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Nombembe in the power seat as new Auditor-GeneralOne stroke of his mighty pen can ruin a career, bring shame upon an entire town, expose the rotten apples that can bring governments to a fall, or earn the nation’s praise for the many unsung heroes who spend our money wisely and correctly.
His name is Terence Nombembe, and his position is that of Auditor-General. To be exact, the first African Auditor-General in the 95-year history of this key South African institution.
The friendly man dressed businesslike in suit and tie, who enters the room for our interview fresh from briefing a high-profile parliamentary committee in Cape Town, is precise in his manner to the same point as his powerful pen and calculator. No hesitation, no margin for error, like the opinions he may express.
For that is his business: expressing opinions, ensuring that every rand and cent of taxpayers’ money has been accounted for properly.
“Our job is to make sure that the public use of financial resources is properly accounted for, that information relating to service delivery is properly and credibly reported. And I choose these words carefully because we are not involved in policy. We simply comment on the credibility of the information that is given to the public,” he says, perhaps with somewhat understated modesty.
The importance of his job cannot be overstated. It is one of the key Chapter 9 constitutional watchdogs established to ensure proper governance and democracy in South Africa.
Prior to 1993, it was merely an extension of a government department controlled by politicians and theoretically open to abuse. Since that year, however, it has been a fully independent institution keeping a wary eye on public spending, from the president down to the most junior official in some forgotten desert outpost.
As the Public Audit Act puts it: “The Auditor-General is the supreme audit institution of the Republic; has full legal capacity, is independent and is subject only to the Constitution and the law, including this Act; must be impartial and must exercise the powers and perform the functions of office without fear, favour or prejudice; and is accountable to the National Assembly.”
The independence of the office and a non-renewable contract of between five and 10 years leave no room for manipulation, abuse
or corruption.
The Auditor-General’s teams perform regular audits on all departments of all three tiers of government and all other publicly funded entities. Once a year, the Auditor-General reports to Parliament about his actions and the performance of his functions.
When I ask him if he is a feared man who experiences resistance in government departments, Nombembe smiles and says this is no longer the case. “I certainly don’t get a sense anymore that we are feared. I believe there is an understanding in the departments of the role that we have to play, and the tendency is now much more towards co-operation. We receive more requests for support and guidance these days from the departments.”
In Nombembe’s definition, a good Auditor-General is one who primarily influences the enablement of results as an institution established to protect democracy, and has to fulfil this role within the strict parameters created for it.
“And those parameters for us, we have defined them very clearly and unambiguously that, if only we can get departments to present credible information for the public, that will enable the public to be confident that government is transparent and serious about accountability.
“To get that result, there is a host of players who need to be brought into the picture, such as the executive authorities, the presiding officers of legislatures and others whom we have engaged in road shows, with which we will continue. My job is to communicate and influence action towards our stated goals in order to build public confidence. And through that confidence, we can attest to the fact that democracy is strong and getting stronger.”
Nombembe says communication is his job. He does not involve himself in administrative functions or the operational activities of his auditing teams. That is left to his Deputy Auditor-General Kimi Makwetu – a thankless experience he says that he himself would not want to relive.
Nombembe joined the Auditor-General on 1 June 2000 as Deputy Auditor-General and chief executive officer, and was appointed Auditor-General by former president Thabo Mbeki on 1 December 2006.
Coming from a rural upbringing in the Transkei village of Qumbu, he matriculated in Mthatha, joined KPMG as a trainee accountant in 1983 and obtained BCom and BCompt (Hons) degrees from the universities of Transkei and South Africa before qualifying as a chartered accountant in 1990.
He left KPMG in 1987 and joined Unilever in Durban as internal auditor and later became an accountant in the Lipton Tea and Soup factory in Pietermaritzburg. In 1991, he joined BP Southern Africa (BPSA) in Cape Town as senior internal auditor, before moving on to BP Botswana as finance manager in 1994. In 1996 he returned to Cape Town as BPSA’s market research manager.
In May 1997, Nombembe was the senior co-founding partner of the auditing firm, Gobodo Incorporated, in Cape Town where he initiated the establishment of Gobodo Corporate Governance Services, an internal audit division that operates nationally with regional offices in Cape Town and Pretoria.
Nombembe says his biggest motivator is what he regards as the powerful vision of his office, namely that “we are the independent world-class provider of public sector audit and related value-added services”.
He says his predecessor Shauket Fakie was instrumental in helping to set up a solid foundation based on credibility, independence and transparency.
“To be relevant in a constantly transforming and developing country, my office is continuously redefining itself to meet challenges presented by change. For example, to make a meaningful impact, we had to acknowledge that public sector auditing goes beyond merely expressing an opinion on the financial statements. We also comment on the effectiveness of key management processes and give feedback on compliance with laws and regulations. This qualitative approach enables public sector managers better to understand the financial impact of the identified problems and assists in helping them to prioritise the corrective actions.”
Turning to problems encountered in carrying out his mandate, Nombembe says across the board, the greatest challenge facing his office is the quality of financial information produced in the government.
“On average, 80% of the financial statements of all departments requires changes. The other area of concern relates to the adherence of financial management prescripts and the regulations that regulate the manner by which that information ought to be credible. In three-quarters of the cases, that is not being complied with,” says Nombembe.
To address these shortcomings, Nombembe says interventions have been identified around a number of issues. The executive authority has to take ownership for good financial management. In order for the executive authority, that is ministers, to take such ownership, he says they need credible and meaningful information from their financial specialists.
“If [chief financial officers] are not producing that information with the frequency and quality that is expected of them, we are missing the point. And there is clear evidence they are not producing that information.
“The third issue concerns the role of governance structures like the audit committees. Ministers are not necessarily involved in these committees, which is an opportunity lost in terms of the wealth of insight that those committees have in guiding the ministers on the risks of service delivery. Therefore the structuring of that governance arrangement needs to be addressed.”
He points to the necessity for the government to adopt the approach espoused in the Companies Act and the King III Codes of Good Governance, that elevates auditing committees to being not mere sub-committees of the board, but committees appointed by and accountable to the shareholders.
With reference to the recent Auditor-General’s report on the Department of Public Works, Nombembe reiterates his concern that the department, as custodian of the state’s immovable assets – that is land and buildings – cannot account properly for what it owns.
“There are a myriad issues related to land and property that need focused attention. The issue of assets accounts for more than 80% of the qualifications that remain unresolved in that department.”
Another area of much concern is the state’s procurement function to which the Minister of Finance Pravin Gordhan also recently referred, saying that new interventions were required to end the large-scale occurrence of fraud and corruption that is costing the state billions.
Nombembe says much of what is required revolves around ensuring that the procurement information system is such that it ensures fraud and corruption are detected early and stopped.
It is not the system itself, he says, that is at fault, as South Africa undoubtedly has “one of the more modern procurement systems”.
It is the fragmentation thereof that allows people to bypass early detection where fraud is committed.
Nonetheless, it has been the Auditor-General who has been instrumental in detecting and exposing most state procurement corruption.
“The bottom line is that we should have a collaborative approach that needs to be better co-ordinated, so that information gathering that is currently fragmented is put together under one roof where it can be better analysed and we can deal with it much more proactively. At present, it is too fragmented,” he says.
The biggest problem, says Nombembe, concerns ethics and compliance, a problem that also in his view underlies much of the problems encountered at local government level.
Conditions at local level, he says, are similar to those at national and provincial level. “The only difference is that the extent of qualifications is more pronounced at the local level. Many municipalities have disclaimed opinions – the worst opinion we can give – while no national government department has that.”
While there is a greater skills shortage in general at local government level than at other levels, Nombembe says the issues, from his point of view, that need to be dealt with have little to do with a shortage of skills. “There is no shortage of skills to provide the necessary accounting services for municipalities. What is lacking is the discipline to keep proper records and documentation. It is once again a compliance issue.”
Another issue his office has highlighted is the fact that at national and provincial government level, compliance with paying creditors within 30 days is lacking in 75% of all cases. This, he says, is of much concern given the fact that the timely payment of creditors is one of the four pillars identified by the government to counter the effects of the recession.
The Auditor-General has offices around the country, with its head office in Pretoria. It employs some 2 000 people and operates with an annual budget of R1.5 billion. The Auditor-General also has a training scheme for some 2 000 trainees to facilitate transformation and lessen the skills shortage. He finds he is spending less time in his office these days and far more time with government leadership across all nine provinces.
Yet, this husband and father of three children tries to arrange his schedule as far as possible to allow him time at home with his family and, if possible, also some time in the gym or on the golf course. ?
Stef Terblanche
Some people speak about shortages as though they represent some absolute, readily identifiable lack of desirable services. Price is rarely accorded its proper importance in their discussion.
If you start raising wages and improving working conditions, and continue doing so, you'll solve your shortage and will have people lining up around the block to work for you even if you need to have huge piles of steaming manure hand-scooped on a blazing summer afternoon.
And if you think there's going to be a shortage caused by employees retiring out of the workforce: Guess again: With the majority of retirement accounts down about 50% or more, most people entering retirement age are working well into their sunset years. So, you won’t be getting a worker shortage anytime soon due to retirees exiting the workforce.
Some specialized jobs require training and/or certification, again, the solution is higher wages and improved benefits. People will self-fund their re-education so that they can enter the industry in a work-ready state. The attractive wages, working conditions and career prospects of technology during the 1980’s and 1990’s was a prime example of people’s willingness to self-fund their own career re-education.
There is never enough of any good or service to satisfy all wants or desires. A buyer, or employer, must give up something to get something. They must pay the market price and forego whatever else he could have for the same price. The forces of supply and demand determine these prices -- and the price of a skilled workman is no exception. The buyer can take it or leave it. However, those who choose to leave it (because of lack of funds or personal preference) must not cry shortage. The good is available at the market price. All goods and services are scarce, but scarcity and shortages are by no means synonymous. Scarcity is a regrettable and unavoidable fact.
Shortages are purely a function of price. The only way in which a shortage has existed, or ever will exist, is in cases where the "going price" has been held below the market-clearing price.