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Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Mon Aug 14, 2017 12:12 pm
by Brett Stevenson
Hi all,

Just a brief penultimate ‘weekly’ update from me.

All is very ‘Quiet on the CPA Front' as we await the Independent Panel Review Report.
Presumably they are busy little beavers and are digging into it feverishly.

So just a few quick comments.

1. Who has ever said they are sorry for this mess?

Forget all the politically correct type sorry expressions.
But the one thing that is missing after all that has been exposed and all that has transpired over the last 6 months is that not one of the people involved has come out and said we are sorry.
a. The CEO (Alex Malley) - he carries on post-termination as if the problem is not him but the people who exposed him.
Just sheer arrogance and bravado. If the Independent Panel do not chase his $4.9 million payout (no matter what it costs) this member will be sorely disappointed.
I have received advice that the payout exceeds what the Corporation Act allows, so there will need to be some pretty good explanations by the board and management of CPA. My guess is that they also need to legally answerable for this.
Everything exposed from his appointment through to his termination needs to be held to the legal and professional ‘blowtorch’, and the light shone brightly upon it.

b. The two COO’s (Adam Awty and Jeff Hughes) - their reward is that Adam Awty has been promoted to interim CEO, and Jeff Hughes continues in his job.
I think the best thing Ian McPhee can do is to stand them both down now pending the report, put in an Interim CEO, and send a clear m,essage that we are not in a state of limbo until September.

c. The rest of the CPA management - well I leave it to members to consider what sort of management are prepared to stand by receiving massive salaries while the ship is burning, and they can’t even ring the fire alarm.
All the excuses in the world cannot overcome their unwillingness to speak out.
I would suggest the best people for the Independent Panel to talk to would be all theCPA staff who left during the Malley years.
Many of them may be the silent heroes who were constrained by confidentiality agreements and legal threats.
Lets hope the Independent Panel review these closely.

d. The CPA divisional leaders and representatives (Representative Council for example, and Divisional Presidents etc).
What can I say. Until the last month virtual silence.
We didn’t know sir. We were just innocent little bystanders. These things never even entered out heads.

e. The board of CPA Australia.
Going all the way back to when Alex Malley became CEO. All of them need to give some sort of explanation as to why they just ignored the obvious.
I shan’t go through and name them individually apart from those that remain.
One would think that perhaps Graeme Wade and Richard Petty having served on the board the whole time would at least have some sort of words of regret.
No, nothing.
How about Sharon Portelli and Michele Dolin - silence there also.
Jim Dickson?- nothing other than justifying every decision that has been made by the board.
Tim Youngberry - too busy on his ‘listening tour’ to have heard the alarm bells ringing in the background (even when on the ACT division)

f. The auditor - Deloitte (Mark Stretton and those that went before)
I imagine he will be to busy trying to defend some pretty poor decisions, that the revelations about CPAA Advice and the Members Register have exposed pretty clearly.
I guess saying sorry in their field is not on as it acknowledges failure and can have legal complications.

Oh well, perhaps the Senate Inquiry might be able to ask that question of the current board when they appear before them.
Lack of any expression of sorrow means that no-one was at fault. It just happened, and all these above mentioned persons just got innocently caught up in it.
Sure.

As for me, I am hoping the courts and/or ASIC will force it out of them.


2. The Independent Review Panel

I am of the view that tis is the real key to any significant change at CPA Australia.
The exposure of tis fiasco has done untold damage to the CPA organisation, the designation, and the membership.
It needed to be done.
But what is needed now is a very open and transparent and ‘no holds barred’ clearing up of the mess.
I would think the Independent Panel provides the best hope for that.
If it fails, or tries to whitewash, then I think the CPA brand in Australia will be mortally damaged.
That's my personal opinion mind you, and I’ll be walking away come December if there are no firm ‘correctives’ in place.

But, to date, I think the Independent Panel have achieved a lot and I am optimistic.

We all know that the appointment of new directors on 30th September is not under a good process (N & R Committee, Representative Council), and we all have major question marks about that.
But let's be realistic here.
Let’s not presume the worst.
I have little confidence in the current Representative Council not the newly formed Nominations and Remuneration Committee.
But all the current board are going, and all we need are some good new directors and a good Chairman to set the ship aright.
As imperfect as the current process is I think it should be enough for the short term.
I expect that whoever is appointed will just be for a interim period until we get a new constitution, and a new member elected board under it.
Hopefully by April 2018.
I also would like to think that the Independent Panel will recommend that only an Interim CEO be appointed until the new constitution and newly elected board is in place.
It is imperative I believe that Adam Awty is not allowed to stay in the CEO position. It’s a bit like pouring fuel on the fire.


3. The Current Head Office Situation

Well this is my ‘two bob’s worth’.
a. The Independent Panel should recommend immediately that the CEO’s remuneration be set at a maximum of $600,000 with no bonuses. Just do his/her job.
That should be done immediately. It sends an immediate signal to the wider CPA membership that things will change.

b. Then all the other management salaries need to be reset based on the CEO’s salary. Again it needs to be done immediately.
Let them all resign if they wish, and let them join the other applicants who apply for their jobs.
If ever the Independent Panel can show it is prepared to make some immediate improvements tis is one change that will win universal approval within the membership.

c. I do not believe that allowing Adam Awty and Jeff Hughes to remain in their positions at CPA Australia can continue.
The ‘old guard’ need to go, we cannot wait until who knows when.

d. CPA Australia Advice needs to either be shut down pronto, or some sort of explanation as to the ‘financial exposure’ CPA Australia is facing.
$20 million is a lot of money.

e. Clearly most other matters will need to wait for the new board, and the IRP report.


4. ASIC, Independent Panel, and Auditor

I would like to imagine that the Independent Panel will be working closely with ASIC on these matters.
The auditor has some significant questions to answer, especially in relation to CPAA Australia Advice, and s202B statement, and the directors remuneration above the constitutional limits (see below).
The expectation is that there will be justice involved here in the true meaning of the word, nit a lets forget the past and press on with the future.


5. The Enronising of Directors Remuneration

How is is that CPA Australia can establish a fully owned subsidiary to allow them to pay the directors above the constitutional limits?
There is nothing to stop them creating as many as they like to do that, and the limits become meaningless.
The constitution becomes almost a meaningless document if you can create a fully owned subsidiary to ‘get around’ it.
This is one of the main weapons Enron used to get around some legitimate accounting constraints.
Surely we have learned something from that. It seems not at CPA Australia.
Surely as a professional accounting body we are not going to allow this sort of ‘legal duck shoving’ to occur?
To me, this is a cameo of all that has been wrong at CPA Australia.
Testing the using the legal limits to the personal benefit of the directors and officers.
This is why ASIC needs to be actively involved in pursuing this. The CBA furore has nothing on what has happened at CPA in terms of directors duties.
If ASIC do not pursue these CPA matters then I would suggest they have lost the plot.


Well, this is my almost final review.

I think we are all hanging out for the Independent Review Panel Report o 15th September.

A large part of the Fighting Fund is still intact.
I have used what I have spent mainly on legal costs, a little on travel and promoting the spillmotion, but am saving the balance until the IRP Report.

By the way my submissions and presentation to the Senate Inquiry is in Hansard if you want a look.
I have a couple of minor grammatical corrections to make.
It will also give you a feel for how ‘out of touch’ some of the other membership organisations are with the 21st century and their membership (I suggest).
Think GIA, AICD, CAANZ, ASA and companies such as AMP, even Computershare.
Methinks they would have been arguing to keep hitching rails outside stores and pubs in 1930 because not everyone owned/used a car.

Oh well, it is strange times we live in.
I would love to hear more from the academic world on these developments.

If I can create the time I shall write a little booklet on what happened at CPA Australia to serve as a salient lesson in so many ways.
Still much to be done, and the story still unfolding.
You can just imagine the Title and Sub-Titles that could be used.
Perhaps some wealthy benefactor might like to fund it? Maybe I shall approach my Alma Mater at UNSW?


Cheers

Brett


Brett Stevenson CPA BComm MDiv
bstevenson100@gmail.com

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Mon Aug 14, 2017 2:13 pm
by Ken Crout
Brett . . . none of this would have happened without you. I look forward to reading your book.

Go well,
Ken

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Mon Aug 14, 2017 2:57 pm
by JWheldon
Well done Brett. At least your book would be accounting related, not about a naked emperor, who's book reviews were not great. Maybe the CPA Australia can sponsor the book and publish it all over the world as a number one education text. Ha Ha Ha Probably not, because they need all the money they can get to pay for the all the termination packages, the directors fees, management expenses, the independent reviews and costs to fix all the mess they have created. Not sure how much of the $90m in surplus will be left by the end of December 2017?

Maybe another skit for Clarke and Dawe on how Alex Malley is going with his book sales and post CPA CEO status. Ha ha ha. Maybe Alex is working hard on a new book as we speak for his thousands of young readers, at high school, on accounting for beginners with lots of life stories, advice and colorful pictures and diagrams????

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Mon Aug 14, 2017 3:28 pm
by passedfc
Yes Congratulations Brett, once again for achieving so much .
Let hope the review brings about the dismissal of Awty and Hughes and that CPA can rebuild into a respected organisation.
I think there should be a bronze bust of Brett's smiling face in the CPA foyer just as a reminder to future Boards and CEO that the members are out there watching.
Thanks again Brett for your vigilance and energy in bringing this about, And also to the many intelligent and witty members on this site who have made the process a positive experience. It has been a pleasure to interact with you all . With the sort of people here, CPA has a chance to rebuild.

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Tue Aug 15, 2017 10:46 am
by CPAwhatever
Thanks Brett for the update. Thanks for leading the change. You spoke when majority were silent. I think we are all waiting for the IRP report. Will be interesting.

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Tue Aug 22, 2017 6:21 pm
by Morris
Whilst I'm not a CPA (I'm a chartered accountant) good on you guys for what you have achieved. I used to travel interstate weekly and would always see the same promotion at the airport and wonder who that person was. Then heard more. Never bought the book. I thought it strange interviewing an astronaut. Then read stories of huge payments for interviews. Hard to believe it happened at a not for profit and then the Exec Rem. I hope justice continues as I see it you're only half done! Keep up your magnificent efforts. Shame can't claw back years and years of Exec Rem.

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Fri Aug 25, 2017 12:02 pm
by deaneus
JWheldon wrote:
Mon Aug 14, 2017 2:57 pm
Not sure how much of the $90m in surplus will be left by the end of December 2017?
that's a great question.

we can deduct

- a $4.9M payout
- $$$ to get bridging insurance
- $$$ for the independent review

grrrr

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Wed Aug 30, 2017 10:39 am
by Magnet
Just a quick question in regards to the Senate inquiry?

Is this now over? Or are the current board still to be brought in and questioned at some later date?

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Wed Aug 30, 2017 12:36 pm
by nakedadmin
I think they had 30 days to appear so they will have to turn up. I reckon they are trying to get out of it in any way they can. I'm sure they are spending some of our money on lawyers to attempt this. I can't wait for them to be forced to appear. I heard that the announcements of their resignations the day after they were asked to turn up was not a coincidence. Imagine how gutless they are in putting in a submission then sending a spokesperson who had to answer all the questions with: I don't know the Directors made that decision.

Re: Brett's 'Weekly' Update A Penultimate One 14th August 2017

Posted: Wed Aug 30, 2017 5:36 pm
by theallseeingeye
I reckon the Board are waiting to see what the Independent Review says. After all, it's only a crime if you get caught. And you wouldn't want to be offering a defence in the Senate one week, only to have it blown out of the water a week later by revelations in the report. Integrity...indeed.