Page 224 - DSD ANNUAL REPORT 2022-2

PART E: FINANCIAL INFORMATION

Notes of the Annual Financial Statements for the year ended 31 March 2022
Notes of the Annual Financial Statements for the year ended 31 March 2022

33. PRINCIPAL-AGENT ARRANGEMENTS

33.1. The Department acting as the principal
2021/22 2020/21
R’000 R’000
Include a list of the entities acting as agents for the department, the fee paid as
compensation to the agent and any other transactions undertaken
National Student Financial Aid Scheme 122 712
Total 122 712

Significant Terms and conditions of the arrangement
The National Student Financial Aid Scheme (NSFAS) administers the Social Work Scholarship programme on behalf of the Department. The
contract expired on 31 March 2022 and is in the process of extension. Based on the agreement, NSFAS is expected to pay scholarship fees
to a list of students provided by the Department. Payments by NSFAS are based on Scholarship Guidelines provided by the Department.

Risks and rewards of the scholarship fund
The main risk of the scholarship arrangement is that the funds earmarked for the Social Work Scholarship may be utilised to pay for
studies other than Social Work studies. This is monitored through monthly and quarterly reports. The main reward of this arrangement is
that the Department has successfully implemented the scholarship programme since the 2007/08 financial year through its partnership
with NSFAS.

Administration fees paid to NSFAS
In the 2020/21 financial year, the Department was required to pay an administration fee of R488 475.00 to NSFAS. Of which, an
amount of R366 356.25 was paid to NSFAS during the 2020/21 financial year. The remaining amount of R122 118.75 was paid to
NSFAS in the current financial year. In the 2021/22 financial year, there were no further administration fees payable to NSFAS in terms
of the Contract. NSFAS is expected to finalise close-out activities before 30 June 2022 after which unspent funds will be surrendered
by NSFAS to the Department.

Transactions
In the 2021/22 financial year, administration fees amounting to R122 118.75 were transferred to NSFAS. At the end of March 2022,
scholarship funds amounting to R52,220 million were in the bank account of NSFAS and had been recognised by NSFAS.

These funds can be reconciled based on the following:
• R67,238 million carried over from the 2020/21 financial year.
• Add: R1,788 million as Interest earned by NSFAS on the scholarship funds.
• Add: R4,132 million as refunds from universities.
• Less: R23,302 million as scholarship payments including current and prior year outstanding fees.
• Add: R2,364 million as Prefunded transfers from 2017 to 2019 academic years.

Implications of terminating the arrangement
Should the arrangement between the Department and NSFAS be terminated, unspent and uncommitted funds are expected to be paid
back to the Department for surrender to the National Treasury. The Department would have to source funding to be able to administer
the scholarship and pay current and outstanding university fees until all liabilities are settled.

224 DEPARTMENT OF SOCIAL DEVELOPMENT ANNUAL REPORT 2021/22