ED 275: Financial Reporting Framework for Non

advertisement
The New B-BBEE Codes –
What they mean for business
Presenter: Anton de Wet CA(SA)
Specialist B-BBEE Auditor and Trainer
DISCLAIMER
Whilst every effort has been made to ensure the accuracy of the seminar, presentation and
handouts, the presenters/authors , the organisers and the Association of Chartered Certified
Accountants do not accept any responsibility for any opinions expressed by the
presenter/author, contributors or correspondents, nor for the accuracy of any information
contained in the seminar handouts.
@ COPYRIGHT
Copyright of this material rests with SA Accounting Academy and the documentation or any
part thereof, may not be reproduced either electronically, photocopied, scanned, typed,
hand-written or in any other means whatsoever without the prior written permission of SA
Accounting Academy
.
The benefits of B-BBEE compliancy
• Retaining market share
• Competitive advantage (preferred supplier)
• New growth opportunities (tenders)
• Economic growth (spending power)
• “Licence to do business” in South Africa?
Turnover Thresholds
Old Codes (R million)
Exempted Micro-Enterprise (EME)
Qualifying Small Enterprise (QSE)
Generic
0–5
5 – 35
35 +
New Codes (R million)
0 – 10
10 – 50
50 +
What drives BEE?
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Mainstream Economy
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
GOVERNMENT
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
5
Supplier
Weightings
Element
Ownership
Weighting (Old
Codes)
20
Weighting (New Codes)
25
Management Control
10
15
Employment Equity
15
-
Skills Development
15
20
Preferential Procurement
20
-
Enterprise and Supplier
Development
Enterprise Development
-
40
15
-
Socio-Economic Development
5
5
100
105
Total
Contribution Levels
B-BBEE Status
Qualification
points (Old
Codes)
Qualification
points (New
Codes)
B-BBEE
Procurement
Recognition Level
Level 1 Contributor
≥100
≥100
135%
Level 2 Contributor
≥85 but <100
≥95 but <100
125%
Level 3 Contributor
≥75 but <85
≥90 but <95
110%
Level 4 Contributor
≥65 but <75
≥80 but <90
100%
Level 5 Contributor
≥55 but <65
≥75 but <80
80%
Level 6 Contributor
≥45 but <55
≥70 but <75
60%
Level 7 Contributor
≥40 but <45
≥55 but <70
50%
Level 8 Contributor
≥30 but <40
≥40 but <55
10%
Non-compliant
Contributor
< 30 points
< 40 points
0%
General Amendments
•
7 elements reduced to 5
•
Management Control and Employment Equity
consolidated into Management Control
•
Preferential Procurement and Enterprise Development
consolidated into Enterprise and Supplier Development
•
3 Priority Elements with 40% sub-minimum targets:
- Ownership
- Skills Development
- Enterprise and Supplier Development
•
Large Enterprise to comply with all 3 Priority Elements to
avoid 1 level discounting
•
QSE to comply with Ownership and either SD or ESD to
avoid 1 level discounting
General Amendments (continued)
• EME less than 51% black-owned automatic level 4
• EME and QSE 51% or more black-owned only need to
obtain a sworn affidavit confirming turnover and black
ownership; no verification required; automatic level 1
(51%+) or 2 (100%)
• QSE less than 51% black-owned need to comply with
all 5 elements subject to discounting – verification is
required similar to Large Enterprise
• Adjusted Recognition for Gender removed; black
woman are separately scored
• In first year (until 11/10/2014) entities may opt to
apply new codes, thereafter compulsory
• Only one scorecard for QSE’s and Large Enterprises
Ownership
•
Sub-minimum to avoid discounting is 40% of Net Value points
•
Points increased from 20 to 25 points
•
Shareholding by Family Trusts clarified
•
Only SA based and regulated mandated investments qualify
•
More emphasis on:
- Employee Share Ownership Programmes
- Broad-based Ownership Schemes
- Co-operatives
•
Black New Entrant threshold was R20m, now R50m
•
Entities applying the Modified Flow Through cannot also apply the
Exclusion principle
Criteria/Indicator
Weighting
points
(Old Codes)
Compliance
target
(Old Codes)
Weighting
points
(New Codes)
Compliance
target
(New Codes)
Voting Rights:
Exercisable Voting Rights of black people
Exercisable Voting Rights of black women
3
2
Economic Interest:
Economic interest of black people
4
25%
4
25%
Economic interest of black women
2
10%
2
10%
Economic interest of black natural people in Designated Groups;
Employee Ownership Schemes; Broad-based Ownership Schemes;
Co-Operatives
Involvement in ownership of black new entrants
Realisation Points:
Ownership fulfilment
Net Value
Time-based graduation factor: 10% of Target (Year 1)
20% of Target (Year 2)
40% of Target (Year 3-4)
60% of Target (Year 5-6)
80% of Target (Year 7-8)
100 % of Target (Year 9-10)
Bonus Points:
Involvement in ownership of black new entrants
1
25% + 1 vote
10%
2,5%
1
7
Involvement in ownership of black participants in Employee
1
Ownership Schemes; Broad-Based Ownership Schemes; Cooperatives
Total
20 + 3 Bonus
Points
3
No
Restrictions
25%
2
4
2
10%
3%
2
2%
0
0
8
10%
25% + 1 vote
10%
25%
0
0
0%
0%
25
Management Control
• Now includes Employment Equity
• Targets now takes the demographic
breakdown of race-groups into consideration
in terms of the Regulations of Employment
Equity Act and the Commission on
Employment Equity Report
• Must use current payroll data
• Must submit EEA returns if “designated
employer”
Criteria/Indicator
Weighting
points
(Old Codes)
Board Participation:
Exercisable Voting Rights of black Board members
3
Exercisable Voting Rights of black female Board
0
members
Black Executive Directors
2
Black female Executive Directors
0
Other Executive Management:
Black Executive Management
3
Black female Executive Management
0
Black Other Top Management
2
1
Bonus point for Black Independent Non-Executive Board
Members
Disabled Employees
Black Disabled employees as a percentage of all
0
employees
Senior Management:
Black employees in Senior Management
0
Black female employees in Senior Management
Middle Management:
Black employees in Middle Management
0
Black female employees in Middle Management
0
Junior Management:
Black employees in Junior Management
0
Black female employees in Junior Management
0
Total
10 + 1 bonus
points
Compliance
target
(Old Codes)
Weighting
points
(New Codes)
Compliance
target
(New Codes)
50%
0%
2
1
50%
25%
50%
0%
2
1
50%
25%
40%
0%
40%
40%
2
1
0
0
60%
30%
0%
0%
0%
2
2%
0%
2
1
60%
30%
0%
0%
2
1
75%
38%
0%
0%
1
1
19
Should be 15
88%
44%
Employment Equity (no longer a separate
Weighting
Target
Weighting
Criteria/Indicator
element)
(Old Codes)
points
points
(Old Codes)
Black Disabled employees as a percentage of
all employees
2
Black employees in Senior Management
5
Black employees in Middle Management
(New Codes)
0
0%
60%
0
0%
4
75%
0
0%
Black employees in Junior Management
4
80%
0
0%
Bonus for meeting or exceeding the EAP
targets per category
3
Total
15 + 3 bonus
points
3%
Target
(New
Codes)
0
0
Skills Development
• Sub-minimum to avoid discounting is 40% of
total weighting points
• Main target significantly increased from 2/3% to
6% of “Leviable Amount” (annual payroll)
• Now 4 points available for training black
unemployed people
• 5 Bonus points available for absorbing
registered learners as permanent staff
• Targets now takes the demographic breakdown
of race-groups into consideration in terms of the
Regulations of Employment Equity Act and the
Commission on Employment Equity Report
Skills Development (continued)
• Must meet SETA requirements to qualify
• Category F (uncertified) and Category G (inhouse) training both capped at 15% of total skills
spend
• Legitimate training expenses such as
accommodation, catering and travel expenses
also capped at 15% of total skills spend
• Mandatory sector training does not qualify
• International training must meet SAQA
requirements
Criteria/Indicator
Weighting
points
(Old Codes)
Compliance
target
(Old Codes)
Weighting
points
(New Codes)
Compliance
target
(New Codes)
Skills Development Spend on Learning Programmes
Skills Development expenditure
6
Skills Development expenditure for black employees with
disabilities
3
3%
0.3% %
8
6%
4
0.3%
Learnerships:
Number of black employees participating in Learnerships,
apprenticeships or internships
6
5% *
4
2.5%
Number of unemployed black people participating in
Learnerships, apprenticeships or internships
0
0%
4
2.5%
Bonus point for number of Black People absorbed at the
end of the learnership
0
0%
5
100%
Total
15
20 + 5 Bonus
Points
Enterprise and Supplier Development (continued)
• Sub-minimum to avoid discounting is 40% in each of
the three main indicators of the ESD scorecard
• “Value-adding Supplier” concept replaced with
“Empowering Supplier”
• ESD contributes to 40 of the total 105 points
• 10 points for developing suppliers
• 5 points for developing other black businesses
• 21 of the 25 points for procurement only allocated to
spend with Empowering Suppliers
• EME’s and Start-ups are automatically Empowering
Suppliers
Enterprise and Supplier Development (continued)
• Maximum 1.5 points for early payment of
black-owned suppliers
• A three year contract with the following
suppliers will result in enhanced recognition
of 120% of actual spend:
- Supplier Development beneficiaries
- Black-owned EME’s and QSE’s
- All new suppliers of the measured entity
Criteria/Indicator
2.1
Weighting
points
(Old Codes)
Compliance
target
(Old Codes)
Weighting points
(New Codes)
Compliance
target
(New Codes)
12
70%
5
80%
3
15%
3
15%
Preferential Procurement
Broad-based BEE Procurement Spend from all Empowering
Suppliers based on the broad-based BEE Procurement
Recognition levels as a percentage of Total Measured
Procurement Spend of the enterprise
Broad-based BEE Procurement Spend from all QSE
Empowering Suppliers based on the applicable broadbased BEE Procurement Recognition levels as a percentage
of Total Measured Procurement Spend for the enterprise
4
15%
Broad-based BEE Procurement Spend from all EME based
on the applicable broad-based BEE Procurement
Recognition levels as a percentage of Total Measured
Procurement Spend for the enterprise
Broad-based BEE Procurement Spend from any of the following Empowering Suppliers as a percentage of Total Measured Procurement
Spend:
suppliers that are 51% black owned;
3
12%
9
40%
suppliers that are 30% black women owned
2
8%
4
12%
2
2%
Bonus Points
Procurement Spend from Designated group suppliers that
are at least 51% black owned
2.2 & 2.3 Enterprise and Supplier Development
Annual Value of all Supplier Development contributions as
a % of Target
Annual Value of all Enterprise Development contributions
as % of target
0
0%
0
0%
10
2% of NPAT
0
0%
5
1% of NPAT
Criteria/Indicator
Weighting
points
(Old Codes)
Compliance
target
(Old Codes)
Weighting
points
(New Codes)
Compliance
target
(New Codes)
Bonus Points
Graduation from Enterprise Development to
Supplier Development Beneficiary
Jobs created by a supported supplier
0
1
0
1
Total
20
40 + 4 bonus
points
Enterprise Development (no longer a separate element)
Criteria/Indicator
Value of all Enterprise Development
Contributions and Sector Specific Programmes
made
Total
Weighting
points
(Old Codes)
15
15
Compliance target
(Old Codes)
3% of NPAT
Weighting
points
(New Codes)
0
0
Compliance
target
(New Codes)
0%
Socio-Economic Development
• No changes
• NPO’s may however lose out on donations
from QSE’s who will now only score a
maximum of 5 points and no longer 25 points
Criteria/Indicator
Value of all Socio-Economic
Development and Approved SocioEconomic Development Contributions
made
Total
Weighting
points
(Old Codes)
5
Compliance
target
(Old Codes)
1% NPAT
5
Weighting
points
(New
Codes)
5
Compliance
target
(New Codes)
1% NPAT
5
Some areas in need of clarification
•
Basis for application new codes?
•
Management Control scorecard - needs to be corrected
•
“Obtain” a sworn affidavit – from who?
•
Enterprise Development and Supplier Development Plan
in place for imported goods or services – guidance needed
•
International training must meet SAQA requirements –
guidance needed
•
“Trainee tracking tool”?
•
Applying demographics to skills spend?
Some areas in need of clarification (continued)
• What is exactly is an Empowering Supplier:
An Empowering Supplier is a BEE compliant entity which
demonstrates that it is a “good citizen South African entity”
complying “with all regulatory requirements of the country”. A
Large Enterprise must comply with 3 of the following criteria
and a QSE with only 1:
•
•
•
•
25% of Cost of Sales, excluding labour and depreciation, must be
procured from South African suppliers or producers. (For the service
industry labour costs are included but capped at 15%);
50% of jobs created must be for black people - provided the number
of Black employees since the immediate prior B-BBEE verification is
maintained;
25% of production must be local production including local
manufacturing, and/or assembly, and/or packaging;
At least 12 days a year must be spent on skills transfer to assist black
EME’s and QSE’s to increase their knowledge in operations or
financial capacity.
Factors to consider going forward
• Be verified now and before 11/10/2014 and
stay compliant for two year more years!
• QSE: Consider donations in February 2014
• The need for BEE consultation
• Plan for higher verification costs
• Start using BEE management software
• Get your accountant/auditor involved!
The BEE experience...
The Alternative…
One streamlined Solution for you and your Clients
Consult
Prepare
Verify
IMPORT CLIENT DATA
IMPORT CLIENT DATA
ONLINE WORKING
PAPERS (SASAE 3502)
APPLY SECTOR CODE
MANAGE CLIENT
INTERACTIONS
PLAN AUDIT
CALCULATE
SCORECARDS
APPOINT ACCREDITED
AUDITOR
SAMPLE DATA
SCENARIOS & ADVICE
UPLOAD SAMPLED
DOCUMENTATION
ELECTRONIC REVIEW
IMPLEMENT & TRACK
LIAISE WITH AUDITOR
ISSUE CERTIFICATE &
ASSURANCE REPORT
NO ACCREDITATION REQUIRED
Key Features
• Work from anywhere (web-based)
• Online File preparation and Document
management
• Online Working Papers & Electronic review
• Data capturing & document upload by client
• Workflow & Client management tools
• Advanced online B-BBEE calculator
• Unlimited scorecards and scenarios
• Apply any Sector Charter
• Import/Export data via Excel
• Reduce costs with online BEE Verification
Pricing
Accounting Practices & BEE Consultants
(Annual License fee Excl VAT)
Firm License Fee
R 1,500
Fee per client registered
R 200
IRBA Accredited Auditors (Excl VAT)
Annual Fee per Client
registered
per QSE Verification
Completed
per Generic Verification
Completed
R 200
R 400
R 900
Businesses
Monthly License Fee until Navigator Auditor is
Appointed (Excl VAT)
R 350 per month
Getting Started
www.beenavigator.co.za
REGISTER
LOGIN
ADD CLIENT
(First client free for 1 year)
Training
Book at www.beetraining.co.za
Download
Related flashcards

Management

42 cards

Management

61 cards

Canadian Hockey League

15 cards

Civil defense

33 cards

Create Flashcards