BUSINESS has been warned to exercise “caution and good judgment” when selecting a black economic empowerment rating agency when the final codes of good practice are gazetted.
Victor Sekese, CEO of audit firm SizweNtsaluba VSP, said on Friday that business should realise that due to huge skill differentials, accredited rating agencies would not necessarily be able to perform at an equal level.
A number of audit firms will be establishing their own rating divisions and will be seeking accreditation. This means that the established auditing firms will be accredited together with new companies created for the sole purpose of entering this market.
“Yet it will not be accurate to regard an accredited auditing firm, which must measure up to the standards and codes of conduct dictated by the auditing profession, as being in the same category as other rating agencies,” Sekese said.
The final codes of good practice, which are expected to be gazetted next week, will signal the green light for companies to apply for accreditation as an empowerment verification agency.
The codes provide guidelines to firms and state-owned enterprises on how to achieve black economic empowerment.
The South African National Accreditation System (Sanas) has been tasked by the trade and industry department to develop a set of accreditation criteria by which the would-be rating agencies would be assessed.
Sanas has already produced a document in which the criteria would be set. They include impartiality, competence and responsibility.
“It is not possible yet to assess how low or high the barriers to entry will be set,” Sekese said.
The demand for empowerment ratings from accredited agencies will be high, he said.
For an indication of the number of potential customers, one had only to take stock of the fact that 29000 close corporations and 9500 companies were formed each month, he said.
“No doubt there will be some pressure to set relatively low barriers to entry,” he said.