Member Criteria, Conduct & Practice

Introduction to Practice Standards (PPS)

The purpose of Professional Practice Standards is to promote and maintain high standards by setting out required practice and harmonising the approach of restructuring and turnaround practitioners when undertaking client engagements. They apply in parallel to the prevailing statutory and legal framework.

The Professional Practice Standards should be read in conjunction with the wider fundamental principles embodied in the ABRT Code of Ethics and should be applied in accordance with the spirit of the Code.

A literal interpretation of a PPS wouldn’t be appropriate where it would be contrary to the fundamental principles of the ABRT Ethics Code, the regulatory or legal framework or any other applicable ethical codes to which the ABRT Member is required to adhere to.

Purpose of the Professional Practice Standards

ABRT Members that personally take on engagements have an obligation to clients to ensure they receive the highest degree of excellence in professional services. ABRT Members have a positive duty to uphold the Professional Practice Standards that are set by the ABRT Board and revised accordingly.

It is also critical that ABRT Members can demonstrate their professional conduct, decisions and actions to the ABRT Board, regulators and others external parties as and when required.

To inform and educate ABRT Members as to the standards of conduct expected of them in the discharge of their professional responsibilities, the ABRT is committed to continually developing and improving the Professional Practice Standards.

Professional Practice Standards (PPS) – Regulatory Status

Professional Practice Standards set principles and key compliance standards with which ABRT Associates and Professional Members are required to comply. They do not represent an exhaustive list of guidance materials to which an ABRT Member can rely upon in undertaking restructuring and turnaround work.

Failure to observe the principles and/or maintain the standards set out in a PPS is a matter that may be considered by the ABRT Board for the purposes of disciplinary action. The ABRT Board may refer a matter for independent assessment by an independent regulatory authority and/or refer the matter to any other professional membership body to which an ABRT Member belongs.

ABRT Members should evidence their compliance with a PPS and should, therefore, document their strategies and decision making processes appropriately. The PPSs’ set out the expected standard of practice, but they are not standards of the law or obligations that are necessarily imposed by any regulation directly. Where an ABRT Member is in doubt about any obligation imposed upon them by a SPP, they should obtain appropriate guidance by contacting the ABRT.

No liability attaches to any body, entity or individual that prepares, issues or distributes a PPS. The obligation to comply with a PPS rests solely upon the ABRT Member, as does their discretion in the practical application and any liability arising from the failure to do so.

Professional Practice Standards (PPS)

1.PPS Initial Contact & Prospective Client Meetings

1.1 The purpose of Professional Practice Statements (PPS) is to promote and maintain high standards by setting out required practice and harmonising the approach of ABRT Members (particularly ABRT Certified Restructuring and Turnaround Practitioners RTP®) to the fundamental aspects of restructuring and turnaround practice. They apply in parallel to the prevailing statutory framework.

1.2 PPS should be read in conjunction with the wider fundamental principles embodied in the ABRT Code of Ethics (the Code) and should be applied in accordance with the spirit of that Code. A literal interpretation of a PPS may not be appropriate where it would be contrary to the fundamental principles of the Code.

1.3 An ABRT Member who becomes aware of any other ABRT Member who they consider is not complying or who has not complied with the relevant laws and regulations and whose actions risk discrediting the profession, should report the matter to the ABRT and, if applicable, any other relevant professional membership body.

1.4 ABRT Members should ensure that their acts, dealings and decision making processes are transparent, understandable and readily identifiable, where to do so does not conflict with any legal or professional obligation. ABRT Members must promote high ethical standards by making staff working for them aware of the ABRT Code of Ethics and the PPS.

1.5 The PPS set principles and key compliance standards with which ABRT Members are required to comply. Failure to observe the principles and/or maintain the standards set out in a PPS is a matter that may be considered by an ABRT Member’s regulatory authority for the purposes of disciplinary or regulatory action (in accordance with their ABRT membership), other professional memberships held (if applicable) and other disciplinary rules or regulatory action.

1.6 ABRT Members should evidence their compliance with the PPS (see 5.PPS Record Keeping on Engagements [ link] ) and should, therefore,
document their strategies and decision making processes appropriately.

1.7 The PPS set out required practice, but they are not statements of the law or the obligations imposed by legislation itself. Where an ABRT Member is in doubt about any obligation imposed upon them by a PPS, they should obtain appropriate guidance.

1.8 No liability attaches to any body or person that prepares, issues or distributes the PPS. The obligation to comply with the PPS rests solely with the ABRT Member, as does any liability arising from any failure to do so.

2.PPS Prospective Client Meetings & Initial Contact

ABRT Members are encouraged to represent to clients that they subscribe to ABRT’s Code of Ethics and PPS.

ABRT Members are required to assess their ability to undertake engagements by:

interviewing all clients to ensure a clear understanding of the engagement required;
considering if they have sufficient knowledge, competence and capabilities to manage all issues relating to the engagement;
determining if there are any issues that require any specific skills or knowledge in order to provide a quality service to the client;
considering if there are sufficient resources and time to undertake the engagement in a timely manner and to meet client objectives.

When

Matters that I/we consider prior to accepting a client engagement include:

the identity of the client ensuring this can be verified by legal documentation;
where relevant, the business reputation of the client’s principal owners, key management and any known related parties;
for a client operating a business, the nature of the client’s operations, including its business practices;
the attitude of the client towards tax compliance;
whether the client displays an aggressive approach to keeping my fees as low as possible;
signs of inappropriate limits to the scope of the engagement including the client’s inability to provide appropriate documentation, receipts and other supporting evidence that enables the preparation and lodgement of BAS / tax returns accurately and in compliance with lodgement requirements;
signs of client involvement in money laundering or other criminal activities;
the client’s reasons for seeking to appoint me/us and for leaving their previous accountant;
whether acceptance of the client would create any threats to my/our independence that cannot be reduced to an acceptable level by putting adequate safeguards in place;
whether acceptance of the client would create any threats to the professional and ethical requirements of the ABRT Code of Ethics.

The advising member must therefore satisfy himself that the directors are aware of their responsibilities. He should also obtain written instructions from the board of directors which clearly define the matters on which he is to advise.

If the advising member receives instructions which would require him to act in a manner materially contrary to the Statements of Insolvency Practice, he should only accept those instructions after careful consideration of the implications of acceptance in that particular case. Where the directors act contrary to the guidance contained in this statement the advising member may be called upon to show that the directors’ actions were undertaken either without his knowledge or against his advice.

This means targeting the sort of clients you wish to work with and becoming more selective with the clients you take on. In the early stages of a firm’s life, many firms take on nearly all clients. That’s because the need for building the client base is most important.

As you plan your growth strategies, you will be looking for growth that:

Comes from a type of work you specialize in, or prefer doing;
Produces a superior level of profitability;
Comes from a preferred type of client; and
Is suited to your firm and team mix.

3.PPS Professional Competence and Expertise

7 Dealings with Appointees

Where a Client or former Client is subsequently subject to an Appointment, a Member
should, subject to:

legal professional privilege,
any other legal rights, or
where the Member would be in breach of any other legal, professional or regulatory duty;

provide to the Appointee, when requested, copies of

the Terms of Engagement and
relevant Client deliverables provided to the Client in connection with theEngagement.

There are no restrictions on the basis of Remuneration that can be applied for Advisory Services. As such, hourly rates, fixed fee, contingency, success fee or a
combination thereof are able to be used.
Members providing Advisory Services to Appointees should be aware of the Appointee’s fiduciary duties and the Appointee’s requirement to ensure that any
Remuneration for Advisory Services provided in an Administration is as agreed and is reasonable (refer PSI7: Disbursements and Expenses).

4.PPS Preventing Illegal Phoenix Activity

Where a Client or former Client is subsequently subject to an Appointment, a Member
should, subject to:

legal professional privilege,
any other legal rights, or
where the Member would be in breach of any other legal, professional or regulatory duty;

provide to the Appointee, when requested, copies of

the Terms of Engagement and
relevant Client deliverables provided to the Client in connection with theEngagement.

5.PPS Record Keeping on Engagements

Where a Client or former Client is subsequently subject to an Appointment, a Member
should, subject to:

legal professional privilege,
any other legal rights, or
where the Member would be in breach of any other legal, professional or regulatory duty;

provide to the Appointee, when requested, copies of

the Terms of Engagement and
relevant Client deliverables provided to the Client in connection with theEngagement.

6.PPS Safe Harbour Advisory Best Practice

Where a Client or former Client is subsequently subject to an Appointment, a Member
should, subject to:

legal professional privilege,
any other legal rights, or
where the Member would be in breach of any other legal, professional or regulatory duty;

provide to the Appointee, when requested, copies of

the Terms of Engagement and
relevant Client deliverables provided to the Client in connection with the engagement.

7.PPS Managing Engagements

1. Introduction

Issues can arise when an ABRT Member is working as part of a turnaround team [2], takes engagements jointly or delegates work to employees or contractors. In such circumstances, the ABRT Member’s planning and administrative arrangements will need to consider how best to ensure that engagements are properly managed and controlled at all times, and that proper regard is paid to the interests of the client and other affected parties.

2. Delegation

Given there is a wide variation in the size of an ABRT Member’s firm [3], each will have a different caseload that is likely to fluctuate. Access to resources will also be highly variable for individual ABRT Members. This creates different requirements in the delegation of work to ensure adequate management and progression of engagements for the client.

Delegation includes:

ABRT Member’s delegation of work to employees or to contractors (working in different geographic locations or at locations remote to the ABRT Member);
taking a reduced role on an engagement taken jointly with other ABRT Members, restructuring and turnaround professionals or the client’s turnaround team (potentially working in a different geographic location or at locations remote to the ABRT Member);
agreeing with the client a colleague, specialist or professional of the turnaround team to take the lead and responsibility for progression of the engagement;
the ABRT Member ensuring specialists or other professionals (whether within their firm or externally sourced) handle work of a specific type (where the engagement requires, for example, additional industry or professional expertise [4]);
the ABRT Member having succession plans [5] that ensures a colleague, alternate ABRT Member or professional within the turnaround team take on the lead and responsibility for progression of the engagement pending unexpected events, inability to act or incapacity.

For each of the above examples (and in other circumstances where delegation takes place), the ABRT Member must be satisfied at all times that work is being carried out in a proper and efficient manner, appropriate to the engagement and the satisfaction of the client.

3. Management

In determining the procedures to be put in place to ensure the appropriate level of management, control and progression of engagements when delegating work, it is recommended that an ABRT Member have regard to the following:

their firm’s size and structure, and the qualifications and experience of employees or contractors;
the requirement for the ABRT Member to be involved in agreeing with the client the engagement’s strategy from the outset and communicating this to delegates (depending on the nature, size and complexity of the case);
the procedures within an ABRT Member’s firm to ensure consultation where engagements are taken on jointly, with other restructuring & turnaround practitioners, external specialists and/or employees/contractors;
the extent to which levels of responsibility are defined, and the circumstances where approval by the ABRT Member taking the lead are required;
providing clear guidelines within a firm to deal with the administration of cases at locations remote from the ABRT Member;
the manner and frequency in which compliance and case progression is monitored, and then reported to the ABRT Member;
the frequency of case reviews, who carries them out and at which point escalation to the ABRT Member is required;
the ABRT Member form’s system for handling communications, correspondence received and, in particular, complaints [6];
the process by which work is allocated on a client engagement, whether taken on jointly by a firm or as part of the agreed turnaround team, the rationale for the split, and the controls to be put in place to ensure objectives are being met, costs are being tracked and work remains within scope; and
the method and process for which specialist advisers (including, for example, agents, solicitors, accountants and insolvency practitioners) and sub-contractors are chosen or recommended, and how their work is to be monitored in line with the client’s expectations.

ABRT Members should be aware that they may be required to justify their decisions and demonstrate they put in place appropriate levels of control to effectively manage engagements.

Depending on the nature, size and complexity of an engagement, ABRT Members should consider documenting procedures that set out guidance for the client’s engagement and have this agreed in writing on a case by case basis. ABRT Members are expected to prepare their own contemporaneous working papers, file notes and Client Advisory Record [7] on client engagements.

Should you require additional guidance on this PPS or have feedback, please email peakpps@abrt.org.au.

Version 1.3 – Maintained 18.08.20

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[1] An ABRT Member’s formally agreed client engagement terms.

[2] Depending on the nature of an organisation’s industry, and the size and complexity of the situation, may be more appropriate for directors to engage a ‘turnaround team’ – multiple advisers, all tasked with assisting in specific areas, and whose advice collectively inform the decisions of the board (and do not conflict with advice the director may wish to receive on a personal level).

[3] Reference to ‘firm’ includes, as appropriate, a company, a partnership, a sole practitioner, and a practitioner working in association with other ‘firms’ or practitioners in other ‘firms’.

[4] This could include (but is not limited to) matters requiring input from accountants, solicitors, taxation agents, independent valuers, insolvency practitioners or industry experts).

[5] See 9.PPS – Dealing with Complaints.

[6] See 8.PPS – Succession Planning.

[7] See 4.PPS – Client Advisory Record.

8.PPS Succession Planning

1. Introduction

Membership of the ABRT is personal to an individual Restructuring & Turnaround Practitioner. ABRT Members have an obligation to ensure that engagements [1] are effectively managed, controlled and administered at all times; and to have appropriate contingency arrangements in place to cover unexpected changes in circumstances. The overriding principle is that the interests of the client and other stakeholders should not be prejudiced.

2. Continuity

Issues of succession can be mitigated where an ABRT Member is working as part of a turnaround team [2], takes engagements jointly or delegates work to employees or contractors. An ABRT Member’s system for managing engagements [3] will need to consider on a regular basis the arrangements in place to ensure continuity and case progression in the event of death, incapacity to act, retirement from practice, or the practitioner otherwise retiring.

3. ABRT Member and Sole Restructuring & Turnaround Practitioner

ABRT Members who are sole restructuring and turnaround practitioners should consider the steps necessary to put a workable Continuity Agreement in place. The full consequences, both practical and financial, of the relationship must be recognised by both the ABRT Member and their nominated successor so that continuity can be achieved, and the interests of the client and other stakeholders safeguarded.

In particular, the nominated successor needs to consider whether the obligations arising from a successor arrangement can be discharged properly and expeditiously, having regard to the number and nature of engagements to be taken over.

A retiring ABRT Member practitioner should have in place arrangements for the transfer of active cases in sufficient time to ensure that the cases are transferred before the retirement takes place or the professional indemnity insurance lapses.

If the nominated successor is an ABRT Member, the transfer of cases should be facilitated as soon as possible after the other restructuring and turnaround practitioner’s death, incapacity or, if no other arrangements have been made, retirement. The arrangements with the nominated successor will need to be reviewed as circumstances dictate, but at annually at a minimum.

The principal matters that might routinely be dealt with in a Continuity Agreement are set out at 6 below.

4. ABRT Member Practitioners and Firms

Every ABRT Member Practitioner in a firm[4] (whether a principal or an employee) should consider the comments made above regarding sole restructuring and turnaround practitioners, and should discuss with the firm the arrangements for succession planning, to cover death, incapacity to act, retirement, or leaving the firm. It is recommended that this is reflected in an agreement or documented set of procedures.

Where there are no other ABRT Member Practitioners in a firm, and in the absence of any contractual arrangements to deal with death, incapacity to act, or retirement, an ABRT Member should have already considered the remaining partners or directors memberships of professional bodies, skillsets, qualification and experience to ensure the proper management of active practice engagements. This includes documenting the procedures and arrangements for another suitably qualified restructuring and turnaround practitioner to take the lead on the caseload.

The principal matters that might routinely be dealt with in an ABRT Member’s Succession Plan are set out at 6 below.

5. Disputes

ABRT Members are not permitted to allow commercial disputes to obscure the over-riding principle set out at the beginning of this paper – that the interests of the client and other stakeholders should not be prejudiced.

It is important, therefore, that the contractual arrangements referred to above should provide for the (essentially) mechanistic and financial consequences of an ABRT Member leaving the firm (or upon incapacity to act). There should be similar considerations when an ABRT Member (either partner or employee) is suspended by a firm or is otherwise excluded from the firm’s offices.

If there is a dispute, it is for the ABRT Member to decide how best to ensure that their professional obligations can be discharged. The Association for Business and Family Enterprise Ombudsman (ASBFEO) may be utilised for alternate dispute resolution (ADR). It is always open to an ABRT Member to consult with the ABRT Board.

As noted above, there may be professional obligations on remaining partners, directors or colleagues to arrange for the proper management of their firm’s engagements, and so ensure that they do not bring their own professional bodies into disrepute (such is the case where there are other ABRT Members, regulated Insolvency Practitioners, and/or lawyers or accountants in practice).

6. Continuity Agreements and Succession Agreements

Principal matters that might be dealt with in a Continuity Agreement:

A clear statement of the circumstances upon which the agreement would become operative, and also the circumstances in which the nominated successor can decline to act.

The extent and frequency of disclosure to the nominated successor of case details and financial information.

Detailed provisions to provide for:

the steps to be taken by the nominated successor when the agreement becomes operative;
ownership of, or access to, case working papers;
access to practice records (see Record Keeping [5] including the current Client Advisory Record [6]); and
financial arrangements.

Principal matters that might be dealt with in an ABRT Member’s Succession Agreement:

Clear statements of what happens in the event of an ABRT Member (whether partner or employee):

dying, or being otherwise incapable of continuing in practice;
retiring from practice;
being suspended or otherwise excluded from the firm’s offices; or
leaving the firm.

Where the agreement provides for another ABRT Member or restructuring & turnaround practitioner (whether in the firm or in another firm) to take over appointments:

the time within which transfer of cases will take place, and the arrangements for the interim period, including provisions for access to information and files;
professional indemnity insurance arrangements; and
the obligations placed on the practitioner, the firm and the successor practitioner, both in the interim period and thereafter;
financial arrangements.

Should you require additional guidance on this PPS or have feedback, please email peakpps@abrt.org.au.

Version 1.3 – Maintained 18.08.20

[1] An ABRT Member’s formally agreed client engagement terms.

[2] Depending on the nature of an organisation’s industry, and the size and complexity of the situation, may be more appropriate for directors to engage a ‘turnaround team’ – multiple advisers, all tasked with assisting in specific areas, and whose advices collectively inform the decisions of the board (and do not conflict with advice the director may wish to receive on a personal level).

[3] See 7.PPS – Managing Engagements.

[4] Reference to ‘firm’ includes, as appropriate, a company, a partnership, a sole practitioner, and a practitioner working in association with other ‘firms’ or practitioners in other ‘firms’.

[5] See 3.PPS – Record Keeping

[6] See 4.PPS – Client Advisory Record.

9.PPS Dealing with Complaints

Introduction

Membership of the ABRT is personal to an individual Restructuring & Turnaround Practitioner. ABRT Members have an obligation to ensure that engagements[1] are effectively managed, controlled and administered at all times. It is in the interest of complainants and ABRT Members, and in the wider public interest, that complaints are dealt with professionally and expeditiously. Failure to do so can only exacerbate any problem, prolong any sense of grievance felt by a complainant, and undermine confidence in the restructuring and turnaround profession.

As a result, practitioners, their firms[2] and the profession may be brought into disrepute. This paper is intended to remind ABRT Members of their duty to deal properly with complaints, and to suggest some matters that might usefully be considered. It is recognised that ABRT Members may hold other professional memberships or be regulated by government authorities and, as such, their rules may override this ABRT Guidance Material.

On Receipt of a Complaint

It is likely that the following steps will be appropriate:

A complaint should be acknowledged promptly in writing.
The ABRT Member should seek to ascertain the background facts as quickly as possible and seek additional information from the complainant as required.
If the ABRT Member concludes that a complaint is unjustified, the complainant should be provided with a full and clear explanation of the reasons for that conclusion.
If an error has been made, the ABRT Member should rectify the error promptly and offer a written apology.
The complainant should always be notified that a complaint can be escalated to the ABRT Board at any time.
The complainant should be kept aware of the steps that are being taken by the ABRT Member to review and respond to the complaint, the likely timetable for the response, and the reasons for any delays.

Duties, Obligations and Responsibility of ABRT Members

It is a feature of the work of ABRT Members that complaints may arise because of an incomplete understanding of the professional standards by which they are required to act. In many cases, actions or outcomes that are obvious to ABRT Members may be seen as wrong or unfair by complainants, as ABRT have certain duties, obligations and responsibilities may not be easily misunderstood. When responding to a complaint, an ABRT Member should provide, where appropriate, a clear explanation of their duties, obligations, responsibilities, professional standards and any relevant legislation.

Other Matters to Consider

The matters that an ABRT Member should consider in relation to complaints include:

The desirability of establishing a formal complaints procedure within the firm, set out in writing, which can be communicated to complainants, colleagues and contractors[3].
Whether complaints should be reviewed by an alternate ABRT Member in the firm or escalated to the ABRT Board.
Early resolution of complaints by telephone conversations and meetings.
Any other ABER Member’s professional bodies documented procedures for handling complaints.
Documenting the complaint, filenotes of the response and status in the Client Advisory Record[4] and retaining as part of Record Keeping[5].
Where the ABRT Member steps away from an engagement, there should be sufficient information recorded about the complaint such that any successor is adequately briefed[6].

Professional indemnity insurance

A complaint may, in some circumstances, have to be notified to an ABRT Member’s professional indemnity insurer. In such cases, any action or response by the ABRT Member will necessarily be subject to any conditions imposed by the insurer.

[1] An ABRT Member’s formally agreed client engagement terms.

[2] Reference to ‘firm’ includes, as appropriate, a company, a partnership, a sole practitioner, and a practitioner working in association with other ‘firms’ or practitioners in other ‘firms’.

[3] See ABRT Guidance Material ‘Managing Engagements’.

[4] See ABRT Guidance Material ‘Client Advisory Record’.

[5] See ABRT Guidance Material ‘Record Keeping.

[6] See ABRT Guidance Material ‘Succession Planning’.

10.PPS Australian Credit Licence – Debt Management Services

There are no prohibitions on a Member who is providing Advisory Services, proposes
to provide Advisory Services, or who has previously provided Advisory Services to a
Client:

acquiring equity in that Client, or
purchasing assets of that Client.

However, in such a situation, the Member must not advise the Client in respect of that transaction and must, in writing, advise the Client that:

they should obtain their own independent advice in respect of the transaction, and
the Member will not be able to act on the Client’s behalf in respect of the transaction.

For the purposes of this section of the Standard, Member extends to the Member’sFirm, Partners and Related Entities.

Member Criteria, Conduct & Practice

Introduction to Practice Standards (PPS)

Purpose of the Professional Practice Standards

Professional Practice Standards (PPS) – Regulatory Status

Professional Practice Standards (PPS)

1.PPS Initial Contact & Prospective Client Meetings

2.PPS Prospective Client Meetings & Initial Contact

3.PPS Professional Competence and Expertise

4.PPS Preventing Illegal Phoenix Activity

5.PPS Record Keeping on Engagements

6.PPS Safe Harbour Advisory Best Practice

7.PPS Managing Engagements

8.PPS Succession Planning

9.PPS Dealing with Complaints

10.PPS Australian Credit Licence – Debt Management Services

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