All professional accountants in business to report non-compliance with laws and regulations (NOCLAR)


NOCLAR is a game changing amendment to APES 110 Code of Ethics for Professional Accountants (Code) which applies to all professional accountants in Australia and is effective from 1 January 2018. It focusses on serious and harmful non-compliance, and guides the judgement of the professional accountant in the direction of the public interest. It also establishes a pathway to enable accountants to disclose NOCLAR to a public authority, and allows members to set aside the principle of confidentiality and report NOCLAR to an appropriate authority.

NOCLAR comprises any act of omission or commission, intentional or unintentional, committed by a client or employer, including by management or by those charged with governance, or by others working for, or under the direction of the client or employer, which is contrary to prevailing laws or regulations.

This amendment to APES 110 provides balanced requirements for the following classes of professional accountants:

  • Auditors
  • Other members in public practice
  • Senior members in business such as directors, officers or senior employees
  • Other members in business.

It sits alongside and supplements the guidance contained within the revised Auditing Standard ASA 250 Consideration of Laws and Regulations in an Audit of a Financial Report.

Objective of NOCLAR

The introduction of NOCLAR stems from a need to address concerns from the regulatory community and other stakeholders that the professional accountant’s duty of confidentiality under the Code was acting as a barrier to disclosure of possible NOCLAR to appropriate public authorities.

The amendment to APES 110 aims to stimulate greater accountability by organisations, to provide protection to stakeholders and the general public from substantial harm resulting from violation of laws and regulations, and to ultimately strengthen the reputation of the profession. The increased emphasis on professional accountants’ duties and responsibilities in this area should also serve to stimulate increased reporting of NOCLAR, and even to act as a deterrent to non-compliance by audited entities and organisations.

Management and those charged with governance have an important role in preventing and detecting potential acts of NOCLAR. Governments, legislators and regulators are uniquely placed to introduce, strengthen legislation or regulation governing the reporting of NOCLAR, appropriately tailored to each jurisdiction, including establishing protection for whistle blowers.

In Australia, we are currently undertaking the strengthening of legislation addressing NOCLAR with the Federal Government’s introduction of a Bill to improve protections for whistle blowers.


Laws and regulations covered by NOCLAR are those that directly affect the client’s, or the employing organisation’s, financial statements or its operations in a material or fundamental way. Examples of legislation to consider include:

  • Money laundering
  • Terrorist financing
  • Bribery
  • Corruption
  • Data protection.

The Code provides a framework approach to identified or suspected non-compliance, outlining the following steps to be taken by the professional accountant:

  • Understanding the matter
  • Discussing the matter
  • Determining whether further action is required
  • Concluding and documentation.

More information

For more information, BDO has released a webinar presented by Willem Olivier, Associate Director Risk, Quality and Ethics and Stephen Newman, General Counsel that explores the new standard and takes you through:

  • The meaning and effect of NOCLAR
  • What constitutes an illegal act
  • What steps have to be taken if an illegal act is detected
  • When a client’s confidentiality can be breached, and
  • What NOCLAR means for auditors.