BEE Auditors cannot give Advice
BEE CHAMBER / 20 SEPTEMBER 2018 - 17.04 / ANDREW BIZZELL
The BEE Commissioner has provided clear instruction that Companies (Measured Entities) must not ask their appointed BEE Verification Agencies for advice as this goes against the globally accepted principle that an auditor cannot provide advice against that which they will perform an audit as such an act embodies conflict.
Measured Entities must, at all times, implement under the B-BBEE Act applying guidance from the objectives of the Act when applying the principles contained in the B-BBEE Codes of Good Practice and in instances where the Act and Codes of Good Practices are unclear or silent, then to secure input from advisors such as BEE Consultants, Lawyers and other professionals.
The BEE Commission is the representative body of the Department of Trade and Industry (DTI) and as such may be approached for Opinions and guidance on issues relating the application of the Act and the Codes of Good Practice. The role of the Commission is to monitor and oversee the implementation of the B-BBEE Act. The Commission is mandated to provide guidance to the public by issuing non-binding advisory opinions on interpretation of any provision of the Act.
If a Measured Entity requires an opinion from the Commission it must do so in writing including such request with all the related documentation required for the Commission to provide such opinion. In the event that the related documentation is not provided the Commission will reject the request as an opinion can only be given against such detail. If a request for opinion is accepted by the Commission it should be expected that a response will be provided within 30 days from acceptance.
Companies should note that BEE Consultants, lawyers and other professionals may have submitted requests for opinions previously and so may be able to provide guidance on the likely outcome of an opinion prior to making such a request.
Practitioner and Professional Members of the BEE Chamber are welcome to engage with the BEE Chamber directly on issues of interpretation as the BEE Chamber is exposed to a large number of requests for opinion from the Commission and as a result can provide an informed input on issues relating to interpretation.
The key message from the BEE Commission is that companies who request advise from their auditors and who make empowerment claims on their B-BBEE Scorecard which are not in line with the BEE Commission will be investigated and open themselves to the associated risks. If found to be guilty of a Fronting Practice the maximum penalties include 10% and annual turnover and 10 years imprisonment for directors and any people involved in the practice. Any Verification Agency providing advice will also be investigated and open themselves to the same risks as well as the possibility of having their license to operate cancelled as has occurred already with SAB&T and BEE Matrix.