The BBBEE Verification process can be hassle free!
BEE has in many cases left some business owners anxious as the terminology isn’t fully understood.
Broad Based Black Economic Empowerment compliance is in no way an obligation set out by law. Making the decision to get verified and being B-BBEE compliant is however something you can only benefit from.
To do business with government or any institution associated with state, you are required to have a valid BEE Certificate. You should also ensure that the BEE Verification Agency is accredited with either IRBA or SANAS.
In the end it becomes simple – Implement B-BBEE, get a good score and your business will grow.
- The government tender act follows B-BBEE principals when awarding tenders,
- Corporates insist on using BEE compliant suppliers to the extent that they have automated systems that remove vendors if they are non-compliant and
- Seeing that private companies are losing business they are electing to use BEE compliant suppliers as well.
B-BBEE Verification is the process of becoming BEE compliant. Once you have chosen the best Verification Agency, your B-BBEE Compliance level can be determined by doing either a partial or a full audit on your company. (Depending on the size of your business)
This comprises three easy steps.
- Completion of Documentation and BEE Verification planning.
- Gathering of Evidence according to the 7 elements of relevance.
- Verification of Evidence and calculating BEE Compliancy
Once this is done, a BEE Certificate of that specific entity’s BEE Compliancy and Procurement Recognition is issued. The BEE scoring levels are explained below. This BEE certificate is then valid for one year from the date of issue.
Categories of BEE Companies
When deciding whether your entity needs to be verified or not it is important to know and understand the three categories which a business may fall under, This determines the BEE planning process the entity needs to do, as well as the pricing of Accredited BEE Verification.
According to the Last Financial Statements i.e. the annual turnover, the following is categorised:
Exempted Micro enterprise, this is when the natural turnover is less than 5 Mil (may be the case of a start-up company) Please note that in the Tourism Industry the annual turnover needs to be less than 2.5 Mil. A full audit is not necessary, only relevant supporting documentation eg. Cipro Registration and Certified Copies of ID’s of owners.
Qualifying Small Enterprise, this is when the annual turnover is less than 35 Mil but more than 5 Mil. A partial on site audit is done, this is where 4 of the 7 chosen elements are verified and an on-site verification is also conducted.
In case of a Generic, a full on site audit is necessary, this means that all seven elements are verified as per the Generic Scorecard, a site verification as well as interviews are conducted.
The 7 Elements of BEE Verification
During the BEE verification the verified entity has to submit physical proof of activity, spending and contributions in the seven elements of empowerment. The elements are:
Proof of shares in HDI hands. A share certificate for example will need to be submitted for this purpose.
Submission of an EE report and the involvement of PDI’s in the organisation on different levels and categories.
Proof of training spend on HDI’s such as in-house programs and accredited programs such as ABET (reading and writing) and mentorship programs.
Proof of purchases from suppliers that are BEE compliant as a percentage of total procurement spending.
Aiding SMME’s and emerging entities owned by HDI’s to trade in the mainstream economy. An example is setting up a CC and contracting such an entity to provide products.
SOCIO- ECONOMIC DEVELOPMENT
Social contributions towards own employees, employees families and communities such as paying employees children’s school fees and contributions towards black sports teams.
Proof of HDI’s in top/senior management. Interviews will be held to confirm seniority, job description, salary etc. When sufficient planning is implemented, BEE does not need to be perceived as a threat to one’s business but rather that of an opportunity.