The first part of the State Capture Commission’s report, released earlier this month, 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. 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.”
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 reigning 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. “
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 benefited from state capture by simply complying with orders, whilst 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 emphasizes. “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 whistleblowing.”
He furthermore 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.
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