In 2023, members voted in favour of resolutions to amend the by-laws and NZICA rules to strengthen the CA ANZ Professional Conduct Framework. The amendments were approved and the by-law changes received the assent of the Australian governor-general, David Hurley.

Peter Vial FCA, CA ANZ group executive for New Zealand advocacy and professional standing, and Vanessa Chapman, CA ANZ group executive general counsel and corporate assurance, discuss what the key changes mean in practice for firms, individual members and disciplinary processes.

Firms and practice entities

Vial says the changes relating to firms and practice entities are aimed at improving the accountability of firms and ensuring that the powers of the disciplinary bodies are appropriate when dealing with firm complaints.

There are three fundamental changes that relate to firms.

“First, New Zealand has aligned with Australia and introduced a new membership category to allow for approved practice entities to become members,” says Vial.

Previously, New Zealand firms had sat outside NZICA’s disciplinary jurisdiction, he says, but in some instances, matters that come before the disciplinary bodies are better suited to be responded to by the firm, rather than by individual members.

Second, a new concept – firm events – has also been introduced into the by-laws and rules. This clarifies the types of matters relating to practice entities that must be disclosed to the Professional Conduct Committee (PCC) by all members who are principals in practices (irrespective of whether the practice itself is a member). It also allows, in both jurisdictions, for firm events to be notified by a firm representative as a notifying principal. Under the previous by-laws and rules, all principals of practice entities had an obligation to disclose certain events involving the firm, such as insolvency. The amended NZICA rules have expanded the categories of such events to be consistent with the by-laws and the categories of events applicable to Australian practice entities.

The types of things that must be disclosed to the PCC include criminal or statutory offences, findings by other regulators or the courts against a firm, conditions or restrictions put on any licence issued to the firm, and insolvency issues.

“This could include, for example, adverse workplace health and safety findings against a practice entity by a tribunal, a condition placed on the practice’s tax agency, or an insolvency event such as the appointment of an administrator for the practice entity,” explains Chapman.

Third, the maximum fines that can be imposed for firm events – on the principals who are members collectively or on practice entity members – have also been increased from $25,000 to $100,000 at the PCC level, and from $50,000 to $250,000 at the Disciplinary Tribunal (DT) level.

“Fines play an important role in any disciplinary framework, although our benchmarking analysis suggests they’re not used in all professional disciplinary contexts,” Chapman says. “We have always had fines as one of the sanctions available to the disciplinary bodies. As a professional membership body, any fines imposed need to be reasonable, and not onerous or punitive. This significant increase is about ensuring there can be an appropriate disciplinary response when dealing with firm events, at a level which is in line with community expectations.”

Individual members

Members should be aware that offence and sanction provisions have been harmonised on both sides of the Tasman, except where there are jurisdictional differences.

“The offence provisions are the matters on which members may be liable for disciplinary action,” says Vial. “For Australian members there’s some new terminology, such as ‘misconduct’ and ‘conduct unbecoming’. For New Zealand members, a new ‘discredit’ offence has been added, which is consistent with the concept of misconduct and conduct unbecoming as it relates to the provisions of the code of ethics on professional behaviour.”

As for sanctions, a key change in Australia is empowering the PCC and the DT to order a member’s fees be waived or refunded in cases where the fees or billing practices have breached ethical standards. This has been available in New Zealand for many years and has been used in a handful of cases where there has been a serious breach of standards.

Vial says it’s important that actions taken by the disciplinary bodies apply the same terminology.

“We want to ensure that New Zealand and Australian members are treated consistently, and harmonisation of these provisions and the processes ensures that it’s fair and clear to members what their obligations are.”

“We want to ensure that New Zealand and Australian members are treated consistently, and harmonisation of these provisions and the processes ensures that it’s fair and clear to members what their obligations are.”

Chapman says the rules on disclosure and notification events are largely unchanged, although a new requirement to notify the PCC in the event of being charged with a serious criminal offence has been introduced. A serious criminal offence is one that could carry a term of imprisonment of two years or more. Self-disclosure to the PCC within seven days of becoming aware of the reporting obligation is a continuing membership requirement for all members, including affiliate members and practice entity members, and a factor that the disciplinary bodies can take into account when considering any sanctions.

A significant change for Australian members is the alignment with New Zealand regarding the ability to investigate complaints about former members, where the conduct occurred while they were a member. However, it’s important to note, this change isn’t retrospective. Chapman says former Australian members accused of serious misconduct can now be investigated by the disciplinary bodies.

“This gives CA ANZ the ability to pursue former members whose actions in membership have negatively impacted on the public’s perception of all CA ANZ members.”

Finally, the PCC now has the power to ask any member for information that may be relevant to an investigation of another member. Chapman says that members who receive information requests from the PCC should respond promptly and honestly to meet their own membership obligations.

Changes to disciplinary processes

Vial says the procedurals components of the rules have been harmonised, along with improvements to make the disciplinary process more efficient for members and complainants.

“For example, the ability for the PCC to resolve a complaint with a consent order at any stage of the process has been added, which will enable cases to be resolved more quickly. Also, for a highly technical complaint, the PCC can now convene a panel of experts to assist with an investigation.”

There are also new powers regarding expedition of hearings at the DT level, including certain types of matters to be referred directly, without undertaking the full complaints process, and the ability for certain cases to be heard by a single DT member, rather than a full panel.

Also introduced into the by-laws is an alternative dispute resolution process, which enables less serious complaints to be dealt with more quickly and more efficiently. While this practice was already in place in New Zealand, the rules there have been expanded, and it is new to Australia.

Going further

In addition to the by-law changes, there are further actions CA ANZ is taking – and encouraging the Australian Government to take – to enhance trust and accountability in the accounting profession. These are detailed in the plan tabled with the Australian parliamentary committees examining the profession and consulting sector: Going Further – A Roadmap to Enhanced Trust and Accountability. They include the Chartered Accountant’s Commitment (below), which will require all members to annually and formally reaffirm their intention to comply with the code of ethics.

Mandatory ethics training has been increased, tripling the mandatory ethics continuing professional development requirement to six verifiable hours per triennium. A new online training program will be introduced as a prerequisite to obtaining affiliate membership (or, in New Zealand, non-member principal status). The program is designed to ensure affiliate members understand the obligations and benefits of CA ANZ membership.

Additionally, the online public register of decisions is being enhanced and more information regarding statistics and data about complaints dismissed and grounds for dismissal will be made available.

Going Further also outlines the targeted and proportionate actions that the Australian Parliament could take to enhance trust and accountability in the large firms. Noting that the disparity in mandatory financial reporting by companies and partnerships has been a line of enquiry at the recent parliamentary inquiries, Going Further asks the Australian Government to consider stakeholders’ information needs and existing reporting requirements, to determine whether these can be extended to provide more insight into large firms’ governance and performance.

While the 2023 CA ANZ Professional Conduct Framework Review has been finalised and the roadmap outlining further actions around ethics and ethical behaviour is being developed, Chapman says it is an ongoing process.

“CA ANZ has, and will continue to, invest in member tools, resources, education and support services to assist members to act in reputation-enhancing ways. We will continuously review and improve our monitoring, oversight and enforcement activities to identify and hold those members to account who do not meet our expectations.”

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The Chartered Accountant’s Commitment

I vow:

• To always bring honour to the profession by acting in the public interest and to behave courageously and with integrity.
• To preserve and enhance the profession’s reputation by adhering scrupulously to our profession’s code of ethics.
• To conduct myself in a manner that maintains and enhances my professional reputation, that of my fellow members and the profession, and of CA ANZ. That through constant study and practice, I will maintain my expertise and knowledge in a changing and challenging world.
• To practise my profession with competence, due care and confidentiality.
• To uphold the profession’s rich tradition of contributing to the community without thought of fee or reward.
• That, as a recipient of the best from the past, I will give my best to aid and shape tomorrow’s profession.