|Clearing the Verification Confusion
February 2009 marked the two year anniversary of the BEE Codes of Good Practice and the date that the first of now 24 verification agencies were accredited.
However since April 2009 there has been much confusion. First the DTI issued a notice saying that only certain certificates are valid. This notice initially gazetted in April was quickly amended to correct errors and stated that from 1st August 2009 the changes would come into effect. On 31st July another update was issued updating the 1st August 2009 deadline to 1st February 2010.
The latest notice briefly states: That all certificates produced by a non-accredited agency would be valid if produced before 1st February 2010 and would be valid for a year from date of issue; and from 1st February 2010 only certificates issued by accredited agencies or agencies with a valid pre-assessment letter would be valid. The DTI did send us a confirmation that small business can still confirm their turnover through an accounting officer or auditor.
Problems still exist which the DTI has been slow in correcting. Currently the Codes do not define a non-accredited agency. Associations have tried which unfortunately is not objective since each association defined a non-accredited agency as being themselves at the exclusion of the rest of the market.
Logically we must look at everyone who is not an accredited agency and define those as being non-accredited agencies. This of course should include verification agencies who have not been accredited as yet and consultants. However the verification guidelines and SANAS requirements should still apply even if they have not yet been proven to meet these standards. IE a verification agency is only allowed to "audit" a BEE scorecard and a consultant is not allowed to "audit" a BEE scorecard. A consultant should be used to prepare a strategy or a scorecard, offer advice and in general make the BEE scorecard an easier task. A verification agency is there to check each piece of documentation to ensure the BEE scorecard is reliable.
Guidelines for accepting a BEE Certificate
Even though agencies have been accredited it does not give you an absolute guarantee that their scorecards are accurate. In the last few weeks we have seen one accredited agency miscalculate the VAT calculation (they multiplied by 0.86 instead of dividing by 1.14) and another accredited agency issued an Exempt Micro Enterprise (EME) scorecard to a company who proudly announces that their annual turnover has increased, now to over 600 million per annum when an EME status can only be issued to a company with a turnover below R5 million.
Practically it is sometimes not possible to ensure that every single supplier scorecard is accurate. Take a decent sample and check the basics of the scorecard - is the correct information present on the scorecard, the company, the address, VAT and Registration no. etc… Then check that the score earned appears to be correct. Add up the scores, check the level and check that the company type (EME, QSE or Generic) makes sense. Ask questions about anomalies like Ownership earning maximum points but Management earning no points or how do you do well on Skills Development if no points are earned for Employment Equity.
All BEE scorecards need to have sufficient documentary evidence. Without this proof the scorecard is invalid regardless of who produced them. If you have any reason to suspect a scorecard even with an accredited agency it must be questioned and proof requested. If an agency has not followed the correct procedures they may find all of their scorecards being rejected or their accreditation status removed.
A word to the wise. A BEE scorecard is only acceptable when it meets certain minimum standards. At the same time a scorecard is worthless if it has no points. EconoBEE is a Broad Based Black Economic Empowerment company with experts who are available to help with all aspects of BEE implementation.
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|Accountants BEE Charter Issued
The DTI recently gazetted the Accountants Charter as a draft BEE Charter section 9(5). The next stage is a short comments submission and then if all parties are satisfied it will be gazetted as a section 9(1) sector code.
Only once it is gazetted as a section 9(1) charter will the CA industry be required to follow this new scorecard. The sector code will apply to CA's, Registered Accountants, members of SAICA, IRBA, TOPP and educational facilities offering Accounting related training.
Salient features: Employment Equity and Skills Development increased to 20 points each, 5 more than the Codes of Good Practice. Preferential Procurement is now 10 points from 20. Preferential Procurement is the driver behind B-BBEE which unfortunately means CA's will spend less time encouraging their suppliers to become compliant. CA's will very likely hire more black employees to reach targets on Employment Equity. They will also spend more money on Skills Development, in particular learnerships which now counts more on their scorecard. This is within the aim of the charter to develop and encourage more black CA's.
The thresholds remain unchanged - EME's below R5 million per annum, QSE's between R5 million and R35 million and generic above R35 million.
|Enterprise development ‘key to meaningful BEE’
Assisting black entrepreneurs to grow their small and medium enterprises (SMEs) is infinitely more important than selling a stake of a business to a black partner.
This is the advice of Keith Levenstein, CEO of leading Black Economic Empowerment (BEE) consulting specialist EconoBEE. He said that in many cases, the “empowerment partner” is only a passive stakeholder in the business.
Speaking at a conference in Durban on how to maximise BEE scorecard points through procurement and enterprise development, Levenstein said enterprise development holds the key to meaningful empowerment.
|Telkom gets a Level 5 BEE Scorecard
The Preferential Procurement element on the BEE scorecard is worth a substantial amount of points, better yet the cost of those points is practically nothing.
Telkom have received their BEE Verification showing them as a level 5 contributor.
Telkom's BEE scorecard and many others are available on BEE Procured.
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