Change on the way for insolvency practitioners
Accountants who are also insolvency practitioners will be required to remove certain conflicts of interest once the exposure draft issued by the Accounting Professional and Ethical Standards Board (APESB) comes into effect.
Insolvency practitioners who have interest in, or an ability to influence a business in the same market as the insolvent company, will be required to eliminate the conflict of interest or decline the appointment.
The exposure draft, which would come into effect in November 2011, also proposed that insolvency practitioners who have moved firms need to consider relationships that the insolvent entity has had with the previous firm of the practitioner.
Other significant changes, according to APESB chairman Kate Spargo, include the introduction of the ‘Network Firm’ definition, which is currently used in APESB’s Code of Ethics in relation to auditor independence requirements.
“Insolvency practitioners have a huge responsibility so it’s vital that when a company enters administration or liquidation, the practitioner acts independently, is not biased and all conflicts of interest, past or present, are identified and eliminated,” Spargo said.
The proposed revision of APES 330 Insolvency Services followed the revised Insolvency Practitioners Association’s Code of Professional Practice, which was issued in January 2011.
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