‘An accountant is one element of a business that you need on a daily basis’
Welcome to this SAIBA CFO podcast, SAIBA is the South African Institute of Business Accountants, it has more than 12 000 members in the country and specialises in a wide range of disciplines such as accountancy and tax, training and development, career enhancement, legislation and financial reporting.
My guest today is Thuso Marumo, he is the CFO and CEO of his own business, Thito-Thuo Consulting, based in Kroonstad, it is a firm which offers a range of professional accounting and tax services, especially to small and medium-size businesses. Before putting on his entrepreneur hat, he was the chief financial officer of the Moqhaka Local Municipality in the Kroonstad area, and he was in this role for eight years. He’s a chartered accountant and also a certified fraud examiner.
Thuso, let’s start with your role as the CFO at Moqhaka, you must have been quite young when you were appointed in this role?
Yes, it was quite fascinating, I think it was about three years after I finished my articles at PricewaterhouseCoopers. One of the issues that led to me joining one of these municipalities was that you get to go there and consult and do work but at the end of the day, there’s no implementation on the final product, regardless of how good the reports would be. So I was curious to find out what is the delay, what is the challenge, why can’t people implement. Most of the reports are written in layman’s terms, it’s plain English, where you can understand and implement from there.
I was one of the youngest CFOs when I joined the municipality.
Let me say that it was not an easy task, to be honest, because one gets to appreciate that once you get into that position you are running the institution, you are not just running a finance department because of the value chain involved. At the end of the day, you need to see to it that people get their salaries, that service providers get paid so that service delivery can continue to our community.
So it’s been quite a journey, I served two terms, the first term I caught it in between and then the last term I completed it in March this year.
I think it must be extremely difficult to be a CFO of a local authority, there is a lot of pressure on those CFOs to achieve unqualified or clean audits. Did you manage to achieve clean and unqualified audits for the Moqhaka Municipality?
There was a huge challenge, like you were saying, when I started at the municipality it had a qualified audit opinion. We pushed with the team and the accounting officer at that time gave me space to work and I was in a position to appoint competent officials to my team, whom through their assistance and collaboration we were able to work as a team and move the municipality to an unqualified audit opinion two years in a row. But let me indicate one thing, getting a clean audit is a collective effort, not necessarily from administration but also from the political administration because yes, you can do your reports on time and submit what you need to submit to provincial and national treasuries and COGTA but if council does not meet regularly, as required, to deal with such reports, you will still have non-compliance, which results in the municipality not achieving a clean audit. A clean audit basically says your financials and your compliance are in sync.
So after two terms there you decided to start your own business, Thito-Thuo Consulting, tell us about this business and why did you decide to start your own entrepreneurship venture?
I think when I joined the municipality, I wanted to get that feel of the public sector and then try to squash away all this complacency and to understand why people are complaining from time to time. I can say that the lack of system uniformity, the PMS system [unclear] senior managers across the board, which ensures that you are paid in relation to the revenue generation capacity of the municipality, and you get a top up of a performance bonus. But you hardly get to that point where those who have performed are rewarded because of the flaws on the systems and that’s one of the issues that made me realise that’s why you’re not going to have a lot of professionals in local government.
I have my fair share of experience and I have also experienced how small businesses suffer in terms of doing business for the state.
But for me, to go on my own I have realised that I have the experience and I have a lot to offer to our SMEs in particular, and some of the issues that they tend to let slip. As Thito-Thuo Consulting we are taking a holistic approach in terms of dealing with our business partners and that’s our aim to assist them. As you know, there are a lot of accounting firms out there but there are also a lot of businesses out there and most of them are struggling. Some are just losing business for the mere fact that their statutory matters are not in order or some are running their businesses like a household and forgetting that they are a separate person to the business, a business is a legal jurisdiction on its own, and as such, certain measures have to be put in place, certain controls have to be put in place to ensure that the business complies and pays the receiver of revenue.
So those are the matters we assist clients with, and we foresee a bright future ahead because the industry can never be too small for all of us and given the virtual world, emphasised by Covid, one can do business now across towns and provinces. We feel that we have a lot to offer to our business community and also individuals because an accountant is one element of a business that you need on a daily basis to ensure that your [unclear] are up to date, otherwise your planning, your budgeting, your financial affairs are going to be in tatters.
Thuso, what do you think are the key skills a CFO must possess to be successful?
You need the qualifications, and you need the experience because every business needs to be looked at holistically. You can’t just put in hours of eight to four and think that the business will thrive, whether it’s a business, state institution or a municipality. For those municipalities or businesses that have made it, you’ll find that the CFOs are putting quite an extra amount of time in, even though such is not being rewarded, but the fact that it will bring in growth and the company will improve, it serves us well, we are happy with that fact. So we want to see our efforts bearing fruit and that’s through that process. Again, if I go back to the municipalities, the issue of skill needs to be prioritised across the government sectors and municipalities because if you don’t have skilled and qualified people doing the work, you’ll have to outsource consultants and have the taxpayer paying twice instead of once for the person appointed to do the work.
Continuous learning as a professional is also important because yes, you can be a chartered accountant now but if you don’t continue to learn or study and improve in related areas, soon you’ll be out of business, that’s a fact. I’m a member of ACCA now, I’m also a member of ACFE and SAIBA. So one needs to join these memberships to keep abreast in terms of industry developments and new trends, to ensure that we give 360 support to our clients so that their businesses thrive.
Do you think you need to be a CA to be a good CFO?
When I started I was not a qualified chartered accountant by then, I was still studying, but all I can say is being a good CFO, yes, you need a qualification, it does not necessarily have to be a CA and you need a sober mind, you need quite a lot of common sense because in some instances you’ll have to make decisions in the best interests of the community. So you don’t necessarily have to be a CA but qualifications in their own spheres, not necessarily CA, but also finance related qualifications.
I have seen a lot of CFOs who are not CAs, so I will not necessarily link that to say that you have to be a CA to be a good CFO.
What do you think are the biggest challenges that CFOs are facing in South Africa today?
It’s quite diverse, one aspect of it is that the CFO position, in most cases, is underrated, they are not involved with critical decisions. Then once the decision is taken, the CFO is the one who must get the car started to get to point B, but if they are not part of key decisions in some cases, it’s difficult to get resources mobilised from one area to another.
So that involvement, acknowledging that the CFO is running parallel to the CEO cannot be left behind because in the absence of the CEO, the CFO is the best candidate who has a 90% understanding of the enterprise and the operations. So we cannot downplay that aspect of the CFOs involvement in our daily operations and our strategic engagements, which is key for institutions to ensure that they are involved from point A to point B so that the business can prosper and there’s growth for the entity.