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

Industry Charters

Chartered Accountancy Charter

Section C From Theory to Practice: The Scorecard

13. The QSE Scorecard for the CA Sector

13.2 Application of the CA Sector QSE Scorecard

13.2.7 The QSE Socio-Economic Development (SED) Scorecard

Purchase

The objective of this section is to measure initiatives that contribute towards SED or sector specific developments that promote access to the economy for Black People.

Although some QSEs may have a turnover of little more than R5 million per annum, others in certain industries with greater turnovers may well be better positioned to contribute to SED than certain of the other Elements. The Code seeks to encourage initiatives that enhance the ability of Black People who remain non-participants in the economic mainstream to be included in participating in the economy in a sustainable manner.

The most critical aspect of this Element is that SED initiatives should result in the sustainable economic participation by its intended beneficiaries and discourage actual dependence on handouts.

The indicators and Weightings are as follows:

QSE SED indicator	Weighting points		Compliance Target for 2016
	Code	CA sector
Average annual value of all SED contributions and approved SED contributions made by the Measured Entity as a percentage of NPAT or turnover	25	25	1% of NPAT or 0,125% of turnover

For purposes of the CA sector, indicator Weightings and Targets have the following interpretations:

•	The compliance Target is set at 1% of NPAT, as recommended by the Code of Good Practice, or 0,125% of turnover, whichever is the greater. In view of the partnership structure it will not always be appropriate to use NPAT and accordingly turnover was agreed upon as an acceptable alternative measure.

•	The full value of SED contributions is recognisable if at least 75% of the value directly benefits Black People.

•	If less than 75% of the full value of the SED contribution directly benefits Black People, the value of the contribution multiplied by the percentage that benefits Black People is recognisable.

•	Beneficiaries of Enterprise Development defined

SED

Social development beneficiaries are either black individuals, or, as is more commonly the case, communities or groups of people. In the latter case the percentage of Black People within the beneficiary groups affects the amount of spend recognition in terms of the Codes: Where 75% of the beneficiary group is black, the full value of the contribution is recognisable

Where less than 75% of the beneficiary group is black, the value of the contribution multiplied by the percentage benefiting Black People is recognisable

Approved SED Programmes

The beneficiaries of approved SED Programmes must meet the definition of SED beneficiaries

•	SED contributions include the following:

o	Current grant contributions to beneficiaries of SED contributions.

o	Guarantees or security provided for beneficiaries.

o	Preferential terms granted for the supply of goods or services to beneficiary communities.

o	Training or mentoring, in the case of the CA sector capacity building of financial management skills, where the portion of salaries and wages attributable to time spent by staff as well as other expenses related to the training and mentoring activities would form part of the SED contributions.

o	Payments made by Measured Entities to third parties to perform SED on behalf of the Measured Entity.

o	Direct costs as well as overhead costs incurred by a Measured Entity directly attributable to SED contributions or incurred in assisting beneficiaries.

o	Development capital advanced to beneficiary communities.

o	Maintaining an SED unit by the Measured Entity - only that portion of salaries and wages attributable to time spent by the staff in, and other expenses related to, promoting and implementing SED programmes.

•	The Measured Entities shall be entitled to receive recognition for any SED contribution, provided that it is possible to quantify such contributions by attaching a monetary value, using a Standard Valuation Method (see the Benefit Factor Matrix below).

•	Qualifying SED contributions shall be measured cumulatively from 1 January 2007 until the date of measurement. If, however, contributions were made before this date, the Measured Entity shall be entitled to adopt an earlier Inception Date which shall not go back more than five years.

•	Non-monetary contributions will be measured by quantifying the cost of time spent by staff or management of the Measured Entity in carrying out such initiatives.

•	Calculation of monetary value

The contribution amount is calculated using the following Benefit Factor Matrix:

Qualifying contribution type	Contribution amount	Benefit Factor
Grant and related contributions
Grant contribution	Full grant amount	100%
Direct cost incurred in supporting SED, sector specific initiatives or approved SED contributions	Verifiable cost (including both monetary and non-monetary)	100%
Discounts in addition to normal business practices supporting SED, sector specific initiatives or approved SED contributions	Discount amount (in addition to normal business discount)	100%
Overhead costs incurred in supporting SED, sector specific initiatives or approved SED contributions	Verifiable cost (including both monetary and non-monetary)	80%
Contributions in the form of human resource capacity
Professional services rendered at no cost supporting SED, sector specific initiatives or approved SED contributions	Commercial hourly rate of professional	80%
Professional services rendered at a discount supporting SED, sector specific initiatives or approved SED contributions	Value of discount based on commercial hourly rate of professional	80%
Time of Employees of Measured Entity productively deployed in assisting beneficiaries and supporting SED, sector specific initiatives or approved SED contributions	Monthly salary divided by 160	80%

Measurement of SED contributions

Where A = the score achieved in respect of the SED contributions made by the Measured Entity

B = the value of all SED contributions made by the Measured Entity measured from the commencement of the CA Code to the date of measurement

C = the compliance Target for SED contributions as specified in the scorecard

D = the Weighting points allocated to the Measured Entity development indicators in the scorecard