DEPARTMENT of ARTS and CULTURE

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DEPARTMENT of ARTS and CULTURE

• MONITORING OF PUBLIC ENTITIES

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LEGISLATIVE MANDATE
Department of Arts and Culture

• Public Finance Management Act and Regulations
• Individual entities founding legislation
• National Treasury Practice Notes

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GUIDELINES
Department of Arts and Culture

• National Treasury guidelines
• National Treasury Practice notes
• King II report

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1. BUDGET PHASE
N. TABLE ANNUAL REPORT To National Assembly 30
September 2008 M. ANNUAL REPORT To AG, Minister
Treasury 31 August 2008 L. SUBMIT FINAL
AFS To AG Latest 15 August 2008 K. AC MEETING
TO EVALUATE AFS Latest 8 August 2008 J. AUDIT
COMPLETE REPORT TO AA 31 July 2008 I. SUBMIT
FINAL AUDITED CONS AFS To Treasury 30 June
2008 H.SUBMIT DRAFT CONS AFS To Treasury 31
May 2008

• BUDGET 2007/8
• To Minister
• 1 October 2006
• B. DRAFT STRATEGIC PLAN
• 2007/8-2009/10
• To Minister
• 1 October 2006
• C. FINAL STRATEGIC PLAN
• To Minister
• 1 April 2007
• D. FINANCIAL YEAR STARTS
• 1 April 2007

BUDGET REPORTING CYCLE 2007/2008
2 REPORTING PHASE
G.SUBMIT AFS FOR AUDIT To AG 31 May 2008
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MONITORING MECHANISMS
Department of Arts and Culture

• Annual strategic plans-draft and final
• Estimates of National Expenditure (ENE)
• PFMA quarterly reports
• Annual reports

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ANNUAL STRATEGIC PLANS
Department of Arts and Culture

• Compilation of Framework Annexure A
• Ensure receipt of
• Strategic Plans
• Draft by 1October
• Final by 1April
• Clarify areas of concern
• Submission to Minister

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ESTIMATES OF NATIONAL EXPENDITURE (ENE)
Department of Arts and Culture

• Inform Public Entities of Budget allocations
• Request ENE information
• Co-ordinate and evaluate ENE detail
• Follow up on areas of concern
• Forward corrected version to National Treasury

• Annexure B

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Quarterly Reports
Department of Arts and Culture

• Income and Expenditure
• PFMA compliance
• Performance information

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Quarterly Income and Expenditure Report
Department of Arts and Culture

• Annexure C
• Annexure D
• Annexure E

• Creation of Reporting Template
• Year to date financial performance against budget
  submitted
• Financial projection for the balance of the
  financial year
• Narration iro variances
• Statement of Financial Position with notes
• Expenditure report iro Staff costs
• List of Investments
• Creation of monitoring template
• Follow up on areas of concern eg.PACOFS

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Quarterly PFMA compliance
Department of Arts and Culture

• Creation of Reporting Templates
• General PFMA Reporting template (NT) Annexure F
• Internal Control Questionnaire template Annexure
  G
• Asset Management Reporting
• Questionnaire Annexure H
• Supply Chain Management Reporting
• Questionnaire Annexure IJ
• Receipt of reports
• Advise Public Entities iro. compliance
• Follow up on areas of non-compliance

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Quarterly Performance Information
Department of Arts and Culture

• Creation of Template for quarterly
• Reporting Annexure K
• Ensure receipt of reports
• Follow up on areas of concern

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ANNUAL REPORT PROCESS
Department of Arts and Culture
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GENERAL ISSUES PERTAINING TO ANNUAL REPORTS
Department of Arts and Culture

• Ensure Public Entities are informed of the latest
  guidelines
• Ensure timeous receipt of Annual Reports (30
  September )
• Managing tabling in Parliament
• Notification of late submission to Speaker of
  Parliament

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ANNUAL FINANCIAL STATEMENTS
Department of Arts and Culture

• Annexure L

• Monitor liquidity
• Monitor solvency
• Check cash flow
• Surplus/(Deficit)
• Disclosure of accounting policies
• Update database of financial information

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AUDIT REPORTS
Department of Arts and Culture

• Audit outcome-Clean, EOM, Qualified, Adverse
• Analysis of AG report
• Comparison to previous years
• Sight of Auditors management letter
• Intervene to ensure that wrongful issues are not
  reported
• Request reports from Public Entities to explain
  Audit Report issues and plan of action to
  eliminate in future
• Visit PE with AG to discuss Audit Report
• Update database of Audit Report history
• Inform Minister of status of Audit Reports

• Annexure M
• Annexure N
• Annexure O

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ANNUAL REPORTS
Department of Arts and Culture

• Assess compliance with Treasury guideline
• Is it User friendly?
• Value for Money
• Judge general appearance
• Compile Score sheet and prepare letters from
  Minister to ensure future compliance

• Annexure PQ

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Other oversight/assistance functions
Department of Arts and Culture
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Establishment of Guidelines
Department of Arts and Culture

• Delegation of Authority Guideline Annexure R
• Materiality and Significance framework Annexure
  S
• Self assessment questionnaire for
• Council Members Annexure T
• Supply Chain Management Manual
• Purchase and distribution of
• Toolkit for Audit Committee members
• Database of various policies
• Performance Reporting for 2006/07 Annexure U

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Training
Department of Arts and Culture

• 2 Workshops on Compliance and Audit Report issues
• Workshop for Council Members in May 2005 on
• King II Report on Corporate Governance
• PFMA
• Annual Reporting
• Code of Ethics
• Fraud risk indicators
• Risk Management
• How officials get into trouble

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Training (cont.)
Department of Arts and Culture

• Multidisciplinary Workshops
• General Policy and Legal challenges
• Impact of legislation on Museums
• Relationship between National and Provincial
  Museums
• Supply Chain Management
• Financial and Human Resource Management
• Legal and Administrative compliance
• 2 Workshops on the Extended Public Works
  Programme
• 2 Workshops on Supply Chain Management System

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General communication
Department of Arts and Culture

• Daily communication with Public Entities
• Visits to Public Entities
• Visits by Public Entities to Department
• Close cooperation with AG Office
• Visits with AG office to Public Entities
• Liaising with National Treasury
• Informing PE of any new directive/guidelines from
  the National Treasury or any other source
• Instruction by Minister to introduce Performance
  Management System within the institution

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Budgeting issues
Department of Arts and Culture

• Additional funding in 2004/05 to establish
  Internal Audit and Audit Committee Functions
• Substantial increases in 2006/07 to increase
  capacity to deal with compliance issues
• R35 million allocated to museums since 2003/04
  for transformation purposes
• Substantial funds allocated to Security of
  Collections at museums from 2007/08
• 2007/08 R39 million
• 2008/09 R43 million
• 2009/10 R80 million

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Human Resource Issues
Department of Arts and Culture

• Conducting of Job Evaluations at
• NFI
• National Library of SA
• Afrikaanse Taalmuseum
• Voortrekker Museum
• Natal Museum

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Legal Issues
Department of Arts and Culture

• Continuous support to Public Entities with regard
  to
• Identifying and managing risks
• Legal advice in general

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Past Interventions by the Department
Department of Arts and Culture

• Dismissal of Board of the State Theatre and
  appointment of an Administrator
• Appointment of an Interim Administrator at the
  NFI
• Appointment of an Interim Financial Manager at
  the National Library
• Appointment of an Interim Financial Manager at
  the Windybrow
• Additional financial assistance to the Market
  Theatre
• Financial assistance to the Voortrekker Museum to
  appoint a financial expert for an interim period
• Dismissal of NAC Council by Minister
• Withholding of subsidies to Public Entities based
  on 2004/05 Audit Reports until Plan of Action
  to Audit issues had been received
• Appointment of an Advisor at the NAC to deal with
  issues (Audit Report related as well as
  Strategic)
• Alignment of Councils term of Office to coincide
  with Budget and Reporting cycle
• Declaring Playhouses as Cultural Institutions in
  terms of the Cultural Institutions Act to enhance
  accountability (Previously Section 21 Companies)
  

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Current and new initiatives
Department of Arts and Culture

• Induction of newly appointed Councils
• Introduction of Service Level Agreements with
  newly appointed Councils
• Investigation into establishment of Shared
  Service Centres
• Introduction of Internships
• Legislative and policy review
• Conducting of a Finance Function Diagnostic at
• NFI
• RIM
• Iziko
• Establishment of Chief Directorate Institutional
  Management and extension of staff establishment
• Performance Management and Reporting system

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Oversight obligations
Department of Arts and Culture

• Chapter 9 of Guide for Accounting Officers on
  the PFMA on transfer payments directs
• In assessing the degree of accountability of the
  Accounting Officer of the Department transferring
  funds to a Public Entity, if a receiving entity
  falls under the scope of the Auditor General then
  the transferring Accounting Officer is not
  expected to maintain micro control once these
  transfers are effected as the receiving authority
  will be accountable for the actual spending.
  This does not absolve the transferring accounting
  officer from putting into place a basic
  monitoring mechanism

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Outcomes
Department of Arts and Culture
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Outcomes (cont.)
Department of Arts and Culture
Average of National Public Entities Arts and Culture Public Entities Percentage DAC vs others
R000 R000
Average income 332,9 25,7 7,7
Average Asset value 581,4 29,1 5,0
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Irregular and Fruitless expenditure
Department of Arts and Culture

• 2005/06
• Playhouse Company R490 300 relating request for
  payment of Service Provider by KZN Province
• Nelson Mandela Museum R308 000 relating to
  extension of Contract for security services
• Both of the above was condoned by the National
  Treasury
• 2003/04
• War Museum of the Boer Republics After
  investigation it was revealed that the AG Office
  misinterpreted relevant legislation and NT
  condoned the expenditure
• No fruitless expenditure has been reported at the
  Public Entities since promulgation of the PFMA

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THANK YOU
Department of Arts and Culture