By Michelle Stevenson

Members of Chartered Accountants Australia and New Zealand (CA ANZ) are well aware of the CA ANZ Code of Ethics and professional and technical standards. But what about their co-workers?

Every year, CA ANZ gets a number of complaints about the failure of CAs to supervise junior staff or to take appropriate responsibility for what other partners in their practice do.

When a practice’s work doesn’t come up to standard, the reputational damage can be painful. So what’s the best way CAs can avoid this situation arising, or deal with it effectively if it does?

It all starts with quality control

Kate Dixon and Rebecca Stickney – leaders of the CA ANZ professional conduct teams in Australia and New Zealand respectively – say the first step is to set up and maintain some quality control systems for the practice.

This includes systems for:

• The review and supervision of work
• Taking on and signing off on engagements
• Helping staff understand the company’s operational policies, including complaint handling policies.

Dixon cites a recent case in which a junior staff member, fairly new to a practice, completed tax work for several individuals and their businesses. But the clients’ set-ups and approaches were particularly complex, and he didn’t have the necessary experience to properly manage these tasks.

“The clients were ultimately very unhappy. There were a number of aspects of poor performance, and that included failure to lodge tax returns and to provide terms of engagement and maintain a proper file,” she says.

“The member did not provide a proper response to the complaint. His lack of response was exacerbated by the fact that he had subsequently changed firms and so did not have access to all the relevant records. When we finally got to speak to him, what became clear was that he had an extremely high workload and there was no supervision provided.

“The Professional Conduct Committee really considered that the primary responsibility to complete the work was with the firm, not the individual, because he was just too junior to be able to manage this properly. From a reputational perspective – both for the member’s firm but also for CA ANZ – that’s obviously a very bad look.”

Check in with your partners

Quality control can also extend to taking responsibility for the work of other partners. When CAs are completing information on behalf of other partners or the firm, they have a responsibility to ensure the information is accurate.

This situation can come about when partners are jointly appointed to insolvency engagements or one takes over an engagement from another colleague.

“Members should take care to have really good quality control policies, check in with their partners, and be mindful about not working in silos,” says Stickney.

“Members should take care to have really good quality control policies, check in with their partners, and be mindful about not working in silos.”

Review your trust account practices

Another crucial area is trust account practices, particularly where other staff members are assisting to comply with the firm’s trust account obligations.

All CA ANZ members must meet certain obligations when handling client moneys and trust accounts. Ultimately, they are expected to oversee and have “rigorous control” of the management of client moneys.

However, if there’s a lack of staff supervision, critical mistakes can be made.

“We had a case where a sole practitioner had failed to adequately supervise a family member who was employed as an administrator, and in that capacity assisted the firm’s banking,” says Stickney.

“The employee erroneously made payments from the trust account to another family member, which also caused the trust account to be overdrawn. The payments were found to be genuine mistakes from using the incorrect account, rather than fraudulent transactions, and the member refunded the trust account once they were aware of the issue.

“The Disciplinary Tribunal considered that the member had inadequate internal controls, which are essential when managing trust accounts.”

Adequate supervision and appropriate quality control procedures may have meant that this issue did not arise, or was detected much more quickly.

How do you deal with complaints about your staff?

Escalation processes play a key role in resolving complaints, says Dixon. If a client’s complaint about the work of a more junior staff member is escalated, a more senior practitioner may be able to solve the issues and avoid the complaint being taken further to CA ANZ. But to do that, they need to come to grips with all the issues raised and work through them in an open, methodical way.

Referring to her earlier example of the junior staff member completing tax work, Dixon says it would have helped if the clients had been made aware of the engagement team or partner from the outset.

“In that case, the firm seemed to have an insufficient idea of what was happening. If the client had known who the engagement partner was, perhaps they would’ve gone to the partner and these issues might have been identified a lot faster, which would have been better for everybody concerned,” she says.

If a complaint is made to CA ANZ in these circumstances, then this might involve a single complaint in relation to two staff members – a junior staff member and the engagement partner. If this occurs, each person is individually responsible for responding to the complaint.

However, Stickney says it can be useful to coordinate the response to the complaint. A more senior member may wish to provide some assistance and support to the subject of the complaint. Demonstrating insight about what might have gone wrong and how it will be avoided in the future is important.

Who is held responsible?

The types of cases mentioned here can result in disciplinary outcomes at a range of levels. Where there’s been a failure to supervise staff, members are held accountable because the conduct bodies will take into consideration who the responsible person in the practice was, whether they should have behaved better and had better systems of quality control.

“We had a recent complaint considered by the Professional Conduct Committee (PCC) where it was pure and simple inadequate supervision,” says Dixon.

“The PCC considered that the member and the team fell short of their obligations under the Code of Ethics to act with competence and due care. There were misunderstandings between the client and the firm, which could have been corrected if somebody with the right seniority had realised what was happening.

“The PCC held the senior member liable to account for breaches of the standards, irrespective of whether he or the junior staff were actually supposed to be carrying out the services. The PCC said it was the senior person who ultimately had to take that responsibility.”

Need help? Call CAAG or check CA ANZ’s resources

The CA Advisory Group provides counselling and support for chartered accountants facing ethical dilemmas or weighing career decisions.
Local panels of experienced CAs offer guidance for fellow members, and can provide you with advice and support on a range of professional and ethical matters.
The CA Advisory Group service is free and all discussions are strictly confidential.
Visit: charteredaccountantsanz.com/member-services/mentoring-and-support/ca-advisory-group
Call: 1300 137 322 (Australia) or 0800 4 69422 (New Zealand)
In addition, CA ANZ has a vast array of useful resources, including a sample quality control and risk management guides.
Visit: charteredaccountantsanz.com/tools-and-resources