How is Materiality determined by a B-BBEE Rating Agency?
The Verification Agency shall consider materiality and the risk of misstatement when planning and performing verification. The Verification Agency shall consider materiality when determining the nature, timing and extent of evidence-gathering procedures and shall base the materiality on the measured entity's underlying information which determines the individual scores for each Scorecard Element.
Materiality is considered in the context of quantitative and qualitative factors affecting the Scorecard Elements.
Materiality is considered qualitatively in respect of:
· Ownership - voting rights and economic benefits to black shareholders;
· Management - board participation and those appointed in top management; and
· Employment equity in respect of black persons appointed to senior, middle and junior management positions.
Materiality is considered quantitatively in the context of the underlying information expressed in rand values (to which monetary sampling approaches may be applied) for:
· Skills development spend;
· Preferential procurement in respect of Procurement Suppliers who claim to be Black Owned and thereafter B-BBEE Procurement Spend relative to total measured procurement spend for the period;
· Enterprise Development Qualifying Contributions; and
· Supplier Development Qualifying Contributions; and
· Socio-Economic Development Qualifying Contributions.