South African Roadies Association settlement agreement; Performing Arts Centre of Free State on its 2014/15 Annual Report; Heritage Assets: GRAP compliance

Meeting report

Chairperson's opening remarks
The Chairperson said that the Department of Arts and Culture (DACS) and Performing Arts Council of the Free State (PACOFS) should regard this meeting as an opportunity to reflect on themselves and their actions and that nothing said should be taken personally. She wanted to express her concern that reports provided to the Committee were consistently inaccurate and missing valuable information. She asked that this be explained.

Ms V Mogotsi (ANC) agreed with the Chairperson that this was the case and that it complicated their task of oversight.

Dr Sakiwo Tyiso, Deputy Director General, Department of Arts and Culture, stated that the Department made an effort to respond to issues raised by the Committee and that if some of the responses were inaccurate the DAC officials would only hear about this when they got to Parliament and it would be easier if the Committee Secretary could let the DAC know in advance.

Mr J Mahlangu (ANC) said that he was shocked at this response. If that was the attitude of the Department then it was no wonder it was having so many issues. He asked Mr Tyiso if he felt that he was in fact addressing fundamental issues raised by the Committee.

The Chairperson added that the Committee was going to write a letter to the Minister of Arts and Culture to express deep displeasure at the conduct of the Department representatives.

Dr Tyiso apologised to the Committee and said that he did not mean any disrespect. He would review the responses given to the Committee and get back to them in due course. He further stated that he felt offended at the response that Mr Mahlangu gave.

Mr T Makondo (ANC) raised a point of order and requested that Mr Tyiso be asked to leave so that the Committee could proceed with the meeting.

Ms Mogotsi seconded his motion.

The Chairperson responded that by asking him to leave the Committee would be relieving him of his obligations and responsibilities to be held accountable to the Committee.

Ms Mogotsi responded that she felt that the Committee would not even get the responses desired from Mr Tyiso and expressed displeasure that the Director General herself was not at the meeting, and that she never attended.

Mr Mahlangu understood the position of his colleagues but he agreed with the Chairperson that the Committee should require Mr Tyiso to stay so that he may be held accountable.

The Chairperson added that if the DAC was unable to answer the questions then the Committee would know that it had fallen short again.

She noted that Mr Tyiso may stay and asked that the presentation proceed.

Improvement on Compliance with GRAP 103: Department of Arts and Culture briefing
Mr Mandla Langa, Director: Financial Administration, Department of Arts and Culture, tendered the apologies of Mr Makoto Matlala, Chief Financial Officer, DAC, who was ill and unable to attend the meeting.

Mr Langa introduced some of the background of GRAP 103 as an accounting standard that applies to public entities which fall under ther jurisdiction of the Department of Arts and Culture. He went on to detail some of the measures that the Department had taken to assist public entities in complying with GRAP 103. Some of these measures included issuing a directive to public entities to comply with GRAP 103, requesting National Treasury to provide financial and technical assistance to entities and the establishment of the Chief Financial Officers Forum which was tasked with brainstorming solutions to aid entities in complying with GRAP 103. A task team was formulated from the Chief Financial Officers Forum which is in the process of coming up with a uniform policy regarding the compliance and implementation of GRAP 103.

The Department had requested an extension of the exemption period from the National Treasury till March 2018 and requested that the Auditor General not issue an opinion regarding GRAP 103. A response on both these issues is still pending. The Department had also requested additional funding of 205 million rand to aid public entities in complying with GRAP 103 as most do not have the necessary funds to do so. Entities would also require additional Human Resources staff to handle the valuation process, the number of heritage objects in the possession of museums ranged from seven objects to 2 million objects. With regards to the Auditor General findings most entities received qualified opinions with regards to compliance with GRAP 103.

(See document for more details).

Discussion
The Chairperson asked Mr Langa why the Department was still only developing a policy to ensure compliance with the Generally Recognised Accounting Practices (GRAP). GRAP 103 had already come into effect in 2012, and she questioned why the DAC was still only at the development stages. She wanted to know when exactly the engagement with National Treasury (NT) had begun, and whether the DAC had only been spurred to do something about GRAP 103 because of the findings of the Auditor-General South Africa (AGSA).

Mr Langa explained that the NT had granted entities a grace period or exemption with regards to GRAP 103 compliance, until the 2013/14 financial year. During this period many discussions between the Department, the NT and the entities too place, about budgetary issues and the practicalities involved. Also entities submitted the request for extension of the exemption period late and so they had yet to get a response from National Treasury.

The Chairperson responded that the entities could not be separated from the DAC and asked therefore what the DAC had done to ensure that the entities submitted their applications timeously/

Mr Langa said that the DAC had instructed the entities to comply with the regulations of GRAP 103 and that he was not sure if the Department possessed the capacity to provide technical on-the-ground assistance to all entities. The NT had acknowledged the problems that the entities and the Department faced but the Auditor-General was unwilling to lower standards when issuing his reports.

Mr G Grootboom (DA) said that he had brought up the issue of budgets in relation to compliance with GRAP 103 in past meetings, drawing attention to the fact that entities were not budgeting for complying with GRAP 103.

Mr Langa responded that National Treasury would look into the entities' request for an extension though they had not requested the funds to hire valuators to assess the value of the assets on entities. If the money for this did not come from National Treasury he was unsure where it would come from.

Mr Grootboom asked if there was a policy or report on the security assets, and if there was any guidance provided by the Department to the entities?

Mr Langa responded that the Department and entities would comply with all aspects of GRAP 103 and that DAC would make it a specific point to ensure that cognisance was taken of the security issues. This might be included in the GRAP 103 policy or made a separate policy.

The Chairperson agreed with Mr Grootboom's question, adding that once the assets of entities were valued it attracted criminals.

Mr Mahlangu asked why GRAP 103 only affected the entities listed in the presentation. The Committee recently visited PACOFS and saw that it too had assets to be valued. He commented that the report by the Department was therefore incorrect.

Mr Tyiso stated that the role of the Department was oversight and that it had requested all entities that were affected by GRAP 103 to produce comprehensive lists of the heritage assets that they held.

Mr Mahlangu commented that the report lacked substance as it did not include dates. It needed to be re-worked as it lacked valuable information.

Mr Langa agreed that dates were missed from the report and said that the DAC would amend and re-submit it to the Committee.

Mr Mahlangu asked which entity had only seven heritage items.

Mr Langa responded that he believed the Robben Island Museum (RIM) had only seven heritage items.

Mr Tyiso added that he too believed it was RIM and that because it had fewer assets it would be easier for it to comply.

Mr Mahlangu asked what was happened once entities complied with GRAP 103. He asked if this was regarded as a once off or “rescue” mission. He thought that annual evaluation would be needed.

Mr Langa agreed that the value of the heritage assets would need to be carried out annually. The onus would be on the contracted service provider to do this. It would be quite a costly process. The DAC would have to factor this into costs when it did get approval from National Treasury.

The Chairperson asked how the Department came to the figure of R205 million for entities to comply with GRAP 103. She asked what kind of analysis was done and what was the breakdown in terms of each entity?

Mr Langa agreed that this was an inaccurate figure and that the actual cost might be significantly lower than this. It was difficult to determine the cost of the valuation of assets, as different valuators charged different amounts.

Mr Grootboom asked if the Department had a particular funding model to allocate funding to its entities.

Ms Mogotsi asked why the National Museum, the War Museum and the Afrikaanse Taalmuseum did well and had been able to comply with GRAP 103 whilst other entities had not? These three were quite large institutions and she wondered why they had been able to comply although the smaller entities had not. The Department should organise meetings with all the entities so that they could share information and give advice to each other.

Mr Tyiso said that these museums had comprehensive lists of their assets and used these to convince the Auditor-General that they had made active steps towards compliance, which was what was taken into account in those specific reports.

Mr Makondo stated that the presentation was poorly done and had numerous gaps. He questioned how the Committee could, as an oversight authority, do its job effectively when the Department presents such poor reports and fails to take into account recommendations that get made by the Committee repeatedly. He went on further to state that if The Department continued to send representatives who did not have the answers they needed or the authority to effect real changes then the Committee would have a serious problem.

Performing Arts Council of Free State Performance report for 2014/2015
Mr Tyiso began by giving an overview of PACOFS over the last financial year, as instructed by the Chairperson. He outlined the performance of the entity stating that its performance was border-line, having completed 52% of its goals. PACOFS was spending more money than it was generating, an issue which had been communicated to the CEO. Attention was drawn to the governance issues within PACOFS. In the past year there had been several resignations, including that of the Chairperson the Council and meeting were very poorly attended by Council members. Minutes were not taken for the meetings that were held and so there was no data that the Department could make use of in order to effectively curate.

Members suggested that questions should be posed in the meantime relating to what the Department had done to aid PACOFS in its operations.

Mr Pieter Lourens, Chairperson, PACOFS Council, began his presentation by explaining that he has been very ill over the last few months and that would explain any discomfort he might display. This was also why he was only recently made Chairperson of the Council. He had been embarrassed by some of the findings of the Auditor-General and hoped to overturn some of them.

He explained that the CEO and CFO duties were at the moment being carried out by the same person, as the  CEO had been suspended in August and formal disciplinary actions and investigations were under way. He introduced Mr Nelson Salimani, Chief Financial Officer and Acting Chief Executive Officer.

Mr Lourens reiterated his intention to improve upon the negative findings of the Auditor General and improve the functioning of the entity in general. He stated that he was passionate about the performing arts and so this was more than just a job to him. He believed that the success of the entity was contingent on not only the Council members but on the staff as well. Managers and employees would be given clear instructions on what their jobs were and what was expected of them.

Mr Lourens explained that he believed that the number of achieved goals was so low because outside consultants had set the goals, as opposed to the managers themselves. In the future, managers would set their own goals and would be held accountable for achieving them.

Mr Salimani gave a brief overview of the performance of PACOFS, and stressed its belief that it was key for to form a strong relationship with the municipalities of the Free State in order to achieve greater success with their endeavours.

Mr Lourens drew attention to the fact that there had been no minutes kept of meetings held by the managers, or in the Council itself, and that had made oversight extremely difficult and it was unacceptable. Also unacceptable was the fact that that no one was held accountable for the under-performance of the entity.

He highlighted numerous challenges faced by PACOFS, such as that the theatres were closed in December and said that this was something that he wished to change. It was his intention to meet with the Departmental representatives as soon as possible and then call a Council meeting to discuss the way forward. He wished to build the capacity of Human Resources in the Department and to hire forensic accountants to investigate how PACOFS ended up in its current financial circumstances.

The Chairperson noted that the Committee appreciated the presentation and also thanked the Committee Members who had paid an oversight visit to PACOFS and suggested some of the changes that were now being made.

Discussion
Mr P Mulder (FF+) expressed the opinion that the Council members of PACOFS were clearly the wrong members, as evidenced by their poor attendance of meetings. The Department should ensure that the correct people were included on the Council.

Mr Tyiso responded that this was an ongoing challenge faced by the Department. People nominated themselves to be in the Council and only once the hiring process was completed and they had been appointed to the Council that it would become apparent that they were not the right people. The Department required Council members to attend 50% of meetings otherwise they would be removed.

Mr Mahlangu asked the Department representatives to highlight in its overview not just what happened within an entity but what the Department had done to assist them. He expressed the need for annual reviews and proactive alteration of strategic plans so that they were adjusted to achieve the goals that had been set for the year. If a consistently low percentage of goals was achieved, then perhaps for the next year fewer and more achievable goals should be set.

Mr Tyiso said that he understood the point that Mr Mahlangu made and that the DAC did in fact do something similar to this.  The five year strategic plans made by entities were to be revised annually, with the entities being able to set goals that they thought they could achieve for the coming year. Underlying problems within the entities meant that even though they were able to set goals for themselves every year, entities were still unable to accomplish the majority of these goals.

Mr Mahlangu noted that it had not been mentioned in the overview given by the Department that PACOFS was late in submitting its documents to the Auditor-General.

Mr Tyiso agreed that this was an omission from the presentation and explained that the submission was late because the Council was required to approve the documents before submission, and it had failed to do so on time.

Mr Lourens added that PACOFS had employed outside consultants to handle this process, and in retrospect this was a mistake.

Ms Mogotsi commended the presentation given by PACOFS and advised that a new Chief Executive Officer should be appointed quickly or else all the good work that had been done so far would be lost.

Ms Bilankulu also commended PACOFS on the presentation and expressed hope that the turnaround strategy suggested by Mr Lourens would be implemented.

She asked on the status of the CEO on special leave, and when a decision was likely to be made on his status?

Mr Lourens explained that he hoped the situation would be resolved by January and that disciplinary action would be taken soon. The charges against the CEO were numerous and it was a weighty case heavy and so it would take time to resolve. He of course wanted the CEO to be given ample opportunity to defend himself against the charges placed against him.

Ms Bilankulu asked why the former Chairperson of PACOFS had resigned, and wondered if there was any danger that Mr Lourens would do the same.

Mr Lourens responded that he did not know why the former Chairperson had resigned and that he had no intention of leaving as long as received the necessary commitment from other relevant parties to do an effective job.

Ms Bilankulu asked what PACOFS intended to do to inspire its employees. Since they had no performance bonuses, it seemed that the employees were demoralised.

Mr Lourens said that he intended to have at least one face to face meeting with the management teams per quarter. He wanted to compliment the current staff because they were very dedicated. It was on his agenda to set up performance agreements with staff members and to monitor performance so that bonuses could be given but currently there was no formal policy in place.

Mr Mahlangu expressed the opinion that the CEO on special leave should be fired, and that he agreed with Mr Lourens that a forensic audit was needed. He recommended that the Chairperson read the report issued by the Committee on PACOFS, pointing out various problems that need to be addressed.

Mr M Rabotapi (DA) gave his encouragement and support to the Chairperson of PACOFS.

Mr Lourens thanked the Committee members for their confidence and expressed gratitude that the Committee took the oversight mandate seriously.

South African Roadies Association (SARA)
The Chairperson asked the Department representatives to take the Committee through the document that Members had n front of them, highlighting the important information.

Mr Tyiso responded that he did not have any information on SARA and so he would be unable to provide any insight into the document the Chairperson was speaking of. He had only prepared with information on the entities.

The Chairperson reprimanded Mr Tyiso for this, expressing that this was exactly why the Committee had been raising such concerns about the attitude and preparedness of the Departmental representatives. She further stated that she would be sending a letter to the Minister that afternoon regarding this matter.

She released the Department representatives and PACOFS from the meeting.

Other Committee business
Adoption of minutes
Ms N Bilankulu (ANC) chaired this part of the meeting.

Members adopted minutes of 13, 15 and 20 October.

The meeting was adjourned.