1. DEPARTMENT OF ARTS AND CULTURE
7/21/2018
NATIONAL ARTS COUNCIL

2. PRESENTATION OUTLINE

3. MANDATE

4. Strategic outcome oriented goal DAC strategic objective
Entities strategic objectives and how it links to DAC objective
Output for 2017/18
An integrated and inclusive society
To lead, coordinate and implement social cohesion programme
Promote equity in the arts through a specific grant making focus on disadvantaged and marginalised individuals and groups with focus on redress, transformation and nation building
5% of funding to support indigenous art forms
25% of funding to support projects in targeted rural areas
10% of funding to support women and women led organisations
15% of funding to support projects benefitting youth
A transformed and productive ACH sector
To develop, protect and promote cultural and creative sector
To promote equity in the arts through a specific grant making focus on the disadvantage and marginalised individuals and groups

5. Strategic outcome oriented goal DAC strategic objective
Entities strategic objectives and how it links to DAC objective
Output for 2017/18
A transformed and productive ACH sector
To provide access to information
To increase access to markets and enable creative engagement for South African art and artists.
Partnerships established with 1 government structure and 2 other relevant structures
An effective and efficient ACH Sector
To implement sound financial management and control systems
Maintenance of efficient and effective systems of financial, legislative and administrative controls
Reporting quarterly, bi-annually and annually
4 internal audits conducted
A professional and capacitated ACH Sector
To build human resource capacity and promote excellence
Development of a highly capable organisational personnel
Implementation of mentorship programme
5 staff trained
Initiatives to promote employee wellness implemented
80% implementation of the approved training plan critical skills
Implementation of PMS annually Implement the approved structure

6. PERFORMANCE REVIEW
NAC reported 32 planned targets for the quarter ended 31 March 2017.
75% of the targets are achieved and 25% not achieved.

7. THREE YEAR PERFORMANCE OVERVIEW
2014/15
2015/16
2016/2017
Achieved
87%
100%
75%
Not achieved
13% -
25%
NONACHIEVED TARGET S 2016/17 (DROP OF PERFORMANCE)
Only 22% of projects assessed prior to final approval out of 90% targeted
Only 25% of projects assessed post approval out of 90% targeted
Out of target 70% disbursements, 67,46 % was achieved
Out of 7 Community arts centres trained , only 5 was achieved

8. THREE YEAR INCOME AND EXPENDITURE TRENDS
NAC
2014/15
2015/16
2016/17
R’000
Income
96,084
98,983
104,627
Government Grant
91,865
96,089
102,054
Other Income
4,219
2,894
2,573
Expenditure
(99,411)
(102,567)
107,859
Deficit
(3,327)
(3,584)
**(3,232)
**The deficit is attributable to the accounting treatment of the NAC income and expenditure. The new and existing grants are charged on the current year allocation and the remaining amount is defrayed from the accumulated surpluses.

9. THREE YEAR STATEMENT OF FINANCIAL POSITION
NAC
2014/15
2015/16
2016/17
R’000
Current Assets
56,286
45,901
40,121
Non-current Assets
17,677
5,664
8,429
Total Assets
73,963
51, 565
48,550
Current liabilities
12,342
4,054
3,068
Total liabilities
Net Asset Value (NAV)
61,621
47,610
45,482

10. ANALYSIS OF CASH AND CASH EQUIVALENTS
NAC
2014/15
2015/16
2016/17
R’000
Cash and Cash equivalents
47,645
45,567
39,774
Add: Trade and other receivables
8,641
335
347
Less: Current liabilities
(12,342)
(4,045)
(3,068)
Net Working Capital/Surplus Funds
43,944
41,857
37,053

11. MOTIVATION FOR CASH AND CASH EQUIVALENTS
The surplus funds for 2016/17 financial year is attributable to funds earmarked for:
Projects contracted but not yet fully paid.
Projects approved for funding but not yet contracted.

12. THREE YEAR AUDIT OUTCOMES
NAC
2014/15
2015/16
2016/17
Audit Outcome
Clean

13. STATUS OF GOVERNANCE AT NAC

14. MANAGEMENT
The operations of the NAC are managed by the Chief Executive Officer (CEO).
The NAC has also appointed a Chief Financial Officer to administer its financial affairs .
The National Arts Council comprises of 34 employees.

15. COUNCIL
The National Arts Council is operating under the guidance of a Council comprising of 12 members appointed by the Minister of Arts and Culture and 5 provincial representatives nominated by MECs.
The Minister of Arts and Culture appointed the Council of the National Arts Council for the period
1 January 2017 to 31 December 2020.
The Council comprises of 17 members.
The induction sessions of the new Council was conducted on 23 and 24 February 2017.
NAC further conducted its own entity Induction on the 31 August 2017.
Subsequent to the announcement of the induction dates, the Chairperson of the Council resigned citing health reasons.
The Minister appointed a new Chairperson on 17 March 2017, Mr Hartely Ngoato.

16. AUDIT COMMITTEE The Audit Committee is in place.
The Committee comprises of four members.
The above include two external members plus two Council members.

17. SELECTED GOVERNANCE STRUCTURES AND MEETINGS HELD
NAC
2014/15
2015/16
*2016/17
Number of Council members 17 18
Number of Council meetings 6 4
Number of Council committee meetings 8 9
Attendance rate of Council meetings
90%
80%
95%
Number of Audit Committee meetings 5
Number of Management meetings 7
Number of Staff meetings
*Note: 2016/17 stats are inclusive of the meetings held by the previously dissolved Council.

18. APPEALS CHALLENGES INTERVENTIONS BY DAC
The Department received an appeal from Eskhaleni Arts and Culture Initiative that is situated in Manguza, KwaZulu-Natal pertaining to funding decision of the National Arts Council.
On 22 December 2016, the Minister appointed two independent assessors to assist him in handling the appeal
The independent assessors concluded their work in March 2017.
Minister approved the recommendations and instructed the NAC Council to review Council decision and engage the beneficiaries. 19

19. INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC
The Department of Arts and Culture received a correspondence from Mr Freddie Nyathela alleging that a grant application submitted by South African Roadies Association (SARA) was not handled properly as a result of failure on the part of the NAC management to adhere to the relevant grant funding policies.
The Department conducted a forensic investigation to ascertain the veracity of the allegations contained in Mr Nyathela’s submission.
The findings of the forensic investigation supported the decision of the management of not awarding a grant to SARA.
The Business Innovation Group (BIG) forensic investigation further revealed that Mr Nyathela’s proposal did not comply with the requirements outlined in the grant funding policies and procedures of the NAC.
Subsequent to the above-mentioned report, Mr Nyathela took the matter to the Public Protector for further investigation. Responding to Mr Nyathelas query, the Minister advised that a new investigation be conducted. 19

20. INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC
The Department of Arts and Culture received a correspondence from Mr Freddie Nyathela alleging that a grant application submitted by South African Roadies Association (SARA) was not handled properly as a result of failure on the part of the NAC management to adhere to the relevant grant funding policies.
The Department shared the report and the following were recommended to Council:
NAC should conduct training awareness and workshops with staff and other stakeholders during which the policies and procedures of NAC are explained.
The policy on expired projects and surpluses should be reviewed to make it more transparent.
The NAC should conduct an audit to establish whether all grants awarded contributed to the achievement of the objectives of the NAC. 19

21. INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL
The salary increases of both the CEO and the CFO for the 2016/17 financial year;
The Department directed Council to investigate the allegations and the following were findings and recommendations from Council:
The CEO’s salary is structured and only includes car allowance and that no performance bonuses and increases were paid to both the CEO and the CFO in 2014/15.
The increase of the CEO salary by 18% from R1 296 226 to R was found not to be correct. 19

22. INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL
The salary increases of both the CEO and the CFO for the 2016/17 financial year;
The CEO received a performance bonus of R137,902.
This amount was in excess of the stipulated 5% as per the Remuneration and Reward Policy of the NAC. 19

23. INVESTIGATIONS CHALLENGES INTERVENTIONS BY DAC AND COUNCIL
Lalela Flagship Project
Council concluded that the project did not comply with the following:
The project did not submit the previous close out report
Non-disclosure from the CEO from the time she became aware that Lalela is owned by someone linked to her family
Council concluded that the project was not supposed to have been approved by the previous Council or put differently,
Council to take disciplinary action against the CEO for non disclosure
The Department has shared the report from Council to the Portfolio Committee. 19

24. INVESTIGATIONS CHALLENGES INTERVENTIONS BY COUNCIL
Anonymous allegations contained in Molemo’s Letter of Appeal and information leakage to the media
The NAC commissioned the services of Grant Thornton for the purposes of conducting the forensic investigation.
The investigation was concluded on 8 February 2017.
Council has started implementing the recommendations from the Grant Thornton
Disciplinary action has been taken against the implicated officials for leaking confidential information and for contravening the NAC’s Code of Ethics. Information Technology Policy as recorded in the “Molemo letter of appeal”.
The officials involved are currently on suspension pending the outcome of their disciplinary proceedings. 19

25. COUNCIL INTERNAL INVESTIGATIONS
CHALLENGES
INTERVENTIONS BY COUNCIL
In addition to the findings of the Grant Thornton’s report, the Council conducted its own internal investigation pertaining to the Company Secretary:
The investigation found that the Company Secretary has:
Breached the NAC policy in particular the Council Charter;
Breached conditions of her employment as contained in the job description; and
Worked against the best interest of the Council;
Performed her duties negligently (Gross negligent).
Council resolved to institute disciplinary action against the Company Secretary.
The Council has since suspended the Company Secretary. 19

26. DEPARTMENT OF ARTS AND CULTURE
7/21/2018
THANK YOU