Financial processes
and structures
Design of the Financial
Structures and Processes
Old Mutual as the Fund Administrator (with great thanks to Maserame Mouyeme, Tabby Tsengiwe, Mandisa Mathobela, Andrew McPherson, and Derek Muller), alongside the Finance Function, played a critical role in ensuring the responsible management and accurate reporting of financial and asset flows. The Finance Function was initially led by Michael Easter, followed by Andrew Mashifane, and then by Zanele Ngwepe from the end of 2020.
The teams were structured to manage the inflow and outflow of funds, and implement, monitor and track financial risk controls through the Fund’s various processes. The finance function was also responsible for producing financial statements and other reporting materials and to do daily reconciliations of the cash balances and annual verification of inventories of the Fund.
The financial functions were overseen by the CFO. The Fund outsourced the financial administration function to Old Mutual, which had the established skills and systems that helped to very quickly put the Fund in a position to operationalise. Old Mutual provided the Fund Administration services on a pro bono basis until end September 2022.
An implicit assumption in the design of the largely outsourced financial model, (done voluntarily by Old Mutual), was that the Fund would operate for a maximum of 6-12 months, rather than the almost three years it actually operated. Because of this, the internal financial processes and tools were manual and therefore challenging to operate. The Fund should acquire or utilise a full function, automated finance system in-house. Elements of the function may be outsourced, but control of the system must reside in-house.
Learnings from other foundations can be leveraged to determine the type of tools that are available in the market at low cost, that will have work flows in place to ensure ease of implementation and accuracy in the fund administration management process.
It is very helpful to have specialised skills easily available to assess contracts for tax implications so as to ensure compliance at all times, thus managing tax risks appropriat
The Fund struggled to get data and reports from implementation partners. A learning from this is that grant agreements and contracts with implementing partners should include payment schedules that are linked to clear and mutually agreed deliverables consistently across all pillars.
The Fund benefitted from having a strong internal audit function provided by SkX Protiviti. Internal audit assisted with testing processes and internal controls to strengthen the internal control environment of the Fund.
Contracts were the foundational documents for the external audit. The full process from the governance of selecting a project, the choice of partner, transfer of grant monies, utilisation of grant monies and ultimate benefits received by the end beneficiary were verified. The finance and project teams worked very closely together in the run up to audits to ensure all the documentation was in place and the project team had verified the payments made and the actual receipt of benefits by the end beneficiaries as per the contract.
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