The Accounting Professional and Ethical Standards Board (APESB) is looking to find a compromise with the Institute of Public Accountants (IPA) for the APES 230 measure, with both bodies committed to an open dialogue.
The APES 230: Financial Advisory Services standard became effective on 1 July. It details the professional and ethical requirements for professional accountants who provide financial planning and credit advice.
However, the IPA adopted its own financial planning standard in place of the APES 230 measure in October last year.
“With one exception, all of our standards have received board acceptance and support from the professional bodies whose members have to apply them, through to regulators and consumers,” APESB chairman Nicola Roxon told the IPA National Congress in the Hunter Valley on Friday.
“Unfortunately a very tricky area of financial services was issuing APES 230 and the board has had the first example of a professional body, the IPA, issuing its own different standard.
“Although this was before my time as a chairman, I can’t come and talk to you today and pretend that this has been a comfortable issue for the board, nor I imagine has it been for the IPA, as it’s hard to see the desirability of having different standards apply in this area.”
Roxon said APES 230 was complicated further by the lengthy and changing nature of the Future of Financial Advice (FOFA) legislation in parliament over the past two years.
“As an independent standard setter, you would understand the board’s view, which was expressed very strongly at the time of issuing APES 230, that our standard should apply to all professional accountants,” she said.
“We do, however, understand that this frustrates some practitioners; perhaps it comes at a price of professional recognition.”
However, IPA chief executive Andrew Conway said the institute wanted a more practical solution.
“I don’t think it’s in anyone’s interest to have a situation where there’s standard arbitrage where people are moving between standards,” Conway said.
“We do believe we act in the public interest and in our members’ interest importantly in making sure that we keep accountants in the profession.
“The dilemma we faced was that accountants were leaving the profession and in our view that was a concern in terms of longer-term public interest – it is not in Australia’s public interest to have accountants leaving the profession.
“The conversations we have with the APESB and its new chair is along the lines of working to bring the standards together and to have one rule that governs financial advisory services provided by accountants to avoid that gap and to make sure we have consistency across the profession, and we’d like to have that ongoing dialogue with the APESB.”
Roxon said she acknowledged Conway’s concern about the risk of accountants leaving.
“Since the issuing of APES 230 in April 2013, 18 months ago, more problems have come to light in this financial planning area – think the likes of the Commonwealth Bank of Australia scandal, Macquarie and Timbercorp,” she said.
“All of these have heightened community anxiety about the quality of financial advice and, ironically, they have the potential to emphasise the importance of the respect for and confidence in the accounting profession and its commitment to the highest ethical standards.
“You also would have not missed the Senate’s disallowance motion, which means the original FOFA laws are expected to come back into effect and as late as [Thursday], negotiations were continuing in the Senate to develop and finalise transition proposals, so I don’t think it’s an understatement to say that this has been an unusual area.”
She said such an environment had proved to be a “very tricky area for lawmakers and standards setters alike and it seems it’s a bit of a moving feast”.
However, she said she was hopeful the various complex developments might provide an opportunity for the IPA to rethink its position.
“We’re certainly committed to working professionally together to try and resolve this matter,” she said.
“We do understand that the IPA has a particular emphasis on small business and that this has an impact on the perspective you have taken, and whilst we acknowledge a difference of opinion, we believe that ultimately consistency and clarity is the aim and that this will assist the whole profession and community.
“I welcome Andrew’s comments and certainly have the same commitment that he does for us to find a way to move forward on this issue.
“On this, and on many other issues, the board’s role is to try to give clear guidance in these especially tricky areas and to help standardise best practice.”
CPA Australia and Chartered Accountants Australia and New Zealand have adopted APES 230 for their members.
