1. PFMA 2013-2014 Audit Outcomes of the Arts and Culture National D 14 October 2014

2. Our reputation promise/mission The Auditor-General of South Africa (AGSA) 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.

4. 4 Creating a better and dignified life for the citizens of South Africa through timely effective, efficient and economical SERVICE DELIVERY How does clean administration improve service delivery

5. Is the Strategic Plans and Annual Performance Plans for entities aligned to the National Development Plan Does the entity have adequate resources (human and financial) available to achieve predetermined objectives Are the targets realistic (can it be done) How are the entities ensuring that Strategic Plans and Annual Performance Plans will be achieved (performance contracts, quarterly monitoring, etc.) The Portfolio committee should review the quarterly progress of entities with regard to predetermined objectives and contributions to NDP The Portfolio committee should review annual achievement of predetermined objectives by entities (Annual Reports) The Portfolio committee should approve and track changes to strategic plans and annual performance reports Considerations for Portfolio Committees when dealing with performance monitoring

6. Unqualified with no findings Unqualified with findings Qualified with findings Adverse or disclaimer with findings Audits outstanding 6 2013-14 PFMA Improvement in overall audit outcomes over the past three years 27 auditees

7. 7 2013-14 PFMA Auditee 2013/14 outcomes (excl Clean) Auditee (excl Clean) Annual Financial statements Audit of Performance information Compliance SAHRA SA State Theatre William Humphrey Afrikaans TaalMuseum Market theatre National Heritage Council PACOFS SA Library for Blind National Museum Department Ditsong Msunduzi National Arts Council National Library of SA Nelson Mandela Museum National English Literary Windybrow PANSALB Unqualified or no findings Findings Qualified Adverse or disclaimer

8. 8 2013-14 PFMA Colour of name indicates the audit opinion from which the auditee has moved. Improved UnchangedRegressedOutstanding Unqualified with no findings IZIKO Museum, Robern Island Artscape, Freedom Park, KZN Museum, Luthuli Museum, Playhouse Company, War Museum of the Boer Republics, National Film Video Foundation of SA Unqualified with findings = 3 William Humphreys Arts Gallery, South African State theatre, SAHRA Die Afrikaanse Taalmuseum, Market Theatre Foundation, National Heritage Council of SA, PACOFS, SA Library for the Blind, Performing Arts Centre of the Free State National Museum Movement Audit outcome 5 5 Movement in audit outcomes 0 0 10 12

9. 9 2013-14 PFMA Colour of name indicates the audit opinion from which the auditee has moved. Improved UnchangedRegressedOutstanding Qualified with findings Windybrow theatre, DAC, Ditsong Museum, MsunduzI, National Arts Council, NLSA, Nelson Mandela National Museum, National English Literary Museum Adverse or disclaimed with findings PANSALB Movement Audit outcome 5 5 Movement in audit outcomes 0 0 10 12

10. 2013-14 PFMA Unqualified Qualified Adverse or disclaimer 10 Three-year trend – financial statements 27 auditees Artscape, Freedom Park, Iziko, KZN Museum, Luthuli M, National Film Video Foundation of SA, Robern Island, Playhouse Company, War M of the Boer Republics, ATM, MTF, NHC, National Museum, PACOFS, SA Library for the Blind, SAHRA, State theatre and William Humphreys Arts Gallery Artscape, Freedom Park, KZN Museum, Luthuli M, NFVAF SA, Playhouse Company, War M of the Boer Republics & National Museum, Department of Arts and Culture, ATM, Market Theatre Foundation, NHC, PACOFS, SA Library for the Blind, Ditsong Museum, Iziko Museum, MsunduzI, National Arts Council, SA Library for the Blind, Windybrow theatre SAHRA, PANSALB, State theatre and William Humphreys Arts Gallery SAHRA PACOFS,NAC PANSALB, State theatre. MTF, Iziko Museum, Freedom Park, KZN Museum, Luthuli M, Playhouse Company, Msunduzi, DAC, Artscape, ATM, Ditsong Museum, SA Library for the Blind, NFVAF SA, NLSA, National Museum, Nelson Mandela National Museum, Robern Island, NELM, War M of the Boer Republics, WHAG, Windybrow theatre

11. 2013-14 PFMA 11 Outcome if NOT corrected Outcome after corrections Avoided qualifications by correcting material misstatements during audit process 2013-14 Outcome if NOT corrected Outcome after corrections Financially unqualified (clean audit/ unqualified with findings) Financially qualified (qualified/ adverse/ disclaimed with findings) 2012-13 27 auditees Quality of submitted financial statements 9

12. Quality of annual performance reports With no findings With findings Annual performance reports of of the auditees were useful and reliable Regression over 2013-14 15 12 2013-14 PFMA

13. Quality of annual performance reports No findings Findings 13 2013-14 PFMA

14. 2013-14 PFMA Most common material findings on usefulness and reliability Improved Regressed Stagnant or little progress 14 Usefulness Targets not SMART and Indicators not well defined and could not be verified. Reliability Completeness of reported information could not be tested against supporting evidence Validity of reported information could not be tested against supporting evidence Accuracy of reported information could not be tested against supporting evidence

15. 2013-14 PFMA Most common material findings on usefulness and reliability 15

16. 2013-14 PFMA 16 With no findings With findings Significant non-compliance with legislation by of the auditees Improved over 2013-14 18 Status of compliance with legislation 3 auditees

17. 2013-14 PFMA 17 Most common areas of non-compliance 2013-14 2012-13 Effectiveness of Internal Audit Supply chain management Quality of financial statements Assets Management 11 14 9 3 6 5 15 13 15 13 Improved Regressed Stagnant or little progress Prevention and follow-up of irregular, fruitless and wasteful expenditure

18. 2013-14 PFMA 18 Status of compliance with legislation

19. 2013-14 PFMA 19 Irregular expenditure incurred R8 170 million (21 067 instances) Increase in irregular expenditure Non-compliance with SCM legislation cause of 100% of occurrences Main areas of non- compliance Required number of quotations were not obtained for procurement under R500 000 Awards were made to suppliers that did not submit valid tax clearance certificate Interest not declared Application of thepreferential procurementpoints system in awardingcontracts and quotationsnot always appliedApplication of the preferential procurement points system in awarding contracts and quotations not always applied Nature Identified by auditees Identified during audit

20. 2013-14 PFMA 20 Fruitless and wasteful expenditure incurred Nature R651 million (80%) 140 auditees (64%) R164 million (20%) 83 auditees (38%) Increase in fruitless and wasteful expenditure Penalties and interest incurred on late legislative/contractual payments Traffic fines Litigations and Claims VAT paid to non registered vendors Payment for services never rendered Identified by the auditees Identified during the audit

21. 2013-14 PFMA 21 Drivers of internal control should improve Good Concerning Intervention required

22. 2013-14 PFMA 22 Drivers of internal control should improve Good Concerning Intervention required

23. 2013-14 PFMA 23 Drivers of internal control should improve Good Concerning Intervention required

24. 2013-14 PFMA 24 Drivers of internal control should improve Good Concerning Intervention required

25. 2013-14 PFMA 25 Root causes should be addressed Lack of consequences for poor performance and transgressions Investigate and take steps to address transgressions against laws andregulations including those specific to SCM. Investigate and take steps to address transgressions against laws and regulations including those specific to SCM. Instability or vacancies in key positions Ensure the filling of key vacant positions with sufficiently skilledindividuals and provide adequate training to existing personnel at thedepartment and applicable entities. Ensure the filling of key vacant positions with sufficiently skilled individuals and provide adequate training to existing personnel at the department and applicable entities. Key officials lack appropriate competencies Implementation and consistent monitoring of all action plans to addresssignificant deficiencies identified by auditors that will ensureeffectiveness. Implementation and consistent monitoring of all action plans to address significant deficiencies identified by auditors that will ensure effectiveness.

26. 2013-14 PFMA 26 Assurance provided by key role players should improve Provides assurance Provides some assurance Provides limited/no assurance Not established Improved assurance Less assurance Limited progress on assurance

27. 2013-14 PFMA 27 Key recommendations for improvement Strengthen the following controls to create a control environment that supports reliable financial and performance reporting and compliance with legislation: Leadership – implementing adequate systems/processesto support accurate and reliable financial andperformance information. Leadership – implementing adequate systems/processes to support accurate and reliable financial and performance information. Financial and performance management enhance the“checks and balances” during the year to ensure that allreconciliations are done on a daily / monthly basis Financial and performance management enhance the “checks and balances” during the year to ensure that all reconciliations are done on a daily / monthly basis Leadership – implementing adequate systems/processes to focus on overall compliance with procurement processes