Wednesday, 31 May 2017
A new standard was issued on 30 May 2017 by the Accounting Professional & Ethical Standards Board Limited (APESB) requiring accountants to consider their obligations if they become aware of a non-compliance or suspected non-compliance with laws and regulations committed by a client or employer.

When does the new standard come into force?

The new standard, ‘Responding to Non-Compliance with Laws and Regulations’ (NOCLAR), comes into force on 1 January 2018 with early adoption permitted. It will be incorporated into the Australian Code APES 110 Code of Ethics for Professional Accountants (APES 110). The amendments reflect changes made by the International Ethics Standards Board of Accountants (IESBA) to the international Code of Ethics for Professional Accountants.

What does the new standard permit accountants to set aside?

The new standard permits accountants to set aside the principle of confidentiality where illegal acts are suspected. The APESB Chair, the Honorable Nicola Roxon, said:

“It is feared that, in the past, identifying potential illegal acts and raising the alarm did not always prevail over confidentiality and other obligations to a client or employer1.”

What are examples of non-compliance with laws and regulations?

Examples of non-compliance with laws and regulations which the standard addresses:
  • fraud, corruption and bribery
  • money laundering, terrorist financing and proceeds of crime
  • securities markets and trading
  • banking and other financial products and services
  • data protection
  • tax and pension liabilities and payments
  • environmental protection
  • public health and safety.

What are the implications of non-compliance?

Non-compliance with laws and regulations may result in fines, litigation or criminal charges for the client. The accountant may also be subject to these implications if the matter is not disclosed to an appropriate authority where required by law or regulation or where considered necessary in the public interest. For example, in NSW it is an offence to knowingly conceal a serious indictable offence2. The new standard will increase the likelihood of detection for organisations or individuals involved in non-compliance or suspected non-compliance with laws and regulations.

How the new standard will help accountants?

  • Encourages professional accountants to speak up where they discover laws and regulations are not being adhered to.
  • It identifies a process for accountants to follow enabling them to raise concerns appropriately without breaching other professional and ethical standards.
  • It aligns Australia’s standard (NOCLAR) with the new international approach.
  • Highlights the importance for organisations to have internal mechanisms (e.g. effective whistle-blower program) to be made aware of allegations of non-conformances and to respond accordingly.

Want to know more?

The APESB has the full text available on its website:

KordaMentha Forensic can provide an experienced and independent set of eyes to provide objective feedback and suggestions to compliance awareness and objectivity.  Our experienced forensic practitioners can also advise on the design and implementation of an appropriate whistle-blower program in accordance with best practice.

1APESB, Media Release: Confidentiality not a cover for illegal acts, 30 May 2017.
2Crimes Act 1900, Section 316