16 September 2022
B-BBEE audit of the Hotazel Manganese Mine Education Trust (HMMET)
The Hotazel Manganese Mine Education Trust (HMMET) is governed by the Broad-Based Black Empowerment Act (2003) and is registered as a Public Benefit Organisation (PBO) with SARS. The Trust was established in 2009 as a vehicle to introduce black participation into the Hotazel Manganese Mine (HMM). It must be noted that the Trust is not owned by HMM nor South32. The core mandate of the Trust is to uplift historically disadvantaged persons, primarily from the Joe Morolong Local Municipality (JMLM), and the broader John Taolo Gaetsewe (JTG) District of the Northern Cape.
The Trust has been established as a public benefit organisation under Section 30 of the Income Tax Act, for the provision of select public benefit activities stipulated in Part One of the Ninth Schedule to the Act, including grants to other public benefit organisations undertaking activities under the same part of the Act. The Trust is exempt from taxation in terms of section 10 (1)(cN) of the Income Tax Act.
The Trust aims to distribute a minimum of 85% of its annual income earned. The Trust has a social investment strategy that guides its expenditure. This work of the Trust is managed by Tshikululu Social Investments. Tshikululu is South Africa’s leading social investment fund manager and advisor, working alongside investors and other development partners to achieve sustainable social impact. Tshikululu plays a role in the identification, governance and monitoring of projects that respond to local needs in a strategic way and is mandated to report to the Trustees on the investment portfolio.
The Trust is governed by a board of trustees, deriving its mandate from its Trust Deed. One of the prescripts in complying with its mandate is to undertake an audit of its financials on an annual basis.
Invitation to submit proposals
It is the intention of the Trust to invite firms to submit a proposal for the independent verification of the HMM Education Trust beneficiaries reported by Tshikululu Social Investments with the objective being that the auditors express an independent professional opinion(s) at the end of each financial year.
The appointed firm will conduct yearly audits for a three-year period. The Trust is committed to black economic empowerment as an essential ingredient of its business, and therefore expects the applicant to demonstrate its commitment and track record to BBBEE in the areas of ownership (shareholding), skills transfer, employment equity and procurement practices (small, medium and micro enterprise/SMME development).
The scope of the engagement includes all the beneficiaries of the various social investment projects and programmes undertaken by the Trust. The Trust will require the following services:
1. Verification of the BBBEE status of the beneficiaries for the financial period in question; and
2. Validation of beneficiary-related criteria contained in grant agreements, where these affect the classification and/or selection of beneficiaries.
All of the above must be completed within one month after the end of each financial year in order for the trustees to review each document prior to its submission to the Board of Trustees for approval.
Preparation of the audit report
The responsibility for the preparation of applicable information, including adequate disclosure, is that of Tshikululu Social Investments. The auditor is responsible for forming and expressing opinions on the information provided. The auditor will carry out the BBBEE audit of the Trust’s beneficiaries in accordance with the International Standards on Auditing (ISA), as promulgated by the International Federation of Accountants (IFAC). As part of the audit process, the auditor may request from the Trust written confirmation concerning representations made in connection with the audit.
Scope of the audit
As stated above, the BBBEE audit of the Trust will be carried out in accordance with the ISA, as promulgated by the IFAC, and will include such tests and auditing procedures as the auditor considers necessary under the circumstances.
In addition to the audit report, the auditor will prepare a management letter, in which the auditor will:
- give comments and observations on the records, systems and controls that were examined during the course of the audit;
- identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement;
- give comments on the extent to which outstanding issues/qualifications issues have been addressed;
- bring to the Trust’s attention any other matters that the auditor considers pertinent; and
- provide a comprehensive assessment of the adequacy and effectiveness and overall internal control system to monitor expenditures and other transactions during the period under review.
The management letter shall also include responses from the Trust and Administrator to the issues highlighted by the auditor.
Access to information
The auditor will have access to all legal documents, correspondence and any other information associated with the Trust as deemed necessary by the auditor for the completion of the audit.
The audit report, management letter and management response, must be received by the Trust no later than one month after the end of the financial year to which the audit relates.
All proposals must include:
- evidence of the firm’s qualifications to provide the above services;
- the firm’s background and experience in auditing PBO/trust clients;
- the size and organisational structure of the firm;
- statement of the firm’s understanding of the work to be performed;
- a proposed timeline for fieldwork and final reporting;
- a proposed fee structure for each of the three years of the proposal period, including whatever guarantees can be given regarding increases in future years, and the maximum fee that would be charged;
- a description of the firm’s billing rates and estimated costs, together with procedures for technical questions that may come up during the year, or whether these occasional services are covered in the proposed fee structure;
- the names of the partner, audit manager and field staff who will be assigned to the Trust’s audit, and provide resumés;
- a declaration of independence by the team in the audit engagement;
- a copy of the firm’s most recent peer review report, the related letter of comments and the firm’s response to the letter of comments;
- references and contact information from at least two comparable PBO/trust audit clients; and
- the firm’s BBBEE level of contribution, clearly articulated, and the corroborating evidence.
Proposals will be evaluated in accordance with the criteria as follows:
|Quality of the proposal||25%|
|BBBEE status||Minimum level 2 compliance|
Proposals must be received no later than 16 September 2022 addressed to:
Email address: ASitenda@tshikululi.org.za
No submissions received after the deadline will be considered. The appointed trustees will make a final decision on the choice of auditors.
If you have any questions or would like further clarification of any aspect of this request for bid, please contact me at +27 11 544 0300. I look forward to receiving your proposal.