Tougher New Accounting Laws are on the Horizon
Creative accounting has been on the government’s radar, and a new Bill that seeks to address new laws to target fraudulent accounting and bribery has been tabled.
New offence for false accounting
The Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015 (Cth) is currently before a Senate Committee, which is due to report to Parliament in early February 2016. It proposes to:
- Create a new false accounting offence; and
- Illuminate the elements that need to be proved in a foreign bribery claim.
If the Bill passes, individuals and companies engaged in false accounting practices in order to conceal or facilitate bribes will be prosecuted under Australian law.
A person will be guilty of a criminal offence where:
- The person (or company):
- Makes, alters, destroys or conceals an accounting document; or
- Fails to make or alter an accounting document where they were under a duty to do so; and
- The person’s intention is that the conduct would conceal or disguise the receiving or giving of a bribe; or
- The person is reckless as to whether the conduct would conceal or disguise the receiving or giving of a bribe.
To establish this offence, the prosecution doesn’t need to prove that the accused person benefited from the bribe in any way, or even identify the person who was going to give or receive the bribe.
Under the new false account legislation, it is not necessary for the prosecution to prove that accounts were forged for the commission of a foreign bribery offence. If you are found guilty of the false accounting offence, an individual could face:
- A fine of $1.8 million; or
- 10 years imprisonment.
A company could face a fine:
- Equivalent to 10% of the annual turnover of the company; or
- Equivalent to 3 times the value of the bribe.
The offence applies to companies operating in Australia and overseas. However, the Attorney- General must consent for an action to be brought against a foreign company or a person who is not an Australian citizen.
Why are the new laws are being introduced?
The new laws have been proposed in direct response to recommendations made by the Organisation for Economic Co-operation and Development (OECD). Australian regulators are attempting to bring Australian bribery laws into line with their obligations under the OECD Foreign Bribery Convention.
The amendment sends a strong message to Australian companies and businesses that they should evaluate their accounting policies and systems to ensure they are not prosecuted under the proposed new laws.
What do the new laws mean for your business?
If you run a business, it is advised that you implement stricter accounting protocols. The risk of 10 years imprisonment or a $1.8 million fine makes it a worth-while investment to ensure that your accounting practices are compliant with the proposed new laws.
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Dominic is the CEO of Lawpath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.