ANNUAL FINANCIAL STATEMENTS
DEPARTMENT OF ARTS AND CULTURE VOTE 14: REPORT OF THE AUDITOR –GENERAL for the
year ended 31 March 2006
The
financial statements as set out on pages 95 to 142, for the year ended 31 March
2006, have been audited In terms of section 188 of the Constitution of the
Republic of South Africa, 1996, read with sections 4 and 20 of the Public Audit
Act, 2004 (Act No. 25 of 2004) and section 40 (1 )(c)(i) of the Public Finance
Management Act, 1999 (Act No 1 of 1999) (PFMA).
These financial statements are the responsibility of the accounting officer. My
responsibility is to express an opinion on these financial statements, based on
the audit.
2. SCOPE
The audit was conducted in accordance with the International Standards on
Auditing read with General Notice 544 of 2006, issued in Government GazetV3 no.
28723 of 10 April" 2006 and General Notice 808 of 2006, issued in
Government Gazette no. 28954 of 23 June 2006. Those standards require that I
plan and perform the audit to obtain reasonable assurance that the financial
statements are free of material misstatement.
An audit includes:
·
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements
·
assessing the accounting principles used and significant estimates made
by management
·
evaluating the overall financial statement presentation.
I
believe that the audit provides a reasonable basis for my opinion.
3. BASIS OF ACCOUNTING
The department's policy is to prepare financial statements on the modified cash
basis of accounting determined by the National Treasury, as described in the
accounting policies to the financial statements.
4. AUDIT OPINION
In m)' opinion, the financial statements present fairly, in all material
respects, the financial position of the Department of Arts and Culture (DAC) at
31 March 2006 and the results of its operations and its cash flows for the year
then ended, in accordance with the modified cash basis of accounting determined
by the National Treasury of South Africa, as described in the accounting
policies to the financial statements, and in the manner required by PFMA.
5. EMPHASIS OF MATTER
Without qualifying the audit opinion, attention is drawn to the following
matters:
1
Inadequate asset management
Section 38(1 )(d) of the PFMA states that the accounting officer is responsible
for the managing and safeguarding of assets.
The following weaknesses were identified for assets including artworks:
Asset
descriptions/barcodes were incorrectly recorded in the asset register;
Asset
locations in the asset register is incomplete/inaccurate;
Assets
purchased during the year cannot be traced from the invoice to the asset
register and vice-versa;
Research expenditure, professional fees and storage costs are captured in the
asset register; and
Assets physically identified cannot be located on the asset register.
Additionally the asset management policy does not deal with the control over
assets, e.g: tagging of assets, physical verification of assets from he
register to the floor and visa versa, sale/donation of assets.
5.2 Supply chain management (SCM)
Due to a lack of monitoring controls the following discrepancies were found:
·
The required number of quotations were not always obtained;
·
Irregular expenditure of R3,351 ,308 which is disclosed in note 21 to the
annual financial statements was incurred as no formal agreement exist between
DAC and the service provider and no proper procurement process was followed.
·
Evidence pertaining to monitoring and evaluating of contracts, which is a
pre-requisite for approval of payment, could not be submitted for audit
purposes.
5.3
Validity of non-financial performance information could not be verified
In terms of section 20(2)(c) of the PAA the information related to performance
against predetermined objectives is subject to auditing by the Auditor-General.
The department does not have a proper policy and procedure framework to manage
the process to finalise their performance information as it was not submitted
for audit purposes.
Section 5.3 of the Treasury Regulations requires that the accounting officer of
a department must establish procedures for quarterly reporting to the executive
authority to facilitate effective performance monitoring, evaluation and
corrective action. No quarterly reports for the period ended 31 December 2005
and 31 March 2006 could not be submitted for audit purposes.
6. APPRECIATION
The assistance rendered by the staff of the Department of Arts and Culture
during the audit is sincerely appreciated.
A H Muller for Auditor-General
Pretoria
25 July 2006