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Draft Amended Aviation Sector – Statement ASC604, Enterprise and Supplier Development – QSE

This is article seven of a series of articles summarizing the draft Aviation sub-sector code. This article discusses the Skills Development Element of the Scorecard and in particular, those of a QSE.

OBJECTIVES OF THIS STATEMENT

1.1. Specify the scorecard for measuring Preferential Procurement and Qualifying Enterprise and Supplier Development Contributions;
1.2. Specify the key measurement principles applicable to calculating Preferential Procurement contributions; Qualifying Enterprise Development and Supplier Development Contributions;
1.3. Define the principles applicable when calculating B-BBEE Procurement Spend and Enterprise Development and Supplier Development Spend; and
1.4. Indicate the formula for calculating the individual criteria specified in the Enterprise and Supplier Development scorecard.

Two essential contribution numbers are the basis of the ESD scorecard:

a. SUPPLIER DEVELOPMENT – Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target at 2% of Net Profit After Tax.
b. ENTERPRISE DEVELOPMENT – Annual value of Enterprise Development Contributions and Sector Specific Programmes made by the Measured Entity as a percentage of the target at 1% of Net Profit After Tax.

Enterprise and Supplier Development:

The sub-minimum for Enterprise and Supplier Development is 40% of the total weighting points (excluding bonus points) of each of the three broad categories, within the Enterprise and Supplier Development element, namely Preferential Procurement; Supplier Development and Enterprise Development. To remove any ambiguity this means that the Measured Entity must achieve at least the following:

I. 10 points under the Preferential Procurement category;
II. 4 points under the Supplier Development category; and
III. 2 points under the Enterprise Development category.

COMPLIANCE WITH PRIORITY ELEMENTS

A Large Enterprise is required to comply with all the Priority Elements;
A Qualifying Small Enterprise is required to comply with Ownership as a compulsory element, and either Skills Development or Enterprise and Supplier Development.

DISCOUNTING PRINCIPLE EFFECT

Non-compliance with the 40% sub-minimum requirements of any of the priority elements, as above, will result in the following outcomes for both Large Enterprises and Qualifying Small Enterprises:

The discounted level that the Measured Entity would have achieved because of non-compliance with the 40% sub-minimum requirements will be recognised by the Verification Professional;

THE QSE ENTERPRISE AND SUPPLIER DEVELOPMENT SCORECARD

The following table represents the indicators and methods for calculating a score for Enterprise and Supplier Development under this statement.

Given that we have discussed the QSE-related information above, below is the Enterprise Development and Supplier Development Benefit Factor Matrix from Statement ASC400 in totality for the Aviation Sector.

The next article will discuss the SOCIO-ECONOMIC DEVELOPMENT SCORECARD.

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