Page 23 - Q&A

Can you still use management statements for
your BEE verification? BEE

September 2020
“My business has automatic Level 4 BEE recognition because our annual
turnover is below R10 million. However, a key client is requiring that we have to
have at least a Level 3 BEE certificate meaning I will now have to verify. However,
I had no planning in place to be able to do so in my previous financial year and
I cannot wait until the current financial year is over. I was wondering whether I
could use management statements for my verification if I can get the necessary
planning measures in place?”

The South African National Accreditation System (“SANAS”) is the body
responsible for the accreditation of BEE verification agencies. SANAS recently
specifically addressed your question by providing clarification on the
measurement period that entities can use for their BEE verification. In the past
some verification agencies were willing to accept management statements
for any 12-month period but SANAS have now stated clearly that the
measurement period can only ever be the financial year end for the business
as registered with the CIPC.

This clarification from SANAS raises some potential issues, the first of which is for
EMEs and QSEs who wish to tender for contracts worth more than R10 million or
R50 million respectively. The BEE Codes state that an EME who wishes to tender
for a contract worth more than R10 million must submit a QSE certificate and
a QSE that wishes to tender for a contract worth more than R50 million must
submit a Generic BEE certificate. If a tender for a contract worth more than R10
million comes up and an EME wishes to tender for the job they will, in most cases,
have no planning in place to comply with the more onerous QSE requirements.
They will now also not have an opportunity to get that planning in place and
use management statements to get the necessary QSE certificate in order to
tender and will lose out on the tender.

Also, companies who have never been compliant or been through a formal
verification process may be discouraged from becoming compliant or
undergoing verification if they cannot do so immediately when it becomes
necessary and may try to find ways of continuing to operate without a
BEE certificate.
An additional area of concern is the fact that there are still a number of grey
areas when it comes to verifications. Programmes that are recognised in one
year may no longer be recognised the following year due to changes in
interpretation or clarification of certain provisions. This could lead to companies
who have all their planning in place to obtain a certain level but, due to a
change in interpretation, could lose points which could potentially mean a loss
of a level or two. These companies then do not have the option to rectify that
situation immediately as they would need to wait until the end of their current
financial year before they can verify on new information.

16