Joint accounting bodies warn of breach reporting legal minefield

The Tax Practitioners Board (TPB) has been warned that its proposed breach reporting regime lacks detail the absence of which will require accountants to acquire legal knowledge far beyond what can be reasonably expected.

The major accounting groups have used a joint submission to the TPB to argue that the board needs to take a more practical approach in circumstances where, as things currently stand, reporting a “Significant breach of the Code” will require practitioners to have substantial legal knowledge.

It said practitioners would need “an understanding of legal concepts, including those contained in criminal laws, such as ‘indictable offences’ and ‘an offence involving dishonesty’, across various Australian jurisdictions”.

“This is not a simple process that can be easily undertaken by a practitioner, if at all,” it said.

“Practitioners will be required to acquire knowledge of criminal laws, including but not limited to fraud, theft, money laundering, bribery, corruption, embezzlement, dealing with proceeds of crime, dishonest use of position, making false or misleading statements, cyber-crimes, and unlawfully obtaining or disclosing information.”

“This kind of knowledge is far beyond what may be reasonably expected of most practitioners,” the joint submission said.

“Further, to fulfil the breach reporting obligations, they are also expected to understand the nature of other indictable offences that may not be as obvious as these examples, at a Commonwealth level as well as in State and Territory jurisdictions,” it said.

“It is not clear how the TPB expects practitioners to develop the understanding of criminal laws that will be necessary within a short period (i.e. within 30 days of a reportable breach from 1 July 2024) over and above their new TASA obligations, noting there is no discretion in the law for the TPB to extend the 30-day period in any circumstances.”

“While the TPB has acknowledged the limitations of practitioners in understanding legal concepts and criminal laws, the concern has not been addressed in the draft guidance and there is no practical guidance in the draft Information Sheet beyond suggesting that practitioners seek legal advice.

“The process of seeking legal advice on what constitutes an ‘indictable offence’ or ‘an offence involving dishonesty’ will likely take more than 30 days to complete, having regard to the need for the lawyer to understand the particular facts and circumstances of the practitioner seeking the advice. Moreover, this is likely to be a costly exercise. This will cause the practitioner to incur additional costs, regardless of whether the conduct is found to merit reporting.”