APES 110: Ethics for Forensic Accountants

What APES 110 Covers

APES 110 Code of Ethics for Professional Accountants (including Independence Standards) is issued by the Accounting Professional & Ethical Standards Board (APESB). Its general principles apply across professional activities. Additional requirements depend on the practitioner’s role.

Membership determines professional obligations. CPA Australia requires members to comply, subject to applicable law. CA ANZ identifies APES 110 as the code for its Australian members. The Institute of Public Accountants’ conduct policy requires members to comply with APESB standards. Analysing bank statements alone does not establish that someone holds one of these memberships.

Use the official APES 110 code and its applicable commencement provisions for the instruction being assessed. Part 1 supplies the general framework. Parts 2 and 3 address members in business and public practice respectively.

APES 215 adds requirements for forensic accounting services. The general code, the specialty standard and applicable law each need consideration. A court instruction adds the court’s own expert requirements.

The Fundamental Principles in Practice

The APES 110 fundamental principles govern both the practitioner’s judgement and the way the work is performed. The following APES 110 summary applies the five principles to fictional forensic tasks. Read the requirements themselves alongside this practical summary.

Principle	What it requires in practice	Forensic example
Integrity	Be truthful and straightforward in professional dealings	A practitioner corrects a draft that calls an unexplained transfer proven theft.
Objectivity	Keep professional judgement free from undue influence and bias	The investigator retains a payment explanation that weakens the instructing client’s allegation.
Professional competence and due care	Maintain the skills needed for the work and perform it diligently	The practitioner obtains currency expertise before interpreting transfers outside their competence.
Confidentiality	Protect information obtained through professional relationships	Access to the statement bundle is restricted to the authorised engagement team.
Professional behaviour	Comply with applicable law and avoid conduct that discredits the profession	The practitioner refuses to obtain private bank records through impersonation.

The CPA Australia principles overview also explains the conceptual framework. The practitioner’s responsibility extends to the public interest, including where the client wants a different answer.

Resolve Ethical Threats in a Forensic Engagement

Use the conceptual framework to identify a threat, evaluate its level and decide how to address it. Consider whether a reasonable and informed third party would accept the judgement on the known facts.

Threat categories include self-interest, self-review, advocacy, familiarity and intimidation. Naming a category does not resolve the problem. An effective response changes the circumstances or reduces the threat to an acceptable level. If that cannot be achieved, decline or end the affected activity, including withdrawing from the engagement where necessary.

A Fictional Disputed Instruction

A director asks a forensic accountant to investigate payments to a former business partner. The accountant previously prepared records for that partner. Several statement periods are missing, and the director wants the report to say that every unexplained debit is misappropriation.

Before accepting the instruction, the accountant takes these steps.

1. Record the earlier work. Identify whether the proposed investigation would examine the accountant’s own work or use confidential information from the former client.
2. Evaluate the proposed scope. Ask whether the available records support the requested conclusions and document the director’s pressure to make an allegation.
3. Assess a workable response. Consider removing the affected practitioner, restricting access to former-client information or allocating appropriate independent review. Record why the chosen action addresses the actual threat.
4. Change the instruction where needed. Require the report to distinguish established payments from unresolved explanations. Request the missing statement periods and record how their absence affects the proposed analysis.
5. Decide whether to proceed. If the former relationship or continuing pressure prevents an acceptable response, decline the work or withdraw through the applicable process.

Client consent is one fact in the assessment. It cannot make an ineffective safeguard effective. A review also cannot correct a conflict where the practitioner must misuse another client’s confidential information to perform the instruction.

The public-practice guidance explains acceptance and conflict responses. Where predecessor information is needed to assess a threat, obtain the appropriate authority for professional clearance and follow the applicable communication requirements.

Objectivity, Independence and Expert Instructions

Objectivity applies to professional judgement across the work. Formal independence requirements depend on the role and engagement. Audit and assurance independence standards do not automatically apply in full to every forensic consulting instruction.

An expert witness has a separate duty under the relevant court rules. The Federal Court’s Expert Evidence Practice Note requires impartial assistance to the Court. That duty overrides obligations to the retaining party. Record the court and the instructions governing the proposed expert role.

Prior work can create a self-review issue. A close relationship can affect the assessment of familiarity. Dependence on one client’s fees or pressure to support a claim can also threaten judgement. Examine these circumstances together with the proposed fee terms.

APES 215 prohibits contingent fees for expert witness services and certain other forensic services requiring or claiming independence. For those services, an additional reviewer does not make a prohibited fee arrangement acceptable. Consult the forensic standard when settling the terms.

In the fictional instruction, changing the report heading from “investigation” to “expert opinion” would require a fresh role assessment. Record any further independence obligations before accepting that change.

Confidentiality and Suspected Non-Compliance

Protect confidential information when collecting statements and when sharing working material. Record the authority for obtaining the records, their intended use and who can access them. Confidentiality continues after the professional relationship ends.

Client permission is one possible basis for disclosure. A legal or professional right or duty can also apply, subject to legal restrictions. For an entity covered by the Privacy Act, Australian Privacy Principle 6 governs use and disclosure. It includes exceptions for Australian law and court or tribunal orders.

When a disclosure request arrives, identify the requesting person and legal basis before sending the bundle. Resolve the request’s scope and any privilege claim with the appropriate legal adviser. Keep the decision and the material actually disclosed in the file.

Non-compliance with laws and regulations, or NOCLAR, has a separate response framework. Section 260 addresses members in business. Section 360 addresses members in public practice, with distinctions between audit work and other professional services.

The CPA Australia NOCLAR guidance explains the role-dependent response. Assess the suspected conduct and raise it with the appropriate management or governance level. Consider further action under the applicable section and governing law.

An internal ethical escalation is different from an external disclosure. Permission under the code does not override a legal prohibition. A statutory reporting duty requires its own legal basis. Record the applicable law and obtain legal advice before a disclosure without consent where the Australian code advises it.

In the fictional matter, missing statements alone establish an evidence gap. Any suspected unlawful conduct needs its own factual basis. Record who assesses the concern and the reason for each escalation or disclosure decision.

Keep an Ethical Decision Record

Keep a decision record that another practitioner can follow from the instruction to the chosen action. Copy these fields into the engagement file and complete them with the actual facts.

• Instruction and role: identify the client or employer, requested work and whether an expert opinion is proposed.
• Applicable requirements: record professional membership, the relevant principle and code provisions, plus the governing law or court requirement.
• Threat and evidence: describe the relationship or pressure and cite the document or communication establishing it.
• Evaluation: explain the threat level and the reasonable and informed third-party assessment.
• Consultations: record the adviser, question asked and advice received, within the authorised confidentiality arrangements.
• Action and owner: identify the change or safeguard, the person responsible and how completion will be confirmed.
• Decision and reason: record acceptance, modified scope, refusal or withdrawal and why that outcome follows.
• Review trigger: name the new information or scope change that requires reassessment, and the person who checks it before release.

Attach the agreed terms and subsequent scope changes. Connect findings to their source records so the release review can distinguish evidence from an instructed allegation. Record any new conflict before approving the report.

For the fictional instruction, retain the original request for a predetermined allegation and the revised scope beside the ethical decision. Release the work only after the responsible practitioner confirms that the agreed changes address the recorded threats.