Professional accounting bodies were questioned about their operating model of monitoring members’ conduct while representing their interests.
An Australian parliamentary inquiry has raised serious concerns over the potential conflicts of interest within professional accounting bodies.
The inquiry, led by Greens Senator Barbara Pocock, calls into question the integrity of these bodies, particularly regarding their dual roles.
Pocock cited a 2023 review during a recent hearing, and pointed out that organisations like Chartered Accountants Australia and New Zealand (CAANZ) collect fees from members while also being responsible for managing their members’ professional conduct.
“Accounting bodies like CAANZ receive fees from members and represent their members’ interests, and at the same time must manage the conduct of those members,” she said.
In response, Kristen Wydell, a general manager at the CAANZ, acknowledged that there was indeed a conflict of interest.
However, she pointed out that her organisation had a way of managing that via a number of provisions.
Related Stories
“The main one is that the decision-makers in our conduct programs are not members and employees of Chartered Accountants Australia and New Zealand,” she told the Parliamentary Joint Committee on Corporations and Financial Services.
“We have independent bodies–the Professional Conduct Committee, the Disciplinary Tribunal, and the Appeals Council.
“Those three bodies are a mix of members and non-members, but none of them are employees or engaged in the management of [the] CAANZ.”
Wydell also noted that the management team that managed the professional conduct of accountant members kept its information separate from all other types of activities of the CAANZ.
“There’s a structural element there as well as a reporting line element. So, by having those independent decision-makers in those committees, it reduces the conflict of interest risk,” she said.
There Is No Conflict of Interest: IPA
Meanwhile, Vicki Stylianou, an executive from the Institute of Public Accountants (IPA), rejected the idea of a conflict of interest existing in her organisation.
“We believe there is no conflict of interest,” she said.
“I have never been shown any evidence whatsoever that we have a conflict because we collect fees from members.
“We are a genuine not-for-profit organisation. So, we also must act in the public interest. We are very, very conscious of that, and we balance the public interest with the members’ interest.”
Stylianou also stated that the IPA’s disciplinary tribunal is “very independent” as they were not run by the accounting body’s members.
“We’ve just recently inducted a whole lot of new people. [We’ve] got a lot of barristers. We’ve got a lot of lawyers who’ve got nothing to do with IPA and the members,” she said.
“So I would totally sort of reject that kind of position.”
ASIC’s Response
The issue of conflicts of interest has also caught the attention of the Australian Securities and Investments Commission (ASIC), which oversees financial services.
Pocock questioned the ASIC about the potential for reform, including the possibility of removing conflicts of interest among professional accounting bodies by taking away their investigatory and disciplinary functions and establishing a single, independent body to perform these functions.
However, ASIC Commissioner Kate O’Rourke said she did not have any insight on issues beyond those related to her organisation.
“Our focus has very much been on the ones that directed to ASIC and or impacting ASIC’s oversight of auditors,” she said.
