Restoring trust requires enlisting and empowering the right people, says RMA Group CFO.
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In the wake of various corporate failures across the world and ensuing calls for financial reporting reform, there’s been a renewed focus on governance. Kyansambo Vundla, group CFO at Rand Mutual Assurance (RMA), says the right kinds of discussions are now taking place at an industry level.
Kyansambo joined RMA in June 2021 and says she arrived at the company at an exciting time, as the 127-year-old organisation is embarking on a new strategy journey, with a focus on growth.
Founded in 1894, the Rand Mutual Assurance Company Limited (RMA) is a non-profit mutual assurance organisation owned by its policyholders. RMA operates in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA), under licence from the Minister of Labour and specifically focuses on the mining and metals sector. But beyond this, the RMA Group also operates under both short- and long-term insurance licences issued by the Financial Services Board (FSB). In this way, it’s able to offer its members value-added products, Kyansambo explains, which is where the growth opportunities exist, particularly within life assurance offerings.
“We’ve identified the strategy to ‘build a business of significance’. With a legacy of 127 years behind us, I think we have a trusted brand in the industry, and with a new exco to take us forward, it’s an exciting time,” she says.
As accounting evolves, audit needs to remain relevant
Kyansambo says that the future of audit needs to be about rebuilding trust in the profession and reinforcing its relevance. By this, she means focusing on flagging and addressing the right areas of risk.
“For the management of an organisation, there’s nothing more frustrating than an auditor who will dig in their heels on a finding that’s not relevant from a risk management perspective, and overlook the true areas of risk due to lack of understanding,” she says. “That’s one of the reasons there needs to be ongoing involvement from senior audit managers and audit partners – to ensure the appropriate risks are addressed – and when structuring the audit and assessing findings.”
She says there also needs to be room in audit firms for more junior team members to challenge audit conclusions “up the line” where necessary. She cites the recent KPMG SA scandal as an example. “Material findings were flagged by the junior staff but ignored by the partner. This issue will perhaps remain a challenge as audit firms remain quite hierarchical in general.”
Essentially, everyone – from the trainees on the external audit team to the members of the various governance committees, the company’s management and directors – needs to have an understanding of their role, be empowered to act in that capacity and have a sense of personal responsibility, says Kyansambo.
Good governance is a people issue
“Governance is codified in many ways through King IV and the Companies Act, for example, but the true success of governance is how those ideals are brought to life in the day-to-day running of an organisation,” says Kyansambo. “You can have the best governance frameworks and structures in the world – policies and procedures, constituted committees, terms of reference, contracts – the whole shebang. But without the right people, it all falls apart. People bring governance to life.”
She says that an important starting point in creating good governance is the understanding of why it’s important – that it’s not merely seen as something onerous or a tick-box exercise, but that its role is to provide business with a protection mechanism and to enable sensible and sustainable decision-making.
Growing cultures of accountability
Kyansambo says that organisational culture plays a significant role in enabling personal responsibility and, therefore, strong governance.
“There needs to be a culture that does not trivialise governance, but prioritises it. This means, first of all, populating the boards with the right people,” she says.
For example, RMA has an identified skills matrix that guides all appointments, and the various governance committees, such as the audit committee, are empowered to function independently. This aims to ensure that the right discussions are had between the right people, and that the board of directors can rely on the various committees to make informed recommendations or to bring in additional skills where required.
She also highlights the importance of the risk identification and mitigation roles played by the internal audit function and the company secretary, both of which tend to be often undervalued.
Governance structures only work when they are enabled by culture, and Kyansambo says much of this revolves around values alignment.
“We spend a lot of time in organisations talking to people about values, but we don’t tend to do the same with our governing bodies,” says Kyansambo. “Very little tends to be done with our governing bodies around identifying and instilling values alignment. And values really should be the driver of governance. I think that’s where King IV was going. Instead of trying to make more rules and codify for every situation, if governance becomes values-driven, you work it ‘into your heart’ and then it becomes part of you. And that’s where we get integrity – where you do the right thing, whether or not someone is watching.”
Kyansambo says that this might sound very philosophical, but at the heart of governance lies questions of motivation – what people will choose to do in any given situation is an expression of their motivation.
“Organisations need to drive their values and let people know that they expect them to align with these. You can only move with the people who are on the same boat as you,” she says. “We can’t expect everyone to have the exact same set of values, but I think for organisations to function sustainably and to succeed, they need people’s values to align with theirs.”