top Management % Senior Management % Professional qualified % Skilled % Semi-skilled % Unskilled % TOTAL % 76

79 Employment Changes Level Employment at beginning of period Appointments Terminations Employment at end of the period Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled TOTAL Note: The lines above do not add up horizontally There have been internal transfers/promotions of staff members and two directorates merged Reasons for Staff Leaving Reason Number % of total number of staff leaving Death 0 0% Resignation % Dismissal % Retirement 0 0% Ill Health 0 0% Expiry of contract % *Other % TOTAL % * Due to the merging of two directorates, one position was removed from the organisational structure Labour Relations: Misconduct and disciplinary action Nature of disciplinary Action Number D Verbal Warning 1 Written Warning 0 Final Written Warning 0 Dismissal 1 77

80 Equity Target and Employment Equity Status Levels Male African Coloured Indian White Current Target Current Target Current Target Current Target Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled Total Levels Female African Coloured Indian White Current Target Current Target Current Target Current Target Top Management Senior Management Professional qualified Skilled Semi-skilled Unskilled Total Equity Target and Employment Equity Status (continued) Levels Disabled Staff Current Target Top Management 0 0 Senior Management 0 0 Professional qualified 0 1 Skilled 0 0 Semi-skilled 0 0 Unskilled 0 0 TOTAL

81 Part E: Annual Financial Statements Index Page Statement of Responsibility 80 Audit and Risk Committee Report 82 Accounting Authority Report 87 Statement of Financial Position 90 Statement of Financial Performance 93 Statement of Changes in Net Assets 92 Cash Flow Statement 93 Statement of Comparison of Budget and Actual Amounts Accounting Policies Notes to the Annual Financial Statements

82 STATEMENT OF RESPONSIBILITY The Council is required to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the Council to ensure that the annual financial statements fairly present the state of affairs of the Council on Higher Education (CHE) as at the end of the financial year and the results of its operations and cashflows for the period then ended. The external auditors were engaged to express an independent opinion on the annual financial statements and were given unrestricted access to all financial records and related data. The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board. The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The Council acknowledges that it is ultimately responsible for the system of internal financial control established by the CHE and places considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the Council sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the CHE and all employees are required to maintain the highest ethical standards in ensuring the CHE s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the CHE is on identifying, assessing, managing and monitoring all known forms of risk across the CHE. While operating risk cannot be fully eliminated,the CHE endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Council is of the opinion, based on the information and explanations given by management in response to the internal and external audit reports, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. Where deficiencies were noted, the controls are being strengthened. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit. The CHE is financially dependent on a transfer payment from the Department of Higher Education and Training for the continued funding of its operations. The annual financial statements are prepared on the basis that the CHE is a going concern and that the 80

83 Department of Higher Education and Training will transfer the payment as listed in the Estimates of National Expenditure (ENE) to the CHE. The Council is primarily responsible for the financial affairs of the CHE. The external auditors are responsible for independently reviewing and reporting on the CHE s annual financial statements. The annual financial statements have been examined by the CHE s external auditors and their report is presented on page 84. The annual financial statements set out on page 87 to 125 which have been prepared on the basis that it is a going concern, were approved by the Council on 29 July 2015 and were signed on its behalf by: Prof N. Themba Mosia Chairperson Dr Denyse Webbstock Acting Chief Executive Officer E 81

84 AUDIT AND RISK COMMITTEE REPORT Audit and Risk Committee members and attendance The Audit and Risk Committee consists of the members listed here under and should meet four times per annum in accordance with its approved terms of reference. During the current year five meetings were held. Name of member Number of meetings attended Dr D Tromp (Chairperson) 5 of 5 Mr M Chilenge 5 of 5 Mr J Samuels 3 of 5 Prof Q Vorster* 4 of 4 Ms V Memani-Sedile* 3 of 4 * Appointed May 2014 Audit and Risk Committee responsibility The Audit and Risk Committee reports that it has complied with its responsibilities arising from section 55(1)(a) of the PFMA and Treasury Regulations section The Audit and Risk Committee also reports that it has adopted appropriate formal terms of reference through its audit and risk committee charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein. The effectiveness of internal control In line with the PFMA requirements, Internal Audit provides the Audit and Risk Committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various reports of the Internal Auditors, the audit report on the annual financial statements, and the management report of the Auditor-General of South Africa (AG SA), it was noted that some matters were reported that indicate some minor deficiencies in the system of internal control and deviations there from. Accordingly, we can report that the system of internal control over financial reporting for the period under review was satisfactory. Assurance was obtained that the identified problems are receiving the necessary attention. Evaluation of annual financial statements The Audit and Risk Committee has: reviewed and discussed the audited annual financial statements to be included in the annual report, with the AG SA and the Council; reviewed the AG SA s management report and management s response thereto; 82

85 reviewed changes in accounting policies and practices; reviewed the entity s compliance with legal and regulatory provisions; reviewed significant adjustments resulting from the audit. The Audit and Risk Committee concurs with and accepts the AG SA s report on the annual financial statements, and is of the opinion that the audited annual financial statements should be accepted and read together with the report of the AG SA. Internal audit The Audit and Risk Committee is satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the CHE and its controls. Auditor-General of South Africa The Audit and Risk Committee has met with the AG SA to ensure that there are no unresolved issues. Recommendation At its meeting held on 27July 2015, the Audit and Risk Committee recommended the adoption of the financial statements to the Council. Dr D Tromp Chairperson of the Audit and Risk Committee E 83

86 REPORT OF THE AUDITOR-GENERAL TO THE PARLIAMENT ON THE Report on the Financial Statements Introduction 1. I have audited the financial statements of the Council on Higher Education (CHE) set out on pages 90 to 125, which comprise the statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets, cash flow statement and the statement of comparison of budget information with actual amounts for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information. Accounting authority s responsibility for the financial statements 2. The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practices (SA Standards of GRAP)and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor-general s responsibility 3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. 84

87 Opinion 6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the CHE as at 31 March 2015 and its financial performance and cash flows for the year then ended, in accordance with SA Standards of GRAP, and the requirements of the PFMA. Report on other Legal and Regulatory Requirements 7. In accordance with the Public Audit Actof South Africa, 2004 (Act No. 25 of 2004)and the general notice issued in terms thereof. I have a responsibility to report findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters. Predetermined objectives 8. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2015: Programme 1: Advise the Minister at his request or on own initiative on page 43 Programme 2: Research Projects on page 44 Programme 3: Dissemination of research findings on page 44 Programme 10: Accreditation of new programmes submitted by public and private higher education institutions on page 48 Programme11: Re-accreditation of programmes offered by private higher education institutions on pages 49 Programme 15: Training for programme accreditation and re-accreditation on page 50 Programme 16: Quality assurance forums for public and private institutions and professional bodies on page I evaluated the reported performance information against the overall criteria of usefulness and reliability. 10. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury s Framework for managing programme performance information (FMPPI). E 85

88 11. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete. 12. I did not identify any material findings on the usefulness and reliability of reported performance information for the following programmes: Programme 1: Advise the Minister at his request or on own initiative Programme 2: Research Projects Programme 3: Dissemination of research findings Programme 10: Accreditation of new programmes submitted by public and private higher education institutions Programme 11:Re-accreditation of programmes offered by private higher education institutions Programme 15:Training for programme accreditation and re-accreditation Programme 16: Quality assurance forums for public and private institutions and professional bodies Compliance with legislation 13. I performed procedures to obtain evidence that the entity has complied with applicable laws and regulations regarding financial matters, financial management and other related matters. 14. I did not identify any instances of material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA. Internal control 15. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. I did not identify any significant deficiencies in internal control. Pretoria 29 July

89 ACCOUNTING AUTHORITY REPORT The Council submits its report for the year ended March 31, Mandate and Objectives of the Council on Higher Education The Council on Higher Education (CHE) is a public entity listed under Schedule 3A of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended. It adheres to principles of good governance, financial and performance management and is held accountable for these to the Parliament of the Republic of South Africa. The CHE was established as a juristic person in terms of section 4 of the Higher Education Act (Act 101 of 1997), as amended and as the Quality Council for Higher Education in terms of the National Qualifications Framework Act (Act 67 of 2008). In summary, the main areas of work of the CHE are: To provide advice to the Minister of Higher Education and Training on all higher education matters, at the Minister s request and proactively. To develop and implement a system of quality assurance for all higher education institutions, including private providers of higher education, which includes programme accreditation, institutional audits, national reviews, and capacity development and quality promotion. To develop and manage the Higher Education Qualifications Sub-Framework (HEQSF) and the development of higher education qualifications. To monitor the state of the higher education system in relation to national policy goals and international trends. To contribute to the development of higher education through facilitating intellectual engagement on key issues in partnership with relevant stakeholders. 2. Role and responsibilities The Council fulfils the role of the Accounting Authority in terms of section 51 of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended. As the Accounting Authority, the Council acts in a fiduciary capacity and its responsibilities include: overseeing effective, efficient and transparent systems of financial and risk management and internal control, internal audit and procurement; taking effective and appropriate steps to collect revenue due, to prevent irregular, fruitless and wasteful expenditure, and prevent losses from criminal conduct and expenditure as a result of non compliance with operational policies; managing and safeguarding the assets, liabilities, revenue and expenditure of the CHE; ensuring compliance with applicable legislation; and ensuring that there is an effective and appropriate disciplinary system for failure to comply with the PFMA and the internal control system. E 87

90 3. Going concern The CHE is financially dependent on a transfer payment from the Department of Higher Education and Training. On the basis that the transfer payment has been listed in the Estimates of National Expenditure, the Council believes that the CHE will continue to be a going concern in the year ahead. For this reason, the Council has prepared the annual financial statements on the basis that it is a going concern. 4. Governance of the Council on Higher Education Council The Council comprises a Chairperson appointed for five (5) years and thirteen (13) ordinary Council members each appointed for a period of four (4)years. Eight (8) non-voting members are appointed to the Council, nominated respectively by the Director-General of the Department of Higher Education and Training, the Provincial Heads of Education, the Director-General of the Department of Science and Technology, the Director-General of the Department of Labour, the National Research Foundation and the Chief Executive Officers of the: South African Qualifications Authority (SAQA), the General and Further Education and Training Quality Assurance Council (Umalusi) and the Quality Council for Trades and Occupations (QCTO) in their official capacities. Three members can be coopted by the Council. All members who served on the Council during the year under review were appointed in terms of the Higher Education Act (Act101 of 1997) as amended. Committees and Sub-committees Permanent Committee The Council has one (1) permanent committee, the Higher Education Quality Committee (HEQC). The HEQC has executive responsibility for quality promotion and quality assurance in higher education. The functions of the HEQC in terms of the Higher Education Act are to: promote quality in higher education; audit the quality assurance mechanisms of higher education institutions; and accreditation of programmes of higher education. Sub-committees On 31 March 2015 four (4) Council sub-committees were in place and were fully functional, namely: 1. Executive Committee (EXCO); 2. Audit and Risk Committee (ARC); 88

91 3. Human Resources and Remuneration Committee (HRRC); and 4. Monitoring and Evaluation Committee (MEC). The members of sub-committees are appointed for the specific knowledge and skills they bring to their respective Sub- Committees. During the year, the Council and its sub-committees, including its permanent committee responsible for quality assurance, the HEQC, have functioned effectively in terms of the CHE s statutory mandate and have adhered to principles of good governance. 5. Subsequent events The Council is aware of one subsequent event arising after the end of the financial year which is disclosed in note 25 of the Financial Statements. 6. Controlling entity The CHE has reviewed its risk profile during the course of the year to consider the extent to which potential events may have an impact on the achievement of the organisation s objectives. Emerging events were assessed from two perspectives likelihood and impact and a number of risks, predominantly on a strategic level, were identified and weighed. 7. Economic entity As required by the Treasury Regulations, the Council has developed and agreed on a materiality and significance framework appropriate to its size and circumstances. 8. Internal audit The internal audit function is under the direction of the Audit and Risk Committee and ultimately the Council, to evaluate the effectiveness of the CHE s systems of internal controls, and to recommend improvements where appropriate. The internal audit function is currently outsourced. 9. Auditors As required by the PFMA,the current external auditor of the CHE is the Auditor General of South Africa. E 89

92 Statement of Financial Position as at March 31,2015 Figures in Rand Note(s) Assets Current Assets Cash and cash equivalents 3 19,102,406 19,730,204 Receivables from exchange transactions 2 143, ,447 Prepayments 4 290, ,501 19,536,273 20,253,152 Non-Current Assets Property, plant and equipment 5 32,108,926 32,751,660 Intangible assets 6 3,490,468 3,291,036 35,599,394 36,042,696 Total Assets 55,135,667 56,295,848 Liabilities Current Liabilities Payables from exchange transactions 7 6,074,259 5,069,491 Provisions 9 762, ,931 6,836,610 5,757,422 Non-Current Liabilities Unspent conditional grants and receipts 10 3,992,329 5,231,439 Total Liabilities 10,828,939 10,988,861 Net Assets 44,306,728 45,306,987 Reserves Revaluation reserve 4,914,475 4,914,475 Accumulated surplus 39,392,253 40,392,512 Total Net Assets 44,306,728 45,306,987 90

93 Statement of Financial Performance for the year ended 31 March 2015 Figures in Rand Note(s) Revenue Exchange Revenue 3,548,825 3,861,005 Interest received- investment 11 1,263, ,263 Non exchange revenue 12 43,928,110 43,184,847 Total revenue 48,740,130 47,858,115 Expenditure Personnel 13 (24,998,707) (23,476,432) Depreciation and amortisation (2,250,810) (1,858,963) Interest paid 20 (990) (154,532) Debt impairment (7,000) (126,553) Repairs and maintenance (1,036,292) (2,193,240) Loss on disposal of assets - (35,825) General expenses 14 (21,446,590) (22,916,603) Total expenditure (49,740,389) (50,762,148) Deficit for the year (1,000,259) (2,904,033) E 91

94 Statement of Changes in Net Assets for the year ended 31 March 2015 Figures in Rand Revaluation Accumulated Total net reserve surplus assets Balance at April 01, ,296,538 43,296,538 Changes in net assets Revaluation of Land and Building 4,914,475-4,914,475 Net income (losses) recognised directly in 4,914,475-4,914,475 net assets Restated Deficit for the year - (2,904,032) (2,904,032) Total recognised income and expenses for the year 4,914,475 (2,904,032) 2,010,443 Total changes 4,914,475 (2,904,032) 2,010,443 Balance at April 01, ,914,475 40,392,512 45,306,987 Changes in net assets Deficit for the year - (1,000,259) (1,000,259) Total changes - (1,000,259) (1,000,259) Balance at March 31, ,914,475 39,392,253 44,306,728 92

95 Cash Flow Statement for the year ended 31 March 2015 Figures in Rand Note(s) Cash flows from operating activities Receipts Grants 43,928,110 43,246,953 Interest income 1,263, ,263 Other receipts 3,548,825 3,861,005 48,740,130 47,920,221 Payments Employee costs (24,998,708) (23,476,432) Suppliers (22,561,712) (23,311,034) Finance costs - (173,102) (47,560,420) (46,960,568) Net cash flows from operating activities 15 1,179, ,653 Cash flows from investing activities Purchase of property, plant and equipment 5 (1,163,007) (2,201,150) Proceeds from insurance claims on property, - 24,359 plant and equipment Purchase of other intangible assets 6 (644,501) (1,077,188) Net cash flows from investing activities (1,807,508) (3,253,979) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (627,798) (2,294,326) 19,730,204 22,024, ,102,406 19,730,204 E 93

96 Statement of Comparison of Budget and Actual Amounts for the year ended 31 March 2015 Budget on Cash Basis Figures in Rand Approved budget Adjustments Final Budget Actual amounts on comparable basis Difference between final budget and actual Reference Statement of Financial Performance Revenue Revenue from exchange transactions Exchange revenue 1,900, ,000 2,270,000 3,548,825 1,278,825 Interest receivedinvestment Total revenue from exchange transactions 250, ,000 1,263,195 1,013,195 2,150, ,000 2,520,000 4,812,020 2,292,020 Revenue from non-exchange transactions Non exchange revenue 44,866,000 (370,000) 44,496,000 43,928,110 (567,890) Transfer revenue Roll-over funds - 12,971,309 12,971,309 12,971,309 - Total revenue from nonexchange transactions 44,866,000 12,601,309 57,467,309 56,899,419 (567,890) Total revenue 47,016,000 12,971,309 59,987,309 61,711,439 1,724,130 Expenditure Personnel (27,313,000) - (27,313,000) (24,998,707) 2,314,293 Depreciation and amortisation (2,250,039) - (2,250,039) (2,250,810) (771) Finance costs (990) (990) Debt impairment (7,000) (7,000) Repairs and maintenance (1,036,292) - (1,036,292) (1,036,292) - General expenses (16,416,669) (12,971,309) (29,387,978) (21,446,590) 7,941,388 Total expenditure (47,016,000) (12,971,309) (59,987,309) (49,740,389) 10,246,920 Reconciliation for non cash items 2015 Surplus 11,971,050 -Depreciation and amortisation 2,250,810 -Bad debts written off 7,000 Funds available for Roll over 14,228,860 94

97 Statement of Comparison of Budget and Actual Amounts (continued) for the year ended 31 March 2015 Budget differences Revenue from exchange transactions was higher than budget due to more applications for accreditation being received from private institutions. Revenue from non-exchange transactions is lower than budget due to the standards development pilot phase only being completed at the end of the current year. The late completion of the pilot phase meant the Directorate was not operating at full capacity. This Directorate has now been merged with National reviews in order to effectively carry out the CHE mandate. Employee costs are under budget due to vacancies that are in the organogram being unfilled during the financial year. General expenses were under budget due to delayed projects in directorates. These projects have been carried forward into the new financial year and completion is expected in the new financial year. E 95

98 Accounting Policies 1. Presentation of Annual Financial Statements The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board. These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise. They are presented in South African Rand. A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial statements, are disclosed below. 1.1 Significant judgements and sources of estimation uncertainty In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include: Trade receivables The CHE assesses its loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the CHE makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. The impairment for loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. Provisions Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 9-Provisions. Effective interest rate The CHE used the prime interest rate to discount future cash flows. 96

99 1.1 Significant judgements and sources of estimation uncertainty (continued) Allowance for doubtful debts On debtors an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the debtors carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition. 1.2 Property, plant and equipment Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used for more than one financial reporting period. The cost of an item of property, plant and equipment is recognised as an asset when: it is probable that future economic benefits or service potential associated with the item will flow to the CHE; and the cost of the item can be measured reliably. Property, plant and equipment are initially measured at cost. The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost. Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition. Where an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item s fair value was not determinable, its deemed cost is the carrying amount of the asset(s) given up. When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. E 97

100 1.2 Property, plant and equipment (continued) The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories. Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management. Major spare parts and standby equipment which are expected to be used for more than one period are included in property, plant and equipment. In addition, spare parts and standby equipment which can only be used in connection with an item of property, plant and equipment are accounted for as property, plant and equipment. Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised. Property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses. Property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses except for Land and Building which are carried at revalued amount being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value. Any increase in an asset s carrying amount, as a result of a revaluation, is credited directly to a revaluation surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit. Any decrease in an asset s carrying amount, as a result of a revaluation, is recognised in surplus or deficit in the current period. The decrease is debited in revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset. An impairment loss is only recognised when the recoverable amount of an asset is less than its carrying amount and is measured as the amount by which the carrying amount of an asset exceeds its recoverable amount. Subsequent to the recognition of an impairment loss on an asset, the related depreciation or amortisation charge should be adjusted for future periods. 98

101 1.2 Property, plant and equipment (continued) An impairment loss is recognised immediately in the surplus or deficit, except where an asset is carried at a revalued amount in accordance with another GRAP standard on property, plant and equipment. Such an impairment loss is treated as a revaluation decrease to the extent of the revaluation surplus available. The useful lives of items of property, plant and equipment have been assessed as follows: Item Land Buildings Furniture and fixtures Office equipment IT equipment Average useful life Indefinite 30 years 1-21 years 1-15 years 1-13 years The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate. Reviewing the useful life of an asset on an annual basis does not require the CHE to amend the previous estimate unless expectations differ from the previous estimate. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset. Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplusor deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. Revaluation of Land and Building Land and Buildings held for administrative purposes are carried at their revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent impairment losses. E 99

102 1.2 Property,plant and equipment (continued) Revaluations are done by an independent valuer every 3 years so that the carrying amounts do not differ materially from those that would be determined using fair values at the reporting date. The fair value of Land and Buildings measured using the valuation model is based on market values. Change in estimate After the revaluation of Land and Buildings, the useful lives of all category of assets related to the building are re-assessed. 1.3 Intangible assets An asset is identifiable if it either: is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract. An intangible asset is recognised when: it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and the cost or fair value of the asset can be measured reliably. The entity assesses the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management s best estimate of the set of economic conditions that will exist over the useful life of the asset. Where an intangible asset is acquired through an exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date. Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred. 100

103 1.3 Intangible assets (continued) An intangible asset arising from development (or from the development phase of an internal project) is recognised when: it is technically feasible to complete the asset so that it will be available for use or sale. there is an intention to complete and use or sell it. there is an ability to use or sell it. it will generate probable future economic benefits or service potential. there are available technical, financial and other resources to complete the development and to use or sell the asset. the expenditure attributable to the asset during its development can be measured reliably. Subsequent to initial recognition intangible assets are carried at cost less any accumulated amortisation and any impairment losses. An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided ona straight line basis over their useful life. The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date. Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life. Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item Computer software Internally generated intangible assets Usefullife 1-8 years years Intangible assets are derecognised: E on disposal; or when no future economic benefits or service potential are expected from its use or disposal. 101

104 1.4 Financial instruments Financial assets and financial liabilities are recognised on the CHE s Statement of Financial Position when the CHE becomes a party to the contractual provisions of the instrument. Financial instruments are initially measured at fair value, including transactional costs. Subsequent to initial recognition these instruments are measured as set out below: Financial Assets The CHE s principal financial assets are accounts receivable and cash and cash equivalents. Accounts receivables are subsequently measured at their amortised costs using the effective interest rate method and reduced by appropriate allowances for estimated irrecoverable amounts which represents fair value. Cash and cash equivalents are measured at fair value. Financial assets or a portion thereof are derecognised when the contractual rights to the benefits specifies in the contract expire and the CHE surrenders those rights or otherwise loses control of the contractual rights that comprise the financial asset. On derecognition, the difference between the carrying amount of the financial assets and the sum of the proceeds receivable and any prior adjustment to reflect the fair value of the asset that had been reported in net assets is included in surplus or deficit for the period. Trade and other payables Trade and other payables are stated at amortised cost using the effective interest rate method. 1.5 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Finance leases- lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balanceof the liability. 102

105 1.5 Leases (continued) Any contingent rents are expensed in the period in which they are incurred. Operating leases-lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.6 Employee benefits Short-term employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service to the CHE. The provisions for employee entitlements to wages, salaries and annual leave represent the amount that the CHE has a present obligation to pay as a result of employees services provided to the statement of financial position date. The provisions have been calculated at undiscounted amounts on current wages and salary rates. The expected cost of compensated absence is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payment as a result of past performance. Defined contribution plans Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to industry-managed (or state plans) retirement schemes are dealt with as defined contribution plans where the entities obligation under the schemes is equivalent to those arising in a defined contribution retirement plan. 1.7 Provisions and contingencies Provisions are recognised when the CHE has a present obligation as a result of a past event, for which it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation and a reliable estimate can be made of the obligation. All the provisions of the CHE are short-term in nature and thus ignore the effect of discounting. E 103

106 1.7 Provisions and contingencies (continued) Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the CHE settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense. A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits. 1.8 Revenue from exchange transactions Revenue from exchange transactions refers to revenue that accrued to the CHE directly in return for services rendered, the value of which approximate the consideration received or receivable. The CHE receives exchange revenue from the Private institutions as indicated below: Private institutions applications for accreditation: Institutions pay a non-refundable fee which is recognised as revenue based on the stage of completion; Site Visits: Site visit fees, including the associated costs incurred, are invoiced to the institutions and recognised in revenue on accrual basis; and Other revenue such as conditions, representations, reaccreditation and referrals for private institutions are recognised as revenue on accrual basis. Interest received Interest received from favourable bank deposits is recognised as revenue from exchange transactions through the statement of financial performance in the period it is received. 1.9 Revenue from non-exchange transactions The transfer from DHET is recognised when it is probable that future economic benefits will flow to the CHE and when the amount can be measured reliably. A transfer is recognised as revenue to the extent that there is no further obligation arising from the receipt of transfer payment. 104

107 1.9 Revenue from non-exchange transactions (continued) Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transfer or. Unspent conditional grant Unspent conditional grants are disclosed as liabilities and only realised as revenue through the statement of financial performance when the conditions related to the grant are met Translation of foreign currencies Foreign currency transactions A foreign currency transaction is recorded, on initial recognition, in Rands, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At each reporting date: foreign currency monetary items are translated using the closing rate; non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous annual financial statements are recognised in surplus or deficit in the period in which they arise. When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is recognised in surplus or deficit, any exchange component of that gain or loss is recognised in surplus or deficit. Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cashflow Fruitless and wasteful expenditure E Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. 105

108 1.11 Fruitless and wasteful expenditure (continued) All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance Irregular expenditure Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including- (a) (b) (c) The PFMA; or the State Tender Board Act, 1968 (Act No. 86 of 1968),or any regulations made in terms of the Act; or any provincial legislation providing for procurement procedures in that provincial government. All expenditure relating to irregular expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of expenses and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. National Treasury practice note no.4 of 2008/2009 which was issued in terms of sections 76 (1) to 76 (4) of the PFMA requires the following (effective from 1 April 2008): Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned Budget information The CHE is typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar. General purpose financial reporting by the CHE shall provide information on whether resources were obtained and used in accordance with the legally adopted budget. The financial statements and budget are not presented on the same basis as the financial statements are prepared on accrual basis and the budget on a cash basis of accounting. A reconciliation between the surplus/(deficit) for the period as per statement of financial performance and the budgeted surplus/(deficit) is included in the statement of comparison of budget and actual amounts. 106

109 1.14 Related parties The CHE operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the national sphere of government are considered to be related parties. Management are those persons responsible for planning, directing and controlling the activities of the CHE, including those charged with the governance of the CHE in accordance with legislation, in instances where they are required to perform such functions. Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by management in their dealings with the CHE. Only transactions with related parties not at arm s length or not in the ordinary course of business are disclosed Standards of GRAP not yet effective The following standards have been approved but are not effective at 31 March 2015: GRAP 105 on Transfers of Functions between Entities under Common Control; GRAP 106 on Transfers of Functions Between Entities not under Common Control; and GRAP 20 on Related Party Disclosures Events after reporting date Events after the reporting date are those events, both favourable and unfavourable, that occur betweenthe reporting and the date when the financial statements are authorised for issue. Two types of events can be identified: those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date) and; those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date). Adjusting events after the reporting date The CHE shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting date. Non-adjusting events after the reporting date E The CHE shall not adjust the amounts recognised in its financial statements to reflect nonadjusting events after the reporting date. 107

110 1.16 Events after reporting date (continued) The CHE shall disclose the following for each material category of non-adjusting event after the reporting date: a) The nature of the event; and b) An estimate of its financial effect, or a statement that such an estimate cannot be made. 108

111 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Receivables from exchange transactions Trade debtors 111, ,142 Less: Provision for doubtful debts - (96,553) Deposits 7,045 22,580 Over payment to supplier 9,000 45,225 Staff loans 16,245 4,053 Trade and other receivables pledged as security 143, ,447 Trade and other receivables were not pledged as security for any financial liability. Credit quality of trade and other receivables The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Fair value of receivables from exchange transactions The fair value of short term receivables approximates the carrying amount of the balance due to their short term maturity. Trade and other receivables past due but not impaired Trade and other receivables which are less than 3 months past due are not considered to be impaired. At March 31,2015, R0.00 (2014: R123,841) were past due but not impaired. The ageing of amounts past due but not impaired is as follows: 1 month past due - 18,000 2 months past due - 13,000 3 months past due - 97,208 The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable stated above. The CHE does not hold any collateral as security. E Trade receivables have not been discounted as the amount is not considered material. 109

112 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Cash and cash equivalents Cash on hand 2,609 1,932 Standard Bank: Current Account 1,825,936 1,427,266 Investec Investment Account 17,026,565 8,415,193 South African Reserve Bank Account 19,006 17,922 Standard Bank: Private Accreditation Funds 228,290 9,867,891 19,102,406 19,730,204 Credit quality of cash at bank and short term deposits, excluding cash on hand The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or historical information about counter party default rates. The CHE holds a short term investment account at Investec Bank where surplus cash is held during the year earning an average interest of 6% pa. This investment is accessible on a day s notice. 4. Prepayments Prepaid insurance and Licence fees Opening balance 136, ,213 Amounts realised to expenses during the year (136,501) (160,213) Additions for the period 290, , , ,

113 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 5. Property, plant and equipment Cost/ Valuation Accumulated depreciation Carrying value Cost/ Valuation Accumulated depreciation Carrying value and accumulated impairment and accumulated impairment Land 6,360,120-6,360,120 6,360,120-6,360,120 Buildings 27,865,363 (5,081,952) 22,783,411 27,665,650 (4,125,769) 23,539,881 Furniture and 1,977,409 (1,223,262) 754,147 1,820,324 (1,072,053) 748,271 fixtures Office 2,347,109 (840,783) 1,506,326 1,743,624 (526,025) 1,217,599 equipment IT equipment 2,919,261 (2,214,339) 704,922 2,716,540 (1,830,751) 885,789 Total 41,469,263 (9,360,337) 32,108,926 40,306,259 (7,554,599) 32,751,660 Reconciliation of property, plant and equipment Opening balance Additions Depreciation Total Land 6,360, ,360,120 Buildings 23,539, ,714 (956,183) 22,783,411 Furniture and fixtures 748, ,086 (151,210) 754,147 Office equipment 1,217, ,485 (314,759) 1,506,326 IT equipment 885, ,722 (383,587) 704,922 32,751,660 1,163,007 (1,805,739) 32,108,926 Reconciliation of property, plant and equipment Opening Additions Disposals Revaluations Depreciation Total balance Land 5,314, ,045,373-6,360,120 Buildings 19,756, ,668-3,869,103 (840,161) 23,539,881 Furniture and fixtures 701, ,434 (49,420) - (154,934) 748,271 Office equipment 582, ,490 (3,336) - (178,013) 1,217,599 IT equipment 858, ,558 (7,428) - (343,847) 885,789 E 27,213,173 2,201,150 (60,184) 4,914,476 (1,516,955) 32,751,660 During the year, assets with a cost price of R2,170,782 (2014: R1,395,394) had fully depreciated, but were still in use. 111

114 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 5. Property,plant and equipment (continued) Details of properties The 7580 square metre property is located at 1 Quintin Brand, Persequor Technopark, Pretoria. The title deed number is T4934/2009. The property was revalued at 31st March 2014 by Onyx Valuation Services under Mr Barry Richardson, a professional valuer, registration number 4500/7. Revalued amount as at 31 March ,900,000 - Acquisitions after revaluation 199,714 - Depreciation (956,183) Carrying Amount 29,143,531 Change in estimate After the revaluation of Land and Buildings at the end of the last reporting date, the useful lives of all category of assets related to the building that were previously recorded with useful lives of 10 years were revised such that they are aligned to the main building which has a useful life of 30 years. It is the CHE policy to revalue Land and Buildings every three years. As at 31 March 2014, the remaining estimated useful life of the building was 23 years and 8 months. 6. Intangible assets Internally generated Computer software, other Cost/ Valuation Accumulated amortisation and accumulated impairment Carrying value Cost/ Valuation Accumulated amortisation and accumulated impairment Carrying value 4,158,202 (1,073,786) 3,084,416 3,783,320 (786,509) 2,996,811 1,096,052 (690,000) 406, ,431 (532,206) 294,225 Total 5,254,254 (1,763,786) 3,490,468 4,609,751 (1,318,715) 3,291,

115 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 6. Intangible assets (continued) Reconciliation of intangible assets Opening Additions Amortisation Total balance Internally generated 2,996, ,881 (287,277) 3,084,416 Computer software, other 294, ,620 (157,794) 406,052 3,291, ,501 (445,071) 3,490,468 Reconciliation of intangible assets Opening Additions Amortisation Total balance Internally generated 2,386, ,441 (233,504) 2,996,811 Computer software, other 168, ,747 (108,504) 294,225 2,555,856 1,077,188 (342,008) 3,291,036 Pledged as security No intangible assets are pledged as security. Internally generated Intangibles Internally generated intangible assets (Software) relates to development costs of the Higher Education Quality Committee (HEQC) and the Higher Education Qualifications Sub- Framework (HEQSF) online systems. These two systems are owned by the CHE and were developed to enhance the CHE s process of receiving and processing applications for accreditation from institutions and meet the definition of internally generated intangible assets according to GRAP 31 on Intangibles. These systems are continuously developed with additional functionality and these development costs are capitalised as soon as they meet the Intangibles criteria. E 113

116 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Payables from exchange transactions Trade payables 1,922,794 4,403,203 Accreditation fees received in advanced 2,748, ,250 Accrued bonus 21,534 29,038 Accruals 1,381,676-6,074,259 5,069,491 CHE pays all its trade and other payables within 30 days of receipt of invoice in accordance with the terms of the PFMA and Treasury Regulations. The fair value of payables approximate the carrying amount due to their short term nature. 8. Operating lease liability Current liabilities 125, ,730 Over payment to supplier - (45,225) 125, , Provisions Reconciliation of provisions Opening Additions Utilised during Total balance the year Leave pay provision 687, ,074 (202,654) 762,351 Reconciliation of provisions Opening Additions Utilised during Total balance the year Leave pay provision 492, , ,931 SARS interests and penalties (Note 20) 316,531 - (316,531) - 808, ,531 (316,531) 687,

117 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Provisions (continued) Leave pay provision The leave pay provision relates to vesting leave pay to which employees may become entitled upon leaving the employment of the CHE. The provision is utilised when employees are paid for their accumulated leave. There are no expected reimbursements of this provision. 10. Unspent conditional grants and receipts In 2010, the National Treasury granted approval to the DHET to transfer an additional R9 million to the CHE for the implementation of the Standards Development directorate which is part of the expanded mandate of the CHE resulting from the promulgation of the NQF Act. Unspent conditional grants and receipts comprises of: Unspent conditional grants and receipts Deferred Income 3,992,329 5,231,439 Movement during the year Balance at the beginning of the year 5,231,439 6,528,286 Income recognition during the year (1,239,110) (1,296,847) 3,992,329 5,231, Investment revenue Interest revenue Interest earned 1,263, , Non exchange revenue Operating grants Grants received from DHET 42,689,000 41,888,000 Deferred Income - Standards development 1,239,110 1,296,847 E 43,928,110 43,184,

118 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Employee costs Basic 20,209,687 20,072,077 Bonus 860, ,719 Medical aid- company contributions 807, ,753 UIF 156,750 58,722 Arbitration awards 188,648 - Leave paid 202,654 78,313 NEHAWU 8,635 7,920 Other short term costs 13,190 9,990 Defined contribution plans 2,037,208 1,392,256 Provident Fund: Administration fees 513, ,682 24,998,707 23,476,432 Included in employee costs are two CCMA arbitration awards relating to the resignation and dismissal of two employees respectively. The CHE won both cases. The first employee resigned and opened a case of constructive dismissal. The applicant was seeking R500,000 but the CCMA awarded the employee R30,000. The second employee was dismissed on the grounds of breach of employment contract and breach of performance management policy. The case was heard at the CCMA and finalised on the 31st March A settlement equivalent to five months remuneration (R158,648) of the employee was awarded. 116

119 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand General expenses Assessment rates & municipal charges 182, ,046 Auditors remuneration 1,545,062 1,349,525 Bank charges 38,650 38,385 Cleaning 385, ,786 Consulting and professional fees 8,329,592 7,739,273 Consumables 129, ,790 Outsourced services 83,780 61,471 Sundry expenses Garden services 38,402 39,522 Insurance 246, ,691 Conferences and seminars 47,619 9,599 Bursaries 38,980 46,040 IT expenses 1,092,924 2,450,611 Lease rentals on operating lease 280, ,941 Promotions 164, ,786 Levies 35,109 23,919 Magazines, books and periodicals 6,287 23,122 Recruitment costs 900, ,153 Office supplies Postage and courier 94,098 91,560 Printing and stationery 495, ,397 External meetings - workshops 41, ,115 Security services 190, ,959 Employee welfare 353, ,382 Subscriptions and membership fees 170,674 56,687 Telephone and fax 266, ,738 Training 772, ,291 Travel - local 2,365,555 3,674,036 Travel - overseas 68, ,701 Electricity 528, ,978 Honoraria 434, ,900 Venue & catering 673, ,918 Small assets below R5000 expensed Remuneration of Council and Committee members 890, ,659 Legal fees 554, ,699 E 21,446,590 22,916,

120 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand General expenses (continued) Prior period reclassification A reclassification between Employee costs and General expenses in the comparative year has been made. Employee welfare expenses amounting to R258,418 were incorrectly disclosed under employee costs last year and have now been reclassified and disclosed under General expenses. 15. Cash generated from operations (Deficit) surplus (1,000,259) (2,904,033) Adjustments for: Depreciation and amortisation 2,250,810 1,858,963 Loss on disposal of assets - 35,825 Debt impairment 7, ,553 Movements in provisions 74,420 (121,000) Changes in working capital: Receivables from exchange transactions 235, ,960 Prepayments (153,621) 23,712 Payables from exchange transactions 1,004,771 3,063,520 Unspent conditional grants and receipts (1,239,110) (1,296,847) 16. Auditors remuneration 1,179, ,653 External Auditors 1,068, ,267 Internal Auditors 476, , Commitments 1,545,062 1,349,525 Operating leases - as Lessee Minimum lease payments due - Within one year 125, ,505 - In second to fifth year inclusive 251, , ,

121 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand Commitments (continued) Operating lease payments represent rentals by the Council for photocopying machines. These leases are negotiated for periods ranging from 12 months to 120 months. The operating lease liability at the end of the period is R377,820 (2014: R141,505) The Council has capital commitments (PPE) of R491,850 (2014: R120,610) for the forthcoming year. Other commitments of R3,678,048 (2014: R5,734,233) relates to contracts and orders made by the Council for goods or services that have yet to be received. 18. Related parties ` Relationships Executive Authority DHET Public Entities under the DHET SAQA Members of Key Management Refer to note 19 Related party balances: Unspent conditional owed to related parties DHET (3,992,329) (5,231,439) Related party transactions: Consulting fees paid to related parties SAQA 1,577,315 1,285,708 Grant received from related parties DHET (42,689,000) (41,888,000) E 119

122 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 19. Members of Key Management and Council Emoluments Executive Management 2015 Emoluments Bonuses& Retention Acting Total performance related payments Allowance Allowance Chief Executive Officer * 1,240, ,240,921 Chief Financial Officer** 984,558 66, ,051,508 Acting Chief Financial 186, ,293 Officer*** Director: Corporate Services 964,902 72,368 90,058-1,127,328 Director: Institutional Audits 964,902 72,368 67,543-1,104,813 Director: Accreditation**** 241,226 12,785 68, ,237 Director: National Reviews and 507,152 59, ,271 Standards***** Director: Quality 471, ,963 Assurance Promotion and Coordination****** Director: Monitoring and Evaluation******* 964,902 72,368 90,058 10,629 1,137,957 6,526, , ,885 10,629 7,209,291 * Resigned February 2015 ** Appointed June 2014 *** April 2014 to May 2014 **** On secondment between April 2014 to December Joined CHE on a permanent basis from January 2015 ***** Appointed Sept 2014 (internally) ****** Appointed October 2014 ******* Acting CEO from March

123 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 19. Members of Key Management and Council Emoluments (continued) 2014 Emoluments Bonuses & Total performance related payments Chief Executive Officer 1,280,730-1,280,730 Chief Financial Officer 1,117,758 64,830 1,182,588 Director: Corporate Services 908,571 70, ,440 Director: Institutional Audits 908,571 70, ,440 Director: National Reviews 191, ,326 Director: Standards Development 83,837-83,837 Director: Monitoring and Evaluation 908,571 70, ,440 5,399, ,437 5,676,801 Council Members Remuneration 2015 Emoluments Total For services as Council and Committee members 890, , Emoluments Total For services as Council and Committee members 941, , Fruitless and wasteful expenditure Opening balance 471, ,531 Current year ,532 Condoned (990) - E 471, ,

124 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 20. Fruitless and wasteful expenditure (continued) Fruitless and wasteful expenditure for the current year relates to interest charged on Telkom invoices for late payment. The Financial Misconduct Committee conducted a disciplinary hearing and the CEO approved its recommendation that no negligence was found on the part of employees responsible for payments. Fraud Case Prior year charges relate to SARS penalties and interest on late payment incurred on Employee tax from This outstanding SARS liability was only discovered and settled in the previous financial year. The CHE discovered a fraudulent incident that occurred in February 2007 involving a cheque written out to SARS meant for Employee tax (PAYE). The cheque for R270, was drawn in favour of SARS but was deposited into an unknown account. A fraud case was opened with SAPS and investigations are currently being conducted. 21. Financial instruments disclosure Categories of financial instruments 2015 Financial assets At cost Total Trade and other receivables from exchange transactions 134, ,745 Cash and cash equivalents 19,102,406 19,102,406 Financial liabilities 19,237,151 19,237,151 Trade and other payables from exchange transactions Provisions At cost 6,074, ,351 Total 6,074, ,351 6,836,617 6,836,

125 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 21. Financial instruments disclosure (continued) 2014 Financial assets At cost Total Trade and other receivables from exchange transactions 386, ,447 Cash and cash equivalents 19,730,204 19,730,204 20,116,651 20,116,651 Financial liabilities Trade and other payables from exchange transactions At cost 5,069,487 Total 5,069,487 Provisions 687, ,931 5,757,418 5,757, Taxation The CHE is exempt from normal income tax as more than 80% of its income is defrayed from funds voted by Parliament. The CHE is exempted from the payment of Value Added Tax (VAT) on the transfer received. As a result, any VAT paid by the CHE is also not refundable by SARS. 23. Risk management Financial risk management Liquidity risk The CHE is only exposed to liquidity risk with regards to the payment of its trade payables. These trade payables are all due within the short-term. The CHE manages its liquidity risk by holding sufficient cash in its bank account, supplemented by cash available in a money market account. E 123

126 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 23. Risk management (continued) The table below analyses the CHE s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. At March 31, 2015 Less than Between1 Between 2 Over 5 1 year and 2 years and 5 years years Payables from exchange transactions 6,074, At March 31, 2014 Less than Between1 Between 2 Over 5 1 year and 2 years and 5 years years Payables from exchange transactions 5,069, Interest rate risk As the CHE has no significant interest-bearing assets, the CHE s income and operating cash flows are substantially independent of changes in market interest rates. Credit risk Credit risk consists mainly of cash deposits with banks and the Corporation for Public Deposits, staff loans and other receivables. The CHE only deposits cash with institutions with high quality credit standing and limits exposure to only one counter-party. The receivables are exposed to a high credit risk and their exposure to credit risk at year end were as follows: ` Financial instrument Bank 2,056,831 11,297,089 Trade debtors 111, ,142 Short term deposits 17,045,571 8,433,115 Trade Debtors age analysis as at 31st March Over 90 Days 60 Days 30 Days Current Total , ,

127 Notes to the Annual Financial Statements for the year ended 31 March 2014 Figures in Rand 24. Contingent Liability On the 9th of April 2014, the CHE was cited as a respondent in a case brought against North-West University by an applicant to the University who was not granted exemption from courses obtained in a prior degree by the University. Aside from the CHE, the respondents include the Minister of Higher Education and Training, SAQA and Higher Education South Africa. The applicant was seeking compensation for damages to the value of R10.9 million plus 15.5% interest from the date of the filing of papers from the respondents. The CHE, together with other respondents, were opposing the application. On the 26th of May 2015, the Judge ordered the case to be dismissed and each party to bear its own legal costs. The contingent liability is therefore CHE s contribution to the legal costs, the amount of which is yet to be determined. 25. Events after the reporting date On the 3rd July 2015, the CHE was cited as a fourth respondent by SANTS Private Higher Education Institution(Pty) Ltd. Aside from the CHE, the respondents include the Chairperson of the HEQC; Registrar: Private Higher Education Institutions; SAQA; the Minister of Higher Education and Training and the MEC of the Department of Education: KwaZulu-Natal. The applicant wants an order reviewing and setting aside the decision of the HEQC taken on the 10th June 2015 withdrawing the accreditation of the applicant for its BEd (Foundation Phase) and BEd (Intermediate Phase) programmes. The CHE will be opposing the application. The costs of the legal fees are not yet known. E 125

128 Notes

129 Notes

130 Notes

131 Published by The South African Council on Higher Education Telephone: +27 (12) Quintin Brand Street, Persequor Technopark Pretoria South Africa P O Box 94 Persequor Park 0020 South Africa ISBN: Design, Layout and Printing by Tirommoho Communications

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