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FAQs - Disclosure of limitation of liability
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These questions and answers regarding the Institute’s Limitation of Liability Scheme/s are a general guide only. They are not intended as professional advice, and you should rely on your own inquiries and assessment and other suitably qualified and specific professional advice. 
 
The Institute expressly disclaims all liability for any loss or damage arising from reliance upon any information in these questions and answers.

  1. What must I do to disclose the limitation of liability to clients?
    2.  
  2. What is considered to be business stationery?
    3.  
  3. Do I need to have the disclosure on audit opinions, financial statements and compilation reports?
    4.  
  4. Do I need to have the disclosure on every page of my communication with clients?
    5.  
  5. What are the consequences of non-disclosure?
    6.  
  6. Is there a requirement regarding the size and colour of the disclosure statement?
    7.  
  7. Do I need to send a letter to clients explaining the scheme?
 
 
1. 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. 
 
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2. 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
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  • fax cover sheets
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  • 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
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  • newsletters and other publications
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  • official correspondence ordinarily used by the person in the performance of the person's occupation.
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  • letters signed by the practice or on its behalf
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  • memorandum of fees and invoices not accompanied by a letter or other document on which appears a disclosure statement when given to a client
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  • email, particularly where the transmission may be interpreted as an official document
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  • websites via which services are delivered to clients (by e commerce) or which are used to promote or advertise the services of the firm.
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3. Do I need to have the disclosure on audit opinions, financial statements and compilation reports? 
 
If an audit opinion, set of financial statements or compilation report is provided to a client under the cover of letterhead or a ‘with compliments’ slip which carries the disclosure statement, there is no need for the disclosure to appear on the attached document. However, if the disclosure statement will not be provided by a covering communication then the disclosure statement should appear on the audit opinion or accompanying report. 
 
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4. Do I need to have the disclosure on every page of my communication with clients? 
 
The disclosure statement does not have to appear on every page of a communication with clients. 
 
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5. 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.  
 
Under PSL in other states, failure to provide the disclosure of the member's limitation of liability under the scheme constitutes an offence carrying a penalty. In NSW the penalty is $5,500, in WA and the ACT it is $5,000 and in SA it is $20,000. 
 
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6. Is there a requirement regarding the size and colour of the disclosure statement? 
 
The Professional Standards Council provides the following guidance: 
 
“The disclosure statement must be printed in a size not less than the face measurement of Times New Roman typeface in 8 point.  
 
The disclosure should:
  • be sufficiently prominent on a practitioner's business documents so that there is a reasonable prospect it will come to the attention of the intended audience - generally on the facing page of the document and in a type size that is easily legible
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  • be included in digital communication formats such as a practitioner's email to clients and prospective clients.
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  • appear on brochures and similar promotional material of the practitioner, but need not appear in advertisements in print media, directory listing or similar forms of promotion or advertising.
    •  
  • appear on websites that promote or advertise the services of the firm.”
There is no requirement in relation to the colour of the disclosure statement. 
 
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7. Do I need to send a letter to clients explaining the scheme? 
 
No. You may choose to provide a written explanation to clients and in this case the Institute has provided a sample letter which can also be downloaded from the Institute’s website. However, this is entirely optional. 
 
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Last Update 10 March 2008