Due diligence behaviour 'standard' proposed for CFOs

The Accounting Professional and Ethical Standards Board (APESB) is to produce a ‘standard’ for accountants, including chief financial officers employed by dealer groups and fund managers, involved in due diligence committees.

The standard will be aimed at helping accountants employed by companies to avoid transgressing the public interest, as defined in the Corporations Act, while serving on due diligence committees during a takeover or merger.

Accountants have an obligation to act in the public interest in terms of the Act, and not just those of the client, while a member of a due diligence committee, according to APESB chairman Kate Spargo.

“Their role demands a level of independence which might be compromised by signing off on public documents of a due diligence committee, for example, and the standard will look at maintaining the necessary independence.

“It’s about getting a standard on what accountants should or shouldn’t do when they are sitting on those committees and are asked to sign off on public documents related to these matters.”

Spargo said the proposed standard for the “vast number of accountants” employed by businesses follows the release last month of a draft of a similar standard aimed at accountants in private practice.

“Often accountants in private practice are on committees that consider the sale or acquisition of assets, and these accountants believed they needed a standard on which these issues were required to be disclosed.

“There are some differences required for a standard for accountants employed in business in that some, such as CFOs, are part of management, and are required to do signoffs in that capacity.”