The Accounting Professional and Ethical Standards Board (APESB) has placed itself in a dangerous place by opting to proceed with the implementation of APES 230 without the full endorsement of key segments of its core constituency.
With the Institute of Public Accountants (IPA) having signaled it will be developing its own standard with respect to achieving Future of Financial Advice compliance for its members, the board of the APESB should reflect upon the manner in which it has handled the APES 230 issue.
In doing so, it might care to consider both its underlying charter and whether it is actually meeting the objectives which gave rise to its formation.
According to the APESB document, Due process and working procedures for the development and review of APESB pronouncements, one of its key tasks is "reviewing the status of the professional and ethical standards annually, and monitoring the needs of the accounting profession and the public, for areas requiring new or updated professional and ethical standards".
However that same document places far more emphasis on compliance with the standards set by the International Federation of Accountants and the Financial Reporting Council than it does on the realities confronting accountants in the day-to-day running of their businesses.
Perhaps this is why APES 230 was so roundly criticised for failing to recognise those day-to-day realities and the consequent commercial impacts they were likely to have.
The question the directors of the APESB must ask themselves is whether their handling of APES 230 reflects an organisation which has become too inward-looking and ideals-focused at the cost of reflecting the concerns of ordinary accountants.
It is clear that the APESB did, in fact, take on some of the concerns expressed by its constituent organisations – something which was reflected in the new standard being slightly adjusted to allow members to accept trailing commissions for Financial Planning Services entered into prior to 1 July 2013 in respect of life insurance, other risk contracts and the procurement of loans, as long as the member does not subsequently provide further services in respect of those contracts or loans.
As well, the APESB said the standard would allow the provision of professional development for members from third parties, provided such activities are Future of Financial Advice (FOFA) compliant.
However it has become evident that a significant number of accountants who rely upon the provision of financial planning for their revenue feel disadvantaged by the APESB approach to APES 230 – and will be making their future decisions accordingly.
