Umda University is a privately owned education institution operating in four provinces of South Africa. The council of the university held four meetings during the 2023 academic year ending July 2023 where the following were documents were discussed: (1) Risk Register (5 top risks) No Risk Control Residual Risk Responsible Executive Manager 1 High rate of failure in all undergraduate degrees, certificates and diplomas Recruit 500 etutors at R5 000 remuneration per month each tutor. An overall average of 10% failure rate is anticipated Chief Financial Officer (Chattered Accountant) 2022: 45% average 2023: 40% average 2 Increasing outstanding fees per year. Secure the services of a debt collector at a cost of 5% per each 100 percent collected account. An average of 50% outstanding fees per year is anticipated Register of students (PHD Bus Management) 2022: 55% of fees 2023: 60% of fees 3 Irregular spending by management per annual budget No irregular spending is permitted. Zero tolerance. Risk, Governance and Assurance Services Officer (PHD Risk Management) 2022: R3 million 2023: R3,5 million 4 Staff costs negative variance per annual budget Freeze vacant posts and not recruit. Maintain staff costs negative variance of less than R500 000 per annum Human resource Director (PHD Bus Management) 2022: R1,5 million 2023: R2 million 5 Decreasing funding from sponsors per annual budget Increase student fees by 1% to all registered students in the next academic period 20% of the annual budget could be funded by sponsors. Vice Chancellor (PHD Bus Management) 2022: 30% 2023: 25% Notes: All risk management reports were timely communicated to both the management and council. (2) Audit Report (matters needing urgent attention) a. Debt cost costs increased from 3% to 5% of university income. b. Non-adherence to accounting policies. c. All computer assets of the university have exceeded the SARS prescribed depreciation rates and period. d. Insurance policies of the university have lapsed due to non-payment of premium. e. Performance information The university has only achieved 2 out of 6 strategic objectives. The university teaching and research has been downgraded by a recognised institution from a rank 11 to 26. Council has not ensured the implementations of recommendations made by both the Internal Audit and Auditors during the last three years. f. Audit opinion, the university obtained a disqualified opinion from auditors. (3) Financial Information Account 2021 2022 2023 Deficit R32 million R40 million R45 million Bank overdraft R300 000 R4 500 000 R5 200 000 Financial reserves R12 million R6 million R2 million (4) Council Minutes (approved) Composition Council has five non-executive members who receives remuneration. Risk related fees for non-executive members are R25 000 per meeting. The chair of the Council, who is a non-executive member, receives R50 000 per meeting. While the deputy chair, also a non-executive member, receives R45 000 per meeting. All other members of council do not receive remuneration. The cost of each meeting, excluding the remuneration of members, is R45 000. It is expected that this cost will increase by 5% in the next academic period. Decisions Zero increase on meeting fees of Council members in the next academic period. Increase the number of Council meetings from 4 to 6 per academic year. Management to apply for government funding even though the Finance Minister announced the blanket 20% budget cut in all social spending. Management not allowed to make any loans. Replenish the university financial reserves by contributing 10% of surplus each year for the next ten years. Question Which of the following controls of the university may worsen the cashflow position of the university? a. Freezing of vacant posts b. recruitment of etutors c. No irregular spending d. Debt collection