Chair Report 
 
 
At Chartered Accountants Business Forum 2008 members will experience more sessions and more choice than ever before. With 61 sessions on offer over the three days you are likely to find exactly what you need, be it technical or professional development. 
 
This year, as in previous years, the Chartered Accountants Business forum is being held at the Adelaide Convention Centre from Wednesday, 7 May to Friday, 9 May. 
 
Here are just a few of the highlights:

 

• A 'must attend' event for all tax agents, Alan Yates, Chair of the South Australian Tax Agents' Board will examine the impending Tax Practitioners Framework and how the 'biggest change to tax agents since the adding machine' will affect you.
 

• Top 10 challenges facing practices plus 27 practice management tips for improved performance
 

• Family law: explore family law issues and their impact on your clients
 

• Building an accountability culture in your practice: discuss the steps of trust, engagement and owenership essential to build an accountability culture in your practice.

 

• Fighting Fraud
 

• Microsoft Office Accounting Professional 2007
 

• Project Management Accounting
 

• Managing Water for Australia
 

• International Finacial governance under Stress

 

• Planting for a future harvest (talent nurturing and succession planning)
 

• Code sets new levels of transparency (Franchising Code of Conduct's disclosure provisions)
 

• Dinosaurs beware (environmental sustainability and climate change)
 

• Reference checking in the Financial Services Industry: a new Australian Standard
 

• Good vs bad in the boardroom
 

• Defence tactics: armour for business risk
 

• Super objective is retirement adequacy
 

• The good, the bad, and the necessary (new regulations in the financial services industry aim to lessen the compliance burden)
 

 

• Waived loan application fee (usually 0.75per cent of the loan)
 

• Zero loan administration fee (up to $187 per quarter per loan facility) on business loan products taken by the practice (excluding overdrafts)
 

• Dedicated ANZ point of contact in each state for all members referred by the Institute
 

• Free subscription to In Business and In Perspective magazines

 

1. Who is a member of the scheme?
 
If you are a CPP holder, affiliate member or practice entity member you are a participating member of the scheme. Any of these who hold an AFS licence are excluded from the scheme for all services they provide. However, if you are an authorised representative of an AFSL then you are not excluded from the scheme. 
 

2. What is a practice entity member?
 
A practice entity member is a practice entity, entitled to use the 'Chartered Accountants' description, which chooses to become a member of the Institute to ensure access to the scheme. See Q.4 below. 
 

3. What liability is limited?
 
The Professional Standards Act only limits occupational liability which is the civil liability arising from the act or omission of a member acting in the performance of his/her occupation. 
This means that liability will only be capped if a member is responsible for the act or omission on which the claim is based and the service relates to public accountancy services. 
 
The court will decide who has responsibility and whether the service is a public accountancy service. 
www.charteredaccountants.com.au 
 

4. If I provide services through a company or trust will my liability be capped?
 
The best way to ensure that services provided through a company or trust are proveded by a 'member' is to apply to practice entity membership for your incorporated practice entity or the corporate trustee of a trust. Practice structures approved by the Institute prior to 2007 are not practice entity members. 
www.charteredaccountants.com.au 
 

5. When does the scheme start to limit my liability?
 
The scheme only limits occupational liability for services provided when the scheme is in force i.e. after 7 October 2007. 
 
When arranging PI cover you should consider that a claim arising from services provided in the previous seven years could be made against you that where these services were provided before 7 October 2007 the liability will not be limited. 
 

6. Do I need Professional Indemnity insurance?
 
You will only get the benefit of the cap if you can satisfy the court that you hold PI cover to the level of the limitation amount set out in the scheme. 
 
www.charteredaccountants.com.au 
 

7. What is the minimum level of PI cover needed?
 
The minimum level of cover is the level of the minimum cap in the sheme. Where a claim for damages is lower than the minimum cap, the sheme does not operate to limit liability. In the Institute scheme this minimum cap and the minimum level of cover required depend on the level of your highest engagement fee and is to increase in stages. 
 
Up to 30 June 2008, where you have no single engagement fee greater than $50k, the minimum level of PI cover will be $500k. The level of damages will not be affected if they are below $500k. 
 
From 1 July 2008 to 30 June 2009 this minimum level of cover will increase to $750k where you have no single engagement fee greater than $75k. 
 
From 1 July 2009 the minimum level of cover will increase and remain at $1m where you have no single engagement fee greater than $100k. 
 

8. What level of PI cover do I need if I have a higher engagement fee?
 
If you have an engagement fee higher than the minimum cap, you must hold PI cover of 10 times that fee (the Limitation amount) up to a Monetary ceiling (depending on the type of service provided) to be able to satisfy the court that you hold adequate insurance. 
 
www.charteredaccountants.com.au 
 

9. What is an 'engagement fee'?
 
The legislation specifies that the court will decide whether the fee charged (and therefore the level of PI cover held and the cap on liability) is based on a 'reasonable charge for the services provided'. The legislation requires the court to have regard to any amount actually charged and to the amount that a competent person of the same qualifications and experiences as the participant would be likely to charge in the same circumstances in deciding if a charge is reasonable. 
 
The schemes have not yet been tested int he courts so we do not know exactly how the court will make this decision. However, it is likely that the terms of a member's engagement letter would be an important circumstance to which the court would have regard in determining what was a reasonable charge for the services provided. 
 

10. What must I do to disclose the limitation of liability to clients?
 
Professional Standards Council (PSC) Regulations require that all business stationery carries the following disclosure: 
Liability limited by a scheme approved under Professional Standards Legislation 
Where the same business stationery is used by a participating member and a financial services licensee, this wording is recommended: 
Liability limited by a scheme approved under Professional Standards Legislation* 
*other than for the acts or omissions of financial services licensees. 
 
Many practices have opted to print the disclosure statement as a footnote on all business stationery. Other alternatives are also acceptable under the regulations, such as adding the wording using word processing, a stamp or a sticker. 
 

11. What is considered to be business stationery?
 
The PSC provides guidance in relation to the presentation of the disclosure statement. Business cards are specifically excluded. The PSC suggests that as a minimum, the disclosure should appear on:
 

• letterhead, and letters signed etc by the practice or on its behalf
 

• fax cover sheets
 

• documents such as written advice, with compliments slips and other documents produced by the practitioner for clients where those documents are not accompanied by a letter or other document on which appears a disclosure statement when given to a client
 

• newsletters and other publications
 

• official correspondence ordinarily used by the person in the performance of the person's occupation
 

• memorandum of fees and invoices not accompanied by a letter or other document on which appears a disclosure statement when given to a client, and
 

• email, particularly where the transmission may be interpreted as an official document
 

• websites via which services are delivered to clients (by e commerce) or which are used to promote or advertise the services of the firm.
 
 

12. What are the consequences of non-disclosure?
 
In Victoria, Queensland and the Northern Territory failure to make this disclosure will result in the scheme not operating to limit liability. 
 
In Western Australia, failure to make this disclosure constitutes an offence under the professional standards legislation, and carries a fine of $5,000.

 

• student enrolments in maths and science are declining at the secondary level in south Australia and elsewhere
 

• affirming primary school students interest in science and encouraging their condinued study through the early high school years is of paramount importance
 

• parents of young children have a vital role in encouraging and influencing their children in their choice of school subjects.
 

Chartered Accountants Local News - SA 
Content 

 

1. Regional Chair Report
 

2. Craig Farrow appointed to National Board
 

3. Chartered Accountants Program
 

4. Figured it out yet?
 

5. Knowledge Centre
 

6. ANZ business banking partnership launch
 

7. Limitation of Liability Scheme
 

8. Wanted - Honorary Auditor