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Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

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Chartered Accountancy Charter

Section C From Theory to Practice: The Scorecard

12. The Generic Scorecard for the CA Sector

12.2 Application of the CA Sector Scorecard

12.2.7 The Socio-Economic Development (SED) Scorecard


The objective of this section is to measure initiatives that contribute towards SED or to Sector Specific Programmes that promote access to the economy for Black People. The challenges which this section of the scorecard seeks to address can be summarised as follows:

The majority of Black People in South Africa are still unable to access the mainstream economy owing to poverty and a lack of education.
The most critical aspect of this Element is that SED initiatives should result in sustainable economic participation by its intended beneficiaries and discourage dependence on hand-outs.


The indicators and Weightings are as follows:


SED indicator

Weighting points

Compliance Target for 2016


CA sector

Average annual value of all SED contributions by the Measured Entity as a percentage of NPAT or turnover



1% of NPAT or 0,125% of turnover


For purposes of the CA sector, indicator Weightings and Targets have the following interpretations:

The compliance Target is set at 1% of NPAT, as recommended by the Codes of Good Practice, or 0,125% of turnover, whichever is the greater. In view of the partnership structure it will not always be appropriate to use NPAT and accordingly turnover was agreed upon as an acceptable alternative measure.
The full value of SED contributions is recognisable if at least 75% of the value directly benefits Black People.
If less than 75% of the full value of the SED contribution directly benefits Black People, the value of the contribution multiplied by the percentage that benefits Black People is recognisable.


Beneficiaries of Enterprise Development defined



Social development beneficiaries are either black individuals, or, as is more commonly the case, communities or groups of people. In the latter case the percentage of Black People within the beneficiary group affects the amount of spend recognition in terms of the Codes:

•        Where 75% of the beneficiary group is black, the full value of the contribution is recognisable

•        Where less than 75% of the beneficiary group is black, the value of the contribution multiplied by the percentage benefiting Black People is recognisable

Approved SED Programmes

The beneficiaries of approved SED Programmes must meet the definition of SED beneficiaries


SED contributions include the following:

Current grant contributions to beneficiaries of SED contributions;
Guarantees or security provided for beneficiaries;
Preferential terms granted for the supply of goods or services to beneficiary communities;
Training or mentoring, in the case of the CA sector capacity building of financial management skills, where the portion of salaries and wages attributable to time spent by staff as well as other expenses related to the training and mentoring activities would form part of the SED contributions;
Payments made by Measured Entities to third parties to perform SED on behalf of the Measured Entity;
Direct costs as well as overhead costs incurred by a Measured Entity directly attributable to SED contributions or incurred in assisting beneficiaries;
Development capital advanced to beneficiary communities;
Maintaining an SED 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 SED Programmes.


The Measured Entities shall be entitled to receive recognition for any SED contribution, provided that it is possible to quantify such contributions by attaching a monetary value, using a Standard Valuation Method (see the Benefit Factor Matrix below).


Qualifying SED contributions shall be measured cumulatively from the date on which the Sector Code is gazetted until the date of measurement. If, however, contributions were made before this date, the Measured Entity shall be entitled to adopt an earlier Inception Date which shall not go back more than five years.


Non-monetary contributions will be measured by quantifying the cost of time spent by staff or management of the Measured Entity in carrying out such initiatives.


Calculation of monetary value


The contribution amount is calculated using the following Benefit Factor Matrix:


Qualifying contribution type

Contribution amount

Benefit Factor

Grant and related contributions

Grant contribution

Full grant amount


Direct cost incurred in supporting SED, sector specific initiatives or approved SED contributions

Verifiable cost (including both monetary and non-monetary)


Contributions in the form of human resource capacity

Professional services rendered at no cost supporting SED, sector specific initiatives or approved SED contributions

Commercial hourly rate of professional


Professional services rendered at a discount supporting SED, sector specific initiatives or approved SED contributions

Value of discount based on commercial hourly rate of professional


Time of Employees of Measured Entity productively deployed in assisting beneficiaries and supporting SED, sector specific initiatives or approved SED contributions

Monthly salary divided by 160



Measurement of SED contributions



Where      A      =      the score achieved in respect of the SED contributions made by the Measured Entity

                   B      =      the value of all qualifying contributions made by the Measured Entity measured from the effective date the CA Sector Code to the date of measurement

                   C      =      the compliance Target for SED contributions as specified in the scorecard

                   D      =      the Weighting points allocated to the Measured Entity development indicators in the scorecard