Approved Auditors No Longer Allowed to Consult on BEE

By Lianne Levenstein, CEO of EconoBEE, a BEE advisory firm

Now that the IRBA (Independent Regulatory Board for Auditors) is ceasing its BEE regulation activities, auditors and agencies will have to cut down on their consulting work.

SANAS (South African National Accreditation System) frowns on verification agencies doing any consulting work saying that this is a conflict of interest and an agency may lose their accreditation if they consult and verify. This is mandated in the verification manual.??

Traditionally the IRBA has not had as many concerns, despite it also having to follow the verification manual. The IRBA has been happy that an auditor signs a certificate based on data collected and prepared by their “partner”, a consultancy.

Some auditors have never visited their verification clients and rely solely on the word of the consultant. This is why we have seen some certificates/affidavits issued for EMEs (Exempt Micro Enterprises – turnover less than R10m per annum), when a simple on-site visit would raise questions if the business size is R500 million, with large warehouses and 100 employees.?

Other auditors have been offering both consulting and verification services, sometimes by the same person. This is obviously a conflict of interest, like being both judge and advocate in the same case.??

SANAS, on the other hand, insist on a site visit and that verification agencies, and now auditors, follow the pre-defined procedures.

Verification agencies and auditors who are accredited by the IRBA (Independent Regulatory Board for Auditors) will not be able to issue BEE certificates after 30 September 2016.

Communication from the IRBA in March explained their desire to withdraw from being a B-BBEE regulator and it seems that this is still going ahead. These verification agencies will be allowed to apply for accreditation with SANAS and be able to continue issuing certificates once they have their SANAS accreditation. IRBA verification agencies must apply for their accreditation with SANAS as soon as possible as the process may take some time.

Companies who have engaged their IRBA verification agency prior to 30 September will be able to receive their BEE Certificate after 30 September, but only until 31 December 2016. A BEE verification should not take more than three months.??

Our view is that most IRBA agencies will easily be able to receive accreditation by SANAS, if not then the industry will be seriously short of capacity for issuing BEE certificates. We believe there will be sufficient capacity at SANAS to cope with increased demand for registrations.

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