Department of Arts & Culture Internal Audit Committee, PACOFS, Ditsong on their 2016 Annual Performance Plan and five year Strategic Plan

Meeting report

Department of Arts and Culture Internal Audit Committee briefing
Adv W Huma, Chair of Internal Audit Committee, Department of Arts and Culture, presented the audit findings and challenges in relation to financial matters, for the Department of Arts and Culture (DAC or the Department). The first challenge related to audit committee membership, since there was vacancy for an additional member, presently being recruited, to replace Ms Karabo Rapoo, who would end her second term as an Audit Committee Member and DAC Risk Committee Chairperson.

The second part of the presentation outlined the Management Action Plan to address the 2014/15 findings of the Auditor-General South Africa (AGSA). 61 findings in total were made by AGSA, along with some extra findings for the previous financial year. Management of the DAC had developed sixty plans, to address 98% of the findings. Internal Audit (IA) was in the process of reviewing these for adequacy and effectiveness. The IA noted slow progress of implementation of the action plans by management, as not much was done in time for the financial year-end. The number of findings were further categorised into ‘adequate, partially adequate and inadequate’ across fifteen business units. (See slide 7 of attached presentation).

In relation to predetermined objectives, eleven findings were cited, of which seven was inadequate, one was partially inadequate and three were listed as adequate. The predetermined objectives category covered information technology; auxiliary services; Arts, Culture promotion and Development Branch, the Chief Directorate for Heritage; monitoring and evaluation and Chief Directorate: Strategic planning and Coordination.

The summary of internal audit findings was presented in Part 3 of the briefing. This list had seventeen audits and consulting assignments categories, ranging from governance audits to a separate evaluation of the entity of Performing Arts Council of the Free State (PACOFS). The 85 findings were further divided into critical/high findings, significant/medium and housekeeping/low findings. Their effectiveness was addressed in an assessment of implementation of corrective action. (See slide 10).

He highlighted that the Information Technology General Control (ITGC) review had a total of 14 findings; all of which were cited as significant/medium importance. The effectiveness of the review finding noted that five findings were resolved, three partially resolved and six were findings unresolved in 2014/15.

Part 4 related to the Summary of Internal Audit Findings- 2015/16. Since this was more recent, the effectiveness was in the process of evaluation. No assessment of implementation of corrective action had been done yet. He subdivided the findings into resolved, partially resolved and still unresolved. There was a total of 22 audits and consulting assignments categories and a total of 66 findings. For the review of adequacy, the findings were divided into critical/high findings, significant/medium and housekeeping/low findings.

Here, the Information Technology General Control has had eight findings, five of which were critical/high findings and three which were significant/medium findings in 2015/16.

The Audit Committee had noted the filling of key posts and the positive attempt towards integrated reporting as areas of improvement. The Audit Committee held the view that through the timely and effective implementation of recommendations from both internal and external audit, recommendations from the Audit Committee, and close monitoring by DAC management and EXCO, more improvements would occur. The IA Committee had 14 recommendations, assessed as resolved/implemented or in progress/unresolved. (See slide 18 for full details).

He gave some examples. The development of quarterly financial statements and independent assurance reviews by internal audit, and reporting to management and the audit committee for oversight, were implemented and on going. The recommendation of enhancing the permanent capacity of the Risk Management and Internal Audit activity, using a phased-in approach, was partially resolved.

Adv Huma concluded that it was not an easy task to hold management accountable.

Discussion
Dr P Mulder (FF+) requested elaboration of the seven findings deemed as inadequate out of the eleven findings in the AGSA category “Predetermined Findings”. This had comprised of the issues outlined, but he wanted to know if those seven inadequate findings in those categories pertained to the entire Department of Arts and Culture or just certain entities.

Mr T Makondo (ANC) addressed the slow implementation by the DAC on the invaluable findings of the Auditor- General South Africa and the Internal Audit Committee. He asked how the Internal Audit Committee could ensure that the DAC implements the programmes, within the policies that are drafted for it, to adhere to the findings

Mr S Mahlangu (ANC) asked how the IA Committee would rate the DAC on a scale of 1 to 5, with 5 being excellent. Also, if one aspect should be identified as most lacking, which would it be? He asked for a rating on overall capacity. He asked if Management had attended the meetings with the Internal Audit Committee.

Ms V Mogotsi (ANC) asked an inaudible question.

The Chairperson asked if there were any reasons given by DAC for the findings that were listed as “inadequate” in the Assessment of Management’s Action Plan as at 22 February 2016. She asked if there were explanations for the inadequacy or partially adequate findings. She asked if the IA Committee thought that there was sufficient capacity in the monitoring and evaluation unit .The concern about the entities would be an essential issue for the Portfolio Committee because 80% of DAC budget was allocated to the entities. The Committee had highlighted the issue that three individuals had been assigned to oversee the entities’ 80% of the budget, when more than four hundred individuals were assigned to the remaining 20% budget oversight in DAC. Maladministration had surfaced with the drafting of the APPs – the Committee had questioned how the APPs could be effective if there were insufficient SMART objectives that could not be measured. The DAC should take full responsibility for its entities, to ensure a well-capacitated and efficient unit. Since 80% of its budget was allocated to the entities, the DAC could not neglect to be accountable for them, but it had to date not done what it should, on those entities.

The Chairperson also appealed to the Internal Audit Committee to assist on filling the vacancies, with sufficiently competent people; if competent people were not appointed, this would later come out in audit findings. She asked if IA could in any way assist on the quality of the recruitment process. The Committee have also undergone an exercise where it would review findings that had recurred over the past two financial years, collating the findings of AGSA and the IA Committee, then highlight those concerns to DAC and offer the necessary support. She asked if the Managers had submitted Action Plans, which were time-bound, to address the issues listed in the findings – these should be explicit, detailing what would be done, by when and by whom, to ensure better accountability.

Ms Mogotsi  further questioned the Management Letter , asking how many points were made, and how many were resolved.

Ms Karabo Rapoo, Audit Committee Member & DAC Risk Committee Chairperson, replied that there was a problem of the alignment of the Annual Performance Plans (APPs). The corporate line of DAC did not align with the APPs of the entities.  Another problem was the timing of the planning. It should be assumed that DAC would draft APPs that would be “sector wise” and would be completed prior to the entities drafting their own plans. DAC had been late in drafting, so the final APPs had to be the ones that the entities themselves had drafted. Monitoring was lacking. She fully agreed that having three individuals overseeing 80% of funds had been a problem. Another issue (which she stood to be corrected on) was that it seemed that some entities did not have a specific individual assigned to monitor and evaluate. Therefore, when the internal audit happened it would have to start to monitor and evaluate from no previous base.

Adv Huma noted that the current governing model of DAC had been weak. The entities had their own hierarchy of management, with boards and executives, but ultimately the DAC would be responsible for the events within the entities. The DAC should, therefore, ensure proper accountability of the entities. Firstly, it should do so by ensuring hat the APPs submitted were properly aligned with the mandate of DAC, since the entities would be executing the mandate. Secondly, since the DAC transfers funds to the entities, it should have a stronger interest in how those funds would be administered. Thirdly, the overall strategic framework of DAC required reworking – there were several duplicated entities and the hierarchy of management complicated the efficiency of some entities and its ultimate accountability that it provides. Lastly, the Portfolio Committee on Arts and Culture, along with the Internal Audit Committee, could ensure better governance in the interim of the reworking of the governance structure, by holding the entities accountable quarterly.

Adv Huma advised that clustered governance could be better suited to the DAC's position.

He then elaborated that the submission of reports had raised questions, but then the point was what the Internal Audit Committee could do about those questions. Often, the very people whom the findings had isolated had not done what they should have done, and so this was a question not of raising more questions, but of becoming efficient. In order to do that, a better structure of overall governance, and one that ensured that people were deriving benefits, had to take place. The entities were currently not delivering to the people on the ground.

Mr M Ameen E Amid, Member of the Audit Committee, DAC, agreed that a clustered governance structure would ensure efficiency, and he recommended that this should be suggested to DAC. The Audit Committee would report to the Audit Officer, and the entities would report to the Executive authority, invariably raising an issue with the reports, because the Boards did not report to the Audit Officer, and the Audit Officer was note responsible for the administration of the funds of the entity.

The Internal Audit Committee could review the existence and quality of the policies within a gap analysis. Whenever the Internal Audit Committee conducted an audit on an entity, the policies and controls would be tested for their adequacy and effectiveness, to determine whether they adhered to the policies of DAC. If procedures were lacking, the IA would make recommendations to advance those policies. In the event of policies not existing, the IA would consult with DAC and attempt to assist with the Departmental procedures, without actually taking managerial responsibility. Thereafter, IA would again test those policies and procedures. One of those exercises could be used as a gap analysis too. In terms of integrated reporting, the provision of a surety model would develop and compile the framework for a policy implementation strategy as well.
 

Mr Amid  noted that the internal audit committees and external auditors were encouraged to work well together to ensure accuracy and co-dependency. The AGSA has not yet made the shift, nationally, to rely on the internal audit or the surety of other external auditors for identification and knowledge purposes. However as the framework would increase and enhance, the AGSA could take the internal audit more seriously and could then be compelled to rely on the information provided by internal auditors or other surety bodies. The Internal Audit Committee had also requested to share information, on the clients that they had commenced with, with the external auditors, so that there could be a shared understanding and quality control between the auditors, thus promoting an on-going interaction between the assurance providers and those in need.

Adv Huma then addressed the question of the quality of DAC. In regard to the findings of the AGSA the DAC had implemented some changes only after these had been raised in several annual findings. Thus, the changes made were not immediate. For instance, supply chain management policy was revised, updated and changes then implemented only after many successive audit findings. The IA Committee was not yet able to say whether all results of the findings had been implemented and adhered to. The effectiveness question would have to address those in charge of the policy implementation, and what would happen in the event of breach, because there was not presently any consequence for non- compliance, and thus to that extent could be deemed as not effective. The IA Committee had asked for integrated auditing and a combined assurance model, but the test whether it was successful or not would surface in the findings and overall efficiency of DAC.

Mr Amid had explained that the extent of the managerial accountability was monitored, but sometimes could not be as accurate as the Internal Audit Committee would have liked, because the initial due dates for accountability would not be adhered to and so they would have to be rescheduled. The plans with time frames would be submitted, but the requested changes would not always occur in that year and would be deferred. The Internal Audit Committee would then have to revise its estimates, based on the deferred date,  resulting in inconsistencies because the initial date could not be tracked or even known, as the management would omit that information. The Internal Audit Committee had ensured that the right questions were asked for the tracking process, and follow-up would occur quarterly. Issues had arisen from staffing problems, although the IA Committee had tried not to accept excuses from management for the lack of accountability and non-compliance.

Adv Huma then moved on to the question of recruiting people with the right capacity. Responses given by management to the reports of the Internal Audit Committee would indicate if management had known what they were doing and so were competent for their jobs. The core competencies relevant to the management of DAC should always be reverted to, for clarification, but the listing of these did not necessarily mean that there was competence in fact. Overall, the management of the DAC needed to be strengthened and so far it had not had the competence necessary to take the Department to the next level. The noted negligence in not monitoring and evaluating the entities had been a concern for a while. The entities were somewhat self-sustainable out of negligence. From an auditing perspective, there were other areas in the DAC, for instance faulty financial statements, which had also insinuated that the management of DAC did not have the right people in place for the job to be done. He thought that perhaps a rating of 2.5 would be fair, because there are areas such as finance and human resource that were good, but not every entity was faulty in maladministration or had pockets of managers who were not up to scratch.

Ad Huma said he had already expressed that a change in the management model would result in overall increased competency of service delivery by the DAC. Should the management have people who could table their requirements, identify the right matters to draft a Portfolio of Evidence (PoE), collate the targets and achievements, and ensure better accountability on those requirements if they were not completed by the due dates, then submit their documentation on time, and with full information, this would change the entire culture of management, to everyone's advantage.

Overall, attendance by management at Internal Audit Committee meetings was very good. In relation to the reasons for the inadequate findings, the management would give feedback, but many times this had proven to be just an excuse. The policies that they had to adhere to were public and so reasons for falling short might be that newer policies could be implemented, or responsibility might have been overridden or customised, but then the new policy had to be checked to ensure it was not negating the overall principles of the DAC.  In regard to the filling of vacancies, the procedure would be that the job description was drafted, advertised and filled by the DAC, and although the IA Committee could look at the process, it could not review it or intervene. Action Plans were received from Management, but timing for implementation was a challenge, because it had been immensely slow. The delays upon delays would result in high risk management. There were 61 findings addressed out of the 63 findings. 

Ms Hope Matolo, Director: Internal Audit Committee, DAC, noted that for the two findings that were listed as not addressed, the IA Committee had not received any feedback on the review. This pertained to predetermined objectives for the APPs, and particularly minimising the risk of having the same issues recurring annually. Only after the most recent meeting where the IA Committee was present, did management give a response.

The Chairperson noted that the Portfolio Committee had a Constitutional obligation to oversee the DAC and its entities, but its Members had gone beyond the call of duty to provide support. The problem was that the DAC had not heeded the advice given to it, with the result that it was now facing challenges. Had that advice been followed, many of the challenges could have been prevented. For instance, the DAC is yet to draft a funding model, to be explicit how its funds were allocated. With that, the artists in need could approach the DAC and show how their needs suited the criteria and so almost be guaranteed sponsorship, as opposed to the rejection that would no doubt follow on the uncertainty of how the funding was allocated. Allocating funds should not be dependent on a mood, but should be structured, and the Committee believed that it fell short. Another concern was the funds allocated to spend on audit of skills, when other Departments had entities that could do this at no cost. She suggested that the IA Committee and this Portfolio Committee should, wherever possible, share their findings, to improve the monitoring process.

Department of Arts and Culture 2016 Annual Plan and budget briefing
Mr Vusithemba Ndima, Acting Director General, DAC, gave an overview of the 2016/17 Budget and Medium Term Expenditure Framework (MTEF) estimates. The DAC had four programmes to achieve its five-year strategic plan. The overview of the estimates were:
Programme 1: Administration: R242 million
Programme 2: Institutional Governance: R397 million

Programme 3: Arts and Culture Promotion and Development: R1 billion
Programme 4: Heritage Promotion and Preservation: R2.1 billion

Slide 11 set out the main details.
There were five main expenditure and strategic goals. He gave examples of some of these as follows:
Goal 1: finalisation of the Revised White Paper on Arts Culture and Heritage
Goal 2: R8 million was allocated for the build-up activities and hosting of a National Convention towards a Social Compact in October/November 2016, and an estimated budget of R41 million had been allocated to the increased focus on the African continent to promote regional integration
Goal 3: R35.9 million will be invested in community arts (focusing on programming, infrastructure refurbishment and new infrastructure development) and R1.3 billion was allocated for community libraries (for library infrastructure, ICT, connectivity, staffing, programmes and library material)
Goal 4: business continuity plans needed R16.5 million for its activities over the next three years
Goal 5: organisational restructuring that would incur a reduction of R18.2 million in the employee compensation budget for 2017/18 and a reduction of R30.2 million for 2018/19, and the DAC had budgeted a R2.4 million for a skills audit

The full strategic goals and objectives, with the strategic objectives, showing performance indicator and targets, were set out in slides 18 – 30 of the attached presentation.

The Chairperson said that unfortunately information as provided could not assist the Committee to monitor and evaluate the DAC, as it should have. For instance, no information regarding the location of the proposed library was given. It was also not specified on what topic or with whom community conversations would occur. The Budget Review of DAC should have been convincing and had sufficient detail for the Committee to be able to tell the House, with confidence, that the requests for funding were substantiated.

Discussion

Mr M Rabotapi (DA) wanted to know if there was any communication between the DAC and municipalities. Since no-one knew off-hand who was responsible for building libraries in the communities, sometimes several were built in close proximity of each other., resulting in duplication in one area and lack of facilities in others, which meant the libraries essentially became white elephants. This was wasting resources when there was not sufficient interaction.

Mr Mahlangu asked where the Community Arts Centre was to be located and said that the Committee had to get sufficient detail, and not vague appeals for funding. He did not even know for instance if this was to be built in KwaZulu Natal or Limpopo, and that meant that the Committee was not able to follow up on the implementation. Exact co-ordinates, at the very least, could be disclosed. As long as the plan was not adequate it would be very difficult for the Committee to grant unqualified reports for the programmes. Two rural developments were noted, one of which involved the Khoi-San, but it actually raised the question to the Committee, although the focus now is on future endeavours by the DAC, whether the past endeavours in this regard were ever completed.

He pointed out that the overall performance of the DAC had not been adequate, since last December. The Acting Director General cannot cite the issue of limited resources as a constraint, when the DAC had under-performed. The major concern was that the management had not done as expected with the funds already allocated. The “issues” that were the excuse for the challenges could not be as tangible as the DAC had claimed, if the concerns had not even been addressed. Both the Acting Director General and the Internal Audit Committee must agree that the DAC was yet to reach its peak of performance, but had under-spent instead.

Mr Mahlangu then addressed the DAC’s aspirations for patriotism, and asked what would be the test used to assess its extent of progress or regression. Archives had been identified for a flagship programme, because they were believed to be very important for the Government, and therefore the Committee wanted more details on this, including the long-term plan. Other aspects had already been raised, including how the DAC interfaces with other important players. It would be inappropriate for the DAC to underperform itself, and then wash its hands of the reports on expenditure by the Provinces, because revenue derives mainly from the National Government. Even where provincial governments do raise its own funds, this would seldom amount to more than around 11%. However, since the misuse of funds could become an issue for litigation, this was a matter of great concern.

He noted that the DAC performance on job- creation was “an unhappy assessment” when the Committee last considered it. He was uncertain on its exact improvement and current analysis, but even beyond the Committee there were concerns that the DAC had had inadequate programmes for job creation. There were three or so Board appointments, and one contract would end in July, and the programmes of the DAC must also take that into consideration. If the programmes did not take into account the contract terms for the Board, the DAC might find itself having to seek extensions, although the expiry date had been known in advance. He asked why the DAC should resort to outsourcing, when the expiry of managerial contracts could be foreseen. He questioned why provision was not being made by looking to promotion of internal candidates. He also commented that lack of representation of women on the DAC’s boards should be noted, as one of the entities had only one woman on the Board. Disabled people should also be considered for Board Membership.

Mr Mahlangu (ANC) also noted that the most of the museums had received qualified audits, because of non-adherence to GRAP 103. The allocations to museums had started from 2017/18, right up to 2020, and he wondered if it was expected that museums would continue with their previous APPs. He questioned the interaction between the DAC and National Treasury. The Committee was aware that the entities were doing the best that they could, but sometimes their efforts would falter due to the lack of the necessary support.

He also said that apart from some issues on the infrastructure that had been addressed specifically there was not a happy result. Where information on heritage was required, insufficient clarity was given as to how it would be retrieved.

He also questioned what would be done to turnaround the PanSALB entity. This had been a particularly sore point for the Committee and he would have expected that there should be a plan to turn it around. He noted that 26 social compacts had been signed, and asked if PanSALB was included, since the entity does currently not have a CEO. The Committee had not approved its APP, nor had the five-year strategic plan been received..

 

Mr G Grootboom (DA) raised six concerns as follows:
a) DAC needed to unpack the Social Compact stipulated. t was unclear what was meant by the term
b) What would happen to the entities not performing such as PACOFS and PanSALB? Does the DAC have any intervention strategies in place?
c) To what extent was the Portfolio Committee involved in the White Paper Process. Obviously as lawmakers, the Committee would be involved in the end, but was it not be possible to intervene during the process
d) How would the DAC conduct the skills audit or was it to be outsourced?
e) Who would be sourcing the libraries with materials? The Committee had visited a library late last year and at the time the visit was made, it had only received four books
f) Commenting on the APP's alignment with the MTSF, he pointed to Outcome 7: “Vibrant, equitable and sustainable rural communities with food security for all”. He questioned what was the purpose of that, in the DAC strategy, and to what extent was the DAC active in government to achieve that.

The Chairperson questioned who specifically were the five hundred AU flags for and how would they be distributed. She commented that the purchase of the flags seemed almost accidental in the sense that they would be purchased in advance and then, as the need for one arose, they would be distributed. It seemed to be wasteful expenditure and gave the impression that the DAC was not organised. She asked on what basis the 65 bursaries were to be awarded and to whom they would be granted. There had been schools closed in Northern Port Elizabeth, due to the shortage of Afrikaans teachers, leaving pupils in need and the DAC definitely need to intervene in their situation. The DAC could approach them and award bursaries, but the criteria had to be explicit and the Committee should know about them and be able to explain it. She questioned what the “one-policy” of 2016 was, and what the “one framework” referred to.

The Chairperson spoke to libraries. In the South African Public Library and Information Services Bill, it was noted that the building of libraries was not a national mandate, but, constitutionally speaking, was a provincial mandate. Since the provincial governments had failed to carry out that mandate, Conditional Grants were put in place, to allow them to appeal to National Treasury for funding. She asked therefore how the DAC was working to integrate all parties concerned and prevent “white elephant” libraries? The actual documentation of the Budget Review was unclear, with information missing on some key items.  Additionally, she questioned how far the DAC was with infrastructure – where and when would building happen. In the past, DAC had been known to start preparations only in the year that it was scheduled to start building, so she wanted to know if the preparatory work for the events due to happen this year had been done. Lack of adequate preparation consumed money, due to procrastination, and in addition, the DAC should say when the initial issues cited were addressed.

She further questioned the implications of slicing the budget for personnel? The R2.4 million allocated for skills audit should be elaborated on.

Mr Ndima said that he had attempted to keep his presentation concise, but that the further details were available. He elaborated that ‘Project Portfolios’ were available, in which community buildings, such as the Arts Centre, could be appealed for ,and if the DAC could accommodate requests for these kind of matters in its budget, it would do so. Exact details were in the Project Portfolio. He admitted that the DAC had not directly worked with the municipalities regarding the building of the libraries, but had worked with the provincial government, who in turn would work with the municipalities to implement the building of the libraries. He acknowledged that there could be a gap in communication. The sourcing of the material was the responsibility of provincial government. The provincial government would draft business plans and budget for  library materials, but the DAC would monitor the processes, because it is in the interests of the DAC to ensure the efficiency of the funds allocated. The exact co-ordinates of the Arts Centre were not known yet. In relation to the Rural Development and Food Security target, DAC was emphasising its contribution to rural development in the building of a library, arts centre or monument, rather than the food security. The under-expenditure was in the areas of capital works and conditional grants.

The Chairperson said it made no difference where the under-expenditure occurs, because it gives the impression that the DAC had not done what it was meant to, and so will not deliver its services to the people.

Mr Ndima agreed on the matter of under-expenditure. He then explained that the destruction of artistic property on university properties had implied that there was a lack of a culture of respecting heritage. It was possible for the university students to demonstrate how unhappy they were and to express their displeasure, but it could be done without destruction. Wanton destruction show a lack of any consciousness of collective ownership. The structures belonged to everyone, and the destruction reflects lack of patriotism.

He said that the DAC would sometimes do research regarding the composition of the Boards to ensure the various competencies were covered by the Board members. He explained that the Board process would call for nominations first and would be presented with names, but the DAC may need to search further for candidates to make up the pool so that it reflected equal male and female candidature.

He explained that expenditure that was irregular was subjected to forensic investigation. The misuse of government money would not be tolerated, nor would incompetence or uncompleted work. The DAC would have to address this and ensure that the lists of tasks would be completed and the work became functional.

Mr Mahlangu (ANC) clarified if any appeals were made to the Board or the Acting Director General.

Mr Ndima noted that he had spoken to the board at SA Heritage Resources Agency (SAHRA) when he had been asked by this Committee if any community work over and above government duties were done. In the past, communities and stakeholders would request funds and ask for support, and then the DAC would monitor and manage the MOUs to ensure that the allocated funds were spent in line with the requests. Here, for the Arts Centre, the DAC had made the mistake of delegating to itself the role of implementing the project on behalf of the beneficiary.

Mr Mahlangu wanted substantive information and a full report on the Arts Centre, because it had been the first time that it had been reflected in the Budget Review, not having been included in the annual plans for 2015, nor in the Strategic Plans. If the DAC had indeed supported this endeavour in the past, then it should have been clearly listed. If not, then it was seemingly a “back-door” initiative, and that was a problem. He wanted to revisit it later, when the DAC should provide further details and authenticated information.

The Chairperson advised the DAC to revert to its funding model and to change it so that everyone could actually know how it works. The Committee would like to know how the DAC would appropriate funds to those who had requested them, and had to know the criteria used to assess the requests. The current review was not a funding model, merely listed the recipients of funds.

Mr Ndima explained that as a matter of principle, no projects were being “sneaked in the back door”. The projects were actually investigated and concluded.

The Chairperson said that the Committee wanted to know why the decision was taken – and on the basis of considering where the DAC was now and where it wanted to be.

Mr Ndima continued to address the PanSALB issues, saying that an advisory body was being put together to assist PanSALB and identify all areas of failure, whether these related to human resources, finance or anything else. A turn-around strategy could not be put in place until the exact causes were known. The DAC was already aware that role classification at PanSALB had been a problem.

He maintained that once the problems were fully identified and resolved, then .DAC would be able to spend more of the funding allocated to it. The  “social compact “was another word for agreement, and this was the call, as a nation, to declare that South Africans wanted to see peace and racial harmony. Development could only occur with the involvement of every sector of leadership, such as business and religious sectors.

The Chairperson reprimanded the DAC for failing to recognise what had been unfolding at PanSALB. The Committee had even implored that the DAC should approach its legal unit , raise questions, and then inform the Committee on the constitutional points and the implications, should PanSALB not be performing, as well as identifying the gaps. DAC should have done so already, because the relationship between itself and the entity had been a serious one, even to the point that the entity had taken the DAC to court. The weight of the legal logistics between the DAC and PanSALB should not have been complacently overlooked.

Mr Ndima said that the Portfolio Committee was relevant to the White Paper process, by its active involvement with the discussions and approval of the draft of the White Paper. The provision of flags could be explained. The spending on the AU flags was low, because of budget constraints, but they would be wisely distributed; for instance at a public hearing with the Minister, not randomly, because the purpose was to educate people on a shared African identity.

Bursaries were awarded through an application process.

The Chairperson noted that since the Committee Members were from different provinces, they were interested in whether the DAC would equally spread the recipients of bursaries amongst the provinces, because it had seemed to be a trend that people from affluent provinces got first preference, at the expense of people from poorer provinces. Thus, it would only be fair to receive a list of the areas in which the bursary recipients had resided.

Mr Ndima assured Members this would be provided.

He noted that the “one policy” questioned earlier was the museum policy that the DAC would like to take to Cabinet. The strategic framework of the South African Public Library and Information Bill was something that the DAC had wanted to be revised.

The Chairperson asked how far the DAC was with those two aspects.

Mr Ndima replied that in regard to the museum policy, many consultations had happened thus far, and there had been integrated work with other departments, such as Departments of Education and Tourism, to get their input on the documentation.

The Chairperson wanted yet further clarity. She reminded the DAC and Members that it had been said that a sufficiently full consultation process was carried out on the White Paper, yet when the Committee probed this further it found that in fact only four out of the nine provinces were consulted. The Committee wanted to see a list of the institutions, provinces, organisations with whom there were consultations, so that the DAC was held accountable to a fully transparent listing.

Mr Ndima said that the list of those consulted on the South African Public Libraries Bill could be provided, but he assured the Committee that all governmental departments that were relevant to the provision of libraries were consulted – these included departments responsible for basic services, education and disability.

The Chairperson asked how the Liberation Heritage Route was linked to the National Heritage Council.

Mr Ndima responded that the role of the Liberation Heritage Route was pivotal and that the contract was taken to Cabinet, which had approved some of its provincial projects. Last month the DAC had met with the Liberation Heritage Route to determine how the provincial projects would be implemented, and which heritage sites the provinces would like prioritised.

Ms Kelebogile Seftubeto, Deputy Director General: Information Governance, DAC, replied to query on patriotic implementation, by specifying that the DAC was planning a country-wide Young Patriots Programme, by hiring a group of unemployed youth to train them, then deploy them to communities to advocate the Constitution, national identity and patriotism. They would do this by way of questionnaires. They would feedback information to the DAC

Mr Mahlangu advised that it would not help to use the unemployed youth. They did not have sufficient weight, since patriotism was a matter of influence, and this could not be exerted by a person who was not influential themselves. He thought it would be better to use sports people or those with some known influence to advocate patriotism. He understood that there is a responsibility to assist those who are unemployed, but their use in this could well result in the programmes falling flat.

Ms Seftubeto replied that the DAC had also had social cohesion advocates, who were professors from universities, sports personalities and other people with influence, so that when approaching communities those individuals could have a platform to influence. The youth would have recently matriculated and so could be trained to influence on a ground level.

The Chairperson said that the community consisted of people of all ages, elderly folk, crèche goers, pupils, students and others, and so the intervention strategies had to look at short, medium and long-term target markets. Pre-schoolers would be those whom the DAC would want to influence long-term, not by indoctrinating them but by encouraging them to understand patriotism and the message that the DAC would like to advocate. This advice would ensure that implementation had results.

Mr Makoto Matlala, Chief Financial Officer, DAC, noted that when GRAP 103 had become standard and compulsory, the entities of the DAC were not ready for it. An appeal for exemption, because of partial non- compliance to GRAP 103, was made to National Treasury, in the Input Forum in the last financial year. Unfortunately the response from National Treasury was received only in December after the audits had taken place. The Minister of Finance has now approved an exemption for the DAC and its entities from compliance to GRAP 103, for the financial years 2014/15, 2015/16 and 2016/17. From 1 April 2017/18, the entities of the DAC should be ready to adhere to the GRAP 103 compulsory requirements. However, the AGSA had noted that there were certain other minimum requirements that the entities should comply with. For instance, the registering of the Heritage Assets was done, because it was a minimum requirement, but its evaluation was still lacking, because that was a GRAP 103 requirement. Professional evaluators would do that for which funding had been requested and received.

The Chairperson was worried that when dates of programme implementation were suspended, officials could then procrastinate and not do the necessary preparation to ensure that the entities would indeed be ready to adhere to GRAP 103 on time – and they could then excuse themselves and say they were not ready. DAC must therefore have a process to monitor the entities and assess their extent of preparation for GRAP 103 compliance.

Ms Monica Newton, Deputy Director General: Arts and Culture Promotion and Development, DAC, answered the questions on the Arts Centre. The DAC had indicated the target as an initiation only, because, as the Chairperson had said, there are a lot of processes that would go into the actual construction. At the moment, a centre in Soweto was in its concept stage and on Thursday the DAC would meet with the Polokwane Municipality to discuss the suitability of a centre. It was thus uncertain, as yet, where it might be based, perhaps even in both places. DAC had started planning for this last year. The Acting Director General had pointed out that the Community Arts Centre and allocation of the refurbishments was unclear at this stage, because it was based on needs that were being reviewed. The Committee would be updated quarterly on this.

Wherever possible, the flagship festivals where flags might be distributed were noted in the APP.

She noted that the DAC was struggling with the verification of the job creation targets. Job creation had continued to be a challenge in the DAC, because the targets set were low in comparison to what AGSA thought would be suitable. There had been some improvements last year, but even then the amounts were lower than AGSA wanted to see. DAC had three year contracts with major universities, including the University of Johannesburg and the University of Limpopo, for language bursaries. However, there was a . mismatch of the students’ academic years and the DAC’s financial years, so that bursaries reflected as allocated for 2017/18 had in fact already been awarded at the start of the 2016 academic year. They were for  linguistics, literature and editing. There were not for language teacher training.

The projects that were flagships for the transformation process would be divided more equally between regional road shows and other projects, with two per province, at a maximum cost of R4 million. These would aim to include vulnerable groups, such as women, disabled and young black South Africans. Ms Newton  assured the Committee that the White Paper process had included the prior questions around the theatre distribution in the country.

The Chairperson asked how far the adoption of the White Paper process was.

Another representative from the DAC answered that the White Paper Process was in the final consultation stage; with contributions from performing arts, fine arts, archives, libraries, languages, and visual arts yet to be considered. The draft Report would be available at the end of May, subjected to further scrutiny and then the final version would be drawn.

The Chairperson said she estimated August 2016 as the final date for the White Paper Process.

Mr Grootboom asked to what extent the White Paper process would be completed, or would the DAC wait for a handbook for visual arts to be drafted first?

Ms Newton replied that the Visual Art Task Team referred to in the White Paper Process would complete its contribution as an inter-sectional process, because the Visual Arts Handbook would be published on its projected date of publication and the White Paper Process would be completed separately.

Mr Conrad Greve, Chief Director: Human Resource Management: DAC, answered the questions around the R2.4 million for the skills audit, and the implications of the personnel budget cuts. The DAC would not appoint a consultant for the skills audit, but the DAC,with the National School of Government , would assist in the process. A discussion had already commenced, and the physical audit should occur in the following weeks. The skills needed to draw up proper APPs would be highlighted, and gaps identified. The amount of R2.4 million was a training budget to cover the gaps. This was roughly 1% of the budget for salaries, which is where the figure of R2.4 million had come from.

The Chairperson noted that in this case the skills audit was described in a misleading way, with the budget being described as “training” and the public would no doubt interpret that as a an external issue.

Mr Greve clarified that this was for training on the implementation of the findings of the skills audit. The Acting Director General had noted that anticipated salary reductions would occur in the outer financial years, so that there would be reductions to the personnel budgets in 2017/18, of R18.2 million, and in 2018/19, of R30.2 million. The personnel budget for the current financial year had already been drafted last year, and so the allocation to this was not touched. The reductions did not take into consideration the annual salary increases. The DAC would be appealing to National Treasury and if it was allowed, it might take a portion of the Community Library Conditional Grant, which was budgeted at over R1 billion, for capacity building in the Department, since the DAC currently had no funding for additional capacity. That shift would be allowed, to a maximum of 4%.

The Chairperson asked if DAC wanted to engage with National Treasury first, or to fill the vacant positions.

Mr Greve responded that both would be done concurrently. It was already engaging with National Treasury. It would be irresponsible of the DAC to fill positions knowing that the personnel budget would be sliced and there was still a possibility that the additional funds from ‘Capacity Building’ may not be provided.

The Chairperson asked if the DAC had identified areas where the filling of vacancies was not necessary.

Mr Greve responded that it had done so. Between October 2015 and February 2016, the DAC had advertised a total of forty positions. The majority of the advertised positions were advertised before February 2016, when the DAC had received the confirmation that there would be a reduction of the personnel budget so there were a couple of positions that the DAC had anticipated filling that would actually be discontinued. For example, in the Communications and Marketing unit, the advertised positions were for the Chief Director of Communications and Marketing, a Director of Communications and a Director of Marketing. However, only the Chief Director posts would be prioritised, because this was the person to whom the others would report in time. Another possibility is that where three or four similar positions were available, only two might be advertised. It was an executive committee discussion.

The Chairperson asked if it would warrant a change the organizational structure.

Mr Greve answered that it would not warrant a change of the organisational structure, but it would warrant the ability to abolish those positions instead. The legislation for the Public Service said that if no funding was available for a position, it would have to be abolished. However, this would not actually result in the change to the overall structure. Reducing of overtime would not have a significant impact, but would mean that smarter methods of completing the work, especially for festivals and commemorations of national days, would be done, to ensure better value for money. About half of the 40 positions advertised would actually be filled. The DAC had a vacancy rate of 7% and had identified vacancies that could be abolished, which would then reduce the vacancy rate down to around 4%. The DAC was always looking to have a maximum 8% or 9% vacancy rate.

Mr Ndima referenced slide 11 of the Budget and MTEF estimates, on Arts and Culture Promotion and Development’. The costs here were anticipated originally to be around R240 million, but the DAC had acknowledged that it would need to review project proposals, so that those already advantaged would not be further assisted at the expense of those who were not. In the Heritage Preservation and Promotion programme, the Library Conditional Grant of R1.3 billion was already in existence, but a lot of heritage institutions required funds for their preservation of history, from that allocation. This budget, as tabled, was an overview and future presentations would list the objectives achieved with percentages.

The Chairperson thanked the DAC on this presentation and advised that none of the Committee's remarks and questions must be taken personally. The Committee was attempting to improve service delivery. Members had, on principle, made a decision not merely to provide oversight but to give advice and support to the DAC. The Committee was, however, advising the DAC to improve, since it had the power to fulfil the dreams of many South Africans. It was not merely being asked to act; it was paid to do so and should not fabricate any of the targets, for this would later be found out. She repeated that 80% of the funding was allocated to the entities, so the DAC must focus fully on these entities and not take an arms-length approach. If the management of the entities was not serving its purpose, then DAC would have to deal with that. It had been forewarned regarding the management of PACOFS, as the signs of PanSALB had repeated themselves. The Committee was prepared to spend days listening to staff but the managers or leaders must listen to the staff members. Although the Committee had given feedback to the DAC it had dragged its feet, and that was why the IA and AGSA had to conduct a review, in which the findings of the Committee were confirmed. The Committee's findings of frustration were not an exaggeration. The three entities were in harmony with each other. The question now was whether the DAC had reviewed documents submitted to the Committee.

Ms Seftubeto answered that the DAC had had an opportunity to review the documentation. Although the presentation arrived very late, the previous documents had been very long-winded, incoherent and not suitable for presentation. Some of the submissions by the entities were received much too late. In answer to the Chairperson's questions she said that all entities' documentation was reviewed, but these were received yesterday.

Mr Ndima said that he was suggesting that the documents should not be considered, or that the entities should be allowed to present but then the Committee should review, highlight inadequacies and assist on its areas of weaknesses.

Ms Mogotsi said that this was what the Committee did anyway, and it seemed that the DAC itself was failing in monitoring and evaluation if it had only received the documents yesterday. If the DAC had done the right monitoring and evaluation of its entities beforehand, then it would have ensured appropriate preparation. It seems that the DAC had not taken the Members of this Committee seriously.

Ms S Tsoleli (ANC) said that she was disappointed that the DAC appeared to have regressed, and she asked what exactly it was doing. 80% of the budget of the DAC was allocated to the entities, and so the 20% was for the DAC, primarily spent on administration and compensation. She had assumed that most of the personnel salaries would cover people who should be monitoring and evaluating the progress in the entities. If the operational function was so lacking that presentation documentation could not be received on time, then what was the DAC actually doing? She agreed that this was undermining the Committee. The Committee had told the DAC what it expected a while ago, and it should have been purposive in preparing. The entities do not report directly to Parliament, but to the DAC, and it must in turn report to this Committee. She asked what this said about reporting weekly and beyond to the DAC?

Mr Mahlangu agreed and said that the DAC should be asked to identify the gaps and revert to the Committee. The Committee could indeed highlight issues that were not up to standard, but that meant that the Committee would essentially be doing the work of the DAC. He cited the discussions around the Community Arts Centre. He thought the DAC should go away and rectify the gaps, then report back with all the information, even if this meant reconvening later at night. A good example of a turnaround had been show in the Nelson Mandela Museum, previously in a poor state but now presenting good APPs that could be used as a guideline to others.

Discussion
The Chairperson had asked how PACOFS felt about its documentation, given what was just deliberated.

Mr Fezile Wetes, Council Member, Performing Arts Centre of the Free State (PACOFS), said that if another document was needed, then it would appreciate a benchmark for doing so.

The Chairperson asked if PACOFS had appreciated why the Committee was not happy with the documentation of the DAC as presented.

Mr Wetes said that he would understand that if a document raised more questions than it answered, then it would be said to be ineffective and he could appreciate that the PACOFS documentation might then fall short of what the Committee wanted.

Mr Mahlangu highlighted that the entity would understand its own documentation, because the Council and staff were working with and responsible for the  entity. Unless there was a glossary had accompanied it, this document was not comprehensible, it was badly crafted and full of acronyms. He accepted that these could be explained by people present, but the document itself should have adhered to SMART principles. There was a slight improvement from past documents, but more could have been done, and he repeated that it would be useful to follow the example of entities such as the Playhouse or Nelson Mandela Museum whose APPs were approved by the AGSA.

The Chairperson repeated that all objectives should be set out in the SMART format: specific, measurable, achievable, realistic and time bound. The objectives in the PACOFS plan are much too broad, and she repeated that if they could not be measured, then how would the Committee monitor progress. The same comments as made to the DAC applied to the entities also.

Mr Nelson Salimani, Acting Chief Executive Officer, PACOFS, noted that having heard the discussions this morning, PACOFS was given an understanding of how it should be drafting its APPs for the future. It would ensure that these would not be as vague as they admittedly were now. Furthermore, he noted the points about the targets being measurable, and said that he had thought again, and perhaps not so many targets should be set out. The SMART principles would be adhered to, and the recommendations would be followed.

The Chairperson asked the DAC to assist, as it had had the privilege of getting input from AGSA on it own APP. She suggested that the DAC must then engage with the person who had assisted it, to give some input also on the entities. There was not much time left, because the APPs would have to be deliberated upon on 10 May, and by that time the DAC would have had to convince the Committee on its budget requests, so that it could motivate for them in the House. The SMART principles would actually ensure better accountability and monitoring of itself, as opposed to having lists of tasks that it did not complete.

The Chairperson noted that PACOFS would now be going back and revising its APPs. However, in the meantime, she asked that PACOFS should highlight the most important aspects.

Mr Salimani apologised that the Chairperson of the Board was not present, due to ill health. He noted that PACOFS had improved from where it had been previously, although more time was needed for further change. One  challenge that could be foreseen, as raised by the AGSA was that it was trying to run with only one executive staff member.

The milestones would be the legacy that the entity had built, within its own province. It had been invited to EXCO and had meetings with the DAC to discuss joint ventures. It was having a meeting with the Deputy Mayor on 5 May, and would discuss a funding model to see how provincial government could fund some of the entity’s projects. The entity had attracted the interest of the executive Afrikaaners to discuss their language and arts. The quality of the entity was higher ten years ago, and it aspired to return to that level, but the main challenge was that it lacked capacity.  Its financial statements are no longer outsourced to an external consultant. Staff morale was admittedly down, because staff members want change. However, leadership aspired to a better future and collective work to achieve that.

The Chairperson repeated that DAC must work more closely with the PACOFS and internal conflicts must be resolved. No ulterior motives for the DAC or the entities would be tolerated. The Committee had previously discussed internal conflicts with the DAC, whose response had been that the entities were governed by boards, which limited the extent to which the DAC could intervene.  However, the DAC would be held accountable by Parliament for any maladministration in the entities, and it was thus self-defeating for it to adopt an arms-length approach. Entities themselves must diffuse any factions that promoted certain agendas and would ultimately defeat its vision and objectives. They must look always to the overall vision of the DAC. by Parliament. Therefore the arms-length approach of the DAC to its entities was self-defeating. The entities itself should steer clear of factions, because that would promote agendas, and look to the vision of the DAC.

Mr Wetes thanked the Chairperson for the recommendation. The entity has made more than 70% progress in dealing with its turnaround strategy. One of the challenges was that the Board did not manage to achieved the right personnel mix, from those who had chosen to stay or leave. A task team had been hired to establish what the challenges were, and one was the lack of communication between management and other staff. There were now monthly meetings, with agendas drawn for mutual interest. In order to have an organised labour force that was effective, there must be engagement with open cards, to avoid later distortion by information being reported second-hand. The Board knew what skills sets were needed, and knew also that a mismatch between positions and skills would be disruptive. There are 24 draft policies to address the concerns of labour. Final decisions on the CEO would be taken in May. A forensic investigation would be done to find out exactly what had happened on the funding, and it had requested from the DAC for this purpose.

Ditsong Museum 2016 Annual Performance Plan highlights
The Council Chairperson, Ditsong Museums, noted that a monthly meeting would occur with the audit committee, which meant a rise in its governance costs. The purpose of this was to deal with all of the issues raised by AGSA. Some of the issues in the past had arisen purely as a result of mismanagement. For example, a policy would be approved by the Council but later could not be found when AGSA requested to see it. Another challenge was the high turnover rate of management, many of whom had retired. Litigation had been reduced by having its own advocate and a legally-trained Chief Executive Officer. It had ordered a forensic audit and had appointed individuals to give feedback in three months time. The findings had proved troublesome, because they raised a severe doubt as to how the previous management had received clean audits when so many aspects now were questioned.

The Ditsong had participated in the military league of the country, and all of its commemorations including the D-Day events last year. The SA Museum in France was still being sustained, even though it was an expensive exercise, based on principle, because so many South Africans had died there. The Arts and Culture Museum was hosting a festival to which many Afrikaans families would be invited. September was declared as the Biographical month at the Cultural Museum. Displays on South African leaders would be exhibited for six to twelve months, and these would include many former colonial or Afrikaans leaders, such as Cecil John Rhodes and since so many primary pupils visit the museum and the leaders featured would also be of the Afrikaans leaders, such as JG Strydom and Cecil John Rhodes. There were significant achievements with GRAP 103 compliance.

Mr Bantomu Mushwana, Chief Executive Officer, Ditsong Museums, noted that since the meeting with the Committee in October 2015, further progress on GRAP 103 had been made; for instance, Ditsong was evaluating its library books rather than outsourcing. The Council's research policy now made clear what assets must be evaluated. It aimed to train sufficient professionals internally to evaluate. Next year's funding would cover the training. It had begun to separate out the equipment needed for the process of evaluation. The discussion with management over the past six months was about Ditsong, and a major point was research and scientific contribution. A strategic plan for IT was being implemented too.

Discussion
The Chairperson noted that she appreciated the “can-do” approach adopted.

Mr Mahlangu cited that two years ago, the average age of management had been highlighted as a potential challenge, so the problem of many retirements could have been foreseen and the entity could have improved the opportunities for younger staff. He highlighted some inconsistencies in the documentation provided, such as names, inconsistent figures, and the survey with an existing customer, and pointed out that the acronyms would need to be explained.

Closing Remarks
The Chairperson reiterated that the DAC had to carry out quality checks on every document, because they would become public documents when received. DAC had also been asked to respond to every person or institution making queries as its track record on this needed to be improved.

Other business:
Minutes 8 March 2016
The minutes were presented.

Mr Grootboom asked for changes on page 3.

Mr Mahlangu queried the reference to a figure of R10 million.

The Chairperson responded that this figure was stated by the DAC. It had been addressed in the meeting and would thus have to be recorded in the minutes.

Ms Tsoleli clarified that the Minutes merely recorded the R10 million offered to an entity and was not a resolution.

The minutes were adopted.

Minutes 5 April 2016:

Mr Grootboom queried the management lists for the DAC entities.

The Committee Secretary noted that there had been a challenge because after the initial submission of this list on due date, several updated versions were also submitted.

Mr Mahlangu stressed that the Committee must have all presentations ten days in advance of the meetings.

The minutes were adopted.

The meeting was adjourned