IFRS - there's nowhere to hide - Grant Thornton

Volume 2. November 2005
9
Occupational health & safety is a risk factor
Non-compliance will result in severe penalties
By Anton Barnard, Director, Business Risk Service,
Johannesburg
With good corporate governance requiring enhanced accountability
and transparency from directors, occupational health and safety has
come to the fore as a key factor of triple bottom line reporting.
In South Africa, occupational health and safety is also receiving a lot
of attention from the Department of Labour and failure to adhere to
the Act could result in severe penalties, including hefty fines and jail
sentences for business owners.
Occupational health and safety is fast becoming one of the
greatest risks for business, not only from a financial point of
view but also in terms of good governance and organisational
reputation.
The Occupational Health and Safety Act (1993) states that an
actual person, as opposed to the organisation, will be responsible
for the implementation of the Act as well as taking
accountability for any legal activity relating to the Act. This
responsibility falls on the owner of the business and in the case
of listed entities, the CEO. If any business is found to be in
contravention of the Act, that person will face criminal
prosecution and could be fined up to R50 000 or 12 months in
prison. In terms of King II, no person with a criminal record
can be a director of a business.
In addition, non-compliance could result in the business having
to close until it is deemed to be compliant and the business will
have to foot the bill for any resulting health and safety
investigations.
Non-compliance could be incredibly costly for any business and
the state will no longer accept ignorance of the Act as an excuse
for non-conformity.
Easy implementation
Misinterpretation of the Act is one of the biggest hurdles faced
by businesses but by following these steps for implementing a
formal health and safety strategy, you can rest assured that if
investigated by the state, you will meet their occupational health
and safety requirements.
Step 1: Structures of defined roles and accountability
Although the executive has to accept accountability for his
responsibilities towards health and safety, it is understood that
he is a busy individual and may delegate the implementation and
management to other members of the organisation.
That being said, the buck still stops at the top and the executive
needs to ensure that his business's health and safety strategy is
clearly defined with a clear reporting framework and, on a
regular basis, assess the status of compliance to the
Occupational Health And Safety Act requirements
Part of the reporting framework must include a safety manager
whose responsibility would include:
developing, implementing and maintaining the safety, health
environment and risk program for the whole organisation
ensuring that the organisation complies with all relevant
legislation
making recommendations to management to eliminate,
reduce, transfer and/or accept the identified risks
performing risk assessments to determine the level of
exposure to the whole organisation
liaising with the relevant outside organisations with regards
to safety, health, environment and risk related matters
ensuring that all employees are aware of the rules regarding
safety, health, environment and risk related matters
ensuring that all incidents/accidents are reported to and
investigated by the relevant authorities
In addition, a safety committee is often recommended for larger
organisations. This committee would:
make recommendations to management concerning safety,
health, environment and risk related matters
discuss all incidents and/or accidents and make
recommendations to management to prevent future such
occurrences
give management feedback on the safety, health,
environment and risk progress of the organisation
ensure that all safety, health, environment and risk related
matters concerning the risk program are attended to on a
regular basis
Triple bottom line reporting has gained favour since the introduction of the King II Report (2002) on corporate governance.
Triple bottom line reporting requires that businesses report to all their stakeholders (i.e. more than just their shareholders)
on more than just their financial results. There is now a need to report on their ongoing sustainability as an organisation in
terms of environmental responsibilities as well as their interpretation of and response to social responsibility.