Date posted: 1/05/2019 8 min read

4 things CAs in public practice can’t overlook

Hanging out your shingle as a chartered accountant brings certain responsibilities, and here’s how CA ANZ can help.

In Brief

  • To ensure public confidence, chartered accountants in public practice are subject to additional requirements and monitoring by CA ANZ.
  • Four key obligations for public practice members are: keeping up with professional development, having a Certificate of Public Practice, undergoing practice reviews and having appropriate indemnity insurance.
  • The CA ANZ website has many resources to assist with these requirements.

By Michelle Hammond

Starting out in public practice is a big decision for chartered accountants. While it is an exciting career step, it is also important to consider fundamental compliance obligations. Failure to follow the rules could land you in hot water.

CA ANZ’s conduct leaders Kate Dixon and Rebecca Stickney spoke to Acuity about why this is so crucial – and how best to approach it.

“One of the hallmarks of being professional and acting in the public interest is having the appropriate expertise,” says Dixon, the Australian conduct and discipline manager at CA ANZ.

“Under the Code of Ethics which binds our members, they are obliged to comply with the fundamental principle of professional competence and due care. This concept includes both attaining and maintaining competency at a level to ensure clients receive competent advice and professional services.”

To ensure public confidence, chartered accountants in public practice are subject to additional requirements and monitoring by CA ANZ. Dixon and Stickney identify four key obligations for public practice members: keeping up with professional development, having a Certificate of Public Practice, undergoing practice reviews and having appropriate indemnity insurance.

“Under the Code of Ethics which binds our members, they are obliged to comply with the fundamental principle of professional competence and due care.”
Kate Dixon, Australian conduct and discipline manager, CA ANZ.

In the following, Dixon and Stickney explain why each of these areas must be made a priority – and what can happen if they aren’t.

1. Check your CPD requirements

As part of CA ANZ’s rules and regulations, all members are required to complete a certain amount of continuing professional development (CPD). The amount varies depending on what type of member you are.

“Chartered accountants have to do 120 hours over three years. Associate chartered accountants and accounting technicians also have requisite hours, although slightly less,” says Stickney, the New Zealand conduct leader at CA ANZ.

So why is professional development so important? “To maintain and develop expertise,” says Dixon.

Stickney agrees: “Ultimately, the purpose of CPD is to keep abreast of modern practice and it’s an ongoing obligation... Failure to have appropriate CPD can often be indicative of other types of competency issues.

“It’s also important to do the right type of CPD. For example, if you are doing a specialist area of work but unrelated CPD, this may be a problem. This is all part of the obligation to maintain your competency.

“CPD may need to be tailored to your learning needs or particular areas of practice. The key thing here is to refer to Regulation CR7, which sets out the different CPD obligations, depending on where you live or the category of membership that you’re in.”

Regulation CR7 also sets out the consequences of non-compliance for members.

More information on CPD requirements.

“Ultimately, the purpose of CPD is to keep abreast of modern practice... Failure to have appropriate CPD can often be indicative of other types of competency issues.”
Rebecca Stickney NZ conduct leader, CA ANZ

 2. Get your ducks in a row with a Certificate of Public Practice

Members need to consider whether they need to apply for a Certificate of Public Practice (CPP) that entitles them to offer accounting services to the public in their own right under the chartered accountant banner.

“If you’re going to be entering into public practice, then you need to get your ducks in a row at the outset. So if you need to have a CPP to practice, you need to apply for that before you get into public practice,” says Stickney.

To obtain a CPP, you need to comply with various requirements, including completion of appropriate practice experience and CA ANZ’s Public Practice Program. This program covers topics including ethical issues, CA ANZ’s compliance framework, handling of client monies, and necessary business skills.

Without a CPP, you could find yourself in trouble.

“Sometimes we get complaints about people who are practicing without a CPP when they should have one, and in some cases where they are ineligible to hold one,” explains Stickney. “Such complaints can be serious, particularly if there is also evidence of a lack of competency or due care.”

Dixon says: “We had one case where the member had lost his CPP as a result of disciplinary action and he kept practicing regardless. We discovered the situation when we received a client complaint. His membership was suspended by the tribunal, so he had a temporary loss of membership.

“We had another case where the member was practicing without a CPP and he breached the client monies requirements. It’s likely that if he’d actually got a CPP and done the Public Practice Program he would have understood his obligations and perhaps would not have fallen into that trap.”

Stickney points out that the CPP obligation also ensures CA ANZ members practise safely. By doing the Public Practice Program – especially if you’ve been doing work completely unrelated to public practice beforehand – it can help to educate or refresh you on the requirements you’ll be obliged to follow.

More information on the Public Practice Program.

3. Prioritise quality and practice reviews

CA ANZ members in public practice, and their firms, are required to undergo quality and practice reviews.

“Essentially, this reviews the firm’s systems, procedures and quality controls, and looks to see if there are any systemic or endemic problems within the practice,” Dixon explains.

“If there’s identified non-compliance, then there is further compliance activity by CA ANZ. That can either be further reviews or referrals to the disciplinary bodies for investigation. We had a case where the member refused to have a review and so his membership was terminated.”

Stickney says that while members sometimes question the need for these reviews, they have a specific purpose and benefit.

“It’s about making sure that members are keeping abreast of all the correct procedures and processes. CA ANZ’s role in monitoring compliance through reviews is an important part of safeguarding the public interest and upholding the respect for the profession,” she says.

“I had a case some years ago where in the course of the practice review, looking at the handling of the firm’s trust accounts, the review actually identified a loophole in the client monies procedures and fraud by an employee was identified. So these reviews are of benefit to members and their clients.”

More information on quality and practice reviews.

4. Make sure you have professional indemnity insurance

Public practice members must hold professional indemnity insurance, but the level required varies depending on what country the member is in. Members practising in Australia are covered by the professional standards schemes. A further area of CA ANZ’s monitoring program is in connection with these schemes, which cap professional liability. In other words, it puts a limit on how much can be awarded for a legal claim against your firm.

“Ensuring that members have appropriate levels of professional indemnity insurance is obviously important from a public interest perspective,” says Dixon.

More information on professional indemnity insurance.

If in doubt, ask.

Stickney and Dixon agree that starting up in public practice can seem complicated.

“If you’re wanting to get into public practice, check out the CA ANZ website,” says Stickney. “If in doubt, get in touch with us to find out what your obligations are before starting out. There’s a range of resources and groups that new and existing public practitioners can access, including the special interest and discussion groups as well as other tools and templates.

“If you need some advice on, say, going into a new area of practice and assistance with what kind of CPD you should do, if you need to catch up or need some leniency, that’s the type of stuff to talk to us about. We’re here to help members.”

More information on being in public practice.

Read more:

The CA Advisory Group provides counselling and support for chartered accountants facing ethical dilemmas or weighing career decisions. The service is free and all discussions are strictly confidential.

Find out more about CA Advisory Group.

Call: 1300 137 322.