Archive for category Accreditation

Today, again we received a query from a person saying “Can you tell me , what is the value of attending this seminar (Prepare for Verification) if the B-BBEE score card /certificate must be done by an accredited agency.”

Our answer is quite simple. A certificate is not “done” by an accredited agency. It is verified by an accredited agency. There is a big difference. The agency verifies (checks) that the scorecard is calculated correctly and issues a formal certificate based on an accurate scorecard.

The whole reason for getting a certificate is to achieve a high score or level. The agency cannot “give” a high score. The company itself wanting a scorecard has to build up that good score. They have to take the correct actions in order to achieve the points on the elements. The agency does not do this, as they are only called in after the company has earned the points and calculated their scorecard. The points are not automatically earned. The elements: Ownership, Management Control, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Socio Economic Development can all contribute towards points on the scorecard.

A sporting analogy is referees do not award points, until the team has scored the try or penalty of conversion. The team itself has to score the points. The coach helps and advises the team on how to score the points or runs or goals. The team itself has to do the work, both off and field and on it before it can earn its points. In the same way B-BBEE consultants act as the coach to the company (team), and the referee is the verification agency and he confirms that the team has earned the points.

Our up-coming seminar on “How to Prepare for Verification” is a one day event training our clients on how best to “play the game” to earn the maximum points before the verification agency can be called in to adjudicate the points earned. We will help you identify the points you have earned and also prepare your files properly. This will ensure that the verification agency will be able to easily and quickly verify the points and issue the certificate.

The minister has gazetted an explanation regarding the new targets conundrum, notice 102 of 2012 issued 7th February 2012.

The key paragraph states:

“With effect from the 9 February 2012, the 0-6 year targets will come into operation. However for measured entities whose Measurement Date is prior to 9 February 2012, the 0-5 year targets will still be applicable. But for measured entities whose Measurement Date is post 9 February 2012 the new targets will be applicable.”

The notice of course should have  stated “With effect from the 9 February 2012, the 6-10 year targets will come into operation.”, instead of saying 0-6 year targets. We have notified the dti of this typo.

That notwithstanding the dti has clarified the issue to some extent, but it still is going to cause some serious problems.

The intention of this notice is that a company that is using its financial period of say 1st January 2011 to 31st December 2011 will use the “old targets”, whereas a company whose financial year ends on 29th February 2012 will use the new, higher targets for its next verification. We can therefore expect to see new targets being implemented as from about March or April of this year.

The codes, and this notice uses the term “Measurement Date”.

One of the key principles of the codes (statement 000, code 000) states:

2.3    The basis for measuring B-BBEE initiatives under the Codes is the B-BBEE compliance of the measured entities at the time of measurement.

This, presumably is what the minister had in mind when he stated “However for measured entities whose Measurement Date is prior to 9 February 2012, the 0-5 year targets will still be applicable.”

There has been some discussion about the concept of “measurement date”. We have always seen the measurement date as the end of the financial period under review. However many verification agencies do not see it that way. They correctly use the financial period for financial information like turnover, net profit after tax, skills spend, ED spend, payroll, SED spend and procurement. However those agencies tend to use ownership data and EE data as it appears on the date of the verification. We have argued that this is not a consistent approach. The purpose of verification is to verify that data as it was on the measurement date. This is consistent with for example an audit where the audit is performed many months after the year-end.

The reason that verification agencies give is that SANAS requires them to interview a selection of employees, and if an employee has left they cannot interview the employee.

In our discussions with the dti, they see measurement date in the same way as we do.

To their credit the dti has promised us that they will fix the “0-6 year” error, and give a more detailed explanation of measurement date.

It does mean that verification agencies that have incorrectly used the verification date as the measurement date will have to change their policies. They will also need to satisfy SANAS that they have sufficient information about an employee who has subsequently left the company to justify having awarded them the points.

We have one more suggestion and that is that the measurement date be included on the verification certificate, clearly showing which target is being used. This information should be included o the verification report that agencies submit to their clients, but is not included on the final B-BBEE Certificate.

The Treasury Dept has issued guidelines to be implemented for the new PPPFA regulations coming into effect tomorrow (7th December).

They have fixed up the errors we identified, and which we had requested them to change – i.e. EMEs that fall into the Tourism or Construction sectors have different EME thresholds. In the original regulations it did not specify that certain sector have different thresholds – it made the blanket statement that EME’s have a turnover of less than R5 million, but did state that the regulations are in line with the B-BBEE Codes.

They have now clarified that an EME is one with an annual turnover of less than R5 million, unless you fall into the tourism sector where the threshold is R2.5 million and the Built Environment Professionals sector where the EME threshold is less than R1.5 million

The second issue relates to acceptable certificates:

The guidelines relating to verification agencies state that certificates will be identifiable by a SANAS logo and a unique BVA number. All certificates bear this logo, other than EMEs, because SANAS has not accredited any agencies to issue certificates for EMEs. No EME certificate issued by a verification agency is allowed to carry the SANAS logo.

The guidelines also do mention with respect to EMEs that “Sufficient evidence to confirm a qualifying EME is a certificate issued by an Accounting Officer (as contemplated in the CCA), a similar certificate issued by a Registered Auditor or a Verification Agency.”

We have spoken to Treasury and they confirm that the intention is for an EME certificate, like all certificates to carry the SANAS logo. While there could well be a legal challenge to the slight ambiguity in the guidelines, there is no doubt that every procurement officer affected by the PPPFA is going to look for a SANAS logo, and if one is not present on the certificate, they will automatically reject it.