Six years ago, when Hassan Ziyath, ACMA, CGMA, was appointed the auditor general of Maldives, the country was spending at an unsustainable level, with high levels of public debt and a large current account deficit. There was also low trust in the country’s budget credibility and controls in spending, accounting, and reporting, according to a World Bank report. Ziyath felt that the most pressing agenda was to rebuild trust in the institution by developing competency and increasing transparency.
But one challenge stood in the way of his ideas for change. The organisational culture of Maldives is largely hierarchical, and the Auditor General’s Office (AGO) was bureaucratic, with junior employees often feeling they didn’t have a say in decisions, Ziyath realised. In an interview with FM, he shares how he sparked change in the AGO and executed reforms that included the recent establishment of the country’s first accounting professional body.
What was the Auditor General’s Office like when you first joined it in 2014?
Ziyath: The AGO is one of the oldest public institutions in the Maldives. There were strong hierarchies, line of command and control, and the communication always flowed from top down. Maldives had a political system based on strong executive branch of the state.
The time when I joined AGO was a period of transition where Maldives had a new constitution (passed in 2008) that was shaped based on the separation of powers, free media, political parties, and civil society, emanating a totally different dynamism and way of thinking among our people. AGO was at a crossroad of the receding old politics and incoming new political system. So, maintaining the neutrality and the impartiality under this circumstance remained as my most important objective.
What was the first issue you tackled in the AGO?
Ziyath: I realised that my first priority should be to change the mindset of the team and to make the AGO relevant and respected under the new political realities that the country has embraced. I was blessed with both capable young people and those with years of experience in the team. I felt that the diversity of the mix should be retained, and synergies should be built by striking a balance between the wisdom of age and desire for change. I wanted to retain the staff and eliminate the apprehension some staff had when there is a change of auditor general. I believe this is the most important step to make change successful in any public organisation.
Later we introduced a strategic planning process that led to the publication of the first strategic plan for the AGO, developed a visual identity strategy for AGO to bring in a much-needed prominence to the organisation, and established the Institute of Audit and Assurance, the training arm of AGO with the task of learning, development, and research.
What were the biggest challenges to these projects? How did you overcome them?
Ziyath: The changing of mindset, instilling open communication, and making the staff feel that they can all contribute regardless of the position they hold were the initial challenges. But building their confidence and helping them see with their own eyes that they are indeed making a difference worked really well. For example, we noticed employees’ lack of engagement during meetings. So we came up with a programme where staff took turns to present ideas, and we also introduced interactive sessions with famous local personalities to talk about soft skills, leadership, and team building. We brought in some fun by celebrating days like the International Women’s Day and International Men’s Day.
At the same time, I had to be mindful of the political sensitivities of the work we do. So we engaged heads of public institutions and ministers early on. This involved personally calling or meeting them to discuss issues we noticed during the audit process and have candid conversations to understand the nature of the issues identified and arriving at settlement without compromising audit independence.
These were important balancing acts to get things done. I think the long-term view is crucial. The key is to avoid the tendency to expect immediate results because there are several points of views and several versions of the same story and it takes time to sort things out; patience matters.
How did you build the trust of the public and other government-related institutions in the AGO?
Ziyath: The AGO is a multi-stakeholder organisation, and there are power dynamics that the AGO has to balance. The reason for the tension is in the nature of audits — the fear factor. This was the biggest barrier that we had to overcome at that time to increase our stakeholders’ trust in the AGO. The reason is because most didn’t understand how the audit process works and confused our audits with anti-corruption investigations. So whenever we wanted to engage in an audit, everyone in the organisation that was to be audited, from junior to the senior levels, felt threatened and saw our work as fault-finding.
Our approach was to remove the fear factor by first becoming a partner, creating awareness, developing the necessary skills, and then subjecting institutions to audits.
We also wanted to make the whole public accountability process work, to make people in charge feel that it makes good sense to do accounting and reporting with transparency and accountability rather than getting caught in the audit process. It is not the number of audit reports that lead to public acceptability and accountability of the state actors, but the knowledge and competency to keep clean records, clean books, and clean reports in the end.
The AGO pushed for the creation of Maldives’ first accounting professional body. Tell us more about that.
Ziyath: I have to think beyond the official mandate of the institution and work in the best interest of the nation. One example is the local representation in the audit profession. Aspiring professional accountants were marginalised in the profession where the auditing and accountancy profession was largely represented by the global accountancy firms. We eased the statutory audit licensing regulation to provide practising opportunities for the local individuals and firms and started issuing audit licensing to local firms in 2015.
We also believe in the power of professional associations for the audit and accounting profession to uphold the ethics and much-needed competencies. As our economy becomes more complex and integrated to the rest of the world, the need for professional associations is becoming ever more increasing. That’s why we spearheaded the work to establish the first professional accountancy organisation (Institute of Chartered Accountants of the Maldives) in the country, which became a reality in September this year.
Climate change is a major threat to Maldives’ economy. What is your role in helping the government manage environmental challenges?
Ziyath: About 99% of the Maldives is made up of the sea; our land area is very small. Creating land for housing, industry, and infrastructure has been a huge challenge for the country. Two options are available to address this issue: population relocation or land reclamation, both of which are issues of contention. Local communities resist being relocated to another island. As a result, the government has resorted to reclaiming land from the sea, and such projects have huge environmental impacts.
Our focus is to promote accountability and transparency in the use of public resources. So, we’re helping the government manage environment challenges by assessing the economy, efficiency, and effectiveness of the government’s responses through our audits. We are developing a framework to conduct environmental audits.
We are also working with the environment ministry to assess the effectiveness of their response to these environmental impacts. We recently issued a performance audit report on the effectiveness and sustainability of the government’s response to coastal erosion. We also carry out financial statement audits of projects involving climate finance.
Any advice for change management in the public sector?
Ziyath: To change an organisation’s culture, you need to promote open communication among staff as a policy. For effective change management in the public sector, it’s crucial to empower team members and provide them with the assurance that their voice matters and that everyone can make a contribution.
Secondly, public institutions must understand the expectations of the public and key stakeholders such as the Parliament. Instilling a results-oriented management culture is key to delivering the mandate and upholding trust in public institutions.
There is also a need to increase the level of stakeholder engagement across the public sector to achieve both vertical and horizontal policy coherence. There is no substitute for effective communication to bring about positive change in our organisations and address pressing issues such as duplication of resources. This can be done through continuous communication, coordination, cooperation, and collaboration.
— Alexis See Tho (Alexis.SeeTho@aicpa-cima.com) is an FM magazine associate editor.