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PRESENTATION TO ARTS AND CULTURE PORFOLIO COMMITTEE, NATIONAL ASSEMBLY , 23 FEBRUARY 2011
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2. Physical Address: Bhunga Building Cnr Owen Street and Nelson Mandela Drive Mthatha Eastern Cape Province Qunu Youth and Heritage Centre Qunu Administrative Area King Dalinyebo Local Municipality Tel: Fax: Website:
Physical Address:
Bhunga Building
Cnr Owen Street and Nelson Mandela Drive
Mthatha
Eastern Cape Province
Qunu Youth and Heritage Centre
Qunu Administrative Area
King Dalinyebo Local Municipality
Tel: Fax:
Website:
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3. LEGAL MANDATE Established in terms of the Cultural Institutions Act33
LEGAL MANDATE
Inspired by the South African Constitution
Established in terms of the Cultural Institutions Act
Subject to national heritage resources act
Subject to public finance management act
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4. 44
WHO WE ARE
The official museum of South African people and government to Mr Nelson Mandela
A Declared national institution in terms of the Cultural Institutions Act
One of the portfolio of Arts and Culture legacy projects along with Ncome Museum, Machel Memorial, Freedom Park, Constitution Hill and others
A Schedule 3A public Entity in terms of the PFMA
A public benefit organisation functioning in the space of culture, heritage, education, research, tourism and socio-economic development mainly
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5. INSTITUTIONAL ARRANGEMENTS55
INSTITUTIONAL ARRANGEMENTS
Arts and Culture Minister established a juristic person Nelson Mandela Museum with 3 sites for public benefit on 11 February 2000
Arts and Culture Minister Appoints Non-Executive Council to Oversee Strategy and Policy Execution for 3 year terms
Council appoints management in consultation with minister
Management implements the Council Strategy within Council Policy Framework subject to the law and established norms and standards for institutions of this type and purpose.
Account to minister, national treasury and parliament
Interface with diverse stakeholders
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6. 66
VISION
To be a leading museum that represents and interprets the life story and values of Mr Nelson Rolihlahla Mandela, a product and champion of ubuntu.
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7. 77
MISSION
Develop a site for collecting, interpreting, and curatorship that promotes critical understanding of Nelson R Mandela’s work, life memory and legacy
A centre for cultural life in the forefront of restoring ubuntu as a pioneering philosophy for social change
Build Nelson Mandela legacy as a vehicle for social change, nation building, pursuit of human solidarity, through education and advocacy programs
Promote sustainable community development and self upliftment in partnerships
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8. VALUES UBUNTU STEWARDSHIP INTEGRITY AND RESPECT88
VALUES
UBUNTU
STEWARDSHIP
INTEGRITY AND RESPECT
LEARNING AND DEVELOPMENT
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9. 99
STRATEGIC PRIORITIES
build and renew museum’s content & quality of offering
build and mobilise resources to increase organisational capacity
improve museum’s public profile, accessibility, footprint & public perception
improve infrastructure, security and facilities
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10. BUILDING AND RENEWAL OF CONTENT & QUALITY OFFERING
BUILDING AND RENEWAL OF CONTENT & QUALITY OFFERING
Nelson Mandela Research Library – in place, books being processed
Research Programme in place
New exhibitions in place
Guided and self guided tours in place
Graded Accommodation and well equiped conference venues
Diverse public programmes in place
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11. BUILD AND MOBILISE RESOURCES TO IMPROVE ORGANISATIONAL CAPACITY
BUILD AND MOBILISE RESOURCES TO IMPROVE ORGANISATIONAL CAPACITY
Audit Reports have improved 2 years ago we had a disclaimer, last year we had unqualified audit, this year also unqualified BUT with emphasis of matter on irregular expenditure,
Improved visitor experience as seen in visitor books comments
Graded Facilities – by Tourism Grading Council and AA
Improved programme execution
Staff development an ongoing programme
Baseline funding or recapitalisation still needed
Human Capacity still a challenge 22 out of 42 required positions funded and filled,
Delays in council appointment still a challenge
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12. IMPROVED PUBLIC PROFILE, ACCESSIBILITY, FOOTPRINT & PUBLIC PERCEPTION
IMPROVED PUBLIC PROFILE, ACCESSIBILITY, FOOTPRINT & PUBLIC PERCEPTION
Presence in more provinces and reaching diverse disadvantaged audiences
Partnership with parliament in last year’s opening ceremony to mark Mr Mandela’s 20th year out of Prison and NMM’s 10th year,
Partnership with Drakenstein Correctional Facility
Positive news coverage
Mvezo issue still not resolved – ocassional negative publicity (generally no comment given) – former minister convened a meeting where national lottery confirmed that no money was ever released to museum, agreement for an advisory team
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13. IMPROVE INFRASTRUCTURE, FACILITIES MANAGEMENT AND SECURITY
IMPROVE INFRASTRUCTURE, FACILITIES MANAGEMENT AND SECURITY
New security and cleaning company
Graded Accommodation
New backup arrangements for electricity and water supplies
Qunu fencing
Partially upgraded facilities for collection management
Bhunga upgrade delayed
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14.
WHO WE ARE
A national museum established in terms of the Cultural Institutions Act,
A Schedule 3A public entity in terms of the PFMA
South Africa’s official museum to Nelson Mandela – housing the diversity of gifts and awards received during his presidency
We are located in the Eastern Cape – OR Tambo District in King Sabata Dalindyebo Municipality
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15.
WHAT WE DO
Governed by a non-executive council of independent directors appointed by the minister broadly representative of all South Africans
Managed by a full time management team
Manage a collection of gifts and awards given to President Mandela, manage sites associated with his early life and point to the rest of the landscape
Conserve, interpret and present for public benefit the story of the life and work of Nelson Mandela in context
Offer Education programmes, research, exhibitions and outreach
Promote social cohesion, national unity, patriotism and economic development through tourism, and other initiatives
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16. WHAT WE OFFER Free entry to a quality cultural experience Exhibitions
WHAT WE OFFER
Free entry to a quality cultural experience
Exhibitions
Education & Outreach Programmes
Guided and Self Guided Tours
Entry into the National Liberation Heritage Route
A base from which to explore the liberation related sites in our region
Preserving and interpreting part of the authentic landscape of Mr Nelson Mandela’s childhood
Fully equipped conference centre, graded accommodation; museum shop with growing diverse offerings
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17.
WHAT WE PLANNED FOR
improved organisational capacity, better governance and unqualified audit
better national footprint
3 exhibitions and improved heritage resource management
infrastructure renewal and security strengthening
training and capacity building
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18. What we accomplished and not accomplished in the year under review
What we accomplished and not accomplished in the year under review
Unqualified audit (BUT with an emphasis of matter)
Reaching other provinces
Library, Completion of the Collections upgrade
New exhibitions
Diverse growth in visitorship
Adjustment to baseline not achieved
New council not in place
Mvezo not resolved, ICMP not complete
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19. Financial Information
Financial Information
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20. Statement of Financial Performance
Statement of Financial Performance
2010
2009
Reserves
Cash and Cash Equivalents
Total Revenue Collected
Operating Expenditure
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21. Graphic Financial Statements Analysis
Graphic Financial Statements Analysis
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22. Financial Highlights.. Reserves and Cash and Cash equivalents
Financial Highlights.. Reserves and Cash and Cash equivalents
The Nelson Mandela Museum’s results for the year show:
an increase in reserves from 10 493 058 to R 10 631 237 which could be attributed to the net effect of the use of rolled over surpluses from the previous years, use of which was authorised by the National Treasury through the Department of Arts and Culture in August 2008, extention of which was further obtained during September 2009, and the reclassification of leases from operating leases to Finance Lease;
In the year under review a decrease in Cash and Cash equivalent from R 19 224 308 to R 8 809 880 has been recorded;
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23. Financial Highlights .... Revenue
Financial Highlights .... Revenue
The Nelson Mandela Museum received most of its funding from the subsidy allocations from the National Government through the Department of Arts and Culture. Total Revenue collected by the Nelson Mandela Museum for the year under review increased by 11.75% from R 20 197 813 to 22 571 767. This increase is attributable to the relatively accelerated pace in which the special projects are being implemented which has resulted into revenue being recognised as the projects implementation progress in accordance with the prescripts of AC 134(IAS 20). A further amount of R 184 738 was realised as interest from short term investments.
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24. Financial Highlights......Revenue
Financial Highlights......Revenue
The subsidy from the Department of Arts and Culture accounted for 65.38% of the total revenue while .038% was from Donor funding, 32.74% from project funding recognised as revenue as projects implementation progress, 1.84% realised as our own income generated through interest from bank investment of amounts received from various project funders, rental of conference venue and charge for accommodation at Qunu Youth and Heritage Centre as well as sales realised on the sale of books and golf shirts.
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25. Financial Highlights... Operating expenditure
Financial Highlights... Operating expenditure
The operating expenditure for the year under review is R 22 596 964 eliciting an increase of 3.55% from that recorded the previous year, constituting a minor variance due to relative increase in other operating expenses comprised of advertising expenses, Audit fees, Council Travel and Accommodation, Consultancy expenses, Exhibition expenses, Repairs-Buildings, Security expenses and general Travel and Accommodation as main contributors. The operating expenditure is made up of % fixed costs on personnel, 11.95% Administrative and Governance expenses, and 63.64% core function activities and cost of sales of 0.36% as well as 3.46% Statutory audit fees. A additional expenditure of R 21 361 was incurred as finance cost on Finance lease liabilities.
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26. Financial Highlights......Budget
Financial Highlights......Budget
The Nelson Mandela Museum is a going concern with a budget of R 15 412 000 for the year 2010/11.
The Museum will continue to adopt a going concern basis in preparing its financial statements in the year ahead as the budget indicates.
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27.
Financial Highlights
While a great deal of work still needs to be done to improve the baseline funding to facilitate meeting targets set in the museum’s strategic plan, the results for the year under review demonstrate progress, and Management remains committed to achieving their strategic objectives
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28. Statement of Financial Position
Statement of Financial Position
2010
2009
Non-Current Assets
Current Assets
Non-Current Liabilities
Current Liabilities
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29. Graphic Financial Statements Analysis
Graphic Financial Statements Analysis
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30. Financial Highlights Non-current Assets
Financial Highlights Non-current Assets
Non-current assets consists mainly of Property, Plant and Equipment showed a decrease from R 1  to
R 5  yielding a net amount of R 3  This net increase is attributable to Additions to fixed assets and reclassification of leases from operating to Finance leases made during the year under review.
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31. Financial Highlights...Current Assets
Financial Highlights...Current Assets
The main contributor to a figure of R in current
Assets is the item Cash and Cash equivalents amounting
to R 8  which in turn mainly consists of R 3 
relating to Cash and balances with banks, Short term
deposits/investments of R 5  and Cash on hand
amounting to R These amounts relate to
Conditional Grants received from the National
Government for R 1  reflected under Current
Liabilities
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32. Financial Highlights.....Non-Current Liabilities
Financial Highlights.....Non-Current Liabilities
The figure of R 253 868 relates to the non- current portion of the Finance lease liability.
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33. Financial Highlights..... Current Liabilities
Financial Highlights..... Current Liabilities
The figure of R 3  is made up of Trade and other liabilities of R 1  representing accrual of amounts owed to Suppliers of goods and Service Providers at year end, R reflecting current portion – Finance lease liability and balance on conditional grant amounting to
R 1 
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34.
Audit Opinion
The Auditor –General has issued an unqualified opinion on the Financial Performance and Financial Position of the Institution for the Financial Year ended 31 March 2010 (p35 of annual report)
But has drawn the attention of the institution to the following matters of emphasis, which while they do not modify his opinion, we take very seriously and have implemented steps to address them:
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35. Audit Opinion Restatement of corresponding figures
Irregular expenditure
Alignment between strategy and budget
Turn around time for payment of service providers
Review of the work of the audit committe by council
Segregation of duties and fraud prevention plan
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36. Restatement of Corresponding figures
Restatement of Corresponding figures
Issue: The corresponding figures for March 2009 financial year have been restated as a result of an error discovered in operating leases which meet the criteria for Finance leases as per GRAP 13 and therefore, were reclassified resulting in adjustments ( see note 20 to the Financial Statements).
Action: The operating leases were reclassified to Finance leases, the equipment concerned capitalised and prior year adjustments were made as reflected in note 20 to the Annual Financial Statements.
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37. Irregular expenditure
Irregular expenditure
Issue: The finding that the museum did not comply with supply chain management requirements as Preference points Framework was not followed with regards to transactions falling between R and R for a total expenditure of R was recorded by the A-G.
Action: The museum developed a formula driven template to implement the evaluation of transactions falling between
R and R using the Preference point system of evaluation. The Financial Controller is in charge thereof. A disclosure was made in annexure 3 of the AFS
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38. Irregular Expenditure Cont....
Irregular Expenditure Cont....
Notes: In this case the requirement where three quotations should be sourced was followed and satisfied and the most favourable quotation, both in price and quality of service was chosen.
This amount has been disclosed as an irregular expenditure in Annexure 3 of the Annual Statement for the year ended 31 March in terms of Treasury Regulations and
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39. Irregular expenditure cont.
Irregular expenditure cont.
Issue: The A-G made a finding that a tender process was not followed for payments exceeding R made to a Travel agent resulting in an amount of R being treated as irregular expenditure.
Action: Museum management advertised in the media for service providers to submit their profiles to be assessed and included in the museum data base where after a rotation system will be implemented. The figure reflected above was disclosed in annexure 3 of the financial statements as irregular expenditure.
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40. Irregular Expenditure Cont....
Irregular Expenditure Cont....
Notes: The only local travel agency in Mthatha named Swift Travel and Tours was used by the museum and an amount of R was paid for the period ranging from 1st April 2009 to 31 March The museum was convinced that the transactions with this agency were below the tender threshold as only R went into their bank account as commission out of the total amount reflected above. The rest was paid to various service providers like hotels, airliners and Car hiring companies for accommodation and transport. The agency did not make use of the same hotels and car hiring companies all the time but rotated use thereof among various hotels, B & B’s and car hiring companies contained in their data base.
This amount has been disclosed as irregular expenditure in Annexure 3 of the Annual Financial Statements for the year ended 31 March 2010 in terms of Treasury Regulations and An application for condonation has been made to National Treasury.
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41. Performance Information
Performance Information
Issue: The A-G raised a concern about the non- alignment of the measure contained in the strategic plan and annual performance plan which did not relate directly to the budget submitted to DAC with regard to the establishment of the Nelson Mandela reference library.
Action: The museum has since drawn up a Strategic plan and the derivative Annual performance plan which are aligned with the funding and estimates as contained in the budget with reference to measurability , relevance and logical linkage.
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42. Non-Compliance with PFMA and Treasury Regulations
Non-Compliance with PFMA and Treasury Regulations
Issue: The A-G made a finding that the museum acted contrary to the requirements of Treasury regulation and sections 51(1)(a)(ii) and 76(4)(d) of the PFMA in that the audit committee did not review the AFS to ensure compliance with applicable standards and no annual evaluation of the Audit Committee was carried out by the Accounting Authority.
Action: There was neither an accounting authority nor an audit committee when the financial statements were drawn as the extended term of the council came to an end on 31 March 2010 and the new one is not in place yet. But hence forth the institution will ensure that the audit committee is evaluated regularly.
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43. Non-compliance with PFMA and Treasury Regulations
Non-compliance with PFMA and Treasury Regulations
Issue: The A-G raised an exception that contrary to the requirements of PFMA sections 38(1)(f) and 76(4)(b) not all payments due to creditors were settled within 30 days from receipt of an invoice.
Action: The institution has established and adopted a system where invoices and statements are date stamped on receipt so as to ensure that they are paid within 30 days of receipt. Payments and payments vouchers are checked by the Chief Financial officer to establish if the procedure is followed.
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44. Non-compliance with PFMA and Treasury Regulations Cont.....
Non-compliance with PFMA and Treasury Regulations Cont.....
Notes: As the exception was raised by the A-G during their audit for 2008/09 which was concluded at the end of July 2009, the museum put in place control measures to remedy the situation as shown in the slide above.
However, the A-G raised this issue again during the 2009/10 audit, picking up examples of payments made in May and June 2009 which period was before the original recommendation was made. On bringing this to their attention they took note of this comment but because it fell within the period under 2009/10 audit they felt it proper to include it in the audit report.
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45.
Leadership
Issue: The A-G noted numerous instances of Non- Compliance with SCM regulations and the internal control deficiencies during the audit.
Action: Although there is no separate Supply Chain Management Office due to the size of the organisation and the shortage of human capital due to limited budget, the Institution has established and put in place a Supply Chain Management Policy which is controlled by the finance department under the supervision of the Chief Financial Officer. A supplier data base has been established and placed under the control of the Financial Controller.
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46. Financial and Performance Management
Financial and Performance Management
Issue: The A-G highlighted that the entity did not perform adequate reconciliations for Assets and conditional Grant expenditure on a monthly basis but at year end and this resulted in misstatements in the AFS.
Action: Although there are teething problems, the museum has acquired and put in place an electronic Asset Management system and asset inventory counts are conducted monthly and reconciliations thereof to the asset register are done. Expenditure is recognised as revenue on conditional grants as the projects are implemented monthly in keeping with the provisions of IAS 20 as GRAP 23 will only take effect on 1st April 2012
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47.
Governance
Issue: The A-G highlighted the fact that the Audit Committee did not review the financial statements before submission on 31 May 2010 resulting in inability to detect the numerous errors identified during the audit process.
Action: As the A-G has mentioned the term of the Audit committee came to an end on 31 March 2010 at the same time as the end of museum council term as the audit committee is the committee of council. The committee, therefore could not have been able to review the AFS as they were only compiled and completed in April-May. This can only be obviated by fixing an audit committee term which outlives the council term.
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48.
Governance cont......
Issue: Segregation of duties to prevent fraudulent transactions and asset misappropriation within revenue is not adequate and the entity has no updated Fraud Prevention Plan.
Action: Management has separated the preparation of payments and the receipting and banking of revenue functions by designating the Administration Officer at Qunu Youth and Heritage centre as a receipting and banking officer and the Admin. Officer - Bunga as the payments officer thus obviating rolling of cash. The institution has established and put in place a Fraud Prevention plan
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49. GENERAL LESSONS FOR THE PERIOD UNDER REVIEW
GENERAL LESSONS FOR THE PERIOD UNDER REVIEW
Value of reaching out to other provinces
Need to factor in more contextual information in projecting project implementation
Need for a new funding formula
Need for recapitalisation
Need for timely appointment and capacitation of professional staff and independent councils
Strengthen alignment of strategy and budget
Ongoing Attention to Human Capacity and Infrastructure
Mvezo matter needs resolution
Value of partnerships
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50. SOME INCIDENTS OF NOTE BEYOND THE FINANCIAL YEAR
SOME INCIDENTS OF NOTE BEYOND THE FINANCIAL YEAR
2010 world cup museum activities
travelling exhibitions
presence of museum exhibitions at public places (Limpopo, Free State, northwest, Western Cape, Eastern Cape, Gauteng)
Mandela Luthuli exhibition
Mandela Day contributions
Positive media coverage
Mvezo meeting by former minister
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51. Way Forward
We plan to incorporate the recommendations of the committee to the strategy subject to budget,
We plan to continue to pursue the approved strategy including resource mobilisation and strengthening the enterprise capacity of the institution
We plan to continue to strengthen governance and negotiate for the learnings we believe are relevant to our sector and institution
We plan to implement the Bhunga upgrade this financial year, close the bhunga building , operate from qunu and implement unprecedented outreach for the museum,
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52.
THANK
YOU
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