July 3, 2007
By Emily Visser
BUILDING a risk and audit service that operates at full capacity is what it's all about for Mohammed Dukander, the executive director of Johannesburg Risk and Audit Services (JRAS).
There has been a range of structural changes to the directorate since Dukander joined the City of Johannesburg in July 2005. "We wanted to give the City dedicated resources for specifically identified high-risk areas, such as revenue and procurement," he explains.
The JRAS has been reorganised to provide a value-added service to the City in terms of its core business. Dukander says the emphasis has shifted to better service delivery through a clearer definition of business objectives, more focused management information and a better understanding of the trade-offs between risk and reward.
Qualified staff in the right positions
The first thing Dukander did when he took up office was to look at capacity issues within the directorate itself. Loss of skills and expertise is a well-known problem in most professional fields and one that required attention in the JRAS as well, he affirms.
Part of the approach was centred on encouraging staff to pursue further studies in the fields of internal auditing and risk management. Indeed, continuous learning is considered important within the unit and great emphasis is placed on training staff and enhancing their skills.
Risk and Audit Services
The directorate incorporates both audit and risk management services, and the integration of the two functions under one roof has meant better service delivery. Fleshing out the two functions, Dukander says the auditing element is focused on supplying a dedicated internal audit function to the City, in areas of supply chain management, 2010 projects, revenue and operation clean audit.
Risk management, he feels, is more than assessing potential risk areas within a company. It is a holistic approach, focussing on sound decision-making principles. "It is not a reactive service.
Dukander brings with him a wealth of experience in both risk and audit management; previously he worked as a director for risk and auditing in the national Treasury. And as a qualified chartered accountant and certified internal auditor, he knows that auditing and risk are about more than giving an organisation a clean bill of financial health.
"The structured approach to risk management is fairly new and is more than looking at financial risk only, as it used to be in the past." He says this new approach came about as a result of high corporate risk mismanagement taking place in the past decade in large global organisations such as Enron, Parmalat and even Fidentia.
Growing an enterprise-wide culture
Other structural changes set in place by Dukander have been to create an enterprise-wide risk management function within the whole municipality and its many entities.
"Audit and risk can do a lot in terms of improving service delivery," he feels.
Three major projects within the City with which the JRAS is closely associated are supply chain, Opcar and the 2010 preparations. Forming part of the 2010 team, the JRAS provides an advisory and consultancy role to the 2010 Unit, especially insofar risk management is concerned.
The Internal Auditors Forum, consisting of the head of auditing of each core City department and City entity, meets on a regular basis to explore issues that cut across all entities and departments. "Audit and risk is now an enterprise-wide service that cuts across universal issues such as health, safety, insurance, finance and reputation within the municipality."
This has resulted in "bridging the gap" between the different City departments. In addition, with a uniform strategy in terms of audit and risk taking shape, this ultimately equates to the achievement of strategic objectives.
Independence contributes to credibility
The JRAS has to maintain its independence at all times and work strictly in accordance with the guidelines set by the Institute of Internal Auditors' Standards for Professional Practice. Under these rules, the JRAS has to be independent from the activities it audits.
In effect, the City of Johannesburg and all its entities are clients of the JRAS, ensuring that the municipality upholds the principles of "good governance".
However, Dukander confirms, the unit only recommends the appropriate action to be taken in the event of an audit or forensic investigation. Taking the matter further lies with the relevant senior management of that department.
To further good governance, the JRAS is overseen by the Group Auditing Committee, which was established by the council to give additional assurance of independence regarding the quality and reliability of financial information used by the City and the financial statements issued. As a non-executive committee it is advisory in nature and does not perform any management functions or responsibilities.
It meets at least four times a year and consists of independent people from the private sector who have reached the highest levels of achievement in their various fields of auditing and risk management. Its main task is to ensure that the City lives up to the responsibility of being an accountable public sector service provider.
The JRAS itself is subject to an independent assessment review conducted by the Institute of Internal Auditors.
Procurement and supply chain challenges
The most vulnerable area for any public sector is its procurement department, and the City of Johannesburg has to set the benchmark in terms of supply chain management. Many tenders and contracts are awarded to different companies and individuals each year, thus Joburg has no shortage of potential risk and auditing pitfalls.
"Non-delivery in terms of procurement is a high risk at any public service organisation."
With the help of a fraud helpline the public can report any occurrence or suspicion of fraud, corruption, theft or any other crimes of dishonesty committed against the City.
The Anti-Fraud Hotline is managed and operated by Internal Audit Services, and all calls are kept confidential. According to Dukander, the department investigates between 40 and 50 calls at any given time.
An approach towards failsafe mechanism form part of the new integrated Risk and Audit Service. "It is essentially about nipping things in the bud."
Rather than wait for an audit report to point to possible mismanagement within a department, Dukander says the JRAS works from a pro-active stance, running fraud awareness campaigns, red flagging issues of importance and working towards a change in culture among municipal workers.
"In the end we want to create a culture in which people will realise that fraud and corruption do not pay."
But the success of any public service sector is a two-way street, Dukander feels. Getting the public sector into shape and dealing with fraud and corruption can only take place with the participation of the public. "Although we have systems in place to identify risk and audit areas, obviously there are areas we may not know about."
It is in this respect that the public can play a crucial role. "The public must have a general awareness of what is out there. We can only act on what has been told to us."
His focus for the next five years, Dukander says, is for his department to add real value to the City and to "change the culture to seeing us [the JRAS] as partners rather than as policemen".
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