Pretoria, 18 July 2008
Vol. 517
No. 31255

GOVERNMENT NOTICE    Gazette No.

Trade and Industry, Department of Government Notice 776

Broad-Based Black Economic Empowerment Act (53/2003): Framework for accreditation and verification by all Verification Agencies

GOVERNMENT NOTICE
DEPARTMENT OF TRADE AND INDUSTRY
18 July 2008
No. 776

FRAMEWORK FOR ACCREDITATION AND VERIFICATION BY ALL VERIFICATION AGENCIES
By virtue of the powers vested in me by section 9(1) of the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003), and pursuant to paragraph 10 (under the heading “STATEMENT 000: GENERAL PRINCIPLES AND THE GENERIC SCORECARD”) of General Notice No. 112 of 2007 published in Government Gazette No. 29617 of 9 February 2007.
I, Mandisi Mpahlwa, Minister of Trade and Industry, hereby-
(a)    Issue the following Verification Manual;
(b)    Determine that the Verification Manual will come into operation on the date of this publication; and
(c)    That the use of this document is prescribed as part of the accreditation process and shall be used by all Verification Agencies when performing B-BBEE verification.
 

MANDISI MPAHLWA
MINISTER OF TRADE AND INDUSTRY
DATE: 11-07-2008
VERIFICATION OF AND REPORTING ON BROAD-BASED BLACK ECONOMIC EMPOWERMENT IN TERMS OF THE CODES OF GOOD PRACTICE
VERIFICATION MANUAL
 
Department of Trade and Industry JULY 2008
Copyright Policy
All rights reserved. Permission is granted to make copies of this work provided that such copies, in whichever format, are for the purpose of verification agencies discharging their professional duties, for use in academic classrooms or for personal use and provided such copies are not sold for income and provided further that each copy bears the following credit line: “Copyright © by the Department of Trade and Industry. All rights reserved. Used by permission.” Otherwise, written permission from the Department of Trade and Industry is required to reproduce, store or transmit this document except as permitted by law.

Authority of the Verification Manual
This Verification Manual was prepared in terms of the provisions of Section 10.1 of Code Series 000 Statement 000 of the Broad-Based Black Economic Empowerment Codes of Good Practice issued in terms of Section 9(1) of Broad-Based Black Economic Empowerment (B-BBEE) Act 53 of 2003 (“The Act”). The “dti” derives the power to issue this Manual from the Act 53 of 2003 read with the Codes.
The Manual incorporates the relevant provisions of SANAS R47 as amended, a document developed by the South African national Accreditation System (SANAS) to clarify the functions of BEE Verification Agencies and to specify the criteria by which they are to be accredited by South African National Accreditation System (SANAS) on behalf of the Department of Trade and Industry (the dti). SANAS also derived its power to issue SANAS R47 as amended, from Act and the Codes.
Application of the Verification Manual
The use of this Verification Manual is prescribed and shall be used by Verification Agencies when performing a B-BBEE verification.
Any Verification Agent who issues a Verification Certificate without applying the Guidelines set out in the Verification Manual shall be guilty of unprofessional conduct and the “dti” may recommend that he lose his Accreditation with SANAS.

Structure of the Verification Manual
The Verification Manual is set out as follows:
Chapters 1-7 Deal with Guidelines on general principles to be implemented by Verification Agencies
Chapters 8-13 Deal with Guidelines and methodology to be followed in conducting Verification <*& Appendix 1 Sets out Samples of Verification Certificates
Appendices 2-8 Sets out the minimum verification procedures for each Element of the Codes that has to be met, and is based on the key measurement principles and calculations of the scorecard for each Element of the Codes
At the end of each appendix reference is made to requirements applicable to Qualifying Small Enterprises (QSEs).

TABLE OF CONTENTS
1.    Definitions…………………………………………………………………………………………….5
2.    Scope of Application of this Manual…………………………………………………………7
3.    Purpose of Verification…………………………………………………………………………..8
4.    Effective Date………………………………………………………………………………………..8
5.    Objective………………………………………………………………………………………………8
6.    Standards of Ethical Conduct & Requirements………………………………………….9
7.    Quality Control…………………………………………………………………………………….11
8.    Agreeing on Terms of Engagement………………………………………………………..12
9.    Outsourcing…………………………………………………………………………………………13
10.    Guidelines for Performing Verification…………………………………………………..14
11.    Professional Scepticism/ Due Diligence…………………………………………………20
12.    Materiality and Verification Risk…………………………………………………………..21
13.    Sampling…………………………………………………………………………………………….22
14.    Evidence……………………………………………………………………………………………..23
15.    Fronting………………………………………………………………………………………………24
16.    Documentation……………………………………………………………………………………25
17.    Reporting Requirements………………………………………………………………………26
18.    Appendices- Certificates……………………………………………………………………….26
19.    Other Reporting Responsibilities…………………………………………………………..27
20.    Withdrawing from the Verification………………………………………………………..27
21.    Minimum Procedures……………………………………………………………………………27

Appendices
Appendix 1: CERTIFICATION SAMPLES
Appendix 2: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 100: OWNERSHIP
Appendix 3: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 200: MANAGEMENT CONTROL
Appendix 4: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 300: EMPLOYMENT EQUITY
Appendix 5: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 400: SKILLS DEVELOPMENT
Appendix 6: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 500: PREFERENTIAL PROCUREMENT
Appendix 7: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 600: ENTERPRISE DEVELOPMENT
Appendix 8: METHODOLOGIES FOR VERIFICATION OF B-BBEE CODES OF GOOD PRACTICE 700: SOCIOECONOMIC DEVELOPMENT