B-BBEE Code for CAs to transform audit profession, but some bodies object

SAICA's Chantyl Mulder: "Black CAs must participate meaningfully and equitably in the country's wealth creation."

In South Africa, 29 percent of chartered accountants (SA) are black, but this falls significantly short of truly reflecting the country’s demographics. To address this, the broad-based black economic empowerment (B-BBEE) Code for CAs has been released for comment before being gazetted, with specific targets for audit and accounting firms and the CA profession.

Chantyl Mulder, executive director for nation building at the SA Institute of Chartered Accountants (Saica) says:

“To understand the purpose of the current draft, you have to go back to the specific purpose of the B-BBEE  Code for CAs, which was written specifically for the CA(SA) profession so that we can transform our membership to reflect the population demographic of the country both in terms of race and gender, so that black CAs will be able to participate meaningfully and equitably in the country’s wealth creation.”

She explains that the vision for the charter hasn’t changed since 2004. The current draft has some amendments that have the specific intention of supporting that vision. It applies to small, medium and large audit and accounting firms.

One of the areas that has been amended is the ownership component, which remains at 32.5 percent, but has been updated to state that the ownership by black CAs with exercisable voting rights must now be 20 percent.

The other amended area is that of skills development, Chantyl says is “critical”. In the generic codes, the skills development component is 20 percent, but for the CA charter, it’s now 30 percent. That additional 10 percent is allocated as follows: 5 percent  for contributions to an accredited bursary fund – SAICA’s Thuthuka Education Upliftment Fund, and the other  5 percent  for students who have completed their learnerships as well as their professional examinations required to be a chartered accountant.

The contribution to skills development should be 4 percent of net profit after tax or 0.5 percent of turnover, whichever is larger. “The skills development component in the previous draft didn’t take into account completed learnerships, but we want to provide proof and measure the impact of skills development activities, being the successful delivery of Black CAs” says Chantyl.

To enable this additional ten points under skills development, the points were taken from enterprise and supplier development (ESD), which Chantyl explains is because accounting and audit firms are service organisations, and procurement is not a significant aspect of their business model. In this section five points have been allocated to the support and  development of black firms, and another five points have been allocated to provide funding to historically disadvantaged institutions, where the profession has played a major role in getting their undergraduate and in some instances post graduate degrees accredited.

“These universities are critical in growing the pipeline of black students and totally under-capacitated. This funding will go to assist these institutions,” says Chantyl.

Says chairperson of the CA Charter Council and executive chairperson of the African Women Chartered Accountants Investment Holding Company, Sindi Mabaso-Koyana:

“We are quite excited to finally be so close to concluding this process. It’s been underway for a long time now. We had already gazetted a charter in 2011, but then the codes were realigned in 2013. Now that the work of realigning the code is behind us, we can put in the qualitative work of transforming the CA profession – to bring back the nobility and trust of the profession.”

The charter is now in a 60-day comment period, after which the DTI and the Charter Committee and Saica will discuss, finalise and gazette the charter. However, Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba), says that his organisation will be opposing the charter as “it benefits the dominant player in the sector (Saica). There is no other sector that has a charter that benefits a privately controlled entity.” 

For this reason, he says Saiba will be objecting to the charter on the basis of anti-competitiveness and the fact that it is not in line with the B-BBEE principles of broad empowerment. “We will ask that it be replaced with an Accountancy Profession Charter.”