Department of Cultural Affairs and Sport and entities; Heritage Western Cape, WC Language Committee & WC Cultural Commission Audit Outcomes: AGSA briefing

Public Accounts (SCOPA) (WCPP)

08 November 2021
Chairperson: Mr L Mvimbi (ANC)
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Meeting Summary


WC Government Departments 2020/21 Annual Reports

The Public Accounts Committee received a briefing from the Auditor-General of South Africa (AGSA), the Departmental Audit Committee, as well as the Western Cape Provincial Department of Arts, Culture and Sports on the audited outcomes of the annual reports of the latter and its subsidiary entities, namely; Heritage Western Cape, the Western Cape Cultural Commission and the Western Cape Language Committee for the 2020/21 financial year. In a closed session, the Committee received an opening briefing on the Department’s audited outcomes from the AGSA.

As reported by the Department, there were a number of programmatic areas which received funding in the current financial year, namely administration (R64 926 million), cultural affairs (R117 128 million), library and archive services (R358 503 million) and sports and recreation (R205 248 million). However, there was still a recorded under expenditure of R9 million which had prompted a request to the Provincial Treasury for a rollover of the funds to the next financial year. The current COVID-19 pandemic had also halted economic activity and therefore necessitated for a rationalisation of operations that had resulted in a significant decrease in the sectors that fell under the Department’s purview.

There were also major adjustments that needed to be made such as the provision of a relief fund for artists and athletes. This had been put in place to give much needed support to athletes and artists and had been rolled out as early as May. The reduction in the budget had necessitated a revision of targets that had to be reviewed and aligned to the reprioritised budget. However, despite the challenges, the Department had achieved their fourth consecutive clean audit.

Meeting report

AGSA Audit Committee Report: 2020/2021 Financial year

The Department had four programmatic areas, namely administration, sport affairs, cultural affairs and library and archive services. Administration had received R64 926 million, cultural affairs R117 128 million, library and archive services R358 503 million and sports and recreation R205 248 million as the final appropriation for the 2021 financial year.

The Department had recorded an under expenditure to the value of R9 million which had been, in part, due to the inability to fill vacancies under compensation of employees, goods and services and capital items that could not be delivered, purchased before, or delivered by 31 March 2021. They had requested Provincial Treasury for a rollover of the funds to the next financial year and a decision was still being waited on.

It was also noted that the economic situation in the country had necessitated a rationalisation of operations that had resulted in a significant decrease in the sectors that fell under the Department’s purview which had resulted from the COVID-19 pandemic. This had and continued to pose significant challenges. However, the Department had continued to deliver on some services, where possible, and had moved its operations mainly online.

The pandemic had decimated the economic sectors in the arts, culture, and recreation space, with tourism also being severely impacted and the resultant economic situation in the country had called for a provincial relief fund for athletes and artists. This had been implemented in April 2021 and had been quite successful.

An 82 of 119 performance indicators had been achieved, 66 of 89 had been programme indicators, and 16 of 30 had been conditional grant indicators. Despite the challenges, a fourth consecutive clean audit had been reached.


The Chairperson informed Members that the purpose of the meeting was for the Committee to be briefed on the audited outcomes of the Western Cape Department of Cultural Affairs and Sports (DCAS) and its three provincial entities by the Auditor-General of South Africa (AGSA). He mentioned that the Department also had oversight over three government entities namely, Heritage Western Cape, Western Cape Cultural Commission, and the Western Cape Language Committee.

He also brought to the meeting’s attention that the public had been invited to attend the meeting, and that notices in all three official languages had been sent to major newspapers.

[The briefing by the AGSA was closed to the public]


When the open meeting resumed, Ms M Maseko (DA) extended her congratulations to the Department for having achieved a clean audit. She zoned in on how it had dealt with the resultant consequences of COVID-19 and asked for an elaboration on the said response measures and/strategies.


Ms N Nkondlo (ANC) noted that her line of questions would pertain to the identified emerging risks, health and safety and finally Broad Based Black Economic Empowerment (BBBEE). She particularly wanted the Department’s Political Head, the Arts, Culture and Sports Provincial Minister, Ms Annoux Marais, to brief the Committee on her strategy to pre-empt possible budget cuts in the next financial year. She also showed interest on whether the Minister had engaged her cabinet colleagues on the subject matter.

She asked for clarity on what had been meant by ‘the shrinking envelope had impacted on the Department’s ability to deliver to its constituents’ as was outlined in the report.

She noted that the Department’s mandate centred in around mass inside and outdoor gatherings of sectors that had been hard-hit by lockdown prohibitions. She wanted to establish how this had affected the Department on a programmatic level.

She highlighted that she had been interested in whether another reduction had been anticipated for the new financial year and whether the Minister had entered into discussions with her cabinet colleagues on the eventuality of another reduction.

Ms Nkondlo said that her line of questioning had been informed by the resilience and drive of South Africans to seek out a living against the backdrop of a deterioration in mental health conditions. She asked whether the Department had made services available that dealt with the psychological impact of the pandemic on the mindset of artists and athletes and whether this specific risk was considered, together with how it translated into monetary value.

In terms of health and safety, she noted the appointments that had been made in this particular function, and wanted to ascertain whether this had required additional budgetary allocations from the Department. Ms Nkondlo also asked whether any of the Department’s staff members had been affected by the COVID-19 pandemic during the past financial year.

She inquired on whether health and safety officers would remain as part of the staff complement, or whether they would be let go as soon as the pandemic had abated.

On BBBEE, she wanted to ascertain what the Department had meant by ‘the problems it had developed with the preferential procurement framework’ as detailed in the audit report. 

She also asked that an explanation be provided for the ‘9% paid to larger enterprises as opposed to 22% that could not be attributed to any business’ comment in that same section.

Ms D Baartman (DA) requested from the Chairperson to provide guidance on whether Members had to limit their questions to the relevant sections under discussion, to which the Chairperson replied in the affirmative.

She congratulated the Department for having obtained a clean audit despite the impact that the pandemic had on the programmatic areas. She noted that Provincial Treasury had also commended the Department for sound internal controls and for having exceeded on their procurement reporting duties.

Replies by the Department

Mr Guy Redman, Head of Department: DCAS,  indicated that major adjustments had to be made, as a relief fund for artists and athletes had to be introduced. Although the fund was not expected, it had become obvious that athletes and artists needed support. The Department, he mentioned, had started as early as May with the process and national government had begun in April 2021. He also added that the disbursement of these funds had been highly successful.

He said that the Department’s budget had thrice been prioritised and that the reduction in the budget had necessitated a revision of targets that had to be reviewed and aligned to the reprioritised budget.

On the mental well-being of the Department’s constituents and the monetary impact of COVID-19 on the sectors, he noted that it had been reported on as it fell into the following financial year.

Ms Brenda Rutgers, Chief Financial Officer, DCAS,  addressing the question on emerging risks, stated that the R140 million in the budget decrease should be seen as adjustments over the three adjusted budgets. The impact on the actual budget reduction had affected service delivery and even though the risk had been inwards, it had a consequential external impact on society.

She indicated that the risk had been mitigated by the provision of much-needed relief funds to the Department’s constituents and detailed that various committees within the Department had deliberated on how the budget had to be reprioritised. She further added that these budget cuts and the predominant crisis, COVID-19 pandemic, had tested good governance in the wake of the practical Impact of lockdown regulations on officials. Senior management concluded that all officials should be resourced to work remotely and to mitigate risk, the Department had to provide the appropriate resources and access to the Department’s systems to officials who had started to work remotely/home. She reflected that the impact had been beyond the financial realm, and that no risk had been identified since details about budget reductions for a particular year are only communicated in February.

On the question about mental well-being, Ms Rutgers informed the meeting that the Department continued to encourage constituents and staff to make use of the employee wellness centre.

She further added that the R120 million had been earmarked for conditional grants, R22,6 million had been deducted from the sports budget and R 34,7 million from library services and said that another reduction had not been expected. She related that the Department normally received communication of any reductions, per an official letter sent out in February.

Mr Shaun Julie, Director: Strategic and Operational Management Support, DCAS, responded to the question about the appointments that had been effected in the health and safety function. He said that the appointments had been made per the directives over the lockdown period by national government. All departments had to appoint compliance officers, as well as a COVID-19 departmental committee. No additional appointments had been made as some staff members had been assigned additional duties.

He had also spoken to the question related to financial disclosures by officials of the Department, and informed the meeting that all senior officials had complied with disclosures of their income and assets submitted. To date, the Department had recorded a 100% compliance rate, he noted. The regulations had particularly been enforced on staff within the finance unit.

On the question that had related to BBBEE, Ms Rutgers noted that the specific areas mentioned by Ms Nkondlo had not been applicable to the Department.

The Department had partnership agreements with businesses and non-governmental organisations. She noted that part of the criteria that had been put in place for BBBEE had been received from the BBBEE framework and that BBBEE prescripts as per legislation had been followed. Also, procurement processes that had been abided by the allocated points, reflected a business’s BBBEE status. The points system, she stated would then indicate whether the company had any black ownership and whether the turnover of the company had been below or above R10 million.

On budget reductions, she stated that once the Department had received notice of envisaged reduction, it followed a proportional formula or mechanism to determine reductions. She added that this would apply to all programmatic areas.

Engagements with Provincial Treasury had also formed part of the deliberation process.

On the question about the number of cases initiated, she informed the Committee that for the year under review, the Department had recorded no cases whatsoever. In a terse swipe, Ms Rutgers rather sarcastically said if there had been any cases then the Department would have reported on that matter

Follow-up questions

Ms Baartman noted that maybe the officials had not properly understood her question and she reiterated that she totally understood the procurement procedures of government, and took note of the engagement between the Department and Treasury. She referred to it as “wonderful” but however, wanted to know how the Department arrived at any decision/processes involved etc. She also wanted clarity on whether the internal processes followed emanated from within the Department or from universally accepted norms within Government

Replies by the Department

Ms Rutgers replied that once the Department received word that the reductions would be affected it would then be discussed at the Medium Term Expenditure Committee (MTEC) as well as the senior management. Engagements with Treasury would normally follow, after which the Department would receive an allocation letter from the executive management team within the Department, thereafter discuss the letter and decide how the reductions would be affected. She said that they also took note of key projects and that these would be isolated and or ring-fenced.

Each programme under the Departments programmatic areas, she stated, had to be considered as unique. It had become difficult to implement cuts only on one programmatic area, therefore decisions had to be taken rationally and in accordance with proportionality.

She also spoke to protected disclosures information and noted that the protected disclosures act was managed by the provincial forensic services, as they had been the custodians of that legislation.

She said that as the Department, they had depended on the provincial forensic services to keep them abreast of developments and their responsibility was to ensure that whistle-blowers were protected. However, that should not be seen as their mandate.

Mr Redman added that each year during strategic sessions, the Department discussed each programmatic area and possible reductions. This then enjoined the program manager to go back to the drawing board with his or her team.

Questions on Section E

Ms Baartman stated that she had prepared questions for both the Department as well as Heritage Western Cape. She first congratulated both entities for the almost R1 million in savings that had been achieved by the Heritage Western Cape.

She said that she had arrived at this total after she had added the savings on catering, accommodation and the advertising budget. She relayed that the heritage entity had moved entirely to a virtual platform.

She also touched on the fact that the other two agencies audit fees had remained more or less the same, whereas an additional amount of R23 000 had been charged by the Auditor-General (AG) to the entity. She asked for clarity on what this amount had entailed.

She recalled that page 93 had to do with unspent funds earmarked for the project related to the Department of Tourism, and wanted to find out what would happen to the unspent funds and whether Provincial Government would lose that allocation. She also noted the decrease in consultancy and outsourcing expenditure by the Department.

Ms Nkondlo asked why there had been an over 100% increase in the allocated funds from R24 million to R64 million.

Replies by the Department

Ms Rutgers said that the R30 million in question was related to sports and recreation with the funds earmarked for the Netball World Cup and the R23 000 extra had been incurred by the Department, as stipulated in the financial statements for the year under review.

She explained that the scope of the audit had not changed and that the AG normally increased its fees between 10 and 20 per cent year-on-year. Normally auditors started work as early as February each year and this meant that some auditing work would be billed for in the following financial year. She added that if Members calculated the total expenditure on audit fees, they would establish that the fees automatically balanced out.

Dr Lyndon Bouah, Chief Director: Sport and Recreation, DCAS, responded to the question about Laingsburg and informed the Committee that the Department had received communication from the municipality that it had spent R350 183 of the allocated amount. They had then subsequently been informed by the Laingsburg authorities that the entire allocation had been spent. On 24 November 2021, they were to meeting with officials to assess whether the project had indeed been completed and processes followed.

Mr Michael van Rensburg, Director: Museums, Heritage and Geographical Names Service, DCAS, informed the Committee that an allocation had been made to the project mentioned by Ms Baartman. The project had formed part of a tourism campaign focused on South Africa’s rich dolomite deposits and significance to science and archaeology.

The Interpretation Centre had been constructed and ownership thereof, rested with the local authority and the political control in the Council had since changed. These changes necessitated a re-engagement with the new political establishment to obtain political approval for a project that had formed part of the previous political administration’s projects. Such developments naturally impacted on the opening and completion of the project. Prior to the mentioned, the Interpretation Centre had officially been named Elandspoort Museum.

He mentioned that the Laingsburg allocation had not only been used for new lights, as charged by Ms Baartman and vehemently pushed back against this claim, stating that the entire sports facility had been earmarked. He iterated that Laingsburg had already provided a quarterly report that detailed how it had spent the allocation and vowed that the report would be shared with the Committee.

He said that the meeting of the 24th would confirm whether what had been stated in the report had in fact been delivered upon.

He also informed the Committee that the Department had entered into a Memorandum of Agreement (MOA) with all beneficiaries and should it be found that entities had not complied with the stipulations in the MOA, the funds would be recouped.

Mr van Rensburg noted that the case by Midnight Storm Investments against the Department had been dismissed in 2019, however, they and the plaintiff had been allowed to leave to appeal which they did. The plaintiff had since approached the Department with a proposal on how to settle the matter amicably. He added that Heritage Western Cape seemed to be interested in the proposal, however, private assessors would provide analysis which would aid in decision making.

Follow up comments and questions by Members

Mrs Baartman said that the comments by Dr Bouah had informed her questions on who audited transfers. She indicated that she wanted to establish whether the Department had any mechanism that tracked how and if transfers had been sent in accordance with rules and regulations.

She recalled that the Department had informed the Committee that it had entered into an MOA with Laingsburg which stipulated how the transfer had to be spent. She noted that the MOA satisfied that the entity had taken into account the quarterly reports submitted by the local authorities.

She asked on what would happen on the 24th of November when the Department discovers that nothing had been done and the money had been misappropriated.

Ms Nkondlo asked for more information on the legal claim against the Department and wanted to know how much had been spent on litigation, and when this matter would be concluded.

Replies by the Department

Dr Bouah replied that on 24 November, he and his team would conduct an inspection of the facility to establish whether the necessary refurbishments, as indicated in the MOA, had been done. He said that he did not have a copy of the MOA, however, a copy would be sent to the Committee.

He reiterated once again that the norms and standards as set out in the MOA had to be subscribed to, and should anything nefarious be discovered, the state money would be recouped. This action would be preceded by engagements with the relevant local government authorities.

Follow-up questions and comments

Ms Baartman reminded the meeting again that during recent visits to the JJ Ellis Stadium and two others in the region, she had hardly noticed any refurbishments and expressed her reservations about the validity of such an announcement.

She thanked Mr Redman for his assistance in locating the page that related to the expenditure by Laingsburg. The Committee had mainly dealt with the overall report, without a real understanding of what happened to transfers made to municipalities and how oversight, monitoring and evaluation over the allocated funds had been conducted.

She mentioned that Dr Bouah had said that entities were also required to provide quarterly reports which would then be followed by site visits for inspection and an expert report.

At this juncture the member chuckled sarcastically and suggested that the Minister as well as other interested parties should urgently undertake a site visit to ascertain whether Laingsburg had indeed complied with stipulations. She expressed her doubt that everything had been completed.

She also wanted to know what happened to the funds that remained unspent and whether the Department would lose the allocations.

The Chairperson commended the Department for its fourth consecutive clean audit and noted the comments by the AG on this performance. He, however, stated that performance audits should also be conducted to ascertain whether actual service delivery against a clean audit occurred. He wanted to ascertain who assumed responsibility for performance.

Ms Nkondlo also asked a question that related to assets and liabilities and asked for clarity on a legal claim that is currently under litigation. She wanted to know the amount spent on litigation, and what the situation was at the moment as the matter would be going to the Appeals Court as well.

She asked for the differentiation between a contractor and a service provider was.

Replies by the Department

Mr Redman conceded that his Department remained committed to performance auditing against financial auditing as this remained a critical tool by which to assess service delivery and various measures were being considered, which would aid this intention.

An official from the AGs office added that the mandate of the AG was to audit all government expenses against predetermined objectives. The nature of the work pivoted resources and know-how towards its mandate. The entity would like to move towards performance auditing conducted by experts such as engineers and quantity surveyors, as ordinary auditors did not have such advanced skills.

The Chairperson noted that he had been aware that the head of the audit committee had particular views on the importance and relevance of performance auditing.

Mr Redman said that performance auditing should be a hallmark of how service delivery on the ground was tracked.

Ms Maseko said that disparities spent a lot of money on AG fees and wanted to ascertain whether the Department had leverage this relationship to the benefit of municipalities. She added that the AG could be of immense help in strengthening governance at municipalities like West Kannaland and Cederburg.

On irregular expenditure, she relayed the following hypothetical anecdote that best describes how bidders circumvent the law through loopholes. She made an example of person X winning a tender of R1 million to build 20 houses. Nothing then stops the winning bidder from going with a different builder on the cheap price. She added that these loopholes had to be addressed.

Mr Redman indicated that the Department had received and experienced the value added by the work of the AG. He said that it had assisted in turning around auditing practices and that these changes could be tracked as well.

He stated that performance auditing presented a challenge to the AG’s office so there had been a realisation that experts such as quantity surveyors and engineers had to be employed. Their expertise would assist the AGSA to conduct adequate assessment of bulk infrastructure such as houses and roads.

An official from the AG indicated that they were only able to determine their value if other government entities attested to that fact. He added that the Arbitration Foundation of Southern Africa (AFSA) had been committed to reduce audit fees in relation to a specific audit and that the AG would like to have performance audits that created a significant challenge.

He also touched on the need for in-house experts that could provide quality information and mentioned that the Department of Education in Child Support already instituted such.

The Chairperson thanked the Committee and all those in attendance for their valued inputs.

The meeting was adjourned.


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