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Article:

New Ethical Obligations for Accountants When NOCLAR is Detected

11 July 2018

Stephen Newman, General Counsel, BDO Australia |

You’re an accountant at an educational institution. Your responsibilities might include financial statements, payroll, accounts payable or receivable, bequests or scholarships.

In the past, these were your only responsibilities. If something ‘untoward’ came to your attention but wasn’t in your position description, you wouldn’t have to deal with it.

This is no longer the case. If you’re a member of CA ANZ, CPA Australia or the Institute of Public Accountants and therefore considered to be a Member in Business under the Code of Ethics for Professional Accountants (APES 110), the world has changed for you.

As from 1 January 2018, a Member in Business can no longer ‘turn a blind eye’, or say “that’s no concern of mine” where non-compliance with laws and regulations (hence NOCLAR) is detected.

What is NOCLAR about?

NOCLAR applies to any Member in Business. It makes it compulsory for them to take certain steps to deal with real or suspected non-compliance with laws and regulations that will have a direct effect on material aspects of their employer’s financial statements or the operating aspects of their employer’s business. Such laws and regulations may include those that deal with fraud, data protection and public health and safety.

The purpose of NOCLAR is to avoid any acts of substantial harm being caused to various stakeholders including the general public. This is regardless of whether that harm is measured in financial or non-financial terms.

NOCLAR makes a distinction between the ‘ordinary’ Member in Business and Senior Members in Business (directors, officers or senior employees). A greater expectation is placed on the latter group to take whatever action is appropriate in the public interest to respond to non-compliance or suspected non-compliance.

NOCLAR sets out a path for Members in Business to follow in how to address an instance of non-compliance or suspected non-compliance. This includes raising the matter with a superior, whistleblowing or reporting the instance to an appropriate authority, where the Member in Business is not legally prohibited from doing so. 

Why is this Webinar important?

Stephen Newman, of the BDO General Council, explained why it’s essential that those working in educational institutions are aware of NOCLAR:

“NOCLAR represents a very significant sea change to the ethical obligations of accountants when confronted with actual or suspected breaches of law and regulations. A failure to comply with NOCLAR may result in disciplinary action by an accountant’s professional association and possible legal action by their employer.

“NOCLAR is not a simple set of rules. It has a number of nuances to it that are important for accountants to know and to educate their employers about.

“The current focus in business on organisational culture, the social licence and regulatory compliance is no less applicable to the education sector. For accountants, NOCLAR is but one step in that direction.” 

How can BDO help?  

BDO can assist your educational institution with further advice about NOCLAR including internal training, preparation of policies and procedures and whistleblowing. Please contact your local BDO Partner if you require such assistance.

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