Asic's License And A 'Full' AFS License?

Submitted By chuck333
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Pages: 10
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Question 2
Explain the article that you have found in your own words and clearly relate the concepts, ideas and facts within the article to one or more of the theories or topics that you have studied this session.

A recent article written by Kathleen Payne has raised the issue surrounding the recent spike in the number of accounting firms looking for possible positive outcomes to ASIC’s new limited licensing regime. Under process as of now accountants don’t have to demonstrate that they meet the experience required for the organisational competence requirement. But this is all to change within three years from the date on which the licence is granted, ASIC may request those accountants to show that they have the knowledge and experience to provide financial service. (Payne, 2013.)
Accounting firms have made numerous inquires about future solutions and how the accounting and finance sector can enhance their business’s in the future. The article raises three main questions that relate to the topic.
1. What is the difference between a ‘limited’ AFS licence and a ‘full’ AFS licence?
2. Which licence best covers the services you want to provide to your clients?
3. What obligations do you not need to comply with under a ‘limited’ AFS licence (Thomas Lawyers, 2013.)
The facts around the article that have been raised originate from the current accountants' licensing exemption remaining in place until 30 June 2016. The topics that are raised concern around CPA Australia are related to the issue surrounding industry organisations providing incorrect information to professional accountants, stating that the exemption will be removed from 1 July 2013.
While a transitional period will commence on 1 July 2013, CPA Australia members will be able to continue to provide advice under the accountants’ licensing exemption during this transitional period. (“Accountants’ exemption reform resources released,” 2013.).
Looking at this from an accountant’s perspective with regard to the firm and its employees, when the reform has been passed through, the legislation states the applicant must have responsible managers who hold the qualifications and have the experience set out by ASIC. There are five options, which the nominated responsible managers can meet. With this being said that the responsible managers have an obligation which requires the responsible manager to have an undergraduate degree in a relevant discipline and a short industry course to meet the knowledge requirements, and three years out of the last five years’ experience as a representative of an AFS licensee which will be in the best interest of the organisation. (“Accountants committed to new licensing regime.,” 2013.).
The concept under the new stricter guidelines, states that if the responsible managers nominated are ‘recognised accountants’, then they do not need to meet ASIC’s experience requirements. They however, need to meet the knowledge requirements. (Kachor, 2013.)
This can be said that an organisation now needs to obtain a limited AFS licence and nominate ‘recognised accountants’ as the responsible managers. This in turn means the entity is subject to a condition that three years after receiving its licence, ASIC can call on the entity to prove its responsible managers have the appropriate knowledge and skills.
Looking through the facts 
given the set requirements associated with obtaining and holding a limited AFS licence, consideration should be given as to whether a ‘full’ AFS licence would be all that more difficult to obtain and maintain. (“Accountants committed to new licensing regime.,” 2013.).The most significant easing for accountants during the transition period is the exemption from the experience requirement. However, it is possible for accounting practices to appoint experienced responsible managers on a contract basis for the first three years of holding an AFS licence as the practice principals themselves gain the relevant experience
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