TECHNICAL VOCATIONAL EDUCATIONAL AND
TRAINING COLLEGES
AN INTRODUCTION TO THE IMPEMENTATION OF
A COMPLIANT RISK MANAGEMENT
PROCESS
July 2014
Risk Management in the TVET Sector
• National Overview
• Imperatives – Legislation and Governance
– Reportable non-compliances
• Implementation Challenges
• Proposed Solution
• Toolkit and Implementation Plan
• Way Forward
Risk Management in the TVET Sector
National Overview and Current State of Affairs (i)
• The percentage of colleges without any risk management function at
all has decreased from 32% to 4% during the twelve months ended
June 2014*
• Whilst this is undoubtedly a positive change, it is weakened by the
varying degrees of adoption of the Risk Management culture by
individual colleges and the lack of a comprehensive, standard
approach to risk identification and mitigation throughout the sector.
*
(Source: Quarterly SAICA project reports June 2013 and June 2014)
Risk Management in the TVET Sector
National Overview and Current State of Affairs (ii)
• 72% of the colleges’ risk management processes continue to be “work
in progress” WIP as at end June 2014*
• It is certain that the risk management systems and processes
apparently in place or being developed vary significantly between
TVETCs
• Due to these anticipated variations in approach, the quality of the
outcomes, from college to college, is also likely to vary considerably
*
(Source: Quarterly SAICA project report June 2014)
Risk Management in the TVET Sector
Imperatives – The Case for Risk Management (i)
• The FET Act requires colleges to implement a risk management
system no less effective than that prescribed to other state entities in
the Public Finance and Management Act. (Section 25 (1))
• The Public Sector Risk Management Framework published by the
National Treasury in 2010 as far as it pertains to PFMA
Risk Management in the TVET Sector
Imperatives – The Case for Risk Management (ii)
• Treasury Guidelines – whilst, under current legislation, some may not
be directly applicable to TVET colleges, they are considered to be
good practice, and the A-G does apply them
• The last report on corporate governance in the private sector
(King III), incorporating the principles of Risk Management has been
cited by the DHET as “best practice” and has been recommended for
adoption by the TVET sector
Risk Management in the TVET Sector
Imperatives – The Case for Risk Management (iii)
• King III emphasises the necessity for “risk management to be part of
an entity’s internal control and governance procedures”
• The Accounting Officer of a public entity is responsible for managing
the financial administration of the public entity and must, for this
purpose, take all reasonable steps to ensure that the public entity
has and maintains effective, efficient and transparent systems of
financial and risk management and internal control
Risk Management in the TVET Sector
Potential Consequences of Ignoring Risk management:
• Audit qualification – non compliance with requirements of FET Act
• Disciplinary action against the Accounting Officer for failure to meet
the legal requirements of the job, as defined in the Public Finance
Act
• Suspension of Council members for failure to ensure that there are
adequate checks, controls and balances in place to mitigate risks that
may adversely affect the college’s performance
Risk Management in the TVET Sector
Potential Consequences of Ignoring Risk management:
• Additional matters raised in the external auditor’s management
report, potentially affecting the achievement of key performance
indicators
• Increased focus on Risk Management by the Auditor-General
Risk Management in the TVET Sector
Implementation Challenges
• Risk Management, including measures to combat fraud and
corruption, remains an important focus for DHET, the AuditorGeneral and, thus, all TVET colleges
• The concept of Risk Management, widely accepted in commerce
and the private sector, may be new to many in the TVET sector –
but it is not optional
• The capacity (availability, experience) of current staff may be
insufficient to achieve an acceptable, compliant outcome
• Departments / branches / staff may perceive risk identification as
a negative reflection on performance
Risk Management in the TVET Sector
Implementation Challenges
•
The Risk Register, as part of an effective solution, must be user
friendly and unintimidating
•
Leadership, from the top, is essential for acceptance of the new
process
•
New Council members may also need specialised RM education
•
Recommendations may be resisted for a variety of reasons, not least
when a particular college already has a satisfactory and compliant
process in place
Risk Management in the TVET Sector
•
The Solution
SAICA and DHET have developed a Risk Management Manual to be
recommended as a standard to all TVET college councils
•
The initial roll out will focus on colleges that are still striving for
compliance with Treasury guidelines, the FET Act and best practice
in so far as Risk Management is concerned
•
The Manual, if adopted and implemented correctly, will assist a
college to become RM compliant subject to certain conditions
Risk Management in the TVET Sector
The Solution
The mere acquisition or adoption of a particular tool alone does not
denote compliance.
The following factors must also be present:
• It must be used to develop an internal audit programme
• Outcomes must be regularly reported to Council
• It must be regularly updated (a living document)
• Council is obliged to ensure that the Risk Management function is
adequately resourced and appropriate skills and capacity must be
acquired
Risk Management in the TVET Sector
The Solution
• It is recognised that the use of any particular tool or risk register
format may not currently be prescribed to Councils
• College councils have three options to choose from:
• Create an internal capability within the college
• Engage third party providers of expertise in the areas of risk
management
• A combination of the two
• Whether in-house or outsourced, a documented process must exist
Risk Management in the TVET Sector
Criteria for Successful implementation of a Risk
Management environment
• Adopt RM policy including a fraud prevention plan
• Application Cross functional cooperation
• of a Risk Management process
• Regularly updated Risk register
• Risk based audit plan
• Regular review and reporting (Principal’s Office, Finance,
Academic, Corporate Services and Registrar)
Risk Management in the TVET Sector
Way Forward
• Council adoption of process or proof of alternative solution in place
• Participation in Risk Management introduction and workshops
• Ownership of RM process by each and every college
• Continuous and ongoing review of risks and verification of mitigating
controls as part of internal audit plan
Risk Management in the TVET Sector
Thank You
Any Questions at this point?