Merry Christmas to Peter Wilson. When it was suggested that Peter Wilson should be independent of the old board so that we can have a fresh start Peter responded with "That's your issue". Summary of the meeting here: viewtopic.php?f=23&t=594
A good summary of where we are up to by Joe Aston of the AFR, linked to from here: viewtopic.php?f=5&p=4137#p4137
If you are new to this website read the story so far: viewtopic.php?t=321#p1793
Check out some of the AFR articles, too many to list and check out some of the ABC reports: http://www.afr.com/business/accounting/ ... 215-h055ej http://www.afr.com/business/accounting/ ... 211-h02x1d http://www.abc.net.au/news/programs/the ... s,/8626662
Please join this website to participate in discussions. Also join our email list at http://eepurl.com/cWsgfb
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WHY

The problem

The members of CPA Australia have lost control of the organisation. The organisation is now controlled by the Directors and senior management with 12 people sharing in salaries worth over $5.5m p.a.

Members do not set the strategic direction of the organisation and management is not accountable to the members. CPA Australia states that their objective is “To become the worlds best member services organisation” but the constitution states other things I have pasted this below for those interested.

The end result is growing member dissatisfaction with things like tennis and basketball sponsorship, promotion of Alex Malley as The Naked CEO and a TV show in which Alex Malley interviews D-list celebrities, CPA Advice missing the mark, wasting members fees on legal actions, refusing to disclose information about the cost of these things and other things the members would like to know. The list goes on and on.

Recently, CPA Australia has engaged in some very questionable actions (possibly corrupt, you be the judge) in relation to suppressing members’ discussion of these issues.

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In detail

CPA Australia does not disclose the salaries of individual Directors or key management personnel. However aggregated information shows that 12 people share in over $5.5m p.a. If you want to find out more there is a discussion about the salaries on this website. Suffice to say that these salaries are obscene.

To be a recognised tax agent association the TPB requires the management to be accountable to the members. One of our contributors has put in an FOI request to the TPB to try to find out how they assessed that. I will let you know if I find out more on that.

Besides that, I am sure that all members would like to see management be accountable to the members.

Two recent statements from CPA Australia on this are:
* The email from Jeff Hughes to Brett Stevenson on 2 March 2017 which seems to have been intended for a wider audience
* The statement released on 16 March 2017 in response to these recent discussions amongst members titled "Important Member Information" /Important Member Information.pdf.

According to CPA Australia they do a lot of research to make sure they do what the members want and formulate their strategy from our feedback. The difference here is that customers provide feedback, members vote. Hence in this document I am exploring the accountability of CPA Australia management to the membership through the voting processes.

I don’t want to get too bogged down in discussing strategic issues. But since CPA Australia is so keen to suggest that research and member feedback is sufficient, I just want to point out the example of CPA Advice. CPAs in public practice cannot set up a SMSF (or provide any other financial advice) without being licensed to do so. CPA Advice was meant to fulfil that need. However as of 1 April 2017 it has just 19 authorised representatives. I wonder how much research they do and how much they are listening to feedback, not much is my guess. The register is available here: https://www.data.gov.au/dataset/asic-af ... esentative and you can search for CPA Advice’s license number, 482657.

Getting back to voting, there are only 2 possible ways for a member to vote:
1. For a representative on their divisional council (NSW, VIC, Malaysia etc.)
2. At a general meeting. I guess that’s where we are headed with this website. CPA Australia seems to suggest in the above statements that this kind of change is not necessary as the current arrangements provide the required accountability. I am going to show you that this is required.

We vote for divisional councillors and the divisions nominate to the Representative Council. Directors also put people on the Representative Council so division nominations only result in a 1 vote majority (I’ll come back to that point).

CPA Australia would contend that the management is accountable to the members because the board is appointed by the Representative Council. In the “Important Member Information” it states:

“Ultimately, the Directors are elected by the Representative Council. Whilst the Representative Council may have regard to the Nomination and Remuneration Committee's Report recommending various candidates, the Representative Council ultimately can decide to disregard this Report and elect to the Board any member who has submitted an application (By-Law6.8 (n)).”

Note that the Nomination and Remuneration Committee is a group of Directors.

Also CPA Australia’s email to Brett on 2 March 2017:
“In any event, members have the ultimate say as to who is appointed to the Board because it is the Representative Council, not the board of directors that has the constitutional authority to determine board appointments.”

So clearly the Representative Council is the key group through with members control the organisation. However, as I said earlier the Directors also appoint people to the Representative Council. The “Important Member Information” released by CPA Australia on 16 March 2017 states:

“Consistent with ASX principles, including diversity, in limited circumstances (not in respect of the election of Directors to the Board), the Board may appoint a member(s) to the Representative Council to ensure diversity. The Board can, if it determines that there should be a person on the Representative Council from any group to reflect membership diversity, request that relevant group, body or committee to elect a person to the Representative Council.”

This statement is misleading. There is no election required and the “group” referred to, can simply be a loosely defined demographic. The Constitution, 62(a)(iii) states that the Directors can appoint people by:

“(iii) subject to Article 62(b), one representative of any group, body or committee established or recognised by the Board to reflect the diversity of membership which the Board from time to time determines should have a Representative Councillor representing that group, body or committee;”

A recent LinkedIn discussion with Richard Blakeman /LinkedIn_discussion_Richard_Blakeman.pdf who put himself forward as the Representative Councillor that represents “Mature Members” showed that there was no election that put Richard on the Representative Council in relation to his representing “Mature Members”. It showed that there is no group you can sign up to if you are a mature member that would then give you a say. Richard maintains that he is on some group that would have similar interests to what mature members have. But it’s really not clear whether “Mature Members” kicks in at retirement or when you stop acting like a child. But don’t worry Richard assures us that the process is the best he’s been involved in and he has found it a rewarding experience. You really need to read that discussion! /LinkedIn_discussion_Richard_Blakeman.pdf

So did CPA Australia mislead the members by implying in the “Important Member Information” that an election from the membership would be required to appoint someone to the Representative Council?

Considering that CPA Australia is relying on role the Representative Council to claim that members have control I think this point is extremely important. To mislead members on this point is a very questionable action.

Based on the latest information available to us, because CPA Australia removed the web pages on the Representative Council, the Representative Council is made up of 23 votes, 12 are from division appointed Councillors (we vote in divisions) and 11 votes from Director appointed Councillors. If there is an even number of votes, the President (a Director) gets a casting vote.

So to control the Representative Council the member vote influenced positions need to vote as a block. That includes Malaysia, Singapore and China. If one breaks rank then it’s even and the President makes the call.

One point made by CPA Australia in the recent “Important Member Information” is that the membership is large and diverse so the idea that the 12 division appointed Councillors would vote as a block is a bit of a fantasy but let’s just imagine for a moment that it happens. What would they have to do to have real control of the appointment of the board positions. To determine this we need to consider how else the Directors control board appointments.

CPA Australia described the process of appointing Directors in detail in the “Important Member Information”. The process is so obviously flawed that it is not even clear whether CPA Australia is arguing for or against changing it. I have copied the CPA Australia description of the process below for ease of reference. Here is my summary:

1. The Directors determine the selection criteria. It would be interesting to see the criteria.
2. The Directors engage an external recruitment agency to create a “long list” of candidates.
3. The Directors review this list and create a “short list”. Presumably this is only from candidates on the long list.
4. About a week before the Representative Council meets to elect the Directors they are sent the information on the short listed candidates. They do not get the names or any information of any other candidates before the meeting.

The two bullet points on page 4 of the “Important Member Information” state:
“* At the meeting in August, the Representative Council will be presented with the names of all applicants (including those on the shortlist, long list and those who did not meet the selection criteria)”
“* The candidates on the shortlist will be ranked against the approved selection criteria”

Seems to imply that the Representative Council ranks the shortlist by selection criteria but it does not actually state that. I guess that the time available in the meeting would not allow it and this ranking would have been done prior by the Directors.

5. At the meeting the names of on the ballot paper are recommended by the Directors and approved by a resolution of the Representative Council
6. The Representative Council votes at this same meeting. Having had a matter of just minutes possibly hours to consider anyone that was not already short listed by the Directors, ask questions of the recruitment agency, and rank that candidate against the selection criteria.

The idea that the candidates ranked at the top of the list against the selection criteria would not get voted in is surely a pure fantasy. But CPA Australia actually stated in their “Important Member Information” that:
“the Representative Council ultimately can decide to disregard this Report and elect to the Board any member who has submitted an application (By-Law6.8 (n))”

So that would just require all the Division appointed Councillors to turn up or give someone a proxy (including Malaysia, Singapore and China), pull a name off the long list having not seen that persons application or resume and determine that they are a better choice than the Director recommendations. Get that name added to the ballot paper by passing a resolution. Then all vote as a block for that person. All in a meeting that happens on one day in August.

It should be noted that the Councillors are required by the constitution for follow the election procedure. So if they are dissatisfied for some reason with the short list or after turning up to the meeting, dissatisfied with the long list, they cannot stop the vote. If they don’t vote the President, a Director, gets the say.

But let’s further explore this fantasy. Let’s say by some miracle the Representative Council appointment of the Directors was not effectively controlled by the Directors and they actually selected their own candidate. What would that achieve?

The constitution states that the Representative Council has these powers (see the Constitution section 61 below):
* Appoint the board by applying the board set election procedure
* If the Directors asks about a member issue they can give guidance to the board which the board does not have to follow
* If more than 50% of the Representative Council say so they can express their opinion to the board.

To make it clear the Constitution states that the Representative Council has no other power.

So having managed to select a Director that was not originally recommended by the board. Is that Director accountable to the Representative Council? No. The Directors are appointed for a period of 3 years, the Representative Council cannot remove a Director and all the information the Representative Council has on Directors is provided by the Directors. As Richard Blakeman said in the LinkedIn discussion the Representative Council is in no better position to evaluate the performance of Directors than any other member. Richard says Directors are accountable to each other through a peer review process, which is a much more consistent explanation with the statements the CPA Australia has made and the Constitution etc.

As stated in the email to Brett Stevenson on 2 March 2017:
“As you will wholly understand, it is for the board to determine the organisation’s strategy, to frame the particular objectives to be achieved in the pursuit of that strategy and to provide oversight to assure the accomplishment of all actions necessary to support its realisation.”

Another give away is where in the Constitution it states: “the Representative Council will have no other powers.”.

This has been a rather long explanation but I wanted to make it 100% clear that:

The members do not control CPA Australia through a wafer thin majority on the Representative Council that only has the power to blindly appoint the Directors in the way the Directors tell it to and has no other power.

How has CPA Australia responded?

Member discussion of this issue has ramped up in about March 2017. CPA Australia has responded with some questionable actions.

Firstly they took the Find A CPA function offline. This was a feature on the CPA Australia website that allows the user to find a CPA in an area. One member used it to find other CPAs and raise these issues about governance and strategy.

For the first couple of weeks after that when you called CPA Australia to ask what was happening with the Find A CPA function on the website, they told the callers it was a technical problem that they were working on fixing. Since then the “Important Member Information” came out and admitted that it was not a technical issue but it had been taken offline because:

“The information about members on our website is available for professional usage. If this information is used incorrectly such as to build email distribution lists then we will take appropriate action.”

So basically CPA Australia is saying that watching a TV show in which Alex Malley interviews Henry Winkler (aka the Fonz) is professional CPD but a member contacting other members about governance of the organisation is not professional! And they took action on that basis.

What is their explanation of why they took the pages about the Representative Council offline? These pages were taken offline at around the same time as the Find A CPA was removed.

http://www.cpaaustralia.com.au/about-us ... ve-council

https://www.cpaaustralia.com.au/about-u ... committees

http://www.cpaaustralia.com.au/about-us ... /australia

http://www.cpaaustralia.com.au/about-us ... a/victoria

These pages were on the website for years and the old versions are available on the internet archive:

https://web.archive.org/web/20160323193 ... ve-council

https://web.archive.org/web/20160321084 ... committees

https://web.archive.org/web/20160307015 ... /australia

https://web.archive.org/web/20160326043 ... a/victoria

Meanwhile CPA Australia has been removing discussions and comments on their LinkedIn group where they do not agree with the content rather than the discussion breached any group rule. Members have witnessed discussions disappear and we have evidence of these discussions having been deleted.

We therefore have evidence of CPA Australia actively trying to prevent members discussing the governance of the organisation. In addition, misleading (perhaps wilful misleading) of members in relation to their Director appointments to the Representative Council and misleading members to think that the Representative Council has the ultimate control of the organisation through the appointment of Directors.


Corruption:

https://en.wikipedia.org/wiki/Corruption
Corruption is a form of dishonest or unethical conduct by a person entrusted with a position of authority, often to acquire personal benefit.

http://www.transparency.org/what-is-corruption/
Corruption is the abuse of entrusted power for private gain. It can be classified as grand, petty and political, depending on the amounts of money lost and the sector where it occurs.

Are these actions dishonest or unethical:
* Removing Find A CPA and lying about why.
* Removing the pages on the Representative Council and Divisional Councils.
* Suggesting that Directors would have to ask a member group to vote to make an appointment to the Representative Council.
* Overstating the influence of the Representative Council. Understating the amount of control the Directors have over it.

Do they benefit personally:
* Over $5.5m p.a. split between 12 people.

Basically trying to stop people discussing governance, lying about things and hiding information so that they can keep their highly paid jobs.

Seems like that’s where we are but the reader can make their own mind up.


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The Naked Webmaster


/cpa-australia-constitution-2014.pdf

CODE: Select all

5. Objects of the Company

             The objects of the Company are to promote excellence, enterprise and integrity
             amongst Members and the financial, accounting and business advisory professions
             generally, to educate Members with respect to their duties and responsibilities as
             members of the financial, accounting and business advisory professions, and to
             prescribe the highest standards of ethics and professional conduct for Members. In
             fulfilling these objects, the Company will:

             (a) take an interest in legislative, economic and social matters affecting the
             Company's objects;

             (b) affiliate with organisations with similar objects; and

             (c) do all such other things incidental or conducive to the attainment of the
             Company's objects.

CODE: Select all

[b]Constitution section 61:[/b]

61. Powers of the Representative Council

(a) The Representative Council shall have the following powers:

(i) to appoint the Board applying the election procedure (if any) from 
time to time prescribed by the Board to the extent the same is not 
inconsistent with this Constitution;

(ii) at the request of the Board, to consider and provide guidance to 
the Board (through the chair of the Representative Committee) on 
Member issues; and

(iii) at the request of more than 50 percent of the Representative 
Councillors, to consider any issue concerning the affairs of the 
Company and, as the Representative Council considers appropriate, convey (through the chair of the Representative Council) the view of the Representative Council to the Board. If requested by the Representative Council, the chair of the Representative Council must convey any such view to the Board.

(b) Other than as set out in Article 61 (a), the Representative Council will have no other powers.

(c) The Representative Council will have no power or authority to bind, instruct or direct the Board on any matter (including in relation to Member issues or any issue considered by the Representative Council under Article 61 (a)(iii)) and does not have the power to dismiss the Board or any Director.

(d) Representative Councillors are not directors of the Company for any purpose (including the Corporations Act) unless they have separately been appointed as Directors by the Representative Council.

CODE: Select all

[b]Constitution Section 62 part:[/b]

62. Appointment of Representative Councillors

(a) Subject to the remainder of this Article 62, there shall be the following Representative Councillors:

...

(iii) subject to Article 62(b), one representative of any group, body or
             committee established or recognised by the Board to reflect the
             diversity of membership which the Board from time to time
             determines should have a Representative Councillor representing
             that group, body or committee; and


/Important Member Information.pdf

CODE: Select all

[b]CPA Australia “Important Member Information” 16 March 2016 part[/b]

For completeness, the full process is set out below:

Representative Council
* The Representative Council’s responsibility under the Constitution is that it must hold an election in accordance with the By-Laws to appoint Directors for a three year term, commencing on 1 October of that year
* Procedures regarding the appointment of Directors and the election process to be undertaken are located inArticle 44 of the Constitution and Part 6 of the By-Laws Composition of the Representative Council
* Under Article 62(a), one Divisional Councillor from each Division is appointed by the respective Divisional Council
* If any Division to which there are attached more than 20 per cent of the total number of members, an additional Divisional Councillor is appointed
* The Board has delegated to the Nomination and Remuneration Council (under Article 62(a)), the power to select and appoint suitable members from “Other Groups” to the Representative Council
* Article 62(b) of the Constitution states that, Divisional Council appointments must not be less than or equal to 50 per cent of the total Council members

Nomination and Remuneration Committee
* The Nomination and Remuneration Committee has four members, all of whom are Directors of the Board
* By-Law 6.8(m) allows for the Nomination and Remuneration Committee to review all Board applications, including review of any supporting material, conducting reference checks, undertaking interviews and making final recommendations to the Representative Council. The Nomination and Remuneration Committee may also provide a recommended ballot list for the Representative Council’s approval
* The Nomination and Remuneration Committee Charter allows for CPA Australia to engage professional advisers or consultants to conduct interviews and communications to assist with the functions of the Committee
* The selection criteria for Director positions are reviewed by the Nomination and Remuneration Committee prior to each round of Director appointments to ensure that they are still appropriate and aligned with CPA Australia’s corporate plan
* Following recommendations by the Nomination and Remuneration Committee, the selection criteria are approved by the Board
* The assessment of candidates is undertaken using a typical Executive Search process using independent external consultants
CPA Australia has appointed Pacific Search Partners as the “executive search partner” to assist with the appointment of Directors process
* If an incumbent Director is eligible for a further term and elects to re-apply they must compete against all other applicants and go through exactly the same process as all other applicants. Since the inception of this process there have been incumbent Directors that have applied for further terms but have been unsuccessful in being reappointed to the Board.
* The executive search partner will review all applications against the approved selection criteria
* The executive search partner will create a ‘long list’ of candidates who best fit the selection criteria and will interview and further assess each of those candidates
* The executive search partner will present a detailed report on each of the candidates on the ‘long list’ to the Nomination and Remuneration Committee, along with recommendations for further consideration
* The Nomination and Remuneration Committee will discuss the outcomes of the executive search partner’s review and will create a ‘short list’ of candidates for the Nomination and Remuneration Committee to interview and further assess
* The Nomination and Remuneration Committee will consider the outcomes of those interviews and will present a final assessment and recommendations to the Representative Council
* Approximately one week before the election of Directors, Representative Councillors are sent meeting papers, which will include candidate reports and supporting material for candidates who were shortlisted and interviewed by the Nomination and Remuneration Committee
* At the meeting in August, the Representative Council will be presented with the names of all applicants (including those on the shortlist, long list and those who did not meet the selection criteria)
* The candidates on the shortlist will be ranked against the approved selection criteria
* The Chair of the Nomination and Remuneration Committee will present the Nomination and Remuneration Committee’s recommendations at the meeting in August, including the candidates recommended for appointment to the Board, and the recommended names for the ballot paper
* The executive search partner will be present at the meeting in August to provide further details of any candidate (including those who were not shortlisted)
* The procedures for the election are set out in Part 6 of the By-Laws, in particular By-Law 6.8

Determining Ballot Paper
* By-Law 6.8(f) provides the structure for the ballot papers to be used and the way in which Representative Council members can vote
* There will be one ballot paper used to elect three Member Directors and one Non-Member Director
* The ballot paper will contain the names of no more than three times the number of positions vacant
* The Nomination and Remuneration Committee will recommend which names should go on the ballot paper
* The Representative Council will approve by resolution the list of names on the ballot paper at the meeting in August

Voting Process
* Representative Councillors must be present either in person or by proxy to participate in the election. They may only give their proxy to another member of the Representative Council
* Once the ballot papers have been approved they will be handed to each member of the Council who will cast their vote by placing a tick next to the names of no more than three member candidates and one non-member candidate
* The Councillors will hand their ballot papers back to the Company Secretary who will act as Returning Officer
* By-Law 6.8(k) states that: “The candidates, in order of highest vote, corresponding to the number of
positions to be filled are elected. For example, if there are four vacancies then the first four candidates with the highest votes are elected”
* In the event that two candidates receive the same number of votes, the President of the Board or his or her nominee shall have the casting vote to determine who is elected