1. Castle Control Board Presentation to the Portfolio Committee on Defence and Military Veterans Presented by: Lt. Gen. JT Nkonyane & CT Gilfellan 10 October 2013 1

2. Aim The aim of this short presentation is to provide: 1.A brief organizational update on the CCB 2.A summary of our 2012/13 Annual Report Performance against pre-determined objectives Financial performance Major issues identified by the AG and progress in addressing them 3.The Board’s new Vision and Strategic Foci 4.Question and the Way Forward

4. CCB Organogram

5. The CCB Board Organization/ConstituencyName Representative of the South African National Defence Force – Chief of Logistics Lieutenant General J.T. Nkonyane (Chairperson) Representative of the Cape Town Regional Chamber of Commerce and Industry Mr K. Jimba Representative of the Iziko Museums of South AfricaMs R. Omar Representative of the Department Of Public WorksMr F. Johnson Representative of the South African Heritage Resources AgencyMr G. Ontong Officer Commanding Army Support Base Western CapeColonel R. Mongo Representative of the City of Cape TownMr D. Hart Representative of the South African Tourism Board (WESGRO)Mr M. Parker Representative of the Western Cape Provincial LegislatureMr C. Dowman Executive DirectorVacant as on 31 March 2013 Two representatives appointed by the Minister of DefenceAdv. D. Mitchell Ms A. Aggenbach Board SecretaryMr D Williams

6. Mandates The CCB is mandated in terms of the Constitution of South Africa, Act 108 of 1996 Legislative mandates of the CCB: LegislationResponsibility Castle Management Act, Act 207 of 1993Mandated the CCB to govern and manage the Castle on behalf of the MOD&MV Public Finance Management Act, Act 1 of 1999 Designated the CCB a public entity (Schedule 3A) Defence Endowment Property and Account Act, Act 33 of 1922 The Castle of Good Hope, as defence endowment property, was transferred to the ‘defence organisations’ for the exclusive use by, and benefit of the SANDF and DOD National Heritage Resources Act, Act 25 of 1999 The Castle of Good Hope is a declared heritage site and should be managed within the legislative framework

7. CCB Strategic Objectives To preserve and protect the military and cultural heritage at the Castle To maximize the Castle’s tourism potential To optimize public access to the Castle The foundation for the efficient and cost-effective discharging of the mandate is good corporate governance, risk-management and sound financial management and best-practice administrative systems

9. Key Points from the Audit Committee Key Points from the Audit Committee Unqualified audit report from the Auditor-General (with KPMG), shows good progress achieved Audit Committee in place, process to appoint new internal audit service provider underway Ensuring adherence to all Policies and Procedures to comply with all SCM and procurement prescripts Performance management information needs a more precise definition and focus; significant progress R13.9m in accumulated surplus – National Treasury approval now obtained Appointment of CFO will strengthen management team and improve delivery

10. Executive Summary of Performance Against Pre-determined Objectives Executive Summary of Performance Against Pre-determined Objectives Hig hly successful Military Tattoo (4000 spectators) Shell-UK Awards evening with their top 300 executives Jive Slave marathon with 5000 runners through the Castle Anglo-Boer War Philatelic Exhibition attracted 3000 visitors Annual paying tourist figures increased by 3519 Month of Photography (October) attracted more than 3000 Annual trading surplus of R883 000 achieved Heritage Day 2012 (free access) numbers exploded from 1795 to 3265 Brazilian National Day and Exhibition in September 2012

11. Programme 1: Administration & Corporate Governance Performance Indicator Reporting Intervals Annual TargetActual Performance No. Board Meetings Quarterly49 Number of Audcom Meetings Quarterly44 HR ManagementQuarterlyR1 369 000R863 829 Supply ChainQuarterlyTo be reviewed and approved Not approved Audit ReportsQuarterlyR329 000R328 000

12. Programme 2: Preservation & Interpretation Of Castle As Heritage Site Performance Indicator Reporting IntervalsAnnual TargetActual Performance No. of visiting learners Quarterly21 00029 012 Number of displaysQuarterlyR242 000R254 174 Repairs and maintenance QuarterlyR2 941 000R122 006 Lean and safe environment QuarterlyR255 000R195 040

13. Programme 3: Maximizing The Castle’s Tourism Potential Performance Indicator Reporting Intervals Annual TargetActual Performance Tourist numbersQuarterly136 000140 888

14. Programme 4: Increase Castle’s Public Profile And Community Access Performance Indicator Reporting Intervals Annual TargetActual Performance Income from events and other tourism activities QuarterlyR262 500R426 950 Marketing and publications QuarterlyR93 000R95 234

16. FY 2012/13: Summary Of Financial Performance

18. Issues Raised by the AG & Our Corrective Actions 1.Predetermined Objectives: Performance indicators and targets not well defined Corrective Actions: Appointment of Executive Director and now CFO, trained on the requirements of the FMPPI Board and management will redefine performance indicators to be more specific as to address the required outcome Management engaged AG & Treasury and it is now done for new FY. E.g. Annual increase in the total number of visitors to the Castle*

19. Issues Raised by the AG & Our Corrective Actions 2. Predetermined Objectives: Strategic Plan incomplete Corrective Actions: Accounting Officer in consultation with Board will update and ensure that Strategic Plan guidelines are adhered to. Done and reflected in 2014/15 APP

20. Issues Raised by the AG & Our Corrective Actions 3. Budgets: Non-approval from National Treasury to retain surplus Corrective Actions Letter was submitted to the new Executive Authority and Treasury. Done, approval obtained in September 2013

21. Issues Raised by the AG & Our Corrective Actions 4. Expenditure Management: Accounting Authority did not take effective steps to prevent irregular expenditure Corrective Actions: Internal Controls are being developed to prevent occurrence of irregular expenditure Accounting Officer and Accounting Authority will maintain an irregular expenditure register, which will contain detailed schedule for financial year listing and irregular expenditures incurred. Done: this was immediately put in place.

22. Issues Raised by the AG & Our Corrective Actions 5.Internal Audit Function: No Internal Audit function for some part of the year Corrective Action: Internal procurement process was aborted due to SCM challenges New process has been initiated Imminent appointment of CFO will also assist

23. Issues Raised by the AG & Our Corrective Actions 6. Procurement and Contract Management: Goods and services with transaction value below 500 000 procured without obtaining required price quotations, as required by Treasury Regulation 16A6.1 Contracts and quotations awarded to suppliers whose tax matters had not been declared by SARS to be in order as required by TR 16A9.1(d) and Preferential Procurement Regulations The preference point system was not applied in all procurement of goods and services above R30 000 as required by section 2(a) of the PPPFA and TR16A6.3(b) Contracts were awarded to bidders based on preference points that were not calculated in accordance with requirements of the PPPFA Corrective Actions Issues raised by the Auditor-General assimilated and addressed by the newly appointed Accounting Officer The SCM policy being amended to address these issues

24. Issues Raised by the AG & Our Corrective Actions 7. Annual Financial Statements: The financial statements not prepared in all material respects in accordance with requirements of section 55(1)(b) of PFMA Corrective Action: Material misstatements were corrected resulting in the financial statements receiving an unqualified opinion

25. Issues Raised by the AG & Our Corrective Actions 8. Leadership: Accounting authority did not establish and communicate policies and procedures to enable and support understanding and execution of internal control objectives, processes and responsibilities. Accounting authority did not implement SCM and performance reporting framework that complies to requirements of PFMA and SCM Regulations, as issued by National Treasury Regulations Castle Manager has not been trained on and exposed to the requirements of the FMPPI Accounting authority has not implemented internal policies and procedures for performance information management and reporting Corrective Actions: Shortcomings in the SCM policy being addressed – new draft updated Appointment of the CFO will ensure all procurement is done in terms of PFMA regulations and Treasury prescripts

26. Issues Raised by the AG & Our Corrective Actions 9. Financial And Performance Reporting: Lack of monitoring and review to ensure correct application of the requirements of legislation ito SCM Management has no supervisory and review function in place to govern the procurement of expenditure relating to the Castle Control Board to ensure that irregular and wasteful expenditure is timeously identified. The entity relied on consultants to prepare the annual financial statements and the responsibility to review the financial statements was not delegated to any of the personnel at the entity as the finance personnel do not have the necessary knowledge to perform such a review. Corrective Actions: Internal control mechanisms in place were inadequate as they were determined by a SCM policy not fully compliant with the PFMA Misstatements in the financial statements occurred in the draft, submitted for audit and adjustments were made after deliberation between management and the Auditor-General

27. Issues Raised by the AG & Our Corrective Actions 10. Governance: Internal Audit not adequately resourced and functional for duration of the year Corrective Actions: Previous contract with IA expired 31 October 2012 and new appointment to follow shortly Board initiated process aborted due to SCM contradictions New advert already placed and appointment imminent

29. The Board’s New Vision and Strategic Foci  Strategic planning session 15 August: Castle positioned as SA’s next UNESCO World Heritage Site  Ten-point Heritage Tourism Action Plan adopted – the Castle repositioned as a living, vibrant and inclusive heritage precinct  Seven strategic themes identified dealing with: (1) protecting the cultural significance of the site, (2) exploiting the full tourism potential, (3) marketing, public relations & communication, (4) human resource development, (5) a customer-focus, (6) heritage enterprise development and (7) demonstrate leadership with partners in the heritage and tourism field.

30. Thank You & Questions CONTACT DETAILS: Calvyn Gilfellan Executive Director/CEO Castle Control Board ceo@castleofgoodhope.co.za 0823346098 021-7871339