Peak accounting group proposes $250,000 maximum fines for members breaching the rules

Accounting firms which breach industry standards could face a five-fold increase in maximum fines, under a suite of reforms floated by leading industry body Chartered Accountants Australia and New Zealand (CA ANZ).

The organisation tabled the findings of its major review on Wednesday, levelling more than three dozen recommendations for how it could better discipline members who step over legal and ethical boundaries.

The review was commissioned in the wake of Big Four accounting firm KPMG Australia being fined $600,000 over evidence its staff cheated on professional exams, and its results come as PwC faces massive scrutiny over the leak of sensitive intel gleaned from confidential federal government information.

CA ANZ chief executive officer Ainslie van Onselen said the review intended to address some of the major challenges facing the sector and help rebuild trust by outside parties.

“As well as a range of procedural and efficiency improvements, the recommendations extend the existing features of the Disciplinary Framework to address events involving firms and the systemic and cultural issues underpinning them, that reflect poorly on our profession,” van Onselen said in a statement.

“Actions from just a few that have the potential to cast a shadow over our profession.”

Proposed changes include:

• Lifting the maximum fines imposed by CA ANZ’s independent disciplinary arms by five times, “for events involving firms, such as certain adverse findings by courts or regulators, criminal or civil convictions and conditions on firm registrations with regulators”,
• Allowing CA ANZ to undertake investigations of former members, instead of current members only,
• Consolidating the decisions of disciplinary bodies into a single online register, making it easier to establish who has been penalised and why,
• And new efforts to remind members of the independent disciplinary process, personal self-disclosure obligations, and ethical standards in the sector.

The organisation has already enacted some measures, others will require a vote of members to come into play.

While the measures are clearly overshadowed by the actions of some of the planet’s biggest accounting firms, they are likely to flow through to smaller CA ANZ members who service small business clients.

CA ANZ policies currently allow its disciplinary bodies to fine members who breach the rules up to $50,000, but fines of that size are relatively uncommon.

Some accountants do not see fines levelled by CA ANZ as the main financial penalty for wrongdoing, with the potential rising cost of professional indemnity insurance policies viewed as a harsher penalty overall.

Enforcement also remains a key concern, with the fines in question largely reliant on adverse findings from external bodies.

In its report, CA ANZ nevertheless saw ramping up its maximum fines as a way to win back public trust.

“Significantly increasing maximum fines is a meaningful development for a membership organisation like ours; it shows how we used this process to test the limits of our framework in
the public interest and in line with community expectations,” van Onselen said.