The governing body of verification agencies, the South African National Accreditation System (SANAS),  have sent a letter of clarification to all verification agencies in relation to the issue of the measured period. The letter is as follows: “I refer to the correspondence issued by Mr Yuneal Padayachy on 14 August 2020 in respect of the above-mentioned matter.(clarity on measured period)  We reiterate that the latest financial year end records must be verified for B-BBEE Verification purposes. The Verification Manual makes provision for the use of financial statements which are not audited and details the additional testing or requirements to be taken into consideration in reducing the risk to an acceptable level. These processes had been agreed to with the dtic and are not new requirements. If the intention of the legislature had been to allow for audited financial statements only, then it would not have allowed for the alternative testing or requirements on unaudited Financial Statements.  As a consequence of that communication, all verifications not done in line with that guidance, effective 15 August 2020, should be corrected. SANAS assessors will sample to determine if the guidelines had been followed by all Rating Agencies” The impact of this communication is as follows:

1. Measured entities will not be allowed to use a measured period different to their financial period.
2. Management accounts need to be aligned to the financial period, therefore an unaligned rating period will not be used.
3. A measured entity is now required to use its most current financial information for a BBBEE audit. For example in 2021, a measured entity with a year end of February will need to use the financial information from March 2020 to February 2021. The measured entity being audited in 2021 will not be allowed to use the financial information of March 2019 to February 2020.

Talk to us about how this communication may impact you going forward.