IPA Remuneration Report Part 4: General Guidance Material

(Supporting Information in your Reports to Creditors)

Explanation of Remuneration and Disbursements charging policies

Remuneration Methods

There are three basic methods that can be used to calculate the remuneration charged by an insolvency practitioner. They are:

a.Time based - hourly rates

This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed.

b.Fixed Fee

The total fee charged is normally quoted at the commencement of the engagement and is the total cost for the engagement. Sometimes a practitioner will finalise an administration for a fixed fee.

c.Commission

The total fee charged is based on a percentage scale of the gross proceeds of assets realisations.

d.Method chosen

Given the nature of this administration we propose that our remuneration be calculated on [insert basis]. This is because:

(GUIDANCE: Provide reasoning for the fee calculation method chosen.)

Explanation of Hourly Rates

(Suggested text for time based remuneration claims..)

The rates for our remuneration calculation are set out in the following table together with a general guide showing the qualifications and experience of staff engaged in the administration.

The hourly rates charged encompass the total cost of providing professional services, and should not be compared to an hourly wage.

The additional expenses being recovered in the hourly rate include:

a)Rental of premises and other infrastructure

b)Insurances including professional indemnity insurance – all registered liquidators are required to maintain professional indemnity insurance or a performance bond

c)Continuing professional development and education of staff – our staff must be aware of the latest changes relating to insolvency law

d)Maintaining a full staff complement – given the nature of our work we require a full highly skilled staff complement at all times.

e)Burden of risk – in many circumstances we are personally liable for any debts incurred whilst trading the business

f)Legal obligations – there are many ongoing reporting requirements which we must comply with regardless of the amount of assets within an administration. There are many instances where we do not recover our full fees or disbursements incurred in attending to an administration.

Having regard to the factors detailed above we believe that the hourly rates listed below are reasonable.

Title / Description / Hourly Rate
(excl GST)
Appointee / Registered Liquidator, Official Liquidator and/or Trustee, bringing
his or her specialist skills to the insolvency administration / $
Director/
Consultant / Minimum of twelve years insolvency experience, at least 5 years
at manager level / $
Manager 1 / More than 7 years experience, at least five years at manager
level, qualified accountant and capable of controlling all aspects
of an administration, maybe appropriately qualified to take
appointments in his/her own right / $
Manager 2 / 6 – 7 years experience, qualified accountant, with well
developed technical and commercial skills, controls 2 – 4 staff / $
Supervisor / 4 – 6 years experience, qualified accountant, will have had
conduct of minor administrations and experience in control of 1
– 3 staff, assists planning and control of medium to larger jobs / $
Senior 1 / 2 – 4 years experience, undertaking professional qualification,
assists planning and control of small to medium sized jobs as
well as performing some of the more difficult work on larger jobs / $
Senior 2 / 1 – 2 years experience, commenced professional qualification,
required to control the fieldwork on small jobs and is responsible
for assisting complete fieldwork on medium to large jobs / $
Intermediate 1 / 0 – 2 years experience, university graduate with little or no
professional experience, required to assist in day-to-day
fieldwork under supervision of more senior staff / $
Intermediate 2 / 0 – 1 years experience, trainee undertaking an university degree
with an accountancy major, required to assist in day-to-day
fieldwork under supervision of more senior staff / $
Secretary/ WPO / Appropriate skills including machine usage / $
Computer
Operator / Appropriate skills including machine usage / $
Clerk / Non-qualified but completed HSC; classification would depend on
experience, salary and complexity of work to be conducted. / $
Typist / Appropriate skills / $
Junior / Completed HSC and plans to undertake at least part-time
degree/diploma, required to assist in administration and day-to
day fieldwork under supervision of more senior staff / $

The Titles Appointee, Director and Manager must not be used unless the minimum criteria are satisfied. The misuse of Titles has the potential to be regarded as misrepresentation.

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