PRESENTATION TO ARTS AND CULTURE PORTFOLIO COMMITTEE ON AUDIT OUTCOME FOR 2011/2012 PERIOD & THE TURNAROUND STRATEGY 13 MARCH 2013 1

PRESENTATION TO ARTS AND CULTURE PORTFOLIO COMMITTEE

ON AUDIT OUTCOME FOR 2011/2012 PERIOD & THE TURNAROUND STRATEGY

13 MARCH 2013

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BACKGOUND

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• DITSONG Museums of South Africa is an amalgamation of 3 national museums and 5 historical sites

• Governed by the Cultural Institutions Act, 1998 (No. 119 of 1998)

• Overseen by a Council of Trustees appointed by the Minister of Arts and Culture

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Council Members Audit Committee Committee of Council – Core Functions

Committee of Council – Corporate Services

Prof A. Oliphant (Chairperson)

Adv M. Mphelo (Deputy Chairperson)

Adv M. Mphelo Adv M. Mphelo (Chairperson)

Ms L. Magobye Ms L. Magobye

Ms M. Makolomakwe Ms M. Makolomakwe Ms M. Makolomakwe

Ms D. Offringa Ms D. Offringa (Chairperson)

Mr T. Kgomommu Mr T. Kgomommu

Mr M. Moope (Independent Chairperson)

Mr R. Ackerman (Resigned) Mr R. Ackerman (Resigned)

Quarterly meetings Quarterly meetings Quarterly meetings Quarterly meetings

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STAFF COMPLIMENT

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•Contract workers - 25•Interns and experiential trainees - 22

Level Post establishment

Current Vacancies

Executive Management 3 1 2

Senior Management 8 4 4

Middle Management & Specialists 29 14 15

Supervisors and High Skilled 86 59 27

Lower level 187 107 80

Very low skilled 18 16 2

Total 331 201 130

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STAFFING

• Number of staff – 201– Managers – 19– Administration and professional staff - 182

• African – 72.15%• Indian – 0.46%• Coloured – 0.45%• White – 26.94%

PRINCIPAL ACTIVITIES •Collection, conservation and safe management of national heritage collections; •Research, documentation and publication of such information for use by researchers and students – nationally and internationally, as well as the general public; •Exhibitions; •Participation in relevant meetings and conferences – nationally and internationally;•Rendering of a heritage–based service to the national and provincial departments as well as municipalities, other museums, tertiary institutions (locally and internationally) and the public in general;•Continued to engage on the implementation of the Organizational Development exercise •Development of two major exhibitions at the DITSONG: National Museum of Natural History and DITSONG: National Museum of Cultural History. It is hoped that the two exhibitions will be launched in the next financial year as they could not be launched in the previous year as planned due to unforeseen circumstances.•Coordination of Council and Council Committees meeting•Preparation of quarterly and annual reports•Attendance of management and council meetings•Participation in DAC meetings

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BUDGET HIGHLIGHTS

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Source of funding

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017

Own Revenue 7 436 231 7 843 388 7 898 285 8 391 533 8 777 530 9 181 235

Reserves 1 000 000 0 5 365 281 1 773 233 1 879 627 0

Grant - Allocated 54 411 000 58 416 000 62 450 000 66 350 000 69 402 000 72 594 000

Grant - Additional required 20 415 723 28 558 062 32 272 844

Total 62 847 231 66 259 388 75 713 566 96 930 489 108 617 219 114 048 079

Growth in grant 6.90% 6.24% 4.60% 4.60%

Remarks:Own Revenue: % increase based on grant percentage allocation increase

Grant - Additional required: For funding of core function and filling of critical vacant postsReserves – Funding of 7 posts on a three year contract , water and electricity and capital budget in 2013/14

BUDGET

Programme 1 – Museum Operations

2011/2012

Targets / Milestones

2012/2013 2013/2014 2014/2015 2015/2016 2016/2017

Accessioning and Inventory and Translocation 2 350 328 2 746 152 2 233 060 3 968 091 4 214 113 4 424 818

Conservation and Restoration 2 395 496 2 428 976 1 140 838 5 143 162 5 400 320 5 670 336

Public Programmes and Exhibition 2 230 925 2 118 102 2 297 824 5 151 166 7 026 396 7 377 716

Natural Collection 11 266 134 12 360 610 14 536 535 16 448 246 18 680 146 19 614 153

Cultural Collection 18 401 349 18 538 423 22 015 195 27 528 821 30 001 029 31 501 080

Military Collection 6 204 768 6 759 537 8 967 271 9 602 556 11 068 494 11 621 919

Total 42 849 000 44 951 800 51 190 723 67 842 042 76 390 498 80 210 022

Programme 2 – Administration & Corporate Services

2011/2012

Targets / Milestones

2012/2013 2013/2014 2014/2015 2015/2016 2016/2017

Administration 1 873 423 1 834 421 2 166 226 5 223 568 5 484 746 5 758 984

Management 5 247 113 4 771 820 5 212 624 5 417 342 5 688 209 5 972 620

Corporate Services 12 877 695 14 701 347 17 143 993 18 447 537 21 053 766 22 106 453

Total 19 998 231 21 307 588 24 522 843 29 088 447 32 226 721 33 838 057

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Total Budget 62 847 231 66 259 388 75 713 566 96 930 489 108 617 219 114 048 079

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• Implementation of the OD structure 331 positions identified by OD exercise; 201 positions currently filled

(not all filled due to budgetary constraints)• Readiness to adopt GRAP 103

Cost implications for listing & valuation of collections Security Lack of personnel Backlog in curation of collections

• Staff retention and succession planning Scarce skills Loss of professional staff through attrition and resignations Conditions of service

• Insufficient security at most sites/museums – not all museums have CCTV cameras, appropriate fencing, etc.

• Socio economic issues and poor exhibits affect visitation to museums leading to low income generation

• Absorption of utility bill of various museums 14

POSSIBLESOLUTIONS

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• Implementation of the OD structure Multi tasking Budget re-alignment to phase in OD implementation

• Readiness to adopt GRAP 103 Suspension of GRAP 103 until it is properly researched and consulted or

provision of additional budget to implement it Updating the collections register and developing policies

• Staff retention and succession planning Training and development programme Performance recognition Continuous review of conditions of service Employment of retired staff on contract when necessary Mentorship programmes

• Security at museums Survey completed Utilised reserve funds for security upgrades Funding from DAC through DPW for security upgrades at some

museums Physical security at all museums

• Socio economic factors and poor exhibits Low entrance fees Designing new permanent and temporary exhibitions

• Negotiating with PWD through DAC to absorb the utility bill 16

AUDIT OUTCOME FOR 2011/2012 PERIOD & THE TURNAROUND STRATEGY

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• Unqualified audit opinion with no emphasis of matter• No material findings on the annual performance report

concerning the usefulness and reliability of the information• Implementation of the outcome of Organizational

Development exercise• Restoration and Maintenance Programme (RAMP) Projects• 23 Audit findings reported in the Management Report

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Audit Findings

Description Action Plan Description

complianceCompliance with Section 31.2 of Treasury Regulations

The policy will be revised to refer to the new organization name and to update it with revised laws and regulations in the third quarter of 2013 financial year

Start DateCompletion

Date

Person ResponsiblePosition Progress Narrative

Title First Name Surname

September 2012

April 2013 mrs noluthando sakawuli cfo80% Task virtually complete

Revised Treasury Regulations to be approved and implemented by 01 April 2013.

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Audit Findings


complianceInaccurate surplus disclosed in Jan - March budget

Regular reviews will be performed by management.


Date



immediately ongoingMrsMr

NoluthandoNkosinathi

SakawuliHlophe

CFOFM

100% - Task complete

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Audit Findings


ComplianceEffectiveness of the Audit Committee

(i) The current Terms of Reference for the Audit Committee are being reviewed, and enhancements will be made to include the mandate to review DMSA’s compliance with relevant legal and regulatory requirements as per the PFMA and Treasury Regulations. Further, the Council of DMSA will consider and approve the revised Terms of Reference(ii) A Legislative Compliance Universe that prioritizes core and critical legislative and regulatory prescripts applicable to DMSA will be developed , and the assessment of the extent and level of compliance will be continuously monitored by the Audit Committee in accordance with its Charter.


Date



1-Oct-12 ongoing Mr Moope MphahleleAC Chairperson

80% Task virtually complete

May 2013 ongoing Mr Moope MphahleleAC Chairperson

20% - Task started

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Audit Findings


Compliance

Supporting documents not provided for inspection

A document movement register will be introduced and access to filing room limited to authorised personnel


Date



immediately ongoing mr nkosinathi hlophefinance manager


Register is in place and document movement is recorded

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Audit Findings


employee costs

Payroll certification All unsigned certificates have been returned for signatures.


Date



immediately ongoing mrs lungile gwambihr manager


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Audit Findings


employee costs

Leave balance not reconciled

Management is reviewing the VIP reports and leave forms for accuracy.


Date



immediately ongoing mrs lungile gwambihr manager


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Audit Findings


employee costs

Provision for leave calculated incorrectly

quarterly reviews of leave reconciliations are being carried out to ensure accuracy of leave provision at the end of the financial year.


Date



september ongoing mrs lungile gwambihr manager


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Audit Findings


employee costs

Performance Agreements not signed

Management agrees that not all contracts were signed due to the implementation of the new structure. However, a road show by the CEO will be conducted to address the importance of signing the performance agreement.


Date



November 2012

ongoing mr makgolo makgolo ceo80% Task virtually complete

Most employees understand the importance of Perfomance Management and they have signed their Perf Agreements. We still have a few cases where employees are resistance to this process.

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Audit Findings


employee costs

No declaration of interest by employees

An e-mail has been sent to all employees requesting them to declare if they have any interest in a private company


Date



immediately ongoing mr werner vd merwesc manager


Less than 5 employees have not yet signed the declaration of interest forms.

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Audit Findings


General IT Controls

Lack of general controls over information technology environment

The Department of Arts and Culture in collaboration with the State Information Technology Agency have committed to assist the institution in addressing the gaps that have been identified.


Date



August ongoing mr eddie reineckeit technician

60% - Task progressing well

Survey conducted by SITA to establish our requirements and signed a User Requirement Survey report. Awaiting quotation.

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Audit Findings


InventoryNo proper stock count procedures

Stock count procedures will be developed, discussed and distributed at the road show scheduled on 20 March 2013


Date



july ongoing mr nkosinathi hlophefinance manager


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Audit Findings


Inventorylack of controls in inventory

Stock count procedures will be developed, discussed and distributed at the road show scheduled on 20 March 2013


Date



july ongoing mr nkosinathi hlophefinance manager


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Audit Findings


movable assets

Fixed Asset Register not updated

The disposed assets have been removed from the asset additions and the new additions are being updated with all outstanding information. From March 2013 the asset register will be uploaded on ACCPAC and maintained on a monthly basis


Date



june ongoing mr nkosinathi hlophefinance manger


Lorge delayed in uploading asset register due to the implementation of the Work Flow system. To be uploaded end March

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Audit Findings


movable assets

Purchase and delivery documentation not consistent with actual item received

From March 2013 the asset register will be uploaded onto ACCPAC and updated on the monthly basis. Asset verifications will be conducted on quarterly basis and all replacement barcodes will be updated on the register immediately after the asset counts


Date



june ongoing mr nkosinathi hlophefinance manager


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Audit Findings


Payablesdifference in payable amounts between TB and age analysis

The technical error in the Accounts Payables module which does not update the age analysis will be fixed when an upgrade is done in November 2012


Date



august ongoing mr nkosinathi hlophefinance manager


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Audit Findings


Payablesbalance of suspense account not zero at year-end

This account is not a typical suspense account as it is an identified deposit account which does not have to be cleared to Rnil at end of the year. These unidentified deposits are included in the financial statement as creditors up until the unidentified deposits are identified and/or refunded the money or allocated to the right account.


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ongoing ongoing mr nkosinathi hlophefinance manager


The account name has been amended to say Unidentified deposit account

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Audit Findings


Audit of pre-determined objectives

AOPO-no explanation for targets which are over achieved

Note is taken of the new requirement pertaining to exceeded work and this will be explained accordingly on a quarterly and annual basis


Date



july ongoing ms neo malao

acting executive director: museum operations


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Audit Findings



objectives not reported in the APR

Thorough checking will be ensured in future.


Date



july ongoing ms neo malaoact executive director


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Audit Findings



target not reported on the quarterly reports

The findings are noted and Ditsong will ensure that mention is made quarterly on every activity, whether applicable or not during the reporting quarter/period. The second whether applicable or not during the reporting quarter/period. The second finding under Collection Management (Key Objective/Strategy/Target) is invalid given that they don’t talk to each other. Auditors may refer to the content under Collection Management heading on the initial strategic plan (dated 28 February 2011) which has nothing to do with security services and Occupational Health issues.


Date



sept ongoing ms neo malao

acting executive director: museums operations


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Audit Findings



inaccurate reporting of performance agreements signed in the Annual Performance Report

Documentation (agreements) is recorded per museum /department to ensure accurate and complete information is kept.


Date



august ongoing ms lungile gwambihr manager


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Audit Findings



Target not meeting SMART criteria

management will ensure that the service delivery indicators are precise and well defined.


Date



august ongoing ms neo malao

acting executive director: museum operations


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Audit Findings


Receivablesinsufficient control over accounts receivables

data captured would be reviewed for accuracy more especially in instances where the system cannot generate an exceptions report.


Date



ongoing ongoing mr nkosinathi hlophefinance manager


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Audit Findings


ReceivablesCredit Policy not adhered to

The shortcomings in debt management processes was due to staff turnover in that section over the past two years, which was compounded by the fact that the current staff member was still receiving on the job training and she went on maternity leave. When she returns from maternity leave in August 2012, the internal credit policy will be adhered to.


Date



August 2012

ongoing mr nkosinathi hlopefinance manager


Reconciliation of debtors accounts being performed, if no positive response is received by end March 2013 then over 90 days debts will be handed over to the collection agency. Credit checks will be performed for new debtors and upfront payment for once of users of our facilities

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Audit Findings


Revenue

Income recognised according to source document with casting error

Management would perform an independent calculation of monies due to them and not just take the amount that the customer pays them as the correct amount of income.


Date



ongoing ongoing mr nkosinathi hlopefinance manager


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THANK YOU!!!

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Documents

PRESENTATION TO ARTS AND CULTURE PORTFOLIO COMMITTEE ON AUDIT OUTCOME FOR 2011/2012 PERIOD & THE TURNAROUND STRATEGY 13 MARCH 2013 1