Department of Arts & Culture; Robben Island Museum & Afrikaans Taal Museum: Interrogation of Audit Reports 2005/06

SELECT COMMITTEE ON PUBLIC ACCOUNTS (SCOPA) &  PORTFOLIO COMMITTEE ON ARTS AND CULTURE  
27 March 2007 
DEPARTMENT OF ARTS AND CULTURE; ROBBEN ISLAND MUSEUM, AND AFRIKAANS TAAL MUSEUM: INTERROGATION OF AUDIT REPORTS 2005/06 
 
Chairperson: Mr T Godi (PAC) 
 
Documents handed out: 
2005/2006 Auditor–General Report on Robben Island Museum
Robben Island Museum 2005/2006 Annual Report (available at www.robben-island.org.za shortly)
2005/2006 Auditor General Report on the Afrikaans Language Report
Afrikaans Language Museum 2005/2006 Annual Report
2005/2006 Auditor-general Report on the Department of Arts and Culture
Department of Art and Culture: 2005/2006 Annual Report (available at www.dac.gov.za)

Audio Recording of the Meeting

SUMMARY 
Three entities were interrogated on their audit reports for the 2005/2006 financial year. 
The Robben Island Museum received a qualified audit report due to the lack of proper record keeping and preservation of the Mayibuye collection as well as the increased deficit incurred in the financial year under review. Representatives admitted the complexity of managing and achieving the goals of the museum, given both its budgetary constraints and the necessary institutional changes. Questions were asked on the achievement of the goals, the new catamaran, the failure to note the Mayibuye collection on the asset register, the functioning of the internal audit committee, non compliance with generally accepted principles of accounting, the level of monitoring exercised and staff capacity. Further questions addressed the need for policies and adherence to them, and the Museum was asked to provide written responses to the specific areas raised by the Auditor General. The management was asked about the overseas trips, the fact that a sitting Councillor was also a shareholder in the ferry service, and the conservation of wild life on the island.   
 
The Afrikaans Taal Museum had received qualifications and matters of emphasis in the audit report. Questions were asked on adjustment of the balances, the building "Historia", lack of understanding on the materiality and significance framework, the fact that the objectives of the strategic plan were not adequately documented in the Annual Report, and provision of leave payments, the amounts in savings accounts, and the lack of recordal of the antique collections in the asset register or financial statements. The issue of representivity raised in the letter by the Chairperson of the Museum, Dr Van Harte, should be taken up by the Portfolio Committee on Arts and Culture. 
 
The Department of Arts and Culture had spent almost its full allocation, but questions were raised on the delays in delivery of capital projects. Questions were asked on the bonuses, the steps to establish a performance management system, the high vacancy rate,  the slowness of the appointment process, the reasons why staff were leaving, and the alignment of asset management systems to the milestones set out by National Treasury. Further questions related to the leadership of the asset management unit, the current state of the asset management register, irregular expenditure on a contract that had expired, and monitoring generally. The Chairperson of the Portfolio Committee on Arts and Culture commented that the Department did not appear to have taken sufficient steps to align itself with universities to address the skills shortages. It was stressed that the Department played a critical role in the transformation of South Africa and promotion of a clear cultural identity.  
 
 
MINUTES 
The Chairperson noted with appreciation the number of members of the Portfolio Committee on Arts and Culture who were attending this meeting, and appreciated the effort to synergise the work of the two Committees.  
 
Robben Island Museum (RIM): Interrogation of Audit Report  
Mr E Trent (DA) explained that the purpose of the meeting was to interrogate certain issues so as to seek improvement in performance. The Committee was concerned over the retrogression in performance by the Robben Island Museum. He noted that the mission of the RIM was to maintain the unique political and universal symbolism and values of Robben Island, to conserve and maintain the natural and cultural resources of the island, to  promote the island as a platform for critical debate and lifelong learning as well as to manage the Robben Island Museum in a manner that promoted its economic sustainability and development. He asked if the Museum believed that it had adequately achieved all these commendable goals. 
 
Mr Paul Langa, Acting Chairperson: RIM, answered that the Museum had achieved some of these goals, but there was still room for improvement in certain important areas. 
 
Mr Trent commended Mr Langa for acknowledging the challenges to reaching all of the goals. He noted that the Auditor General (AG) had stated that the deficit before grants had increased from R19,5 million in 2005 to R37,2 million in 2006. It was not clear what this deficit would be in 2007. He asked for an explanation of the increase in deficit, and noted that it surely challenged the Museum’s ability to maintain its economic sustainability.  
 
Mr Langa explained that the deficit was due to the necessary institutional changes as well as the purchasing of a new boat to transport visitors to RIM. Given the specific nature and purpose of the RIM; its budget and expenditure needed to be aligned to the better and integrated management of  both the historical and ecological resources of the Island. He added that the budget had traditionally been provided through a Correctional Services account. 
 
Mr Trent wanted to know whether the new Robben Island catamaran boat was already in operation. 
 
Mr Langa answered that it took about seven to twelve months before a newly purchased boat could be fully in operation. The hand-over of this vessel was expected to be completed shortly.  
 
Mr Trent noted that this boat should have been in operation from February 2007 as cited in the 2005/2006 Annual Report.  
 
Mr Langa responded that although it was behind schedule, it did not report an operational deficit. 
 
Mr Trent noted that the cost of the newly purchased catamaran could not be the sole cause of the current deficit suffered by the RIM. Capital expenditure was not written off in one year, but would be written off over a period of time. The response was not satisfactory. 
 
The Chairperson commented that this reason was not accepted as the cause of the deficit.  
 
Mr Langa concurred that the biggest challenges faced by RIM were the current budgetary constraints. Since the museum and the whole island had to be preserved, this task entailed complex requirements and service provision. The integrated conservation management system sought to address complex needs such as transport. He added that the museum’s budget had never been interrogated before, which compounded this issue, as it had formed part of the Correctional Services budget. 
 
The Chairperson said that the Committee needed to assured that the funds provided to the RIM would be appropriately utilised, managed and administered. This necessitated the appointment of sufficiently skilled people. 
 
Mr Trent focused on RIM’s management of the natural and cultural resources and heritage of Robben Island. He noted that the Mayibuye collection was not recorded on an asset register and its catalogue was incomplete. This was a cause of concern as this collection was very important and valuable. He asked for an explanation why this was the case, and asked what had been done to improve the preservation of this collection.  
 
Mr Langa explained that the there were five elements to this collection. These were the historical papers, art, posters and banners, sound and oral history, films and video, and the artefacts and photographic archives.  
 
The Chairperson interjected to explain that RIM should clarify why the asset register and catalogue for this collection were incomplete and what was being done to correct this situation. 
 
Mr Langa restated that this collection consisted of various categories. These categories had been registered to varying degrees. The problems encountered in the registration process had affected the ability to timeously record the collection.  
 
The Chairperson reiterated that Mr Langa should clarify whether the asset register and catalogue had been updated.  
 
Mr Langa said that although such recording was taken place, there were some items that could not be clearly recorded. These were recorded as ‘unnamed items’.  
 
Mr Trent said that the recording of these items was important as these items could easily go missing. He asked specifically what RIM was doing to manage the risk of this happening in the interim, and how long the recording would take. He asked why did it take so long to simply record an item. He also asked if RIM was experiencing a capacity problem.  
 
Mr Langa explained that, with the assistance of the Department of Arts and Culture, RIM was currently recording the items. It was expected that these would be finalised in 2007. He acknowledged that the constraints were related to the budget.  
 
Mr Trent stated that this matter would be dealt with as part of the Committee’s recommendations to RIM. 
 
Mr Trent focused on RIM’s audit history, and stated that three qualifications and six matters of emphasis were received for the 2005/2006 financial year. These matters had not apparently been problematic in the preceding two financial years. This was a cause of concern. Departments and entities needed to improve, not regress. A few observations made by the AG were highlighted. These included the fact that there could be no reliance on the internal audit unit, as it was ineffective for the 2005/2006 financial year. The approved audit plan was not executed. He asked that reasons be provided for the deterioration of the internal audit function. 
 
Mr Langa explained that although the services of another unit had been commissioned, the internal audit was not performed adequately. It was therefore decided to cancel this process. A tendering process for conducting the internal audit was put out, and RIM was currently being audited.  
 
The Chairperson asked whether RIM was satisfied that this audit would be adequately conducted. 
 
Mr Langa expressed his confidence that this audit would proceed as desired.  
 
Mr Trent wanted to know whether existing problems were likely to be identified in the pending audit.  
 
Mr Langa responded that the relevant policies had been reviewed. 
 
The Chairperson asked if this then meant that the AG would not cite these issues as problematic again. 
 
Mr Trent added that although the policies were renewed, people needed to be trained to apply these policies effectively. These individuals should also be monitored, and RIM needed to ensure that all policies were adhered to.  
 
Mr Langa answered that the relevant services and appropriate skills were hired to provide these services. 
 
Mr Trent noted that the AG was of the opinion that the problems experienced by the RIM were related to the non-compliance to the Generally Accepted Accounting Principles (GAAP) and Generally Recognised principles (GRAP). RIM seemed not to have the skills to comply with these regulations, as evidenced by incorrect accounting, and the lack of control over journals, noted in the AG’s report. He requested the AG representatives to clarify why these problems were not detected earlier. 
 
A representative from the AG’s office explained that the main reasons for the qualifications were the non –compliance to GAAP and GRAP.  
 
Mr Trent wanted to know if the RIM had the capacity to comply with these regulations, and what had been done to correct this matter.  
 
Mr Langa responded that internal systems had been put in place and a service group was currently being trained to assist in compliance with these regulations. The AG’s office was also lending assistance.  
 
Mr Trent noted that the observations made in the AG’s report were very critical and included the lack of procedures to ensure effective cash management; lack of appropriate documentation and approved policy and procedure frameworks. These were basic aspects for the management of finances. He asked if these systems had subsequently been put in place. 
 
Mr Langa answered that a cash management policy was in place. At the time the AG was conducting the audit and requested this document, it could not been provided. Unfortunately, when this document was provided for auditing purposes, the audit for that particular section was already concluded..  
 
Mr Trent asked if there was adherence to these policies and procedures. 
 
Mr Langa confirmed the monitoring of the level of compliance. 
 
Mr Trent suggested that, due to the time constraints and for the purposes of the Committee’s recommendations to Parliament; RIM provide written responses to the specific areas raised by the AG and the progress made to improve these weaknesses. 
 
Mr Trent wanted to know whether RIM had the capacity to implement all the prescriptions of the relevant legislation. 
 
Mr Langa said that a new integrated conservation management system had to be developed and had been submitted to the executive committee. There were also new demands TIM needed to deal with and much needed to be done to develop workable systems to execute the work effectively. There were about 38 vacant positions in RIM, an increase from the 28 recorded in 2005. The institution was currently being realigned to the new demands faced.  
 
The Chairperson noted that the staff capacity had deteriorated.  
 
Mr Langa answered that the demand on the institution was higher than anticipated. The skills needed were very different from those the museum had inherited from the Department of Correctional Services (DCS).  
 
The Chairperson said the staff shortages were compounded by the lack of critical skills. The issue of capacity, in terms of skills and numbers, was clearly not improving. This had an impact on the ability to monitor compliance with procedures and policies. The non-compliance was caused by the current capacity constraints. The filling of vacancies was crucial in improving institutional performance. This regression was reflected in the number of qualifications and emphases of matter in the 2005/2006 annual report. RIM should urgently address the current vacancies. 
 
Mr Trent recalled that one of the core objectives of the museum was to promote sustainable economic development. Currently, RIM was not generating enough income to cover its costs, despite the popularity of the museum. In addition to this, the museum experienced a shortage of sufficiently skilled staff. 
 
Mr D Gumede (ANC) wanted to know whether parliament had been consulted regarding the funding capacity of the RIM. Moreover, he asked if a budget had been provided for the number of vacant posts to be filled. He asked if they were not filled because of scarcity of skills and asked what skills were desperately needed.  
 
Mr Langa explained that that these vacant posts needed to be funded as required by the relevant guidelines. These were specific posts, which required specifically skilled individuals. The recruitment process was on track. 
 
Mr P Gerber (ANC) noted the international trips made by some staff members during the 2005/2006 financial year. He asked RIM to explain why Mr Forbes travelled to London to inspect fire trucks donated to the museum. He noted that Department of Public Works (DPW) and the RIM financed the plane ticket and accommodation respectively. 
 
Mr Langa explained that the museum had developed a particular emergency response for fires and other emergencies, and did not have any fire trucks. The British Council made an offer to the RIM as part of the total donation of fire trucks to Africa.  
 
The Chairperson interjected to explain that although the need for fire trucks was understood, the Committee did not understand why a trip to London was undertaken to view these donated trucks. 
 
Mr Langa said that this official needed to sign the necessary agreements on behalf of the receiving country and organisation.  
 
Mr Gerber noted that a current Council member was also a shareholder in the current ferry service provider for RIM. There had been an increase in commission paid to these service providers, from R12.0 million in 2005 to R17.4 million in 2006.  
 
Mr Langa answered that Councillors were compelled to declare their interests.  
 
Mr Gerber expressed his dissatisfaction with this response. He requested RIM to provide the minutes of the meetings with the particular service provider. This was not a very healthy situation. Mr Trent expressed similar concerns.  
 
Mr Gerber wanted to know whether the conservation of existing animal life on the island was outsourced and who was responsible for the culling of excess animals. 
 
Mr Langa answered that the only animals culled had been wild cats and there were currently no wild cats on the island. 
 
The Chairperson hoped that the concerns raised by SCOPA were noted. These would again be emphasised in the resolutions and recommendations to be made by the Committee.  
 
Afrikaans Taal Museum (ATM): Interrogation of Audit Report 
Mr Trent commented that although the ATM was very small, the principle of compliance and sound financial management was critical and SCOPA had a responsibility to ensure that the Museum was held accountable r. 
 
Mr Trent noted that the ATM reflected deterioration on its financial management. It received five qualifications in 2004, which had been resolved in 2005, but qualifications were again detected in 2006. The emphases of matter followed the same trend. Although the main excuse was the lack of capacity, the ATM’s organogram did not reflect any vacancies. He asked ATM to explain what capacity constraints were referred to in the Annual Report and what would be done to correct this matter. 
 
Mr Jack Louw, Director:ATM, did not believe that the capacity of the financial management of the museum had deteriorated. The qualifications made were based on the complexity of reporting donations received by any organisations.  
 
The Chairperson acknowledged that that there may have been no regression, and that the type of qualification might appear owing to the nature of the work of the museum. Mr Louw should therefore not focus his response on that particular qualification dealing with donations. 
 
Mr Trent agreed that it was very difficult to recognise revenue in advance, because the source was not immediately identifiable, given the nature of donations. This was a very important issue, but a solution needed to be found.  
 
Mr Trent commented that the general ledger revealed that adjustments to the balances had not been made to be carried over for the following year. he asked if these had now been corrected. He further noted that the trade and other receivables and recovery of debts could not be adequately identified due to under and over statements, amounting to R3 500. He asked if this had been corrected. 
 
Mr Louw confirmed that these matters had been dealt with. 
 
Mr Trent commented that he had some difficulty in understanding the relationships of the ATM to the Afrikaans Language Council. The related party note to the financial statements said that the property "Historia",  registered under the name of the Afrikaans Language Museum,  was actually originally purchased by the Afrikaans Language Council, and no income received from this property was included in the financial statements of ATM. He asked for comments from representatives of the AG.  
 
The representative from the AGs Office explained that they were not involved in that particular audit. 
 
Mr Louw explained that the particular building was a public building and was purchased by the Afrikaans Language Council in 1990. This sale was negotiated with the relevant Minister at the time together with the Department of Education, but it was decided to transfer the to the building to the Council and not the State. This caused confusion as the Minister had nominated the Council, and the building appeared to be private property. The audit function, performed by PriceWaterhouseCoopers at the time, classified these buildings as assets on the ATM’s financial statements. In 2004, the AG decided that this building should not be on the financial statements of the museum because it belonged to a private entity, although this private entity was also a public council. This caused a matter of emphasis due to the significant value of the property that was not reflected in the financial statements. The  building was currently treated as a separate building. 
 
Mr Trent noted that there was a lack of understanding of the materiality and significance framework. He requested Mr Louw to comment on this matter.  
 
Mr Louw explained that this was a fairly recent matter. The ATM received a form from the Department of Arts and Culture, which required the museum to state its norms and standards. This was done according to the guidelines set out in the PFMA, and was approved as a guideline for its work. At the time of the audit, the auditors rejected the ten to twenty percent norms stated, and prescribed a 0.5 to 2.5 percent standard. The error then was mentioned as a Matter of Emphasis. However, the standards had subsequently been corrected and had been sent to the Minister for approval. 
 
Mr Trent said that SCOPA would increasingly focus on the reliability of performance information provided by government departments and entities. The AG had noted that the objectives of the strategic plan were not adequately documented in the Annual Report, to facilitate comparison and benchmarking to the desired performance set out in the Strategic Plan.  
 
Mr Louw explained that ATM did not align its objectives with its accounts. This information had been sent to the AG and feedback was still pending. This matter would be rectified in the following annual report. 
 
Mr Trent was informed by the representatives from the AG that they could not give feed back as Cape Town office personnel, who were not present, had done the audit. Mr Trent said it was difficult to understand this if the relevant officials were not present. 
 
Mr Trent focused on the observation by the AG that ATM failed to supply sufficient information regarding the provision of leave payments.  
 
Mr Louw and the officials from the AG's office could not immediately respond to this matter, and the Chairperson ruled that the Committee would make a follow up at a later stage.  
 
Mr Trent anticipated an improved audit report. 
 
Mr Louw expressed his confidence that this would be the case. 
 
Mr Gerber welcomed Dr Edna Van Harte, Chairperson of ATM, to the proceedings and stated that he had welcomed her report in which she expressed her dissatisfaction at the lack of full representivity on the ATM board. It did not reflect the demographics of South Africa, and she had urged Minister Jordan to address this shortcoming.  
 
The Chairperson noted the comment made by Mr Gerber and ruled that a statement by the Chairperson on this matter would probably better be dealt with before the Portfolio Committee on Arts and Culture.  
 
Mr Gerber noted that the liabilities for the 2004 financial year were reported as R38 000 and this figure increased to R155 000 for 2005. The statement of financial performance reflected a decrease in revenue, from R3.9 million in 2004  to R2.3 million in 2005. This also meant that there was a loss of R34 000. However, the museum had a fixed deposit account at Absa Bank and a money market fund at Sanlam. He asked whether, given the amount of money managed and the loss experienced, these savings were not too high. He asked if ATM had an investment policy. 
 
Mr Louw explained that the fixed deposit was a grant received from the Department and was paid out to all museums about two years ago. Another R430 000 was also received for its transformation plans. This money was currently being utilised for specific transformation purposes.  
 
Mr Gerber asked for clarity on the R843 000 received from the sale of goods in 2002.  
 
Mr Gerber explained that was due to the building that had been taken off its financial register, that was valued at R870 000.  
 
Mr Gerber noted that the antique collection was not recorded in the fixed asset register or any financial statements. It was accounted for in the acquisitions register. He asked if there was  a current evaluation based on the current market value and asked how it was covered in the insurance policy. 
 
Mr Louw confirmed that the museum followed a system of evaluation for its antique collection and was also insured for about R200 000. Since the museum had an intangible collection, many artefacts were not in its possession and therefore the size of the insurance did not necessarily reflect the full value. The antique collection was mainly audiovisual.  
 
The Chairperson hoped that the next annual report reflected an improvement on all the concerns raised in the 2005/2006 annual report. The issue of representivity raised in the letter by Dr Van Harte, as well as by Mr Gerber, should be taken up by the Portfolio Committee on Arts and Culture. 
 
Department of Arts and Culture (DAC): Audit Report Interrogation 
The Chairperson noted that further meetings would be held between SCOPA and Playhouse Company and the Pan South African Language Board (PANSALB) on 8 May 2007. As these entities were accountable to the Department, it would be expected to attend the proceedings.  
 
The Chairperson noted that the Department had spent almost its entire budget as expected by Parliament. The under spend was too a large extent due to the slow delivery on the capital projects such as the Freedom Park Trust. He asked why there were delays, and what was being done to ensure that these projects were delivered on timeously. 
 
Prof Itumeleng Mosala, Director General, DAC, answered that the Freedom Park Trust project was very complex, particularly on the capital works side of the construction. Many plans could not be delivered on for very specific reasons. Both the Board and management of the Freedom Park Trust were unable to spend the money allocated for the project by the Department. The Department was thus forced to return the money to National Treasury (NT). 
 
The Chairperson asked whether the Department was suggesting that the slow delivery on plans for this project would continue until its completion. 
 
Prof Mosala confirmed that, given the complexity of the project, delays should be expected. This building project intertwined many South African political and cultural issues and the political changes would affect the capital project plans. When the Freedom Park Board made a presentation to the Presidency, the feedback received had necessitated a review of certain aspects of the project.  
 
The Chairperson focused attention on the R4.7 million bonuses paid out during the 2005/2006 financial year. He asked the Department to explain this, particularly in view of the inadequate performance management processes. He noted that although they were approved, the payments were way beyond the norm. 
 
Prof Mosala explained that the DAC, as a department independent from the Department of Science and Technology was only four years old. The processes needed to be established and developed from scratch. There were continuing capacity weaknesses due to the vacancies. Performance bonuses were paid to those staff members who had acted in a dedicated way and overextended themselves in difficult circumstances. There was no deviation from the standards under which performance bonuses should be paid.  
 
The Chairperson wanted to know what progress had been made to establish the performance management system in the DAC. This was necessary to ensure that all funds could be accounted for.  
 
Prof Mosala explained that although the systems were in place, the capacity to adequately enforce these systems was currently lacking. The Department needed to increase the number of staff members and fill all the current vacancies.  
 
The Chairperson acknowledged the high vacancy rate in the Department. In the 2005/2006 financial year the Department recorded 38.5% vacancy rate, an increase from the previous year. He asked what was  being done to deal with such high vacancy rate, why the vacancies were not being filled timeously, and how the Department would ensure that the delivery of services were not adversely affected. 
 
Prof Mosala said that there was an error in the information provided to the AG, and the real vacancy rate was still at 28%.  percent. 77 of the posts listed as vacant were unfunded.  
 
The Chairperson stressed that the vacancy rate was a great concern. He asked the Department to explain how it had managed to spend 99% of its budget, in the context of this vacancy rate, and enquired if this did not indicate that the existing staff capacity was sufficient to operate the Department.  
 
Prof Mosala explained that the existing staff were overextended already in trying to reach the levels necessary to achieve the goals and work of the Department.  
 
The Chairperson wondered why the appointment process was so slow. 
 
Prof Mosala acknowledged the slow pace of filling these vacancies. A new structure for the Department, which incorporated its needs and demands, had been presented to Minister Jordan. Discussions had also been held with the Department of Public Service and Administration regarding the approval of the staff capacity and skills required in the DAC. Some posts needed to be transformed into higher level skilled positions.  
 
The Chairperson noted that the DAC was developing a Personnel Skills Development Plan  for every employee in the Department, and asked for a progress report.  
 
Prof Mosala answered that this process had not yet been completed. It would be aligned to the requirements of the pending new positions and posts required by the new departmental structure.  
 
The Chairperson wanted to know when this process was expected to be completed. 
 
Prof Mosala answered that it would be completed by March 2008. 
 
The Chairperson observed that this time frame was not properly determined. 
 
Prof Mosala answered that the statutory processes approved by the DPSA at every stage of its institutional development drove DAC. The progress was constrained by delays in getting the necessary approvals, as well as the other legislative frameworks. 
 
The Chairperson noted that the Department’s assets were all recorded on an asset register, as stated in the 2005/2006 Annual Report. He asked if the asset management systems were compliance with the milestones set out by the Asset Management Reforms (AMR) of National Treasury. 
 
Prof Mosala acknowledged that these systems were not as yet fully compliant with the relevant standards. However, DAC was fairly competent in managing weaknesses and problems arising out of its asset management system, which were related to the current limited personnel capacity and leadership in the Department. Further senior management appointments in the supply chain management unit had been made, mostly at Chief Director and Director level. The recent appointees proved to be very competent in managing these issues. The next audit report would reflect an improvement of this system. 
 
The Chairperson asked whether this response implied that the Department had addressed the matters raised in the AG’s report. 
 
Prof Mosala confirmed that the Department was in the process of addressing the matters raised by the AG. A meeting with the audit unit had been held recently, and the Department received strong leadership and guidance in this regard.  
 
The Chairperson said that according to the AG, the asset management unit operated without a senior manager. He asked for an explanation and asked if the unit was sufficiently capacitated. 
 
Prof Mosala expressed his confidence that the management of the unit was in a position to  improve the management of assets. 
 
The Chairperson stressed that the adequate management of assets was very critical because assets needed to be accurately accounted for. There had been instances where Departments could not locate assets. Given the assurances provided, the Department would be held accountable. 
 
The Chairperson turned his attention to the reasons why staff were leaving DAC. He asked that there be some clarity on the resignations as well  as transfers to other public service departments. 
 
Prof Mosala explained that people made career changes for economic reasons. The public service rearrangements were such that staff members could be appointed to higher level posts at other departments.  
 
The Chairperson urged Prof Mosala to refrain from providing generic responses. He stressed that the Committee wanted to know about the exodus of staff from DAC in particular.  
 
Prof Mosala reiterated that DAC staff members had cited economic reasons when leaving the DAC. Other departments also poached staff.  
 
The Chairperson suggested that the human resource strategy might also limit the growth opportunities in the Department. This policy could also be reconsidered.  
 
Mr B Pule (UCDP) commented that although the unqualified audit report for the 2005/2006 financial year was welcomed, the Matters of Emphasis noted by the AG needed to be addressed. He asked the Department to clarify why it had received a Matter of Emphasis for the inadequate management of its asset register and asked what the current status of this register was.  
 
Prof Mosala said that different reasons accounted for the inadequacies in the asset register. The separation of the DAC from the DST meant that assets needed to be divided between the two departments, and separate asset registers created. Insufficient capacity in this newly established unit, the suspension of senior officials, and the move of premises also compounded the weaknesses. The Department was busy dealing with this matter. 
 
Mr Pule noted the discrepancies in the supply chain management, including irregular expenditure of R3.9 million, which was incurred when there was no formal agreement signed between the Department and the service provider. He asked if there was an adequate supply chain management policy in place,  as well as related business-processing procedures. He enquired who had authorised the payment of R3.9 million. 
 
Prof Mosala confirmed that these processes were in place. The services were properly awarded through a tender process, but the Department had not detected that the contract had expired, since the senior management of this unit also left at that same time. The Department continued to procure services by the service provider. 
 
The Chairperson ruled that the Department should not minimise the importance of this error, as it highlighted the capacity and monitoring challenges faced by the Department. The Director and COO were suspended for reasons that were not yet known. 
 
Prof Mosala acknowledged these challenges. He added that the contract could be renewed. 
 
Mr Pule wanted to know how the expenditure had been classified.  
 
Prof Masala agreed that this had amounted to irregular expenditure. However, the matter had now been rectified and the contract had been renewed. 
 
Mr Pule asked how the Department justified expenditure when the monitoring processes were not adequate nor properly followed. 
 
Prof Mosala replied that this was an isolated incident. Monitoring procedures were adhered to ‘under normal circumstances’. 
 
The Chairperson commented that this question went beyond that particular incident. 
 
Prof Mosala said that the Department had established a separate section of the supply chain management unit to focus on the monitoring of payments to contracted service providers. 
 
The Chairperson wanted to know how this monitoring was done, given the capacity constraints. 
 
Prof Mosala said that the Department had made specific appointments in this regard. The management of the supply chain management and finance units had been greatly improved. 
 
Remarks by the Chairperson of the Portfolio Committee of Arts and Culture 
Ms P Tshwete (ANC), Chairperson of the Portfolio Committee on Arts and Culture expressed her dissatisfaction at the responses provided by the Department. Although all Departments faced a skills shortage, DAC had not taken steps to align itself with universities and higher education institutions to address this matter. There were therefore no real mechanisms to improve and develop the skills capacity within the department. Ms Tshwete added that given the number of unemployed graduates, the high vacancy rate in the Department could not be justified. The DAC needed to clarify the skills needed.  
 
She noted that the Portfolio Committee had met with the CEO of the Freedom Park Trust to discuss the challenges faced in the development of this project. The issues highlighted by SCOPA would also be taken up with the Trust. 
 
Chairperson’s closing remarks: 
The Chairperson thanked the entities for their responses, which would be used by SCOPA in drafting its resolutions and  recommendations, which in turn aimed to ensure that the challenges faced by these institutions could be resolved. He stressed the critical role of the DAC in the transformation and development of a representative South African culture. People, who had for centuries been subjugated and their culture mutilated, must be given a sense of identity.  Freedom without a clear sense of identity and forward thinking did not serve any purpose, so the central role of the Department could not be overemphasised.