Quality Control for Firms Insolvency November 2010

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Quality Review ProgramQuality Control for Firms - Insolvency

Review Code: reviewId

PLEASE COMPLETE THIS DOCUMENT AND KEEP ITAT YOUR OFFICE FOR YOUR REVIEWER

Content Page

1. About this Questionnaire................................................................................................................2

2. A System of Quality Control ..........................................................................................................3

Reviewers Comments.........................................................................................................................3

3. Leadership Responsibilities for Quality Within the Firm.............................................................6

5. Independence Requirements - administration level......................................................................8

7. Human Resources.........................................................................................................................12

8. Administration Performance........................................................................................................13

9. Monitoring.....................................................................................................................................14

Privacy Notification - The Institute of Chartered Accountants in Australia (the Institute) respects the privacy of individuals and acknowledgesthat the information you provide in this questionnaire is personal information as defined by the Privacy Amendment (Privacy Sector) Act2000. The information is being collected for the purposes of carrying out a Quality Review of your practice. If this information is not providedthe Institute may not be able to proceed with your review. Members who hold a Certificate of Public Practice are required to co-operate withthe review work performed by the Institute - Regulation 715.

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1. About this Questionnaire

CONFIDENTIALITYYour practice information is highly confidential. Therefore, please do not identify your practice, anypersonnel (partners, staff, etc.) or clients of the practice in this questionnaire.

What is the purpose of this questionnaire?

This questionnaire asks you about the quality control policies and procedures in place in your practice. Thequestions are based on APES 320 Quality Control for Firms, effective as at 1 July 2006, APES 330Insolvency Services, effective 1 April 2010 and IPAA Code of Professional Practice for InsolvencyPractitioners (COPP), effective May 2008.

APES 320 requires a firm to establish a system of quality control designed to provide it with reasonableassurance that the firm and its personnel comply with professional standards and regulatory and legalrequirements and/or that reports issued by the firm or engagement partners are appropriate in thecircumstances. A system of quality control consists of policies designed to achieve these objectives andthe procedures necessary to implement and monitor compliance with these policies.

This questionnaire is designed to:

ascertain the quality control procedures in place in your practice, and assess whether, in the context of your practice, these policies and procedures meet the requirements of

APES 320 and other professional regulatory and legal requirements.

Who should complete this questionnaire?

You, being the partner or principal responsible for quality control in your practice, should complete thisquestionnaire before your reviewer visits the practice. Your reviewer will discuss your responses with youduring the initial review meeting.

How should the questions be answered?

For most questions a yes, no or N/A answer is appropriate. Where applicable, please include a reference

to your practices quality control policies and procedures. If required by the question, or you believe it isappropriate, include a brief description of your quality control procedures.

Please have the documents which you use to implement quality control, such as policy/procedure manualsand standard forms, available for your reviewer during the review.

What will your reviewer need?

Your reviewer will ask to sight the following, where applicable. Please ensure these are readily availableat the time of your reviewers first visit.

1. Quality control manual (or equivalent).2. Training and Development records for the last 3 years.

3. Professional reference materials.4. PI insurance certificate/policy document (or equivalent documentation if your broker/insurer will not

provide a certificate).5. Evidence of adequate Fidelity Cover.6. Practices with partners residing anywhere in Australia except Tasmania: a copy of your practice

letterhead, with compliments slip and electronic media.7. Annual ASIC Registered Liquidator Form.8. Auditors report for your Trust Account.9. Administration and investigations checklists.10. Activity logs for CA program candidates.

Who do I contact if I need help completing this questionnaire?

Please contact your reviewer, or alternatively Suzanne Smith, Quality Review Administrator, on 02 92905723.

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2. A System of Quality Control

The firm shall establish and maintain a system of quality control designed to provide it withreasonable assurance that the firm and its personnel comply with professional standards andapplicable regulatory and legal requirements and that reports issued by the firm orengagement partners are appropriate in the circumstances.

APES 320(3)

Members must implement systems, policies and procedures to ensure effective compliancemanagement.

IPAA COPP (15-16)

Reviewers Comments

2.1 Does your firm have a Quality Control Manual (orsimilar document) appropriate to the size and operatingcharacteristics of your practice? (Sample qualitycontrol policies and procedures for a small firm arecontained in the Institutes Quality Control Guideavailable on the Institute website atwww.charteredaccountants.com.au/Industry-Topics/Quality-review.aspxAPES 320(124)

__________________________________________

__________________________________________

If your firm does not have a Quality Control Manual,how has it documented its quality control policies andprocedures?

__________________________________________

______________________________________________

If your firm is a sole practice, go to Question 2.4

2.2 How are your firms quality control policies andprocedures communicated to partners andstaff?APES 320(11)

__________________________________________

__________________________________________

2.3 Do your firms quality control policies and proceduresrequire documents to be retained for a period of timesufficient for monitoring of the system and/or legal and

professional requirements?APES 320(128)

__________________________________________

Quality Control Issues

2.4 Are partner(s) members of discussion groups?

__________________________________________

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Reviewers Comments

2.5 What professional reference materials do youmaintain?

__________________________________________

During the review your reviewer will ask to

sight your professional reference materials.

This may be in electronic form.

Reviewer to initial that professional

reference materials have been sighted:

2.6 What Administration and or investigation checklistsdo you maintain?

__________________________________________


sight your checklists. This may be in

electronic form.

Reviewer to initial that checklists been

sighted:

2.7 Does your practice have professional indemnityinsurance which provides at least the minimumlevel of cover to comply with Regulation 711 andAppendix R4A, s.1284 of Corporations Act and

Regulatory Guide 194? (Provide a copy of your PIInsurance Certificate for your reviewer.)

_________________________________________


sight evidence of your PI insurance.

Reviewer to initial that evidence of PI

insurance has been sighted:

2.7.1 Are any of the practices activities excludedby the policy?

_________________________________________

2.8 Do any of the partners in the practice reside in NSW,QLD, VIC, WA or the NT the ACT? If no, go toquestion 2.8.

_________________________________________

2.8.1 Does your professional indemnity coverand/or business assets at least equal thelimitation amount as defined in theAccountants Scheme?R4(713)

_________________________________________

2.8.2 Does your office stationery disclose Liability

limited by a scheme approved under ProfessionalStandards Legislation? (Provide a copy of yourpractice letterhead, with compliments slip and

electronic media for your reviewer.)

_________________________________________

Reviewer to initial that evidence of

disclosure has been sighted:

2.9 Is your practice required by the Privacy Act to applythe National Privacy Principles (generally turnovergreater than $3 million)?

__________________________________________



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Reviewers Comments

2.9.1 If so, does your practice have policies and proceduresin place to monitor compliance with the Privacy Act?

You may wish to refer to the guidance provided on the Privacy

Commissions website at www.privacy.gov.au/business

__________________________________________

______________________________________________

2.10 Does your practice provide any designated serviceswhich trigger obligations under the Anti-MoneyLaundering and Counter-Terrorism Financing Bill2006?

Refer to:www.charteredaccountants.com.au/Industry-Topics/Anti-

money-laundering.aspx

__________________________________________

__________________________________________

__________________________________________

2.10.1 If so, does your practice have policies andprocedures in place to monitor compliance with theAct?

__________________________________________

__________________________________________

__________________________________________

2.10.2 Does your practice have systems, policies andprocedures to ensure effective risk management?IPAA COPP (17)

__________________________________________

__________________________________________

2.10.3 Does your practice have systems, policies andprocedures to ensure effective complaints

management?IPAA COPP (18)

__________________________________________

__________________________________________

2.10.4 Does your firm have a policy against providingadvice to an insolvent entity (or, if the entity isa company, its directors) on how to causeassets to be unavailable in an Administration orto otherwise avoid the consequence of theinsolvency?APES 330(3.3)

__________________________________________

http://www.privacy.gov.au/businesshttp://www.charteredaccountants.com.au/Industry-Topics/Anti-money-laundering.aspxhttp://www.charteredaccountants.com.au/Industry-Topics/Anti-money-laundering.aspxhttp://www.privacy.gov.au/businesshttp://www.charteredaccountants.com.au/Industry-Topics/Anti-money-laundering.aspxhttp://www.charteredaccountants.com.au/Industry-Topics/Anti-money-laundering.aspx


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__________________________________________

2.10.5 Does your firm have a policy against thepayment of inducements to secure insolvencyappointments or to secure or present theappointment or nomination of another person?APES 330(4.11)

__________________________________________

3. Leadership Responsibilities for Quality Within the Firm

The firm shall establish policies and procedures designed to promote an internal culturerecognising that quality is essential in performing engagements. Such policies andprocedures shall require the partner(s), or for larger firms the firms chief executive officer (orequivalent) or, if appropriate, the firms managing board of partners (or equivalent), to assumeultimate responsibility for the firms system of quality control.

APES 320(14)Reviewers Comments

3.1 Who within your firm (titleno name) hasoperational responsibility for the firms qualitycontrol system?

___________________________________________

___________________________________________

3.2 Does the firm have policies and procedures so that thisperson has the appropriate experience and ability, andthe necessary authority, to assume that responsibility?APES 320(17)

___________________________________________

___________________________________________

3.3 Does the firm, or each individual with a Certificate ofPublic Practice (CPP), keep a record of Training andDevelopment as required by R7; RegulationsRelating to Training and Development?

__________________________________________


sight the Training and Development records

for each individual with a CPP, for the last 3

years.

Reviewer to initial that Training and

Development records have been sighted:

3.3.1 Does this Training and Development address all theareas each partner practices in?R7 (1002) requires a member with statutory registration(s), e.g. tax

agent, registered liquidator, to undertake at least 40% minimum

Training and Development in each specialty area.

__________________________________________

3.3.2 Are the overall Training and Development hoursadequate? Note IPAA requires a minimum of 40hours per annum.

If Training and Development records areinadequate the Institutes professional

standards division will be advised of the

member concerned for follow up action.



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__________________________________________



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4. Ethical Requirements - practice level

A firm shall establish policies and procedures designed to provide it with reasonable

assurance that the firm and its personnel comply with relevant ethical requirements.APES 320(19)

A Firm which provides Insolvency Services shall establish policies and procedures which

prohibit the Firm, its Partners and employees, and the Close and Immediate Families,Controlled and Associated Entity of the Firms Partners and employees from acquiring orderiving a benefit from dealing with any assets including property which comes under thecontrol of a Partner or employee due to an Appointment, without obtaining the prior approvalof the court.

APES 330(6.1)Reviewers Comments

4.1 Does your firm have policies and proceduresdesigned to provide it with reasonable assurance thatthe firm, its personnel and others comply withrelevant ethical and independence requirements asrequired by the APES110, APES 330 and the IPACode of Professional Practice?APES 320(19, 24)

___________________________________________

___________________________________________

4.2 How does your firm deal with any issues of non-compliance with ethical requirements, includingindependence, by any partners or staff?

___________________________________________

5. Independence Requirements - administration level

The concept of independence is fundamental to compliance with the principles of integrityand objectivity.

5.1.1 Professional standards require members to maintaintheir objectivity in relation to all practice areas. Thiswill need to be evaluated on a case by case basis, andfor employees as well as partners. To assist inevaluating objectivity do you have any situationswhere:

(a) a person in the firm1is, or could be deemed, anofficer of a client?

___________________________________

(b) there are loans between a person in the firm orclose family member and a client?

___________________________________

(c) a person in the firm or close family memberhas or has had an investment in the client?

___________________________________

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Reviewers Comments

(d) the firm, or a person in the firm, has or has hada material business relationship with a client?(Examples include having a mutual business

interest with an officer or employee of a client,

or the firm having a joint venture with a client.)

___________________________________

(e) any partner in the practice undertakesengagements for relatives or friends?

___________________________________

(f) a person in the firm, has or has had any otherpersonal relationship with an officer oremployee of a client?

___________________________________

(g) a person in the firm, has or has hademployment with the client in a position toexert direct and significant influence?

___________________________________APES 110 (210.7), APES 330(4.6)

In situations where any of the above conditions exist,how does the firm ensure it remains objective?

___________________________________________

___________________________________________

5.1.2 Conflicts of interest have an important bearing onactual and perceived independence. Has your firm:

(a) accepted an Administration (other than as acontroller) where the firm has provided amaterial professional service in the previoustwo years (other than as excepted in APES330(4.5))?APES 330(4.7)

___________________________________

(b) provided advice to the directors of an entitypersonally and then accept an insolventappointment to the entity?APES 330(4.9)

___________________________________



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Reviewers Comments

(c) accepted an appointment where there was aprevious engagement that has a reasonableprospect to lead to litigation claims against thefirm, is material to the insolvencyadministration or was related to therestructuring of the companys assets to avoid

the consequences of insolvency?APES 330(4.10)

___________________________________

5.2 Other independence issues

5.2.1 Does your practice comply with the following specificrequirements:

(a)not charge fees to clients on a contingency basisother than in accordance with APES 330(8.8

and 8.9) and IPAA COPP (13.2.5)?APES 110 (240.3-.4)

___________________________________

5.2.2 Generally any client monies handled by your firm mustbe dealt with through a trust account in accordance withAPS 10; Trust Accounts (excluding insolvencyadministration bank accounts)

(a) does your practice handle any client monies?

___________________________________

(b) does your practice maintain a trust account?

____________________________________

(c) do you have a current, unqualified auditorsreport for the trust account?(APS 10.34.1 requires members who operate

a trust account to have the account audited

annually for each period ending 31 March,

within 90 days of that date.)

____________________________________

During the review your reviewer will ask

to sight your trust account records and

auditors report.

Reviewer to initial that auditors report

has been sighted:

(d) if the auditor's report for the trust account isqualified, has a copy been sent to the RegionalManager within 3 months of the balance dateof the trust account?(APS 10.35)

___________________________________



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6. Acceptance and Continuance ofAdministrationsThe firm shall establish policies and procedures for the acceptance and continuance of clientrelationships and specific engagements, designed to provide it with reasonable assurancethat it will only undertake or continue relationships and engagements where the firm:

(a) Is competent to perform the engagement and has the capabilities including time and

resources to do so; and(b) Can comply with relevant ethical requirements; and(c) Has considered the integrity of the client and does not have information that would

lead it to conclude that the client lacks integrity.


6.1 Does the firm have policies and procedures for theacceptance and continuance of Administrations?APES 320(38)

__________________________________________

6.1.1 Do these policies and procedures consider:

(a) whether the member has the capacity and hasaccess to the necessary resources to conductthe proposed Administration in an effective andefficient manner?APES 330(3.5)

___________________________________

(b) whether the member has the capabilities toconduct the Administration?

APES 320(38(b))

___________________________________

(c) whether the firm can comply with relevantethical requirements?APES 320(38(c))

___________________________________

6.1.2 Where issues are identified (but they do not preventthe acceptance of the Administration) and the

practitioner decides to accept or continue theAdministration, is the resolution of the issuesdocumented?APES 320(38)

__________________________________________

6.2 Does the firm have policies and procedures regardingwithdrawing from an Administration?

__________________________________________



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7. Human Resources

A firm shall establish policies and procedures designed to provide it with reasonableassurance that it has sufficient personnel with the capabilities and competence, andcommitment to ethical principles necessary to:

(a) perform its engagements in accordance with professional standards and regulatory

and legal requirements; and(b) to enable the firm or engagement partners to issue reports that are appropriate in the

circumstances.APES 320(47)

Reviewers Comments

7.1 Does your firm have policies and procedures to provide itwith reasonable assurance that it has sufficientpersonnel with the appropriate skills and experience?APES 320(47)

__________________________________________

7.2 Does your firm have policies and procedures in placerequiring that the Appointee has the appropriatecapabilities, competence, authority and time to performthe role?APES 320(54)

__________________________________________

7.3 Does the firm assign appropriate staff with thenecessary capabilities, competence and time toperform Administrations in accordance withprofessional standards and regulatory and legalrequirements?

APES 320(56)

__________________________________________

7.4 Does your firm currently employ staff who areundertaking the Chartered Accountants (CA) Program?

If no, go to Q8.1

If yes:

(a) how do you ensure your candidates are properlysupported and mentored?

___________________________________

___________________________________

(b) how do you ensure your candidates aremaintaining an accurate record of theirpractical experience?

Reviewer to initial that records are

being maintained e.g. log books:

___________________________________

___________________________________



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Reviewers Comments

(c) what other methods do you employ to assist inthe professional development of your CAprogram candidates?

___________________________________

___________________________________

8. Administration Performance

A firm shall establish policies and procedures designed to provide it with reasonableassurance that engagements are performed in accordance with professional standards andregulatory and legal requirements, and that the firm or the engagement partner issues reportsthat are appropriate in the circumstances. Such policies and procedures shall include:

(a) Matters relevant to promoting consistency in the quality of engagement performances;(b) Supervision responsibilities; and(c) Review responsibilities.

APES 320(58)

8.1 Does your firm have policies and procedures designedto provide it with reasonable assurance that:APES 320(64)

(a) appropriate consultation within the firm takes placeon difficult and contentious matters?

___________________________________

(b) sufficient resources are available to enable

appropriate consultation to take place?

___________________________________

(c) conclusions resulting from consultations aredocumented and implemented?

___________________________________

8.2 Does your firm have policies and procedures ensuringthe completion of Administration files on a timelybasis?APES 320(93)

__________________________________________

8.3 Does your firm have policies and procedures regardingthe confidentiality, safe custody, integrity, accessibility,retrievably and retention of Administrationdocumentation?APES 320(96, 101)

__________________________________________



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9. Monitoring

The firm shall establish policies and procedures designed to provide it with reasonableassurance that the policies and procedures relating to the system of quality control arerelevant, adequate, operating effectively and complied with in practice. Such policies andprocedures shall include an ongoing consideration and evaluation of the firms system ofquality control, including a periodic inspection of a selection of completed engagements.


9.1 Does your firm have policies and procedures to providean evaluation of whether the quality control system hasbeen appropriately designed and effectivelyimplemented and whether the firms quality controlpolicies and procedures have been appropriatelyapplied?APES 320(106)

__________________________________________

9.2 Who within the practice (title only-no name) isresponsible for the monitoring process?APES 320(106(b))

__________________________________________

9.3 Does the monitoring process include, on a cyclicalbasis, inspection of at least one completedengagement for each partner?APES 320(106(a))

__________________________________________

9.4 Do the firms policies and procedures require that thoseperforming the engagement or the engagement qualityreview are not involved in inspecting theengagements?APES 320(106(c))

__________________________________________

9.4 Does your firm have policies and procedures designedto provide it with reasonable assurance that it dealsappropriately with:APES 320(119)

(a) complaints and allegations that the work performedfails to comply with professional standards andregulatory and legal requirements?

___________________________________

(b) allegations of non-compliance with the firmssystem of quality control?

___________________________________



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Reviewers Comments(c) As part of this process, has the firm established

clearly defined channels for firm personnel toraise any concerns in a manner that enablesthem to come forward without fear of reprisals?

___________________________________

(d) Does the firm require complaints andallegations and the response to them to bedocumented?APES 320(129)

___________________________________

(e) If, during investigations into complaints andallegations, deficiencies in the firms qualitycontrol are identified, does the firm takeappropriate action?APES 320(122)

___________________________________

Institute of Chartered Accountants Australia

Quality Control for Firms Insolvency November 2010

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