Joint Venture Rules and Regulations
Binding agreement between
THAWT ADVISORY SERVICES (Pty) Ltd AND THAWT Inc.
AND THAWT (Pty) Ltd
(Hereinafter referred to as "THAWT")
AND
All Level 1, Level 2, Level 3 and TIA associates and their THAWT registered staff who are deemed to be signatories to this agreement.
(Hereinafter referred to as "associates")
CONTENT
Delivery
Fees and Invoicing
The Vision
Quality
Brand
Financial
Insurance
Staff
Referrals
Conflict Resolution
Disciplinary Action
Delivery
- Once budgets are finally agreed, members are expected to work within their budgets and deliver the required service at the agreed levels of quality by the required deadlines.
- Should a member spend more time than budgeted to complete their part of a project, the member’s firm will only be paid the allocated budget, unless the client agrees to pay the related overrun.
- Where a member is a junior staff member of an association firm, the THAWT Associate of that association firm takes the responsibility for ensuring that the staff member remains available to complete the assignment.
- The Project Leader and/or Project Manager is responsible for ensuring quality of all team members involved on the project.
- All projects will have a THAWT quality control review associate (QCRP) who will not be involved in delivery.
- Should budgeted audit fees comprise more than 15% of total fee income of the engagement partner or of the member firm, the audit quality leader of THAWT shall be notified immediately.
Fees and Invoicing
- THAWT will invoice the client on a pre-agreed basis.
- Fees will be disbursed, via internal invoicing, once THAWT is paid by the client.
- A royalty of 10% of all fees earned (THAWT Royalty) will be paid to THAWT (Pty) Ltd.
The Vision
- Members, member firms and their staff are expected to apply the fundamental principles of ethics as subscribed to by their professional bodies, which include Integrity, Professionalism, Objectivity, Professional competence and due care, Confidentiality and Professional behaviour.
- This will only succeed if we find the right people (THAWT Person) and they remain with THAWT. People will only stay if they are respected, recognised, making money and happy.
- We need to find, attract and protect these good people.
- We cannot lose time on admin issues and petty squabbles. There will be many unforeseen problems that arise. We need wise, compassionate leaders and efficient ways to deal with them while keeping our clients satisfied.
- The hope is that we find people that like each other and will stay together in harmony. In this way the Country Chairperson’s power becomes needless and we all gain access to new revenue opportunities where we can showcase our abilities.
Quality
- All associate’s must abide by the quality standards as set out by their guiding bodies.
- The member and their member firms are required to have a quality management system in place as required by ISQM1 and ISQM2. No work shall be approved without confirmation that the member and firm comply with these requirements.
- All THAWT members must:
- Abide by the spirit of IRBA and SAICA’s code of conduct.
- Abide by the spirit of SAICA’s rules and regulations in relation to trainee accountants.
- Any person who is providing low quality work or is seen to be providing low quality by the market, will not be allowed to be a member of THAWT.
- Should any existing member begin providing low quality work he will have to explain himself to the body of associates and clarify his plan to improve his quality. Should this not be rectified with two months said associate will be removed from THAWT. All fees will be forfeit and all assignments will be handed over to another associate to deliver on.
- No associate may misrepresent his specific association relationship.
No joint venture associate may represent himself as a member of THAWT.
Brand
- Only the THAWT brand may be used on THAWT assignments.
- No member may use the brand of another member without the express permission of that member’s firm.
- We all need to protect and support the THAWT brand and each other's brands. The most important brand is a person's name and we shall, at all times, protect the name of a colleague.
Financial
- All costs to third parties, incurred by associate’s and their member staff must be paid on time.
- Should the failure to pay on time result in any negative impact to THAWT and/or other associates, then the guilty associate will be subject to disciplinary procedures and will be tasked to repair any relationships and/or pay said liabilities and any related costs incurred. Said associate may be removed from the Association.
- This portal has the added benefit of linking us to each other for our own client work.
Where THAWT members utilise the services of other THAWT member's associates and/or staff, any fee payable to said member associate must be paid in full and on time.
- A royalty (Link-up Royalty) of 5% of the invoiced/paid fee is to be paid to THAWT (Pty) Ltd.
- This cost is to be borne equally by both THAWT members. Each member will contribute 2.5% to THAWT (Pty) Ltd for this service.
- Any associate who does not comply as required will be subjected to disciplinary procedures and could face removal from the THAWT Collective.
- Failure to pay on time will result in interest being levied at prime during the period of non-payment.
- Associate’s may by mutual agreement irrevocably waive their right to interest.
- Associate’s may by mutual agreement agree to delay payment of costs between each other.
- The only reason for delays in payment must be short-term cashflow restrictions.
- Funding each other is frowned upon within the THAWT collective as it damages relationships. No associate may be asked to fund another associate.
- Should any associate’s business become non-viable or face cashflow issues, that associate must immediately notify EXCO.
Insurance
- All associate’s are required to take out adequate indemnity insurance to protect themselves and their staff from lawsuits arising out of their activities.
- All associate’s must have current professional indemnity insurance which is adequate to cover all potential claims as determined by the EXCO or a minimum of R5 million.
- Where necessary some associate’s may be required to take out specific professional indemnity insurance for specific projects should EXCO consider this client to be high risk.
Said project will bear the entire cost of this insurance.
- All associates are liable for the safety of their own assets.
- Should an asset be broken by a associate’s staff then that associate is solely liable for any costs incurred in fixed or replacing that asset with an identical asset.
- Should an asset be stolen by a associate’s staff then that associate is solely liable for replacing that asset with an identical asset.
- If, for cost purposes it may be cheaper to arrange joint asset insurance each associate is still liable for their portion of the insurance premiums in advance.
Transformation
- Transformation is important to THAWT and we give it our 100% support.
- We encourage all members to embrace transformation both the hard and the easy.
- Equity ownership may not be seen to be a sophisticated solution to transformation but it is the most visible. We should embrace this reality and assist in creating real equity value-added relationships.
- The THAWT Collective will introduce you to each other across grographic and other boundaries. You are encouraged to network and develop cross-cultural friendships which could lead to firm mergers that may open doors for both BEE and Non-BEE players. Where you find new friends within the THAWT Collective and merge with each other we ask that you pay a royalty of 2% of new business generated within the first 24 months of operation (Merge Royalty) to THAWT (Pty) Ltd
- Where members have thought leadership ideas on transformation, this is welcomed and we will pilot and test these ideas where the opportunity arises.
Staff
- All member associates are to ensure that they manage their own employment relationships.
- THAWT accepts no accountability and bears no responsibility for employer-employee disputes between member associates and their staff.
- All associates are to ensure that their staff are complying with their relevant employment rules and regulations and the relevant BEE codes.
- Use of staff, Member associate’s may agree that associates and staff could be shared on the following basis:
- The associate whose staff are required must grant approval for the use of their staff.
- Once approval is obtained staff will be charged out at 80% of their full rate.
- This full rate is arrived at on the three times principle which will be worked out by:
- taking the staff’s cost to company for the year and
- multiplying that number by three, and dividing it by the number of available hours in the year which is hereby assumed at 1200 hours for a normal year.
Example:
Cost to company of R7,000 per month will result in a rate of R210 per hour.
The rationale for the 80% rule is that associates are effectively sharing the 1/3rd profit portion of the staff member on a 50/50 basis.
- Should staff be used for non-fee-producing work, associate’s must agree upfront on the basis of costing or whether any cost is to be allocated.
- Failure to do so will result in the associate whose staff is being used for admin work forfeiting that income.
- No associate may use another associate’s staff without the express permission from that associate.
- No associate may negotiate will other associate’s staff on pricing or work hours.
- These negotiations must be held at a associate level.
- Should any cost be incurred as a direct result of one associate’s staff’s fault, error, negligence and/or misconduct, then that associate is solely liable for said costs.
- A royalty (Link-up Royalty) of 5% is payable to THAWT (Pty) Ltd.
- This cost is to be borne equally by both THAWT members.
- Each member will contribute 2.5% to THAWT (Pty) Ltd for this service.
Referrals
- Should associates refer work to each other outside the THAWT portal a commission is recommended between said associates.
- This commission suggested is 5% of the fee if the work is non-recurring and 10% of the fee if the work is recurring.
- The commission is payable when the work is completed and the client has paid the fee.
- A Royalty (Referral Royalty) of 10% is payable to THAWT by the associate receiving the commission.
- Should any associate take on a new client as a result of work performed via THAWT this must be disclosed to EXCO. A 5% or 10% commission (Associated Royalty) will be payable to THAWT (Pty) Ltd on the above basis.
Conflict Resolution
- Should there be conflict between associates the following process is outlined:
- Associate’s are encouraged to resolve the conflict between themselves.
- Should any associate act in a way which brings THAWT into disrepute or affects other neutral associates then that associate will face disciplinary action and will be removed from the THAWT Collective.
- An EXCO member or other designated associate will arbitrate the conflict at the going Auditor General rate for Specialists.
- This cost will be shared equally between conflicting associates.
- The waiver of this cost is at the sole discretion of the arbitrator.
- Should any party feel that the arbitrator may not be objective they are entitled to go to outside arbitration.
- Again this cost is borne equally between conflicting parties.
Disciplinary Action
- Any disciplinary action against any associate will be done in terms of the Conditions of Service Manual.
- On request by said associate the proceedings may be presided over by a mutually agreed independent party.
- Any costs will be borne equally by THAWT and said associate unless the said associate is found guilty in which instance said associate will bear all costs. Such costs will be paid in advance.