REPORT
OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS OF THE ROBBEN
ISLAND MUSEUM FOR THE YEAR ENDED 31 MARCH 2006
1. AUDIT ASSIGNMENT
The financial statements as set out on pages 35 to 44, 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) (PAA) and section 55(1 )(c) of the Public
Finance Management Act, 1999 (Act NO.1 of 1999) (PFMA). These financial
statements are the responsibility of the accounting authority. 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 Gazette
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 entity's policy is to prepare financial statements on the basis of
accounting determined by the National Treasury, as described in note 1 to the
financial statements.
4. QUALIFICATION
4.1 Inadequate control over journals
Due to an inadequate policy framework no supporting documentation to journal
entries to the amount of R196 811 could be provided.
4.2 Incorrect accounting treatment of leases
Finance leases at an estimated amount of R887 780 have not been disclosed in
the financial statements in accordance with International Accounting Standards
(IAS17).
4.3 Grants received
Ineffective project management controls are exercised over grant income
received for a special project.
5.AUDIT OPINION
In my opinion, except for the effect on the financial statements of the matters
referred to in paragraph 4, the financial statements present fairly, in all
material respects, the financial position of the RIM at 31 March 2006 and the
results of its operations and its cash flows for the year then ended, in accordance
with the basis of accounting determined by the National Treasury of South
Africa, as described in note 1 to the financial statements, and in the manner
required by PFMA.
6. EMPHASIS OF MATTER
Without further qualifying the audit opinion, attention is drawn to the
following matters:
6.1 Non-compliance with Generally Recognised Accounting Practice (GRAP).
According to section 55(1) of the PFMA, RIM has not prepared the financial
statements in accordance with GRAP:
·
Accounting policies are inadequately disclosed;
·
Terminology changes have not been effected; and
·
The cash flow statement has not been prepared using the prescribed
method.
6.2
Cash management policy
No procedures have been established to ensure efficient and effective cash management.
As a result, inadequate interest income was earned on excess funds.
6.3 Compliance with prescriptions
Due to an inadequate policy framework or inconsistent monitoring controls, RIM
did not fully comply with:
·
IAS 16: Residual values and the useful life of assets were not reviewed
at year-end;
·
IAS 39: An entity should assess at each balance sheet date whether there
is any objective evidence that a financial asset or group of financial assets
is impaired. No objective evidence could be obtained that the amounts were
impaired due to events that occurred after the initial recognition of the
debtors;
·
In accordance with Treasury Regulation 31.1.20), bank reconciliations
should be performed at least on a weekly basis. RIM performs bank
reconciliations only on a monthly basis;
·
In terms of section 51(1)(b) of the PFMA, an accounting authority for a
public entity must take effective and appropriate steps to collect all revenue
due to the public entity. The collection procedures for the year under review
were inadequate; and
·
An insufficient number of quotes were obtained in accordance with
paragraph 8.3 of the supply chain management policy.
6.4
Internal audit
According to Treasury Regulation 27.2, the accounting authority should
implement an internal audit function. No reliance was placed on the work of
internal audit, as the internal audit function was ineffective for the
2005/2006 financial year.
6.5 Mayibuye collection
In terms of the Cultural Institutions Act, 1998 (Act No. 119 of 1998), the
principal activity of the RIM is the collection, conservation and safe
management of national heritage collections on behalf of the South African
nation. Collections at the Mayibuye Centre are not recorded on the asset
register and the catalogues are incomplete.
6.6 Material adjustments
The annual financial statements were submitted to this office on 31 Mayas
required by the PFMA. The following material adjustments were, however, made to
these financial statements on the 31 July 2006 to prevent further
qualification:
·
Leave provision (overstated) and bonus provision (understated) by an
amount of R 416881;
·
An un-posted expense batch amounting to R 169 130 was subsequently posted
to the financial statements;
·
Grants received amounting to R34 873 639 were incorrectly allocated to
the statement of changes in net assets.
7. APPRECIATION
The
assistance rendered by the staff of the Robben Island Museum during the audit
is sincerely appreciated
AH Muller for Auditor-General
Pretoria
31 July 2006