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Clearing up the BEE-verification confusionFebruary 2009 marked the two-year anniversary of the BEE Codes of Good Practice and the date on which the first of now 24 verification agencies were accredited. However, since April 2009, there has been much confusion. First the Department of Trade and Industry (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 1 August 2009, the changes would come into effect. On 31 July, another update was issued – updating the 1 August 2009 deadline to 1 February 2010, writes EconoBEE.
The latest notice briefly states that: all certificates produced by a non-accredited agency would be valid if produced before 1 February 2010 and would be valid for a year from date of issue; and from 1 February 2010, only certificates issued by accredited agencies or agencies with a valid pre-assessment letter would be valid.
The dti did sent us a confirmation that small businesses 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 attempted to do it, but unfortunately it 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 that have not been accredited as yet, as well as consultants.
However, the verification guidelines and SANAS (South African National Accreditation System) requirements should still apply even if they have not yet been proven to meet these standards i.e. 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 one an absolute guarantee that their scorecards are accurate.
In the last few weeks, we have seen one accredited agency miscalculate the VAT calculation (it multiplied by 0.86 instead of dividing by 1.14) and another accredited agency issued an Exempt Micro Enterprise (EME) scorecard to a company that proudly announces that its annual turnover has increased, now to over R600 million per annum – when 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 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 number, among others? Then check that the score earned appears to be correct. Add up the scores, check the level and check that the company type (EME, Qualifying Small Enterprise or Generic) makes sense.
Ask questions about anomalies such as Ownership earning maximum points, but Management earning no points; or how does one 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 it.
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, it may find all its scorecards being rejected or its 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.
