BEE Charter Presentation

CHARTERED ACCOUNTANCY PROFESSION CHARTER Ref: 127520/hh INTRODUCTION INTRODUCTION History – imbalances Economic and social requirements to open and expand SA economy Government’s growth strategy Legislative support Business reality Codes of Good Practice OPPORTUNITIES & THREATS Growth Industry charters Procurement forces Government work Partnerships and joint ventures Verification work INDUSTRY CHARTERS Maritime Transport & Service Forwarding & Clearing Information Communication & Technology Mining Tourism Petroleum & Liquid Fuels Financial Services Why a Charter for the Chartered Accountancy Profession? SAICA members as at end May 2005 according to race 0% 3% 2% 7% 88 % African Coloured Asian White Unknown SAICA Membership as at end May 2005 according to gender 21% 79% Female Male BEE NEGOTIATING FORUM STAKEHOLDERS ABASA Academics Auditor-General AWCA Big firms Black firm forum C&I FASSET FSB IRBA Medium firms National Treasury SAICA Small practices Trainees from regions Enterprise development The objective is to measure initiatives for assisting and for accelerating the development, sustainability and ultimate financial and operational independence of such beneficiary entities through the expansion of the financial and / or operational capacity of those beneficiary entities The criteria and weightings points are as follows: •Enterprise development contributions made by the qualifying small enterprise as a percentage of turnover Note for CA purposes turnover will be used in place of EBITDA An appropriate percentage still needs to be agreed Code CA sector Targets for 2016 20% 20% ?% Preferential procurement The objective is to measure the extent to which the CA sector QSEs procure products and services from companies that are BEE compliant This also includes micro enterprises as well as qualifying small enterprises The criteria and weightings points are as follows: •BEE procurement spend from suppliers based on the BEE procurement recognition levels or deemed micro enterprise recognition levels as a percentage of total measured procurement spend Code CA sector Targets for 2016 20% 20% 50% Residual The objective is to measure initiatives intended to directly provide black people who are natural persons with a means of generating income for themselves The criteria and weightings are as follows : •Qualifying residual contributions made by the enterprise measured as a percentage of net profit after tax Code CA sector Targets for 2016 20% 20% 2% CA SECTOR SCORECARD vs DTI CODE Objective - to keep as close to Code as possible Definitions and interpretations tailor scorecard for CA sector Bonus points differences Residual – specific areas identified but not limited to:   CSI projects (poverty alleviation, wealth creation) Nation building – public sector capacity building QUALIFYING SMALL ENTITIES (QSE) QSE may elect to be measured using FIVE of the SEVEN elements Entities with no employees cannot use employment equity indicator If QSE uses more than elements, BEE status measured on 125 BEE points Ownership will be multiplied by 1,25 where a minimum of 20 points is achieved CHALLENGES Forum has identified existing challenges and a variety of desirable future outcomes Specific activities recommended to effect transition (Not intended to be exhaustive) IDENTIFIED CHALLENGES Black professionals leaving public practice Black partners play disproportionate role in business development Lack of career awareness and inadequate subject choices Inconsistent standard of education Poor pass percentages at university HDIs not accredited Poor pass percentages in QE Perceived lack of transparency at QE level Black trainee perceptions White trainee perceptions Working conditions and opportunities Skills development / Indirect empowerment / Enterprise development / CSI Who is responsible? CA Sector Responsibilities Direct empowerment Ownership Management control Indirect empowerment Preferential procurement Human Resource Development SAICA  Secondary education  Engage with universities  Training environment  Training capacity  Qualifying exam CA Sector  Career awareness  Bursaries  Training programme  Mentorship  Administrative support training Enterprise Development Development and assistance of black firms in practice – CA Sector Technical assistance - SAICA Focus on start up and small business development Corporate Social Investment CA Sector - bursaries SAICA create platform for small and medium practices to participate Some of the Risks taken into account Certain constituencies may not support Charter Charter only addresses CA profession Charter may not be gazetted as a sector code and may not have legal status Possible interference From geographic and discipline charters eg tax Targets are challenging Impact of new corporate legislation on training capacity Increasing complexity could lead to higher costs Verification agencies may not understand profession Time it takes to qualify as CA may blunt efforts Long period of training pipeline Can turnover be used rather than EBITDA for measurement purposes? The Draft Charter will be signed on 10 August 2006 Conclusion ... transitional period CHARTER COUNCIL A Charter Council will be established as an independent body with a mandate to oversee the implementation of the Charter COMPOSITION OF CHARTER COUNCIL Comprised... SAICA Small practices Trainees from regions CONSULTATION ACCOUNTANCY PROFESSION CHARTER CHARTERED ACCOUNTANCY PROFESSION CHARTER SECTION A – Background  Objectives, scope and background information... be remunerated CHARTER ADMINISTRATION Through SAICA: Consolidate ratings Issue guidance notes Prepare annual reports based on submissions Submit reports to BEE Advisory Council on BEE Engage with