The Minister of Arts and Culture, Mr Nathi Mthethwa, provided the Committee with a broad overview of the Department of Arts and Culture (DAC) 2016/17 Annual Report. The Minister reported that the Enyokeni Cultural Precinct project was carried out without following proper guidelines. As such, the Department accepted responsibility for the damages and work not done on the precinct. The Minister also spoke to the importance of commemoration of certain events and people that had shaped SA’s history.
Members were then taken through the Annual Report of the Department where the presentation touched on the targets not achieved, financial matters, human resource matters and corrective actions that will be taken in the next financial year to remedy the targets not achieved for the four programmes of the Department namely, administration, Institutional Governance, Arts and Culture Promotion and Development and Heritage Preservation and Promotion.
The presentation also looked at the financial performance of the Department – it received an unqualified opinion. The presentation touched on the reasons for this outcome, budget spent per programme and under-spending per economic classification. Another presentation was made on the Generally Recognised Accounting Practice 103 where the Committee was informed of the need for the Department and its entities to comply with the Practice although it came with challenges.
The Committee asked about the Enyokeni Precinct, reasons for deviations in the Administration programme, the Samora Machel monument in Mpumalanga and how the Department monitored transfers to provinces. Further questions were raised about heritage sites in the Kruger National Park, how the Department ensured its officials complied with National Treasury requirements, reasons for staff leaving the Department and an update on the PanSALB Board dissolved by the Minister. It was noted the failure of many of the projects in the provinces is due to lack of monitoring.
Input by Minister of Arts and Culture
Minister of Arts and Culture, Mr Nathi Mthethwa, outlined that the Department is planning on commemorating the Khoi-San communities who lived in South Africa before the arrival of Jan van Riebeek in 1652. The reason for the commemoration is to educate young people and enlighten those who thought that life in South Africa only began in 1652. He stressed that this is an important era of South Africa, part of the country’s heritage and should be celebrated as such. He added that commemoration of the centenary of Oliver Reginald Tambo is also key not only for South Africa but also for the rest of the continent. He supported this by quoting a former Nigerian diplomat who said “Oliver Tambo belongs to a remarkable generation of South African leaders. As I got to know Tambo better I came to a conclusion that no man ever wore a great destiny with more humility and dignity”. When South Africans reflect on the times on the drafting of the Constitution, they often reflect on OR Tambo– he drafted the foundations of the Constitution by developing its guidelines even before CODESA wasformed.
The Chairperson requested the Minister summarise his input as the Committee has only a limited time for the meeting.
Minister Mthethwa said there are two matters the Department of Arts and Culture (DAC) wishes to raise with the Committee. The first matter pertained to the Enyokeni Cultural Precinct - the problem with the precinct is that it was carried out without proper guidelines being followed. Responsibility should lie with officials of the Department and not with King Goodwill Zwelithini. The Chief Law State Advisor advised that the Department should have conducted a forensic audit - this was completed in November 2015 and the results were issued to the Department in January 2016. The audit concluded that there had been no proper planning for the precinct. The audit also revealed there were challenges of land ownership and budget considerations - the budget for the precinct was set at R300 million but it cannot be accounted for. The Department has since put aside R28 million to complete some of the projects it had started.
The Department’s expenditure in Programmes One and Four is higher compared to the targets achieved - this was attributed to some targets being partially implemented and funds spent on implementation of unforeseen/unavoidable programmes like responding to the Vuwani protests and the Rhodes Must Fall protests. Programme One includes costs that cover operations and accommodation leases which are not measured in the Annual Performance Plan (APP).
The Chairperson thanked the Minister for his political input and for admitting that the Department would be taking responsibility for the incomplete precinct. She said the Committee does not have the competence to advice the Department on a plan moving forward to resolve the matter, however she is aware that Parliament’s legal advisors can further comment and assist the Department. The matter will be communicated to a relevant Committee, whether it will be Standing Committee on Public Accounts (SCOPA) or the Portfolio Committee on Arts and Culture.
Mr Mthethwa asked the Chairperson if he could be excused for the rest of the meeting as he has another important matter to attend to. In his absence the Deputy Minister would be answering the Committee’s questions.
Ms P Samka (ANC, Eastern Cape) thanked the Minister for his presence and for his political overview of the Department. She had hoped the Minister would be doing the presentation himself because it is important for the Committee to get the Executive Authority’s views and comments on the state of the Department and on the Enyokeni precinct project. She said the Minister is well-informed about South Africa’s heritage, which shows his dedication to the industry and Department. His commitment encourages the Committee to work hard and it encourages Members to also further learn about South Africa’s heritage.
Mr M Khawula (IFP, KZN) corrected the Chairperson saying that the Committee had concluded that it would refer to Enyokeni Precinct matter to SCOPA and not seek legal opinion. Further, it also concluded that it would plan a visit to the Enyokeni Precinct. He agreed with Ms Samka that the Minister’s commitment is indeed encouraging, however the Department has not as yet addressed the issue of inclusivity.
Mr D Stock (ANC, Northern Cape) shared the sentiments of Members. He also thanked the Minister for his commitment to commemorating South Africa’s history.
Ms L Dlamini (ANC, Mpumalanga) said she would like to further engage on the Enyokeni Precinct project.
Minister Mthethwa responded by saying the forensic audit was submitted to SCOPA. However, during completion of the forensic audit, the officials, who were found to be guilty of criminal offences, resigned from the Department and went to seek employment in another Department. The Minister suggested that the four programmes of the Department should be unpacked for the Committee so that Members could see how each programme was designed to help develop the arts and culture sector.
Department of Arts and Culture 2016/17 Annual Report
The Chairperson requested the Department to only report on the targets it was not able to achieve, financial matters, human resources matters and the corrective actions that will be taken in the next financial year to remedy the targets not achieved.
Mr Vusi Mkhize, DAC DG, by way of an overview, said 37% of targets under the Administration programme were not achieved, 10% of targets in the Institutional Governance programme were not achieved, 16% of targets were not achieved under the Arts and Culture Promotion and Development programme and 37% of the targets in the Heritage Preservation and Promotion programme were not achieved.
Programme One: Administration
The third draft of the Revised White Paper was submitted to the Department in February 2017 however, the White Paper was not submitted to Cabinet as envisaged. To remedy the unachieved target, broader consultation processes were undertaken to ensure a wider reach. The Draft Revised White Paper was also subjected to a Socio Economic Impact Assessment (SEIAS) and this required more time. The South African Cultural Observatory (SACO) was appointed to implement the socio- economic impact assessment. To date the first report was submitted to Department of Performance, Monitoring and Evaluation and the final report was submitted on 13 October 2017. An approved integrated enterprise-wide Information and Communication Technology (ICT) architecture plan was schedule for implementation, however only a Draft Tailored Architecture Framework, a Draft Organisational Model for Enterprise Architecture and a Draft Baseline Business Architecture Framework were developed instead. The deviation was prolonged by consultative processes in the finalisation of the plan and schedule. The process is very iterative to ensure that elements of the system are adequately addressed.
Payments due within 30 days were delayed due to reconciliation of invoices of supplier-project schedules. A procedure document was approved by the Acting DG on 20 February 2017. The procedure document was communicated to staff in the first quarter of the 2017/18 financial year. Its contents include centralisation of receipt of invoices in finance and implementation of invoice certification stamps. This started in the first quarter of 2017/18. Furthermore, the finance department is engaging the IT directorate to consult Statistics South Africa (StatsSA) about its invoice tracking system.
Programme Two: Institutional Governance
The social compact convention was planned for the year however it was not hosted as planned. The deviation was due to conflicting schedules, which led to delays in finalisation and approval of calendar dates. Only 96% of councils for public entities were fully constituted, excluding the Pan South Africa Language Board (PanSALB) Board. PanSALB Board was in the process of challenging its dissolution in court and as such the Department was unable to constitute its Council. Now that the court has ruled in favour of the Department, the process to reconstitute the Board is underway and details of the process were shared with all stakeholders. The Department commenced with the process of constituting the PanSALB board as the advert was sent calling for nominations.
Programme Three: Arts and Culture Promotion and Development
The Department targeted to provide 7 590 individuals with temporary work opportunities. The target was however not achieved as not all the projects that would generate work opportunities took place during the financial year. There was thus a shortfall in employment numbers.In order to remedy the above, the Department has made it mandatory that all beneficiaries report on job creation. On application, provinces and beneficiaries will have to state the number of jobs they will create and the Department will closely monitor progress.
Programme Four: Heritage Preservation and Promotion
The Department targeted to submit at least one policy and one legislative framework to Cabinet for approval i.e. the Museum Policy and South African Public Library and Information Services Bill. The target was not achieved because obtaining the SEIAS sign-off form was a long process. The Social Protection Community Cluster recommended the SEIAS be addressed before submission is made to Cabinet. The Department concluded the assessment in October, which will enable it to submit the Bill to the Minister and to Cabinet.
23 new libraries were targeted to be built during the year, however only 20 new libraries were built. This translates to only 87% achievement against the set target. In Gauteng, projects are structurally completed but did not reach practical completion due to snags that had to be attended to before a practical completion certificate could be issued. The library in Verkeerdevlei (Free-State) was officially opened on 29 March 2017 but the contractor could not issue the practical completion certificate due to minor things that needed to be attended to.
Mr Makoto Matlala, DAC CFO, presented the 2016/17 audit outcomes where the Department was given an unqualified audit opinion. The Auditor-General of SA (AGSA) drew attention to misstatements in the financial statements, non-compliance with regulations, inadequate systems, findings on predetermined objectives and implementation of consequence management against officials not complying with regulations. Adequate and reliable corroborating evidence could not be provided for the reported achievements against planned targets for the number of artists and organisations provided with work opportunities.
Reasons for not achieving a clean audit were due to effective steps not being taken to prevent irregular expenditure amounting to R15 202 000 as disclosed in Note 23 of the annual financial statements. The AGSA also pointed out effective steps not being taken to prevent fruitless and wasteful expenditure amounting to R493 000 as disclosed in Note 24 of the annual financial statements, disciplinary steps not being taken against officials who had incurred and permitted irregular expenditure in prior years and deviations approved by the Accounting Officer even though it was not impractical to invite competitive bids.
In terms of budget spent per programme, the numbers were as follows:
- Administration: 92.5%
- Institutional Governance: 80.2%
- Arts and Culture Promotion and Development: 97.6%
- Heritage Promotion and Preservation: 99.5%
In terms of under-spending per economic classification, Mr Matlala said the under-spending of R11.7 million on the compensation of employees was caused by posts that the Department could not fill and commit to in 2016/17, given the risks of over-expenditure on the compensation budget for 2017/18 due to budget cuts in the Medium Term Expenditure Framework (MTEF) allocation. The underspending of R12 million on goods and services was due to journals for operating leases paid on behalf of public entities being posted from the Office Accommodation. There was also delay in the appointment of a service provider to assess the conditions of infrastructure for the Department and its entities’ buildings negatively affected the finalisation of the User Asset Management Plan (UAMP). As a result, repairs and maintenance to entities’ infrastructure could not be done optimally.
An underspending of R4 million on departmental agencies and accounts was due to funds allocated to the South African Heritage Resources Agency (SAHRA) that could not be transferred. A final report with audited financial statements on the previous transfer that was done to the SAHRA for the Delville Wood project is awaited.
Generally Recognised Accounting Practice 103
Mr Matlala said the Accounting Standard Board has introduced the Generally Recognised Accounting Practice 103 that is applicable to public entities in the Arts and Culture sector. GRAP 103 is an accounting standard that prescribes the uniform accounting for classifying and recording heritage assets and regulates related disclosure requirements. Public entities reporting to the Department must comply with the requirements set out in the standard.
The Department has since issued a directive to its entities to ensure they comply with GRAP 103. The public entities were requested to compile progress reports for the Departments’ consideration pertaining to the implementation of GRAP 103. The Department also requested National Treasury to provide technical and financial assistance to entities affected by GRAP 103. GRAP 103 remains a standing agenda item on the Department’s CFO’s Forum where financial matters, including compliance issues, are discussed. The entities were requested to appoint a heritage expert and audit firms to assist with GRAP 103 implementation.
Mr Matlala said the Department, on behalf of its entities, has applied to National Treasury for exemption from complying with GRAP 103.The application related to extension of the transitional period to 31 March 2018. As part of the Departments’ submission to National Treasury, the Department requested the AGSA defer the expression of audit opinion on compliance with GRAP 103. The request for deferral of opinion was informed by a need to allow entities to phase in GRAP 103 using their limited financial resources due to budgetary constraints. Approval for the exemption was granted by the Minister of Finance.Unfortunately, this was recognised by the AGSA based on the notion of fair presentation. Most of the entities received qualified audit opinions in the 2014/15, 2015/16 and 2016/17 related to compliance with GRAP 103.
He said that the challenges relating to GRAP 103 included that the standard was approved without consideration of cost implications as funding was not made available to entities to assist with implementing GRAP 103 in the 2014/15, 2015/16 and 2016/17 financial years.The heritage assets should be evaluated by expert valuators in the heritage sector, however there are a limited number of people with the required expertise. Entities were required to develop heritage assets policies that were in line with the standard but there were no benchmarks that would serve as guidelines to the policies. Owing to the fact that the quantities of heritage assets in some entities are very large with different buildings, locations and large museums will face challenges because valuation of assets will take longer than one financial year.
Ms Dlamini asked what the cause was for most of the deviations in the Administration programme. She said management of the Administration programme affects the rest of the programmes - as such the Department has to ensure that its administration is equipped. She commented on the Samora Machel monument in Mpumalanga and said that it was not well built. Also, she hoped that the investigation into Machel’s death would be completed soon. The Nelson Mandela Research Centre in Alexander township has still not been used due to electricity wires not being built in properly. She asked how the Department monitors its transfers to the provinces because in most cases provincial departments are not able to account for money used for projects. There are a number of heritage sites inside the Kruger National Park (KNP), but it is difficult to co-ordinate the heritage sites because the KNP site falls under a different department. She asked how the department is ensuring the sites are well managed.
The Chairperson asked what measures the Department is going to put in place to ensure its officials follow Treasury guidelines. She enquired about the staff turnover and main reasons for the employees leaving the Department. She then asked for an update on the PanSALB Board that was dissolved by the Minister.
Mr Mkhize responded that there are items that have not been included in the APP but these items formed part of the Department’s operational plan. These items included IT support and rental – the Department sets aside a budget for each of these each month.
A Department official responded to the question on employees leaving the Department by explaining employees who left DAC have to cite their reasons for leaving as either retirement, terminated contracts, promotions, unfair working environment, personal aspirations or for development purposes.
Mr Mkhize added that National Treasury advised that the Department takes the officials who did not follow the Treasury guidelines to a disciplinary hearing. Instead, the Department had written back to Treasury that it proposes the officials each receive a written warning, instead of taking them to a disciplinary hearing.
Mr Vusi Ndima, DAC DDG: Heritage Programme, said the Department transfers grants to each province to ensure they manage their heritage sites accordingly. DAC will follow-up with officials managing the Mbombela Library.
A Department official said DAC was in the process of developing a national artistic workbook. The revised White Paper is scheduled to look at the Playhouses and assess whether they still suffice the need they were intended for.
Mr Matlala added that as part of the Department’s consequence management plan, it intends on withholding grants from provinces who do not provide the Department with project plans and looking at how each province plans on utilising the grant.
Deputy Minister of Arts and Culture, Ms Maggie Sotyu, added that most provincial departments are struggling to manage their libraries. The Department has put forward a proposal that each conditional grant given to provinces should be monitored. The Deputy Minister said she was appointed as the convenor for the Samora Machel monument however she could not provide the Committee with the report regarding the monument as it must first be submitted to the President.
The Chairperson thanked the Deputy Minister for her brief input. The Chairperson noted the failure of many of the projects in the provinces is due to lack of monitoring, including the Winnie Mandela Museum, which has not yet been erected.
The meeting was adjourned.
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