Robust business conversations drive a high-quality audit, says Deloitte's Andrew Mackie
“I would encourage every incoming CFO to find a way to do some deep thinking as to who they are and how to fill the role,” says Andrew Mackie, Deloitte’s new Head of Audit & Assurance for Africa, comprising 15 countries and 185 partners. In this interview, Andrew talks to CFO South Africa about his passion for audit and transformation, the balancing act that finance executives have to go through every day, and how clarity of purpose and priority is what really matters for a leader.
“A new CFO would do well to have a 100-day plan. What are quick wins to establish credibility quickly? If you have a clear, well thought-out strategic plan, you can rapidly establish alignment with the CEO and the chairpersons of the board and audit committee. Establishing those relationships early on is much more important than frantically studying the detail in an attempt to quickly understand your new company.”
Born in Zambia and educated in Johannesburg, relationships have been the cornerstone for Andrew’s own career. “My dad was a company secretary and I always wanted to be a CA. I started with Deloitte as a vac student in the audit department in December 1985, when I was 18 years old, and I was being paid a little bit of pocket money. The principle of building relationships is still there now. That is what I built my career on at Deloitte – and I really, really love the firm.”
Andrew also loved the auditing environment and has always dealt with high-calibre clients like South African Airways, Imperial, Sappi and Nampak. “The thing about being an auditor is that the profession only exists because it has been gifted public trust. That is a special thing,” he says. It is up to the profession to maintain that trust, he adds. “That is why I do what I do. Our role as auditors is important.”
One of Andrew’s first roles as a young partner in 2000 was that of the firm’s Transformation Director. “It was fascinating to be focused fully on transformation and BEE. I loved that opportunity,” he says. When Arthur Andersen collapsed in 2002, Andrew was the only English-speaking partner within the global Deloitte firm with airline credentials, and was offered a partnership to the United States to partner Delta airlines. “We declined it as a family. We have always chosen to live in South Africa.”
An often-heard complaint is that there is not enough finance talent in the country but Andrew is more optimistic than others. “Yes, there is a talent scarcity, but that doesn’t mean talent doesn’t exist. When I see clients that are resolute about filling a position, they manage to do so. It might cost a little and it might take a little longer. There is a normal bell curve for talent in South Africa, although it might be smaller than in rest of the world. There are still lots of exceptional people. But, of course some, businesses are constrained by their cheque book. None of these challenges are uniquely South African.”
The challenge South Africa faces is the absolute need to transform, says Andrew. “There aren’t enough black CAs in the market yet. I have been so impressed with the emerging black talent. Many are exceptionally good. But there are just not enough people. The problem is systemic and starts at school, the state of the economy also does not help. It is really hard to build the next tier of CFOs. The bench is not yet deep enough. We need to fix that as a finance community in South Africa, in collaboration with SAICA and universities.”
According to Andrew, the South African CA qualification is a very highly regarded qualification – as are the country’s CFOs, of whom numerous have stepped up to the CEO role.
“I also think that the tumultuous time we are experiencing in South Africa creates a sharpness in the business community – and in CFOs in particular. We don’t know what tomorrow holds, constant change is the new norm. We have learnt to deal with that as a finance community and it has improved our robustness. Our guys punch way above their weight – being more hardy and street-smart than elsewhere – as we go through stuff that you just don’t get to see elsewhere in the world.”
Four CFO faces
Deloitte has devised a useful tool, which divides the job of the CFO into four faces: steward, operator, strategist and catalyst. The last two faces are the ones ‘above the line’ and are generally regarded as the ones CFOs should spend more time on, as they add more value to business performance. “There is also a danger in that,” says Andrew. “The strategist seems to be the ideal role for CFOs but that is not always the case.”
Sometimes there is the need for a CFO to buckle down and get involved, says Andrew. “The balance between the four faces should be determined by the events that the company finds itself in. If you are a natural operator or steward, there might be circumstances in which you could be the perfect CFO for a company for a certain period of time. There are many hats to wear and wearing the operator hat could be the appropriate one at that moment.”
According to Andrew, the real question is: if you want to play ‘above the line’, what do you need to change to free yourself up? “I like to use the four faces approach to have those conversations with CFOs. How much time do you spend on each of these buckets? How much time would you like to spend on these buckets? What needs to shift?”
“Perhaps the CFO needs to make compromises on his or her own role. It is about knowing oneself. Sometimes getting the balance right can be a simple matter of diary management. I like to have those conversations with CFOs and ask some questions: Would you like to spend more time thinking about strategy? What’s stopping you? Do you HAVE to be in all of those meetings? Do you trust the person underneath you?”
Andrew argues that good auditors should add incredible value to CFOs. “At Deloitte, we try to position ourselves as an advisor to the CFO via our audit role. While maintaining full auditor independence, auditors should leverage the unique vantage point to support and challenge CFOs. When a CFO sees the audit partner as a peer, that can be really powerful. It is, however, up to the audit partner to be good enough, to have business acumen and an understanding beyond technical auditing challenges.”
That added value is crucial for Andrew and it is an approach he continuously shares with his colleagues. “When I am leading an audit, I make sure that partners working with me have conversations with CFOs and divisional CFOs. Not about the audit but about the business. In fact, really robust business conversations drive a high-quality audit because it helps the audit partner place the audit in context.”
With the Independent Regulatory Board for Auditors (IRBA) often criticising auditors’ independence, is Andrew not afraid of a slippery slope?
“No, this is not about coziness. This is about the auditor doing his job: really understanding the business but at the same time bringing his experience to bear for the benefit of the CFO. Audit partners will only be trusted by a CFO if there is professionalism and independence. No audit partner will risk the reputation of himself or the firm for the sake of one client. There is a clear line in the sand.”
Discipline of thinking
One of the best CFOs that Andrew has ever worked with stood out due to that CFO’s ability to think and plan. “He would tell me: ‘I need to talk to you in a couple of weeks’ time about something. I can’t talk to you about it yet, as I am still thinking about it.’ He would really think through different permutations, whether that involved accounting, moving people around in the organisation or other matters.”
“This CFO was a very strategic CFO,” Andrew continues. “He had a discipline of thinking, taking time to let things float in his subconscious. For him, it was no problem to go home at two o’clock to sit on the porch, stare at his garden and wrestle with some important issues.”
The principle is something Andrew tries to execute in his own work as well. “I try to plan in thinking time: I like to go away from the noise and think about three or four important decisions I have to make. It is so hard to do that, to really try to find time to think about things that matter on a really deep level. But a business needs intellectual horsepower and it is up to the leadership to generate that. You do not do that by clearing 400 emails.”