1. Association for BEE Verification Agencies Public Workshop 17 February 2006 Facilitator: Lenhle Daka

2. Agenda TimeThemePresenter 09:00 – 09:10WelcomeLenhle Daka 09:10 – 09:20 09:20 – 09:30 ABVA & the DTI ABVA and SANAS Takalani Tambani Mandla Sithole 09:30 – 10:00Member’s Constitution & StructureVuyo Jack 10:00 – 10:30 T E A B R E A K 10:30 – 12:30Discuss SANAS document on the Accreditation of BEE Verification Agencies – Auditor Qualifications Ebrahiem Mohammed Ithuteng Ndomane 12:30 – 13:00Process Going ForwardTheo Lombard 13:00 – 14:00LUNCH

3. Constitution & Structure Vuyo Jack

4. Broad-Based Black Empowerment Act Promote achievement of constitutional right to equality, increase broad-based & effective participation of black people in the economy and promote a higher growth rate, increased employment & more equitable income distribution Establish national policy on B-BBEE to promote economic unity of the nation, protect common market & promote equal access to government services

5. Codes of Good Practice Code 000 – Framework for the Measurement of Broad Based Black Economic Empowerment Statement 020 – The Approval, Accreditation and Regulation of BEE Verification Agencies

6. Industry Body Founding Members resolved to establish an Association of private sector BEE verification agencies Serve as formal representative entity for fulfilment of requirements of the Codes “Association of BEE Verification Agencies” commonly referred to as “ABVA” ABVA will be the Industry Body for BEE Verification agencies

7. Objectives of ABVA To promote the objectives of the Act and the Codes To promote high levels of professionalism and competence To regulate the proper conduct and practice of members To represent the BEE verification sector in its dealings with the Department, SANAS, the public and other relevant stakeholders To promote general public knowledge of the BEE verification requirements and processes. To facilitate participation by SANAS, the dti, NEDLACBUSA, and other relevant role-players, in ABVA’s activities.

8. Membership Membership Criteria – Private sector based agency or similar legal entity – Compliance with criteria for accreditation – Commitment to achieving objectives of the Act and the Codes – Currently engaged in providing BEE verification services – Reasonable proof independence & impartiality – No record of blacklisting in terms of the Act and the Codes Types of Members – Full Members are Verification Agencies that have SANAS accreditation – Associate Members are agencies awaiting accreditation Must demostrate commitment and proven progress towards compliance Must achieve SANAS accreditation within 6 months All participating agencies will be associate members until achieving SANAS accreditation Associate Membership in ABVA does not guarantee SANAS accreditation

9. Membership Termination of Membership – Insolvency, dissolution or closure of the member’s legal entity – On written notice of termination to the Secretary – A resolution of the Board Misconduct Proven non-performance of duties required by the Act or the Codes Failure to comply with the criteria for membership of ABVA Blacklisting by SANAS or the Dti – For any other reason recognised by law. – The Member or Associate Member concerned must have a reasonable opportunity to hear the case against it and state its own case – The liability of the Members and Associate Members limited to the amount of unpaid subscriptions or any amounts specifically provided for in this Constitution

10. Conflicts of Interest – Members must act at all times as independent service providers when performing their duties as verification agencies. – Members must therefore not create any conflict of interest between their activities as verification agencies and any consultancy services they may directly or indirectly also provide.

11. Structure ABVA Statutory Board Advisory Board Represented by dti, BUSA Executive Committee Technical CommitteeDisciplinary Committee SANAS STC SANAS, dti, Government, ABVA, BEE Consultants, Labour, Business

12. Structure Chairperson of the Board – elected at an AGM to hold office for one year Board of Directors – minimum 7 members – elected at an AGM to hold office for one year; Executive Committee – minimum of 5 members – Board will appoint from amongst its members Secretary – appointed & employed by the Board – part- or full time basis – for remuneration and other benefits determined by the Board, to manage the administration and finances of ABVA Founding Members entitled to nominate I person for appointment as a Director on the inaugural ABVA Board of Directors

13. Management Members at AGM vote for election of Board members & Chairperson (simple majority) General governance - the Board General management - Exco Board member, absent without good reason from 2 consecutive scheduled meetings deemed to have resigned from the Board Only paid-up Members of ABVA in good standing may be elected or appointed as members of the Board Secretary report to Exco Interim structure in place until first AGM

14. Advisory Board Established to facilitate participation by the dti, BUSA, and other relevant role-players, in ABVA’s activities Attend and participate in meetings of the ABVA Board of Directors Not be entitled to the voting rights provided for in this Constitution ABVA have invited the dti and BUSA to become members of the Advisory Board – members entitled to nominate one representative and one altermate to represent its interests ABVA may, in consultation with the current members of the Advisory Board, invite additional parties to become members of the Advisory Board

15. Procedure: Meetings Annual General Meeting held as soon as possible after close of ABVA’s financial year. – 1 st AGM to be held after initial accreditation Business of the annual meeting of ABVA will include: a) receiving annual report of ABVA’s affairs and audited financial balance sheet & accounts of ABVA b) election of auditors c) approval membership fees d) transaction any other matters the Board deems expedient Board maintain minutes Records kept of: a) appointments members of Exco & officers of ABVA b) names elected Board members c) resolutions & proceedings of meetings of Board & Exco

16. Procedure FINANCIAL – The financial year of ABVA will be from 1March to 28 February. – Proper books of account kept by the Financial Committee appointed by the Board – Accounts examined at least once every year AMENDMENTS – Constitution amended by resolution passed by not less than two- thirds of members of ABVA present at general or special meeting DISSOLUTION – resolution passed by not less than two-thirds of the members of ABVA present at a special meeting

17. Criteria and Standards SANAS Document Ebrahiem Mohamed

18. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months 7. Have professional indemnity (in case of fraudulent acts by verified entities engaging in fronting) 8. Verification agreement for clients which meets Verification Standards 9. Has unrestricted operational capacity to perform core function of verification 10. Statistical data on BEE progress provided to the dti 11. Verification services to QSE’s at reduced cost/no cost as enterprise development Optional: All 10 criteria met? Grant Agency accreditation certificate Refuse accreditation if found that criteria not met Ineligible to apply to Minister for accreditation No Apply to Minister with motivational evidence of compliance to 10 criteria Yes Criteria and Process for Accreditation of Verification Agencies

19. 1. Superior Contributor (65% or more) Criteria and Process for Accreditation of Verification Agencies

20. Criteria 1.Superior Contributor PAGE 7 Point 7-7.1.2 A conflict exist between the SANAS document (statement 050) and codes for QSE. Most verification agencies fall within the QSE criteria/scorecard. Statement 050 requires all verification agencies to comply with all 7 element. Does it mean that verification agencies that fall within the QSE scorecard can choose not to report on ownership?

21. 1. Superior Contributor (65% or more) 2. Member of Industry Body Criteria and Process for Accreditation of Verification Agencies

22. Criteria 2. Member of Industry Body Covered by Vuyo Jack Refer to Code 000 Statement 020

23. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel Criteria and Process for Accreditation of Verification Agencies

24. Auditor Qualifications Ithuteng Ndomane

25. Auditor Qualifications Terminology Auditor Qualifications are BEE Verification Analyst Qualifications Analyst - person carrying out the verification Outsourcing - verification of the measured entity by a third party on behalf of the verification agency

26. Auditor Qualifications Underlying Principles Verification agency should have documented policies and procedures on human resources management – Selection of competent personnel – Provision of ongoing training – Performance measurement and monitoring – Maintenance of up-to date records

27. Auditor Qualifications Junior Verification Analyst Qualification – Completed a BEE Verification Learnership programme (to be created), OR – A tertiary qualification (National Diploma/Bachelors Degree) Work Experience – Minimal work experience Performs the verification under close supervision of the senior verification analyst

28. Auditor Qualifications Senior Verification Analyst Qualification – A tertiary qualification (Bachelors degree) Work experience – 5 years commercial work experience, OR – 2 years external audit experience, OR – 3 years internal audit experience, OR – 2 years BEE verification experience. Guides, supervises and reviews work performed by junior verification analyst

29. Auditor Qualifications External/Expert Verification Analyst Qualification – A tertiary qualification (Bachelors degree) Work experience – 5 years commercial work experience, OR – 2 years external audit experience, OR – 3 years internal audit experience, OR – 2 years BEE verification experience. Decisions on the outcome of the verification remains with the verification agency

30. Auditor Qualifications Verification Specialist Qualifications – Tertiary qualification (Bachelors degree) Work Experience – 10 years commercial work experience, OR – 3 years external audit experience, OR – 5 years internal audit experience, OR – 3 years BEE verification experience. Performs an independent review of the evaluation and endorses the result of the verification Each Verification Agency must have at least one verification specialist. This function can not be outsourced

31. Auditor Qualifications Outsourced Arrangements Verification agency should draw up an outsourcing agreement Verification agency takes full responsibility for the verification Decisions on the outcome of the verification remains with the verification agency Measured entity needs to be informed about the outsourcing agreement

32. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards Criteria and Process for Accreditation of Verification Agencies

33. Criteria 4. Compliance with Verification Standard Compliance with code 000 statement 050/ SANAS document in total

34. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality Criteria and Process for Accreditation of Verification Agencies

35. Criteria 5. Robust internal Controls 5.1 Operate independently 5.2 Manage conflict of interest 5.3. Client Confidentiality Page 3 – Point 6 – 6.1.3

36. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months Criteria and Process for Accreditation of Verification Agencies

37. Criteria 6. Staff members conducting verifications on client has not provided any other services i.e. consulting Page 7 – Point 7.3.5

38. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months 7. Have professional indemnity (in case of fraudulent acts by verified entities engaging in fronting) Criteria and Process for Accreditation of Verification Agencies

39. Criteria 7. Have professional indemnity Page 8 – Point 7 – 7.4.1

40. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months 7. Have professional indemnity (in case of fraudulent acts by verified entities engaging in fronting) 8. Verification agreement for clients which meets Verification Standards Criteria and Process for Accreditation of Verification Agencies

41. Criteria 8. Verification Agreement Page 6 – Point 7.2.4

42. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months 7. Have professional indemnity (in case of fraudulent acts by verified entities engaging in fronting) 8. Verification agreement for clients which meets Verification Standards 9. Has unrestricted operational capacity to perform core function of verification Criteria and Process for Accreditation of Verification Agencies

43. Criteria 9. Unrestricted operational capacity Page 8-10 – Point 9.1 – 9.5.4

44. 1. Superior Contributor (65% or more) 2. Member of Industry Body 3. Qualified Personnel 4. Compliance with verification Standards 5. Robust internal controls to: Operate independently Manage conflicts of interest Ensure client confidentiality 6. Staff member(s) conducting verifications have not performed any other service for that client for 24 months 7. Have professional indemnity (in case of fraudulent acts by verified entities engaging in fronting) 8. Verification agreement for clients which meets Verification Standards 9. Has unrestricted operational capacity to perform core function of verification 10. Statistical data on BEE progress provided to the dti 11. Verification services to QSE’s at reduced cost/no cost as enterprise development Optional: All 10 criteria met? Grant Agency accreditation certificate Refuse accreditation if found that criteria not met Ineligible to apply to Minister for accreditation No Apply to Minister with motivational evidence of compliance to 10 criteria Yes Criteria and Process for Accreditation of Verification Agencies

45. Process Going Forward Theo Lombard

46. Process Going Forward DescriptionDate Feedback from all attendees on SANAS Criteria and Standards to comments@abva.co.za 22/02/2006 Consolidation of all feedback and presentation to SANAS28/02/2006 SANAS STC (Special Technical Committee)15/03/2006 Associate Membership Application (Application form available on website from Monday 20/02/2006 24/02/2006 Confirmation of Membership Fees15/03/2006 Payment of Membership Fees31/03/2006 SANAS AccreditationTBA Conversion to Full MembershipTBA Annual General MeetingTBA