1. B-BBEE VERIFICATION FRAMEWORK

2.  The BEE Verification process evolved since the release of the B- BBEE strategy in 2003  The dti was requested to provide guidance on appropriate standards and entities to be used  The Market required certainty on verification agencies  Different standards and methodologies were applied  The dti appointed SANAS to develop accreditation standards for Verification Agencies  The dti embarked on a consultative process when developing accreditation standards (R47) – committee represented by SANAS,BUSA and ABVA BACKGROUND BACKGROUND BEE VERIFICATION AND ACCREDITATION PROCESS

3. INDUSTRY BODY FOR VERIFICATION AGENCIES  The dti encourages the establishment of an independent Industry Body  Provide guidance to the Verification Industry through the development and maintenance of high quality and reliable BEE verification services  To set standards, enforce a code of conduct and facilitate continuous training and complaint.  Uphold quality of verification process  Facilitate good professional conduct among industry participants

4. FRAMEWORK FOR VERIFICATION & COMPLIANCE  According to Code 000, Statement 000 of the Broad Based Black Economic Empowerment Codes of Good Practice:  Verification of BEE compliance is encouraged and to this end, the dti will from time to time issue clear guidelines on the verification process.  The dti together with relevant Industry Body will develop the Verification Methodology that will be used as standards by all verification agencies when performing the B-BBEE Verification.

5. SCOPE OF VERIFICATION MANUAL The dti, gazetted the Verification Manual on the 18 July 2008,  These methodologies serve as minimum standards that all VAs are obliged to conform when conducting verification.  The Verification Manual is also intended to be used by SANAS for accreditation of VAs. The VAs are also required to uphold these standards beyond the accreditation process.  An Approved VA 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

6.  To give confidence that information is tested for validity and accuracy  To reduce the risk of misstatement to an acceptably low level,  Provide an assurance of the integrity on the information  Assess, verify and validate BEE Information for decision making THE PURPOSE OF BEE VERIFICATION

7.  Set acceptable minimum Standards of Ethical Conduct underpinning the responsibilities of VA  Outlining the responsibilities of VAs to its clients iro quality control, contracting and reporting  Provide procedures to be applied in ascertaining assurance on whether the principles of B-BBEE have been met. THE GUIDELINES OBJECTIVE

8. A Verification Agency shall:  Be a legal enterprise  not have equity share or voting rights in the entity to be varified  not be a party to a debt-creating agreement between itself and the entity  retain authority and shall be responsible for its decision relating to the BEE verification  establish, implement and maintain a management system  document policies, systems, programmes, procedures and instructions GENERAL REQUIREMENTS FOR VERIFICATION AGENCY

9.  The Verification agency must ascertain the classification of the Measured Entity (e.g. Generic, QSE, EME etc.)  The Verification Agency must then obtain Audited Financial Statements from the Measured Entity in order to confirm the classification of the Measured Entity  Once the Verification Agency has established the classification they will utilise the methodology applicable for that Measured Entity as detailed in the Verification Manual. GENERAL REQUIREMENTS FOR VERIFICATION AGENCY (Cont..)

10. STANDARDS OF ETHICAL CONDUCT & REQUIREMENTS  To give confidence to all parties that rely upon verification  VAs to demonstrate that decisions are not influenced  Principles for inspiring confidence: Impartiality The source of revenue for BEE Verification Agency is the client - potential threat to impartiality Threats to impartiality include: Self-Review Threats, Self-Interest Threats Competence Ability to apply knowledge and skills effectively in terms of B-BBEE

11. STANDARDS OF ETHICAL CONDUCT & REQUIREMENTS  Outsourcing Decision-making regarding verifications shall never be outsourced  Openness Access or disclosure of information – about verification status of any measured entity All Accredited VAs to populate to the dti BEE IT Portal  Confidentiality Keep proprietary information confidential – BEE Verification Agency may disclose a measured entity’s actual verification result, without compromising confidentiality

12. STANDARDS OF ETHICAL CONDUCT & REQUIREMENTS cont..  Professional Scepticism / Due Diligence Requires investigation of and reasonable questioning of documentation Comparing the documents and representations presented by the Measured Entity

13. CONTACT DETAILS Makhosazana Seate BEE Director : Procurement Transformation Tel: 012 394 1694 Fax: 012 394 2694 Cell: 083 703 8543 E-mail: mseate@thedti.gov.za