- Issues surrounding CA ANZ accounting members who run a public practice without a CPP are common.
- Holding a CPP does bring additional obligations – but also benefits such as a liability cap under the professional Standards Scheme.
- Members who practice without a CPP can face fines and serious sanctions.
By Anthony O’Brien
The message is simple. If you plan to offer your services as a chartered accountant to the public, plan to have a Certificate of Public Practice (CPP). It may seem a fairly clear-cut obligation, but issues around members in public practice who either don’t hold a CPP, or who fail to comply with all the obligations that a CPP entails, are not uncommon. In fact, “they appear with some degree of regularity”, says Australia-based Kate Dixon, Manager – Professional Conduct and Complaints at Chartered Accountants Australia and New Zealand.
Dixon cuts to the heart of the matter, noting that the requirement to hold a CPP “is a public interest issue – one that assists us in regulating the profession, and making sure our members are equipped to provide services to the public”.
The requirements to gain a CPP differ slightly between Australia and New Zealand, although a key requirement is to complete the Public Practice Program, where members are required to complete about five hours of e-learning and attend a two-day workshop. It is also necessary to have the required level of professional indemnity insurance and appropriate continuing professional development.
Given that the process of attaining a CPP is not especially onerous, it begs the question: “why do some Chartered Accountants offer their services to the public without a CPP?”. Rebecca Stickney, Dixon’s counterpart in New Zealand, suspects several factors may be at play, including ignorance of the rules and the fact that some members simply aren’t qualified to hold a CPP.
The grey areas
Practising without a CPP brings considerable risks. One of the most significant – though less obvious – pitfalls is that members can easily find themselves out of their depth.
This was certainly the case in New Zealand, where a provisional member set up practice promoting themselves as the face of a practice offering chartered accounting services to the public, while their spouse was the director and shareholder of the company, perhaps in an attempt to circumvent the rules.
“By the time the member’s activities came to our attention, they had gained a CPP but were nonetheless sanctioned for a longstanding breach of the public practice rules,” says Stickney. A critical aspect of the case was that the member did not have skills commensurate with their role. “It was a tax negligence claim from a client that drew the member’s activities to our attention,” she notes. “The member just didn’t have the level of expertise that would be expected of a chartered accountant offering services to public clients.”
In a different vein, Dixon encounters instances where members just haven’t made it their priority to gain a CPP. This, too, can lead to problems, because completing the CPP program is more than a mere formality. The e-learning and workshop content provides valuable information that can prove essential to chartered accountants when operating a public practice.
In one particular case, recalls Dixon, a member offering public services without a CPP was found to be non-compliant regarding their trust account obligations. Yet one of the topics covered in the CPP program is the obligations surrounding the handling of client monies. This member was suspended from membership by the Disciplinary Tribunal. If the member had completed the training and obtained a CPP, the non-compliance with the trust account obligations may never have arisen.
There are grey areas, too. A member can be a principal of the practice without being named as a partner or principal and without holding equity in the practice. In this situation, being a principal is determined by the activities and responsibilities undertaken. The rule of thumb though, is that principals who are responsible for providing accounting services to the public for reward will be required to have a CPP.
The risks can be high
On the plus side, the requirement to hold a CPP is an individual obligation, which applies regardless of the practice through which services are provided. So switching firms doesn’t mean having to apply for a new CPP.
And although holding a CPP does bring obligations, including the requirement for regular practice reviews, the pay-off is the ability to use the CA branding, which comes with a level of assurance of quality. An additional benefit for chartered accountants in Australia is access to the Professional Standards Scheme, which provides a liability cap for members in public practice. “Without a CPP, members who are principals lose the benefits of this scheme,” warns Dixon.
Operating a public practice without a CPP brings noteworthy risks that can potentially jeopardise an accountant’s ability to earn a living. According to Stickney, members caught practising without a CPP can be subject to fines and costs as well as sanctions that attach to a member’s professional conduct record. While publicity is not meant to be a punishment, its effects are usually the most significant consequence for members.
In the worst-case scenario, membership can be revoked. Dixon clarifies the position: “If a chartered accountant loses their membership as a result of practising without a CPP, they can continue to offer their services to the public, although not as a member of our organisation.” Stickney adds: “This can be an issue for members wishing to undertake any reserved areas of work, such as licensed and qualified audits in New Zealand.
Public practice is the highest risk work area in terms of complaints. A high proportion of the complaints we receive involve public practitioners even though they represent the minority of our members.
“If they retain their membership but lose their CPP, they cannot continue to offer services to the public, and this can seriously impact their livelihood,” she says. It also means there is no coverage by the Professional Standards Scheme in Australia. In a recent case, the Disciplinary Tribunal in Australia suspended a member for continuing to practise without a CPP after they were removed by the Tribunal at an earlier hearing. Stickney notes that similar decisions have been made in New Zealand.
Flying under the radar is unlikely
Expectations of being able to fly “under the radar” without a CPP are highly unrealistic. “Public practice is the highest risk work area in terms of complaints. A high proportion of the complaints we receive involve public practitioners, even though they represent the minority of our members,” explains Stickney. And, as she notes, clients in having recourse to the complaint regime may bring to our attention members who provide services to the public when not qualified to do so.
Complaints from clients are an important means by which Chartered Accountants ANZ is alerted to members practising without a CPP. But it’s by no means the only channel.
Non-compliant members can be detected as part of the organisation’s monitoring activities, and also through the information that many members provide about their employment as part of the annual subscription process. For example, Dixon says: “If a member is a principal in a firm of public practice, they should hold a CPP, so we check this.”
Practice reviews also play a role. “When we review a firm, we may discover that one partner doesn’t have a CPP,” Dixon adds. Both Stickney and Dixon are eager to assure members in practice that it’s never too late to acquire a CPP. “If someone has breached the rules and they have only just gone into practice, in all likelihood some latitude will be extended,” says Stickney. However, even members who have breached the requirement for many years can still be approved for a CPP.
The key is to take the necessary steps to gain a CPP as soon as you know you need one. Stickney sums up: “We want to encourage people to come forward and make sure that they’re practising appropriately.”
Lead the Public Practice landscape
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Do you need a CPP?
Plenty of information is available on when chartered accountants need to hold a CPP, and how to obtain one.Learn more