14 February 2017 Our reputation promisemission The AuditorGeneral of South Africa has a constitutional mandate and as the Supreme Audit Institution SAI of South Africa exists to strengthen our countrys democracy by ID: 744005
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Slide1
Briefing on GRAP 103 for Department of Arts and Culture entities
14 February 2017Slide2
Our reputation promise/mission
The Auditor-General of South Africa has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, exists to strengthen our country’s democracy by
enabling oversight, accountability
and
governance
in the
public sector
through
auditing,
thereby building public confidence
.Slide3
What we
do
and what we
do not doSlide4
Outline of the presentation
Audit outcomes for 2015-16
Requirements of GRAP 103,
Heritage assets
Overview of heritage assets within the sector
Challenges faced by the entities
Challenges faced by the Auditor-General of South Africa
RecommendationsSlide5
Audit outcomes for 2015-16
There was an overall regression in the audit
outcomes
for the Arts and Culture entities for the 2015-16 financial year.
The major
contributor
to this regression
was the fact that the
requirements of GRAP 103,
Heritage
assets
came
into effect in
2014-15. This
affected 38
% (10) of
the entities in the portfolio
.
Entities affected by this are as
follows :
8
museums
William Humphrey
Art
Gallery
National
Library of SA Slide6
Requirements of the Standard – GRAP 103
Initial recognition :
The cost of fair value can be measured
reliably.
Future economic benefits are expected to flow to the
entity (par. 13).
If
an entity holds an asset that might be regarded as a heritage asset but which, on initial recognition, does not meet the recognition criteria of a heritage asset because it cannot be reliably measured, relevant and useful information about it shall be disclosed in the notes to the financial
statements (par. 17).
Measurement at recognition:
A
heritage asset that qualifies for recognition as an asset shall be measured at its cost.
Where
a heritage asset is acquired through a non-exchange transaction, its cost
shall be
measured at its fair value as at the date of
acquisition (par. 24 and p25).
.
Slide7
Overview of heritage assets within the sector
Auditee
Type of assets
Progress
Number of heritage assets (estimate)
Amount
disclosed in annual financial statements 2015-16
Ditsong Museums of SA
Invertebrates, vertebrates, library books, military uniforms, military weapons, military aircraft, furniture, ceramics, toys, clothes, meteorite crater
and
houses
Project team has been appointed to count
the
heritage assets. Valuation has not yet started.
Unknown
R0
Iziko Museums of Cape Town
Library reference books
Art collections
Social history and national history collections
Verification
and valuation of assets are in progress.
R1,3 million
R0
KwaZulu-Natal Museum
Natural
science collection, Human science collection and cultural history
The heritage assets policy and evaluation plan have
been
drafted
A request
for service providers to submit
proposals to value
heritage assets has been advertised.
R336 000
R0Slide8
Overview of heritage assets within the sector
Auditee
Type of assets
Progress
Number of heritage assets
(estimate)
Amount
disclosed in annual financial statements 2015-16
National English Literary Museum
Arts and
artifacts
(works of literature)
Waiting for funds from National
Treasury
Unknown
R 0
National Library of SA
Books,
j
ournals, serials, newspapers, magazines, maps, prints,
s
ound and music recording
Benchmarking
with other international libraries completed and business plan developed.
No actual work has been done
Unknown
R12,7 million
Msunduzi/Voortrekker Museum
Photographs, textiles, artworks and ethnographic items
Service provider was appointed on 1 February 2017 for the
valuation of heritage assets.
R7 832
R0
Nelson Mandela National Museum
Medals, coins, stamps, objects of decorative or fine art, stationery, insignia, precious metal and weaponry.
Service provider appointed. Valuation will be completed
by February 2017.
Unknown
R3 390Slide9
Overview of heritage assets within the sector
Auditee
Type of assets
Progress
Number of heritage assets
(estimate)
Amount
disclosed in AFS 2015/16
National
Museum
Art collection; book collection; acarology; arachnology; mammalogy; ornithology; palaeontology; herpetology; botany; entomology; human osteology; anthropology; history documents, photographs, objects; textiles; numismatics; weapons;
and r
ock art
O/S
R651 298
R0
War Museum of the Boer Republics
Object
collection, document
collection, library collection, Philatelic collections and photographic collections
3 experts (valuators)
were consulted . They concluded that it is not possible to obtain a reliable fair value of the heritage assets.
R36 168
R0
William Humphreys Art Gallery
O/S
O/S
O/S
O/SSlide10
Challenges faced by entities
Funding from National Treasury is only available from 1 April 2017 and the cost of complying with the Standards outweighs the benefit.
Different measurement techniques and experts are
used.
There is
no clear guidance
from the Accounting
Standards Board and the National
Treasury.
Sustainability of entities to comply with the Standards after the one-off funding from National Treasury has been depleted.
Availability of sufficiently skilled valuators to determine reliable fair values.
Security of assets after the valuation
process.
No adequate human resource capacity to perform the verification process as most of the entities have high volumes of heritage assets.Slide11
Challenges faced by the Auditor-General of South Africa
The exemption issued by the
minister
of Finance
for all
DAC
entities from complying
with the measurement and recognition
criteria of GRAP 103 was assessed by the AGSA’s technical division and the outcome was that it affects
the fair presentation of
financial statements
and was therefore not
accepted for audit purposes.
Entities were unable to prove impracticability to comply with the measurement criteria of the
Standard.
No evidence was provided by management to substantiate their claim that no active/open market existed for some of the heritage assets.
No proper categorisation of assets and therefore a blanket approach was followed in valuation of assets.Slide12
Recommendations
The Department of Arts and Culture should take a lead and do research to identify different heritage assets within the sector and whether there are active markets and if possible develop a White paper on heritage assets in South
Africa for entities to use as a guideline.
National Treasury should support and guide entities on the procurement process
and if possible
compile database of valuators
that can
be used.
ASB needs to provide clear guidance and possibly alternative accounting where it is impractical to value heritage assets.
Each entity has its own individual challenges which should be considered when seeking a solution.
Entities need to embrace the Standard and demonstrate that all possible solutions had been considered when they disclose heritage assets.Slide13
How to get in touch with the AGSA