The Chartered Accountancy (CA) profession’s BEE Sector Code

A draft CA Sector code was published in October 2009, with a 60-day commentary period. After this period, the Code was finalized and published in May 2011 for implementation via Gazette 34267.

The Codes of Good Practice were reviewed and changed. These new Codes were gazetted in October 2013 and were given until 30 October 2015 to have their new Sector Codes gazetted. The CA Sector Charter Council embarked on a process to make the necessary amendments to its CA Sector Codes in line with the new amended Codes and at the same time a mid-term review of targets was undertaken. Agreement could not be reached on the revised Codes within the deadlines set by the dtic. The original CA Sector Code was repealed by the dtic. The CA Sector Code negotiation process was started again with some new representation and a new chair elected.

Agreement was reached and final signatures were obtained in September 2018.

Vision
The vision of the Chartered Accountancy (CA) profession Sector Code is to grow the number of Black People in the CA profession to reflect the country’s population demographics, to empower and enable them to meaningfully participate in and sustain the growth of the economy, thereby advancing equal opportunity and equitable income distribution.

Scope
The scope of the Sector Code is Broad-Based Black Economic Empowerment (B-BBEE) for the CA profession and sector.

Employers and education institutions are only included in the scope of the Sector Code to the extent that they employ South African Institute of Chartered Accountants (SAICA) trainees and members of SAICA or offer accredited SAICA education and training programmes leading to attaining the designation Chartered Accountant South Africa (CA(SA)).

While the Sector Code’s primary objective is the transformation of the CA profession and sector, for practical purposes all staff, partners, and directors employed by firms in public practice are included in the ambit of this Sector Code.

The Accountancy profession comprises numerous organised membership bodies with members employed throughout the economy, including commerce and industry, the public sector, academia, and those in public practice, either as owners or Employees. Those non-members of organised accountancy membership bodies, but performing similar functions or offering similar services, are deemed to be part of the Accountancy profession.

The CA profession is one segment of the Accountancy profession. It comprises members of SAICA; organisations in public practice offering training; organisations in commerce and industry, as well as government and parastatal organisations, also offering training to the extent necessary to obtain the CA(SA) designation; academic institutions offering undergraduate and postgraduate education aimed at qualifications necessary for the CA(SA) designation; and SAICA the institution, to the extent necessary to obtain the CA(SA) designation.

The scope of this Sector Code is the CA profession only. In developing a Sector Code (and scorecard) for the CA profession, it is recognised that the primary focus should be on Skills Development aimed at increasing the number of Black (especially Black Female) CA(SA)s in South Africa.

For purposes of the CA Sector Code, entities with common Ownership, Control or Management as defined in Affiliated Entities should be aggregated.

Chartered Accountants are trained in commerce and industry, government and parastatal organisations, and public practice. Unlike other industry Sector Codes, this Sector Code addresses
a profession that not only spans a unique industry sector (public practice) but also reaches across many other industry sectors.

This uniqueness is recognised in the Sector Code.

The development of a Sector Code for the CA profession stems from the numerous interactions with the organs of state; specifically the National Treasury, the Office of the Auditor-General,
the IRBA, and the Financial Services Board.

CA(SA)s, and particularly Black CA(SA)s, have been identified as being scarce professionals with specialised skills which are in short supply and of national strategic importance. This situation needs to be rectified, hence the need to develop a Sector Code for the CA profession.

The Sector Code of the CA profession is characterised by the following:

1. It embraces the spirit of what the government intends to achieve with B-BBEE rather than being rules-driven;
2. The CA profession is unique in that it is directly involved in the development of CA(SA)s and RAs who often take up leadership positions in the economy and society as a
   whole;
3. It was developed voluntarily;
4. It constitutes a framework and establishes principles from which B-BBEE will be implemented in the CA profession and sector;
5. It represents a partnership programme with the government as outlined in the government’s strategy for B-BBEE;
6. It provides the basis for engagement with other stakeholders, including but not limited to, providers of education and training, regulators, government, and labour;
7. It establishes quantitative targets and qualitative responsibilities with respect to each indicator of the scorecard; and
8. It outlines processes for implementing the Sector Code and mechanisms for monitoring, measuring, and progress reporting.

The Sector Code applies to the CA profession in South Africa and therefore the South African firms making up the CA Sector. The provisions specific to the CA Sector Qualifying Small Enterprises (QSEs) are set out in paragraph 13. Unless expressly stated otherwise, the provisions stated here will apply to both general constituents of the CA Sector and QSE constituents.

GUIDING PRINCIPLES

The following key principles have been adopted by the CA profession with regard to the implementation of the Sector Code:

1. All B-BBEE initiatives of the CA profession will be measured and reported on an annual basis.
2. This annual reporting date for B-BBEE purposes will be the financial year end of the entity.
3. Ownership will include Black CAs and this will be tracked on an annual basis.
4. The fundamental principle that all measurement of B-BBEE initiatives is based on the actual level of B-BBEE compliance at the date of measurement will be adhered to.
5. The CA profession will adhere to economic principles when implementing the B-BBEE initiatives so as to ensure the sustainability of the B-BBEE process.
6. The CA profession will account for and present all B-BBEE initiatives in accordance with the substantive and economic reality and not merely the legal form.
7. The CA profession will ensure that there is uniformity in how B-BBEE initiatives are recognised and measured so as to facilitate a comparison of B-BBEE progress between different constituencies.
8. The CA profession undertakes to promote information that is free from material error and bias and can be depended upon by users to be a faithful representation of that which it could reasonably be expected to represent. Any representations made will be capable of being supported by appropriate evidence and documentation.
9. The CA profession undertakes to provide information pertaining to the B-BBEE initiatives that is complete.
10. The CA profession undertakes to provide available information on a timely basis.
11. No transitional period shall be provided for the implementation of the CA Sector Code.
12. A Measured Entity that is part of the CA Sector Code may only be measured in accordance with the CA Sector Code.
13. The CA Sector Code is binding on the applicable sector, organs of state, and public or private entities.

IMPLEMENTATION

CHARTER COUNCIL

1. A Charter Council has been established as an independent body with a mandate to oversee the implementation of the Sector Code.
2. The Charter Council membership has been drawn equitably from stakeholders.
3. The Charter Council will consist of representatives from each of the following stakeholder groups (11 in total): Small Size Firms
   Large Firms
   Medium Size Firms
   Black Chartered Accountant Practitioners (BCAP)
   IRBA
   SAICA
   ABASA
   AWCA
   Members in Business
   Auditor-General
   National Treasury

The Charter Council will address issues of principle and in particular:

1. Supply guidance on sector-specific matters affecting B-BBEE to the entities within the sector;
2. Compile reports on the status of B-BBEE within the sector;
3. Share information with the national monitoring mechanism and approved accreditation agencies, namely the B-BBEE Commission, B-BBEE Presidential Advisory Council, line
   ministry (National Treasury) and the Minister of Trade and Industry;
4. Undertake ongoing monitoring of the pipeline of undergraduates, postgraduates, and trainees as they relate to the CA profession to ensure a positive shift in terms of race, gender, and pass percentages; and
5. Undertake ongoing monitoring of the achievement of targets as set out in the scorecard. If it is deemed appropriate, new targets will be set if these targets are achieved during the period.

REGULATORY ISSUES

The regulatory environment and architecture of this sector must promote the empowerment objectives of this Sector Code, ensure appropriate standards of entry, operation, and disclosure, and facilitate competition. In terms of Statement 000, if an entity is within a sector of which all Sector Codes have been issued in terms of section 9 of the B-BBEE Act, as amended; such an entity may only be measured for compliance in accordance with that code.

A future article will list the details of the scorecard.