Although the Amended Codes state that they will only come into effect after a one year transition period, 10th October 2014, the reality is that companies will need to prepare as soon as their new financial year begins.
In other words, if their financial year-end is February 2014, companies will need to start working on the new codes from March 2014.
A business whose year-end was September 2013, had already started their financial year before the new codes were announced and will therefore need to be applying the new methodologies of the Amended Codes.
B-BBEE compliance can be broken into a few core phases comprising both the previous financial year period, which is used for verification, and the future financial year period which can be used to maximise points or refine methods of earning points.
It has long been our view that a sound understanding of Black Economic Empowerment and how it affects your business is absolutely key to successful verification. As a consultancy, we recognise that companies expect advice tailored to their business.
This is best done by gathering quality information. It therefore becomes critical for businesses to have sufficient information about BEE to enable them to match what earns them points with what they have done.
Once BEE is understood, each piece of data should be processed firstly to ensure it is correct and secondly that it is optimal from a scorecard viewpoint.
We suggest that businesses start with Employment Equity and Procurement, then with Skills Development, followed by Enterprise Development and Socio-Economic Development. The final element is Ownership. This is because ownership doesn’t change that often.
Businesses are now able to start producing their first preliminary scorecard where the score, in all likelihood, will be low. This is normal for most businesses, however, it is a good starting point. Work can then be done towards increasing the score in line with business strategy.
The final step is verification. Many businesses start with verification by using an outside company which is an expensive exercise. To know your BEE score, rather calculate it yourself or use a software system that we provide and then address areas where additional points can be scored. Only then should formal verification be done through a recognised verification agency.
If a business has a scorecard already prepared, it should find their verification to be quite smooth. The only additional information needed are the small amounts of sampled data that the verification agency selects.
Preparing for verification has become more of ascience. It involves selecting the best agency, preparing documentation andspeeding it up, all while earning more points.
Broad-Based Black Economic Empowerment (B-BBEE)compliance is therefore a process and should be viewed as such.
* Keith Levenstein is CEO of EconoBEE