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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Verification Manual

12. Materiality and Verification Risk

 

 

12.1 The Verification Agency shall consider materiality and the risk of misstatement when planning and performing verification.

 

12.2 The Verification Agency shall consider materiality when determining the  nature, timing and extent of evidence-gathering procedures and shall  base the materiality on the measured entity's underlying information which determines the individual scores for each Scorecard Element.

 

12.3 Materiality is considered in the context of quantitative and qualitative factors affecting the Scorecard Elements.

 

12.4 Materiality is considered qualitatively in respect of:

 

12.4.1 Ownership - voting rights and economic benefits to black shareholders;

 

12.4.2 Management - board participation and those appointed in top management; and

 

12.4.3 Employment equity in respect of black persons appointed to senior, middle and junior management positions.

 

12.5 Materiality is considered quantitatively in the context of the underlying information expressed in rand values (to which monetary sampling approaches may be applied) for:

 

12.5.1 Skills development spend;

 

12.5.2 Preferential procurement in respect of Procurement Suppliers who claim to  be Black Owned and thereafter B-BBEE Procurement Spend relative to  total measured procurement spend for the period;

 

12.5.3 Enterprise Development Qualifying Contributions; and

 

12.5.4 Socio-Economic  Development Qualifying Contributions.