Auditing SA Edition 6

Oct-Dec 2023 Edition. Vol 6

TO COMPLY OR NOT TO COMPLY Restore trust in the audit profession

IMPROVING AUDIT OUTCOMES

Ensuring accountability and transparency Advancing Auditing &Accountability

ADV KHOLEKA GCALEKA

Acting Public Protector talks audits

PARTY ‘BEFORE’ GOVERNMENT DEBACLE

Why SOEs crumble under political pressure

THE RESOURCE CURSE Just energy transition & supreme audit institutions

Kgomotso Sethusha

Contibutors:

Adv Kholeka Gcaleka Cobus van Rensburg Patricia Stock Phillip Rakgwale Helper Zhou Prof Mabutho Sibanda Lungisani Bhengu Janse Rabie Prof Bomi Nomlala Kemi Mathatho Prof Bernard Agulhas Ané Church Prof William Gumede Dr Liezl Groenewald Phuti Phukubje

CONTRIBUTORS

Editorial Director:

CONTENTS 06

CEO’s Note

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Nardine Nelson nardine@kwedamedia.co.za

COVER STORY: Public Sector Audit is a vital activity within Democratic States

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Improving Audit Outcomes in the interest of the public

Publishing Partner:

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Has the AI summer arrived in the audit sector?

Kweda Media www.kwedamedia.co.za

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Navigating a minefield of local government - Top 5 risks for municipalities

Editorial Enquiries

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MGI RAS - Leadership aimed towards enhancing audit results

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There has to be a wall between party politics and government

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To comply or not to comply...

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The essence of forensic accountants in audit engagements

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How to advance auditing and accountability for the citizens and the future

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GGA - The resource curse, the just energy transition and supreme audit institutions

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South Africa cannot afford a water crisis too much is at stake...

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KEP - World class auditing

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If you can, blow a whistle like Brandon

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SAIGA - 3rd Annual Conference & Awards showcase

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Trivia and History... Test your knowledge

Sales Director:

T: 012 004 0741 E: researcher@saiga.co.za

Advertising Enquiries

T: 082 739 3932 E: auditingsa@kwedamedia.co.za

DISCLAIMER: Auditing SA is published by the Southern African Institute of Government Auditors (SAIGA): www.saiga.co.za, PO Box 36303, Menlo Park, 0102, South Africa, Tel: 012 004 0741, WhatsApp No: 069 5387276, Editor: Kgomotso Sethusha email: researcher@saiga.co.za SAIGA accepts no responsibility for any loss incurred by any individual acting or refraining from acting as a result of any material in Auditing SA. SAIGA cannot accept responsibility for any opinions expressed by contributors, nor for the accuracy of the information contained in articles, contributions, advertisements or other material. The editor reserves the right to edit material.

COPYRIGHT NOTICE: All rights reserved. No part of this electronic publication may be reproduced by any means without the written permission of the publishers. This includes making photocopies or uploading portions of the publication. Extracts of reasonable length may be made for personal research purposes. ISSN: 1028-9011

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CEO's Note

he basic relationship between the state and its citizens, in which the state accounts for its actions in terms of how it uses public funds and makes decisions, has broken down. At the heart of this malaise is the lack of accountability and corruption which has crippled service delivery of basic human needs.

In her keynote address, Gcaleka hammered home this point even further by emphasising the crucial role auditors and accountants play in fostering openness, accountability, and public trust in institutions.

This has led to Minister of Justice and Correctional Services Ronald Lamola tabling a bill that seeks to strengthen the National Prosecution Authority’s (NPA) independence and capacity to pursue highlevel crimes.

The edition also contains interesting and thoughtprovoking articles, that, however, are not limited to auditing and accounting, but also cover politics and health issues, in light of the current water crisis.

If passed, the bill will see the establishment of the Investigative Directorate Against Corruption, targeting among other cases, the ‘state capture’ crimes.

Her views are fully detailed in the cover piece of this Spring edition.

You may also read about how improving audit outcomes in South Africa is a multifaceted endeavour that requires addressing challenges, upholding independence, embracing technology and promoting transparency.

It will ensure the effective implementation of the recommendations from the State Capture Commission as it will allow the NPA to apply the experience gained from South Africa’s efforts to tackle high-level corruption.

Has the AI summer arrived? Find out why leading players in the audit sector are starting to experiment with various AI-driven tools to improve audit processes, and many more.

All in all, this bill is an essential step in reinforcing South Africa’s anti-corruption efforts and ensuring that those suspected of corrupt activities are held accountable.

Enjoy your reading!

This was one of the main takeaways from Lamola’s presentation at the 3rd Annual SAIGA Conference, which was held at Emperors Palace last month.

Themed “Advancing auditing and accountability for citizens and the future,” the conference, which coincided with SAIGA’s 35-year anniversary celebrations, brought together auditing and accounting professionals, politicians, opinion makers and thought leaders.

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Russel Morena SAIGA CEO

These included among the many speakers and panelists, the Acting Public Protector, Adv Kholeka Gcaleka, Deputy Auditor-General Vonani Chauke, CEO of IRBA, Imre Nagy, Prof Mabutho Sibanda, SARS Deputy Commissioner Bridgette Backman, the CEO of PwC, Shirley Machaba and Dr Liezl Groenewald from the Ethics Institute.

This year, we revisited the principles that have remained central to SAIGA’s existence as we ignited meaningful discussions around the critical role that auditors play in the public and promoted the core values of this Institute.

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PUBLIC PROTECTOR OF SA

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he International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountability (CIPFA 2004:10–11) held that the main function of governance structures in the public sector is to ensure that the institutions that are under the control of the state carry out their responsibilities in a proper manner and achieve the intended outcomes in the best interest of the public.

Public sector audit is a vital activity within democratic states. It underpins the relationship between the government and the governed, the executive and the legislature, and different parts of the government.

However, recent audit reports of the Auditor-General show that there has been little improvement in the audit outcomes of public sector institutions and that they, in fact, continue to be non-compliant with relevant legislation, resulting in irregular, fruitless and wasteful expenditure (Auditor-General 2016–2021).

Some of these challenges and weaknesses include failure to maintain effective internal controls for good corporate and financial governance, inadequate identification and management of financial risks, the inability to ensure that the institution implements and fully complies with legislative requirements, inadequate management of conflict of interests and ethical performance, as well as the inability to ensure the integrity of financial information.

KHOLEKA GCALEKA Acting Public Protector Republic of South Africa

PUBLIC SECTOR AUDIT IS A VITAL ACTIVITY WITHIN DEMOCRATIC STATES 8

Advancing Auditing &Accountability

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Accordingly, there is strong evidence that public case institutions, in general, fail to comply with the principle of good corporate governance and that they do not fully adhere to best practices as far as financial management is concerned.

We come across these when investigating maladministration and improper conduct.

These reports make it evident that the effectiveness of the oversight mandate of financial governance structures in the South African public sector is a matter of concern, resulting in inadequate utilisation of public funds and resources thus amounting to failure of good governance and service delivery.

GOOD FINANCIAL GOVERNANCE According to the Organization for Economic Co-operation and Development (OECD), a good financial governance framework should, among others: •

•

•

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“promote the transparent, fair and efficient allocation of resources, and a frame-work that is consistent with the rule of law and that supports effective supervision and enforcement; protect and facilitate the exercise of stakeholder rights and ensure the equitable treatment of all stakeholders; recognise the rights of stakeholders established by law or through mutual agreements and encourage active cooperation between the roleplayers in creating a sustainable and financially sound enterprise; ensure that timely and accurate disclosure is made on all material issues regarding the organisation, including the

Auditing SA

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financial position, performance and ownership; and ensure the strategic guidance of the organisation, the effective monitoring of management by the board, and the board’s accountability to the organisation and the stakeholders.”

On a national level, in relation to the National Development Plan (NDP): Vision 2030 serves as an overarching good financial governance framework. Chapter 14, in particular, deals with the application of financial governance principles in the public sector. Whether this is effectively being implemented, is a different story.

A critical role we need to interact with is that of Parliament in holding public institutions accountable and serving as a deliberating forum for matters of public interest. Section 44 of our Constitution states that the mandate of parliament and provincial legislatures is to produce public policies and refine legislative products.

Public sector audit underpins the relationship between the government and the governed, the executive and the legislature, and different parts of the government.

Accounts Committees (PAC).

These two committees oversee the utilisation of public funds by national and provincial departments.

Furthermore, the National Treasury provides guidance in terms of the Public Finance Management Act (PFMA) 1 of 1999 to all public institutions through Treasury Regulations. Section 3 of the Treasury Regulations requires public sector institutions to have an internal audit unit that operates under the supervision of the audit committee, we are, however, of the stern view that the PFMA places more responsibility for monitory and taking appropriate action on the treasury for expenditure.

Since 1994, the South African Government has developed extensive structures to regulate good financial governance in the public sector. These structures are designed in terms of a country-wide macro framework and institutionspecific micro frameworks (i.e., organisational policies and arrangements).

Some of the most prominent microfinancial controls in this regard include the following: • •

• The most significant committee as far as financial oversight is concerned, is the Association of Public Accounts Committee (APAC), which consists of the Standing Committee on Public Accounts (SCOPA) and Provincial Public

Advancing Auditing &Accountability

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budgeting processes and controls; controls outlined in section 3.3 of the National Treasury’s Guide for Accounting Officers in terms of the Public Finance Management Act (2000); control measures specified by the Institute of Internal Auditors of South Africa’s Public Internal Financial Control: A New Framework for Public Sector Management (2007); financial controls such as financial statements, balance >

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PUBLIC PROTECTOR OF SA

• • •

•

sheets, income and expenditure statements, and cash-flow statements; performance audit reports; regulatory compliance checks; the functioning and controls of accounts committees and audit and risk committees, e.g., Municipal Public Account Committees; the oversight controls of internal audit units and representatives of the AGSA.

Across the world, governments are faced with growing challenges of increasing complexities that include low levels of public trust, rising economic and financial instability and social fragmentation into increasingly polarised groups.

Meanwhile, citizens are becoming more vocal, particularly given the amplifying effect of digital technologies, and their expectations for a more transparent and accountable public sector and better public services are growing.

According to the OECD, throughout the world cities face the most acute challenges of service delivery because of fast-growing populations.

Local government is regarded as the cornerstone of democracy and the first line of service delivery to the community. Our South African situation is an apt illustration of this view. The outlook placed by the Auditor General on local government, which is supported by PPSA investigations, doesn’t inspire a better future.

There is a general concern that although local authorities are the frontline local government organisation closest to the people, the scope and quality of service delivery is one of the most critical

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areas that have significantly tainted their credibility and institutional image.

Institutions, to scrutinize the stewardship and use of public resources.

According to local experts, some of the causes of poor service delivery in town councils include councillor interference in administration, inadequate public participation; inadequate alignment of budget with the requirements of the central government; lack of political and administrative leadership; inadequate infrastructure and shortages of skills.

Public sector auditing, as championed by the Supreme Audit Institutions (SAIs), is an important factor in making a difference in the lives of citizens. We are still fortunate as SA as the AG holds a global record of good auditing standards and integrity.

A critical role we need to interact with is that of Parliament in holding public institutions accountable and serving as a deliberating forum for matters of public interest.

The auditing of government and public sector entities by SAIs has a positive impact on trust in society because it focuses the minds of the custodians of public resources on how well, or not, they use those resources.

Such awareness supports desirable values and underpins accountability mechanisms, which in turn leads

AUDITING AND ACCOUNTING FOR THE CITIZENS A risk to be considered with public sector institutions in a democracy is that power and resources, like all things, can be mismanaged or misused, leading to an erosion of trust that can undermine the essence of the democratic system.

It is therefore critical that the citizens of a country are able to hold their respective public representatives accountable. Democratically elected representatives can only be held accountable if they, in turn, can hold accountable those who implement their decisions.

Consistent with the spirit of the Lima Declaration6, an important component of the accountability cycle is independent, effective and credible Audit and Accountability Advancing Auditing &Accountability

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to improved decisions. Once audit results are made public, citizens can hold the custodians of public resources accountable. In this way, auditing and accounting promote the efficiency, accountability, effectiveness and transparency of public administration.

Independent, effective and credible Accountability Institutions such as Institutions Supporting Democracy (ISDs), are therefore essential components in a democratic system where accountability, transparency and integrity are indispensable parts of a stable democracy.

The extent to which auditing and accounting are able to make a difference in the lives of citizens depends on the ability and capacity of audit and accountability institutions in:

Auditing SA

•

•

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Strengthening the accountability, transparency and integrity of government and public sector entities; Demonstrating ongoing relevance to citizens, Parliament and other stakeholders; and Being a model organisation through leading by example.

In this regard, its ethics and integrity are central to ensuring the authority and legitimacy of its work. To ensure that elected officials act in the best interests of the citizens they represent, governments and public sector entities need to be accountable for their stewardship over, and use of, public resources.

The institutions that are responsible for auditing and accounting responsibilities and functions serve to strengthen accountability,

Advancing Auditing &Accountability

transparency and integrity by independently auditing public sector operations and reporting on their findings. This enables those charged with public sector governance to discharge their responsibilities, in responding to audit findings and recommendations and taking appropriate corrective action, and thus complete the cycle of accountability.

It is thus important to recognize that government auditing is a cornerstone of good public sector governance. By providing unbiased, objective assessments of whether public resources are responsibly and effectively managed to achieve intended results, auditors help government organisations achieve accountability and integrity, improve operations, and instil confidence among citizens and stakeholders. >

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PUBLIC PROTECTOR OF SA

The government auditor’s role supports the governance responsibilities of oversight, insight, and foresight.

Oversight addresses whether government entities are doing what they are supposed to do and serves to detect and deter public corruption. Insight assists decisionmakers by providing an independent assessment of government programs, policies, operations, and results.

Government auditing is a cornerstone of good public sector governance; providing unbiased, objective assessments of whether public resources are responsibly and effectively managed to achieve intended results.

Auditing and Accounting practices can and ought to provide a direct link between transparency and the credibility of the government.

Lawmakers and the public look to audits for assurance that government actions are ethical and legal and that financial and performance reporting accurately reflects the true measure of operations.

The principle of probity calls for public officials to act with integrity and honesty. The erosion of public trust, if public information and actions are not reliable, undermines a government’s legitimacy and ability to govern. The political, social, economic, and environmental costs to society can be extensive.

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The principle of probity also applies when information is disseminated to lending authorities or other principals who have an interest other than an ownership share.

The consequences of violating the expectation for probity can be swift and shattering when the people’s trust in the government, its institutions, and its leadership is undermined.

Demonstrating ongoing relevance to citizens, parliament and other stakeholders.

Audit and accountability institutions continue to demonstrate ongoing relevance by responding appropriately to the challenges of citizens, the expectations of different stakeholders, and the emerging risks and changing environments in which audits and accounting are conducted.

Errors and irregularities are costly when large amounts of resources are misused, misappropriated, or abused and have a direct impact on numerous programs affecting citizens’ lives and health, as experienced in the state capture and subsequently the PPE saga, whilst the commission was still in progress.

Because the government’s success is measured primarily by its ability to deliver services successfully and carry out programs of relevance to and for the benefit of citizens, in an equitable and appropriate manner, government audit activities should have the authority and the competency to evaluate financial and program integrity, effectiveness, and efficiency.

Advancing Auditing &Accountability

ROLE OF THE PUBLIC PROTECTOR: OVERSIGHT OF FINANCIAL GOVERNANCE RESPONSIBILITIES Jurisdiction: The core function of the Public Protector, as determined by sections 181 and 182 of our Constitution, and the Public Protector Act, is to investigate any conduct in state affairs, or in the public administration in any sphere of government, that is alleged or suspected to be improper or to result in any impropriety or prejudice; to report on that conduct, and to take appropriate remedial action. This translates to approximately 1000 organs of state, including national and provincial departments, Metropolitan and local Municipalities, and public bodies.

The investigation of the mishandling of public funds within the Government sector is therefore within the ambit of the jurisdiction of the PPSA to the extent that if public officials are involved in the commitment of these offenses, it would undoubtedly also amount to improper conduct on the part of that official as described in the Constitution.

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a hard stance against wrongdoing within your midst, it creates a culture of impunity within the profession and where impunity is rife, lawlessness and chaos become the order of the day. As a layer of protection entrusted with protecting the use of our nation’s resources against any form of abuse by those entrusted with public power, we must ensure that we do our work diligently.

However, this does not mean that the PPSA assumes the investigative and prosecuting functions of law enforcement and prosecution agencies, but rather, it seeks to supplement and complement these agencies where possible.

The PPSA primarily operates as part of the national integrity framework consisting of a network of oversight and accountability bodies.

CONCLUSION In an opinion piece published by the International Monetary Fund (IMF), the National Treasury’s Mr. Ismail Momoniat details how our country and its key decision-making structures were in recent years infiltrated and influenced by powers outside of the state machinery.

This, as we witnessed during the Commission of Inquiry into the State of Capture, led to decisions of the state being taken to favour those outside the state.

Momoniat acknowledged that the financial system, on its own, cannot protect against corruption. “No public finance arrangements can by

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themselves prevent corruption in these circumstances, but in South Africa they did provide red flags and speedbumps, to slow down corrupt transactions. The priority is to fix the political governance and accountability system, even as we make technical improvements to our accountability system. At the same time, we need to rebuild state capability while putting in place a permanent anti-corruption mechanism.”

Auditors have a role to play in exacting accountability in state affairs and help build a strong culture of accountability.

The profession through its various bodies should take a tough stance against those who bring the name of auditing into disrepute through unscrupulous deals.

Surely, we cannot deny how unpleasant it was to witness those we have entrusted with being the eyes and the ears of our society, being named as the collaborators and enablers of the capturing of the state that our country witnessed.

When as auditors, you do not take

Advancing Auditing &Accountability

In that way, we give meaning to the dream the constitutional architects of our democratic dispensation had in mind when they deemed it fit to install into our constitutional, institutions such as the PPSA and the AGSA, among others.

In my humble view, if we all protect public resources through our auditing and investigating process, we will indeed advance accountability for the citizens of our country and in that way ensure that the constitutional promises of improved quality of life for all and a freed potential of every person are realized.

If auditors can raise the red flags that threaten our ability as a country to reach the goals, we have set for ourselves as a country under the NDP, then a solid foundation for a public service that is free of corruption and any form of maladministration can be laid.

By doing this, I can safely assert that most of the people of South Africa will begin to meaningfully enjoy the fruits of our democracy and most importantly we will when the time comes, hand over to the next generation, a functional state and functional public service that is free from corruption and other forms of maladministration. 

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PUBLIC GOVERNANCE

In the complex and interconnected world of public governance, the role of government auditors cannot be overstated. The Registered Government Auditors (RGAs) under the auspices of the Southern African Institute of Government Auditors (SAIGA), understand the vital importance of their work in ensuring accountability, transparency, and the responsible use of public funds.

LUNGISANI BHENGU

Rga, Bap(Sa), Tax Practitioner Managing Director: Impulse Accountants (Pty) Ltd

IMPROVING AUDIT OUTCOMES IN THE INTEREST OF THE PUBLIC 14

Advancing Auditing &Accountability

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The Importance of Public Trust Public trust is the bedrock upon which a stable socio-economic environment is built. Audit outcomes play a pivotal role in fostering this trust. When citizens have confidence in the government's financial management, they are more likely to support public policies and investments. Conversely, a lack of trust can lead to disillusionment and instability. RGAs have to recognise their responsibility in maintaining and enhancing this trust.

The importance of public trust cannot be overstated. It transcends mere confidence in financial management; it extends to the broader perception of government institutions. When citizens trust that their tax contributions are managed with integrity and efficiency, they are more likely to engage actively in civic life, contributing to a healthier democracy.

Enhancing Auditor Independence

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he journey to better audit outcomes starts with acknowledging the existing challenges in our audit practices.

South Africa's public sector, like many others globally, faces issues such as inadequate resources, capacity constraints, and the inherent complexity of public financial management. These challenges can hinder the effectiveness of audits and limit our ability to provide comprehensive insights into

Auditing SA

government spending.

In recent years, we have witnessed the strain placed on public resources due to economic uncertainties and unforeseen global events. The result has been increased pressure on auditors to do more with fewer resources. However, it is crucial to recognise that investing in audit processes is an investment in the public interest. Adequate resources are essential to ensure that audits are conducted thoroughly and impartially.

Advancing Auditing &Accountability

One key factor in improving audit outcomes is auditor independence.

SAIGA has been instrumental in promoting and ensuring this independence. When auditors are free from undue influence or conflicts of interest, they can carry out their work with the highest level of objectivity and integrity. Commitment to independence should be nonnegotiable, as it is the cornerstone of achieving credible audit outcomes.

To strengthen auditor independence further, it is essential to establish clear guidelines and ethical standards. Auditors must have the autonomy to make professional judgments without fear of retribution or external interference. This independence not only safeguards >

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PUBLIC GOVERNANCE the credibility of our profession but also upholds the public interest.

Strengthening Risk Assessment Robust risk assessment methods are essential in the audit process. To identify potential financial irregularities and mismanagement, auditors must have the tools and knowledge to conduct comprehensive risk analysis.

In South Africa, where the public sector encompasses diverse entities, effective risk assessment becomes even more critical. By continuously improving our risk assessment practices, the quality of audits can be enhanced.

Risk assessment should be a dynamic and ongoing process. Government auditors should be trained to identify emerging risks and adapt their audit approaches accordingly. Additionally, collaboration with other regulatory bodies and experts can provide valuable insights into emerging risks and best practices.

Capacity Building and Training Auditing is a dynamic field, and auditors must keep pace with evolving financial practices and technologies.

SAIGA recognises the importance of continuous professional development (CPD) for government auditors.

Through training programmes, workshops and knowledge-sharing initiatives, they equip auditors with the skills needed to navigate the complexities of modern public financial management. A well-trained auditor is an invaluable asset to the public interest.

Investing in the continuous development of auditors pays dividends in the form of improved

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audit outcomes. As the landscape of public financial management evolves, auditors must be prepared to address new challenges and opportunities.

Ongoing training ensures that auditors remain at the forefront of their field.

Leveraging Technology Technology has revolutionised auditing. Data analytics, automation and advanced software tools have made it possible to analyse vast amounts of financial data with unprecedented speed and accuracy.

By embracing these technological advancements, we can streamline audit processes, detect anomalies more efficiently and provide timely insights to government entities.

Technology is our ally in delivering better audit outcomes.

The adoption of technology is not just a matter of efficiency; it also enhances the depth and breadth of audits. Advanced data analytics can uncover patterns and trends that might have been missed with manual methods. Moreover, technology-driven audits can be conducted in real time, allowing for quicker responses to potential issues.

Transparency and Accountability Transparency in government financial reporting is a fundamental principle.

The public has a right to access information about how taxpayer funds are used. SAIGA advocates for transparency in financial reporting, urging government entities to adopt open and accessible practices.

Transparent financial reporting not only enhances trust but also allows for better scrutiny of public spending.

Transparency is not only about revealing financial data but also about

Advancing Auditing &Accountability

providing context and explanations.

Clear and comprehensible financial reports empower the public to understand government finances fully. Additionally, transparency should extend to the outcomes of audits, ensuring that the public is informed about the findings and recommendations.

Collaboration with Stakeholders Effective auditing is a collaborative effort. Auditors, government entities and the public must work together to achieve the best outcomes. SAIGA fosters collaboration by providing a platform for dialogue and cooperation.

When all stakeholders are engaged in the audit process, people can identify issues early, resolve them efficiently, and ultimately improve audit outcomes.

Collaboration extends to sharing best practices and lessons learned.

Government entities should view auditors as partners in improving financial management, not adversaries. By working together, we can collectively advance the cause of accountability and transparency in South Africa.

In conclusion, improving audit outcomes in South Africa is a multifaceted endeavour that requires addressing challenges, upholding independence, embracing technology and promoting transparency.

As RGAs under SAIGA, we are committed to this mission, knowing that our work directly impacts the public’s trust in government institutions. By continuously striving for excellence in our audits, we contribute to a more accountable and transparent South Africa, where public funds are managed responsibly in the interest of all citizens. 

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INSPIRING GREATNESS

ARTIFICIAL INTELLIGENCE (AI)

HAS THE AI SUMMER ARRIVED IN THE AUDIT SECTOR?

EXPLORING OPPORTUNITIES AND THREATS In recent years, the auditing profession has been undergoing a transformative shift, primarily driven by advancements in artificial intelligence (AI)/machine learning (ML) technologies.

Traditionally characterized by labour-intensive manual verification processes, the audit landscape has found itself at an intersection of unprecedented opportunities and challenges, spurred by the digital era's massive data generation and escalating unethical behaviours.

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PROF BOMI NOMLALA, PROF MABUTHO SIBANDA AND HELPER ZHOU (PHD)

University of Kwazulu-Natal, School of Accounting Economics and Finance

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everaging a range of AI tools, including Natural Language Processing for document analysis, Robotic Process Automation for data recon and validation, and predictive analytics for risk assessment, auditors globally are exploring innovative avenues to enhance efficiency and accuracy in their processes.

Advancing Auditing &Accountability

Furthermore, initiatives like the US government’s AI-driven analytics to identify financial discrepancies and Singapore AG’s office's deployment of AI tools for financial data analysis underscore a burgeoning trend in AI adoption within the public sector.

While private entities lead in harnessing AI capabilities, governments globally are not far behind, taking pivotal steps towards integrating AI in audit procedures, with the United States and Singapore being notable examples, thereby highlighting a global shift towards an AIaugmented audit process.

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This demands a practical shift and commitment by the South African government auditors to actively start exploring and embracing pertinent auditing tools that improve the quality of audit outcomes.

Concerningly though, is the fact that auditors in general, especially across developing countries like South Africa, are not adaptive to the wave of AI/ML-driven innovations.

The slow pace of adopting these technologies may largely be due to two primary reasons. Firstly, a lack of technical skills, which includes data science and machine learning, among others, smothers any potential appetite among auditors

Auditing SA

to jump and join the “AI mantra” bandwagon. These skills are largely crucial in helping auditors easily conduct advanced data analytics by querying data from multiple sources and also, where necessary, automating menial, repetitive tasks.

Secondly, fear of job losses is another fundamental reason why auditors both in the private and public sectors may have a constrained appetite to fully adopt AI in their audit processes. Whilst this possibility may hold true for some mundane tasks, it’s important to note that, in essence, AI, which in this current version is narrow, can only empower users, including auditors, to focus on more creative

Advancing Auditing &Accountability

tasks that may not be automated.

Interestingly, despite these and other challenges, according to a 2020 Accenture report, over 80% of audit and compliance executives anticipate a significant impact of AI on the audit profession, a perspective mirrored by the rapid adoption rate of AI tools in organizations worldwide.

Inevitably, leading players in the audit sector are starting to experiment with various AI-driven tools to improve audit processes. This includes promising developments, like Deloitte's substantial investment in the AI-based auditing platform >

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ARTIFICIAL INTELLIGENCE (AI) Deloitte Omnia. In the recent past, EY’s Tokyo office leveraged machine learning to develop an innovative tool named EY Helix GL Anomaly Detector, to detect anomalous entries in large databases. This has been found to be the first of its kind and it's still being refined through increased exposure. Key to note from this, however, is that these developments are largely nascent and yet to be fully replicated across the profession.

documentation, especially within government departments, for various transactions like tender submissions. This will require advanced techniques like Optical Character Recognition (OCR) to trough through scanned documents and convert them into readable texts. For a profession that is faced with limited skills, this may hamper the full adoption and utilisation of AI tools to perform effective and efficient audit tasks.

Unrelenting breakthroughs from AI technologies like the recent OpenAI’s large language models, including applications like ChatGPT, means that the sector needs to catch up but, importantly, do so responsibly.

In conclusion, the audit sector stands at a crucial juncture – a transition from a manual to a potentially fully AI-augmented process, teetering between the "AI spring" and "AI summer." While the industry showcases readiness to foster AI-driven transformations, fostering a symbiotic relationship between AI technologies and human expertise appears paramount, thereby nurturing an environment that harmonizes innovation with adaptable regulations.

These technologies are accompanied by both clear-cut and subtle risks, which auditors should be aware of to avoid compromised audit outcomes. For example, the latest crop of AI tools, particularly generative algorithms, have the capability to create synthetic (which is to say) fictitious data, and this may be misused by companies to hide certain fraudulent transactions, and without better and more advanced tools, auditors may find their role in ensuring the reliability of financial statements seriously compromised.

As we navigate this transformative period, characterized by both hope and hype, the sector is challenged with harmonizing the rapid pace of AI integration with ethical considerations and practical constraints. This period of transition, likened to a burgeoning "AI spring," poses the critical question of whether the traditional audit process can withstand the full brunt of an impending "AI summer," steering toward a future where AI not only augments but potentially revolutionizes the audit landscape.

It is within this complex backdrop that this study explored the evolving narrative, evaluating the current state of AI integration in the audit sector while envisioning a future steered by balanced growth, innovation, and ethical adherence, nurturing a terrain ripe for the advent of Artificial General Intelligence (AGI) and possibly quantum computing in auditing. 

Inevitably, the profession grapples with pivotal concerns, including potential job losses, the necessity for ethical AI to mitigate biases and data privacy issues, and heightened cybersecurity risks. The latter is amplified by the integration of AI with IoT devices, which increases the potential attack surfaces for cybercriminals, underscoring the urgent need for robust cybersecurity measures.

The audit landscape is further constrained by fragmented data structures, which make it difficult for interested players to develop and train algorithms that can be used across various stages of the audit cycle.

This is further exacerbated by the dominance of manual

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MUNICIPAL RISKS

NAVIGATING A MINEFIELD OF LOCAL GOVERNMENT: TOP 5 RISKS FOR MUNICIPALITIES 22

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1.

Standard Transfer Specification The Standard Transfer Specification Token Identifier Prepaid Electricity Meter Reset, with its looming deadline of 24 November 2024, carries a severe risk of loss of revenue, as the meters that have not been reset, by this date, will no longer function. This can also have a legal implication, as municipalities will fail to provide a basic service (electricity).

COBUS JANSE VAN RENSBURG Internal Audit Manager: Moore Southern Cape

I

t is no secret that South African municipalities are faced with many challenges. From service delivery protests to financial instability, the minefield of risks and concerns seems endless.

In 2024 South Africa will celebrate 30 years of democracy. However, if one considers the bleak picture painted by the Auditor-General’s (AG) report regarding the state of municipal finances as well as the state of the infrastructure in many municipal areas, the question remains as to how effective local government is in meeting its mandate.

In the aftermath of a global pandemic and in light of these unique challenges, it follows that a more proactive risk management process might be required to achieve a better municipal landscape. This article aims to summarise the top five risks currently faced by municipalities. As providers of oversight and assurance, we as government auditors (internal or external) should be aware of these risks, as they will have an impact on the future of our clients.

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The concern here is the slow progress that municipalities have made to date. SALGA (2023) reported that 65% of meters have not been reset yet, which is just less than 3 million meters!

Municipalities that have not started with the reset process can no longer delay. A decision will have to be made as to whether officials will go door-to-door or whether the reset process will be outsourced.

2. Administrative Adjudication of Road Traffic Offences Controversy

The controversial Administrative Adjudication of Road Traffic Offences (Aarto) Act is a step closer to becoming a reality after the Constitutional Court confirmed its constitutionality in July this year.

Its current implementation date is 1 July 2024. This brings yet another risk of loss of revenue for municipalities. Aarto will centralise traffic fine collection, where all fines will be processed by the Road Traffic Infringement Agency. This can result in a loss of municipal revenue, as not all the revenue collected will be paid back to municipalities. >

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MUNICIPAL RISKS Municipal revenue collection has already been impacted, as prepaid electricity sales have decreased significantly over the last year because of consumers going off the grid to curtail loadshedding. Another big risk for municipalities is readiness to administer the new process. Aarto will completely change the way fines are imposed, enforced and collected.

This will require new processes, increased coordination with the National Government and additional training.

3.

Local Government Audit Outcomes In her Report on Local Government Audit Outcomes, the AG slammed municipalities for their failure to implement infrastructure projects.

This is a big concern for most municipalities, as it directly impacts service delivery (such as water supply and roads). A review of most municipal financial statements will show large amounts of underexpenditure on municipal grants received from national and provincial governments.

This is a clear indicator of a reactive approach to project management and maintenance. Simply put, municipalities are failing their communities. The root causes seem to relate to poor project management and inadequate supply chain management processes.

To correct this, municipalities will need to ensure that a proper risk appetite is set and that adequate standard operating procedures are implemented for infrastructure project management. Supply chain processes should also be closely monitored as part of the project management process.

mistake made by municipalities is to limit their BCPs to information technology and data protection only.

A well-developed BCP should include strategies to address damages to offices and infrastructure as well as disruptive events.

Other common errors include ignoring plans for alternative working areas and omitting the BCP from the budget. The question each accounting officer should ask is: if our offices are destroyed tomorrow, how will we continue to serve our communities? Having a BCP is not good enough. It should also be comprehensive, based on a thorough risk assessment and adequately tested.

5. The Protection of Personal Information Act (POPIA) and Cybersecurity risks

Lastly, municipalities can no longer ignore the threats associated with cybersecurity. Gone are the days when cyber risks were just an addition to business risks. The cyber risk landscape and the business risk landscape are the same thing. The Protection of Personal Information Act (POPIA) is no longer a new thing and the time has come for municipalities to take this act seriously. It is also imperative that municipal workers understand that this is not merely an “IT risk”, but a risk that must be owned by all staff.

A common example is where hackers, through the “Darkweb” use phishing and spoofing techniques

Municipalities need to implement improved and agile risk management processes to send an email from a legitimate employee’s email address to Human Resources, to “inform” them of a change of banking details. The email looks very legit and even contains a bank confirmation letter with the “new” banking details. Unaware HR officials can easily fall for this trick.

Municipalities will therefore need to embark on an awareness project to ensure that all staff is adequately trained. Cybersecurity policies should be implemented to ensure that staff identity, municipal finances, citizen identity and citizen finances are adequately protected against malicious attacks and exploitation.

As independent assurance providers, we should advise and warn our clients as much as possible to enable them to do proper risk management.

No municipality can afford to lose any more revenue, not meet its mandate, or suffer unnecessary losses due to inadequate continuity planning or a lack of awareness. With resources becoming increasingly limited and municipalities having to operate in continuously changing environments, the minefield of risks is becoming more treacherous.

The price of a reactive approach is too high, and municipalities will need to implement improved and agile risk management processes to navigate the road ahead. 

4. Municipal Business Continuity Planning

The violent protests of 2021, as well as other recent incidents such as the vandalism of the municipal offices in Swellendam, have shown the need for municipal business continuity planning (BCP). A common

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(GASP) PSA QUALIFICATION

Public Sector Auditor Qualification, NQF level 8, 315 credits REGISTRATION OPEN

PROGRAMME STRUCTURE: Knowledge modules can be completed in the following timelines: 12 months | 18 months | 24 months | 36 months Note: Students will be credited for the modules they have already completed.

COURSE OUTLINE

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Entry requirements: NQF Level 7 in Accounting or Auditing

Year 1 Programme 1: Principles & Ethics of Auditing

Assessments Final Integrated Summative Assessment (FISA) External Integrated Summative

88 Multi-model (18 classroom days) 63,5 Practicals days

Assessment (EISA)

Programme 2: Public Financial Management

Work experience modules 100 workplace days

Programme 3: Financial Accounting & Reporting

Year 2

47 Multi-model (9 classroom days) 60 Practical days

49 Multi-model (10 days classroom days) 62,5 Practical days Programme 4: Financial Governance 47 Multi-model (9 classroom days ) 66 Practical days.

Programme 5: Modified Cash Framework 7 Multi-modal (2 classroom days)

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LEADERSHIP AIMED TOWARDS ENHANCING AUDIT RESULTS PATRICIA STOCK

Co-founder and CEO of MGI RAS

L

eadership plays a pivotal role in shaping outcomes, as the conduct of leaders directly influences the results achieved. The quality of leadership is truly exemplified by the outcomes they generate and take pride in.

In accordance with the Auditor General SA’s report on the audit outcomes for the fiscal year 2021/22 concerning the 424 PFMA organisations (https://pfma-20212022.agsareports.co.za/auditoutcomes/), the audit outcomes have shown a gradual upward trend since the previous administration’s term ended. Overall, 114 auditees now have a better audit outcome than in 2018-19, with 46 having a worse outcome – an overall net improvement in the outcomes of 68 auditees (17%).”

While there has been a general trend of improvement, it’s important to note that the prevalence of unfavourable results remains higher

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than desired. This indicates a need for more robust and effective management.

In this fourth year of carrying out our enforcement mandate in the national and provincial government, the AGSA expanded their work significantly by implementing the process at 202 auditees – from 95 in 2020-21. They plan to further increase this number to 430 in 2022-23.

According to the AGSA https:// pfma-2021-2022.agsareports. co.za/current-status-of-mis/, “there has been a shift at departments and public entities: from a slow response to our findings and recommendations over the years to attention now being paid to what we report as MIs and actions being taken to resolve these. We found that until we issued notifications, no actions were being taken to address 82% of these matters.An MI is resolved if all steps have been taken to recover financial losses or to recover from substantial

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harm, when further losses and harm are prevented through strengthening internal controls, when there are consequences for the transgressions (which include disciplinary processes) and, if applicable, the matter has been handed over to a law enforcement agency.”

A vision and an individual are intrinsically intertwined In our quest for progress, we require visionary leaders who are not just individuals with vision but, in fact, embody that vision.

Visionary leaders possess a unique ability to perceive the present reality and envision its potential transformation. Their personal vision serves as the guiding force that charts their course and paves the way for others.

These leaders are defined by their unwavering sense of purpose, their keen gaze directed toward the future, and their remarkable foresight in spotting >

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MGI RAS opportunities capable of propelling the organization to greatness.

The extent of a leader's vision is evident in the profound impact they can make and the broad horizons to which they can lead the organization.

Nurture the seed's growth, eliminate the weeds Perceiving the potential for greatness within the organisations we lead sparks a profound desire to safeguard the seeds of progress and take the necessary actions to eliminate any hindrances. It is the duty of leaders across all sectors to instil hope, particularly by implementing solutions that address the challenges our country faces. Thus, tackling the most challenging issues, which erode past gains and values, becomes crucial for bolstering public confidence.

Perceiving the potential for greatness within the organisations we lead sparks a profound desire to safeguard the seeds of progress and take the necessary actions to eliminate any hindrances.

The overall success, growth, and sustainability of an organization are intrinsically tied to the quality of leadership decisions and the extent of stakeholder engagement.

However, the effectiveness of these decisions and actions depends on the quality of information available.

Therefore, promoting transparency in reporting and enhancing

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alignment between financial and performance information, planning, and reporting is paramount.

Unfortunately, the sluggish response in addressing the root causes of poor administration and its subsequent consequences often stem from inadequate assurance provided by various stakeholders.

This, in turn, results in delayed and inadequate corrective actions.

Leadership is the exercise of influence driven by both competence and character Leaders should exude a transferable confidence that inspires and influences others. This confidence is deeply rooted in competence and independence. True independence, in both appearance and action, often necessitates the courage to accept the risk of unpopularity.

committed to their personal development for the benefit of others and the organizations they serve. Pushing for high standards in all aspects is an essential part of this growth-oriented leadership approach.

Leveraging the ecosystem and engaging stakeholders actively to drive improved outcomes Anecdotally examining the entire ecosystem reveals that some stakeholders fail to provide adequate assurance due to shortcomings in either character or competency. This deficiency in assurance correlates with undesirable outcomes, mirroring the issues repeatedly reported by the AGSA.

Leaders wield their influence over people and processes through the strength of their character. While skills are important, character, defined by integrity and honesty, holds a higher position. Honesty ensures a leader's independence of mind, preventing undue influence from those who deploy them or those they oversee, such as the management.

Competency is another critical aspect. It involves the ability to execute responsibilities to a level that yields acceptable quality outcomes. Accepting roles in which one lacks competence can pave the way for mistakes or even wrongdoing. This leads to a situation where "you don't know what you don't know," resulting in a passive approach to leadership.

To foster growth, we need leaders with a growth mindset,

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Influence, in this context, emerges from the level of expectations— both of oneself and others. High expectations of self and others tend to lead to high-performing organizations. Conversely, high expectations of oneself coupled with low expectations of others often result in individuals taking on work beyond their roles, sometimes causing those responsible for governance to become overly operational. On the flip side, low expectations of leaders and high expectations of others can make boards susceptible to undue influence, particularly from management.

Hence, it's crucial to establish clear individual Key Performance Indicators (KPIs) for all assurance providers, including the board, and

consistently measure performance against these KPIs. Within the broader ecosystem, we require leaders who not only set the example by demonstrating competency but also navigate with a strong moral compass.

The present state of our country can be partly attributed to the scarcity of such leadership models. People are recognized by the outcomes they achieve, just as one discerns the type of fruit a tree will bear by examining the tree itself.

If leaders neglect the nurturing of their organizations and fail to create the right conditions for growth, they cannot expect positive results. To yield a good

crop, it's imperative to protect it from the encroachment of weeds. This necessitates decisive leadership and effective structures and processes to eradicate impediments. Failure to invest in establishing the right people and processes, as well as nurturing their development, invariably leads to mediocrity and value erosion.

The likelihood of enforcing consequences for poor behaviour and results remains low in an environment that fosters wrongdoing. Consequently, we observe consistent underperformance and minimal improvement. This is because those closest to the organisation play a pivotal role in determining its success or failure.

Not everyone perpetuates wrongdoing, which underscores the importance of protecting and supporting professionals and whistleblowers who are committed to ethical conduct in environments that may exhibit irregularities as the norm. Various bodies such as law enforcement, professional bodies etc. can also play a critical role in offering support.

In summary, what we need are more audacious stakeholders who are willing to manage access to and exit from organizations and the broader ecosystem.

Batho Pele (People First) The success of an organisation is intrinsically linked to its people and leaders. Regardless of the grandeur of the vision, it's the collective effort of the team that breathes life into that vision.

Any transformation within an organization commences with its > people; thus, the nurturing of

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MGI RAS organizational culture plays a pivotal role as it acts as the vehicle to success.

Culture, when cultivated effectively, becomes the driving force for the adequate execution of the organisation's strategy. This, however, hinges on meaningful engagement and empowerment of employees. An engaged workforce is essential to deliver services that meet the desired standards.

“In our quest for progress, we require visionary leaders who are not just individuals with vision but, in fact, embody that vision.

Visionary leaders possess a unique ability to perceive the present reality and envision its potential transformation.”

Effective leadership is tasked with the responsibility of creating an enabling culture and environment for professionals to thrive. This involves an investment in upskilling longserving employees, which can be facilitated through integration into the rewards and incentive system.

By doing so, organizations can unlock the full potential of their workforce and foster a culture of growth and development.

Board diversity and independence Just like a tree that might yield some good fruit, it's essential to tend to the tree because even the fruitful parts can become corrupted. To address the root

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causes of infestation, we require robust and independent leadership in positions of significant influence, such as the Chairman.

The Chairman, irrespective of the outcomes, sets the tone for the entire organisation, serving as a role model and enabling others to act.

This level of influence, when directed toward the organisation's best interests, paves the way for sustainable and long-term value creation, as well as decisive actions when needed. Sustainable value is one that doesn't hinge on the presence of specific leaders but is ingrained in the organisational culture, embodied in policies, procedures, and shared norms that every member of the organization upholds.

Selecting an independent and competent Chairman can be achieved by involving an independent body, whether an individual or an organization, in the director selection process.

This should include recruitment based on a predefined competency framework and relevant skills.

Transparency in disclosing the selection process is crucial. When it comes to board diversity, it extends beyond demographics to encompass diversity of thought, ensuring that individuals with differing perspectives are part of the decision-making process.

Lawmakers should also consider the requirement for each member of the assurance providers to be affiliated with an accountability body, guaranteeing oversight and monitoring by an independent accountability structure within the ecosystem. >

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SIONARY LEADERSHIP Auditing SA

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Crafting enabling regulations to facilitate prompt consequence management Improving legislation often begins with the adoption of the best provisions from existing laws, creating a foundation for more effective consequence management.

For instance, the Companies Act has provisions to successfully declare delinquent directors accountable for enabling wrongdoing. However, there are still gaps within the PFMA and MFMA regarding consequential measures for directors serving entities not covered by the Companies Act.

While enabling legislation is crucial, we must also emphasize actionoriented leadership.

Leaders should be proactive and responsive, rather than merely complying with requirements…..

I commend the AGSA for setting a commendable example in promoting accountability through the Public Audit Act and effectively implementing the MI process.

Nevertheless, there is a pressing need for decisive leadership to act on the AGSA's recommendations for consequence management.

While enabling legislation is crucial, we must also emphasize actionoriented leadership. Leaders should be proactive and responsive, rather than merely complying with requirements by creating more manuals and policies without translating them into meaningful actions. Achieving a balance between

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improving legislation and maintaining the ability to respond effectively is essential. Stagnation can hinder innovation, so we must be open to evolving and adapting to changing circumstances.

Embrace digital transformation within the public sector In the face of the growing importance of AI and the abundance of tools and skills both domestically and worldwide, it's apparent that there's no complete shortage of the required expertise. Therefore, the shortage of progress in this area can often be attributed to a lack of leadership and political will.

One solution is to implement AI tools under the monitoring of an independent or centralized body. This can be a significant step in reducing non-compliance and, in some cases, curbing corruption.

For instance, by implementing enhanced conflict screening during the procurement process before awards are made. Digital tools also offer the potential for improved coordination in service delivery, streamlining processes and enhancing efficiency.

To achieve this integration, universities, professional bodies, and firms must be deliberate and proactive. For example, adopting a mandatory public service component, akin to the model in medical education, can be part of the qualification program. Furthermore, public sector specialization programs should receive strengthened support through enhanced collaboration between professional bodies, universities, firms, and other relevant stakeholders. This interconnected approach will nurture the next generation of public sector leaders and professionals while emphasizing the integral role of the public sector in our society.

Conclusion The true measure of a leader's greatness is not defined by the best of times, but by their ability to navigate and transform adversity into success. Greatness isn't solely determined by success but by the capacity to overcome challenges and adversities, particularly during the most trying times.

Prepare professionals by intensifying the focus and enhancing collaboration for the greater public interest

Reflecting on the life of Nelson Mandela, we find a profound example of determination to prove that Africans are fully capable of self-governance. He understood that his personal example would carry more weight and influence than any policies he could enact.

Elevating the significance of the public sector within our economy and the professional sphere is a paramount step. It's vital to acknowledge that the public and private sectors are intricately connected. When we accord the public sector the attention it deserves, it opens doors for better integration of public sector education from the foundational stages of education to higher education and corporate skills development programs.

Mandela's legacy teaches us that when the title of leadership fades, what truly matters is who you were, who you choose to become, and the values you uphold. Thus, the real test of leadership is not during its zenith but after, when the true character of the leader endures. It's the friends that remain in your heart when all is said and done that truly matter, as they reflect the essence of your inner self. 

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Making a Difference

by Helping Organisations Nurture Value for Stakeholders.

MGI RAS was established with the common purpose of providing world class professional services in South Africa, throughout the continent of Africa and globally.

We provide sustainable solutions aimed at enhancing good corporate governance, sustainable financial management practices and effective people development in both the public and private sectors of the economy.

MGI RAS entities provide assurance (incl. external audit), accounting, taxation, payroll, audit quality assurance, Sustainability and ESG advisory and assurance, IT audits, data analytics, project assurance, compliance review, performance information consulting, financial management consulting and people development (incl. coaching and training) which is central to our service offerings.

Head Office

www.mgiras.com

Gauteng E: info@mgiras.com T: +27 (0)12 880 1935 F: +27 (0)86 525 1732

Unit 8 Stanford Office Park 12 Bauhinia Street Highveld Technopark Centurion South Africa, 0169

POLITICS

THERE HAS TO BE A WALL BETWEEN PARTY POLITICS AND GOVERNMENT WILLIAM GUMEDE

Associate Professor, School of Governance, University of the Witwatersrand and a Sunday Times columnist

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ppointing current or former politicians, party activists and the politically connected onto the boards and as executives of state-owned entities (SOEs), is one of the reasons why many South African SOEs have chronically failed to deliver on their mandates and have been beset by incompetence and corruption.

Appointing current and past politicians to SOEs has led to the politicisation of the management of these state companies, turning these companies to prioritise political, selfenrichment, and corrupt objectives, rather than on delivering quality services and becoming profitable.

They undermine good corporate governance, accountability, and oversight in SOEs. They sap the morale of ordinary employees, introduce toxic organisational cultures into SOEs and drive away talent. Many politicians and party activists are appointed to boards or management of SOEs by governing parties often solely based on patronage - to reward them for party loyalty, and support of the party leader or faction. In the overwhelming cases, South African politicians and party activists appointed to boards have limited specialised skills,

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beyond having been in politics or their connectedness to current governing party leaders. However, their skills gained from party politics are often not only unsuitable to the state or SOEs, but they are also toxic to these institutions.

Many party activists appointed to boards often have too much time on their hands and try to get involved in the management of organisations – and the allocation of tenders and the appointments of senior management, which undermines corporate Advancing Auditing &Accountability

governance. This undermines the corporate governance firewall between the board and management to ensure the optimal function of organisations. Similarly, politicians and party activists on boards often see themselves as more senior than management – and in some cases demand to receive the same benefits and remuneration or more than management for their services.

Politicians appointed to SOEs often politicised the boardrooms, making critical decisions based on party,

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faction and self-interest reasons.

They turn SOE boardrooms into spaces where factional politics are played out. They bring toxic organisational cultures to SOEs – often gate-keeping appointments for board and executives, channelling contracts to politically connected companies and pushing projects which are unsustainable or do not fit within the mandate of the business but are politically motivated.

Politicians on boards destabilise boards, management, and companies, and have more power than ordinary board members because of their political seniority in their party.

They have more power than other board members or executives – undermining corporate governance – as board members must have equal power, rather than one or a few board members having more power than others. It is very hard for SOE executives to question politicians on their boards – even if the politicians are wrong.

Political appointees within SOE boards and executives can often not be challenged, as they bring the weight of the governing party to bear in boardrooms where they serve as executives or board members.

Going against them often means not only being fired but also being blacklisted from working for any other SOE – so it is career-ending.

This means the views, decisions and actions of politically connected SOE board members and executives often go unchallenged, even if they are destructive to the business, undermine the performance of the organisation, or are corrupt.

This means that political appointees to management and boards cannot

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be held accountable by the rest of the board or management. They can only be held accountable by the governing party leadership – who in many African countries, often value loyalty to the governing party and leader over everything else, which means that politicians board, and management are unlikely to be held accountable.

Political appointees to SOE boards and management also bring their political baggage – their acolytes, their political enemies and their corruption cases with them. This means that SOEs which are managed by political appointees often see a replay of the political fights, the corruption and the incompetence that follows these political appointees.

Appointments to boards and management of SOEs should be based on merit, competence and appropriate practical experience.

Politicians from liberation and independence movements who adhere to such beliefs about SOEs, once they get appointed to SOEs, do not really care whether SOEs are efficient or profitable if they provide jobs public services, or patronage. This means that the liberation and party politicians turned SOE executives and board members invariably undervalue the role of a board member as providing accountability for SOEs to be managed responsibly, honestly, and efficiently – and they oppose other managers or board members, who emphasise that SOEs should be run efficiently, honestly and profitably.

There has to be a wall between party politics and the state or SOEs. Appointing active politicians to SOEs breaches the wall between Advancing Auditing &Accountability

politics and state – and makes SOEs accountable to the party, rather than delivering on their public mandates and to their consumers.

There are many countries where former politicians are appointed to public sector entity boards, whether France or South Korea. They are normally appointed on the basis that they are fully retired from party politics, and have specialised skills acquired in non-political careers, such as being accountants, doctors, or lawyers. However, in South Africa and most African countries, many governing party leaders are career politicians. Many have never managed anything else, other than party politics. The majority do not have specialist or technical or business skills – a basic requisite to manage complex SOEs. A key reform to improve the effectiveness of South African SOEs is to ban politicians from appointments to boards and management. This is the only way to prevent the politicisation of SOEs – which is at the heart of their corporate governance failures, delivery misfiring, and high levels of corruption. Appointments to boards and managements of South African SOEs should be removed from politicians, should be professionalised and should be more transparent. Appointments to boards and management of SOEs should be based on merit, competence and appropriate practical experience.

If not, these critical companies will continue to fail to deliver on their mandates, remain hotbeds of corruption, and be a drain on public finances.  *William Gumede is Associate Professor, School of Governance, University of the Witwatersrand and author of Restless Nation: Making Sense of Troubled Times (Tafelberg)

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COMPLIANCE

PROF BERNARD AGULHAS

CA(SA)

ANÉ CHURCH CA(SA)

"To be or not to be? That is the

question - Whether ’tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles, and, by opposing, end them?"

T

he famous question from Shakespeare’s Hamlet was perhaps best explained by former Israeli prime minister Golda Meir, who sharply retorted: “This is not a compromise — either you be, or you don’t be.”

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If only it was always that simple.

In a profession that will soon be challenged — or probably already is — by the dreaded artificial intelligence (AI), accountants and auditors must by necessity take up arms and defend their raison d’être; unlike Hamlet, our choices are more limited - not only must we remain future-fit, but also restore the former glory and esteem that the profession held prior to the recent audit failures.

Within this context, what is the profession’s “X factor”? What will distinguish it from AI, rendering it Advancing Auditing &Accountability

fit for purpose in the future, as well as credible after the audit lapses of the past? For a start, the ability to think for oneself must surely eclipse the ability to script programmes to do so. Behavioural competencies such as critical and analytical thinking, scepticism and being independent, therefore, remain the exclusive domain of human beings (at least for now).

This, unfortunately, doesn’t mean that human beings themselves are not open to being programmed — and the auditing profession is no different. If we repeatedly do

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TO COMPLY OR NOT TO COMPLY...

something for sufficiently long periods, and we believe that we can justify our behaviour, it is not difficult to get lulled into a false sense of what we believe is “the right thing to do”. The problem is that not everyone has a consistent understanding of what this is and leaving it to our souls to guide us might be putting too much faith in humankind.

Not all is lost, however; our laws and regulations save the day.

South Africa has world-class legislation - such as the Public

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Finance Management Act and the Companies Act – which is derived from a world-class constitution. These are more than just guidelines; they provide us with much-needed direction in navigating our way through a complex, tricky, unethical and often corrupt environment. They even prescribe consequences, should we depart from such direction, mostly to create a culture of compliance and, ultimately, accountability.

A culture of compliance should not be underestimated Advancing Auditing &Accountability

in a world where corruption and misconduct are the order of the day.

But it should not be confused with the belief that “ticking the boxes” absolves us of responsibility. >

South Africa has world-class legislation - such as the Public Finance Management Act and the Companies Act– which is derived from a world-class constitution 37

COMPLIANCE

We still have to apply those unique skills of critical and analytical thinking, judgment and professional scepticism, and we still have to demonstrate our ethical behaviour. Without doing so, we reduce ourselves to mere chatbots (not to be derogatory of the value added by AI to our lives and our profession).

Respect for the law

Accountants and auditors, as well as those in leadership positions, fulfil a critical role in doing what is right by the public.

It has become too easy to discard our laws and regulations, claiming they inhibit performance and productivity. Take the parastatals Transnet, Eskom and the SABC as examples where the primary legislation designed to hold public servants to account has been subverted by exemptions to compliance. These, inevitably, reduce transparency, accountability and much-needed consequences for noncompliance.

A culture of compliance should also not be fostered only in response to the fear of being caught. As the great Albert Einstein once asserted, those who do good solely out of fear of punishment — or at the prospect of rewards — are “a sorry lot indeed”. A fearbased culture often obscures the necessary voice of reason, where interpretation is, in fact, necessary.

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We no longer live in a world that is black or white; that is too easy.

Our complex environment requires us, as professionals from whom society has great expectations, to apply our training and consistently demonstrate appropriate behaviour. Our moral compass requires continuous recalibration.

That’s not to say every requirement in every law applies to every entity — but let’s not throw out the baby with the bathwater. As true professionals and public servants, we can honour our social contract to act in the public interest

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by deferring to our laws, standards and codes even if we don’t do so slavishly (we are not chatbots).

Accountants and auditors, as well as those in leadership positions, fulfil a critical role in doing what is right by the public. They shine a light on wrongdoing — and they should be doing so rather than seeking avenues to justify poor governance and non-compliance. Leaders and the profession should not find themselves having to hide anything, lest they be forced to utter those dreaded last words of Hamlet: “The rest is silence.” 

* Agulhas is the former audit regulator and an adjunct professor in auditing at the University of the Free State; Church is a lecturer in auditing and corporate governance at the University of the Free State.

(This article first appeared in the September 2023 issue of Financial Mail)

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FORENSIC ACCOUNTANTS

THE ESSENCE OF FORENSIC ACCOUNTANTS IN AUDIT ENGAGEMENTS

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here is a misconception that forensic accounting and forensic auditing are the same thing.

Auditors loosely define forensic accounting as the use of accounting principles and investigation techniques to identify fraud and theft. Forensic accountants qualify to testify in court and are instrumental in building legal cases.

KEMI MONGOADI MATHATHO

MBA, CFE, IAT(SA) SQR Audit Director

With the growing complexity of the business environment and the growing number of business-related investigations, forensic accounting professionals are increasingly asked to assist in the investigation of financial and business-related issues.

Improving infrastructure of internal control and accounting systems There have been many instances where forensic accountants are called in to determine the possible causes of the collapse of companies or SOEs who are involved in the reporting of financial statement misrepresentation.

Global companies like Enron, Xerox and many state-owned entities like ESKOM, and SAA have harmed the reputation of their appointed auditors.

In effect, shareholders, most especially the taxpayers, are financially affected.

In order to mitigate fraud and theft, and to restore public confidence, entities can take steps to improve the infrastructure of their internal control and accounting systems.

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Advancing Auditing &Accountability

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Forensic investigations, such as shareholder and partnership disagreements regarding financial records for valuations, and business/ employee fraud investigations, which may involve fraud tracing, asset identification and recovery, forensic intelligence gathering, and due diligence reviews are all examples of forensic accounting activities.

The difference between financial audit and forensic accounting The difference between financial audit and forensic accounting is the tasks’ objectives. The processes undertaken in forensic accounting versus auditing are where the real difference is. Auditing will typically have a programme and plan from the start that does not diverge in any shape or form. Contrary to that, a forensic accountant’s investigation may require several pivots or new directions depending on the information that is uncovered. A financial audit is performed with the main objective of evaluating the financial statements of the firm to assess its fairness and accuracy.

Forensic accounting is more concerned with establishing the existence of fraud, determining the extent of damage or losses involved as a result of the fraud or crime and gathering sufficient evidence for use by the courts of law to come up with a fair and judicial ruling for indemnification and/or prosecution.

With forensic accountants frequently specialising in detecting fraud, forensic accounting is one of the most in-demand areas of accounting, especially considering the losses brought on by corporate fraud. Soft skills such as conducting effective interviews are vital to any forensic accountant, and the volume of data produced by modern companies

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requires analytical tools to direct the forensic accountant’s attention toward suspicious transactions or accounts.

The key to forensic accounting engagement is the use of both skill and advanced analytical tools.

There are apparent similarities in the ways and methods of carrying out duties and responsibilities to attain the objectives. The financial audit pursues the indications of fraud, prepares a report on the extent verified, and makes recommendations for further investigations. However, these functions are performed as a result of the financial audit review and not as the financial auditor’s main goal. Financial audit examinations such as forensic accounting include verification and inspection of supporting documents to ascertain the accuracy of claims against the company.

In financial audit, the aim is to avoid penalties and sanctions whereas, in forensic accounting, the objective is to determine the possible existence of third-party claims or willful desire to evade the obligations.

•

Confirming the existence and accuracy of receivable balances by sending out confirmation letters.

•

Financial statement audit and forensic audit of banking institutions both include confirmation of balance and existence of accounts.

The basic aim of the financial audit is to aid management, while forensic accounting generally seeks evidence to support litigations.

The outcome of a forensic audit is far more unpredictable At times, the forensic accountant may have to reconstruct books and

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records, or specific transactions, from whatever information is available.

The specific information needed may not be readily available or may not be in a form that the forensic accountant needs or can use. Thirdparty verification and confirmation. At times, the forensic accountant may need to obtain third-party verification to confirm matters that arise during the investigation. These third parties may include vendors, customers and banks.

The audit engagements permit a forensic accountant and auditee to divide the investigation into phases, allowing for the control of the investigation and its costs. In practice, the possible results of an ordinary financial audit are pretty much predictable (e.g., unqualified, qualified, disclaimer, or adverse opinion), whereas the outcome of a forensic audit is far more unpredictable.

Yesterday’s experience is not sufficient to track fraudsters of today Experts in this area of forensics must be active in order to guarantee that they have the necessary knowledge to adhere to the standards and fulfil any forensic accounting/auditing engagements.

It should also be noted by forensic accountants/auditors that the experience of yesterday is not sufficient to track the fraudsters of today. Violations and fraud risks are becoming more complex by the day, and rapid technological advancement is making fraud discoveries harder.

So should one suspect that they or their company are victims of fraud, it is essential that they appoint a forensic accountant within the audit engagement to carry out the work and bring the case to a satisfactory conclusion. 

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AUDITING AND ACCOUNTABILITY

HOW TO ADVANCE AUDITING AND ACCOUNTABILITY FOR THE CITIZENS AND THE FUTURE

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n the development field in recent years, increasing attention has been given to understanding and promoting methods that enable relatively powerless people to hold more powerful people, organisations, and institutions to account.

Many development practitioners see efforts towards this kind of accountability as having the potential to transform power relations in favour of the less powerful.

PHILLIP RAKGWALE

CISA, CIA, CFE, RGA, M.INST.D Chairperson of the Saiga Council

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Citizen Participation and Accountability

For those who look at issues of

Advancing Auditing &Accountability

governance and development from the perspective of citizens, it is both the right and the responsibility of citizens to participate in accounting for themselves and in holding other actors to account. If social exclusion and discrimination are to be reversed, governments and aid agencies need to be accountable to marginalised and excluded citizens. Involving such citizens in accountability initiatives calls for innovative and far-reaching participatory processes.

In the words of a well-known scholar of accountability, Jonathan Fox, “If voice is about capacity for self-representation and self-expression, then power is

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about who listens.” (Accountability Politics: Power and voice in rural Mexico, 2008)

What is accountability and why is it important?

In their Policy Briefing on Making Accountability Count, IDS researchers Joanna Wheeler and Peter Newell ask why accountability matters for different actors, and under what conditions it operates.

They tell us that “the concept of accountability describes the rights and responsibilities that exist between people and the institutions that affect their lives, including governments, civil society and market actors.”

They say that accountability takes many different forms, but go on to describe the two key components of most accountability relationships: •

Answerability – the right to get a response, and the obligation to provide one.

•

Enforceability – the capacity to ensure that an action is taken, and access to mechanisms for redress.

They also argue that when accountability works, citizens can make demands on powerful institutions and ensure that those demands are met. This can enable them to realise their rights and gain access to resources.

How do citizens participate in claiming accountability?

Many methods for citizens to participate in claiming accountability have evolved since the 1990s. In their 2013 paper on The Impact of Transparency and Accountability Initiatives (TAIs), IDS researchers John Gaventa and Rosemary McGee look at TAIs from five different sectors.

They report on various approaches for citizen participation in TAIs from other parts of the world,

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including. Public Expenditure Tracking Surveys, citizen report cards, scorecards, social audits and community monitoring have all been used to develop direct accountability relationships between service users and service providers. Participatory budgeting, sector-specific budget monitoring and participatory audits have all been used to improve citizen engagement in the management of public finances.

Advancing auditing and accountability

Auditing is only one part of accountability. The early Egyptians and Babylonians created auditing systems, while the Romans collated detailed financial information.

Some of the first accountants were employed around 300 BC in Iran, where tokens and bookkeeping scripts were discovered.

As early as the 5th and 4th centuries BC, both the Romans and Greeks devised careful systems of checks and counterchecks to ensure the accuracy of their reports. In English-speaking countries, records from the Exchequers of England and Scotland (1130) have provided the earliest written references to auditing.

INTOSAI-P 12: Strengthening the accountability, transparency and integrity of government and public sector entities: Principle 1: Safeguarding the

public to hold government and public sector entities accountable.

Demonstrating ongoing relevance to citizens, parliament and other stakeholders : Principle 5: Being responsive

to changing environments and emerging risks.

Principle 6: Communicating with stakeholders.

Principle 7: Being a credible source of independent and objective insight and guidance to support beneficial change in the public sector.

Conclusion: What are the outcomes of citizen engagement?

In their Working Paper 'So What Difference Does It Make?', John Gaventa and Greg Barrett map the outcomes of citizen engagement from an analysis of one hundred case studies drawn from research carried out by the Development Research Centre on Citizenship, Participation and Accountability.

They cluster the positive outcomes of citizen engagement into four (4) main categories: 1.

Construction of citizenship.

Increased civic and political knowledge, a greater sense of empowerment and agency.

2.

Practices of citizen participation.

Increased capacities for collective action; new forms of participation; deepening of networks and solidarities.

3.

Responsive and accountable states. Greater access to state services and resources; greater realisation of rights; enhanced state responsiveness and accountability.

4.

Inclusive and cohesive societies.

Inclusion of new actors and issues in public spaces; greater cohesion across social groups. 

independence of SAIs.

Principle 2: Carrying out audits to

ensure that government and public sector entities are held accountable for their stewardship over, and use of, public resources.

Principle 3: Enabling those charged with public sector governance to discharge their responsibilities in responding to audit findings and recommendations and taking appropriate corrective action.

Principle 4: Reporting on audit results and thereby enabling the

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*Summary of the 2023 SAIGA Conference address by President Phillip Rakgwale

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GGA

THE RESOURCE CURSE, THE JUST ENERGY TRANSITION AND SUPREME AUDIT INSTITUTIONS DR ROSS HARVEY

Director of Research and Programmes Good Governance Africa

Dr Ross Harvey

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everal African countries are blessed with abundant natural resources, both in quantity and diversity. But political economy configurations and poor leadership continue to hold us back.

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More broadly, the world is at a critical juncture – the fall of the Berlin Wall in 1989 promised to usher in a new era of prosperity and a pervasive adoption of Western liberal democratic capitalism.

But two recently published books by prominent authors Martin Wolf and Pranab Bardhan respectively demonstrate how this expectation has been shattered. Not only has autocracy grown, but the world has grown more unequal and more

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divided. Russia’s war on Ukraine, now nearly 18 months old, following the disruptive effects of COVID-19, has exacerbated pre-existing trends toward populism and dissatisfaction with the post-Cold War liberal order.

The climate crisis has not abated either, despite some reprieve from the economic lockdowns during COVID-19. The need for a just energy transition could not be more urgent.

The Russian war has, of course,

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demonstrated the fragility of a global transition towards renewable energy, as many countries have resorted to fossil fuels if temporarily, to weather the impact of sudden energy supply disruptions brought on by sanctions against Russia.

Clearly, energy security still shapes political and economic trajectories disproportionately.

I paint a picture, below, of what scholars have termed ‘the resource curse’ and the need for a just energy transition. Underpinning our ability to reverse the resource curse and embark on a just energy transition will be the quality of our governance institutions. Auditors, and audit institutions, play an irreplaceable role in shaping the incentives that will determine the success or failure of African countries over the next eighty years, by which time Africa alone will account for four elevenths of the world’s population.

The Resource Curse

Natural resource wealth should, intuitively, result in a development dividend. Often it fails to do so, especially in weakly institutionalised or ‘emerging market’ contexts.

Why? The answer depends on many factors. To begin, the ‘resource curse’ is best defined as the paradoxical relationship between resource abundance and underdevelopment.

Scholar Richard Auty first coined the term in 1993. The first empirical work on the subject was published

by Jeffrey Sachs and Andrew Warner in 1995. Since then, a proliferation of academic literature has sought to make sense of the paradox.

In summary, the literature shows that natural resource wealth tends to be strongly correlated with a range of adverse development outcomes.

In the economic category, we see slow growth, weak industrialisation, negative savings, and poor human development outcomes. In the political category, we tend to see

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a growth towards autocracy in the presence of natural resource wealthy countries, or the proliferation of armed conflict (though there is limited evidence suggesting that natural resource wealth necessarily causes such conflict).

These outcomes are well documented, and a range of causal mechanisms have been proffered as explanations for how the resource curse operates. I focus on three of these: First, there is the rentier effect.

Natural resource wealth generates rents that accrue to the ruling elite in any given country. Some scholars have referred to this as the peril of unearned income.

The late Douglass North and his collaborators theorised a ‘double balance’ between political and economic institutions. How rents are generated and distributed determines the nature of the elite bargain that underpins the balance of these institutional arrangements. Typically, natural resource wealth flows into the hands of the select few who run a country. These elites then build economic institutions that cement their power rather than generate broad-based development. Rents are distributed to the ruling elites’ patronage circles instead of being invested in innovation, infrastructure and the provision of public goods.

Elites ensure that a sufficient mass of citizens support the existing elite bargain. There is no incentive to build the productive sectors of the economy. To do so would, ironically, constitute a political risk to the stability of the elite bargain. Typically, productive sector growth produces a middle class, which starts to demand political representation and a return on taxes in the form of ubiquitously distributed public goods. In the end, the presence of natural resource wealth leads to a calculus among ruling elites that renders the costs

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of reform higher than the costs of repression. Those outside the patronage circles can expect rough treatment and zero service delivery.

The exact anatomy of how this effect plays out in any given country is determined by historical factors, the type of resource available, and – as is the case with all ‘resource curse’ cases – the quality of governing institutions at the time of discovering the resource.

For instance, oil has a different effect on the elite bargain to diamonds.

Also, the geographic type and location of the resource play a role. Offshore oil, for instance, is less prone to theft than onshore oil. Some research has shown that onshore oil is correlated with higher coup frequency, possibly because the government increases military expenditure to protect oil fields.

Resultantly stronger armies formed a risk to the ruling elite. Alluvial diamonds, on the contrary, can easily land in the hands of rebel groups.

This sustains those groups but also creates internal problems, as rebel leaders often cannot easily discern which members are real believers in the cause, and which are simply resource-hunters. By and large, though, the rentier effect tends to consolidate elite bargains that favour autocracy over democracy.

Second, there is the taxation effect.

In essence, countries with extensive natural resource wealth place sufficient rents in the hands of elites to avoid the need for broad-based taxation. Taxation comes with a social contract that elites would rather not have to fulfil.

Resource rents help elites to avoid such a contract. My own view is that resource-poor countries tend to do better than resourcewealthy countries because elites in the former, of necessity, design institutions that protect private property and incentivise innovation. >

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GGA

This tends to have a positive multiplier effect that generates growth in a diverse array of productive sectors, all with a positive reinforcing effect that disincentivises political actors to move towards autocratic aspiration. A broad tax base, therefore, tends to act as a bulwark against autocracy and sustains democracy.

Of course, it is not a guarantee, and voter turnout at present is worryingly low even in countries with relatively broad tax bases. So, all these general trends have exceptions, which in our time are exacerbated by technologies such as social media that proliferate extreme views.

These are often fuelled by intentional disinformation campaigns and associated electoral manipulation.

Either way, it is generally a good idea to foster a broad tax base. Any situation in which a small elite can remain in power thanks to narrow resource rents is suboptimal as it weakens the social contract that typically sustains democracies.

Finally, there is the Dutch Disease.

There are two elements to this predominantly economic mechanism. In the first instance, the export of raw commodities drives up the value of the host country’s currency, which makes its manufactured products (tradable goods) less competitive on global markets. It also makes imported inputs into those products more expensive. In the second instance, the primary sector draws resources away from the manufacturing sector.

The product space is also typically quite disconnected because the skills required for the mining sector are not easily transferrable into other sectors. The combination of these effects is to render a country susceptible to commodity price shocks as there is no buffer of a sustainable, broad-based manufacturing sector.

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Resource-wealthy African countries are afflicted by all the above effects to varying degrees.

The good news is that a relative consensus has emerged in the literature that the extent to which the above effects take root and proliferate is determined by the quality of a country’s governing institutions at the time of discovering resources in commercial quantities.

In Angola, for instance, when oil became a serious commercial play in the early 1970s, the country was in the middle of throwing off Portuguese colonial rule, followed shortly thereafter by a devastating civil war that lasted from 1975 to 2002. The ruling MPLA ultimately won through Soviet and Cuban support funded by oil rents, which were ironically earned through US oil companies while the CIA and South Africa were covertly supporting the rebel UNITA group. In this instance, the resource curse was exacerbated by Cold War dynamics.

Either way, there were no serious governance institutions in place at the genesis of the country’s postcolonial independence, as has too often been the case.

Institutions are best defined as the social systems – the beliefs, norms, values and culture – that motivate regular human behaviour.

In other words, institutions provide the scaffolding that generates the incentives by which humans operate.

Optimal institutions incentivise transparency, accountability and broad-based participation. Supreme audit institutions play a critical role in shaping and sustaining desired norms of transparency, accountability and participation (the three pillars of good governance). We must invest in strengthening these institutions so that they create credible threats against defection and rewards for good performance.

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Countries, like Norway, which discovered resource wealth after these institutions were already embedded in their political economy, were able to manage that wealth in a way that has generated broadbased development. Citizens trust their government to distribute that wealth in a way that benefits all citizens. This also encourages citizens to pay their taxes, which then strengthens the social contract that protected against the resource curse in the first instance.

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aspirant dictator’s promise of a brave new world, normally some kind of Marxist utopia. Underpinning a large part of African countries’ inability to break out of these interlocking growth inhibitors is a persistent lack of access to energy, especially among rural populations.

Sub-Saharan African countries' average percentage of the population with access to electricity has grown from 28.26% in 1997 to 48.23% in 2020 (the latest figure from a recently updated World Development Index dataset from the World Bank).

Similarly, in Sub-Saharan Africa, only 8.97% of the population had access to clean fuels and technologies in 2000. Twenty years later, it had risen only to 17.64%. Fossil fuel energy consumption (as a % of total) has not been measured since 2015, but it was at 79.86% then, essentially unchanged since 2000. In SubSaharan Africa, the figure was at 39.79% by 2014, the last available measure.

Without broad-based access to energy, manufacturing on any scale remains impossible. Not only that, but the absence of electrification often leads to indoor air pollution (dirty fuels used for cooking and heating), which remains a massive contributor to unjustifiably high mortality rates (187 per 100,000 in 2015 for sub-Saharan Afric; and 114 per 100,000 for the world).

Just energy transition

Outside South Africa, African countries have played a negligible role in contributing to global warming (they account for only four percent of global emissions) but suffer disproportionately from the effects of climate change. Moreover, many African countries continue to be afflicted by persistent poverty, growing youth unemployment, and inequality. The combination of these factors often renders electorates susceptible to succumbing to every

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Deforestation also proliferates as citizens use that biomass to cook and heat their homes. Net forest depletion in sub-Saharan Africa was at 1.55% of Gross National Income by 2020, down from 2.8% in 2003.

The rest of the world’s depletion was essentially zero, making SSA an outlier.

Against this backdrop, and fuelled by apparent western hypocrisy, is a groundswell of voices in favour of Africa utilising its fossil

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fuel resources – “drill baby drill”.

Russia’s invasion of Ukraine and the subsequent imposition of sanctions against Russian oil and gas led to a short-term reversal of many western nations’ commitments to a renewable energy transition.

But short-term reversion to coal and fossil fuels does not appear to be a good reason for African countries to become locked into a future undergirded by fossil fuel exploitation.

In light of what we know about the resource curse, a foolhardy pursuit of fossil fuel exploitation would likely produce more pain than progress. What many pundits fail to understand is that it would not only risk the rentier, taxation and Dutch Disease effects from taking root in weakly institutionalised contexts but would also risk locking countries into trajectories that crowd out opportunities for alternatives and may result in stranded assets.

In many countries in Africa, there are no functional electricity transmission grids. Thus, even if one exploited all the available fossil fuels, there is no guarantee that this would result in short-term mass electrification.

Moreover, the opportunities for unproductive rent-seeking in any mass infrastructure projects are extensive. I am therefore of the view that localised energy solutions are increasingly preferable to any mega projects.

Of course, none of the above suggests that renewable energy transitions are without flaws or even wholly achievable at present. Fossil fuels remain, on average, far more energy-dense than renewables, and renewables come with their own set of inefficiencies, negative environmental externalities, and waste problems. For instance, batteries remain expensive and inefficient, are only likely to last for >

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GGA one pathway through which to start overcoming the growing challenge of youth unemployment.

about ten years, and then must be disposed of. Moreover, they require lithium, which is environmentally destructive to mine. Wind turbines are, similarly, non-renewable in that they are composite constructions that also must be discarded at some stage, though they can be recycled for other infrastructure purposes such as bridge components.

is where supreme audit institutions will play a critical role. Ultimately, my view is that localised solutions will most likely make the most sense.

For instance, micro solar grids might make the most sense in a remote Tanzanian village located far from the liquified natural gas reserves off the coast, especially in the absence of a centralised transmission grid.

Hydropower, similarly, requires environmentally destructive damming (unless new and less invasive options can be established), which often destroys downstream livelihoods. Many economists have also raised the concern that current producers of solar panels, such as China, retain a significant first-mover advantage and will sell panels into African countries without sufficient skills and knowledge transfers. This precludes African countries from tapping into global value chains, which in turn sustains the current commodity trap – exporting raw bulk low-value material and importing finished high-value products.

In another context, small nuclear modular reactors might make the most sense, or some combination of the above. This is where the serious conversations need to turn, instead of the typically polarised views of ‘renewable’ vs ‘fossil fuel’.

The question then becomes a matter of choosing optimal energy pathways for African countries. Policymakers must choose paths that minimise the opportunities for unproductive rent-seeking and provide the most efficient energy without the environmental and social costs associated with many options. This

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Solutions

At Good Governance Africa, we are of the view that the optimal development pathway, especially for resource wealthy countries, is to try and truncate what economists have called the Environmental Kuznets Curve – an inverted U-shaped relationship between environmental degradation and per-capita income growth. Policymakers are obligated to choose energy configurations that will minimise negative externalities – the divergence between social costs and private returns. Resultant broadbased energy availability provides the necessary condition for potential manufacturing growth in selected value-chain opportunities. This is

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Of course, the above theory is moribund without associated conditions required to build what scholars Daron Acemoglu and James Robinson have called a Narrow Corridor. Countries which succeed in the long run are those with the political and economic institutions that create an enabling environment for responsible private sector dynamism to flourish. Specifically, we require capable states that grow in sophistication alongside a citizenry that is equally skilled at holding governments accountable for their decisions. China and Russia, for instance, fall well outside this narrow corridor and are destined for a hard landing because their autocrats are susceptible to serious strategic mistakes. In China’s case, the state is capable and growing in sophistication, but the citizenry is not equipped to hold its government to account. Increasingly, the only voices that its leader listens to are his own yes-men who are too fearful to speak the truth. The same goes for Russia and countless others.

At Good Governance Africa, we are of the view that supreme audit institutions can play a critical role in strengthening both arms of governance that can create narrow corridors. Credible audits can incentivise governments to manage rents in the interest of citizens, and citizens can use audit results to punish or reward governments to serve them properly. This is the key to ensuring that Africa’s resources serve its citizens instead of cursing them. 

FOR MORE INFORMATION CONTACT:

GGA - SADC

Tel: +2711 268 0479 Email: info@gga.org

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HEALTH

SOUTH AFRICA CANNOT AFFORD A WATER CRISIS TOO MUCH IS AT STAKE… JANSE RABIE

Head of Agri SA’s Natural Resource Centre of Excellence & Legal and Policy Executive Officer

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he loadshedding crisis looms largely over the lives of South Africans.

From the economy and jobs to safety and the cost of living, virtually no part of life in South Africa has been left untouched.

Agri SA has also contributed to this discussion, raising the potentially catastrophic implications of loadshedding for the country’s food security.

Energy is required to pump water and to power aerobic and anaerobic processes in water treatment.

Loadshedding, unfortunately, interrupts the supply of power, resulting in the degradation of the systems relied on for water treatment, which are exceptionally difficult to reboot once they fail.

This failure is rendered even more alarming by a second factor from the past, namely that sewage treatment plant regulations mandated the return of treated water to rivers.

For this reason, it made sense to position these plants close to rivers and waterways. But when treatment processes fail, the untreated water is

But while all eyes have been on loadshedding, another threat is growing: the threat to water safety in South Africa. This challenge is inextricably linked to loadshedding but is also a consequence of systemic local government failures.

The systemic flaws are highlighted in the Consolidated General Report on Local Government Audit Results for the 2021–22 Fiscal Year by AuditorGeneral Tsakani Maluleke, which shows municipalities continue to struggle with unauthorised, irregular, fruitless, and wasteful spending, with only 38 out of 257 obtaining clean audits.

This highly consequential matter must be a priority for the ministers of electricity and water and sanitation, Kgosientsho Ramokgopa and Senzo Mchunu, respectively.

At the core of the problem is the fact that sewage treatment plants need electricity, a resource in short supply.

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likely to flow directly into vital water resources. Loadshedding (worsened by government inaction) has brought about precisely such failures in parts of the country.

The health implications of untreated water contaminating key rivers and waterways could be fatal. Indeed, South Africa has already registered several cholera deaths. Unless we urgently address the looming pollution crisis, waterborne diseases could soon plague the country.

In addition to health, there are food security and economic implications too. The mere possibility of water contaminating crops raises the risk of our produce being rejected by export markets unwilling to expose their own populations to any risk.

Given the importance of South Africa’s agricultural exports for the

balance of trade and employment, it is difficult to overstate the importance of preventing the contamination of food. Last year, South Africa already saw a ban on certain fruit exports to neighbouring countries and a ban on wool exports to China (both for reasons not related to water contamination), while South African citrus farmers continue to battle the European Union (EU) arbitrary trade regulations. South Africa simply cannot allow any further threats to our access to key export markets.

To alleviate the crisis, urgent action is needed. A State of Disaster has already been declared to address the energy crisis. Under the regulations published in February 2023, “water infrastructure including water treatment plants” is recognised as essential infrastructure, giving the relevant cabinet member the power to exempt water infrastructure from loadshedding. This must be given effect immediately.

More complex is the question of how to address the failures of local government. For one thing, the regulations of the State of Disaster provide for the relevant cabinet minister to issue directives that require municipalities to ensure the security of water supply. Given the magnitude of local governments’ demonstrated incapacity, guidelines need to be issued that spell out precisely what is required of municipalities. In some cases, this may mean a directive requiring cooperation with the private sector since it appears that they, at least, are making real inroads on this issue.

In the Northern Cape, for example, the private sector has taken the lead to try and protect the province’s water resources. Gariep Watch, an agricultural watchdog body supported by Agri SA and its affiliated members Agri Northern Cape, Raisins SA, Orange River Producers Association and Karsten Boerdery, conducts quarterly water

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quality surveys demonstrating the consequences of the systemic lack of resources for the proper management of the nation’s water systems. Gariep Watch has had to resort to filing criminal charges over the pollution of local water resources with untreated sewage.

While the private sector has shown itself to be highly motivated and effective, it is unfair to expect them to pick up the tab for all the necessary interventions. This brings us to the third required intervention. In addition to loadshedding exemptions and directives aimed at improving local government performance, we need additional resources allocated to tackling this problem.

Municipalities need sufficient resources to invest in mitigation strategies in the form of generators and solar panels in the event of escalated loadshedding. Since first implementing loadshedding 16 years ago (in 2007), there is no excuse for the continued failure to implement a mitigation strategy for this most vital of municipal functions.

But there are also problems that extend beyond loadshedding, notably the chronic shortage of personnel to fulfil these functions. Under the best of circumstances this shortage is a problem; exacerbated by loadshedding, it is potentially catastrophic. Therefore, the national treasury and the Department of Water and Sanitation must play an active part in crafting solutions and allocating resources for these functions to be performed properly.

The stakes could not be higher.

Water sustains both our bodies and our food supply. Hence, our health, food security, and agricultural exports depend on the confidence of South Africans and food importers’ confidence in the quality of our water and therefore the quality of our food.

We can only hope the members of South Africa’s cabinet are up to this most important responsibility. 

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KEP CONSULTING

WORLD CLASS

AUDITING

ACCOUNTING

& ADVISE Founder & CEO of KEP Consulting (Pty) Ltd, Phuti Phukubje tells of the birth of the company and it’s journey towards its present-day success…

K

EP Consulting’s resilience was tested when it was hit by the Covid-19 pandemic while it was still in its formative years. The company managed not only to survive, but to grow in leaps and bounds as it exited this challenging and tragic period,” says Phuthi Phukubje, CEO of KEP Consulting (Pty) Ltd.

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From humble beginnings Phukubje says the company was born in 2013 after a discussion with two friends at the Office of the Auditor-General in Brooklyn, JHB. At the time he was the Executive for Audit and Investigation at Sentech SOC Ltd. He was soon joined by Elisha

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Musindo who was then a Director at Rakoma & Associatesand it was with the both of them at the helm of KEP Consulting that the company started witnessing its first spurt of growth. Phukubje is quick in acknowledging Musindo’s inputs during these early years.

“Elisha and I worked tirelessly through this period, and he

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contributed immensely to building the company,” Phukubje says.

Although there was work coming in, the assignments were small and short, and were barely enough to keep the lights on. “I had to use a lot of my personal savings to pay for KEP’s operations. Some close friends even advised me to go back to a full-time job. I persevered and had faith that one day we will break through,” says Phukubje.

“But in 2021/22 during the Covid pandemic, the strain was too much and Musindo left to join another firm,” he laments. “Things became extremely difficult as I navigated the journey alone.”

“I persevered and had faith that one day there would be a breakthrough. All that KEP needed was one reasonablesized, consistent contract which would enable us to resolve outstanding financial backlogs and ease the burden of living from hand-to-mouth,” ...

Some of the small projects KEP were awarded included assisting the Ellias Motswaledi Local Municipality with the investigation of irregular, fruitless and wasteful expenditure in a period of three years. The consultancy helped Metsimaholo Local Municipality with audit support, preparation of AFS using GRAP, identification of irregular expenditure, and preparation of AFS Notes relating to UIF. KEP conducted a review on the AFS for EHC on GRAP. The

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consultancy also prepared the AFS for the Mining Health & Safety Council. Building a reputation of success, and despite its own financial challenges, the consultancy ensured that it improved the status quo of the client after each and every assignment that it took on.

KEP limped through the Covid pandemic period. But survived!

Whew! A breather...

In March 2023 KEP was awarded a contract to prepare annual financial statements using GRAP and also to resolve prior audit qualifications at the Housing Development Agency (HDA). The contract was relatively small, but made a difference. "I worked on the contract together with Mr JR Aguma, a long-time credible friend to ensure that the challenges facing HDA were adequately addressed - I knew that the HDA’s issues would be a thing of the past!"

In the same month KEP got a contract to assist with technical IFRS, preparation of AFS as well as policies and procedures (SOP) at the Airports Company of South Africa (ACSA).

“In April of the same year we got a contract at Broadband Infraco (BBI) to prepare AFS and to provide audit support,” Phukubje continues.

“On this project I worked with my friend, Thilivhali Ramawa, who had been CFO at NEMISA back in 2018.”

“Things were finally looking up!”

In June 2023 KEP was awarded a contract to assist with Tender Compliance Review for the 2022/23 year at a Municipality in Limpopo.

The consultancy also helped with unauthorized, irregular, fruitless & wasteful expenditure investigation, the write off recommendation

Advancing Auditing &Accountability

to Municipal Public Accounts Committee (MPAC), and ultimately to the special council. KEP cleared about R7.3B through this exercise. It also saved the municipality from prior recurring audit findings. In terms of Tender Compliance Review, KEP helped the municipality because the files were either incomplete or non-existent.

Further strides in the Public Sector In July 2023, KEP was awarded a standing contract at SALGA where they will be allocated struggling municipalities. To date the consultancy has been allocated Emfuleni Municipality in Sedibeng until 08 December 2023 for audit support and capacitating the office of the CFO with AGSA audit assistance.

“We welcomed our first intake of trainee auditors/accountants that are funded by Local Government Seta (LGSETA) in July 2023. This was done through collaboration with the LGSETA and the South African Institute of Government Auditors (SAIGA).

The aim is to produce qualified RGAs who specializes in public sector accounting,” says Phukubje.

“We are pleased that we are now able to impart our knowledge and experience to others,” he acclaimed.

National Treasury research has proven that there is a scarcity of qualified public sector accounting skills and LGSETA has responded to the cry by funding firms like KEP, so that they can have the capacity to train and produce quality professionals.

The trainees will be exposed to SCM, assets, financial statement preparations, VAT, Income Tax, compliance, etc.

In three years they will write board exams and qualify as RGAs. >

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KEP CONSULTING

In Sept 2023 KEP attended its first SAIGA Conference at Emperors Palace where they networked and met many stakeholders.

Continued growth KEP has also recently acquired new offices at Nina Park, Pretoria North (just 5 km from Wonderpark mall). The consultancy’s staff complement has increased to 20

by September 2023.

“What gives KEP its competitive advantage over other firms is the experience we acquired at the Auditor-General SA (AGSA) in the past,” says Phukubje. “That experience is rock-solid. We can turn public sector entity around; municipality, SOE, government departments, etc.”

Relevant experience Phukubje adds that sitting in various board and council meetings and chairing audit committees has helped

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tremendously in terms of solidifying KEP’s experience in the public sector.

The CEO’s experience includes: • •

• • • •

NEMISA: Member of Board and Chair of ARC William Humphrey Art Gallery: Member of Council and Chair of ARC (Gallery received clean audit three years in a row) MDDA: Chair of ARC - MDDA received three clean audits in a row Mining Qualification Authority: Chair of ARC - MQA received two clean audits in a row Police Civilian Secretariat: PCS received two clean audits in a row Department of Social

Advancing Auditing &Accountability

Development: DSD received three clean audits in a row Striving forward Phukubje cannot resist a reflection of the past few years: “We are grateful to our partners who have supported us through the difficult time and those who have seen our potential and gave us an opportunity to make a difference,” Phukubje adds.

KEP continues to make an impact in the Public Sector with a concerted focus on struggling municipalities.

“We are ready to serve the nation by helping municipalities, and helping professionals grow,” the CEO concludes. 

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WHISTLEBLOWING

IF YOU CAN, YOU'LL BLOW THE WHISTLE LIKE BRANDON jumped into the water with a National Sea Rescue Institute (NSRI) pink rescue buoy to assist the men. After playing a significant role in rescuing them from death, Brandon chose to remain anonymous.

DR LIEZL GROENEWALD

Senior Manager: The Ethics Institute

D

espite all the good humans do, humanity is in trouble. We just have to watch the news to realise that needless suffering seems unavoidable, from violent protests and mob justice to murder, pandemic levels of corruption, and extreme levels of poverty. The feeling of powerlessness appears to be increasing, and despondency is setting in. But are we genuinely powerless? Is it not within our individual power, instead of being mere bystanders, to become upstanders?

On 28 August 2023, News24 reported that an unknown bystander helped rescue two men swept off a harbour wall in Cape Town. The man, identified only as Brandon,

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On 10 May 2023, a 13-year-old boy in Michigan, named Owen Burns used a slingshot to launch a marble at his 8-year-old sister’s would-be kidnapper. On why he did it, he stated that he just had to do it, “Cause if I didn’t … she would’ve been taken away or … worse.” Owen’s brave act earned him unexpected rewards and he expressed, “I’m grateful for all of that, but you don’t have to give me all the stuff for no reason. I know I did something right, but it’s just me.”

Numerous examples exist of people who, despite endangering themselves, “just do it.” They are rightfully hailed as heroes, rescuers, and saviours. These individuals choose to be active upstanders and not passive bystanders. They demonstrate courage, and their acts of bravery are altruistic, aimed at saving the lives of others.

This raises the question: how do the actions of whistleblowers differ from those of such rescuers?

Whistleblowers act to save not just individuals’ lives, but the lives of their organisations by exposing

Advancing Auditing &Accountability

conduct that could harm their reputation and sustainability.

Some whistleblowers choose to reveal their identities, while others, like Brandon, prefer to remain anonymous.

Whistleblowers are, in essence, upstanders. They possess confidence in their judgment and believe their actions will make a difference. They are more likely to do the right thing because they take the time to stop and think before acting. They are the opposites of bystanders who prefer to look the other way in the hope that someone else will act.

The intervention of upstanders is often the only reason why wrongdoing such as corruption, violence, bullying, and fraud cease.

The concept of the bystander effect was popularised by social psychologists Bibb Latané and John Darley following the infamous 1964 murder of Kitty Genovese in New York City. At the time, it was reported that 38 neighbours failed to step in to assist or call the police as the 28-year-old woman was stabbed to death outside her

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apartment. While the details of the case were disputed 40 years later, it shocked the U.S. and signalled a troubling cultural shift.

Latané and Darley identified two factors contributing to the bystander effect: diffusion of responsibility and social influence. The perceived diffusion of responsibility means that the more onlookers there are, the less personal responsibility individuals will feel to act. Social influence means that individuals monitor the behaviour of those around them to determine how to act.

According to the Institute of Business Ethics in the UK’s 2021 Ethics at Work Survey, 38% of employees in corporate South Africa who knew of wrongdoing in their organisations did not report it out of fear of being seen as troublemakers by management.

Another 21% believed the organisation already knew about it (social influence), and 15% felt it was none of their business (diffusion of responsibility).

Let’s examine Brandon’s actions

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in light of these reasons. Brandon could have reasoned that he should wait for the NSRI to arrive, like others, fearing that he might inadvertently harm the two men and be accused by authorities. He might have assumed that someone in the crowd had already contacted the authorities or would jump in to help.

Alternatively, he could have chosen to walk away, leaving the men to fend for themselves. If Brandon had chosen to be a bystander, waiting for others to act, the outcome could have been tragic. Similarly, being a bystander when aware of harmful activities in an organisation could have dire consequences for the organisation and its stakeholders.

The intervention of upstanders is often the only reason why wrongdoing such as corruption, violence, bullying, and fraud cease.

Organisations can defuse the social and behavioural paralysis of the bystander effect by increasing awareness of the detrimental effects of wrongdoing and offering training on how and where to blow the whistle. To alleviate the fear of victimisation, management must be trained in confidentially handling

Advancing Auditing &Accountability

whistleblower reports and protecting the reporter’s identity. Similarly, employees must be educated on measures they can take to protect themselves from retaliation.

Upstanders are heroes, saviours, and rescuers. They worry less about the consequences of helping and more about the example they set for future generations. When confronted with a situation that feels wrong, their emotional instincts drive them to make wiser choices about what to do next. They become a Brandon or an Owen.

As a dear friend and well-known whistleblower said, referring to Brandon and Owen: “All these we accept as natural and “lucky”. And we accept them for what they are. But when someone reports wrongdoing, somehow, we want to complicate it into something highly complex.

Whistleblowing is whistleblowing. It is the act of seeing something wrong and acting on it. Making it known in order to address it, Brandon-style. If you can, you will.”  The article first appeared in the Ethics Institute’s Newsletter

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SAIGA CONFERENCE

3 Annual SAIGA rd

T

he 3rd Annual SAIGA Conference was a resounding success, thanks to the multitudes of delegates who graced the event at Emperors Palace, East of Johannesburg, on 14-15 September.

The event attracted the members of the Institute, other professional bodies, industry experts, academics and thought leaders. The list included among other high-profile speakers, Minister of Justice & Correctional Services Ronald Lamola, City of Tshwane Mayor Cilliers Brink, Deputy SA Auditor-General Vonani Chauke, GGA CEO Chris Maroleng, Dean of African Ambassador Andre Mzapayeke, and CEO of IRBA Imre Nagy.

The conference culminated with a lavish gala dinner celebrating SAIGA’s 35th year anniversary, which featured keynote speaker Acting Public Protector Kholeka Gcaleka, CEO of MGI RAS Patricia Stock, PwC CEO Shirley Machaba, Auditor-Generals of Lesotho Gail Makenete, Auditor-General of eSwatini Timothy Matsebula, and Prof Mabutho Sibanda from the UKZN.

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Advancing Auditing &Accountability

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Conference & Awards

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Thank You

"SAIGA extends heartfelt gratitude to all Sponsors, Partners, Speakers, Stakeholders, Delegates and valued guests for their invaluable participation at the conference. Your presence and contribution have truly enriched the event – and we look forward to more meaningful collaborations that will ‘advance auditing and accountability for the citizens and the future."

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TRIVIA QUESTIONS

TRIVIA ?

NO 1

Welcome to the Auditing SA Trivia Challenge! Test your knowledge on a variety of fun and interesting topics, and discover how well you know the inner workings of financial oversight, accountability, and public sector audits in this engaging quiz. Let’s begin!

1

How many years are celebrated on a Silver Anniversary?

2

What “O” is sometimes called black gold?

3

In which year did the Office of the Auditor-General gain its full independence?

4

Should audit reports be dated to the date on which the financial statements are issued?

5

In which year did the Auditor-General’s office launch its own report?

HAVE YOUR SAY Help develop our eMag with your insightful comments. What topics do you want the Auditing SA to feature? What would make it a great magazine for our diverse audience of auditors and accountants?

and share knowledge.

We would appreciate your feedback on our magazine and the SAIGA website. By hearing from you, we aim to stimulate conversations, tackle complex topics, follow developments in your industry,

Your Magazine, Your Say!

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Your feedback will be published in the next edition. So, tell us what you think and be a contributor.

email your comment to: researcher@saiga.org.za

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6

Who is the only player in test cricket history to have scored over 1,000 runs for two different countries?

7

11

Who was the SA Controller and AuditorGeneral from 1954-1957?

Which colour was the pimpernel in Baroness Orczy’s novel?

8

Which footballer played for Wits University, Manchester United and Bafana Bafana? The player shares a name with a DA member of parliament and an American actor from the film You're Not You?

9

12

How many official languages are there in South Africa?

13

Which two countries share the River Plate

If financial statements fail to disclose a

estuary?

material fact, the auditors may disclose the information in an explanatory paragraph and issue an unqualified opinion on the

10

statements. True, or False?

Which Springbok holds the record for the quickest hat-trick in a World Cup match?

October in History

1.The United Nations (UN) was created on October 25, 1945, based on the voluntary union of

sovereign states.

2. In the pre-dawn hours under a pale African moon in Zaire, the Rumble in the Jungle takes

place. The crowd of close to 60,000 chants, "Ali, bomaye," meaning "Ali, kill him."

3. On October 30, 1974, Muhammad Ali became a heavyweight champion when he knocked

out George Foreman in the eighth round of the “Rumble in the Jungle,” a match in Kinshasa.

4. South Africa’s human rights activist Desmond Tutu won the 1984 Nobel Peace Prize for his

efforts in resolving and ending apartheid.

5. On October 14, 1968, the Apollo 7 crew became the first to broadcast live on television

from space. Throughout the 11-day Apollo 7 mission, there were a total of six transmissions that allowed viewers to watch the astronauts float in the spacecraft and eat the first hot meal in space.

6. The Rivonia Trial began in October 1963. Ten leading opponents of apartheid, including

Nelson Mandela, went on trial on charges of treason.

Auditing SA 63

Advancing Auditing &Accountability

?

www.saiga.co.za 63

Together, we can build a capable, ethical & developmental South Africa.

Strengthen

Establish

• • • • • •

• • • • •

Service delivery Reputation & credibility Ethical practices Audit outcomes Risk identification & mitigation Management

A robust ethical approach Stronger stakeholder relationships Efficient & economic ways of working A competitive edge Full control through performance measurement

Ensure

Decrease

• •

• • •

Accountability Employees are highly skilled & competent professionals through up-skilling

Costs Wastage Complexity

Assisting Local Government and Municipalities to strengthen their Procurement & Supply Chains and help deliver better services to communities. Now is the time.

Email saenquiries@cips.org.za to find out more.

Become a SAIGA member today Get your membership now and receive

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A great country, starts with great municipalities.

To build a great country, you have to start with the communities and municipalities that form it. The Investec Balance Sheet Management team with our out of the ordinary approach, high-level expertise and competitive rates, will continue to partner with you in building better municipalities, forming a great country as we do.

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