CFO – Quality Council for Trades and Occupations
The Quality Council for Trades and Occupations is a public sector entity run with a private sector mentality and this high standard of integrity has ensured that the QCTO received a clean audit for the fourth consecutive year.
CIARAN RYAN: This is CFO Talks and I’m very happy to introduce Innocent Gumbochuma, who is CFO at the Quality Council for Trades and Occupations. The Quality Council was established in 2010 in terms of the Skills Development Act and its role is to set standards and develop occupational qualifications for various trades and occupations in South Africa. Now, interestingly, Innocent is a Certified Professional Accountant in Canada, he’s also a CA and he has an MBA. First of all, Innocent, welcome that’s quite a resume, you have spent a lot of your life studying, is that correct?
INNOCENT GUMBOCHUMA: Thank you very much. Thank you for the very generous introduction, it sounds like a whole lot but it’s just three things. So yes, I spent a bit of time studying.
CIARAN RYAN: You’re very modest, also joining us on the line is Nicolaas van Wyk, who is the Chief Executive Officer of the South African Institute of Business Accountants. Welcome, Nick.
NICOLAAS VAN WYK: Hello Ciaran, hello Innocent, it’s great to be here.
CIARAN RYAN: Yes, so we’re going to have a conversation here. First of all, I really do want to find out about the Quality Council for Trades and Occupations. Innocent, maybe you can kick off by telling us a bit about that and its role in the South African economy.
INNOCENT GUMBOCHUMA: Thank you very much. Thanks, Nick. welcome. I get this question quite a lot, and last year I was one of the key speakers at the Finance Indaba that is hosted annually, and one of the key questions is what is the QCTO or Quality Council for Trades and Occupations. The organisation was established on paper in 2010 and then it became operational in 2012. I joined the organisation in 2013, initially as the Director of Finance, setting up the finance function. It is a division in the Department of Higher Education and Training. So basically, what the organisation does is it’s a very important organisation in the South African economy in that it quality assures, it develops qualifications and it certifies learners. So I’m going to explain the three facets that I’ve just said. So the first thing is when students pass or finish their matric, there are those who go to university but the majority of those go to what used to be called FET colleges, now they are called TVET colleges, and the TVET colleges sector falls under the QCTO. So there are quite a number of providers, thousands and thousands of both public providers and private providers. So the role of the QCTO is to ensure that the quality assurance function of all the programmes and skills that are taught are quality assured to the satisfaction of the standards set by the QCTO, where at the exit point, we issue a certificate to say for example, here is an electrician, who has completed all that is needed, the practical, the theory, or here is an artisan or here is a plumber, or here is a boilermaker, a driver, a hairdresser, a bookkeeper, a tax practitioner, all those are mixed in the trades and occupation. [indistinct] That in every organisation in this country you get employees with that qualification. It touches across the economy. So that’s the number one part of the quality assurance. Then comes the very important, and I’m saying the very important, because we are looking at the age that we’re in of technology, technological change, we’re talking about the 4IR and a whole lot of things. The qualification development that is key, the QCTO develops qualifications, but the model that we use is by industry for industry. An industry, for example, I would say, what is the qualification that comes to mind, the marine industry, there’s a qualification, for example, called shipbuilder. We gather experts in that field and through the coordination of the QCTO the qualification is developed, goes through all the stages that needs to be done until it is registered with the South African Qualifications Authority. So the QCTO has to ensure that the right qualifications are being developed, and the QCTO listens to the industry, what are the qualifications that are lacking, what are the qualifications that are needed in the economy, and then the QTCO develops those qualification and registers them with SAQA. Once they are registered, then there has to be an uptake from the skills and development providers and obviously students. So that is very key issue there. Then the last part that I obviously talked about was certification of learners who have completed those [courses]. So we make sure that we certify and we also verify which is the [indistinct] that we have introduced for employment purposes, we do verification services. I don’t know whether I’ve talked too much, but in a nutshell, that’s the broad spectrum of what the QCTO or the Quality Control for Trade and Occupations does.
Bulk of funding received from SETAs
CIARAN RYAN: And it is state-owned, are you funded by the government?
INNOCENT GUMBOCHUMA: Yes, we are state-owned, we are under the Department of Higher Education and Training and we are funded partly through the National Treasury, it’s very small, I think it’s 20%, and 80% comes from what are called SETAs, which are Sector Education and Training Authority, through the skills levy, which every employer in South Africa contributes towards. So from that skills levy, from each SETA, we get 0.5% of the skills levy that they collect.
So that’s where the bulk of our funding comes from, and why do we get it from the SETAs, most of the work that we’re now doing was initially delegated to the SETAs and we are taking those functions and we are also monitoring all the 21 SETAs, so if you are familiar with that, each sector has its own SETA. For example, the AgriSETA will deal with agricultural-related activities, MerSETA is manufacturing, InSETA is insurance, BankSETA for the banks and financial sector, and so on. There are 21 of those. So that’s where our funding comes from. There are a few services that we offer as an organisation, every organisation to stay afloat you have to be innovative and get some streams of income, so we’ve got that through verification services, also through certification services and lately through accreditation services, and that is actually growing because we accredit those providers or colleges that want to offer our qualifications. We ensure that before we accredit that they have met all the requirements that have been set down by the QCTO so that they can train the learners.
CIARAN RYAN: Nicolaas, you might want to jump in here because the South African Institute of Business Accountants is involved in accreditation of accountants as well. So there’s obviously some parallels here and room for interaction.
NICOLAAS VAN WYK: Yes, the professional sector is quite dynamic and interesting, the government has really taken a very proactive stance within the sector, which is very welcome. So
historically South Africa had many, let’s call them associations of people that grouped themselves together under a title, and they distinguished based on the functions or services they provided. The most typical ones, I suppose, it would be like an attorney, doctors, accountants, engineers. But there are also many other voluntary associations of people in all spheres of the South African economy.
I think there are now more than a 100 association’s registered with SAQA. So the National Qualifications Framework Act wanted, I think, that’s my view of the matter, I’m not an expert in this field, to start formalising the professional associations in South Africa, and then provided that the South African Qualifications Authority is allowed to register associations. Then SAQA ensures that these associations are run professionally, that they are solvent and liquid, that they have certain structures and procedures in place, as an oversight, I suppose, of a free market activity. So we annually report to SAQA. Also, again, historically, most association’s qualifications were sourced and based on the CHE qualifications and degrees, and then a professional association would monitor the experience and the competencies of a person. Then after going through a degree and experience, would then grant them a designation. So that is our relationship with SAQA. Then some of our sister organisations decided then to also go the QCTO route, where they develop their own qualifications, for professionals. So it’s an intricate relationship and that’s why I’m so happy to have this discussion and to also learn a lot more about QCTO and how we can support them. From our side, we’ve developed a designation that we’ve registered with SAQA for Certified Financial Officers or Finance Executives, CFOs, FDs and the like. What we found, based on different types of research, is that the accountant is such a traditional term, but the modern economy has changed so much. So that role of the CFO has changed to be more of a strategist, an operations manager, an HR manager. So it’s quite a unique position to be a CFO at this stage. So that’s what I also want to hear from Innocent, about his role as CFO and how that has changed from just being an accountant. So what we then decided is to register a designation for this changed role and CFO, and possibly explore a formal qualification with QCTO for CFOs. So that’s my view on our discussion.
CIARAN RYAN: Innocent, maybe you want to jump in there with your views on what Nicolaas has just said.
INNOCENT GUMBOCHUMA: Yes, what Nick has just said is quite true, it’s an intricate relationship, and I’m glad that he has mentioned it because the professional bodies like his organisation, the oversight is by the South African Qualifications Authority. But I think also if I may bring in here, maybe I might have left it out in my introduction of QCTO, it is one of three quality assurance bodies, the first one being Umalusi, which deals with up to matric, then there’s CHE, which deals with universities, and then there’s QCTO. However, as an NQF family we then register with SAQA. The NQF is the National Qualifications Framework. So those are the four organisations that oversee this space. It will be interesting because, like I said, the qualifications that developed, you will be shocked at the number of qualifications that are out there. If you will allow me in this conversation, just how sometimes ignorance, without knowing what is happening, can cause problems. I went into a hair salon sometime back, before I even joined the QCTO, and it was at a mall, so when I went in there they said, we do not do the African hair. So I left that place very distraught and I said, no, this is racist and everything. Now, when I joined the QCTO I discovered that there are two qualifications, there’s a Caucasian hair qualification and there’s African hair. So I really, really was amazed by that, and that ignorance, also I could not go back, I think the place had changed by that time, and apologise. I just wanted to say what Nick has said about looking at the development of a qualification for a business executive or CFO that will be very, very interesting.
Trade qualifications empower youth to become self-employed
CIARAN RYAN: Just to carry on with the Quality Council for Trades and Occupations, can you give us a sense of the budget that you have per year and how is that deployed, I guess there’s a staff? It sounds like you’ve got thousands of qualifications that you’re evaluating, I suppose that budget goes.
INNOCENT GUMBOCHUMA: Yes, we don’t have such a big budget and it is always my cry to all the powers that be that this organisation is a vital organisation in unemployment alleviation. I think between the three of us, we’ve had issues where, for example, you call a plumber, but he’ll tell you that he is coming tomorrow because he’s fully booked. We’ve got those kinds of shortages and if we have a lot of those kinds of qualifications for trade, then it’s easy to start your own business, and that in effect will reduce unemployment, which we are fighting against. So why I’m saying this is I want to magnify that my organisation needs quite a huge budget to ensure that the system is properly monitored. So the budget is, like I said, it’s a bit small, it’s just, just below R200 million. Our staff, when I joined the organisation, we had 20 staff seven years ago, now we have 105. When I opened the organisation, I was involved with most of the staff interviews because we were trying to capacitate the organisation. We had planned to grow to 346 staff members by next year but unfortunately, we all know what has happened with Covid, the budgets have been cut. So I am sweating right now to see how best do I navigate this thing. So we’ve got that for staff, our organisation, you might have guessed, that we are human resources-oriented, we depend on people, even those who develop qualifications, those experts. So most of our funds go towards salaries of the QCTO employees, towards consultant fees, we call them consultant fees but they are the people who do the development of the qualifications. We’ve got verifiers and monitors who visit all over the country to verify and monitor those providers that we have accredited, or we want to accredit. We want to physically go there, and check do you have the right equipment for this qualification, do you have procedures in place, do you have a building and so on. So you find that most of our funds, before the pandemic, we spent quite a lot on travel, accommodation, car hire and so on because our people travel across the provinces. So then, obviously, we’ve got our goods and services that we use, our IT systems, and a huge chunk goes to the building that we rent in Hatfield, we are leasing.
CIARAN RYAN: And how are you operating during lockdown, what are the sorts of challenges, logistical challenges that you’ve got?
INNOCENT GUMBOCHUMA: I’m very happy, I think my organisation in the public sector was one of the few organisations that continued to work from the day of the lockdown. We’d already simulated and practiced working from home, not because of the pandemic, but we were already of the view that should we come to work on a Friday, why can’t we sometimes just work from home and see how it goes. So we had already, for example, moved to Office 365, we had already given everyone VPN to access the systems from home. So when this pandemic came, it was easy, I haven’t set foot in the office since the initial lockdown in March, so I’m still working from home, everyone is to working from home. Of course, we took, the opportunity to change the layout of our offices into more open plan to meet Covid regulations. But basically, the organisation was ahead in terms of the logistical part of working from home. I’ve been releasing salaries without problems and I’ve been signing purchase orders. Fortunately, as well, we had actually appointed a provider through the tendering process for enterprise content management and that also involves automation of all our systems so that we don’t do things manually. So it came at the right time and it was easy and seamless.
CIARAN RYAN: Let’s talk about the role of the CFO, you already mentioned a number of different functions that you’re involved in. It seems that you’re involved in office planning, you’re involved in recruitment and interviewing. The role of the CFO has changed over the years, is that not true, and maybe you can just talk over the seven years or the last decade, give us a sense of what kind of changes and what’s expected of the modern CFO.
INNOCENT GUMBOCHUMA: I have always said that the days of reporting numbers and leaving things, they are over for a CFO. If you want to be a CFO who is on top of his game, and by the way, I don’t want to sound like I’m bragging, but I just came out of a gruelling audit under Covid conditions, and I’m happy to say I have secured a fourth consecutive clean audit report without findings…
‘The CFO is now the trauma surgeon’
CIARAN RYAN: Wow and this is by the Auditor General?
INNOCENT GUMBOCHUMA: The Auditor General of South Africa, yes. They don’t do sample auditing, they audit 100%. So the fourth consecutive year with no findings is no mean feat, especially in the public sector, we all know what’s happening in the public sector. I always say that I want, and even my team know that, yes, we might be in the public sector but I run my organisation, the areas that I run and I’m responsible for, in a private sector mentality and way of doing things, where we are agile, we’re on top of things, we are responsive. So that, for me, those are some of the things that the modern CFO has to…if we check around just the regulations, National Treasury issues regulations every other fortnight. So for a CFO it’s not just about the numbers now, you have to ensure that you adhere to regulations. By the way, the public sector is the most regulated industry and it’s really quite tough. For a CFO right now you don’t [indistinct], I think maybe based on what I have learnt and also when I was doing my professional exams with the Canadian CCA, the Canadian Institute of Chartered Accountants, there is globalisation now and we cannot distance ourselves from what is happening. Organisations need to be benchmarked and, I, for one, want to know how the similar body in Germany is doing, how are they managing their issues. So as a CFO you need to also have a global outlook. I think that the other thing that is key and that is changing, is the technology, we all know that, it’s evolving very quickly and this provides the potential for CFOs to reconfigure our finance processes. I say to my team, I do not want you guys to spend more than two hours producing management accounts, producing financial reports. That should be a click of a button. Spend time analysing and giving me trends and make decisions based on that. So technology has made it possible. I am actually driving…we get a lot of data through our MIS system and we should move also to big data analytics, we cannot leave those things, those things are key, cost-effective and it is going to help in our strategic planning and so on. As you know, the CFO is responsible for the risk management of the organisation in all facets of the organisation. A CFO, like myself, you find that I’m extremely busy because every other meeting in the organisation I have to attend because whatever decision is taken there, there might be financial implications. So you cannot leave things to happen on autopilot, you need to be there, you need to take charge, you need to advise. There are also changing risks within an organisation, like, for example, now we have Covid-19, they all look to the CFO, where are we going to get the money. Now, you have to be the trauma surgeon. I read an article where they said the CFO is now the trauma surgeon. We have to navigate through all these waters and be the source inspiration in a changing environment. This is not your normal ten years ago CFO role. There is really a greater role to play for a modern CFO in strategy, validation, and execution. If agility is not a buzzword for a CFO, then I will be worried about the credentials of that CFO because you have to make sure that your organisation is agile. In a nutshell, there are so many complexities in every other organisation, and as a CFO those complexities are just not challenges, you might view them as opportunities, how do I steer my organisation forward. So my message is a modern CFO is a forward-looking CFO, rather than just reporting on what has happened. So the more a CFO can demonstrate [indistinct] business acumen, rather than simply performing like a bean counter, the more valued they will be in the organisation, and that’s what I have tried to be.
CIARAN RYAN: That’s an interesting term that you use there, trauma surgeon. I think the CFO is also the person who’s having to say no a lot. I think the other thing that you brought up there was the number of meetings that you’re having to be a part of, I’m sure that your workload must be incredible because you’re not just involved, as you say, in the bean counting side of things, you’re involved in very much the forward-looking direction and strategy of the business. Nicolaas, did you want to jump in there about the role of the CFO and also maybe mention the CFO designation.
NICHOLAAS VAN WYK: I just want to ask Innocent, it’s amazing that he had this four-year clean audit, and you can hear the passion he has for not only his own profession but also for QCTO, and he compares himself to the international companies that are in his sector. Now, that is to me amazing because I think that is the solution for South Africa’s problems, if we just start comparing ourselves and benchmarking ourselves with international best practice, then that gives you a goal to achieve and to compare yourself. So I want to ask Innocent, what is then, and I’m sure it’s the same in the private sector, so we do ask this same question for our private sector CFOs, but what in Innocent’s view is the ailment that’s infecting or affecting the public sector, why can’t we get rid of the corruption? I’m sure there are lots of issues that we can talk about, the competencies and the qualifications of CFOs in the sector, the unbelievable pressure that they have, working under political influence or is it just a case of they’re not emotionally equipped to stand up against bullies within the sector? It’s something that everybody’s talking about, I would love to have Innocent’s view.
INNOCENT GUMBOCHUMA: Thanks Nick, [indistinct] but I totally agree with what you’re saying, but maybe before I answer that, I would want to concur on the issue that you said obviously about in South Africa that we lack this urge of benchmarking with international best practices, and that we suffer from what we call bounded rationality, where you think you’re the best, but when you go out there, you actually find out that you are not, you are not that good at all. I can give you a practical example, I used to think that OR Tambo International Airport is so huge and massive until I went to Dubai International, so that bounded rationality was revealed. So it is very important, there are so many countries that are well ahead and we don’t necessarily have to reinvent the wheel, but to benchmark ourselves, I think that’s what made those companies or nations to prosper. However, coming to your very hot topic that you introduced, what I see in the public sector is it might not be fact based but I think that most people, if an audit is done now, most people are not qualified
to be in the positions that they are in. So that creates a problem because that means somebody put you there and if somebody puts you there, then you are their person, you are not an independent person, you have to dance to the tune of that person. So the problem that we have is I think there’s too much deployment, rather than competency-based employment in key positions because you should be able to, I know things are tough, but you should be able to say no. If you can’t, then you’d rather resign, and you have your reputation intact. I think there’ll be so many organisations willing to absorb such a principled approach, but it rarely happens in the public sector. Hence, now we talk about so much corruption, it makes me, with the passion that I have, it makes me rather sad even to say I’m in the public sector because somebody will always think, oh, okay, these are the guys, which is not true. In my organisation, not even a single cent has been missing for the time that I have been there.
‘If you are given something that you do not deserve, you are compromised’
CIARAN RYAN: This is fascinating, Innocent, what you are saying. Does it not really go down to the ethical boundaries. There are published ethical codes for accountants and chief financial officers. But there’s something missing there, if it’s not being applied, you’ve already talked about deployments, and then you are answerable to somebody else, and straight away you are violating that ethical code, is that not the case?
INNOCENT GUMBOCHUMA: Yes, definitely because you’re already compromised because if you are given something that you do not deserve, you are compromised. There is no way, you’ve got no backbone, nothing. But if you walk in an organisation and then you go through all these steps, you are appointed on merit and everything, you’ve got no allegiance to anyone, but to uphold the professional standards and the ethics because there’s no pressure whatsoever. You’ve got no one holding any strings behind you to say, hey, I will say this. I think what is happening now, I am just hoping that the leadership, those who are leading the public entities or those who are the decision-makers and even the executives or parliamentarians…people are being held accountable, and that should send a really strong message. But it’s going to take time because I want to believe [indistinct] there’s no easy way to success, you cannot get into an elevator to success, you have to take a ladder, step by step. So that’s my take on it and sometimes it’s quite sad, personally, because you don’t want to be brushed with the same brush, and sometimes you think, should I continue in this sector, have I done enough in this sector, should I perhaps look for other opportunities.
CIARAN RYAN: Okay, we’re just really running out of time. Two minutes and two quick questions, if I can, Innocent. Just a little bit about yourself and your career path, where you grew up and how did you end up at the Quality Council for Trades and Occupations.
INNOCENT GUMBOCHUMA: Okay, I’ll be quick. Like I said, I grew up in Zimbabwe and I did my tertiary education in Zimbabwe at a university called Midlands State University, and I worked for the Reserve Bank. I think at that time the South African Embassy advertised that there are certain skills that are needed in South Africa and they were giving out work permits. So during that time I took a work permit but I wasn’t too sure whether I wanted to move but then the economic conditions changed and then I had an option to move to South Africa. When I came here, I did struggle a little bit because I started all over, literally from scratch. I did quite a number of temp jobs, working for labour brokers here and there. The big organisation I worked for was SABMiller because I was SAP certified and I was dealing with the SAP side of accounting on the investments. I then joined Umalusi, which is one of the quality councils, as a permanent employee, as an assistant manager there and then I rose through the ranks. Then the QCTO was formed, so I moved to QCTO, I did my MBA and all my professional qualifications. I am married with three daughters and during my spare time I’ve got a little restaurant, and I can invite you guys and I’ll cook for you.
CIARAN RYAN: Where is that?
INNOCENT GUMBOCHUMA: In Pretoria East.
NICOLAAS VAN WYK: We will definitely be there, thanks for the invite [laughing].
INNOCENT GUMBOCHUMA: Sure, I will hold you to that, you’re going to have to come hungry.
NICOLAAS VAN WYK: We can do an Accounting Weekly article about the restaurant and finance executives.
INNOCENT GUMBOCHUMA: [Laughing]
CIARAN RYAN: What’s the name of the restaurant?
INNOCENT GUMBOCHUMA: It’s Sunset Lounge, so people come from work and they lounge a bit before they go home.
CIARAN RYAN: Wow, okay, that’s wonderful. Final question, any advice for aspiring CFOs, people who are working their way up the career ladder, what would you advise them?
INNOCENT GUMBOCHUMA: I think from this conversation, if you heard me correctly, I was also giving advice. So when I was saying there’s no elevator to success, you’ve got to take the ladder step by step. But one of the key things that I think youngsters need take note of is you’ve got to invest in yourself, and make it so difficult for organisations not to give you what you deserve because you’ve got the qualifications. The qualifications is one side, you’ve got the passion, you’ve got the willingness, you want to do the dirty work because you can only get to the top if you are willing to do the dirty work, and what I mean by that is you’ll get your hands dirty, you’ll be hands-on. So the number one thing is there is a lot of competition out there, people are studying, I always encourage my team to earn a qualification of some sort, it will change your perspective on things. The traditional, like we say, traditional accounting is changing now, technology is doing those things. So you need to equip yourself with the relevant qualifications that can be useful. But the most important thing I think as a young person is somebody must draw up their career path. I’m still below 40 and I’m nominated for CFO of the Year with another organisation, CFO South Africa, and I am hoping that I will get an award or so. I still feel that at 39, I became CFO at 38, it was a bit too late, but I was a Director of Finance at 30. So a young person can still occupy a high post, it’s not about age but it’s about what value can you provide, can the organisation depend on you, can you be the rock that cements the organisation, the cornerstone of the organisation, and then I don’t think you’ll go wrong, your talents will be noticed, of course, backed by some academic credentials. That would be my advice.
CIARAN RYAN: Wow, fantastic advice. I think let’s leave it at that, I thoroughly enjoyed this conversation. It really was inspiring, particularly your views on the public sector, and I think your advice as well to up-and-coming finance executives. Thank you so much, Innocent, for coming on, let’s stay in touch.
INNOCENT GUMBOCHUMA: Thank you so much, I really appreciate your time for this discussion, it took time but let’s finish this conversation over a very nice matured steak at Sunset Lounge.
NICOLAAS VAN WYK: We will do that.
CIARAN RYAN: Indeed, we shall.
