Presentation to Portfolio Committee on Arts and Culture 20 March 2013

Reputation promise/mission The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, it exists to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

2012/2013 Anticipated audit outcomes

Summary of anticipated audit outcomes Audit outcomes based on either interim audits performed or based on engagements held with management on the status within the auditees where interim audits not performed. The status can still change based on the quality of AFS submitted. This status serves as an early warning signal in entities where there are possible challenges. The status update was performed in February.

Anticipated audit outcomes 2012-2013

Department of Arts and Culture Summary of anticipated audit outcomes 7 entities are anticipated to receive clean audits, i.e. financially unqualified opinion with no findings on compliance and predetermined objectives. Freedom Park Iziko KwaZulu Natal Performing Arts Council Luthuli Museum Market Theatre Msunduzi/Voortrekker Natal Museum

Department of Arts and Culture Summary of anticipated audit outcomes 5 entities are anticipated to receive financially qualified audits. National Arts Council Pansalb Packofs SAHRA* State Theatre * Improvement expected from Disclaimer to Qualified

Main reason for other matters Compliance Quality of Annual financial statements (12) Non compliance with procurement processes (12) Performance information Usefulness (7) Reliability (5)

Interim Audit of Predetermined Objectives

Audit of predetermined objectives defined as: Annual audit of reported actual performance against predetermined objectives, indicators and targets as contained in the annual performance report . Integral part of the annual regularity audit process, confirming the Compliance with laws and regulations Usefulness of performance reporting Reliability of performance reporting

AGSA strategy to the audit of predetermined objectives Adopted a phased-in approach Factual audit findings reported in both management and audit reports No audit opinion in audit reports – only findings Regular interaction with stakeholders (NT, Presidency, DPSA) to determine and test audit approach Provided inputs to drafting of NT Frameworks (FMPPI) Completed phased audit approach Audit to the extent necessary to express an audit opinion Audit opinion in the management report Audit reports contain audit findings – not audit opinions

Audit criteria Main criteria Sub-criteria Existence Compliance with regulatory requirements Timeliness Presentation Measurability Usefulness Relevance Consistency Compliance with regulatory requirements: Existence : Objectives, indicators and targets must be predetermined and performance information must be reported against them Timeliness : Performance information must be reported within two months after year end Usefulness Presentation: Performance against predetermined objectives is reported using the relevant principles from the National Treasury guidelines. Measurability : Indicators are well defined and verifiable, and targets are specific, measurable and time bound, as required by the National Treasury Framework for managing programme performance information. Relevance : The indicators/measures relate logically and directly to an aspect of the institution's mandate and the realisation of strategic goals and objectives, as required by the National Treasury Framework for managing programme performance information. Consistency : Objectives, indicators and targets are consistent between planning and reporting documents as required by the National Treasury regulations. Reliability: Validity : Reported performance has occurred and relates to the institution. Accuracy : : Amounts, numbers and other data relating to reported performance have been recorded and reported correctly. Completeness : All actual performance that should have been recorded has been included in the reported performance information. Validity Reliability Accuracy Completeness

Audit approach Understand and test the design and implementation of the performance management systems, processes, and relevant controls 1 Test the measurability, relevance, presentation & consistency of planned and reported performance information 2 Conclude on the usefulness of the report on predetermined objectives 3 Test the reported performance information to relevant source documentation to verify the validity, accuracy & completeness of reported performance information 4 Conclude on the reliability of the reported performance for selected programmes or objectives 5

OVERVIEW The final draft 2013-14 APP was audited for the Department of Arts and Culture The focus of the interim audit was on the: measurability and relevance of indicators and; measurability of targets.

Findings – Measurability of Indicators WELL DEFINED 4.71% error rate. 4 out of a sample of 85 indicators were not well defined VERIFIABLE 14% error rate. 12 out of a sample of 85 indicators were not verifiable

Findings – Measurability of Targets SPECIFIC 8% error rate. 7 out of a sample of 85 targets were not specific MEASURABLE 7% error rate. 6 out of a sample of 85 targets were not measurable

Findings – Measurability of Targets TIME BOUND None of the targets were identified as not time bound.

Findings – Relevance RELEVANCE None of the indicators were identified as not relevant.

Technical indicator descriptions Framework for Strategic Plans and Annual Performance Plans effective 2012/2013 requires all departments and public entities to have a technical indicator description for all performance indicators. These technical indicator descriptions must be published on the website of the department/public entity. Department of Arts and Culture did not have any technical indicator descriptions for the 2012/13 year as well as 2013/14.

Technical indicator descriptions

Recommendation The department should develop the technical indicator descriptions to ensure consistent understanding of the indicators and process to reach the objectives.

Conclusion The APP have been changed, where applicable Department in the process of developing the technical indicator description Department is in the process of developing a lower planning document to indicate all key stages towards realisation of outputs or targets.

Questions?