VERIFICATION AGENCIES WORKSHOP5-8 September 2006

CHRISTINAH LEBALLOSANAS BEE PROGRAMME MANAGER

South African National Accreditation System

BACKGROUND ON HOW R47 WAS DEVELOPED

BEE VERIFICATION AGENCY ACCREDITATION UPDATE

- SANAS Specialist Technical Committee (STC) tasked with finalisation of Accreditation Criteria that Verification Agencies shall comply with.

- STC composed of :- Industry Body ABVA- Business BUSA- the dti- SANAS

- Meets requirements of :- Balance of Interest- Impartial- Competent

1) Have had 5 meetings.

2) Comments

3) Tested the R47 document

4) Outstanding issues for STC

Qualification of analysts (auditors) used by Verification Agencies

STC PROGRESS

Verification Agencies Chambers DTI STC Members

COMMENTS

Statement 020 changed to clearly separate out Requirements

for Approval and Requirements for Accreditation Minister approves against Statements 020 SANAS accredits against detailed document R 47 but Statement

020 gives General requirements for Accreditation and gives

mandate to accredit. The Minister uses Accreditation as input into decision to

Approve Criteria for approval are (defined in Statement 020) :

Member of Industry body Be a superior contributor Be accredited

ACCREDITATION CRITERIA STATEMENT 020 & R47

ASSESSMENT AND APPROVAL PROCESS

1. SANAS RECEIVES AN APPLICATION AND

DOCUMENTATION

SANAS RECOMMENDS TEMPORARY APPROVAL

TO THE MINISTER

2. SANAS PRE-ASSESS THE VERIFICATION

AGENCY

SANAS INFORMS THE MINISTER ABOUT

THE OUTCOME

3. SANAS ACCREDIT THE VERIFICATION

AGENCY

SANAS INFORMS THE MINISTER

SANAS ISSUE THE ACCREDITATION

CERTIFICATE

THE VERIFICATION AGENCY APPLY TO THE MINISTER FOR APPROVAL INCLUDING THE

ACCREDITATION CERTIFICATE

Temporary approval does NOT imply accreditation.

BEE TEMPORARY APPROVAL

THANK YOU

SANAS R 47-01

ACCREDITATION OF BEE

VERIFICATION AGENCIES

WORKSHOPSean MacCurtain

6.THE ROLE OF BEE VERIFICAYION AGENCIES

6.1 Assess, verify and validated BEE Information for decision making

◙ Verify both disclosed and undisclosed BEE-related information◙ Verification should be based on principles contained in BBBEE Codes of Good Practice as well as relevant gazetted industry charters

6.THE ROLE OF BEE VERIFICAYION AGENCIES (Cont.)

6.2 Evaluate BEE transactions and scenarios

◙ Verification Agencies may include indicative BEE scores based on the Scenario presented

7. The Accreditation Role Of SANAS on behalf of the DTI

◙ Accredit BEE Verification Agencies in terms of accreditation criteria (R47) ◙ The DTI to evaluate the BEE status of the Verification Agencies

8. RESPONSIBILITIES OF BEE VERIFICATION AGENCIES

◙ Comply with R47◙ Be a Superior Contributor to BEE◙ Be a member of the Industry Body◙ Verify according to the Codes

9. TEMPORARY APPROVAL TO OPERATE AS A BEE VERIFICATION AGENCY FOR NEW OR EMERGING

VERIFICATION AGENCIES

◙ Pre-assessment before approval◙ SANAS shall make recommendation to the Minister◙ Granted by the Minister of DTI and lasts for 180 days

10. PRINCIPLES

GeneralAim: To give confidence to all parties that rely upon verification

◙ Impartiality◙ Competence◙ Responsibility◙ Openness◙ Confidentiality◙ Resolution of Complaints

QUESTIONS ◙

11. REQUIREMENTS

General requirements

A Verification Agency shall:◙ Internally display a Positive commitment to all seven elements◙ be legal enterprise◙ not have equity share or voting rights in the entity to be rated◙ not be a party to a debt-creating agreement between itself and the entity◙ have a legally enforceable agreement◙ retain authority and shall be responsible for its decision relating to the BEE verification

11. REQUIREMENTS (Cont.)

General requirements

A Verification Agency within a month of being accredited shall:

◙ Evaluate and document the significant risk from its verification activities.◙ evaluate its finances and sources of income.

12.MANAGEMENT SYSTEM REQUIREMENTS FOR VERIFICATION AGENCIES

The Verification Agency Shall:

◙ establish, implement and maintain a management system◙ document policies, systems, programmes, procedures and instructions◙ communicate the system documentation◙ ensure that system documents are understood, implemented and are available to personnel

13. Example of Document Structure.

Policy Manual

Procedures

Forms

Records

13. STRUCTURAL REQUIREMENTS

13.1 Structure and Top Management of BEE Verification Agency

The Verification Agency Shall:

◙ identify top management◙ document its organisational structure and the structure shall include reporting lines◙ have formal rules for appointment, terms of reference of any committees

13. STRUCTURAL REQUIREMENTS (Cont.)

13.2 Safeguarding of impartiality

◙ Composition, terms of reference, duties, authorities and responsibilities of committees shall be documented and authorised by top management

14. HUMAN RESOURCE REQUIREMENTS

14.1 Competence of management and personnel

◙ Processes to ensure up-to-date knowledge relevant to verification criteria◙ Determine competence required◙ Defined processes for selecting, training formally authorising and monitoring verification analysts

14 HUMAN RESOURCE REQUIREMENTS (Cont.)

14.2 Personnel involved in the verification process

◙ Competent◙ Sufficient number of verifying analysts and verification managers

14.4 PERSONEL RECORDS

◙ Records of qualification◙ Training◙ Experience◙ Competence◙ Job description◙ Contract

14.5 OUTSOURCING

◙ Process that describes the conditions under which outsourcing may take place◙ Procedure for monitoring outsourced bodies◙ Records of outsourced bodies◙ Decision making shall never be outsourced

14.6MANAGEMENT OF IMPARTIALITY

Policy Manual◙ Publicly available statement about understanding the importance of impartiality◙ Document the possibilities for conflicts of interest.

Organisation Structure◙ Document relationships

Outsourcing◙ Activities of other related bodies do not affect the confidentiality, objectivity and impartiality

14.6 MANAGEMENT OF IMPARTIALITY (Cont.)

Organisation and Personnel◙ A minimum period of two years need to elapse following the end of consultancy◙ Commercial and Financial pressures◙ Both internal and external personnel to declare any situation known to them that may present conflict of interest

15.INFORMATION REQUIREMENTS

◙ Information about activities◙ Information about BEE status granted◙ Information about validity of a given BEE score◙ Information to the dti about the status level of measured entity

16. DOCUMENT CONTROL

◙ Procedure to control documents

◙ Distribution of documents and availability of documents at all locations where operations are performed.

◙ Periodic Review

◙ Obsolete documents◙ Review and approval by authorised personnel to issue◙ Master list with current revisions◙ Amendments by hand procedure◙ Procedure on changes to documents maintained in computerised systems

16.5 BEE VERIFICATION CERTIFICATES

◙ Minimum requirements

◙ Effective date.

◙ Overall BEE status and status level of each of the seven elements

16.5 BEE VERIFICATION CERTIFICATES (Cont.)

16.6 Directory of verified entities

◙ Maintenance making the directory available to the DTI

16.7 Reference to verification and use of marks

◙ Policy on governing any mark authorised for use by verified entities.

◙ a procedure detailing on how to make references to verification status to avoid:

misleading statements

Bringing the Verification Agency into disrepute

CONFIDENTIALITY

◙ Policy on confidentiality to the information obtained during the performance of verification

◙ Information about verified entity, not made publicly available shall be regarded as confidential

◙ Information about the verified entity from other sources shall be treated as confidential◙ Verification Agency must have facilities that shall ensure the secure handling of confidential information◙ Before making confidential information available to other bodies, the Verification Agency must inform the verified entity.

18. INFORMATION EXCHANGE BETWEEN A BEE VERIFICATION AGENCY AND ITS CLIENTS

18.1 Information on the verification process and requirements

◙ Update of the verification process and summary of verification process◙ Information about fees◙ The BEE Verification Agency ‘s verification requirements◙ Necessary arrangements for the conduct of verifications

18. INFORMATION EXCHANGE BETWEEN A BEE VERIFICATION AGENCY AND ITS CLIENTS (Cont.)

18.1 Information on the verification process and requirements

◙ Documents describing the rights and duties of clients◙ The resolution of complaints and appeals

19. PROCESS REQUIREMENTS

19.1 Verification Methodology◙ Verify, evaluate and validate based on BEE Codes of Good Practice◙ On site verification not telephonic verification◙ Validation of computer spreadsheet and protection of data

19. PROCESS REQUIREMENTS

19.2 General Requirements applicable to verification evaluations

◙ Have a process for selecting and appointing VA analysts/teams◙ Formal rules/contractual conditions that include impartiality◙ Verification plan and dates of verification◙ Procedure on determining time needed and size of the team and expertise required

19. PROCESS REQUIREMENTS (Cont.)

19.2 General Requirements applicable to verification evaluations

◙ The BEE Verification Agency to provide names, background information about each member of the team to the client well in advance◙ Multi-site sampling

19. PROCESS REQUIREMENTS (Cont.)

19.3 Verification

19.3.1Request for BEE verification

The BEE Verification shall require: ◙ an authorised representative of an entity that requested verification◙ Name and address(es) of its physical location(s)◙ Its functions and relationships within a larger corporation

19. PROCESS REQUIREMENTS (Cont.)

19.3 Verification

19.3.1Request for BEE verification

The BEE Verification shall require: ◙ general information such as its activities, human and other resources ◙ Information concerning the entity’s use of consultancy relating to BEE

19. PROCESS REQUIREMENTS (Cont.)

19.3 Verification

19.3.1Review of request for a BEE verification The BEE Verification shall conduct a review of the request for verification to ensure that: ◙ information submitted is sufficient◙ requirements are clearly defined◙ differences are resolved◙ it has resources and time required to complete the verification◙ there is a written agreement

19. PROCESS REQUIREMENTS (Cont.)

19.3 Verification

19.3.1Review of request for a BEE verification The BEE Verification shall conduct a review of the request for verification to ensure that: ◙ there is a written agreementThe Verification Agency shall notify the entity that requested a BEE verification when accepting or not accepting the request.

19. PROCESS REQUIREMENTS (Cont.)

19.3.3 Verifications

◙ verifications are to be done according to plan◙ verifications shall take place on site◙ verification team shall collect sufficient evidence◙ verification team shall interview a sufficient number of staff◙ verification team shall provide a detailed written report soon after verification

19. PROCESS REQUIREMENTS (Cont.)

19.4 Special evaluations

◙ short notice verifications to investigate complaints◙ verifications shall take place on site◙ client shall be notified of the visit◙ additional care shall be taken in choosing the team (conflict of interest)

20. APPEALS

◙ procedure on receiving, evaluating and making decisions on appeals◙ verification Agency is responsible for all decisions at all levels of the appeal-handling process ◙ Appellant shall be notified of the outcome

21. COMPLAINTS

◙ procedure on receiving, evaluating and making decisions on complaints◙ verification Agency is responsible for all decisions at all levels of the complaint-handling process ◙ complainant shall be notified of the progress and outcome

22. RECORDS ON BEE VERIFIED CLIENTS

◙ Records to be maintained are records on internal audits, Management reviews, personnel, verification process for all verified entities and entities that submitted requests for verification. ◙ facilities shall ensure confidentiality ◙ Verification Agency shall have a policy and procedure on retention of records

23. INTERNAL AUDIT (VERIFICATION PROCESS/SYSTEM)

◙ Policy and procedure on internal audits◙ Periodic internal audits◙ Predetermined schedule◙ To be carried out by trained and qualified personnel ◙ Non-conformances/ audit findings clearance ◙ Audit records must identify activity audited and findings◙ Follow-up audits to verify implementation

24. CORRECTIVE ACTION

◙ Policy and procedure on corrective actions◙ process start with investigation – root cause analysis◙ Select and implement appropriate corrective action◙ Monitor effectiveness ◙ Extra/unplanned audits

25. MANAGEMENT REVIEW

◙ Policy and procedure on management reviews◙ Top Management’s responsibility◙ Periodic and with predetermined schedule◙ the management review shall take account of: review of objectives the suitability of policies and procedures the outcome of recent internal audits appeals and complaints corrective actions assessment by external bodies changes in the volume of work staff training◙ Actions and findings shall be recorded and be carried out within appropriate and agreed time lines

QUESTIONS

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