S governance State
S governance State Capture Report Implications for the accountancy profession. The first part of the State Capture Commission’s report, released earlier this year, documents an account of events where many sectors and individuals colluded to create an environment in which billions could be pilfered. This was achieved by deliberately sidestepping constitutional and regulatory checks and balances. Those implicated range from politicians and the boards and management of State- Owned Entities (SOEs) to provincial and local governments and even private sector consultancy bodies. In considering how state capture could be prevented in future, the Zondo Commission also looked at the role that accountants (both within government departments and SOEs) could play to help prevent a recurrence of such blatant disregard for good governance. Professor Rashied Small, the executive responsible for the Centre of Future Excellence (CoFE) at the South African Institute of Professional Accountants (SAIPA), says they welcome the emphasis on the importance of accountants in circumventing future state capture attempts. “Yet, this invariably raises the question of whether accountants are currently sufficiently well-equipped – both from a skills and ethical perspective – for the daunting responsibility of not only identifying irregularities, but also making them known through whistle-blower reports when corrective actions do not follow, if they are employees, or use the reporting channels of NOCLAR and reportable irregularities when they are contracted professionals to perform engagements.” NOCLAR is defined as any act of omission or commission. Professor Small says this consequently brings into question whether the profession’s current training and continuous development initiatives are sufficiently robust. “Accountants’ knowledge and skills sets – that were adequate in the past – have now been found to be seriously lacking when it comes to reining in those who are not beholden to any legislation, rules and regulations,” he explains. He further notes that the report highlights the importance of accountants – irrespective of their designation or functional expertise – to be sufficiently skilled and courageous to speak truth to power. “They must take upon themselves responsibility when crucial governance principles are deliberately contravened. This will, however, be heavily dependent on the provision of the necessary legislative and regulatory protections to such whistle-blowers.” Ultimately, the impact of the State Capture Report will hinge on whether: ‘prosecution’ and ‘prevention’ happen in parallel. The Commission’s report divides those involved in state capture into three groups: “facilitators”, “followers” and “resistors”. facilitators and followers are described as those who personally benefitted from state capture by simply complying with orders, while resistors are those who refused to participate in corrupt activities – and were eventually removed and replaced. “Accountants can’t afford to be facilitators or followers,” Professor Small emphasises. “They must execute their professional responsibility with due care to the requirements for good corporate governance, thereby serving the public interest in a transparent, accountable and ethical manner. Furthermore, they have – as magnified in the report – a weighty responsibility to assist in ensuring that both internal and external quality management systems are implemented.” Professor Small explains that, whereas it may in the past have been adequate for accountants to possess technical knowledge and practical experience, there is now an increasing need for cognitive intelligence. “This intelligence encompasses professional scepticism, which is based on environmental awareness; and professional judgement that is underpinned by ethical conduct. A change in mindset will be necessary to facilitate whistle-blowing.” He stresses the need to draw clear distinctions between firstly education and learning, secondly skills and technical knowledge, and finally ethics and the moral responsibility of professionals. “Ultimately, the impact of the State Capture Report will hinge on whether: ‘prosecution’ and ‘prevention’ happen in parallel,” he concludes. S 32 | Service magazine
NFMW: TRUSTED CUSTODIAN Growing members’ investments and keeping them informed along the way to a secure retirement The National Fund for Municipal Workers (NFMW) has grown to be the largest fund within local government. With a membership base of more than 55 000 (employees and counsellors) throughout South Africa, it is clear that we are the fund of choice. Our members are at the centre of what we do: our decisions and in the strategies that we employ in the management of the fund. We pride ourselves in providing excellent service. Our administration cost is of the lowest in the industry, which translates to less of our members’ contributions being spent on cost and more going towards retirement savings. Our excellent long-term investment performance track record places us on a par with the best managed portfolios in South Africa and ahead of our peers in local government. The Fund has won numerous awards such as the Institute of Retirement Funds Africa Best Practices Industry Awards. These awards are a testament to the Fund’s compliance with regulatory requirements and recognition for setting the benchmark for excellence in local government. FREEDOM OF ASSOCIATION NFMW supports the South African Local Government Bargaining Council (SALGBC) in the retirement fund rationalisation exercise. We are in full support of members belonging to a retirement fund of their choice within local government. Value of our membership is guaranteed through our commitment to governance, impactful investments with financially sound returns, membership care and our responsible leadership. From 1 July 2022, the SALGBC will allow local government employees the freedom to belong to the retirement fund of their choice. NFMW is the fund of choice. We urge all local government employees to join NFMW and to benefit from our services: lower administration fees, excellent communication, good governance among our other superior offerings. NFMW will participate in the SALGBC accreditation process to extend its value proposition to new members. We look forward to continuing to serve our members beyond the rationalisation of retirement fund exercise. NOT YET AN NFMW MEMBER? Scan the QR code to complete and submit your details online. We will do the rest to help you become a member of the fund of choice in local government. • Contact us: (012) 743 3000 | info@nationalfund.co.za | www.nationalfund.co.za
