New AG says there's 'a culture where people believe they can get away with stuff'

"I would love to pretend I dreamt about being an auditor when I was a little girl but that would be untrue. I was raised by a father who was an attorney for many years, and I’m the quintessential daddy’s girl. All I ever wanted was to be like daddy,” says the country’s new auditor-general.

Her sunny smile and infectious laugh keep illuminating a dimly lit room at her office. Her father was judge George Maluleke, who died in 2017.

His role in black legal history is undisputed. He was a partner in a practice with Dikgang Moseneke, who later became deputy chief justice, and Willie Seriti, who was also appointed to the bench and later chaired the arms deal commission.

The country’s first female auditor-general admits she had a privileged upbringing. She was raised in Soshanguve, north of Pretoria, where her family ran a large retail store. Even after they moved out of the township, judge Maluleke would send his children back to Soshanguve in school holidays to work at the store. “All the holidays, every day, that’s what I did.”

Ironically, it was her father who dissuaded her from pursuing law and instead channelled her towards commerce. In 1994 she enrolled for a BCom degree at the University of Cape Town. She found vacation work at local accounting firms, introducing her to a profession that would shape her life.

Public sector bug bit

It also happened that at the dawn of freedom, SA had a shortage of black chartered accountants. “I remember a conversation with somebody who was in the firm and they made a point that there aren’t enough black people in the profession. I asked why, and they said ‘they struggle to pass the board exams’.

That informed a shift ... I decided I’m gonna pass the board exam, I’m gonna do this.”

After graduating, she served articles at PricewaterhouseCoopers in Johannesburg, and later took up advisory work at Worldwide Capital.

When her husband got a job in the Eastern Cape, she followed and found a job at the Eastern Cape Development Corporation. “That’s where the public sector bug hit.” Back in Johannesburg after that stint, Maluleke worked with Sipho Pityana at Izingwe Holdings, partnering in a six-and-a-half-year journey before taking up a partnership at Deloitte.

But there was always that lingering need to serve, to make a difference. As fate would have it, she found herself working on a volunteer project with former auditor-general Terence Nombembe. He tried to persuade her to join the auditor-general’s office, but she played hard to get for a year, then relented in 2011. “You know Terence, he’s gentle but persistent.”

The position of head of audit portfolio became vacant and she fitted the bill. She reported to Kimi Makwetu, who was deputy auditor-general at the time. (Makwetu died last month, days before his term as auditor-general was due to expire.)

Nine years after joining the office, Maluleke succeeded him, also becoming the country’s first female auditor-general.

Meticulously professional

Transitioning to the public sector can be a culture shock for those used to the professionalism, red-tape-free and expeditious nature of the private sector. However, the office of the auditor-general is not just another government department, it operates in a meticulously professional manner that rivals, if not exceeds, some of the highest private sector standards. That’s what Maluleke found upon joining.

“There is this notion about service and it’s pretty deep-seated; that’s why the office is an easy place for me to be in. There’s also a very high level of professionalism. I don’t know if I could have found a better place within the public sector for me to thrive. High levels of brilliance and a high drive for performance ... all of those things that make up what a professional outlet ought to be like.”

Still, she was in for a shock. “I started to encounter what was happening in the public sector, things like disclaimer audit opinions. When you are a private sector auditor and accountant, you are taught about an idea of a disclaimer; then you forget about it because you never see it again. And then you come here and there is a thing called a disclaimer.”

Her predecessors produced report after report, made findings after yet another warning about mismanagement of public finances and drafted recommendations on how to fix things. Their work largely gathered dust, ignored by accounting officers and political leaders. Things are different now.

I started to encounter what was happening in the public sector, things like disclaimer audit opinions. When you are a private sector auditor and accountant, you are taught about an idea of a disclaimer; then you forget about it because you never see it again. And then you come here and there is a thing called a disclaimer

Makwetu fought hard to bequeath her a powerful accountability instrument that arrived too late in his own term of office. The amended Public Audit Act empowers the public finance watchdog to hold errant accounting officers personally liable for irregular expenditure that cannot be explained. Makwetu audited public finances during the years of state capture.

He expressed to me, during an interview in 2019, his frustrations at his findings and recommendations being ignored. “If one looks at what has happened over the period [of state capture], it’s a period where the strong tone at the top, geared towards supporting the development of strong institutions, has been absent and I think that’s the biggest contributor to all of this. There wasn’t somebody at the top [keeping watch]. There were some, but maybe they were overwhelmed by those that did not share the vision,” he lamented at the time.

Maluleke is armed with the signed Public Audit Act and she plans to fully use its powers. “I think it’s a game-changer for the public accountability processes within government. Ours is to implement it in a way that it’s been intended.”

She is upbeat about the support promised by the political principals. “At the centre of government I’m seeing high levels of engagement and support for the work of the office, and a will to change things.”

But she prefers the carrot before the stick. “You gain more through preventative measures. We will apply the law as it’s been designed ... But we believe that we have to do it at the same time as finding ways to inspire, to inform, to support in closing the gap between what’s promised and what is actually practised.” She singles out the approach the office took with the R500bn Covid intervention as an example of smarter ways of doing things.

The office tracked and audited the money in real time. This led to quick interventions at, for example, the Unemployment Insurance Fund (UIF) where money paid under the Temporary Employer/Employee Relief Scheme (Ters) — a wage protection grant for workers affected by the lockdown — was paid to those it was not meant for. The audit quickly picked up the discrepancies and loopholes were closed. UIF commissioner Teboho Maruping was suspended.

Real-time audits were also applied to the R350 temporarily relief grant for the unemployed, administered by the Social Security Agency. That’s impressive, I interject, but money budgeted for personal protective equipment for health workers was stolen even though her office was auditing the expenditure in real time.

Close the loopholes

'You have weak controls in government, you have a culture of noncompliance and a culture where people believe they can get away with stuff. That’s what we’ve got to push back,” she replies. She identifies the need to close loopholes that are a result of government systems that are not well integrated and processes that are easy to flout. People who operate these systems need to be taught skills. The UIF system, for example, could not pick up that its own employees were claiming Ters benefits, while a few greedy civil servants received the R350 grant undetected.

Consequence management such as the Gauteng government’s quick action on PPE fraud, as well as decisive action by law enforcement agencies to punish wrongdoers, will discourage bad behaviour, she says. And not all projects can practically be audited in real time. “We have to find a balance between the normal regulatory work, which we must do, and doing differentiated audits that respond much more to the risks at hand.

This real-time audit is a differentiated audit offering that we designed to respond to an existing risk. Going forward, we’ll be looking to doing more of that.” Another resource she wants to make optimal use of are internal audits in government departments and institutions, guarding against weak accounting and corrupt practices.

“The external auditor, being us, comes at the end of the year. The internal audit is there on a continuous basis, and I would want to find ways to up the contribution and the value of the internal audit function in government.”

Relinquishing chair

Overseeing public finances for the next five to 10 years is not going to be an easy job, and will be extremely demanding of her time. That is why Maluleke is relinquishing her chair of the South African Institute of Chartered Accountants.

Her focus will be leading an institution that employs about 680 chartered accountants, 550 registered government auditors, information-system auditors, engineers, forensic specialists, town planners, quantity surveyors and others who have special skills. The office of the auditor-general also runs a large internal training institution that produces a pool of auditors and accountants who graduate to other jobs in the public and private sectors.

It has delivered about 1,200 chartered accountants in the past 20 years. “We see our guys taking on key roles such as CFOs and CEOs in different entities across the state, and when I look at it, I just marvel at the notion that we’ve created this.” The mother of two daughters (17 and three) used to be a keen marathon runner and has completed the Two Oceans in Cape Town.

But her busy schedule has forced her to scale down on marathons. Nowadays a jog is all that she can realistically fit in before the grind begins. “My daughters keep me energised and focused on different things.” She is also close to her wider family and dedicates spare time to catching up with them. Her family of overachievers includes sister Basani, who is the CEO of African Bank.

Asked what her historic appointment means, she pledges to use the role to inspire girls and young women to dream of attaining similar, if not higher, success. “I carry the torch from those who came before me and fought hard to pave the way for me to be where I am. I intend to carry it higher for those who come after me to have an even smoother passage to greater heights that our country and the world have to offer,” she says.