The Generic Scorecard for the Chartered Accountancy Sector, part 10 – Enterprise and Supplier Development – key principles, contributions, monetary and non-monetary contributions, and bonus points
- Supplier and Enterprise Development: Key principles
7.1 Measured Entities are encouraged to align their Enterprise Development and Supplier Development initiatives with their supply chain requirements, thereby linking Enterprise Development and Supplier Development to Preferential Procurement.
7.2 Qualifying Enterprise Development and Supplier Development Contributions of any Measured Entity are recognisable on an annual basis.
7.3 In the case of contributions, programmes and/or initiatives that span multiple years, the total contribution amount must be divided by the number of years, and the average per year is then to be used for the Annual Contribution.
7.4 Measured Entities are encouraged to develop and implement an Enterprise Development plan and a Supplier Development plan for Qualifying Beneficiaries. This plan should include:
7.4.1 Clear objectives;
7.4.2 Priority interventions;
7.4.3 Key performance indicators; and
7.4.4 A concise implementation plan with clearly articulated milestones.7.5 Measured Entities will not receive recognition for the same activities undertaken under Enterprise Development and Supplier Development; they will only receive recognition for one of the two.
7.6 No portion of the value of any Qualifying Enterprise Development and Supplier Development Contribution that is payable to the beneficiary after the date of measurement can form part of any calculation.
- Supplier and Enterprise Development: Contributions
8.1 Investments in Beneficiary Entities.
8.2 Loans made to Beneficiary Entities.
8.3 Guarantees given or security provided on behalf of beneficiaries.
8.4 Credit facilities made available to Beneficiary Entities.
8.5 Grant Contributions to Beneficiary Entities.
This would include grant contributions made to the SAICA Enterprise Development initiative.
8.6 Direct costs incurred by a Measured Entity in assisting and hastening the development of Beneficiary Entities.
8.7 Overhead costs of a Measured Entity directly attributable to Enterprise Development and Supplier Development Contributions.
8.8 Preferential credit terms granted by a Measured Entity to Beneficiary Entities.
8.9 Preferential terms granted by a Measured Entity in respect of the supply of goods or services to Beneficiary Entities.
8.10 Contributions made to settling service costs relating to the operational or financial capacity of Beneficiary Entities.
8.11 Discounts given to Beneficiary Entities in relation to the acquisition and maintenance costs associated with the grant to those Beneficiary Entities of franchise, licence, agency, distribution or other similar business rights.
8.12 The creation or development of capacity and expertise for Beneficiary Entities needed to manufacture or produce goods or services previously not manufactured, produced or provided in the Republic of South Africa is provided for the Government’s economic growth and local Supplier Development and initiatives.
8.13 Facilitating access to credit for Beneficiary Entities without access to similar credit facilities through traditional means owing to a lack of credit history, high risk or collateral.
8.14 Provision of training or mentoring to suitably qualified entities or individuals to Beneficiary Entities, which will assist the Beneficiary Entities to increase their operational or financial capacity.
8.15 Maintaining an Enterprise Development and Supplier Development unit which focuses exclusively on support for Beneficiary Entities or candidate Beneficiary Entities.
8.16 New projects promoting beneficiation by the Measured Entity for the benefit of Enterprise Development and Supplier Development Beneficiaries.
8.17 Provision of preferential credit facilities to a Beneficiary Entity by a Measured Entity may constitute an Enterprise Development and Supplier Development Contribution.
Examples of such contributions include, without limitation:
8.17.1 Provision of finance to Beneficiary Entities at lower than commercial rates of interest;
8.17.2 Relaxed security requirements or absence of security requirements for Beneficiary Entities unable to provide security for loans; and
8.17.3 Settlement of accounts with Beneficiary Entities over a shorter period of time in relation to the Measured Entity’s normal payment period, provided the shorter period is no longer than 15 days.8.18 Providing training or mentoring to beneficiary communities by a Measured Entity. (Such contributions are measurable by quantifying the cost of time (excluding travel or commuting time) spent by staff or management of the Measured Entity
in carrying out such initiatives. A clear justification, commensurate with the seniority and expertise of the trainer or mentor, must support any claim for time costs incurred.)
8.19 Maintaining an Enterprise Development and Supplier Development unit by the Measured Entity. (Only that portion of salaries and wages attributable to time spent by the staff in, and other expenses related to, promoting and implementing Enterprise Development and Supplier Development constitutes contributions.)
8.20 Payments made by the Measured Entity to suitably qualified and experienced third parties to perform Enterprise Development and Supplier Development on behalf of the Measured Entity.
8.21 For the Bonus Points: Actual revenue billed by a Black Owned Professional Services Firm that a Measured Entity voluntarily subcontracts on a professional services assignment.
Supplier and Enterprise Development: Monetary and non-monetary contributions
Subject always to the definition of Qualifying Enterprise Development and Supplier Development Contributions, the following monetary/non-monetary contributions will, without limitations, be considered:
9.1 The provision of seed or development capital.
9.2 Contributions made towards the settlement of the cost of services relating to the operational or financial capacity and/or efficiency levels of a Qualifying Enterprise Development and Supplier Development Beneficiary, including, without limitation:
9.2.1 Professional and consulting services;
9.2.2 Licensing and/or registration fees;
9.2.3 Industry-specific levies and/or other such fees; and
9.2.4 IT services.9.3 Facilitation of access to credit for Beneficiary Entities unable to access similar credit facilities through traditional means owing to a lack of credit history, high risk and/or lack of collateral.
9.4 Provision of training and/or mentoring to Beneficiary Entities, which will assist the Beneficiary Entities to increase their operational and/or financial capacity.
9.5 Maintenance by the Measured Entity of an Enterprise Development and Supplier Development unit, which focuses exclusively on support of Beneficiary Entities or candidate Beneficiary Entities.
9.6 Provision of preferential credit facilities to a Beneficiary Entity by a Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution. Examples of such contributions include, without limitation:
9.6.1 Provision of finance to Beneficiary Entities at rates of interest below the applicable rate. Such contributions will be measured as the value of the differential between the actual interest rate provided to the Beneficiary Entity and the appropriate rate; and
9.6.2 Relaxed security requirements or absence of security requirements for Beneficiary Entities unable to provide security for loans. Such contributions shall be measured as being 3% of any positive differential between the initial capital value of the loan and the value of the security taken.9.7 Settlements of accounts with Beneficiary Entities over a shorter period of time in relation to the Measured Entity’s normal payment period, provided the shorter period is no longer than 15 days. Preferential payment terms which extend beyond 15 days will not qualify as Qualifying Enterprise Development and Supplier Development Contributions.
9.8 Provision of training and/or mentoring to a Beneficiary Entity by a Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution. Such contributions will be spent by the staff or management of the Measured Entity in carrying out such initiatives. Any travel or commuting time may not be included in this cost. Furthermore, a clear justification must be supplied with respect to the calculation of such time costs incurred, commensurate with the level of seniority and expertise of the trainer or mentor. Common forms of such contributions include, without limitation:
9.8.1 Professional and consulting services;
9.8.2 IT services; and
9.8.3 Any other services which help to increase the entity’s financial and/or operational capacity and which have not also been accounted for under Skills Development.9.9 The maintenance of an Enterprise Development and Supplier Development unit by the Measured Entity may constitute a Qualifying Enterprise Development and Supplier Development Contribution.
Common examples of such contributions include, without limitation, the salaries and wages of staff involved in the operations of such Enterprise Development and Supplier Development unit. However, only that portion of salaries and wages which relate to time spent by the staff in the field and the other expenses related to the promotion and implementation of Enterprise Development and Supplier Development in respect of Beneficiary Entities or candidate Beneficiary Entities, should be taken into consideration
under Enterprise Development and Supplier Development Contributions.
- Enterprise and Supplier Development: Bonus Points – CA Sector
Bonus points have been set aside to encourage the extension of joint audits or sub-contracted audits with Black Owned Professional Services Firms in the listed company sector. Given the complex nature of the proposed arrangements, bonus points have been made available as an option in a menu of other options for Enterprise and Supplier development.
There is recognition that such arrangements could be complex, and cognisance should be taken of the following:
10.1 Independence;
10.2 Confidentiality;
10.3 Sharing of assignment risk; and
10.4 Client consent, which will be required.
The next article will discuss the Enterprise Development and Supplier Development’s Benefit Factor Matrix and Measurement.
