The Committee heard a series of briefings from the Department of Cultural Affairs and Sport (DCAS) on the risks that constituted assurance gaps during the 2016/17 financial year, the value derived from the transfers of funds to various sporting stakeholders -- in particular, the financial commitment between DCAS and the Chippa Training Academy, including value derived by the Phillipi community through this commitment – and the internal audit mechanisms in place to mitigate the future loss of minor capital assets by the Department
A member of the DACS audit committee explained the terminological misunderstanding that had led to confusion around the use of the word “gaps,” and suggested possible ways in which that could be resolved.
The meeting also heard an outline from DCAS on the funding of sports federations and the conditions under which funding was provided. Although the Department expressed satisfaction with the contract between itself and the Chippa Training Academy, including the social value derived from it, Members were still uneasy about some aspects of the relationship, including the fact that the organisation was based in the Eastern Cape.
Another area of concern where Members sought reassurance was the loss incurred by the Department due to library books borrowed, but not returned by library patrons.
Audit Committee briefing on the 23 risks constituting assurance gaps identified in 2026/17
Ms Judy Gunther, Member of the Audit Committee (AC) of the Department of Cultural Affairs and Sport (DCAS) led the presentation on the 23 risks that constituted assurance gaps during the 2016/17 financial year.
By way of background, she said the issue under discussion had arisen during a briefing by the AC on the systems of internal control within the Department. At that meeting, the AC had been requested to further brief Parliament on the risks not covered for the 2016/17 financial year.
The AC had therefore prepared a presentation which went into more detail on which areas of the Department’s work were affected, and what the specific issues were. (See attached presentation)
The Chairperson asked what the implications were for risk control and management at the DCAS if assurance covered some risks, and not all of them. Who was responsible for these gaps?
Mr S Tyatyam (ANC) asked about the new risks brought about by new ways of working – how were they dealt with? He also asked the AC what the procedure was regarding the transfer of funds in the period between two sets of annual performance plans (APPs).
Ms Gunther said it must be made absolutely clear that by using the term “gaps,” the AC was not referring to the non-existence of control measures per se, but rather the lack of independent assurance that those measures were at an optimum level of effectiveness. Shee urged the Committee to note this difference. She made the observation that there had been a misunderstanding regarding the word “gap,” and told the Committee that a consultation process with all the relevant people in the audit process would be undertaken soon to review the terminology and eliminate the kind of confusion she had just identified.
Mr D Joseph (DA) asked what the correct way of posing questions on this matter would be – what was the replacement term for “gap”?
Ms Gunther replied that one way could be to ask if the accounting officer was comfortable with the risk control measures already in place to achieve Departmental objectives.
On Mr Tyatyam’s question on transfers, she said that in the last two years, the office of the Auditor-General of South Africa (AGSA) had changed its interpretation regarding the process. AGSA had begun to assert that the transfer of funds to entities should fall under the heading of “goods and services”. She confessed that the new interpretation did not “make sense” to her, and she felt that the new approach was potentially counter-productive.
Value derived from transfer of funds to various sporting stakeholders in 2016/17
Dr Lyndon Bouah, Chief Director: Sport and Recreation, DCAS briefed the Committee on the value derived from the transfer of funds to various sporting stakeholders in 2016/17.
He said 120 sport federations received funding for development, administration, transformation and capacity building. DCAS also provided ad hoc funding for athletes travelling to international events. 22 federations received funding for international travels, while support had also been given to major sporting events, with 62 federations being funded in this regard.
The Department’s After School Game Changer (ASGC) programme had a broader mandate than that of DCAS in that it sought to provide access to comprehensive quality after-school programmes – sport, arts, academic and life skills – to all learners in no/low fee schools. Through partnerships, the ASGC had mobilised 274 non-governmental organisations (NGOs), increased the number of learners in programmes by over 10 000, and leveraged millions of rands of investment in the sector.
The reason behind the allocation of more than one amount to organisations was that each deliverable could be captured in its own Memorandum of Understanding (MOA), with clear financial commitments and outputs. This enabled good project and financial management and ensured that partners did not blur deliverables between projects.
Mr Joseph requested clarity on the term “federations” - was it synonymous with “organisations”? He also wanted to know what happened when organisations broke up into different splinter groups, and these groups then approached the Department for funding. Was there a difference between a cultural organisation and a sports organisation in terms of treatment by the Department? Hr also asked whether the Department was the recipient of outside donor funding, and if so, what the nature of that funding was.
Mr Tyatyam requested a breakdown of the areas of expenditure on which the 120 federations actually spent the money. He also asked for more details regarding the identity of the cycling organisation listed as a recipient of DCAS support. How did the DCAS ensure that organisations receiving funding from its coffers were not simultaneously funded by other government Departments?
Mr Brent Walters, Head of Department (HOD): Cultural Affairs and Sport, DCAS, highlighted the
challenge of skewed funding, where most of the money went to the top flight of sports or cultural organisations at the expense of grass-roots ones. Referring specifically to Mr Joseph’s question, he said the Department was getting some private donor or sponsorship funding, but it was just not enough.
Dr Obouah explained that in the sporting sector, organisations were called federations because one of the requirements for recognition was that at least five clubs should be affiliated to an organisation.
Regarding the areas at which funding was directed, he referred the Member to the DCAS’s 2016/17 annual report, where the information was tabulated.
On the cycling question, he said the Department recognised only Western Province Cycling (WPC) as the sole affiliate of the sport of cycling in the province – all other cycling bodies would then feature as partners of the WPC.
With regard to breakaway organisations, Dr Obouah said it all came down to recognition. Unless the organisation was recognised by statutory sport bodies such as the South African Sports Confederation and Olympic Committee (SASCOC) and others, no funding from DCAS would be forthcoming. In addition, before DACS could approve funding, applicants had to declare all other sources of funding.
Financial commitment to Chippa Training Academy (CPA), and value derived
Dr Obouah said the relationship with the Academy had begun with a compulsory briefing session which had taken place at the Philippi Stadium, where representatives of 12 entities (potential bidders) had attended. Afterwards, only two proposals had been received.
The bids had been evaluated and Chippa Training Academy had been awarded the operating contract from April 2016 to March 2019. In the last financial year, overall usage had been 181 days. The Academy was paying salaries to the tune of R 41 116.65 per month, and maintenance to the value of R26 854 per month.
Aside from the sporting programmes and matches run from the stadium, which in and of themselves had the positive effect of enriching community life in Philippi, the stadium hosted a number of community-based and church events. For example, Philippi College (South African Police Services) continued to use the stadium for passing out parades, as well as for some of its league football matches.
Over Easter weekend the stadium had played host to the Twelve Apostles and Universal Churches respectively. The Academy was currently in discussions to host the former Platinum Stars FC for their home games for the 2018/2019 season. To this end, they were working with the Premier Soccer League (PSL) to resolve the on-going issue of the stadium’s PSL accreditation. The belief was that at the start of the new season, Cape Town’s newest National First Division (NFD) side would be based out of Philippi.
The stadium, and particularly the pitch, had received a very positive report from the PSL’s Technical Assessment Committee following their visit last year. Given the challenges and costs faced in hosting events at other city venues, the Academy was confident of attracting further NFD and even PSL matches to the stadium.
Mr D Mitchell (DA) requested clarification as to how Chippa Training Academy got the contract, as it seemed the entity was based in the Eastern Cape, and not the Western Cape.
Mr Joseph was interested in finding out more about the other contender for the contract. Who were they and what services had they offered? He also asked if the process of appointing a new operator had already started, as the contract had only nine months left to go.
Mr Tyatyam wanted to know what the Department’s initial investment in the stadium had been. What was the DCAS’s involvement in assisting the effort to make the stadium compliant with Premier Soccer League (PSL) requirements in order that PSL matches could be allowed to take place there?
The Chairperson questioned the rationale behind Chippa being chosen to operate the facility, as it seemed to him that other clubs and entities other than Chippa were using the stadium. His suspicion was that Chippa was using the stadium as a business, and if so, was that correct?
In his response, Dr Obouah said the bid had been open to the public and the Department’s main concern had been to find someone who met the requirements and could ensure that the stadium was well maintained. The fact that Chippa was based in the Eastern Cape was irrelevant. Dr Obouah said the other contender was a catering entity called “Blaauw”, and the Department had decided against its bid because it was not responsive to the soccer aspects of the tender.
To Mr Tyatyam, he answered that the stadium had been built as a training facility for use during the 2010 World Cup at a cost of R40 million. The funds had come out of the DCAS’s budget. To assist in obtaining PSL accreditation for the stadium, the Department was in discussions with the City of Cape Town on the matter, as it was in the interests of the DCAS that the PSL that matches be played there.
Mitigation of future loss of minor capital assets
Ms Cecilia Sani, Director: Library Services, presented the background to the loss of revenue that had occurred in the libraries section of the Department. She explained that in terms of the policy on “the management of library material as assets”, municipalities were granted 12 months to search for books that could not be verified during the asset verification process.
For the 2016/17 financial year, the total value of library material assets disclosed equated to 6.3 million items with a value of R481 million. The Department’s modified cash standards required the assets to be included in the asset register and disclosed as such, with an indication of the number and value of books that could not be verified at the end of the reporting period.
The value of books that were under investigation in 2016/17 equated to R4.2m, which translated to 0.8% of the total asset base of R481m. Once municipalities confirmed the books as lost, an account was issued to provide them with the amount owed to the Department. This amount was disclosed as accrued revenue recognised. Municipalities reimbursed the Department the amounts indicated in the accounts. This was disclosed as revenue received: fines and penalties. The revenue was ploughed back into the library books budget to compensate for the lost books.
Books written off during 2016/17 related mainly to the City of Cape Town, due to its unfunded mandate. Other municipalities had reimbursed their losses in full.
The losses could be ascribed to books that were not returned by patrons. Public libraries had policies and controls in place to manage books not returned by patrons on the due date. Even though public libraries continually experienced losses due to the human element involved, it was minimal when compared to the total asset base.
Mr Joseph asked what the highest amount the Department had written off in the past had been.
Ms Boulle replied that she did not have the information on hand, but would send it later to the Committee secretariat.
The Chairperson said that the presentation had put the Committee’s concerns at ease, because Members had not been aware that some of the loss was actually recoverable, and that investigations were done before the loss was written off.
The meeting was adjourned.
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