IRBA regulatory withdrawal and impact on B-BBEE verification
An overview of the huge impact that IRBA regulatory withdrawal has on future B-BBEE verification in South Africa.
- IMPACT ON B-BBEE VERIFICATION
The Independent Regulatory Board for Auditors’ (IRBA) decision to withdraw from the regulation of the broad-based black economic empowerment or B-BBEE verification industry will have far-reaching implications for auditors who wish to continue serving as verification agents under SANAS, as well as clients who had obtained IRBA verification certificates. The following areas also gets impacted by the above decision:
- ENTERPRISE AND SOCIO-ECONOMIC DEVELOPMENT
SANAS’s interpretation and application of the Codes differ in various ways from that of IRBA. For instance, under IRBA, clients can make donations for Enterprise and Socio-economic Development outside their financial years, provided they do so before the date of measurement. This was practical and convenient as no company would know the exact amount to be spent based on the net profit after tax (NPAT) until the final financial audit is completed. Financial audits are normally conducted during the six months after the end of the financial year. Under SANAS, measured entities will have to project their NPAT to make donations timeously, making sure that they rather overspend than underspend, as no correction is allowed later.
For the above purpose, the amounts recommended by SERR Synergy (Pty) Ltd should clients wish to make donations through a third party as per the Codes, allow for a refund, thus affording the client peace of mind in the event of excess Enterprise, Supplier and Socio-Economic Development contributions.
- SKILLS DEVELOPMENT
Another area of note is Skills Development, where SANAS requires payment and skills transfer to occur in the year of measurement. In the case of learnerships, internships and apprenticeships, these programmes must at least commence in the financial year of measurement. Clients would be well advised to familiarise themselves with the impact that these changes will have. Other significant points to consider will be discussed later.