By Michelle Stevenson

No chartered accountant wants a complaint made against them, but it happens – for all sorts of different reasons, with all sorts of different outcomes.

Kate Dixon and Rebecca Stickney – leaders of the CA ANZ professional conduct teams in Australia and New Zealand – analysed CA ANZ’s professional conduct and disciplinary decisions for the 2018-19 financial year to see where CAs commonly came unstuck.

CA ANZ receives about 300 to 400 complaints per year, with the majority coming from the public. The remainder generally arise from internal CA ANZ referrals (including practice reviews), or come from other regulators or CA ANZ members. Of the complaints made, a significant majority are about members in public practice.

Dixon and Stickney point out that the majority of the complaints CA ANZ receives each year are resolved without adverse finding. Roughly half of the complaints will be dismissed after investigation, with only a small portion referred to the Disciplinary Tribunal for substantive hearing.

“Being subject to a complaints regime is quite a big responsibility for members and it’s often a very daunting process for those involved. But you can see that only a small proportion of matters are referred to the Disciplinary Tribunal for a disciplinary hearing,” says Stickney.

She acknowledges many members may feel that once they get referred to the disciplinary bodies, it’s a losing battle. But she points out that the most serious outcomes are reserved only for the most serious cases.

“There are a lot of members who, after investigation, [find that] the complaint isn’t upheld or, while there’s a caution, that’s an opportunity to observe what went wrong last time and do better next time,” she says.

“…while there’s a caution, that’s an opportunity to observe what went wrong last time and do better next time.”

What type of matters attract complaints?

The majority of complaints, by far, relate to ethical issues, including conflicts of interest, breach of confidentiality, lack of integrity, a lack of care and diligence in performing client engagement, or a lack of professional behaviour, including unacceptable delays. Poor communication also regularly features.

Dixon and Stickney often see complaints relating to allegations of failure to:

• have terms of engagement
• engage properly with the client about fees
• follow instructions
• respond to correspondence
• provide books and records on the termination of an engagement.

Failure to comply with CA ANZ’s requirements is another big category of investigations. While CA ANZ does receive complaints about technical issues, these are a smaller proportion.

Consent agreements: What they are and the penalties incurred

In the 2018-19 financial year, about 5% of the matters investigated by the Professional Conduct Committee (PCC) resulted in a ‘consent agreement’. This is where the member accepts they have not complied with requirements, and the PCC and member agree on the imposition of a disciplinary sanction. Often, details of those disciplinary outcomes are published.

The PCC can’t impose a suspension or termination of membership by consent agreement.

“If you’re going to lose your membership, this must occur by virtue of a tribunal decision,” Dixon explains. “So the issues for which the PCC offers consent agreements are never going to result in loss of membership, but they are still serious matters.”

The sorts of matters that have led to consent agreements include:

• conflict of interest
• lack of audit independence
• technical failures and failure to have a letter of engagement
• inappropriate disparagement.

The types of sanctions imposed by the PCC via a consent agreement include:

• a reprimand or severe reprimand
• a quality review
• a fine
• a requirement to pay the costs of investigating the complaint and the publication of the decision (including, in many cases, by identifying the member).

“With regard to publicity, in some cases there may not be a public interest in naming the member concerned. However, the decision may be published because of its educative benefit for the wider membership. The PCC will consider this in deciding what, if anything, should be published,” says Stickney.

Reasons for a loss or suspension of membership

Only a small proportion of matters investigated by the PCC are referred to the Disciplinary Tribunal, but many of those result in suspension or termination of membership. A total of 32 cases were concluded by the Disciplinary Tribunal or Appeals Tribunal/Council in the 2018-19 financial year. A number of other cases were heard, but are pending appeal.

Fraud, dishonesty, and failure to engage with CA ANZ in relation to the disciplinary issue were the most common reasons for termination of membership.

Reasons for suspension of membership included:

• bankruptcy
• conflict of interest
• a lack of integrity or professional behaviour
• failure to comply with CA ANZ’s liability capping requirements, or failure to engage with the disciplinary process. 

Complaints involving significant incompetency and failure to follow technical standards have generally led to a censure/reprimand of the member concerned and, in some cases, an order not to undertake certain types of assignments such as auditing (in New Zealand).

Fines are issued where there is an aggravating feature to the member’s conduct and the disciplinary bodies are seeking to denounce that conduct and deter others.

All Disciplinary Tribunal decisions are published on CA ANZ’s website (and potentially elsewhere). In all but exceptional circumstances, the member’s name and location are also published

Suspension versus termination: What’s the difference?

Suspensions and terminations of membership both reflect a loss of trust and confidence in the member in question, with termination obviously reserved for more serious matters.

The maximum suspension period is five years, with suspension timeframes guided by consistency with other cases.

However, in both suspension and termination, a member is required to apply for readmission as a CA ANZ member, with the success of that application at the discretion of the organisation.

“Significant fraud or dishonesty... is most likely going to result in a permanent loss of membership because that’s incompatible with being a chartered accountant,” Dixon points out.

“Significant fraud or dishonesty... [is] incompatible with being a chartered accountant.”

She adds that dishonesty isn’t always in relation to money.

“We had a recent dishonesty case where the court found that the member was dishonest. The member themselves didn’t get a financial benefit, but he dishonestly assisted a third party in a fraudulent undertaking,” she says.

Failure to engage only makes things worse

If a complaint is made against you as a CA ANZ member, the worst thing you can do is fail to engage in the disciplinary process, says Stickney.

“We do find that people who don’t take the complaint seriously enough at the start will often be referred to the Disciplinary Tribunal. Then, when the writing’s on the wall, they regret it because they might not have actually been referred had they taken the complaint more seriously,” she says. 

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Counting the complaints

300-400

complaints received by CA ANZ annually. About half of complaints are dismissed after investigation.

15-30%

of CA ANZ members called up on complaints will be cautioned.

5-10%

will be issued with a consent outcome.

80:20

male to female split among members who are subject to a complaint.

Source: CA ANZ professional conduct and disciplinary decisions FY 2018-19

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Want a complaint-free record? Do this…

• manage your client relationships well
• Be conscious of your obligations under the CA ANZ Code of Ethics.
• Engage with the disciplinary process as and when necessary.
• Seek help or support if you need it.

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Need help?

Call CAAG 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)