Statement from the Board 20 July 2018

The CPA Australia Board met this week and would like to provide you with an update on a number of matters discussed at the meeting.

1. Draft Corporate Strategy 2018-2021

Following the release in June of the CPA Australia draft corporate strategy 2018-2021, we have embarked on an extensive consultation program to share the draft strategy with members and to seek your views.

As part of the consultation, CEO Andrew Hunter engaged with all Divisional Councils and hosted three webinars in which he was joined by more than 180 members. Recordings of the webinars are available on the CPA Australia website. Many members have also provided feedback directly to Andrew through the email [email protected]

Members have also attended feedback sessions facilitated by independent strategic consultant Bevington in various locations around Australia.

Andrew and the executive team will begin collating the feedback received to refine the strategy that the Board will consider at its next meeting in August.

The Board takes this opportunity to thank all the members who have offered their views on the draft strategy. It is being developed with members at its core and we welcome the contribution of members throughout the process.

2. Post Implementation Review of CPA Australia Advice

At the CPA Australia Board meeting held on 16 July 2018, the Board of CPA Australia considered the Post Implementation Review of CPA Australia Advice Pty Ltd conducted by PwC Strategy. View the letter from PwC Strategy regarding the outcome of their review.

PwC Strategy concluded that demand from members for the CPA Australia Advice offering was insufficient to ensure its financial viability, and PwC Strategy found no evidence to suggest that future demand for the offering in its current form will increase to a financially viable level. In light of these findings, the Board of CPA Australia has decided to exit the business of CPA Australia Advice although we note that the role of accountants in providing high quality independent fee-for-service advice remains important to Australians.

Today CPA Australia Advice has provided notice of the decision to all of its existing authorised representatives and to staff. CPA Australia Advice will work with all authorised representatives to transition from the business before the end of the calendar year.

The PwC Strategy review recommended that CPA Australia consider alternative models for supporting members who wish to provide financial advice.

Taking into account the uncertainty created by the potential impacts of the Financial Adviser Standards and Ethics Authority (FASEA), increased regulation and costs, as well as potential outcomes from the Financial Services Royal Commission, the Board will prudently consider how CPA Australia can be best equipped to support members in the provision of financial advice.

3. Review of management expenses

As part of our commitment to best practice governance and business accountability, the Board engaged an independent third-party to conduct a comprehensive review of CPA Australia’s executive and management expenses.

The Board has now received and considered the final report and is committed to introducing policies and procedures that will strengthen CPA Australia’s control environment. This includes new policies for credit card and expense management systems and processes which are being introduced.

4. Internal audit and implementation of whistleblower program

As part of an overall review of the Risk Framework of CPA Australia, the Audit and Risk Committee (ARC) has reviewed the Internal Audit function and considered best practice and current capabilities of the organisation. The ARC has determined that CPA Australia and members would benefit from a fully outsourced Internal Audit function to strengthen internal controls and procedures. CPA Australia will shortly request proposals from third party internal audit specialists.

Separately, CPA Australia has engaged an independent, external organisation to develop and implement a whistleblower program. This is in line with best practice which requires that CPA Australia implement an external reporting option to work in collaboration with our internal reporting.

The aim is to protect and support both employees and members, and to ensure they have a safe means to report wrongdoing, appropriate protection when they make such reports and a framework to properly handle any reported matters.

We envisage implementing the new whistleblower process within the next two months. Once we have done so, we will communicate this to members via CPA Update and provide details of how matters can be reported and details about how they will be handled.

5. Group audit role request for proposal

In our Board statement of 8 June 2018, we announced that the role of External Auditor for the 2018 CPA Australia Accounts would be submitted to a competitive tender of appropriate auditing firms.

This process is now underway with the Board inviting suitably qualified firms to tender for the role. We have received interest from leading firms and anticipate being able to announce the successful firm by the end of August 2018.

Peter Wilson AM FCPA
President and Chair
On behalf of CPA Australia’s Board of Directors