Principles of professional conduct for liquidators and bankruptcy trustees

 Checklists and guides, Ethics, Insolvency practices, Practitioners Association (IPAA), Standards  Comments Off on Principles of professional conduct for liquidators and bankruptcy trustees
Apr 282011
 

Set out below are seventeen principles of professional conduct devised by the trade body for Australian insolvency practitioners to govern and inform their conduct as liquidators, administrators, receivers and bankruptcy trustees.   

The Insolvency Practitioners Association of Australia (IPA) says that the primary purposes of its Code of Professional Practice (Code) are “to: 

  • set standards of conduct for insolvency professionals;
  • inform and educate IPA members as to the standards of conduct required of them
  • in the discharge of their professional responsibilities; and
  • provide a reference for stakeholders against which they can gauge the conduct of IPA members. “

The summary of principles presented below is taken from the Code.  Each principle is described in great detail in the Code.  A PDF copy of the 124 page Code is available at the IPAA website, or may be found HERE.  Earlier versions of the Code may be found HERE.  This current edition of the Code has been effective since 1 January 2011.

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 The Principles

 Conduct

 Principle 1          Members must exhibit the highest levels of integrity, objectivity and impartiality in all aspects of Administrations and practice management.

Principle 2          When accepting or retaining an Appointment the Practitioner must at all times during the Administration be, and be seen to be, independent.

Principle 3          Disclosure and acceptance of a lack of independence is not a cure.

 Principle 4          Members must communicate with affected parties in a manner that is accurate, honest, open, clear, succinct and timely to ensure effective understanding of the processes, and their rights and obligations.

Principle 5          Members must attend to their duties in a timely way.

 Principle 6          A Practitioner must not acquire directly or indirectly any assets under the administration of the Practitioner.

Principle 7          When promoting themselves, or their firm, or when competing for work, Members must act with integrity and must not bring the profession into disrepute.

 Principle 8          When dealing with other Members in transitioning or parallel appointments, Members must be professional and co-operative, without compromising the obligations of the Member in their own particular appointment.

 Principle 9          Practitioners must maintain professional competency in the practice of insolvency.

 Remuneration

 Principle 10        A Practitioner is entitled to claim remuneration, and disbursements, in respect of necessary work, properly performed in an Administration.

 Principle 11        A claim by a Practitioner for remuneration must provide sufficient, meaningful, open and clear disclosure to the Approving Body so as to allow that body to make an informed decision as to whether the proposed remuneration is reasonable.

 Principle 12        A Practitioner is entitled to draw remuneration once it is approved and according to the terms of the approval.

 Practice Management

 Principle 13        When accepting an Appointment the Practitioner must ensure that their Firm has adequate expertise and resources for the type and size of the Administration, or the capacity to call in that expertise and those resources as needed.

 Principle 14        Members must implement policies, procedures and systems to ensure effective Quality Assurance.

 Principle 15        Members must implement policies, procedures and systems to ensure effective Compliance Management.

 Principle 16        Members must implement policies, procedures and systems to ensure effective Risk Management.

 Principle 17        Members must implement policies, procedures and systems to ensure effective Complaints Management.

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 The IPAA says:

 “The Code is a living document.  It will continue to be amended from time to time to reflect changes and developments in insolvency law and practice. …. (and) it is the fundamental building block upon which the insolvency profession sets and manages standards of professional conduct. We were gratified to see the ready acceptance of the Code by the profession, regulatory bodies and the Courts following its initial release.”

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Author: P Keenan 28/4/2011

Was it worth the effort?

 Criminal convictions, Insolvency Laws, Personal Bankruptcy, White collar crime  Comments Off on Was it worth the effort?
Apr 122011
 

“When ITSA (the Insolvency and Trustee Service Australia)  identifies criminal behaviour such as this, it will investigate the matter and pursue the offender to the full extent of the law”.   So said Mr Jeff Hanley, Assistant National Manager of ITSA’s Enforcement unit in a media release commenting on the case of Mr Peter David Wilson of Sea Lake, Victoria.

While ITSA may well pursue offenders to the full extent of the law, the sentence in the Wilson case again raises the question of whether, generally speaking, the judiciary in Australia  regards bankruptcy offences as relatively trivial.

Mr Wilson’s crime was that he signed a Statement of Income declaring his annual income to be significantly less than he earned. In support of this false Statement of Income he provided an Australian Taxation Office Notice of Assessment which, enquiries revealed, he had altered to show a taxable income that was less than it actually was.

As required by the Bankruptcy Act, Mr Wilson had been making fortnightly income contributions.  But he fell behind in the payments. When requested by his Trustee to complete an Annual Statement of Income Mr Wilson “saw a way of not having to make the contributions by falsely lowering his annual income to his Trustee”.

“This offender deliberately fabricated documents to avoid disclosing his true income and therefore pay less by way of a return to his creditors” said Mr Hanley.

“In a Record of Interview with ITSA Investigators, Wilson made full and frank admissions about his offending – stating he intentionally altered the document so as to reduce his income for the purposes of not having to pay compulsory income contributions.”

The penalty? Mr Wilson pleaded guilty and was released on a $1000 recognisance to be of good behaviour for 12 months. A further condition imposed was that Wilson continue to make fortnightly payments in reduction of his debt to ITSA.

Of course, we do not know all the facts nor the character and circumstances of Mr Wilson at the time he appeared before the court.

But one wonders whether light sentences such as this would have any detterent effect at all on other would-be offenders with  fraudulent intent.

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Author: P Keenan 12/4/2011.   Disclaimer: The material published on this blog is general in nature. It is made available on the understanding that the Author is not thereby engaged in rendering professional advice.  Before relying on the material in any important matter, users should carefully evaluate its accuracy, currency, completeness and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.