THE INSTITUTE of Public Accountants (IPA) has welcomed the Insolvency Inquiry Report released by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and hopes the Federal Government will accept the 10 key recommendations and moves quickly in its implementation.
“We know that small business is doing it tough and faces huge challenges, particularly in this current COVID-19 environment,” IPA chief executive officer, Andrew Conway said.
“It is therefore critical for the survival of small business that a new regime is implemented which encourages small businesses to assess their position and execute a turnaround with specialist advice from their chosen trusted advisers.
“One of the most pertinent recommendations in the report is that of a Small Business Viability Review, where a voucher worth up to $3,000 is provided to obtain tailored advice to improve their business operations. If the business is assessed as unviable then another $2,000 would be provided to aid in the winding-up process, making the support a total of up to $5,000," Mr Conway said.
“In the latter circumstances, the ASBFEO report recognises that a restructure of business affairs managed by the small business owner, and with approval from a registered liquidator, may have more positive outcomes beyond what is the current norm, including greater returns to creditors.
“To help facilitate this, it has been recommended that a Directors Insolvency Agreement be established where the small business owner can provide a proposal to a registered liquidator on the best way to manage the business. The proposal may seek a restructure or the winding up of the business, with the retention of the existing company and a sale of the business and/or its assets to an unrelated party.
“Another key aspect of the report relates to the accessibility of information, including for the small business owner and for creditors. The report recommends that a modernised approach be taken to information, including simplification, use of plain language, using fact sheets, limiting the volume to relevant information and greater use of electronic means. The IPA agrees that we need to demystify the process to enable more informed choices and better outcomes.
“The IPA is fully supportive of the recommendations and urges the government to implement them as soon as possible,” Mr Conway said.
About the Institute of Public Accountants
The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies. In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 38,000 members and students in over 80 countries. The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants.