The Board Conduct Committee (BCC) found a registered tax agent company breached the Code of Professional Conduct (Code), when it failed to ensure a BAS agent service it provided, or that was provided on its behalf, was provided competently. 

The company failed to provide adequate supervision and control of a BAS agent employee who was charged with multiple counts of obtaining a financial advantage by deception, and of making and using a false document. The employee misappropriated over $2 million from clients directly from their bank accounts.

During our investigation, the company cooperated fully and demonstrated how the egregious behaviour of the employee was carefully designed to evade detection. The company also established that there was no evidence to suggest that its processes were inadequate or causative of the employee’s criminal activities. No one (including the affected clients) had any reason to believe or suspect the employee was behaving untrustworthy. 

The BCC determined that the company breached Code item 7 (you must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently) by failing to provide adequate supervision and control of its employee. 

In determining the appropriate sanction for the company’s breach of the Code, the BCC noted the company:

• took all necessary steps as soon as they became aware of the employee’s misconduct
• completed remediation processes to the satisfaction of all affected clients
• suffered significant financial impact and reputational damage due to the employee's conduct
• lost clients and the ability to attract new clients
• suffered damage to their standing within the industry which is expected to have a significant impact on their future growth.

After considering these factors, the BCC imposed a written caution and ordered the company to report to the Tax Practitioners Board every 6 months for the next 2 years on the improvements they have made to their processes and staff training.

We encourage tax practitioners’ efforts to test and improve their systems and risk management and we remind practitioners to keep us informed of issues adversely impacting registration. We want to work with you to enhance the integrity of the tax profession, and transparency and cooperation can support early resolution of issues.