Page 90 - DUT Annual Report 2020

DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
REPORT OF THE CHIEF FINANCIAL OFFICER AND THE CHAIRPERSON OF THE FINANCE COMMITTEE
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ANNUAL FINANCIAL REVIEW
This report provides an overview of the financial results of the University for the 2020 financial year, the budget process allocation of limited resources and control mechanisms in place to maintain financial discipline.
The global and local economy growth have had a direct impact on the University and the Education Sector within South Africa as a whole. In particular, Higher Education with their reliance on State Appropriations being dependent on National Treasury and its commitments to curbing of the pandemic as well as the countries development imperatives.
Despite continued pressure on its financial resources, the University has had a positive financial year, achieving a net surplus from its operations. This may be attributed primarily to vacancies against certain budgeted academic and administration staff positions, cost containment measures, fiscal discipline and the new norm of operations due to the Covid 19 pandemic and related lockdown implications which resulted in the reduction in expenditure incurred for the period.
OVERVIEW OF BUDGET
PROCESS
The Executive Management Committee oversees the allocation of resources for the University and ensures that governance processes are followed so as to promote the attainment of the strategic objectives of the institution including medium and long-term sustainability. The annual budget process captures the growing needs of the University placed against scarce financial resources.
The budget process starts in April and ends in September when the overall budget for the ensuing year is approved by Council before the commencement of the following financial year on the recommendation of the Finance Committee. The Income and Salary budgets are prepared applying zero based budgeting principles based on inputs from each operating division.
Budgetary control and oversight is performed through monitoring and reporting of budget versus actual results
on a quarterly basis with explanation and interrogation of variances at the Senior Executive Management meetings and thereafter presented at meetings of Finance Committee and Council.
The following principles underpin the budget process: The Ministerial Statement on University funding; Alignment to the strategic plan of the University; Strategically balanced budget; and
Financial sustainability.
A key strategic focus is underpinned by the need to ensure the financial sustainability of the University. In this regard, conservative financial management is practiced by ensuring that there are effective mechanisms in place to maintain financial discipline.
SALIENT FEATURES OF THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 2020
The University has obtained an unqualified audit opinion on the consolidated annual financial statements for the year ended 31 December 2020. The consolidated annual financial statements set out on pages 101 to 166 of the annual report include the results of the Group and the University.
The accounting policies applied in the preparation of the annual financial statements are consistent, in all material respects, with those applied in the previous financial year except where otherwise stated.
Summary of Financial Performance
The group reported a net surplus before taxation and the transfer of restricted funds to reserves, of R685m (2019: R709m) split as follows:
Council controlled funds R618m (2019: R654m); Student accommodation R70m (2019: R55m); and Specifically funded activities (R3m) (2019: R0.4m.