Portfolio Committee on Arts and Culture Overview of the Department of Arts and Culture 2013/14 Annual Report Fiona Clayton 14 October 2014

OUTLINE Introduction Achievements Matters for consideration: Financial and non-financial / programme performance Report of the Auditor-General of South Africa Human resources management

INTRODUCTION The 2013/14 Annual Report provides the following: achievements of the Department against performance targets outlined in the APP in line with the Department’s strategic goals; financial and non-financial performance information; report of the Auditor-General of South Africa; and human resources management information.

INTRODUCTION (Continued) During the 2013/14 financial year the Department’s work was spread across six programmes: Programme 1: Administration Programme 2: Performing Arts Programme 3: National Language Service Programme 4: Cultural Development Programme 5: Heritage Promotion Programme 6: National Archives and Library Services

ACHIEVEMENTS The Department reports on the following achievements: 71 per cent of the planned targets were met; A number of cultural events and festivals were supported and projects implemented or completed during 2013/14; In collaboration with the DBE, over 200 artists were placed in schools across eight provinces; A film studio handed over to the community of Diepsloot; Over R1 billion was used to build 16 new libraries and upgrade 55 existing libraries; and Awarded 336 bursaries to students in language studies and a further 73 bursaries to students pursuing careers in the heritage profession. Please note that these are a selection of achievements extracted from the annual report.

MATTERS FOR CONSIDERATION Financial performance The Department’s budget grew from R2.7 billion in 2012/13 to R2.9 in 2013/14. Only 94.5 per cent, or R2.7 billion against a budget allocation of R2.9 billion, was spent. This represents an amount of R200 million that remained unspent (Slide 52). Compared to 2012/13, this marks an increase in under expenditure of 4.5 per cent, i.e. the Department has performed worse in terms of spending its budget allocation. Under expenditure arose from unspent funds for the Conditional Grant, MGE projects, capital works and the flags in schools project. Five out of the six programmes report spending above 95 per cent of the final appropriation (Slide 52). The Department should clarify 71 per cent of targets achieved versus 94.5 per cent of budget spent. Programme 5: Heritage Promotion spent only 88.3 per cent, or R73.2 million against R82.9 million, of its final appropriation. What percentage of planned targets were achieved? This is also the programme for which the AG could not verify performance information for 20 per cent of the targets.

MATTERS FOR CONSIDERATION (continued…) Non-financial / programme performance Programme 1: Administration Only 94.1 per cent of employees entered into performance agreements (PAs) for the 2013/14 financial year. The annual report for the Msunduzi/Ncome Museum was not tabled. This therefore means that the target of 26 annual reports tabled for public entities was not achieved, contrary to what is reported. While the Department has a vacancy rate of 8.3 per cent, positions such as the CFO and DDG: Corporate Services were vacant during the 2013/14 period. Only 77 per cent of the capital works budget was spent. The NDP highlights the importance of social cohesion, yet 3 out of 4 measurable targets linked to the strategic objective of implementing the social cohesion framework were not achieved (see pages 194 - 195 of the annual report)

MATTERS FOR CONSIDERATION (continued…) Non-financial / programme performance Programme 2: Performing Arts 95 per cent of the budget allocation for this programme was spent, R29.9 million was not spent. Three out of 12 targets for this programme, 25 per cent, were not achieved including awarding bursaries to 20 youths in arts, culture and heritage in community-based organisations and high schools. This did not take place due to broader DAC budget reprioritisation. What are the ramifications of not awarding these bursaries?

MATTERS FOR CONSIDERATION (continued) Non-financial / programme performance Programme 3: National Language Service All targets set for this programme have been met Programme 4: Cultural Development The Department should clarify why it had supported nine more cultural events than initially planned, yet failed to create the projected 18 000 short-term jobs linked to supporting these events.

MATTERS FOR CONSIDERATION (continued…) Non-financial / programme performance Programme 5: Heritage Promotion Only 73 out of the planned 106 bursaries were awarded as applicants failed to meet qualification criteria. The flags in schools project consistently does not meet annual targets and has contributed R44 million to under expenditure in 2013/14 (Slide 58). Programme 6: National Archives and Library Services The National Archives has been functioning in the absence of the leadership of a national archivist during the period under review.

REPORT OF THE AUDITOR-GENERAL OF SOUTH AFRICA The Department received a qualified audit opinion for 2013/14. In addition to the matters raised by DAC in Slides 43 – 50 of its presentation, the following issues are to be considered: For the two programmes selected by the AG to evaluate reported performance, the usefulness and reliability for performance information for 20 per cent of targets for Programme 5 was questioned. Financial statements were not supported by adequate records as required by the PFMA. Material misstatements identified by auditors were not corrected resulting in the qualified audit opinion. The Department contravened Public Service Regulations by not filling vacancies within 12 months.

HUMAN RESOURCES MANAGEMENT The Department’s microstructure was not finalised during 2013/14. There is room for improvement regarding leave management – over 70 per cent of staff utilised sick leave in the 2013/14 leave cycle; R1.6 million was spent on leave pay-outs to employees who terminated their service. None of the senior managers received performance rewards since many of them failed to submit performance agreements by the 31 May 2013 deadline. Disciplinary action taken? The use of consultants has to be scrutinised. Excluding the internal audit, the total contract value for the projects listed in the HRM report in the annual report is just over R36 million. Does the Department have a consultancy reduction plan in place?

SUMMARY Regression in audit opinion: unqualified in 2012/13  qualified in 2013/14 Non-compliance with laws and regulations in relation to financial management Under expenditure: 1 per cent in 2012/13  5.5 per cent in 2013/14 Under expenditure on Capital Works budget and the impact on service delivery. Management of performance information: how are records and performance information managed in the Department? Performance management Use of consultants

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