ACCOUNTING

Addressing transformation

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The new BBBEE Chartered Accounting (CA) charter is much more than a mere tick box exercise; it illustrates an industry rising to the challenge of transformation, while keeping in mind the need to retain the world-leading reputation of the sector.

The CA charter has issued a deviation report to the standard allocation of points required under  BBBEE legislation, so that the allocation works harder to deliver. “The report is a high-level document demonstrating where there has been deviation from the BBBEE codes, and why this deviation is necessary.  This deviation report needs to be opened for public comment - and if accepted, our new industry charter will be gazetted,” says Chantyl Mulder, responsible for nation building at SAICA.

Apart from its significance for companies that need a guideline making sense in a service sector, the deviation report and the proposed charter are demonstrative of a sector that has closely examined the practical implications of the original BBBEE codes, and has devised creative and sustainable ways to use the suggested new code to cultivate growth and equality within the sector.

How will the charter impact the sector? Mulder remarks:   “In a nutshell, our charter aims to deliver more Black CAs.’ She adds that this will create a charter that is ‘inclusive and values substance over form. It became clear to us that the ‘normal’ scoring system weighted to procurement was not going to work for us, and that it should be reweighted towards skills development.”

The objective is therefore to create more Black chartered accountants South Africa [CAs(SA)], thus satisfying the market’s need for accredited professionals, while also achieving meaningful transformation and racial balance. More accredited professionals who are also more reflective of the national demographic in both the public and private sector, will bolster accuracy of reporting and better governance, and stimulate a healthy dose of accountability.

The deviation report utilises the generic codes as a base for its charter as far possible. Mulder explains that “we want to change the generic BBBEE codes based on empirical research and sector-specific issues.” Through adjusting the base codes, the charter aims to balance the membership numbers faster and with more quality than would otherwise be possible, thereby creating scorecard equilibrium within the accounting sector.

The report sets out a tough ownership target at 32,5%, up from 25% in the generic code. This means that firms need to place 32,5% of their voting rights and economic interest in the hands of Black people to achieve 100% of the ownership points. Furthermore, legislation does not allow realisation points to be applicable: the profession is set up as in the main as partnerships. The ownership target includes affiliated entities - the consulting entities that are allied to most of the bigger professional firms. The management scorecard is the exact equivalent of the generic one with its tough, though achievable, scorecard weighting of 19 points.

Another noteworthy deviation from the generic codes is in the area of enterprise and supplier development, where the CA charter has designated 30 points - 10 less than the generic version, which allocates 40 points to this part of the scorecard.

Importantly, SAICA is recommending under supplier development a weighting of 5 points for the support of historically disadvantaged institutions where the profession is growing its pipeline. The reasoning is fairly simple: as the sector is a service one, and the domain of service professionals,  it is not in the business of manufacturing or trading of goods. Because preferential procurement has limited applicability to the CA sector, the reduced 10 points have been added to skills development, which is the key to increased levels of growth and transformation in a service industry.

The CA charter’s proposed skills development score is therefore up to 30 points, from the conventional 20. Mulder argues as follows: “If our charter is about producing CAs, then the focus of our charter has to be on skills development.” With the benefit of the additional points, more focus will fall on learnerships and bursary fund investment. She stresses that ‘it is impossible to grow the number of Black CAs(SA) without funding.’ The only way to transform the sector is to ensure that African and coloured CAs(SA), and would-be CAs, are trained and included in the pipeline to join the workforce – thus achieving a dual purpose of addressing the skills shortage and transformation.

Programmes such as SAICA’s Thuthuka work with talented learners from a grassroots level, while partnering with all accredited universities. It has special focus on accrediting historically disadvantaged institutions to increase accessibility to the profession and to grow the national pipeline. ‘Any assistance to historically disadvantaged institutions will help bolster your scorecard,’ Mulder says. What also makes the CA charter unique, is that established firms are encouraged to assist small and emerging Black firms, and are awarded bonus points if they provide these firms with experience and training while working with listed clients.

Altogether, the CA charter provides a refreshing and comforting variation on the generic codes, with a special focus on skills development and transformation. It sets challenging targets that are designed to enable transformation, holistically to enhance the sector, and to help the nation to achieve the objectives set in the National Development Plan (NDP).

Kibi Magome

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