The purpose of the Professional Practice Standards (PPSs) is to ensure Members of the Association for Business Restructuring & Turnaround (ABRT), and all those who work for, represent and act on their behalf maintain the highest professional standards at all times. Each PPS should be read in conjunction with the wider fundamental principles embodied in the ABRT Code of Ethics (Ethics Code) and should be applied in accordance with the spirit of the Code.
The PPSs set out practice guidelines ensuring that all those leading an engagement in the restructuring and turnaround of a business, as well as the resolution of financial distress of a business or its stakeholders, do so in a ‘best practice’ way, harmonised with all prevailing statute, and ethical and other relevant guidelines at all times. PPSs set out required practice but are not statutory or legislative statements.
A literal interpretation and use of a PPS may not be appropriate where it contradicts the fundamental principles of the Ethics Code, the regulatory or legal framework or any other applicable ethical codes to which the Member may be required to adhere to. Members should apply their own professional discretion, logical reasoning and rationalisation such that the PPS may also be applied to the full range of business structures.
1. Details of the ABRT Member and the Client(s) to be Advised under an Engagement
1.1. The Client Advisory Record essentially records all key information about an ABRT Member’s client engagement.
1.2. The Client Advisory Record should include the Initial Client Meeting (PPS 1) which is the date that confidential information was shared and discussed with the ABRT Member.
1.3. At the outset, the following information should be logged:
1.3.1. The name of the ABRT Member and advisory firm acting in the matter as the lead professional on the engagement (assigned day to day responsibility). This should include the unique URL issued to the Member and recorded on the ABRT Professional Directory.
1.3.2. The name of any secondary advisor (and their advisory firm, if relevant) who has knowledge of the engagement (including the unique URL issued to the ABRT Member and recorded on the ABRT Professional Directory).
1.3.3. The name of any other competent authorising body with whom the ABRT Member holds membership with and is entitled to practice and any statutory registrations (such as AFSL, ACL holders or the Tax Registration Board).
1.3.4. Names and contact details of the client(s) and confirmation of the ID used to verify their identity (including the Director Identification Number, if relevant). This should include the registration details of relevant companies, businesses or trusts relevant to the ABRT Member’s engagement (this includes all ACNs, ABNs and relevant Business Names under which the business has traded).
1.3.5. A summary of the client’s objectives and the proposed type of engagement or proceedings.
2. Referral Source
2.1. The ABRT Member should state whether contact was made via a direct enquiry or whether the client was referred by a professional adviser (for example, derived from an accountant, tax advisor, lawyer, business consultant, past or existing client, or ‘other’).
2.2. If the matter was referred to the ABRT Member via a qualified referral, it is at the discretion of the ABRT as to whether this source is to be kept confidential (the reasons for keeping the source confidential should be recorded).
2.3. The ABRT Member should state whether any fee has been charged for initial consultations with the client; stating the amounts charged and dates paid by the client.
3. Proposal and Terms of Engagement
3.1. The Client Advisory Record should include the date of any proposal and/or the letter of engagement sent to the client and their acceptance (whether electronically or by some other action taken in acceptance of the terms by the appropriate client authority).
3.2. A Client Advisory Record should be kept of the fee quoted and charged for the execution of the matter. The record should include the basis upon which the remuneration of the ABRT Member and their team has been calculated and how this reflects:
3.2.1. The complexity of the case, including the company’s size, liabilities, options, distribution of assets, industry sector, risk, frequency of updates, and/or any special or unique circumstances etc.
3.2.2. In relation to PPS 3 Triage, the timeframes, deadlines, urgency and director duties relevant to the company information collected. The level of risk and responsibility required to be undertaken by the ABRT Member.
The effectiveness with which the ABRT Member and their team fulfils
3.2.4. The value of the company’s assets and the potential negotiations, meetings, creditor communications and telephone calls (taking into account PPSR creditors with ALLPAAP and PMSI security interests).
3.3. The Client Advisory Record should include all invoices and payment dates relevant to the ABRT Member’s engagement.
4. Key Factors/Use of Agents
4.1. Ensure the Client Advisory Record includes the key determinants that have led to the conclusion that restructuring and turnaround advice to be given is the most appropriate considering the clients objectives and the relevant circumstances.
4.2. Ensure the Client Advisory Record records any recommendations made with regards to third party professional assistance that are likely during the course of the Engagement. A note should be made that the client has been advised of any third-party costs likely to be incurred during the Engagement and, if possible, a quote or estimated fee is provided.
4.3. The ABRT Member should ensure that the client instructs any third-party professional advisers (such as valuation agents, solicitors, tax accountants or industry specialists) and include details within the Client Advisory Record.
5. Case Progression
5.1. ABRT Members should refer to PPS 10 Management of Engagements to ensure a high-quality professional service is continually provided to clients throughout engagements.
5.2. Given the broad nature of engagements and unknown factors that might require a change in the course of the advice given, ABRT Members should consider the use of ‘Milestones’ (where the Engagement is broken down into steps) and should consider their fee charging structure in line with meeting client expectations.
5.3. Should the client fail to provide critical information in a timely manner, stop communicating or repeatedly fall short on promises – to the degree to which it hinders the ABRT Member in the progression of the engagement – then the ABRT Member should consider sending (or communicating as best as possible) a written warning notice which states that the Engagement is at risk of termination. This should be included within the Client Advisory Record.
6. Termination of Engagement
6.1. Much of the work undertaken by ABRT Members is front loaded at the commencement of the Engagement. ABRT Members may also be dealing with important and time sensitive matters on other client engagements. Where a retainer is taken or a fixed fee has been charged, the ABRT Member is entitled to protect the integrity of their advice and the fees paid in advance.
6.2. Should the ABRT Member fail to receive any communication or reasonable responses from the client for delays in the provision of information within 3 weeks or by a date critical to the Engagement (whichever is relevant), then the ABRT Member has following options (which must be recorded on the Client Advisory Record):
6.2.1. Choose to provide a refund (although the ABRT Member is under no obligation to do so) and terminate the Engagement.
6.2.2. Temporarily suspend the Engagement on mutual terms agreed with the client.
6.2.3. Adjust the scope of works and Engagement with or without an additional charge (based on the criteria at 3.2 above).
6.2.4. Terminate the Engagement and notify the client that no refund is payable.
6.2.5. If the ABRT Member is unable to make contact with the client, it is at the ABRT Member’s discretion as to whether to terminate the Engagement after 3 weeks (minimum). This is due to the likelihood that the Engagement and scope of works have changed during that period.
6.2.6. It is at the sole discretion of the ABRT Member whether to re-engage the client and whether a fee is warranted in doing so.
6.3. The ABRT Member may summarily terminate the Engagement upon the discovery of fraudulent or highly negligent activity by the client; including persistent lying, overstating key numbers and/or falsifying information, or disregard for the professional services provided by the ABRT Member or any of their team. This should be noted on the Client Advisory Record.
Member should refer to PPS 9 Dealing with Complaints if the client raises
objection. The ABRT Member may wish to seek the advice of the ABRT Board or
provide them notice where a complaint is likely to be made.
ABRT Board – Maintained November 2023 [sandbox]