acuity Letter

The following is a letter submitted to the editor of the CAANZ magazine acuity.

CAANZ has chosen not to publish the letter for “editorial” reasons.

Dear acuity Editor

I read the “Briefing from the president” in the Oct/Nov acuity with interest. Integrity and ethics are the focus of significant media attention and community concern. To quote from our annual reports: “ethics is the currency of our market, underpinned by the principles of integrity, objectivity, competence, due care and professional behaviour”.

Unfortunately, my experience with CAANZ leadership indicates that there is a significant gap between what Ms Stanton says about ethics and integrity and what she and her board do.

During the last year, I’ve been dumbfounded to uncover 35 ethical issues around CAANZ leadership all of which have been denied or ignored by Ms Stanton and the chair, Murray Jack.

The following examples illustrate unfortunate circumstances which need to be addressed to prevent ordinary CAs risking their reputation as was recently witnessed with CPAA.

Our directors chose a CEO who is not constrained by the ethical code. Shortly before his appointment, he cut short his CEO role at the Te Papa Museum in New Zealand citing family commitments in Rarotonga in the Cook Islands. He was also quoted as saying:

“I have a sort of windows [sic] of opportunity in the family space that gets narrower as time goes by. When you get to my age, you realise you won’t live forever.”

The Te Papa accounts during his tenure apparently ceased to disclose the inconvenient comparative figures for a key performance metric. The accounts state that remuneration is based on performance principles. It is presently unknown whether our CEO was personally involved in the (non) disclosure or whether he benefited from it.

Despite concerns being raised on these points prior and after the CEO’s term commenced, Ms Stanton and Mr Jack have not explained how the associated risks for CAs and the accounting profession can be justified. The board’s response has essentially been that despite the outcome, the selection process was rigorous. Questions such as these by members were described as unwarranted and a personal attack. Despite CAANZ’s core goal being to advance the practice of accounting, the board has turned a blind eye to the apparent failures in the Te Papa accounts.

The board arranged for a governance review to be conducted by a person apparently not bound by an ethical code. The reviewer informed me that he was not answerable to the members (ie those whom the review is meant to safeguard). This review was portrayed by the directors as being “independent” and members were advised that the structure was “sound”. This is despite the fact that CAANZ shares essentially the same governance disenfranchising characteristics as CPAA which imploded around the time of the review.

Two CAANZ directors have been directing members for more than the 6 year limit clearly intended by the By-laws and board charter. Mr Jack has been directing members since July 2009. This issue was highlighted to the board, the main council and the Victorian regional council. They all decided to ratify the directors’ stance without explaining how this aligned with upholding the highest standards of good governance.

CAANZ acknowledged issuing accounts which are not transparent. Despite this being a fundamental failure for an accounting organisation, the acknowledgement was not accompanied by any apology or investigation. Also unknown to most members is that CAANZ hid the fact of its acknowledgement from a member enquiry on the issue on two separate occasions before media pressure resulted in its exposure to members.

Even after the board’s acknowledgement and making vague promises of improving disclosure, members had to rely on the media to discover that the Kairos project reportedly cost them around $1.6m before being abandoned.

Ms Stanton and Mr Jack advised me that they directed the executive to consider greater levels of voluntary disclosure in 2018. They fail to explain how being properly accountable to members can be considered to be “voluntary” by the board of an accounting organisation, as if it were some kind of munificence.

A key performance metric for CAANZ is student and member numbers. The CAANZ accounts fail to disclose comparative numbers that would highlight what appears to be poor performance, instead indicating they are “going from strength to strength”.

The board engaged a PR agency apparently not bound by the ethical code to help support its stance on governance issues raised by a member. No explanation has been provided as to why this is appropriate in a member organisation whose sole purpose is to serve members, not “manage” them. How is this an ethical use of member funds, especially when the nature of such expenditure is hidden from members?

Ms Stanton and Mr Jack have stated to me that they see no problem with the fact that directors can only be reviewed for misconduct by people appointed by the directors. Moreover, CAANZ has ignored multiple requests for the contact details of the Professional Conduct Oversight Committee chair – thus apparently hindering a proper consideration of why directors cannot be impartially reviewed.

A less significant but telling scenario is the bizarre situation where car benefits from Mercedes, BMW, Mini and Audi were (and remain) concealed from members on the main members’ benefits page. Despite the Head of Members promising that this would be remedied, Ms Stanton and Mr Jack see no issue with the promise being broken and keeping such information buried on a subsidiary web page with no indication on the main page that such car benefits exist.

When confronting Ms Stanton with issues including those mentioned above, she initially offered to meet with me and the Vic Council chair to discuss them. She later withdrew the offer and wanted to substitute a straightforward meeting with a ‘mediation’ session involving the PR agency and subject to a mandatory confidentiality condition. Why would leadership of a member organisation seek to silence a member who is seeking high standards of integrity to be upheld?

No-one in the CAANZ leadership team is prepared to offer any rational argument supporting the dubious stances taken on the many ethical issues I’ve encountered. My Victorian state representatives tell me that they have somehow satisfied themselves that my concerns have been addressed by council and the board. All of these leadership bodies have stated that they “do not intend to re-visit these issues”.

As Ms Stanton observes, the board’s unwillingness to openly deal with such issues is itself a concern – a pointer confirming the existence of issues that we as professional sceptics look out for.

Ms Stanton is also right to observe that the integrity of our brand is only as strong as the behaviour adopted. My concern is that the actions and inactions of CAANZ leadership is dragging us down the same ignominious path as our CPA cousins.

The general community has been dismayed by dubious practices exposed by the banking Royal commission, where profit motives have clouded the judgement of business leaders. It is all the more appalling then to discover the abovementioned issues with the leadership of a member organisation which plays such a critical role in our economic system.

My hope is that by bringing these issues to light, ordinary members can decide whether leadership has upheld the standards of ethical behaviour and integrity to which they and the community aspire, and make their expectations known to those currently entrusted to look after our best interests.

Pre-eminence has long been a strategic pillar for CAs. If we wish to maintain the trust placed in us by the community, it should be demonstrated by actions, not by lip-service.

Gerald Jaworski, CA