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The regulator has stressed that firms using outsourced services will be responsible for the quality control of the outsourcing arrangement under the new code changes.
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TPB issues warning on outsourced services and code changes
03 December 2024
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Tax Practitioners Board (TPB) chair Peter de Cure has provided further details about the TPB's expectations regarding quality management systems as set out under section 40 of the new code obligations.
"Section 40 of the code obligates all tax practitioners to establish and maintain a system of quality management in relation to the tax or BAS agent services provided with reasonable confidence that they are complying with the code," de Cure said speaking at an IPA conference.
De Cure said the TPB wanted to see that the staff working in the practice were appropriately qualified and trained, had the right CPE and had the right tools to work within their remit.
"So if you're running a small to medium sized practice I don't expect all of your staff to be properly trained in transfer pricing but I do want to see that staff are adequately trained and qualified to do the work that they do on a day to day basis."
"If you're doing R&D work, then you might be using an external consultant. If you're using a consultant then you need to know that the consultant is properly qualified, that they're registered with the TPB to provide R&D advice and that they're doing it properly.
De Cure also stressed that accounting firms using outsourcing arrangements would be responsible for the quality control of the outsourcing arrangement.
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"If you're using offshore people, then it's your obligation to make sure that those people that are providing those services to you are appropriately qualified and supervised and managed, to deliver those tax services because you're using their work in order to provide your tax output."
"So with these offshore providers, you may want to ask if they've got a registered tax agent working there that can adequately demonstrate to you that their staff are qualified to do the work that they're doing that is being relied on by you to deliver tax services.
"I just want to emphasise that you as the practitioner are responsible for ensuring that each entity providing tax services on your behalf maintains the knowledge and skills relevant to the services being provided and are appropriately supervised and controlled having regard to that level of service."
The practitioner would also be responsible for ensuring they are working in accordance with the quality management system that has been set out, he added.
De Cure explained that the way that firms comply with section 40 would be proportionate to the style and type of practice they run.
"Some of the things that you should document and enforce are governance and leadership within your practice."
"You need to monitor your performance. The ATO monitors agents in terms of where they fit in relation to their profile. You should have a think about where your practice sits in relation to its profile.
"For example, how many audits are you getting? How many audits are you losing? How many adjustments do you get? Are you providing a competent service for your clients?"
Tax practitioners also need to have appropriate records of client engagement, he added.
"That could be engagement letters or correspondence with your client that demonstrates that there is a paper trail and that you have proper record keeping for both yourself and your client and you should have systems in place to protect the confidentiality of that information."
"It's critical that within your business you've got appropriate procedures and protocols to protect information."
The TPB said practices should also have a conflict of interest policy and should have recruitment and training policies that demonstrate that the people that they're hiring are fit for the work that they're being hired for.
Following the new obligations relating to disqualified entities which were introduced earlier this year, de Cure said practitioners must also ensure that if they're hiring someone in their tax practice as a tax practitioner, they must make enough enquiries to ensure that they are not a disqualified entity.
"If they are and you still want to employ them, you have to apply to the TPB for permission to employ [them]."
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