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If this topic is distressing or triggering, please proceed with caution. If you or someone you know is experiencing financial abuse, support and resources are available at 1800RESPECT in Australia or your local authority overseas. Please prioritise your wellbeing.
As told to Alexandra Cain
Question: “I am a public practitioner working with a client — a small construction business run by a married couple. The company’s documents list the wife as director, even though I have never met her in meetings. In casual conversation over the phone, the wife mentioned she has little involvement in the business and seems unaware of her legal status as a director.
The company is struggling financially, with mounting debts and a potential liquidation on the horizon. If the business is liquidated, the wife, as a director, could be held liable for the company’s debts — something she seems entirely unprepared for.
I have done some research that indicates the husband has a history of appointing family members as company directors without their knowledge in previous businesses, all of which ended in liquidation.
Additionally, the wife has confided that her husband has pressured her to sign documents she did not fully understand, and she fears retaliation if she questions him. Should I be concerned about potential financial abuse? And if so, what steps should I take?”
Answer: In such a situation, as a professional practitioner, you should be concerned with potential financial abuse. One essential step is to call a formal meeting with all appointed directors to outline director duties and ensure all involved are aware of their requirements.
Your organisational policies should cover financial abuse awareness, and it is vital to refer to these policies. These policies should have a communication protocol for such situations, outlining your next steps.
Whether it was the husband or the wife who signed up to the client engagement contract, the contract should outline communication details for all directors and how communication is to be handled during the engagement.
You say the wife seems confused, so it is important to have a conversation with her separately from her husband, to make her aware of her director duties and help her to understand the financial liabilities she is exposed to if liquidation were to occur. A one-on-one, private conversation assists to prioritise her safety.
During the client onboarding process, the wife’s contact details would have been collected, including her mobile phone number. If you cannot reach her or meet her in person, make sure you document that you have gone to every length to have a private conversation with her, but it has not been possible.
Australia’s director ID regime provides assistance to directors who have been appointed officeholders without their consent. Treasury is also looking at ways to support directors coerced into directorships.
Be sure to follow organisational policies about the escalation process to a senior partner or compliance officer. You may also want to reflect whether, as part of the onboarding process, you should have become aware of the husband’s past behaviour regarding appointing family members as directors and the subsequent business failures. You may need to amend your onboarding processes accordingly.
As always, it is essential to meet the requirements of APES 110 Code of Ethics for Professional Accountants. Threats to the principles of confidentiality and integrity can arise in matters like this one.
Some of the potential consequences of being in breach of your ethical obligations may include a professional conduct investigation, civil penalties and potential loss of your professional certifications. You might also lose your job or your practice.
