Gugulethu-born Kimi Makwetu heads up the office of the Auditor-General, monitoring public sector financial spending – with his sights set on ensuring honesty, transparency and accountability.
Constant reports on public sector financial spending have revealed a slow process with a lot of questions being raised in terms of clean audits and the state of spending in these departments. The Auditor- General (AG) is tasked with ensuring thorough monitoring and reporting in this regard, with a vision of promoting better financial management, trust and leading by example.
At the head of the institution we find Kimi Makwetu, who took over the reins from his predecessor, Terence Nombembe, in December last year.
Makwetu describes his days growing up in Gugulethu in Cape Town with a jovial temperament that slips through as he reminisces about his younger days. “If you look at me, I look like one of the guys I grew up with in the township – I am a ‘laaitie van die Kaap’”.
Although he started high school in Cape Town, Makwetu completed his schooling at St. Johns College in the Eastern Cape, after which he returned to his hometown to finish his tertiary education at the University of Cape Town, completing a Bachelor of Social Science at the end of 1989. In the early ‘90s, he com- pleted a postgraduate diploma in accounting at UNISA and the University of KZN.
For Makwetu, his passion for financial management had its roots in his early days as a youth. While his father was employed by a construction company, his mother was self-employed, selling meat products to the migrant labour quarters in Langa, Cape Town. “I used to be my mother’s ‘accountant’. I often say that as an accountant I got trained domestically and when I went to institutions of public learning, it was more about getting the formal certificate and the recognition for it. Being a middle child, my siblings knew that my role was also to make sure there was enough money to help them with their studies and other things they might have needed.”
After taking over as the Auditor-General last year, Makwetu describes his journey and new role in an analogy. ”I often say that I have regarded the role of the AG as the guy who is in the dining room entertaining his guests. As deputy, I was the guy in the kitchen. I spent time with the chef and made sure that whatever they were preparing for the guests and the AG was something that was palatable and of good quality. My role as the deputy AG was to make sure that I strengthen the machinery that will enable the AG to produce credible information that will be believable by a broad range of stakeholders.
“I work with a team of executives to build a strong foundation in the institution that will enable us to deal with any challenges when they come our way. This was important and prepared me for this role because now I know the ingredients that go into the food. Previously I have been part of the menu with all the chefs and everybody else, and now I’m able to taste and see what it is like to dine at the high table. I’m looking forward to enjoy the food.”
Makwetu views integrity as a cherished value that should extend to society. In this regard, he views honesty and dishonesty as learnt behaviour that can be unlearnt through practising integrity. On the topic of integrity, he says the contrary has often been found through audit outcomes and that one of the aims of the AG is to be proactive in ensuring the re-establishment of trust in those who manage public financial spending.
Makwetu further says that accountability is very important when it comes to restoring trust – and that it is here where leadership has a role to play. “You will see in our reports that one of the issues we highlight very strongly is the lack of consequences for certain deviations, which suggests that the accountability chain is weak. The only people who can strengthen the accountability chain is leadership. When leadership acts, when there are things that ought to be acted on, then we are likely to get a better accountability. Those two go together, and one should also be acting in accordance with the laws that already exist, because there is enough that has already been defined in the laws of the land which indicate what sort of steps need to be taken.”
Another problem often faced by internal auditors at public institutions is intimidation. Once again, Makwetu says that leadership and governance can make a difference. “There are instruments that could be used to protect internal auditors. To what extent these are being applied, and to what extent leader- ship prevails when it comes to people who intimidate internal auditors, is another big challenge. It is exactly on matters like these that leadership ought to demonstrate that they will act on circumstances, because you will find that people who intimidate internal auditors are probably a couple of ranks below the management of the institution. They are outside of the governance and oversight structures of the institute.
“When governance in the institution is improved, then the people who are in leadership are able to report on their achievements without doubting the credibility of the information they are using. So there is an integral link in the area of interest in an environment where you have strong leadership. It is all about elevating the role of the leaders in the institution for them to create an environment where someone can be raising concerns in order to assist in the improvement of the controls of the institution,” he says.
According to Makwetu, the challenges faced by municipalities in terms of ensuring proper reporting entail more than a general need for chartered accountants. “Firstly, when you look at the reality in the public sector, especially in municipalities, it is not so much chartered accountants you want to aim at in terms of addressing challenges faced. When we audit, we struggle to find proper records, so the challenge is a lack of proper record keeping. Proper record keeping extends beyond the role of the chartered accountant.
“We are finding that normally in institutions that are well managed and well run, daily and monthly controls. We have found that the type of controls that are geared toward preventing hings from happening are not always appropriate. At the same time, if the proper daily and monthly controls were in place, things that might have slipped through the system could have been saved.
“The third challenge is an environment with regular inaccurate reports. People produce reports and then file them away, but these are reports that need to be transmitted to those who need to exercise oversight over the situations, like the councils and municipal public accounts committees, whose responsibility it is to review them and to monitor compliance in all matters that they prescribe as the highest body of governance in the institution. Furthermore, the whole environment of IT systems, which deal with controls and the information, are sometimes not managed with diligence.
“If you look at all of these as the key focus areas that could turn the situation around from both a financial and governance management perspective, the question of who must do them will depend on the complexity of the activities of a particular institution.
“If I look at challenges broadly: In the early stages of my career, as a black South African, I grew up in an environment where the level of trust in my ability did not come easily. The challenge was obviously to try and do a little bit more than normal. To try to come across as somebody who is stuck in a belief system, because you’re black you can’t get it right. And that was one of the big challenges, because it slows down one’s ability to move on and grow quickly,” he says.
According to Makwetu, the office of the AG has achieved a lot since apartheid in respect of raising its public profile as an institution.
“But what we are focusing on now, going forward, having looked at our plans, looking at our vision, is that the work that we do must start having an impact, and that is our focus over the next 10 years – what we’re going to try and push for. We know that some of the decisions as well as the actions that will arise from having to create impact are not largely in our hands, but we think we have sufficient persuasive power to prevail on those who are the decision makers and actors. We think that it is possible to achieve a public sector in SA that is characterised by transparency, accountability and good governance, and that’s the journey we want to walk with the current administration as well as the sixth administration when it sees the light of day at the end of 2019. And we set ourselves the next 10 years to really put our efforts into making sure these three key issues of transparency, governance and accountability become a reality instead of a distant dream.”
Touching on the 2012/13 audit outcomes, Makwetu says the final figures are still being analysed, but that on the whole there is little evidence to vouch for a move in a positive or a negative direction. “The current picture portrays no significant regression, nor has there been a significant improvement. There are those who are getting better, and there are still those who are stuck where they were, so it’s still a bit of a mix. But certainly you will also see some forward movement toward gearing up for clean audits. I think there is quite a significant number of institutions that have done better than previously,” he says. When reflecting on how the monitoring of public sector spending, as well as the extended work the AG does, has changed since the advent of democracy, Makwetu says there has been a greater sense of appreciation overall, together with significant skills development.
“We have been at different stages of development, but there is a level of awareness that we have created over the years. Over the last 20 years we have also made our footprint in the international arena where, for a number of years until 2012, we have audited the United Nations. We have also audited the likes of the WHO, and were president of the International Organization of Supreme Audit Institutions up until last year. So we do have a very strong presence in the international arena.
“Twenty years ago we probably had no more than five to 10 chartered accountants permanently employed at the AG. Today we are proud to have more than 500 people of that qualification as part of our staff at various levels. We have geared up significantly in promoting and branding the organisation to be attractive to young South Africans.”
Makwetu says his biggest accomplishment, since joining the AG seven years ago, includes deepening the culture of growing people’s talent and helping them realise their potential. “Through our collective efforts as a team, as well as what I did individually, we have contributed to multiplying the ranks of the professional accountant in SA. We have had some significant successes in that regard. Many of those people have been absorbed into various levels of responsibility in the organisation.”
As for Makwetu’s philosophy and journey from a leadership point of view, it has been about empowering people whom he works with and allowing them to master themselves. “It is also about empowering them to master significant systems of government, as well as to appreciate the fact that in government, you may not get the double pay you experience in the private sector. But you have a great opportunity to contribute to a greater good. If all of them could be given the ability to exercise their independent thinking toward achieving that goal, the end may well be better than the beginning for us,” he concludes.