While the implementation date of APES 230 has been postponed, there are some critical elements of the draft standard that accountants and advisers need to be aware of
As discussed last week, APES 230 is a proposed standard developed by The Accounting Professional and Ethical Standards Board (APESB). While the APESB recently announced that it will postpone the introduction of APES 230 to 1 July 2014, accountants and advisers impacted by the standard need to understand its far-reaching implications for how they conduct business.
Presuming everything has been pushed back a year, other things like asset-based fees and commissions on debt and insurance will all change based on progressive time periods. The point here is there are critical elements that you need to start thinking about now.
These critical elements are important for two key areas of accounting and advice. The first is if you have an integrated accounting and financial planning practice – and I would say that integrated practices include accountants and planners that are in joint ventures. The second is if you have accounting and planning centre of influence (COI) or referral arrangements.
For integrated practices and those in joint ventures, they need to: review the customer service proposition and fee structures to move away from asset-based fees; and implement an appropriate consent form in relation to insurance and debt. It should be noted that this also includes financial planning practices where an accountant has a controlling interest.
Accountants in referral arrangements will need to:
- undertake an appropriate due diligence process on their referral parties;
- assess the professional competence of their referral partner and assess their objectivity in relation to the advice;
- implement an appropriate referral agreement and maintain an ongoing monitoring process in relation to the agreement; and
- review the fee arrangements under this agreement.
Financial planners in referral arrangements with accountants will need to understand and deal with these issues to ensure that they can maintain the referral partnership.
In my next blog, I will discuss what the licensing arrangements that accountants and advisers need to be aware of.
