AFSA Notice—AFSA reviews non-professional expenses charged by practitioners

Monday, August 8, 2016

Non-professional expenses are generally of two types—those incurred with external providers, for example advertising, travel and accommodation; and those incurred internally, for example, telephone, photocopying and printing—where these are not already included in overheads.

AFSA reviewed 125 reports from 65 trustees to creditors. Of the trustees, 60 were ARITA members. Over 80 per cent of the practitioners sampled referenced the ARITA Code of Professional Practice in relation to non-professional costs—all ARITA members have an obligation to do so.

There is considerable variation in how firms deal with non-professional expenses. Some firms include non-professional expenses in overheads, charge at cost or charge at an internally determined rate. The rates charged for photocopying, printing and stationery also vary considerably. In a number of cases, firms were found to charge an internally determined rate for expenses that was well above the rate that would be charged by an external party offering the same service. The most frequently charged non-professional expenses related to photocopying, printing and searches.

AFSA is following up instances of non-compliance with individual practitioners. We are also consulting with ARITA on how to provide further guidance on best practice for non-professional expenses, including clearer disclosure regarding expenses that might be included in overheads rather than directly expensed.