Five-fold increase in penalties recommended for accountants

Mike Taylor

Managing Editor/Publisher, Financial Newswire

7 June 2023

Accounting firms and accountants affiliated with major accounting group Chartered Accountants ANZ (CA-ANZ) are facing the prospect of a five-fold increase in maximum penalties for breaches.

The five-fold increase in penalties is one of the key recommendations from an Independent Review, the Professional Conduct Framework Review Final Report, chaired by CA ANZ Chair John Palermo and CA ANZ Chief Executive Officer Ainslie van Onselen.

van Onselen said the Committee conducted a comprehensive and thorough process focused on ensuring that CA ANZ’s independent disciplinary bodies operate under a robust and fair framework with clear processes that serve both the interests of members and the public.

According to van Onselen it had been more than five years since the last major review was conducted, “so it was timely to revisit the Disciplinary Framework to ensure it is robust, and in line with current global best practice and the high expectations we set ourselves”.

“As well as a range of procedural and efficiency improvements, the recommendations extend the existing features of the Disciplinary Framework to address events involving firms and the systemic and cultural issues underpinning them, that reflect poorly on our profession. Actions from just a few that have the potential to cast a shadow over our profession.

“The Committee has recommended a raft of tangible actions such as: a fivefold increase in maximum fines for events involving firms; reinforcing with our members what their ethical and self-disclosure obligations are; and enabling former Australian Members to be investigated.

“Significantly increasing maximum fines is a meaningful development for a membership organisation like ours; it shows how we used this process to test the limits of our framework in the public interest and in line with community expectations.

“We will continue to reinforce the work we do to support our members’ deep knowledge and commitment to the Code of Ethics, which is a fundamental requirement of their ongoing membership. This includes the wealth of resources available in our Ethics Hub as well as continuing to mandate ethics CPD for all Members,” van Onselen said.

Some of these key recommendations from the Review include:

• A five-fold increase in maximum fines for events involving firms, such as certain adverse findings by courts or regulators, criminal or civil convictions and conditions on firm registrations with regulators.
• Introducing voluntary firm membership in New Zealand which aligns with the Australian approach and responds directly to submissions made by firms in New Zealand.
• Changing the current situation in Australia where CA ANZ cannot undertake an investigation into the conduct of former Australian Members, allowing the disciplinary bodies to investigate regardless of membership status.
• Creating more extensive guidance materials for all Members about the independent disciplinary process, their personal self-disclosure obligations and making ethical obligations clear.
• Strengthening the powers of the disciplinary bodies to engage a panel of experts to provide technical guidance on complex matters.
• Introducing measures to make the disciplinary process more efficient, such as a conciliation process to give complainants and CA ANZ/NZICA Members an alternative mechanism for resolving their dispute.
• Enabling better transparency by consolidating decisions of the disciplinary bodies into a single online public register, including statistics and data about complaints dismissed and grounds for dismissal.
• Amplifying and reinforcing the work we do to support our members’ deep knowledge and commitment to the Code of Ethics, which is a threshold requirement of their ongoing membership. In conducting its Review, the Committee also found that the Disciplinary Framework:
• Meets or exceeds the standards set by the International Federation of Accountants. · Is consistent with mandatory components of the Professional Standards Council Model Rules.
• Meets or exceeds international and peer benchmarks. · Responds appropriately and proportionately to proven academic misconduct by Provisional Members, in relation to assessments and examinations undertaken for the conferral of the CA Graduate Diploma.
• Confers powers to the disciplinary bodies to consider certain matters pertaining to Firm Events.