Australia: Whistleblower Provisions for Professionals

PREAMBLE 

Is whistleblowing a new thing for professionals like us? The answer is No! 

Laws already exist for whistleblowing provisions in many countries around the world including China(i) and Hong Kong(ii). 

In the recent decades, “white collar” crimes that caused millions and billions of damages(iii), these wrong doings could have been avoided or the effects minimised had the relevant authorities been notified earlier for them to act sooner. 

Certain countries have system in place to reward whistleblowers for raising infringement issues to the relevant authorities. The whistleblower’s identify would be protected by heavy penalty for any unauthorised disclosure. 

The onus is now placed on professionals to report to the relevant government authorities on what they know in respect to any clients’ illegal wrongdoings. 

Auditors always had the obligation to act independently and through the mandatory Auditing Standards and related Guidelines including the corporate laws to report on any violation of company policy, law and regulation. 

Recently the obligations to report of known breaches of law and regulation have been extended to non-auditor professionals, these include professionals who supply other services such as tax advising and other services. 

Australia has joined this worldwide trend and have enacted law and regulation to force all professionals to report to the relevant authorities should the uncovered breach of law and regulations have not been rectified by the client. Keeping silent is no longer an option once any breaches were discovered and not rectified. 

This reporting regime is generally foreign to professionals who provide taxation and business services. It usually was a case of the professionals raising awareness of the breach with the client and then step back and allow the client to form his/her own course of action.

Now this silent approach is no longer permissible under the whistleblowing provisions. 

Can the professional resign from his professional obligations to avoid his duty to report the discovered wrongdoings? 

Once the breach is uncovered and not rectified by the client, the obligation to report to the relevant authorities cannot be negated by resigning as the professional for that client. 

Would this reporting on our clients be in contravention to the professional confidentiality and the Privacy laws? 

Another counter argument from the professionals would have been the contradiction of their obligations under the whistleblowing and the professional confidentiality this was the real dilemma for taxation and business advisors. 

However, most countries including Australia have added an exemption in the Privacy and confidentiality legislation to allow the professionals to report the discovered and not rectified breaches to relevant authorities. 

This is very sensitive for tax advisors, they have to understand the client’s existing and prospective tax plans. Some of the arrangements to minimise taxation may conflict with the existing tax law and regulations. 

It would be advisable for all tax and business advising professional firms to review their internal policies and procedures and implement suitable measures to deal with any possible conflicts between the firm and its clients.

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