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

Industry Charters

Chartered Accountancy Charter

Section B: Framework

9. Risk Management


The following potential risks have been identified which may impact negatively on the successful implementation of this Sector Code. Additional risks and unintended consequences may arise during the implementation phase of the Sector Code. The Charter Council will need to monitor these and any other risks, ensuring appropriate strategies are put in place to mitigate any risks and unintended consequences.


For each potential risk identified possible mitigating actions have been recommended. These will need to be considered and adapted if necessary, rather than simply adopted without considering the circumstances at the time.




Certain constituencies may not buy into the Sector Code and either passively or actively not support its implications.

During the formulation process, we ensured all parties did not participate regularly and fully and requested them to report back to and regularly consult with their respective constituencies.

The Forum chairperson and/or steering committee engaged Forum members and or constituencies to address any unresolved issues.

This Sector Code addresses only the CA profession, omitting many other accounting bodies, their members and others offering similar accountancy services.

A letter was sent to all other known accountancy related membership organisations advising them of the CA B-BBEE Negotiating Forum, and recommended they run similar processes. We offered experiences from this process and suggested that in due course it may be appropriate for a larger group to meet to share experiences and maybe work together.

Charters may be gazetted as Sector Codes or transformation charters. The latter has no legal status and are for informational purposes only. Sector Codes will have the same status as the Codes of Good Practice.

In order to have maximum impact, the Forum needs to ensure that the Charter is gazetted as a Sector Code. This requires a stringent process and close alignment to the Codes of Good Practice with any deviations being fully justified.

Appropriate consultation with the Forum, with constituencies and with other professional advisers is necessary to ensure the Charter is gazetted as a Sector Code.

There are risks that different scorecards may be required or indeed used, for different geographic locations of a national business with multiple locations.

Where the ownership and management of a practice is regarded as being national a single scorecard should be applied. In the case of independently owned and managed franchise operations, each franchise should have its own scorecard.

There have been suggestions that different Sector Codes will need to be used for different service disciplines within a multidisciplinary firm (e.g. audit, tax, legal services may be different).

The philosophy of one firm one Sector Code/scorecard nationally and for all offerings has been strongly advocated.

The targets set in the scorecard must be challenging to make a difference, but some may regard them as unrealistic. In developing the Sector Code and scorecard, the assumption is that the economy will continue to grow at an average of 5% per annum or more. Growth makes the targets more achievable than when there is low or no growth.

Should the economy not reflect constant growth of 5% per annum or more, additional strategies may be required to ensure the targets are met.

The regulations flowing from the Companies Act No. 71 of 2008 will in all probability bring about a fundamental change with regard to the requirements for the audit of companies, in that audits will possibly no longer be mandatory for 'closely held' companies that do not meet the threshold requirements for a 'public interest' company designation.

A regulatory change of this nature will significantly reduce the number of audit trainees. The impact of this on the Sector Code goals and scorecard targets will need to be considered and factored into strategies agreed by the Charter Council.

The Codes of Good Practice have become increasingly complex, which will result in greater complexity in this Sector Code and scorecard. Small and medium enterprises will find it difficult and expensive to administer and move away from compliance.

Requirements for compliance with the Sector Code and scorecard must be kept as simple as possible, particularly for small and medium enterprises.

The role of the membership body, SAICA, must be clearly reflected together with the resource requirements to discharge any responsibilities it assumes.

The SAICA Board must approve any recommended role for SAICA during the implementation process.

The training platform for CAs is well defined as being training inside and outside of public practice. This platform could be significantly increased by extending training in the public sector.

SAICA should work in partnership with the public sector and the profession to develop a training model for implementation in the public sector.

Due to the length of time taken for a CA to qualify (minimum of seven years, assuming the correct school exit pass), there is a risk that after the ten -year period there may be a perception that not enough CAs have been trained.

As well as focusing on the number of CAs, the pipeline of trainees and post-graduate students must be monitored. This may also include relevant undergraduate students.

The definition of 'black people' includes African, Coloured and Indian groups. The ultimate objective of the Sector Code is to achieve equitable representation of the different race groups and gender in its membership. In the CA profession Africans and Coloureds are substantially underrepresented in the membership demographics and we would expect particular emphasis to be placed on these groups, including women in general.

The reason for the less inclusive focus is that in terms of the B-BBEE measures applied by the CA profession, and particularly membership, the Indian population group already satisfies the indicators. However, measures should be put in place to ensure that the situation is monitored, and any deterioration addressed by including the Indian group in the initiatives.