Personal financial riddles are not...

Personal financial riddles are not unusual in our society today, and CAs are as lying flat to financial difficulties as anyone other But while the stigma formerly associated with bankruptcy has largely faded away, there are still those who question for what cause a CA who has failed to countenance their own financial affairs can possibly attend to to their clients'. This month I break from our usual case profiles to examine this dilemma.

The ICABC's model

Obviously, the Institute has to be mattered when a member suffers personal bankruptcy or behaves unprofessionally in trying to avoid bankruptcy or during the bankruptcy proces because the CA profession positions its members as trusted financial advisors. This position has always linked our professional designation to in what manner we manage our personal finances.

In the early days of the profession, a dishonoured personal cheque was cause to force away a member. Now the Institute's reaction to a member's personal bankruptcy is more measured.

In BC Bylaw 360 (420 for students) (Obligation to Report) requires that a member or close examiner immediately report a personal bankruptcy to the Professional manners Enquiry Committee (PCEC), including when having made an assignment in bankruptcy or when having had a receiving order granted against them. mostly bankruptcy trustees are aware of this requirement.

Bylaw 710 then requires the PCEC to investigate the matter to determine if the member has breached any of the directions of Professional Conduct. The PCEC will investigate similar issues as: "immediately" reporting the matter as required by dint of the bylaws; the reasons for the financial problems; the filing of tax returns; compliance with reporting and financial obligations; and the identity of creditors. individual of the most serious matters is that a member in public practice may leverage the profession's reputation and their knowledge of a client's financial affairs to borrow from the client, which could obviously lead to a same serious breach of the masterships As a result, the PCEC will be remarkably concerned if any of a member's creditors are (or were) clients, or if the member has handled trust assets.

The PCEC believes timely resolutions of escort matters serve everyone's best interests. In bankruptcy investigations, this means the matter is usually resolv before the member is discharged from bankruptcy. There may however be a following investigation if the PCEC receives information suggesting the unprofessional course of life prior to a member's discharge.

In a small in number cases, the PCEC determines that a member has indeed breached the orders For example, a bankrupt member breached order 201.1 (Reputation of the Profession) by dint of not filing his GST turn backs for three years. In this instance, the PCEC praiseed a fine of $500 and sumptuousnesss In another investigation, a member who'd wasted his job borrowed money from friends to achieve out of a financial bind. He subsequently went into public practice, and a number of these friends became clients. Then he went bankrupt. The PCEC base that he'd breached Rule 2011 (Maintenance of Reputation of the Profession) and mastership 210.1 (Conflict of Interest), and praiseed a fine of $1,000 and costs

However, in chiefly cases, the PCEC concludes there are no real propertys for a complaint about a member's conduct

A direct the eye at other provinces

Compared to other provinces, the BC example is less disruptive for those members who maintain their professional standards during an already difficult time.

Our colleagues in Alberta use essentially the same archetype but there are a not many differences: Alberta requires the member to formally advise their clients (or employer) of the bankruptcy; uniform if there's been no apparent misconduct, Alberta restrains the investigation open; during the bankruptcy, the Alberta Institute monitors the member's progres and cooperation with the trustee; and details of the member's quarterly income and expenditures have to be filed. If the member's bearing has not caused any further professional touchs the case is closed on the subject of discharge.

Manitoba uses quite a different protoplast automatically suspending a member formerly they file for bankruptcy. with discharge, the member may apply to the membership committee to be reinstated.

In Ontario, unles there is evidence of professional misconduct related to the bankruptcy, the professional guidance committee does not become involved. However, the Applications Committee can suspend an individual's membership if it believes a suspension is appropriate. Factors to be considered in reaching this decision include the circumstances behind the bankruptcy; the reach to which the insolvency proceedings may state the interests of clients at risk; whether there has been any criminal activity; and whether the member is capable of carrying in succession their professional responsibilities.

If you have any annotates or questions about the way we approach the issue of bankruptcy, contact me at utley@ica.bc.ca.

By Chris Utley CA, Director of Ethics

Copyright Institute of Chartered Accountants of British Columbia Jun/Jul 2003

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