While failing to properly complete a RATA is an offence, BusinessDay has seen them filed blank, incomplete or attached to a mass of difficult-to-understand management ledgers.THE information provided by company directors when their businesses fail is typically incomplete, inaccurate and unreliable, insolvency practitioners say.
Liquidators also believe that the penalties imposed on directors who fail to disclose the affairs of their collapsed companies are too light, a new study has discovered.
Under the corporations law, directors of companies going into administration are required to fill out a ”report as to affairs” (RATA) form, detailing the assets and liabilities of the enterprise, which is then filed with the Australian Securities and Investments Commission.
The reports are usually the first glimpse of a failed company’s financial situation gained by creditors, employees and the public.
However, while failing to properly complete a RATA is an offence, BusinessDay has seen them filed blank, incomplete or – in one case – attached to a mass of difficult-to-understand management ledgers.
”They’re just not done properly and there doesn’t seem to be much concern on the part of the regulators,” said accountant Peter Keenan, who conducted the study.
For his paper, which is published in the Australian Insolvency Journal and also available on the website of the Centre for Corporate Law & Securities Regulation at The University of Melbourne, Mr Keenan surveyed 105 of the 523 official liquidators registered with ASIC late last year.
Asked if RATAs were generally of an acceptable standard, 59 per cent of respondents said ”sometimes” while a third said that they ”rarely” were.
While 60 per cent of liquidators who were surveyed suggested that ASIC ditch its present form, which is regarded as confusing, and switch to a questionnaire-style form, as is used in New Zealand, Mr Keenan said he was undecided as to whether such a move would improve the quality of information provided.
”I don’t really buy the idea that because it’s a questionnaire more of them will be filled out,” he said.
”Directors have to prepare tax returns, which are very complex documents.
”I don’t see that a RATA shouldn’t be considered in the same light,” Mr Keenan said.
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