2. THE Budgetary Review and Recommendation Report of the Portfolio Committee on Arts and Culture, DATED 17 october 2018

The Portfolio Committee on Arts and Culture (hereinafter referred to as the Committee), having considered the performance of Vote 37: Department of Arts and Culture (hereinafter referred to as the Department), reports as follows:

  1. Introduction


  1. Mandate of Committee

The Portfolio Committee on Arts and Culture (the “Committee”) is empowered, through the Constitution, to ensure that executive organs of the state in the national sphere of government are accountable to it. The Constitution further empowers committees in the National Assembly to maintain oversight of the exercise of the national executive. In order for the Committee to provide oversight, the Budget Review and Recommendation Report (BRRR) is an essential tool to assess the Department’s performance and strategic direction. The BRRR also acts as a mechanism to measure service delivery and identify areas that require urgent interventions. This process enables the Committee to understand how the Department has implemented its appropriated budget.


  1. Description of Core Functions of the Department

The Department derives its mandate from the Constitution with specific focus on language and culture, access to information and, to some extent, education. The Department further seeks to unleash the potential of the Arts, Culture and Heritage sector to contribute to job creation and economic growth and development through the Mzansi Golden Economy (MGE) strategy. The Department focus is to promote and preserve infrastructure, provide community library services, position cultural and creative industries to contribute to economic growth, and facilitate social cohesion and nation building. In addition, the Department is also responsible for the promotion of the performing arts in South Africa; provision and promotion of official languages and enhancement of linguistic diversity in South Africa; and provision and maintenance of the declared cultural institutions, National Archives and National Library of South Africa. The Department is responsible for 26 entities established to enable the Department to deliver on its mandate. These entities are categorised into Development Agencies, Performing Arts Institutions, Libraries, Heritage Institutions and Constitutional Entities.  


  1. Purpose of the BRR Report

Section 5 of the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) requires the National Assembly, through its Committees, to produce a Budgetary Review and Recommendation Report, which assesses the performance of each national department with reference to the following:

  1. The Medium Term Estimates of Expenditure, Strategic Priorities and Measurable Objectives, as tabled in the National Assembly;
  2. Prevailing Strategic Plans;
  3. The Expenditure Report as published by the National Treasury (NT) in terms of section 32 of the Public Finance Management Act (No. 1 of 1999);
  4. The Financial Statements and Annual Reports;
  5. The Reports of the Committee of Public Accounts; and
  6. Any other information requested by or presented to a House of Parliament.


  1. Method

In compiling the 2018/19 BRRR the Committee utilised the following documents:

  • 2018 President’s State of the Nation Address (SONA);
  • 2014 – 2019 Medium Term Strategic Framework;
  • 2015/16 – 2019/20 Strategic Plan of the Department of Art and Culture;
  • 2018/19 Annual Performance Plan of the Department of Arts and Culture;
  • 2018/19 first quarterly report of the Department of Arts and Culture and entities;
  • 2017/18 Annual Report of the Department of Arts and Culture and entities;
  • 2017/18 Budget Review and Recommendation Report of the Portfolio Committee on Arts and Culture; and
  • The National Development Plan (NDP): Vision for 2030.


  1. Portfolio Committee’s Oversight Environment

The publication of the 2014 – 2019 Medium Term Strategic Framework (MTSF) was heralded by the establishment of the fifth Parliament and the fifth administration after the 2014 general and provincial elections. The 2014 – 2019 Medium Term Strategic Framework (MTSF) identified the following priorities:

  • Radical economic transformation, rapid economic growth and job creation
  • Rural development, land and agrarian reform and food security;
  • Ensuring access to adequate human settlements and quality basic services;
  • Improving the quality of and expanding access to education and training;
  • Ensuring quality health care and social security for all citizens;
  • Fighting corruption and crime;
  • Contributing to a better Africa and a better world; and
  • Social cohesion and nation building.


These priorities were then expanded into fourteen outcomes and their associated activities and targets. Outcome 14, ‘a diverse, socially cohesive society with a common national identity’ of the NDP is allocated to the Department of Arts and Culture.


The President emphasised that during the 2014 – 2019 MTSF sport and culture will play a major role as unifying factors as they both respond to Outcome 14. It also became apposite for the government to promote inclusive heritage by erecting monuments as well as symbols that honour the heroes and heroines of the struggle who delivered the freedom and democracy in South Africa.


The President stated that the Department needed to continue with the national priority of nation building and social cohesion. The SONA highlighted the following, which may have a bearing on the work of the Department.


  • 2018 is the year of hope and renewal and the continuation of the acceleration of radical socio-economic transformation;
  • The commemoration of the 100th anniversary of the births of Nelson Mandela and Albertina Sisulu;
  • The necessity to educate “the children of the poor”;
  • The establishment of a Youth Working Group to engage with Government on its policies and programmes;
  • The creation of a team to accelerate the implementation of new infrastructure;
  • The introduction of an African language in all public schools;
  • The introduction of the National Senior Certificate (NSC) examination on South African Sign Language (SASL) offered to deaf learners at the end of 2018;
  • The call to adhere to the Batho Pele vision to ensure the ongoing transformation of service delivery;
  • The President concluded his address with a quotation of the lyrics of the late Hugh Masekela’s song, Thuma Mina (Send Me).


  1. The Portfolio Committee oversight approach

Since the beginning of the fifth parliament, the Committee has been actively involved in oversight functions. These activities seek to ensure the accelerated delivery of arts, culture and heritage services and that South Africans enjoy the value of their diverse heritage. The Committee has challenged Department’s entities to align themselves with broader strategic priorities of government and the NDP to contribute to economic growth and job creation. The Committee robustly engaged with the Department and its entities to ensure that they fulfil their constitutional mandate.

The Committee acknowledges that the Department has a pivotal role to play in realising the vision of the NDP. The Committee believes that the strengthening of the current programmes of the Department could enhance the delivery of services and a realisation of a dream of a ‘better life for all’.


  1. Oversight role of the Committee

As mandated by section 55 of the Constitution of the Republic of South Africa, 1996, the Committee exercised it oversight function through robust portfolio committee meetings where the executive accounts on a regular basis. The Committee has to date not conduct oversight visits in 2018/19 financial year. However, the Committee has called the Department and entities to Parliament to account for performance and other pertinent matters.  



  1. Overview of the key relevant focus areas

The following policy developments and achievements characterised the sector during the 2017/18 financial year:


  1. National Policy on South African Living Heritage

Living heritage has the potential to promote social cohesion and nation building. It could also facilitate and improve livelihoods of individuals and communities. It provides a basis on how people understand themselves, their places in the world and their relation to other people.


  1. Policy Framework for National Museums

The aim of the policy is to transform the management and operation of museums in terms of access, redress, equity, social cohesion and nation building.


  1. National Policy Framework on Underwater Cultural Heritage

The policy establishes an integrated approach whereby the Minister and the Department, as the custodian of South African heritage, will work in partnership with relevant government departments and a range of other stakeholders to ensure that underwater cultural heritage is safeguarded for the benefit of all South Africans and for the world.


  1. National Policy on the Digitization of Heritage Resources

The process to develop a National Framework on the digitization of heritage resources was informed by many digitisation projects that have been and continue to happen in the country. There were no norms and standards of doing it, such that it presented some risks to the South African heritage.


  1. White Paper on Arts, Culture and Heritage

The Department conducted a Socio-Economic Impact Assessment (SEIA) to finalise the revision on the 1996 White Paper. The SEIA was finalised in March 2018 to allow the Cabinet processes to take place.


  1. Employee wellness programme

The Public Service Regulations, 2016 as amended, paragraph E.5, requires that the Heads of Departments should put in place health promotion programmes that are meant to raise and intensify appropriate education, awareness and prevention interventions. The Department ensures that wellness promotion campaigns are conducted once every quarter to encourage healthy lifestyle and reduce risk of ill health.


  1. Social Cohesion Programme

As part of the Social Cohesion Programme, The Department supported the Albinism Awareness Campaign held at Freedom Park, Pretoria on 29 June 2017. The campaign was attended by people with albinism and various supporting groups such as police and the academic sector.


  1. International Relations Programme

The celebrations kicked off with a launch at the National Heritage Monument and Heroes’ Acre site in Pretoria on Wednesday, 3 May 2017. From there on, the Department hosted highly successful Africa Month festivities featuring various arts and culture disciplines, including music, literature, film, fashion and cuisine, along with panel discussions and dialogues.


  1. The Incubator Programme

Over the past two years, each of the six Performing Arts Institutions have received a grant from the Department’s Incubator Fund to unleash the economic potential of the creative sector through a structured programme of skills training and the development of locally produced content in the performing and visual arts sectors. The first Incubator Trade Fair, which took place at the Market Theatre in Johannesburg from 19 – 25 June 2017 sought to display the arts development initiatives emanating from the Incubator Programme.


  1. The South African Cultural Observatory

The 2017 – 18 financial year saw the successful hosting of the second South African Cultural Observatory National Conference from 24 – 25 May 2017. Respected global and local subject matter experts, researchers and practitioners spent time exploring and debating the theme, "The Creative Economy and Development”, drawing on perspectives from Africa and around the world. The theme is very relevant for the South African government, which is exploring new options to expand and thus grow the economy. The Conference coincided with Africa Day (25 May) celebrations and as such, most of the discussions were premised on the African experience of growing, maintaining and developing a strong cultural and creative economy.


  1. Indoni Cultural Festival

The Indoni Cultural Festival was held in Durban on 9 October 2017. Indoni is a celebration of our culture and heritage, bringing together various cultures from across the country while displaying their diversity and richness through various activities and functions. The Festival included the Indoni Miss Cultural South Africa 2017 event. Finalists were chosen by a panel of judges within their regions to represent their cultures. The selection criteria included the Indoni Culture School exam results, understanding of their cultures, living their cultural values, cultural performances, and their confidence and potential to be effective ambassadors for their culture.


  1. Commemorations and Celebrations

A colloquium in honour of the late Stephen Bantu Biko was hosted at Freedom Park’s Gallery of Leaders in Pretoria on 11 September 2017. Under the theme, “The Year of OR Tambo: Celebrating Our Liberation Heritage and Black Consciousness”, the event marked 40 years since the death of Steve Biko, the leader and founder of the Black Consciousness Movement, and dealt with a broad array of issues that exemplified Biko’s life as an intellectual and a political activist.


  1. Library and Information Association of South Africa (LIASA) Conference

The 18th LIASA Annual Conference, under the theme “Re-envisioning the Role of Library and Information Services” was held at the Birchwood Hotel in Boksburg from 2-6 October 2017. The theme sought to guide discussions on the current state of libraries and librarianship in South Africa, including the future of the South African library and information services sector. The Deputy Minister, Ms. Maggie Sotyu delivered the keynote address for the Conference.


  1. The 14 National Oral History Conference

The 2017 National Oral History Conference was held under the theme “OR Tambo in Memoriam: Reminiscing on a Centenary of Struggle, True Leadership & Leadership Values of the Liberation Stalwart”. The Conference was organized by the Department in partnership with the Oral History Association of South Africa (OHASA) and the Eastern Cape Department of Sport, Recreation, Arts and Culture, and served as a platform for an exchange of ideas, for sharing research findings and as an opportunity for skilling new oral history practitioners.


  1. National Archives Week

As part of Africa Month celebrations, the Department hosted the Archives Awareness Week

from 8–12 May 2017 under the theme, "The Year of OR Tambo: Archives - Promoting Youth Education”. The Archives Awareness initiative seeks to highlight the significance and the role of the National Archives and Records Service of South Africa in terms of collecting and preserving South Africa’s documentary heritage. The awareness programme further seeks to highlight career paths that can be pursued in the archiving profession.


  1. Summary of previous key financial and performance recommendations of Committee


  1. 2017 BRRR Recommendations

During the 2017 BRRR the Committee made the following recommendations:


  • The Department should ensure that it achieves all the targets by planning thoroughly and holding respective managers accountable for non-performance. The Department should ensure that they respond to the matters raised by the Auditor-General of South Africa (AGSA) and work on them to get a clean audit.  
  • The Committee commends all the entities that have improved in their audits. Senior management, leadership of the entities that have regressed should pay close attention to all the AGSA findings and matters of emphasis that made them to regress. The accounting authorities of entities should strengthen their oversight and monitoring.
  • Auditees that submitted financial statements of poor quality, and as such do not comply with the PFMA, for auditing should strengthen their processes and controls to create and sustain a control environment that supports reliable reporting. Their internal processes (internal audit) should be strengthened to enable them to identify misstatements in the financial statements. Misstatements should be corrected before the financial statements are submitted to the AGSA for auditing.
  • The Department should strengthen their oversight and monitoring unit so that the problems that occurred at Performing Arts Company of the Free State (PACOFS) do not recur. The management at PACOFS should act on recommendations made by the AGSA in a timely manner and implement action plans for internal controls that are sustainable. Since the bulk of the Department’s budget is transferred to its entities, the oversight and monitoring of all entities should be strengthened.
  • When inducting Councils that govern entities, the Department should ensure that they spell out the Committees’ legislative mandate.
  • The Department has to plan meticulously so that it achieves its targets and expends the budget appropriately and fully.
  • The underspending on Capital Works projects is a recurring matter. The officials who are involved in the Capital Works projects should account for this. The Department should plan in such a way that the scoping work is given a full year to be completed and the following year, it must done over a year and be planned accordingly.
  • The Department should ensure that it achieves what it has planned and it expends the funds accordingly. The Department should do quarterly reviews on its expenditure to check if it is on track on its expenditure. The Committee declares under-expenditure unacceptable.
  • The Department should ensure that they follow-up to the recommendations as per the forensic report of the Enyokeni Cultural Precinct project and ensure that perpetrators are brought to book.
  • The challenge in relation to the procurement processes for the Khoisan Heritage Route should be resolved by the Department as soon as possible so that the project can continue.
  • Although the report from the Department states that, the confirmation of the commencement of the project will be issued in the 2018/19 financial year, the Department should proactively put a project plan in place. As the Department states that they will execute the project themselves by appointing experts to assist in planning and implementation of the project. The Department should therefore, in the lead up to the implementation, look for people with the relevant expertise so that the project can commence without any delays.
  • The Department should ensure that it gets reports from universities of all its bursary recipients with all their demographics (sex, age, language and disability status).  
  • The Committee brought the Department, AGSA and NT together to resolve the challenges of Generally Recognised Accounting Practice (GRAP) 103: Heritage Assets. The Department should use the information from the meeting they had with the AGSA and NT to guide and assist the entities to overcome the problems brought by GRAP 103.



  1. 2017/18 Committee Budget Report


The Committee supported the 2017/18 budget of the Department and its Annual Performance Plan (APP). It also supported the strategic alignment of the Department’s programmes with the NDP.


  1. Overview and assessment of the 2017/18 vote performance
    1. Service Delivery Performance for 2017/18

The Department achieved 82% of its planned targets (53 out of 65 targets) during the 2017/18 financial year. The following are the highlights of the Department’s achievements:


  • Programme 1: Administration
    • All payments were made within 30 days.
    • 31 Izimbizo were held.
    • The vacancy rate is at 3.9%, well below 10%.


  • Programme 2: Institutional Governance
    • 12 international engagements were facilitated.
    • 8 Africa/Middle East Engagements were facilitated.
    • 24 shareholder compacts were signed.
    • All Councils for the public entities reporting to the Department were fully constituted.
    • The Department’s Annual Report was tabled in Parliament within the deadline.
    • 300 young patriots were supported.
    • One Moral Regeneration Movement programme was supported
    • 22 social cohesion advocates platforms were created and/or supported.


  • Programme 3: Arts and Culture Promotion and Development
    • 20 flagship events were supported financially.
    • 30 cultural and creative sector projects were supported financially through Cultural Events.
    • Four terminologies were developed in four domains (ICT, Finance, Pharmaceutical and Engineering).
    • 30 touring venture projects were supported financially.
    • 27 research reports were produced.
    • 352 artists were placed in schools.
    • 329 bursaries were awarded towards development of qualified language practitioners.
    • 14 incubator projects were financially supported.


  • Programme 4: Heritage Preservation and Promotion:
    • 18 living human treasures were documented.
    • 27 newly built and/or modular libraries were supported financially.
    • 41 library maintenance and / or upgraded projects were supported financially.
    • 12 records management inspections were conducted.
    • 6 784 national symbols toolkits were distributed to district offices of the Department of Basic Education.


  1. Voted funds and expenditure patterns
    1. Overview and assessment of financial performance


The Department’s final appropriation for the 2017/18 financial year was R4.372 billion. Actual expenditure for the period under review was R4.141 billion. Expenditure thus represents 94.7 % of the final appropriation. The rate of expenditure against final appropriation has regressed for a second consecutive year. During 2015/16, the rate of expenditure was 98.3 % of the final appropriation. This fell to 97.4 % in 2016/17.


  1. Appropriation statement for the 2017/18 financial year


Below is the Department’s appropriation statement for the 2017/18 financial year. This shows appropriation per programme:


Table 1: Appropriation per programme

Voted funds and direct charges


Adjusted appropriation

Shifting of funds


Final appropriation

Actual expenditure


Expenditure as % of final appropriation









  1. Administration

370 422

1 916


372 208

322 208

50 130


  1. Institutional Governance


297 420


1 299


(1 000)


297 719


161 635


136 084



  1. Arts and Culture Promotion and Development




1 092 595




(1 763)








1 090 832




1 050 635




40 197





  1. Heritage Promotion and Preservation



2 611 301



(1 452)



1 000



2 610 849



2 607 002



3 847





4 371 738



4 371 738

4 141 480

230 258



As reflected above, overall under-expenditure amounted to R230.3 million or 5.3 % of the final appropriation. Under-expenditure in 2016/17 amounted to R105.1 million or 2.6 % of the final appropriation. This therefore indicates a year-on-year increase in unspent funds.


Programme 2, once again, drastically underspent on its final appropriation. This programme only spent 54.3 %, or R161.6 million of the total appropriation of R297.7 million. In 2016/17 expenditure for this programme stood at 80.2 %.


In its 2017/18 annual report, the Department provides the following reasons provided for under-expenditure:


Table 2: Reasons provided for under-expenditure in sub-programmes


Reasons for under-expenditure

1: Administration

  • The under-expenditure was due to ICT network project for the VWL Building (the Ministry’s physical location) emanating from delays in delivery of equipment from overseas.

2: Institutional Governance

  • Delays with the implementation of capital works projects.

3: Arts and Culture Promotion and Development

  • Delays with the implementation of projects by beneficiaries of Mzansi Golden Economy, and with the upgrading of Community Arts Centres projects.

4: Heritage Promotion and Preservation

  • The under-expenditure was due to non-completion of infrastructure project.


  1. Department’s performance against the pre-determined objectives

The table below provides a concise overview of general performance for the period under review.


Total budget spent


Total targets set


Targets achieved


Targets not achieved


Success rate



In the annual report, the following are reported as the key challenges for non-achievement of targets.


Programme 1:

  • The Department has once again not fully expended its budget allocation. While the Department has planned to expend 100 % of the annual budget, only 94.7 % was spent.
  • The planned target of having 50 percent women employed at senior management service (SMS) level was not achieved. As at the end of the financial year, only 47.8 % of people employed at this level were women.
  • The Revised White Paper (RWP) on Arts, Culture and Heritage (ACH) was not submitted to Cabinet as planned.




Programme 2:

  • The Department’s User Asset Management Plan (UAMP) was not approved. The contract with the appointed service provider (Bigen Africa Services) was terminated due to failed to comply with the terms of reference. The Department appointed a second service provider at the end of February 2018.


Programme 3:

  • Only seven out of the planned 20 public art projects were financially supported during the period under review. The Department cites delays in setting up the adjudication panel to process Mzansi Golden Economy funding requests/applications and non-compliance by beneficiaries as a reason for this deviation.
  • The Department failed to financially support 150 community arts projects as planned. The AGSA notes that the supporting evidence provided indicates that only 85 projects were supported instead of the 150 claimed by the Department.
  • Only one Community Arts Centre (CAC) refurbishment project was supported while the Department has planned to support a total of 15. The Department claims that funds could not be transferred to the implementing agencies due to non-submission of compliance documents. The refurbishment project also failed to achieve its target in the 2016/17 financial year.


Programme 4:

  • The Department financially supported three out of four multi-year projects to modernise the archives.
  • The policy on the digitisation of heritage resources was not developed.
  • Five out of eight file plans were evaluated and approved.



  • The submission rate of performance agreements for the 2017/18 financial year was 85.6 % for salary levels 1-12 and 82.2 % for the senior management service.



  1. Contextualising the report of the Auditor General of South Africa and its implications
    1. Financial Audit


The Department has achieved a financially unqualified audit opinion with findings. The audit opinion thus remains unchanged from those achieved for the last three years. The following section contains an overview of matters raised by AGSA.


  1. Audit on pre-determined objectives

The AGSA performed procedures to obtain evidence about the usefulness and reliability of the reported performance for the following programmes: Programme 2: Institutional Governance and Programme 3: Arts and Culture Promotion and Development. The AGSA performed further procedures to determine whether the indicators and related targets were measurable and relevant and whether the information was valid, accurate and complete.


On Programme 2:

  • Indicator 11: Number of arts education programmes supported.

The planned target for this indicator was not specific in clearly identifying the nature and required level of performance and not measurable. The supporting evidence submitted to the AGSA did not agree to the reported achievement in the annual report. The AGSA thus recorded an achievement of nil compared to the achievement of one as per the annual report.


  • Indicator 16: Number of social cohesion advocates platforms created and/or supported.

The AGSA was unable to obtain sufficient appropriate evidence for the reported achievement. This is due to the absence of evidence for the appointment and/or approval of social cohesion advocates. As such, the AGSA was not able to verify if the platforms were conducted by appointed social cohesion advocates. The AGSA tried to confirm the reported achievement through other means, but was not successful.


On Programme 3


  • Indicator 13: Number of community arts projects supported financially.

Supporting evidence submitted to the AGSA did not substantiate the reported achievement of 150. Based on the evidence provided, the achievement for this indicator was 85 instead of 150 as reported.


  • Indicator 15: Number of artists placed in schools.

Management did not have adequate controls in place to verify the source supporting the actual reported performance. The reported achievement of 352 artists placed in schools is therefore questionable because of insufficient appropriate audit evidence.


  1. Compliance with the laws and regulations
  1. Annual financial statements

The financial statements submitted were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1)(b) of the PFMA. The AGSA identified material misstatements on commitments and contingent liabilities in the submitted financial statements. Material misstatements were corrected which resulted in the financial statements receiving an unqualified audit opinion. 





  1. Procurement and contract management

Goods and services of a transaction value above R500 000 were procured without inviting competitive bids. The accounting officer approved deviations even though it was practical to invite competitive bids. Further, the Department did not always advertise invitations for competitive bidding for a required minimum period. All these actions are in contravention of Treasury Regulations governing procurement management.


  1. Expenditure management

The Department failed to take effective steps to prevent irregular as well as fruitless and wasteful expenditure. The AGSA notes that effective and appropriate steps were not taken to prevent irregular expenditure amounting to R12.3 million. The majority of the irregular expenditure incurred is because of deviation from the normal procurement processes. Fruitless and wasteful expenditure amounting to R32.5 million was incurred through rental paid on an unoccupied building. The AGSA has flagged expenditure management for at least three successive financial years.


  1. Consequence management

Disciplinary steps were not taken against some of the officials who had incurred or permitted irregular and fruitless and wasteful expenditure as required by the PFMA. This matter was raised by the AGSA in the previous financial year as well.


  1.   Internal control deficiencies
  2. Leadership

The AGSA identified weaknesses in leadership as controls in place were not always effective to ensure oversight monitoring and review of compliance with laws and regulations, annual performance report and the annual financial statements.


  1. Financial and performance

Management did not perform adequate review of the annual financial statements as well as the annual performance report submitted for audit purposes. Further, the failure to implement adequate controls in place to prevent detect non-compliance with laws and regulations resulting in the occurrence of irregular and fruitless and wasteful expenditure.


  1. Observations
  • Succession Plan: The Department does not have an internal succession policy making it challenging to appoint senior personnel once senior managers move on. An example is that the DAC is struggling to fill the vacancy of a Deputy Director-General (DDG) for Arts and Culture Promotion and Development.
  • Recruitment and Selection: The Department advertises vacancies first and then resorts to using employment agencies when suitable candidates do not apply for the vacancies.
  • Proper planning: The Department seems not to be using the Specific, Measurable, Attainable, Relevant and Time bound (SMART) principle in their planning.
  • Mzansi Golden Economy (MGE): There has been persistent underspending on the MGE projects, such that it has failed to create the desired jobs. This is partly due to the lack of effectiveness of the MGE adjudication committee.
  • Consequence management: Disciplinary steps were not taken against some of the officials who had incurred or permitted irregular and fruitless and wasteful expenditure as required by the PFMA. This is a recurring finding as the AGSA also raised it in the 2016/17 financial year.
  • Leadership: The AGSA identified weaknesses in leadership as controls in place were not always effective to ensure oversight monitoring. A case in point is the Department’s inability to assess/verify the impact of its artists in schools programme.
  • The Department lacks consequent management as it fails to reprimand officials who incur fruitless, wasteful and irregular expenditure.
  • Irregular, fruitless and wasteful expenditure: Irregular expenditure amounting to R12.4 million was incurred during the period under review. Fruitless and wasteful expenditure amounting to R32.6 million was incurred during the period under review. As this is a recurring finding, it is illustrative that the Department is failing dismally to prevent irregular, fruitless and wasteful expenditure.
  • Under-expenditure: The Department reported under-expenditure in all programmes. Under programme 3, Capital Works only expended 31.1% of its budget. The Department historically underspends on Capital Works projects and this, to a large extent, points to leadership inefficiency.
  • Under-expenditure: This is a recurring matter and should be addressed through proper and adequate planning.



  1. Recommendations   
  • Succession Planning: The Department should develop a succession policy and ensure that all employees are part of its development as well as its implementation.
  • Recruitment and selection: When the Department uses agencies, the prospective employee should be in the employment of the Department not that of the agency.  This is in line with the recent amendment of the Labour Relations Act (LRA) (Act 66 of 1995), which dictates that clients of labour brokers have to hire contractors after three months who earn less than R205 433 annually.
  • Proper Planning: The Department should ensure that it applies the SMART principles in their planning.
  • Mzansi Golden Economy: The Department should find ways of utilising these funds effectively so that the anticipated jobs could be created. 
  • Consequence Management: Leadership should ensure that all those who are found to have contravened legislation, policies and regulations are reprimanded accordingly.
  • Leadership: the Department should strengthen its monitoring on all of its entities, and all the personnel in the monitoring and evaluation unit should be held accountable for underperformance on entities.
  • Irregular, fruitless and wasteful expenditure: Internal control mechanisms should be strengthened to curb the recurrence of irregular, fruitless and wasteful expenditure. The Public Financial Management Act (PFMA) section 81 (1)(b) states that an accounting officer of an institution commits an act of financial misconduct if that accounting officer wilfully or negligently permits an unauthorised expenditure, an irregular expenditure or wasteful expenditure.  All senior managers if found to have been negligent on irregular, fruitless and wasteful expenditure, should be held accountable.
  • Under-expenditure: The management should draft an operational plan that will make them spend the budget on Capital Works as planned.  


    1. National Film and Video Foundation (NFVF) ( 09 October 2018)

The National Film and Video Foundation (NFVF), which has been operating since 2001, is governed by the National Film and Video Foundation Act (Act 73 of 1977), as amended by the Cultural Laws Amendment Act (Act 36 of 2001), to develop and promote the film and video industry in South Africa. 


  1. Financial performance

In its 2017/18 budget, the Department funds the institution through the NFVF sub-programme in Programme 3: Arts and Culture Promotion and Development. The budget allocation for the 2017/18 financial year was R129.1 million. Relative to the 2016/17 budget allocation, this represents a nominal increase of 5.0%, or R6.2 million.


  1. Auditor General Report

The entity received an unqualified audit opinion with findings for 2017/18 financial year. The findings of the AGSA were:


  •  Irregular expenditure: The NFVF incurred irregular expenditure of R7.1 million due to overspending of the budget and not following proper tender process.


  • Performance information: The AGSA selected three programmes, namely Programmes 1, 3 and 4 for the audit of the annual performance. Programme 2: Policy and Research and Programme 5: Administration and Human Resources were excluded from the audit process. The AGSA did not identify any material findings on the usefulness and reliability of the reported performance information;


  • Compliance with legislation:
    • The financial statements submitted to the AGSA for auditing were not prepared in accordance with the prescribed financial reporting framework. Material misstatements identified by the auditors were corrected resulting in the financial statements receiving an unqualified audit opinion.
    • The AGSA notes, “A person in the service of the entity whose partner or associate had a business interest in a contract awarded by the entity participated in the process relating to that contract in contravention of treasury regulation 16A8.4.”


  • Internal control deficiencies: Management had not prepared regular, accurate and complete financial and performance reports supported and evidenced by reliable information. In addition, management did not effectively monitor compliance with applicable laws and regulations



  1. Observations
  • The process of funding films and bursaries is not clear.
  • The surplus funds has decreased over the last three years.
  • The entity seems to focus on Hollywood and ignoring Bollywood although South Africa is member state of the Brazil, Russia, India, China and South Africa (BRICS) group.
  • The entity is the only one that has tried to recoup misused monies by employees.


  1. Recommendations
  • There should be a clear plan of funding films and bursaries and it should be documented.
  • There entity should find means and ways of raising more fund so as not to deplete the surplus funds.
  • The entity should change its focus to include the Bollywood industry.
  • The entity should maintain its stance on taking action against employees who have transgressed legislation, regulations, and policies pertaining to SCM.


  1. National Library of South Africa (09 October 2018)

The National Library of South Africa (NLSA) is established in terms of the National Library of South Africa Act (Act 92 of 1998). Its objectives and functions are prescribed by this legislation. In the main, the NLSA is mandated to collect, preserve, make available and promote awareness of the national documentary heritage.

  1. Operational performance:

The entity achieved 90% of its targets.  The following targets were not achieved:

  • Own revenue generation: The NLSA has planned to generate own revenue to totalling R6.4 million. Only R2.7 million or 43% of the target was achieved. They cite delays in the approval and implementation of the revenue generation strategies as the main driver for not achieving this target.
  • Irregular expenditure: The target to reduce the number of incidents of irregular expenditure was not achieved. In fact, compared to the 11 incidents in the 2016/17 financial year, 25 new incidents of irregular expenditure were incurred during 2017/18.
  • Resolution of audit findings: Three out of 37 audit findings remain unresolved as at the end of the financial year. These include findings relating to GRAP 103 and with measures put in place, should be resolved.
  • Number of monograph publications purchased: This project was temporarily suspended as part of the GRAP 103 project. The NLSA had planned to purchase 1 000 monographs but only 198, or just under 20%, were acquired.

Number of serial publications subscribed to: Nineteen fewer serial publications were subscribed compared to the planned target of 90. The NLSA explains that because of cost containment measures certain serial publications, including those that are deemed too expensive were cancelled.


  1. Financial Performance






Total revenue



Total expenditure



Percentage expenditure

Fruitless and wasteful expenditure


Irregular expenditure incurred


Surplus (Deficit)


85 934 000

175 726 661

261 660 661

262 965 116


88 129

1 487 039

2 147 544


  1. Auditor General Audit Report

In 2017/18 financial year, NLSA received a qualified audit opinion, which is the same as 2016/17 financial year. This means that the NLSA did not act on the AGSA’s recommendations to correct their misdemeanours of 2016/17. The findings by the AGSA are:


  • Annual financial statements: The submitted annual financial statements for auditing were not prepared fully in accordance with the prescribed financial reporting framework and supported by full and proper records as required the PFMA.
  • Expenditure management: Effective steps were not take to prevent irregular expenditure amounting to R1.5 million.
  • Assets management: Proper control systems to safeguard and maintain heritage assets were not implemented, as required by the PFMA
  • Supply chain management (SCM): The majority of the irregular expenditure was caused by non-compliance with SCM prescripts.
  • Leadership: The leadership failed to exercise adequate oversight responsibility regarding financial and performance reporting and compliance as well as related internal controls.
  • Financial and performance management: Management did not prepare regular, accurate and complete financial and performance reports that are supported and evidenced by reliable information; management also did not review and monitor compliance with applicable laws and regulations.



  1. Observations
  • There was an increase in professional fees, and one board member was used as a consultant by the entity.
  • The entity had spent approximately R800 000 on litigations.
  • The number of entrants to the library had decreased markedly.


  1. Recommendations
  • The PFMA section 50 (2)(b) states that a member of an accounting authority may not use the position or privilege for personal gain. It is clear that the entity did not observe the aforementioned clause of the PFMA when one of its board members was accorded an opportunity to consult in the entity. The entity should ensure that no board member does work for the organisation in future.
  • The entity should try to solve staff challenges internally so that it is not exposed to unnecessary litigation. It must be noted that in a case whereby the entity loses a case, which could have been solved internally, that respective manager who lodged the case, should pay the litigation fees from his/her pocket.
  •  The marketing unit of the entity should work hard to increase the numbers of students using the library.


  1. Ncome/Msunduzi Museum (09 October 2018)

Ncome Museum is located in Nqutu about 40km from Dundee in KwaZulu-Natal (KZN) and overlooks a historically significant battlefield. The museum was constructed as one of the Legacy Projects, and established in 1997 in terms of the Cultural Institutions Act as amended in 1998. The second phase was completed during the 2012/13 financial year.


Msunduzi Museum is located in central Pietermaritzburg, KZN. The site is also one of Pietermaritzburg’s important heritage attractions, comprising historic buildings which have been repurposed to deliver inclusive and appropriate museum services and exhibitions.

Msunduzi Museum is a Cultural Institution in terms of the Cultural Institutions Act 119 of 1998 as amended. The Msunduzi Museum also takes responsibility for the Ncome Museum which is an undeclared institution.


  1. Operational performance

The entity achieved 89% of its planned targets. The achievement per programme was as follows:


  • Administration:  83% of targets were achieved (one target was over achieved and one target not achieved).
  • Business Development: 91% of targets were achieved (seven targets were over achieved and one target was not achieved).
  • Public Engagement (Exhibitions): 75% targets were achieved (three targets over achieved and one target not achieved).
  • Public Engagement (Education): 100% targets were achieved (six targets over achieved).


  1. Budget and Expenditure











(Over)/Under Expenditure







(Over)/Under Expenditure









Public engagement









Business development








Total by Expense Items









  1. Challenges
  • Funding: The reserves are depleted because the institution has utilised them. 
  • Remuneration rates and provision of adequate funding for governance structures.
  • A large amount of expenditure is related to audit fees:
    • Internal Audit R177 727 (1.1% of total operating expenditure)
    • AGSA R702 865 (4.4% of total operating expenditure)
  • The implementation of GRAP 103 on an ongoing basis will require additional funding in order to undertake entire collection revaluation every five years.


  1. Auditor General Audit Report:

The entity received an unqualified audit opinion.

The AGSA selected two programmes for evaluation of the usefulness and reliability of reported performance information, namely Programme 2 and 3.


  • Programme 2: The AGSA flagged an issue with measurability, as it was unable to obtain sufficient appropriate evidence to support the achievement of the target relating to the purchase, cataloguing and digitisation of library materials.
  • Programme 3: No findings.
  • The annual financial statements submitted for auditing were not prepared fully in accordance with the prescribed financial reporting framework and supported by full and proper records as required the PFMA.
  • Expenditure management: No preventative measures were in place to prevent irregular expenditure.
  • Leadership: Policies were not adequately implemented to create the environment for certain processes to be adequately administered. Action plans were not effective to avoid repeat findings.


  1. Observations
  • The vision of the entity is not ambitious.
  • The entity is in a seSotho speaking area, but its language use/usage does not consider seSotho. 
  • The entity did not act on the AGSA findings to curb repeat findings.
  • The reserves of the entity are being depleted.


  1. Recommendations
  • The vision of the entity should be revised so that it can have better ambition so that the entity can aspire to achieve more.
  • The entity should enlist the use of the language unit of the DAC to assist them with translation of isiZulu to seSotho.
  • Leadership should play its role and ensures that it acts on AGSA findings stop repeat findings.
  • The management of the entity should work hard to increase its reserves by having more people visiting the museum. A new marketing strategy should be devised.


  1. Ditsong Museums of South Africa) (16 October 2018)

Formerly known as the Northern Flagship Institution, Ditsong Museums of South Africa (DMSA) is an amalgamation of eight national museums; seven located in Tshwane and one in Johannesburg. The Cultural Institutions Act (Act 119 of 1998) gave effect to the amalgamation in order to drive national development and transformative imperatives. The DMSA is a Schedule 3A public entity in terms of the Public Finance Management Act (Act 1 of 1999) (PFMA) and an agency of the Department of Arts and Culture (Department). Ditsong operates under the jurisdiction of a council appointed by the Minister responsible for Arts and Culture.


  1. Operational performance

The entity achieved 79% of its targets. This is an improvement from the 45% achievement in the previous financial year.


  1. Financial performance







Total revenue



Total expenditure



Percentage expenditure

Fruitless and wasteful expenditure


Irregular expenditure incurred


Surplus (Deficit)


80 777 000

38 862 185

119 639 185

124 348 303


307 507

27 572 988

(4 709 118)


The irregular expenditure incurred during 2017/18 comprises the following incidents:


  • R12 693 for services rendered without an official purchase order;
  • R960 162 for a contract continued on a month to month basis;
  • R118 503 – no formal approved deviation;
  • R26.5 million – bid advertised for less than 21 days without approval from NT.


  1. Auditor General Audit Opinion

In the year under review, the entity received a qualified audit opinion, which is an improvement from the previous year adverse audit opinion.  The basis for the qualification are twofold:


  • Heritage assets: The AGSA was unable to obtain sufficient appropriate audit evidence for valuation of Heritage assets. This is because the entity did not maintain complete records of the information used to determine values of heritage assets. The AGSA also could not confirm the amounts by alternative means which then resulted in the AGSA being unable to determine whether any adjustment was necessary to the value of the heritage assets in the financial statements.
  • Prior period error: The AGSA was unable to obtain sufficient appropriate audit evidence for the amount disclosed in the prior period error for the adjustment of R1 726 354 on fruitless and wasteful expenditure, R1 287 291 for irregular expenditure, R1 628 245 for trade and other payables and R8 237 189 for revenue from exchange transaction.

The AGSA findings were:

  • The annual financial statements submitted for auditing were not prepared fully in accordance with the prescribed financial reporting framework and supported by full and proper records as required the PFMA.
  • Material misstatements of revenue from revenue from non-exchange, irregular expenditure, fruitless and wasteful expenditure and commitments identified by the auditors in the submitted financial statements were corrected.
  • Expenditure management: Effective steps were not take to prevent irregular and fruitless and wasteful expenditure.
  • Consequence management: The AGSA was unable to obtain sufficient appropriate evidence that disciplinary steps were taken against officials who had incurred irregular and fruitless and wasteful expenditure. Disciplinary steps were not taken against some officials who had contravened the PFMA.


  1. Observations
  • The entity is struggling to achieve its set targets.
  • The management does not execute consequence management.
  • The entity received a qualified audit opinion, which shows that the entity is not working towards receiving a clean audit.
  • The matter of the post-retirement medical aid is a challenge to the entity.
  • The entity does not have a policy on career pathing and succession planning.
  • The vision of the entity is not ambitious enough.


  1. Recommendations
  • The entity needs to strive to achieve the targets it sets.
  • It is imperative that the entity executes consequence management when required.
  • The entity should work towards receiving a clean audit.
  • The post-retirement medical aid matter needs to be addressed.
  • Concerted effort is needed to implement career pathing and succession planning.
  • The entity should revise its vision, as it is not ambitious enough.



  1. Summary of the Audit outcomes of the Department and the entities

The Committee notes that there has been a 27% improvement in the audit outcome of the portfolio, with an increase of clean audits from four in 2016/17 financial year to seven in 2017/18 financial year. Encouragingly, qualified audit opinion decreased from eight in 2016/17 financial year to six in 2017/18 financial. The decrease in qualification is due to the improvement of the audit outcome for five out of seven entities previously qualified on GRAP 103.

The Committee commends entities that received a clean audit for a second year in a row. The Committee is deeply concerned that six auditees received a qualified audit opinion.

It is encouraging that DMSA and PACOFS who previously received adverse opinion received qualified opinion. This is an improvement on the part of these entities; however, they need to strengthen their controls to get an unqualified audit opinion.


  • Impact of General Recognised Accounting Practise (GRAP) 103 standard to the audit outcomes

The accounting standard, GRAP 103, which was effective from 2014/15 financial year, is a contributor to the portfolio for getting qualified audit opinion. However, there has been a decrease in qualification as five out of seven entities who received qualification in the previous financial year because of the GRAP 103 standard, were able to resolve it.


  • Entities with irregular, fruitless and wasteful expenditure within the vote

The Committee is concerned that there has been an increase in irregular expenditure by entities. The increase is from R129 million to R135 million, which is a 5 percent increase from 2016/17. The irregular expenditure was due to uncompetitive and unfair procumbent processes in seven percent of the entities, and in 15 percent of the entities, three quotations were not obtained. Most (78%) of the irregular expenditure was incurred by six entities in the portfolio, namely DMSA (22%), State Theatre (17%), the Department (13%), the Pan South African Language Board (12%), Iziko (7%) and PACOS (7%).


The total fruitless and wasteful expenditure incurred in the portfolio in the current financial year increased to R35 million from R3 million in the previous financial year. Ninety five percent of the fruitless and wasteful expenditure, which is R33 million was incurred by the Department on rental payment of their previous accommodation and incurring penalties. The Committee is concerned of the steep increase on fruitless and wasteful expenditure. The Committee views perpetual irregular expenditure and fruitless and wasteful expenditure with discontent as it has a malicious impact on the public trust on the Department and its entities.


  1. Performance overview of 2017/18
    • Expenditure within the Vote


For the 2017/18 financial year, the total budget allocation was R4.327 billion. The Department has spent R4.141 billion or 94.7% of its adjusted budget by 31 March 2018. The rate of expenditure has regressed from a 97.4 percent in the previous financial year to 94.7% in the financial year under review.


R3.5 billion or 80% of total expenditure was spent on transfers and subsidies and R584.4 million or 13.6 % of total expenditure was on current payments. The bulk of operational spending, which is R430.9 million was on goods and services and compensation of employees.


Total expenditure up to the end of the first quarter (June 2018) amounts to R919.1 million or 21% of the main appropriation. This is comparable to spending in the first quarter of 2017/18 during which R812.6 million of the main appropriation of R4.4 billion, or 21%, was spent.


The Department has failed to expend the quarterly projected budget for each of the four budget programmes. Expenditure in Programme 2: Institutional Governance, which historically incurs under-expenditure, has one again shown slow spending. In the current financial year, expenditure stood at R26.6 million out of the main appropriation of R416.0 million, or 6.4 %. This is well below expenditure in the first quarter of the 2017/18 financial year, when this programme spent 12% of its appropriated budget. According to the Standing Committee on Appropriations (SCOA) report, the overall under-expenditure is mainly attributed to slow spending on payments for capital assets in Programme 2 (heritage assets) and in Programme 1 on operating leases and property payments. Further, the Committee notes that while Programme 2 underspent on its budget by 74%, it achieved six out of the seven, or 86%, of the planned targets for the first quarter.


The Department reports an increase in the percentage of targets achieved during the first quarter when compared to the 2017/18 financial year. While 79% of targets were achieved in the first quarter of 2017/18, 89% was achieved in 2018/19. There is however no increase in percentage expenditure.


The SCOA report has raised the following matters in relation to the first quarter expenditure:


  • Programme 1: Under-expenditure incurred by this budget programme is lower than projected by R13.5 million, or 17.9%, mainly for office accommodation due to delayed submission of invoices as well as municipal service charges by the Department of Public Works.
  • Programme 2: The bulk of the under-expenditure is attributed to poor spending on infrastructure projects due to delays in signing a Service Level Agreement (SLA) for the Winnie Mandela House and Clinic; delays in the implementation of capital works at the JL Dube House, OR Tambo Memorial, Isibhubhu Cultural Arena (eNyokeni), Isandlwana (statue of King Cetshwayo) and the Raymond Mhlaba statue projects. Slow spending on infrastructure is also attributed to suspended payments on the Delville Wood Museum project as a result of substandard construction work at the site.
  • Programme 3: The lower than projected expenditure by R16.3 million, or 5.2%, is mainly under Transfers and Subsidies for the Mzansi Golden Economy (MGE) projects. The reason provided for this is the receipt of fewer applicants for MGE financial support than anticipated. The report also states, “slow spending was also experienced on capital transfers to public entities due to delays in the internal routing approval processes for authorisation of payments, as a result payments were only processed in early July”.
  • Programme 4: This programme has spent R22.7 million, or 4.1%, less than the projected expenditure for the first quarter. The delayed transfer of funds for the National Library of South Africa capital works project is the driving factor behind the under-expenditure in this programme. In terms of the Memorandum of Agreement, this transfer will only take place in October.
  • Personnel: Spending on personnel showed a variance of R7.2 million, or 11.6%, when compared to the projected expenditure of R62.2 million. A number of vacant positions have contributed to the under-expenditure on personnel. These positions include:


  • Programme 1: Chief Director; Director; five middle management and one low level posts;
  • Programme 2: Director and two low level posts;
  • Programme 3: Deputy Director General, two Director; and two middle management posts;
  • Programme 4: Chief Director.


  1. Overall observations
    • The Department did not follow up with the meeting the Committee held with the Chairpersons and Deputy Chairpersons of Entities in November 2017.
    • The remuneration of council members seems to be a challenge in the portfolio.
    • Post retirements benefits are depleting the funds of the entities.
    • The Department seems unable to monitor entities, such that some entities do things that are in contravention with legislation.
    • The portfolio has increasingly accumulated a number of litigations, which come with huge financial burden.
    • A number of artists are not benefiting from opportunities that are available in the Department, mainly because of  lack of information and marketing by the Department. The entire value chain from when the Department makes calls for application for funding until adjudication seems not to be effective and efficient as most artists miss out
  2. Overall recommendations
    • The Department should soon follow up with the meeting the Committee held with the Chairpersons and Deputy Chairpersons of Entities in November 2017.
    • The Department should address the matter of remuneration of council members.
    • The Department should address the matter of post retirements in some of its entities, as it poses financial challenges. 
    • The Department should have develop a strategic plan of monitoring its entities, and provide such to the Committee within 30 days.
    • The Department should work to reverse the increased litigious nature that prevails within its portfolio. If officials are found reckless in the manner in which they deal with matters before the court, these officials should be held personally liable for the costs incurred as taxpayers fund these cases.
    • The Department should increase access to information regarding available opportunities for funding and increase access to funding for cultural projects and events.  Above all, the Department should have better communication with applicants and have efficient and transparent adjudication process. 


  1. Appreciation


The Committee thanks the support of the Department and entities that worked hard to produce documents that were required to generate this report.


Report to be considered.