- Members are obliged to notify CA ANZ of any adverse findings or restrictions made against them by a court, regulator, professional body or authority.
- Adverse findings by courts usually result in disciplinary action.
- Notifying CA ANZ yourself and being open and honest with responses may make a difference to the final outcome.
By Alexandra Johnson
An adverse finding or sanction from a regulatory body doesn’t only damage your professional reputation; it also raises questions about your fitness to be a CA ANZ member.
Kate Dixon and Rebecca Stickney – leaders of the CA ANZ professional conduct teams in Australia and New Zealand – say adverse findings and sanctions could be related to a range of issues. They may be connected to a civil or criminal court decision. It could be due to disciplinary action taken by another professional body or from an investigation by regulators such as the Australian Securities and Investments Commission (ASIC) or Tax Practitioners Board (TPB) in Australia, or the Financial Markets Authority (FMA) or Companies Office in New Zealand.
In some cases, members may lose their membership or registration held with another agency or have other conditions or penalties imposed. They may enter undertakings, receive a conviction, be made bankrupt or generally have their conduct denounced.
“Members have express obligations under the CA ANZ By-laws and NZICA Rules to notify us of a number of matters, including convictions, insolvency, an adverse or unfavourable finding by a court, another regulator, professional body or authority and the imposition of a condition or restriction on a professional membership, registration or licence in the member’s name,” explains Stickney.
Where matters are reported or picked up through CA ANZ’s own monitoring, they may be investigated by the organisation’s Professional Conduct Committee and result in disciplinary action.
Tax Practitioners Board outcomes
Recently, some CA ANZ members had their tax agent registration withdrawn by the TPB due to not observing their personal or professional tax obligations, says Dixon.
“We have had a range of outcomes. Last year a member had his tax agent registration terminated by the TPB for four years and he was disqualified from applying for registration during that period,” she explains.
“Relevantly, the TPB found the member breached the code of professional conduct for tax agents, and that he was no longer a fit and proper person to act as a tax agent. When this member was brought before CA ANZ’s Disciplinary Tribunal in relation to this and other matters, his CA ANZ membership was terminated.”
Other CAs who have been in trouble with the TPB have been terminated for different periods and also received sanctions from the CA ANZ disciplinary bodies, including censures, severe reprimands and reprimands. Such sanctions can have serious ramifications.
“There’s a risk of reputational harm affecting your good standing with clients or employers. There’s the stress and disappointment of professional relationships potentially ending,” explains Dixon. “Sometimes clients will observe disciplinary sanctions of a member and decide to leave the practice, or it can have a bearing on current and future employment.”
“Sometimes clients will observe disciplinary sanctions of a member and decide to leave the practice.”
While New Zealand does not have a TPB equivalent, tax agents are granted similar agency by Inland Revenue which may be removed by the Commissioner, says Stickney.
“Some members have been referred to the New Zealand Disciplinary Tribunal where their tax agency has been removed as a result of persistent failure to meet filing obligations or the accountant has not met their own tax obligations and have large arrears not under arrangement.”
“Some members have been referred to the New Zealand Disciplinary Tribunal where their tax agency has been removed.”
A bad day in court extends further
Adverse findings by courts usually result in disciplinary action. “This can cover a broad range of issues,” Stickney says. “For example, criticism by a court of the member’s credibility as a witness; findings that a member was negligent or incompetent in the performance of client engagements; criticism of a member who the court found had assisted a client hide assets from a liquidator; and criminal convictions or other judgments where the member’s conduct is found to be unethical or illegal.”
Members banned from acting as directors by the New Zealand Registrar of Companies is another example, says Stickney. “The Registrar will periodically prohibit people from being
directors, which has resulted in suspension of membership for the period of the banning order in past disciplinary cases.”
Dixon says in Australia in recent years, members have been banned by the Commissioner of Taxation from acting as a superannuation trustee or a responsible officer of a corporate trustee where the superannuation entity had contravened the relevant legislation, “and similarly, as a result members can end up in the CA ANZ Disciplinary Tribunal,” she says.
Become familiar with disclosure obligations
The key, says Stickney, is not to treat any finding or sanction from an external body in isolation. She adds that while all issues should be reported to CA ANZ within the timeframes under the By-Laws and NZICA Rules, not all disciplinary action from external bodies will be investigated. The fact that a member self-reports such matters may be considered a factor in their favour.
And just as CA ANZ monitors other regulatory bodies to identify adverse findings against CAs, any disciplinary sanction made under CA ANZ By-Laws or NZICA Rules may need to be reported elsewhere and have a bearing on a CA’s other registrations.
Both Dixon and Stickney urge members to become familiar with their disclosure obligations and let CA ANZ know if anything untoward is occurring in their lives.
“Members have a professional obligation to disclose this information, but if they let us know and give us a full and honest response, all the circumstances will be taken into account and can make a difference to the final outcome,” says Stickney.
The CA Advisory Group provides free, confidential support for chartered accountants facing ethical dilemmas or weighing career decisions. Call 1300 137 322 (Australia) or 0800 4 69422 (New Zealand), or go to bit.ly/CA-AG