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 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 e-tutors at R5 000 remuneration per month per tutor.	An overall average of 10% failure rate is anticipated	Chief Financial Officer (chartered 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% collected account.	An average of 50% outstanding fees per year is anticipated.	Registrar of students (PhD Business 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 do not recruit.	Maintain staff negative cost variance of less than R500 000 per annum	Human resource director (PhD Business Management)
2022: R1,5 million 2023: R2 million
5	Decreasing funding from sponsors per annual budget	Increase student fees by 1% for all registered students in the next academic period.	20% of the annual budget could be funded by sponsors.	Vice-Chancellor (PhD Business 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 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.

(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

e. Performance information

The university has only achieved 2 out of 6 strategic objectives.

A recognised institution has downgraded the university teaching and research from a ranking of 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.

Council minutes (approved)

Composition

Council has five non-executive members who receive 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 Minister of Finance announced a blanket 20% budget cut in all social spending.

Management is 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 should appear in the updated risk register of the university?

i. Lapsed insurance policy.

ii. Disqualified audit opinion.

iii. Poor achievement of strategic objectives.

iv. Nonadherence to SARS prescribed depreciation rates.

a.

i and iv

b.

i and ii

c.

i and iii

d.

i,ii, iii and iv