Influence and passion

Lee White FCA

Executive general manager – members

Business guru Ken Blanchard once said that the key to successful leadership is influence, not authority. For me, that hits the nail on the head. The Institute’s influence in both policy and the setting of standards has provided a backbone for financial reporting and auditing in Australia.

Our Leadership & Quality team is at the forefront of promoting financial integrity and a sound economy through its policy advice and by speaking out on issues where the profession’s expertise is highly relevant. Having recognised technical experts at the Institute strengthens our credibility in influencing key stakeholders and leading the profession.

Members tell us that they want to see strong advocacy and thought leadership from the Institute and we’ll have a strong focus on that next year. Our objective is to have a strong domestic position and engage internationally where we can add value on behalf of our members. The projects described here barely scratch the surface of the work we have ahead of us. But it gives a sense of the passion and determination we have.

The Leadership & Quality team is tasked with picking the major issues 18 to 24 months ahead of time. Its role is to lead thinking and debate on emerging issues in advance of their fruition. The challenge for each member of the team will be to allocate the appropriate amount of time to the forward-looking agenda, and not be distracted by the ‘here and now’. With ongoing analysis and monitoring of our environment, we will be in a position to respond quickly on behalf of the profession.

Success for us is a fine blend of thought leadership and effective advocacy. Our leadership papers are driving high-level discussion and debate on issues that we are sensing in the market. One example from this past year was the Institute being the only non-UK organisation to be invited by the House of Lords to give evidence to an inquiry on the future role of audit – an invitation borne from the visibility and relevance of our thought leadership papers on an international level.

Effective advocacy means timing and nature of commentary are critical to upholding financial integrity for the profession, rather than merely adding to the noise that already exists. The year ahead will see us improve the way we engage with and support members through our services, conferences, thought leadership, guidance, tools, training and products. The team has been instrumental in shaping policy development that benefits the public and the profession, and the efforts and achievements will continue in the New Year.

Yasser El-Ansary CA

Tax Counsel

We live in interesting times; perhaps even in a period that the will be remembered as the tipping point in the way personal tax information is shared. One of the critical issues that will be addressed over the next 12 months is to decide whether or not Australia should adopt a tax advice privilege regime, which would be broadly similar to the common law privilege that exists between lawyers and their clients.

A 2008 report by the Law Reform Commission analysed the arguments for and against the introduction of tax advice privilege in Australia. That report ultimately recommended to the Attorney- General that a tax advice privilege regime for non-lawyers should be introduced. Tax advice privilege is one of the issues that could fundamentally alter the consumer protection parameters that exist between a client, their advisor, and the ATO in the future. The current government has been embarking on a broad reform agenda around greater protections for consumers – which I commend – but whether or not they proceed with the tax advice privilege regime is unknown.

The argument, of course, should be measured by the benefits that could be delivered to taxpayers. Irrespective of whether someone visits a lawyer or an accountant, they should be able to access comparable legal safeguards. Accountants play a vital role as advisers to millions of Australians and we need to protect and build upon the fundamentals of that relationship (see page 48 for more details).

Karen McWilliams ACA

Manager of Chartered Accountants in business

The concept of putting money into a potential ‘black hole’ can be very difficult for some of us. But in light of recent statistics that point towards a downturn in productivity in Australia, 2012 is the time for businesses to start taking risks to improve their productivity by investing in innovation. Innovation comes in many forms and it’s not just about coming up with a brand new design that you can patent and start running with. In order to combat a decline in productivity, businesses need to reconsider the basics: how does your organisation do business and what internal processes achieve the results?

It can be challenging to take a risk and experiment with new ideas. There are often many ideas about new processes or products, but only a few will be effective. This is difficult to come to terms with but, ultimately, in order to have a significant impact on their productivity, businesses can’t get stuck in a rut of going through the same motions and processes.

In 2012 we’ll be offering some guidance on how to approach innovation. We’ll be looking at ways we can help businesses establish the appropriate processes to help them innovate. Importantly, businesses need to establish a culture where people feel comfortable suggesting ideas. Sometimes the best ideas about how to do things differently can come internally from employees, as they’re close to the ground. Asking employees for their ideas can be an easy and inexpensive way to start the ball rolling on innovation.

It’s going to be an interesting and challenging time for business next year as the many forms of innovation – process improvements, IT and new technologies for the business processes or product enhancements – are explored. This is the time to get ahead of the market, and we’re looking forward to helping our members on their journeys.

Paul Meredith FCA

Professional standards manager

The Professional Standards team is our conduit to the Accounting Professional & Ethical Standards Board as the APESB reviews and develops high quality professional standards for the profession. We concentrate on pre-empting market issues and responding to the business environment, and then working through how this translates to members. Governance and risk management are dominant in the post-GFC world, and we’re working with the APESB on a new risk management framework that is particularly relevant to Chartered Accountants in practice.

The proposed new standard, APES 325 Risk Management for Firms, would introduce mandatory requirements for firms to establish, maintain, monitor and document a risk management framework (see page 56 for details). Such a framework would include policies and procedures to identify, analyse and manage a range of risks, including technology, business continuity and HR. The standard is likely to be issued by the APESB shortly and take effect from 1 January 2013. The Institute will be providing guidance material to help practices incorporate their quality control policies and procedures into the risk management framework.

In the current climate, supporting ethical business practice has also been a major focus for us. Of significant interest will be the finalisation of the APESB’s new guidance note for accountants in business – comprising 17 case studies that illustrate the application of a structured approach to the resolution of ethical issues.

Linda Vogel

Manager professional conduct and mediation

One of the areas I am keenly involved in is the Institute’s voluntary mediation service. We created the service as a pilot in 2010 and, due to demand, it has grown into an ongoing service. Mediations can be conducted in Sydney, Melbourne, Perth, Adelaide and Brisbane. The mediation service is open to both Chartered Accountants and members of the public, provided there is a bona fide civil dispute involving at least one Chartered Accountant, and the matter is not a disciplinary matter in disguise. The mediation service is run on a user-pays and strictly confidential basis.

I am delighted to say that I have communicated with various people who have had a commercial/legal dispute, and that early intervention has acted as a catalyst for the parties to settle their disputes. We have a 100 per cent settlement rate on the occasions that we have organised formal mediation hearings. I look forward to receiving new enquiries from members in the future, as I believe mediation is a useful, confidential and safe avenue for people to explore potential solutions to their problems in a way that gives parties control over the process, rather than relying on costly and lengthy litigation. In my view, litigation is a lottery and often there are no winners.

Assunta Corbo FCA

Manager quality review

The quality review program continues to evolve. It has grown from a pilot in 1995 with a review of 10 Chartered Accounting practices to today, where more than 400 practices are reviewed annually by an independent and expert team of Institute-accredited reviewers.

Next year we will make significant enhancements to the program, introducing an innovative review approach for the auditing practices of the largest firms, and enhancements to the program’s approach to the review of financial planning and insolvency services. Our 2010 thought leadership paper Quality Review: past, present and future outlined the program’s direction within our fundamental objective of adding value to reviews while minimising duplication. We are pleased to see the leadership initiatives outlined in the paper now being implemented.

It is important to develop the program to meet the increased focus of regulators, government and standard-setters on the quality of work performed by Chartered Accountants in practice. The Australian accounting profession exists within a co-regulatory environment. We are an integral part of this environment, maintaining quality within the profession and retaining the Institute’s position as a leading professional accounting body.

As well as enhancing the program, we are committed to building on the work and results of the program by developing new guidance and tools for members and working alongside regulators and other bodies. One of the objectives of the program’s enhancements is to gain a deeper insight into the drivers of quality, enabling the Institute to focus its resources where they will be most effective.

Kerry Hicks FCA

Head of reporting

Financial reporting is likely to change significantly next year, particularly for SMEs (including not-for-profit organisations). The removal of special purpose financial reporting for those entities lodging financial statements on the public record is under review by the Australian Accounting Standards Board. This review, which includes research currently in progress, will continue into 2012 and will likely result in an exposure draft on the issue. And the new Australian Charities and Not-for-profit Commission will be setting up consistent financial reporting requirements for entities under its jurisdiction from 1 July 2012. We’re expecting draft legislation or a consultation paper on that in the next few months.

On behalf of our members, my team will strive to influence the outcomes of these proposals, to ensure that any changes achieved bring minimum complexities to the sectors. Our focus in the debate will be to achieve consistent, comparable and relevant outcomes for all, which also protect the public interest.

The introduction of IFRSs for private company SMEs (including not-for-profits) is something we’d like to see. This is much simpler, and will even increase consistency and comparability opposed to those preparing special purpose financial reports today. We will continue to advocate its use for the SME sector, including notfor- profits, whose users want a simple financial report.

Liz Westover CA

Head of superannuation

At the Institute, I’m proud to say that we’re setting a new benchmark for self-managed superannuation fund (SMSF) advisors with the launch this year of our new CA SMSF Specialisation program. 2012 will be a big year as we roll out the new program that will allow Chartered Accountants to enhance the services they offer to their SMSF clients through additional training and studies. With Chartered Accountants already making up one of the largest group of service providers in the SMSF industry, this is a great opportunity for us to build on our personal learning and qualifications, backed by the Institute, to provide high quality services to the Australian public and the SMSF sector.

With a background as an SMSF practitioner myself, I appreciate the importance of providing high quality advice to trustees and the reliance that clients place on that advice. SMSFs are experiencing strong and sustained growth, and it is likely that more of them will be seeking guidance and support from their trusted advisors. This new specialisation will enable us, as Chartered Accountants, to demonstrate our knowledge and experience in this important sector.

For more than 865,000 Australians, SMSFs are the chosen means for saving for retirement, belonging to one of over 460,000 funds. Each of these funds will require the services of an external service provider, whether it be an accountant, tax agent, financial adviser, administrator or auditor. It’s exciting to see the pivotal role that Chartered Accountants play in this sector’s success. Personally, I’m looking forward to the chance to build on my own learning over the next 12 months and becoming a CA SMSF Specialist myself!

Hugh Elvy

Head of financial advisory services

In an ideal world, financial advice would always be high quality, easily accessible and provided in the best interests of the client by recognised professionals. In reality, however, this has not always been the case. During next year, the federal government will be focused on implementing reforms within the financial services sector, with a goal of making financial advice more accessible, equitable, conflict-free and affordable for the Australian public.

While this is an important goal, the implementation of this reform package will be challenging for Chartered Accountants who provide financial advice, in terms of what type of advice they can provide, how they will be licensed, and what forms of remuneration are appropriate. We are committed to assisting members through these changes by providing guidance, tools, resources, and ongoing support for the regulatory reforms. We’ll continue to work closely with ASIC and other stakeholders in implementing the new measures, focusing on a policy designed to increase access to financial advice, reduce cost-barriers, and provide a valuable service to clients.

With the challenges ahead, we might not reach a ‘nirvana’ of financial advisory services in 2012, but I’m looking forward to seeing us move closer to a trusted and high quality financial advice framework.

Article last updated 22 December 2011