Review of APES 330 – Insolvency Services

When the Accounting Professional & Ethical Standards Board (APESB) updates APES 330 – Insolvency Services to take account of the new insolvency laws, it may need to give guidance on the responsibilities of accountants sitting on disciplinary committees and on their handling and use of confidential disciplinary information.  

The APESB originally issued APES 330 in September 2009. Since then APES 330 has been revised in November 2011 and September 2014. It applies to accountants generally, whether a member of ARITA or not.

No substantial issues or problems were identified in the 2016 review by the Board but it necessarily identified the pending legislative changes under the Insolvency Law Reform Act 2016 and related laws. The APESB noted that ARITA would be updating its Code to make whatever changes are needed to reflect the legislative reforms. However this would not happen until the supporting law is in place. APESB takes the same conservative approach.

Professional conduct as a statutory committee member

One issue that may need attention in light of that part of the new law commencing on 1 March 2017 is the increased role of the professional bodies, and their individual members, in sitting on statutory insolvency practitioner registration and discipline committees, and, for example, sharing and using confidential information of the regulators about those practitioners. Although there will no doubt be legal and regulatory guidance issued, there are new professional obligations, discretions and potential liabilities of individual trustees and liquidators in what might be termed the ‘co-regulatory’ aspect of the new law. The avoidance of conflicts and material self-interest, and the misuse of disciplinary information, and the process of decision making and the giving of reasons, will be important, and accountants’ handling of those issues, may come under legal scrutiny; as may the disciplinary processes of the professional bodies themselves.  Issues of procedural fairness in the regulation of professionals are heightened when livelihood is at stake.

The intersection of the responsibilities of insolvency accountants with their pending NOCLAR obligations is another area of possible contention.

Co-regulatory type arrangements of New Zealand insolvency practitioners with CAANZ and RITANZ are likely under current proposals, although these are much different to Australia’s more prescriptive and limited approach.

Professional codes

Professional codes like APES 330 are not law per se, but they assist a court or other disciplinary body in determining compliance with accepted professional standards.  An alternative is to call for expert evidence.

In the insolvency context, the various insolvency codes were recently discussed and relied upon in ASIC v McDermott, in the matter of Conalpin Pty Ltd (in liq) [2016] FCA 1186, leading to a consent finding that the liquidator was in default of compliance with professional standards.

At the same time, a court will reject a code if it is legally incorrect or too prescriptive: Cresvale Far East v Cresvale Securities [2001] NSWSC 89. 

Misleading or wrong regulator guidance is treated the same way: In the matter of Bevillesta Pty Ltd (in VA) [2011] NSWSC 417.  

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