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B-BBEE verification is meant to give the public assurance that the information given in the certificate has been rigorously verified, the codes have been correctly and consistently applied, and that there is evidence to support the points granted. It also means there is consistency in the application of the codes. Different verification agencies looking at the same information should arrive at the same results, however this is often not the case. B-BBEE verification is meant to give the public assurance that the information given in the certificate has been rigorously verified, the codes have been correctly and consistently applied, and that there is evidence to support the points granted. It also means there is consistency in the application of the codes. Different verification agencies looking at the same information should arrive at the same results, however this is often not the case.

There are several questions regarding interpretation which means that we will not get the same results from the same information. Verification agencies interpret matters differently. The codes are written by and interpreted by human beings and this means matters, which are crystal clear to the drafter, may be ambiguous to the reader. Examples include:

  • The use of loans for Enterprise Development and Supplier Development. The codes state – in the benefit matrix – that the balance outstanding is claimed subject to limitations in the benefit matrix. Elsewhere in the codes it states that if the programme is multi-year then the benefit must be spread over the period of the programme. Some verification agencies allow Enterprise Development and Supplier Development loans to be recognised based on the closing balance of the loans and others only recognise the portion of the loan paid during the year.
  • Bursaries. Some agencies will only allow bursaries once the bursary recipient’s results have been received and he or she has passed. This is an issue if the course spans a financial year-end. Other agencies allow the bursaries in the year of payment.
  • We have heard anecdotes of verification agencies which do not allow measurement of procurement from 51% black-owned companies if the 51% black ownership was calculated using the Modified Flow Through Principle. We have not encountered this but it will have significant adverse impact on procurement for many of our clients if generally applied.
  • Many verification agencies allow companies to claim the same people for learnerships and for unemployed black people trained. Other agencies did not allow this practice. One I have dealt with based this interpretation on a ruling received from the BEE Commission. This ruling was made specifically to that verification agency and not widely distributed. If you had engaged that agency, you could have been penalised if another agency was used as there could have been a significant difference in score. Please note that there is now a proposed amendment to the codes which states companies may not claim for the same people in terms of learnerships and unemployed people trained.

This means companies need to engage with their verification agencies to determine interpretations applied. Failure to do so may result in significantly negative results. Many agencies propose meetings before the verification process starts. These are useful but may be too late. These meetings happen after year-end shortly before the commencement of the verification. It  is then too late to correct numbers of learners, or amounts of loans, using two of the examples above. Companies will need to engage with their verification agencies during the financial year to ensure interpretations applied in the previous verification can still be applied. We need time to plan and apply the interpretations received.

If you require any assistance, contact me on richard@globalbusiness.co.za or 083 440 2130.

 

 

 

 

Richard Ryding is the head of B-BBEE at Global Business Solutions

 

 

 

 

 

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