Fri, 15 Nov 2024
Overall, the IPA supports the recommendations from the report
and believes they will go a long way to restoring trust in the profession, if
they are implemented. IPA believes that we must take a holistic and coordinated
approach to ensure that we achieve a cohesive and robust outcome in order to
restore trust and confidence and to improve accountability and governance.
Protecting the term ‘accountant’ in law must come with parliamentary scrutiny
What’s wrong with a parliamentary committee pressing for greater accountability for professional bodies wanting the law to protect the term ‘accountant’?
The term ‘accountant’ is currently unprotected, and anybody can call themselves an accountant even if they are not a member of a professional association.
This situation has caused angst over the years because professional bodies might get complaints from members of the community about people who call themselves accountants but are either unqualified or do not have a membership of professional bodies.
Professional bodies cannot deal with people who are not members if there is no requirement of somebody to become one to be able to call themselves an accountant.
The constitutions, by-laws and ethical standards will not be adhered to by people who are not to be members of bodies in the first instance.
It should also be explained at this juncture that regulating the use of the term ‘accountant’ would cover off those people that are involved in unregulated work.
A tax agent must be registered to provide tax agent services and the same is true for somebody who wants to audit certain kinds of entities.
Those registrations are administered and enforced by the Tax Practitioners’ Board and the Australian Securities and Investments Commission, respectively.
The same is true for liquidators and financial planners that are overseen by the corporate regulator.
People doing accounting work are generally outside of the scope of specific regulation unless they are members of the associations and subject to the provisions of codes of ethics unless they are corporate officers such as a director or company secretary.
Provisions of company law relevant to those roles in particular would apply to somebody with accounting qualifications from university who might not for whatever reason be a member of a professional body.
Sometimes membership of a professional body becomes less relevant to individuals and it becomes as dispensable as a polystyrene
What the PJC recommendation would do if enacted is give the professional accounting bodies an advantage in the marketplace by ensuring only those that are appropriately qualitied and are members of professional accounting bodies can call themselves an accountant.
The question then becomes what membership bodies meet the criteria as those that are entitled to have their members use the word ‘accountant’.
There are three obvious candidates: Chartered Accountants — Australia and New Zealand, Institute of Public Accountants, and CPA Australia.
All three bodies fund the accounting profession’s ethical standard setter and also have their own self-regulatory functions related to their membership.
What must be made clear here is that the bodies’ self-regulatory function begins and ends with the contractual obligation of membership with an individual.
Their regulatory role is to ensure they try to, first, protect the reputation of the brand and, second, ensure the profession and the professional body are not brought into disrepute by behaviour that might best be described as roguish.
This self-regulatory remit is limited and can confuse members of the community who might call a professional body to complain about an accountant.
The complainant might find that the individual is not a member of the professional association they called, and they may need redirection to the appropriate association to be able to complain.
They might also find that an individual with which they have a dispute is not a member of an association at all and this is a phenomenon that the Tax Practitioners’ Board frequently observes when looking at fake tax agents.
The TPB has had to deal with cases in which individuals have cosplayed tax agents, made money from doing returns for clients who knew no better, and created a regulatory risk for those who trusted a person they thought was legitimate to handle their private information.
The TPB has the power to chase unregistered practitioners and hit them with an appropriate penalty as they did in the case of Jayden van Dyke, an unregistered preparer of tax returns.
Van Dyke copped a $1.8 million penalty from the Federal Court for spending several years doing tax returns without having the appropriate registration with the TPB.
This is the kind of thing the TPB is capable of doing because it has the power to act against people that are not appropriately registered to provide a service.
A similar kind of action could occur if somebody is found to be calling themselves an accountant if the term becomes protected, but they are not appropriately qualified nor are they a member of a professional body.
This recommendation would provide consumers with an assurance that anybody that calls themselves an accountant legitimately has the necessary qualifications and membership, and are subject to the discipline and self-regulation of a body.
It also gives the profession greater protection from a legal perspective if people other than the members of those three professional bodies are prohibited from calling themselves accountants.
There is another issue that the bodies are always going to be concerned about and that is membership retention.
A legally protected term might encourage people to continue paying their membership fees so they can continue calling themselves an accountants given that they have been qualified and trained in the discipline.
Any move to legislate the protection of the term ‘accountant’ — a protection that is a privilege and not a right – must be accompanied by more stringent, more regular, and far more intrusive monitoring of the professional accounting bodies.
This is necessary because there is nobody at the present time that holds the bodies’ feet to the fire as it were to justify their claim that they act in the public interest.
Professional associations must be humble as organisations and recognise that they would be given a privilege under law for which they must be held accountable.
Chartered Accountants — Australia and New Zealand had no problem welcoming the notion of getting legal protection for the term ‘accountant’ but it was less comfortable with some of the other things the committee wanted the bodies including CAANZ to do.
One of the committee’s suggestions was that the government should review the investigatory and disciplinary processes of the bodies, and also consider whether a single body for discipline for the accounting profession should be established.
CAANZ was a little cranky with the idea because, the chartered accountant’s media release notes, the recommendation was based “on an assumption that there are no mechanisms in place within accounting bodies to prevent and manage conflicts of interest”.
“As we clarified in our opening statement here, CAANZ is a private membership body with By-Laws that enable us to hold our members to account, and in some cases expel them from our community,” CAANZ’s statement says.
“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.
“We have already provided extensive evidence that shows our conduct and disciplinary framework is entirely independent of the board and management, with the independent Professional Conduct Committee, Disciplinary Tribunal and Appeals Tribunal comprised of senior Chartered Accountants, lawyers, ethicists and academics.”
Consider what the recommendation to provide legal protection for the term ‘accountant’ means and then evaluate CAANZ’s reaction to a suggestion that the bodies’ systems be looked at.
The parliament would be giving professional associations a privilege by ensuring that membership of their organisations means somebody could call themselves an accountant under the law.
Parliamentarians in return have asked for the disciplinary and investigations processes to be looked at in order to ensure they are fit for purpose.
Professional associations should welcome the interest of parliamentarians and recognise with a degree of humility that getting protection for a term like ‘accountant’ ought to come at the price of greater scrutiny from people taxpayers elect to monitor, maintain and enforce contemporary community standards and expectations.
Any other stance from any professional association would rightfully be seen as arrogant, and attract a heightened level of scepticism from policymakers and an understandable demand from politicians that the accounting profession be regulated more by bodies such as the Australian Securities and Investments Commission.
READ MORE:
Regulation
Recommendations
from the consulting inquiry focused on whistleblowing, partnerships, large
firms and consultants will enhance transparency and drive change across the
profession, the IPA has said.
By Miranda Brownlee • 18 November 2024
The Institute of Public Accountants says it hopes the
recommendations from the consulting inquiry into large consulting and
accounting firms will restore trust in the profession if implemented.
The Parliamentary Joint Committee on Corporations and Financial
Services Committee tabled its final report for its inquiry into the audit,
assurance and consultancy industry last week, outlining 16 priority
recommendations for immediate action and 40 in total.
IPA chief executive Andrew Conway said there were numerous
recommendations in the report that the IPA believes would strengthen the
regulatory environment, including those relating to whistleblowing,
partnerships, large firms and consultants.
"IPA believes that we must take a holistic and coordinated
approach to ensure that we achieve a cohesive and robust outcome in order to
restore trust and confidence and to improve accountability and
governance," Conway said.
"In particular, IPA supports the expansion of the information
sharing provisions to enhance transparency and collaboration between
stakeholders including regulators and professional accounting bodies, and their
co-regulatory function."
The IPA also strongly supported recommendation 27, which proposed
legislating the term ‘accountant’, which the IPA has previously advocated for.
"This will make a significant difference to restoring trust in
the profession and protecting consumers," it said.
The committee’s approach to the regulatory framework for the
investigation and disciplinary functions applicable to the accounting and
auditing professions was also welcomed by the professional body.
"We are also pleased that the Committee recognises the
regulatory ecosystem which includes auditors, large firms, partnerships,
consultants, as well as accountants," Conway said.
"There are multiple stakeholders which must work together to
restore trust."
However, the IPA urged the government to ensure the reforms are
proportionate, particularly for smaller accounting firms.
"We emphasise that reforms should be proportionate given that
the vast majority of accountants adhere to the high professional and ethical
standards which are demanded of them by the regulators, the public they serve
and also their peers," Conway said.
"It is worth repeating that the egregious actions of some, or
the culture of certain organisations, are a far cry from the small accounting
firms and sole practitioners serving small businesses and mum and dad clients
on a daily basis."
Conway noted the professional accounting bodies had all developed
systems and processes and had reporting requirements to the Financial Reporting
Council, the Professional Standards Councils, the Tax Practitioners Board, and
the International Federation of Accountants.
"The IPA has promoted its five-point plan to members which
aligns with the recommendations of the Committee and which are essential to a
proportionate regulatory framework."
Conway said the recommendations are set against the reforms to the Tax Agent Services Act
already underway, which would also contribute to restoring trust.
"IPA remains optimistic that bold and broad reforms will
eventually restore the trust that has been lost."
