EDUCATION

Training the public sector

Zak Sadek, Head of Public Sector Assurance at Grant Thornton Johannesburg
Zak Sadek High res (1).JPG

The public sector is lamenting a lack of skills, particularly in the financial management sectors of its businesses—and public sector financial training for trainee accountants isn’t currently part of the traineeship at all. Making public sector financial training mandatory would most certainly help government to attract qualified financial managers to a sector hampered by a drastic shortage of skills, says Zak Sadek, Head of Public Sector Assurance at Grant Thornton Johannesburg. 

With one in three municipalities regarded as ‘dysfunctional’, Minister of Cooperative Governance and Traditional Affairs, Pravin Gordhan, has identified the critical need to attract qualified and competent staff, such as municipal managers and chief finance officers, into key financial management positions. Gordhan has stated that as many as 170 financial officers throughout the country do not have the required qualifications.

Sadek, who is also an assurance partner in the firm, responsible for practice development, business development as well as transformation, says it is no secret that local government faces a serious skills shortage, which is evident by the billions of rands in fruitless and wasteful expenditure highlighted by the Auditor General every year. In addition, he says, Gordhan has publicly lamented the fact that as many as 40% of local government financial managers in South Africa do not have the required qualifications which has a serious impact on effective municipal management.

Sadek says government has come out strongly with regard to the seriousness of the lack of skills, so there is no reason to doubt the figures, which he believes provide a reasonably accurate gauge of the challenges. However, he says the real question is, how do we plug the gap?

“Currently public sector auditing exposure is not compulsory for trainee accountants. While the idea needs development, I would envision a three to six months module focused on auditing government entities as compulsory. Therefore all trainees, whether at an audit firm or at a corporate entity, would gain experience in the sector and you increase the chances of developing specialist public sector accountants.

“Just as medical graduates must perform a stint at public hospitals to qualify as doctors so accountants, engineers and virtually any highly skilled vocation could do the same. So wherever the trainees are based—an auditing firm, bank or the auditor general—they will gain experience in public sector, by increasing the spread of trainees exposed to the public sector one can comfortably state we would have trainee accountants seeing working in the public sector space as a lucrative option.”

Lack of skills

So how does a lack of proper finance skills in local government impact the man on the street?

The ramifications are widespread, says Sadek. “It’s clear that it is the root cause of the lack of service delivery. It has a direct bearing on everything from provision of housing to education and a ripple effect on macro-economic environment impacting on our country’s international perceptions; FDI and ratings. The recent student protests over university fees are a very relevant example. When we consider the amount of money lost to fruitless and wasteful expenditure you realise that that money could very easily have paid for the studies of thousands of deserving students.”

Talking about how the lack of finance skills in local government affect its own functioning, Sadek believes that municipalities are unable to fulfil its mandate to its constituents.

“Like a business that doesn’t meet its commitments and goes into liquidation, municipalities are unable to continue operating and eventually have to be bailed out to cover the shortfalls. This places further pressure on the public purse and funds have to be diverted from other priority areas to assist.

“With improved financial skills we can drastically reduce wasteful expenditure and run more efficient operations capable of effective service delivery. The increase in skills means that we can limit corruption, make better decisions and the funds will go where they belong,” he says.

According to him virtually every facet of the organisation is affected including key areas such as revenue management, bill collections to procurement and human resources—and the right skills are the nucleus for any entity.

Stakeholders

Sadek advises that government must work with and lobby the various stakeholders including the universities; the overarching body, the SA institute of Chartered Accountants (SAICA), as well as the private sector, to create a system that benefits each entity and the country as a whole.

“Government entities could also register as a training entity with SAICA whereby article clerks could appropriately qualify via the public sector route, a concept we refer to as the ‘training outside practice- TOP’ route of becoming a professional accountant.”

Talking about the factors that steer graduates away from public sector and into private sector accounting, Sadek says widespread negative perceptions of and actual inefficiencies in the public sector certainly steers candidates to the relative safety of the private sector. Secondly, most candidates don’t have exposure to the public sector and therefore never consider it as a viable option. The private sector benefits with remuneration structures such as profit share schemes, which are a definite pull factor; and while government certainly has benefits it needs to use these to compete for the best talent.

“The public sector needs to become more professional and start to compete more vociferously for the talent pool. It starts with applying business and commercial decision based business outcomes and not inherently political objectives and rewarding performance and not patronage. This will go a long way to offset the negative perceptions and make it a conducive environment for highly skilled individuals. This is of course a long-term undertaking.”

As for the importance of local government partnering with universities in the proposed traineeship programmes, he says it is important to get the buy-in from universities in order to get institutions to amend their curriculum for the public sector —and they will need to work closely with SAICA, who should be the nominated administrator to add credibility to the traineeship course.

“Academia will need to make students aware of public sector accounting and auditing and treat it with the same gravitas as the private sector programmes. Curricula will have to be adapted to include subjects such as the Public Sector Finance Management Act and the Municipal Finance Management Act. This change will of course have to be implemented gradually. By introducing a mandatory public sector component for article clerks as part of their three-year traineeship to qualify as chartered accountants, the number of graduates who will consider the sector as a viable alternative would increase significantly,” he says.

Traineeship

The mandatory 36-month traineeship for audit trainees which is overseen by the SA Institute of Chartered Accountants (SAICA) is currently only conducted at audit firms, the Auditor General (AG) and certain corporate institutions such as banks and most trainee accountants receive absolutely no exposure to the public sector.  Once they have qualified as chartered accountants virtually all graduates get absorbed by the private sector or within the professional services firms, while very few candidates are placed in the public sector.

“Most third year trainees completing their traineeship leave the firms to go and work in the commercial world whilst a few would remain within the professional firms, for most of these trainees the public sector is not an option as they have never had any experience in this sector,” says Sadek.

“Should a mandatory public sector traineeship component be incorporated—be it even three to six months—it would afford candidates the opportunity to experience the dynamics of public sector organisations and therefore could become a career opportunity.

“As an example, we had an audit trainee who we offered a short-term contract to work in our public sector department. When his contract ended he went on to work for the AG.  Had we not given him the opportunity, he may never have found his passion for public sector audit work.”

In conclusion, Sadek says it’s a long and difficult road ahead, but this should not stop us from striving to achieve our goal of an efficient and professional local government.

“Sound financial management has a direct impact on all citizens as well as wider economic ramifications to business and growth objectives. South Africa has too many urgent needs such as fighting deepening poverty levels and creating jobs to be further hamstrung by maladministration and wasteful expenditure. The consequences as evidenced by the violent service delivery protests are indeed dire.

“It’s really my challenge to SAICA and the nation as a whole—if we really want to fix the country—if we don’t want the public sector to continue to lament poor skills in the financial management processes, then we seriously need to make a plan - today,” Sadek concluded.

Lianne Osterberger

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