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Chartered Accountants ANZ has defended its existing disciplinary framework with the consulting inquiry calling for a review into the professional bodies’ investigatory processes.
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CA ANZ slams recommendation for review into professional bodies
11 November 2024
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A recommendation for the government to review the professional bodies’ investigatory and disciplinary processes goes against the evidence provided throughout the Inquiry into the large consulting and accounting firms, according to Chartered Accountants ANZ (CA ANZ).
The Inquiry into the big four consulting and accounting firms handed down its final recommendations last week, with the committee making 40 recommendations in total, including 16 priority recommendations for immediate action.
In recommendation 25, the committee has called for the Australian government to review professional accounting bodies’ investigatory and disciplinary processes and, if appropriate, establish a single, independent body to perform these functions.
“Such a body should incorporate a positive disclosure standard so that relevant entities would be required to disclose incidents that are flagged to the Australian Securities and Investments Commission and the new integrated Financial Reporting Council,” the committee said.
CA ANZ said while it welcomed many of the recommendations aimed at improving accountability and transparency of large accounting firms, this recommendation did not appear to consider the evidence provided at the committee.
“[It] is based on an assumption that there are no mechanisms in place within accounting bodies to prevent and manage conflicts of interest,” it said.
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The professional body said it previously clarified that CA ANZ is a private membership body with by-laws that enable it to hold its members to account and, in some cases, expel them from its community.
“As associations with an approved professional standards scheme and members of the International Federation of Accountants (IFAC), all professional accounting bodies have the same obligations to implement conduct rules and processes,” it said.
“We have already provided extensive evidence that shows our conduct and disciplinary framework is entirely independent from board and management, with the independent Professional Conduct Committee, Disciplinary Tribunal and Appeals Tribunal comprised of senior Chartered Accountants, lawyers, ethicists and academics.”
CA ANZ said its independent conduct team applies the rule of the law “without fear or favour” and that all CA ANZ members are subject to the same conduct rules regardless of where they work.
“In 2022, we conducted an extensive review of our framework and last year our members voted in favour of a number of recommendations to strengthen our ability to respond to behaviour deemed unethical, including increasing fines for firm events fivefold,” it said.
The professional body also outlined that the ability to impose significant fines, like those seen from the Public Company Accounting Oversight Board (PCAOB), requires statutory powers under legislation.
“During recent appearances at both the Senate and parliamentary joint committees, CA ANZ said we would gladly accept the ability to do the same, should the government choose to go down that path,” the body said.
CA ANZ said it had already taken steps to publish and proactively provide key stakeholders a Professional Standards Annual Report for Australia, with information regarding reviews, conduct, discipline, and other relevant information.
“We also currently report to the Financial Reporting Council (FRC), Tax Practitioners Board (TPB) and Professional Standards Council (PSC). We believe Recommendation 25 is duplicated effort and does not mirror approaches in other sectors with a scheme,” it said.
The major accounting body said it was also unconvinced that changes to partnership caps would drive better governance or culture in firms.
However, the professional body has welcomed recommendations aimed at strengthening the resourcing and effectiveness of the chief government auditor regulator, ASIC, and other bodies such as the Companies Auditors Disciplinary Board, as well as recommendations in relation to whistleblowers and whistleblower protections.
“We also welcome recommendations focused on improving accountability and transparency of large firms,” it said.
“Enhancing the reporting and governance obligations of large professional services firms is also a central tenant of our roadmap to enhancing trust and accountability within the profession.”
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