Annual and Quarterly Reports on Public Entities: Department briefing

Meeting report

ARTS AND CULTURE PORTFOLIO COMMITTEE

Annual Report on public entities and quarterly reports

SUMMARY
The Department briefed the Committee on the financial position of the entities under its control. The Department explained that the financial reporting of these institutions was improving. During questioning by the Committee, it Members were concerned about the sustainability of these institutions as they relied heavily on state funding. The Department assured Members that mechanisms were in place to remedy this situation. Due to a misunderstanding, it was agreed that the presentation of the Department's Annual Report would be deferred to a future meeting.

MINUTES

Department briefing
The Department realised its responsibility to oversee all public entities under its control. The areas of focus would be compliance, governance and financial stability. The Department had set the standard for compliance at 80%. However; only two or three entities had met these standards. Room for improvement was therefore recognised. The Audit Report had been divided into three sections, namely qualification, emphasis on matter, and unqualified or clean reports. The 2003/4 report had shown an improvement compared to the 2002/3 report, as more clean reports had been submitted. More financial records were also submitted on time. The Department had broken down the issues identified by these entities and remedial action had been taken to rectify these issues.

Discussion
The Chairperson asked to what extent risk management had been used by these entities. He also asked for more detail on the compliance workshops held by the Department. Currently the entities had to deal with 17 pieces of legislation. In the view of the Department, was there no easier way of legislating these entities? Was it realistic to expect these institutions to raise revenue?

Mr T Wakashe answered that the Department was looking for a way to streamline legislation in an attempt to make things easier for these entities. Traditionally these entities were not expected to raise funds as other countries and the South African business sector was not too philanthropic. This has led to an over-reliance on state funds.

The Chairperson asked what was considered a healthy ratio of state funding versus corporate funding. Mr Wakashe stated that he thought 60:40 was a healthy ratio.

Mr M Rennie said risk management structures were not in place but this would be beneficial to these entities. The cost of risk management wa often too high. The compliance workshops had been successful as the attendance was 90%. The interaction had created good ideas as human resources and legal recommendations had been made.

Ms D van der Walt (DA) stated that the percentage costs of these institutions relative to its income had shown that the income had been made up of 90% grants from the Department. The salary cut had been too high which was wrong. This situation would not be sustainable in the long run. Too much assistance is expected from the business sector.

Ms D Kohler-Barnard (DA) asked how it was possible for the National Arts Council to reflect R900 000 in 2003 in its coffers to R8 million currently in its coffers.

Mr Rennie explained that this money was meant for distribution and that it had not been distributed as yet.

Mr M Sonto (ANC) asked how it had been possible for the entities to continually have cash flow problems? How was this sustainable?

Mr Rennie stated that constant follow ups and the implementation of remedial action would resolve this problem. Another mechanism was to observe the audit meetings from an observer's perspective and hold the auditor and directors to task if their remedies were unsuccessful.

Mr L Zita (ANC) asked what the level of awareness of zoos and other entities were.

Mr Wakashe answered that it varied as zoos were the most popular entities while museums were struggling. Outreach programmes were being held to attract the public. These programmes should be aligned to tourism and exhibitions.

Mr Sonto asked how the fact that the financial accounting of these institutions had not been in order affected their service delivery.

Mr Rennie agreed that financial accounting would affect service delivery. However, he could not specify how this would happen.

Ms Van der Walt asked why the State Theatre's finances had been so unstable and expressed concern at the closure of libraries.

Mr Rennie said the State Theatre's financial instability was not really a matter of concern as its financial problems were due to maintenance and they would be receiving revenue from the sale of property it currently has no use for. The National Library for the Blind was not doing as well as it could.

Mr Wakashe stated that he feels the National Library for the Blind was not receiving as much funding as it should.

The Chairperson asked what the difference was between what had currently been granted and what would be required in the future. Were there any training programs for those on the boards of these institutions?

Mr Rennie stated that training was given in the form of workshops and the plans for this training will be extended, perhaps in the form of a slide show.

The Chairperson suggested that increased marketing and upgrading of the institutions would increase their revenue and perhaps the SETA's could assist in training the board members.

Ms N Mbombo (ANC) asked who was responsible for the distribution of human resources to these institutions and if it had been done with a unified approach.

Mr Wakashe answered that there was no unified approach to human resources as individual institutions were responsible for this.

Ms Van der Walt asked if work of arts were still loaned out and what the revenue from this was.

Mr Wakashe stated that institutions still loaned out art, but he was not able to state what the revenue was.

The Chairperson asked for the presentation on the annual report and it was explained that due to a misunderstanding, the Department had not prepared a presentation on the Annual Report.

The Chairperson asked that the Director General of the Department present the Annual Report himself.

The Committee perused the minutes of the meetings for 7 September 2004 and 19 October 2004. Some errors were corrected and the minutes were adopted.

The meeting was adjourned.