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When do the Amended Codes REALLY come into effect? – EconoBEE Newsletter – 1 July 2014

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When do the Amended Codes REALLY come into effect?

The Amended codes were gazetted by the dti minister, Dr Rob Davies on 11th October 2013. The Codes originally stated that there will be a transitional period before the “compulsory use of the Generic and Qualifying Small Enterprise Scorecard.” (para 1.7 of Code 000.)

On 18th March 2014 the minister issued a gazette extending the transitional period to 30th April 2015.
There can be different interpretations to this:

  1. It could mean that any certificate dated and issued after 30th April MUST use the Amended Codes. This interpretation is supported by the notice issued by the minister when he decided that as from 28th January 2010, certificates will only be considered valid if issued by a SANAS accredited verification agency.

  2. A second precedent was set when the chief director of the B-BBEE unit issued a document on 9th July 2012 referring to the effective date of the sector codes and stating that if an entity appointed their verification agency prior to the start date they could use the generic codes, but if appointed after the inception date of the sector code they should use the sector code.

  3. A third interpretation could be used following the ruling by the dti relating to the date when the 6-10 year targets had to be used on the 2007 codes. In this case the dti stated that the new targets must be used for any entity whose measurement date was after 9th February 2012.

All interpretations have led to problems:

  • In the case of (1) many unaccredited agencies pre-dated their client’s scorecards to 28th January 2010. We expect to see this happening again!
  • In the case of (2) we know that many companies appointed their agencies up to 14 months prior to the date of issue of the certificate. As proof they showed an agreement between their client and themselves dated prior to the deadline. If option (2) is used, then many companies will appoint their agencies now for this year, next year and the following 5 years to be able to use the old codes forever!
  • In the case of (3), we still see many companies being verified in 2014 using 2011 financial data and being able to use the 0-5 year lower targets. To circumvent the Codes all a company needs to do is use very old financials.

What is the right interpretation? We believe that (1) is what the minister intended, i.e any certificate dated AFTER 30th April 2015 must use the Amended Codes. 

There is another issue in that the QSE codes, sector codes and specialised enterprises scorecards are not yet available. Even the already issued generic scorecard has many issues and errors. It is unfair to expect an entity to use a scorecard that has not yet been finalised. It will be impossible to find the right strategy to become compliant if the rules are not yet written or concluded. An entity being verified on the Amended Codes in June 2015 may well be using financial data for a period of March 2014 to February 2015. They would be unable to make decisive decisions between March 2014 and the date that the codes are finalised – which may only be February 2015.

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EconoBEE Newsletter
 01 July 2014

In this issue

  • When do the Amended Codes REALLY come into effect?

In other news

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