- Most complaints are levelled at CA ANZ members in public practice.
- Conflict of interest, potential breaches of the code of ethics and client services matters are leading causes of complaint.
- All complaints are subject to a robust and fair investigation.
No chartered accountant relishes learning that they are the subject of a complaint, and it can be a highly stressful aspect of professional life. But a few precautions can minimise the risk of receiving a ‘please explain’.
Acuity spoke with CA ANZ’s Rebecca Stickney, leader of the Professional Conduct team in New Zealand, and her counterpart in Australia, Kate Dixon, for insights into complaint handling, the areas to watch, and how CAs can protect themselves.
“A whole range of people make complaints,” says Kate Dixon. “Members of the public, clients, former clients, even other accountants.” Complaints can arrive through a number of channels – email, phone or post, but the standard rule is that each complainant must formalise the process.
CA ANZ also receives internally generated complaints regarding internal compliance and following the decisions of regulators, notes Dixon.
What do the complaints cover?
The most common complaints are levelled against members in public practice. And while complaints span a variety of issues, there are common threads.
Three key areas – conflict of interest, potential breaches of the code of ethics and client services matters comprise most of the issues investigated.
Rebecca Stickney notes: “There is a significant number of complaints in New Zealand that relate to issues such as timeliness, compilation and tax engagements, trustee and executors and inadequacy in correspondence with clients.” Tardiness that brings about unexpected tax penalties is another area of concern.
Managing conflicts of interest
A key area for CAs in public practice is managing conflicting interests between themselves and their clients. In some circumstances, particularly a marriage breakdown, accountants can easily find themselves caught in the crossfire.
“This is something that comes up quite a lot,” notes Stickney. “And it usually happens as a result of the accountant not having good processes to ensure the conflict is appropriately disclosed and managed.”
A common danger zone is a CA acting as a trustee of a couple’s family trust, while also being the accountant for their business. Stickney says this arrangement may be fine until a couple’s marriage collapses and divorce proceedings become acrimonious. At that point, she says, the accountant “can end up in the firing line, facing accusations about bias or favouring one side over the other”.
In this situation, accountants are generally good at letting clients know they can’t act for both parties. However, Stickney feels that part of the problem may be not thinking about perceptions of bias. She urges caution, saying, “Discuss the fact that there is the prospect of a conflict of interest. Work out exactly what services you will or will not be providing, and document all of that. Discuss the fact that it’s a conflict situation and it may be in the clients’ best interest for each to get separate accounting advisers.”
Documentation is key. If you've got good files and records to support your position, you're going to be in a much better situation
If the client wishes to continue the relationship, be aware that things may change as the relationship proceedings progress. “It’s about being very careful,” says Stickney. “If you’ve been asked to do the accounts for a trust, don’t just send them to the person that you’re working with. Send it to both parties and act on both their instructions. If they can’t agree, say, ‘Look, we're waiting. I can’t do anything until I have your unanimous instructions’.”
The breakdown of a business partnership can also be fertile ground for complaints. Under these circumstances, it is essential to have all the correct documentation, such as shareholder or director resolutions, ready before amending company records.
Kate Dixon explains: “Instructions that a director is resigning need to be confirmed by the director themselves – either by a resignation letter, or in some other written way.” Equally, amendments to shareholdings should be appropriately authorised and the member should not register changes without correct authority, she notes.
Failing to follow client instructions
Another common area of complaint involves accountants failing to act in accordance with instructions. A typical example is an unreasonable delay in transferring a client’s files to a new accountant when the client moves on. “The new accountant will often be the source of the complaint about these types of poor professional clearance processes,” says Kate Dixon.
Similarly, clients may complain that a member is slow to complete their tax returns. Dixon explains: “We receive complaints along the lines of ‘The member has refused to do my tax for the last three years, and he keeps saying, ‘I'll get to it soon’. ‘I just really want my tax done, and now the Tax Office is checking me, and I'm worried about penalties’.”
Developing a process to deal with busy periods, or even personal issues, so that workflow can be maintained while keeping clients aware of delays can help to avoid these sorts of situations.
Failure to comply with professional standards
A third theme is non-compliance with CA ANZ requirements. Rebecca Stickney explains: “Practising without a certificate of public practice can come to our attention through either internal channels or client complaints. So while it may at first appear to be a regular sort of complaint, an element of it is that the member shouldn’t actually be offering services to the public.”
Such complaints potentially can be very serious. “If a member is not entitled under the bylaws or NZICA rules to provide services to the public, and if there are competency problems, that’s quite significant,” warns Stickney.
Still in this area, a number of complaints arise in relation to members in practice having inadequate, or even no, professional indemnity (PI) insurance. “Part of the public practice requirements is to have an appropriate level of PI,” says Dixon. “And we do get members that don’t have that.” Failure to comply with CPD requirements can also trigger complaints.
Related: How to handle a complaint
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How and where are complaints resolved?
Most complaints are resolved at the Professional Conduct Committee (PCC) stage, which is the first level in the hierarchy of disciplinary bodies. From here, complaints can escalate to reach disciplinary tribunals, or even the Appeals Tribunal or Appeals Council.
“The overwhelming number of complaints end up with no further action being taken beyond the Professional Conduct Committee level but about 20% do go through to tribunals,” says Dixon.
On the plus side, less than 1% of members have complaints levelled against them – a remarkable statistic for any industry. Nonetheless, while both Dixon and Stickney acknowledge how unpleasant it may be for CAs to have a complaint levelled at them, the possibility of having a complaint raised reinforces the need for good client services.
In tandem with this is the need to have an effective complaint handling policy. “That can often nip things in the bud before it gets to us,” says Dixon. “But even if it does reach us, it will really help if you have a good policy about responding to complaints in an appropriate way. Further, documentation is key. If you have good files and records to support your position, you’re going to be in a much better situation.”
In fact, members in public practice are required to have policies and procedures for dealing with complaints and allegations under PS-1 Quality Control (New Zealand standard) or CR-3 Public Practice Regulations (Australian standard).
If you are the subject of a complaint, rest assured that as stressful as the experience may be, it will be the subject of a robust and fair investigation process. “The process certainly isn’t geared against the member,” notes Stickney. “But people who respond proactively and take it seriously are the ones that generally come out of it much better.” If members are experiencing stress or need some support, there are avenues available.
If you’re faced with a challenging ethical situation at work, or wish to discuss a complaint, the Chartered Accountants Advisory Group (CAAG) offers free, confidential guidance. Contact the service centre on 1300 137322 or 612 92905660 (outside Australia). Or email firstname.lastname@example.org
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