Obtaining a B-BBEE certificate is becoming a competitive advantage for organisations; therefore they need to ensure that the information provided is factually correct.

Risk factors:

-          Points received in the verification process might not be justified

-          Agencies might not be SANAS accredited, which means that certificates received from them might not be valid

-          Not being evaluated according to the correct sector code

-          Not necessarily interpreting the law directly - Stances are then made with ideas not founded within the law. E.g. If you meet the Economic Active Population (EAP) target which is currently 54.3% then you will be able to receive bonus points, but some agencies penalise clients by changing the EAP percentage to 87% which is unfounded.

-          Not ensuring that site visits are done prior to the actual audit in order to determine the documentation required for the audit

-          Fraudulent documentation used for B-BBEE evaluations or B-BBEE certification

"In the modern times we live in, a company's documents can be fraudulently manipulated without too much difficulty. By having a system in place where such matters are dealt with speedily and decisively and by reporting  such matters to the appropriate authorities, such behaviour can effectively be deterred "Explains Corne Bester: Legal and Compliance Manager, Emex Trust.

In order to mitigate risks in receiving incorrect B-BBEE certificates, it is important to understand under which sector you will need to be evaluated and what the verification agency will look at. Sector codes include:

Construction Sector Code:

Application of this code contains:

-          Should the majority of the entity's turnover be obtained from construction-related activities, this sector code applies

-          If they don't obtain majority turnover from construction-related activities, then the sector code won't apply. The entity will then be governed by any sector code applicable, if not, they will then be audited in terms of the DTI Codes of Good Practice

Tourism Sector Code

This code applies to all privately owned enterprises within this sector as well as parts of the value chain in the sector and binding to all organs of state and public entities, organised labour, and communities involved within this industry. Some of them include:

-          Accommodation

-          Hospitality and related services

-          Travel distribution systems

Forest Sector Code

This sector code applies to all enterprises involved with commercial forestry as well as first-level processing of wood products. This will include the following sub-sectors:

-          Growers sub-sector

-          Contracting sub-sector

-          Fibre sub-sector

-          Sawmilling sub-sector

-          Pole sub-sector

-          Charcoal sub-sector

Transport Sector Code

Sub-sectors within this sector include:

-          Bus, commuter and coach services sub-sector code

-          Public sector transport sub-sector code

-          Maritime transport and services industry sub-sector code

-          Domestic aviation sub-sector code

 

Mitigating the risk factors

1.       Sector codes

·         Organisations need to ensure that they are evaluated within the correct sector code and that verification agencies are accredited by SANAS

2.       Agencies to be accredited by SANAS

·         Agencies accredited by SANAS will supply certificates to organisations containing the SANAS logo, and are listed on their website: www.sanas.co.za/directory/bbee_default.php.

3.       B-BBEE certificates should contain a SANAS logo

·         Should the agency not be accredited then the certificate won't have a SANAS logo, this means that the B-BBEE certificate won't be valid if issued after 1 February 2010

4.       Preparation site visits

·         Preparation site visits or pre-audits are vital to ensure that clients discuss documents required prior to audits as agencies won't be allowed to accept documentation once the audit is completed.

 

B-BBEE verification risks are becoming an important factor in terms of being rated and receiving B-BBEE certificates from verification agencies. Another contributing factor that needs to be taken into consideration is suppliers and supplier verification - their certificates will have an effect on your certificate as well. Therefore, it is important to focus on reducing risks in order to receive an accurate certificate which will assist organisations in business transactions as well as transformation and development.

End.

 

About Emex Trust
Emex Trust is a South African National Accreditation System (SANAS) accredited B-BBEE Verification Agency, No. BVA 037. We are accredited under the Codes of Good Practice as set out by the Department of Trade and Industry (DTI) as well as for construction and tourism sector codes. Emex Trust assists clients by scheduling a site visit to discuss documentation required for their audit; by having regular workshops on B-BBEE and what it entails as well as assisting clients with Bulk Search (match your suppliers against our database of B-BBEE certificates). We can also provide Call Centre follow-up of your suppliers if we don’t have their certificates. Learn more about Emex Trust, our scope and B-BBEE verification by visiting our website, www.emex.co.za.