We have received a few queries around the concept of the Measurement Period of a Measured Entity in respect of a B-BBEE Verification. It should be noted that the 2015 Draft Verification Manual is a Draft and remains as such. Any principles, methodologies or concepts found in the 2015 Draft Veri- fication Manual cannot be applied to any B-BBEE Verification. In consultation with the Department of Trade, Industry and Competition’s (the dtic) Broad-Based Black Economic Empowerment (B-BBEE) Policy Unit, the following is applicable:
In ‘Criteria for Verification Engagement’ the 2008 Verification Manual expressly provides for ‘any other legislation or regulation as provided for in the Codes’ to be used as criteria when evaluating the Measured Entity. The Companies Act is referenced in the Codes, as such the definition of ‘financial statements’ found in the primary legislation finds application. It defines financial statements as:
Includes
• Annual financial statements and provisional annual financial statements;
• Interim or preliminary reports;
• Group and consolidated financial statements in the case of a group of companies; and
• Financial information in a circular, prospectus or provisional announcement of results, that an actual or prospective creditor or holder of the company’s securities, or the Commission, Panel or other regulatory authority may reasonably be expected to rely on.
The Companies Act, in Section 30, demands the Annual Financial Statements of a company to follow its Financial Year-End. The Verification Manual prescribes the Audited Financial Statements (now sufficiently defined as per above), to be used across the verification of several elements:
Unless otherwise stated in specific B-BBEE Sector Code of Good Practice, The Measurement Period can thus only ever be the Financial Year-End of the Measured Entity as registered with the Companies Intellectual and Property Commission (CIPC). Any other period elected would fall short of the requirements detailed in the 2008 Verification Manual. Measurement of a Measured Entity’s B-BBEE Verification Status is based on historical data in which the Latest Measurement Period is utilised for a B-BBEE Verification. The intention behind this is to ensure that B-BBEE Verifications are con- ducted on the most recent information and aligned to the Financial Year-End of the Measured Entity.
A B-BBEE Consulting company Serr Synergy took SANAS to the High court on this matter and it was decided by the court this year that SANAS cannot dictate the measurement period that must be taken into account when verifying an enterprise’s compliance with the codes of good practice.
