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CPA, Deloitte forget to mention $1.2m in exec pay

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Time4Change
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CPA, Deloitte forget to mention $1.2m in exec pay

Post by Time4Change » Mon Jul 03, 2017 11:06 am

CPA Australia has revealed it forgot to declare more than $1.2 million in remuneration to directors of its foreign subsidiaries in a document to members on Friday.
The corporate regulator has also forced CPA to reveal the number of full voting members at the body after repeated member requests for the information were ignored. The total number of voting members was 119,464 as of Friday, out of a total member count of about 155,000.

The supplementary director pay disclosure, sent to members on Friday afternoon, shows that CPA excluded its Malaysia and Shanghai subsidiaries from its original disclosure and did not include all payments to all directors as required by law. Both documents were signed off by auditor Deloitte.

CPA members, upset at the way the body is being run, have watched in despair as seven directors of the accounting body resigned and CEO Alex Malley was sacked with a $4.9 million golden parachute in the past month. Last week saw confirmation that all CPA public practice members will lose their legal shield from multimillion-dollar lawsuits from October due to a legal conflict of interest with the body's loss-making advice arm.

'CPA hiding info'

CPA member Andrew North, who first complained to CPA and ASIC about the director pay disclosure issue more than three weeks ago, said CPA and Deloitte have still not got it right as the new document isn't a single combined report of all payments from CPA and its subsidiaries to all directors as required by law.

"Management have not learned anything out of this exercise and continue to get it wrong and breach corporations law. As per the first [pay disclosure], the basis of preparation has been incorrectly modified to limit the extent of the disclosure. The auditor is culpable in allowing this breach of corporations law," Mr North said.

The original pay document was produced after the required 100 CPA Australia members sent a request, citing Corporations Act 202B, which compelled CPA to disclose the remuneration of each director at "the company and its subsidiaries".

"As per the first S202B, the basis of preparation has been incorrectly modified to limit the extent of the disclosure. Management is seeking to hide information by modifying the [basis] of preparation which has the effect of reducing information required to be given. The original S202B still needs to be reissued by management," Mr North said.

The unforced pay disclosure error by CPA, a regulator of accountants, comes after the body admitted to other errors in its accounts that were all made under the watch of interim CPA chief executive Adam Awty when he was company secretary.

'No apology, no explanation'

The new pay document reveals that four directors at CPA's Malaysia and Shanghai subsidiaries earned between $175,285 and $398,907 last year for their roles as CPA employees. The four were not paid for their role as directors.

It also shows that the total pay provided to all directors of CPA and all its subsidiaries is $5 million not the $1.87 million described in the document sent to members at the start of June. That's because the more than $1.8 million in collective pay of interim CEO Mr Awty and executive Jeff Hughes, who are also directors at the offshore entities, was not included on the 202B list.

When first asked about the pay disclosure errors last month, CPA had played it down, saying it had merely neglected to include one director earning "about $1600 from the disclosure".

Mr North said that CPA had also not apologised nor clearly explained to members why it was sending out the reissued document on Friday.

Member number revealed

The Australian Securities and Investments Commission told Mr North in a letter that it had asked CPA to reveal member numbers but would not provide details on its ongoing investigation into the accounting body, which includes looking at potential breaches of directors duties.

"We agree that regardless of whether this is explicitly required under the law details regarding the number of voting members that CPA Australia has is information that should be provided to members if requested," senior ASIC executive Jane Eccleston wrote.

The number of voting members is critical as there is an online petition calling for a complete spill of the CPA board which requires a list of at least 5 per cent of voting members to force an emergency meeting. Thanks to ASIC's intervention, rebel members now know they need about 6000 signatures. They have collected more than 1200 so far.

Ms Eccleston also said that ASIC was unable to impose a fine on CPA for the incorrect preparation of the 202B director pay document.

"For your information, we note that ASIC does not have the power under the Corporations Act 2001 to impose such a penalty directly as it would require court action," she wrote.

CPA continues to maintain is has complied with the law and accounting standards over the pay disclosures.
"We respectfully disagree with Mr North's assessment," said CPA spokesman Stuart Dignam.
He said the two documents were prepared "as defined in the Corporations Act 2001" and in accordance with accounting standards about related party disclosures.

Deloitte did not respond directly to questions but spokesman Tony Ritchie said CPA "is responsible for the preparation of the 202B" director pay disclosure and that the accounting body had complied with its obligations under the Corporations Act.
http://www.afr.com/business/accounting/ ... 701-gx2u3z

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nakedadmin
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by nakedadmin » Mon Jul 03, 2017 11:48 am

So much for Integrity. These Directors and Deloitte are a disgrace to the profession. And it's still not compliant with s202B.
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passedfc
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by passedfc » Mon Jul 03, 2017 12:05 pm

CPA board and executive are a disgrace to the profession and an insult to all members.
No Integrity
No ethics
No credibility
Deloitte audit is an absolute sham and they must be taken to account.
The 202B has to be redone in full, as one document .

Time4Change
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Time4Change » Mon Jul 03, 2017 12:22 pm

Can we add this to the agenda as well, when the board and executive are removed, can we also removed Deloitte as the official auditors of CPA Australia as they have failed their duties as auditors and I think every 3 - 5 years we should change auditors. I know its a management things, but we members should have a say in who the association appoint as auditor

chuck_meister
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by chuck_meister » Mon Jul 03, 2017 12:31 pm

Time4Change wrote:
Mon Jul 03, 2017 12:22 pm
Can we add this to the agenda as well, when the board and executive are removed, can we also removed Deloitte as the official auditors of CPA Australia as they have failed their duties as auditors and I think every 3 - 5 years we should change auditors. I know its a management things, but we members should have a say in who the association appoint as auditor
Totally agree, auditor rotation is important to maintain a proper independent fresh check.
The three to five years is a good period. For years four and five it should be put to a vote of confidence of members
to extend for one year. Mandatory switch after five audits have been completed.

deaneus
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by deaneus » Mon Jul 03, 2017 3:04 pm

Time4Change wrote:
Mon Jul 03, 2017 12:22 pm
Can we add this to the agenda as well, when the board and executive are removed, can we also removed Deloitte as the official auditors of CPA Australia as they have failed their duties as auditors
Great point - if they're going to be this rubbish at it, time to give the job to someone else. Let's spread that embarrassment around.

...and it's a CA firm, so quite frankly they can take a long walk off a short pier.

Time4Change
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Time4Change » Mon Jul 03, 2017 3:41 pm

No let's remain professional and let's the public be the judge. We need to remain positive and professional. We members know they won't be CPA Australia auditors again, they are off the list.

Tigers333
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Tigers333 » Sun Jul 16, 2017 12:01 pm

audits are a great joke....to the uninitiated public they think things are reviewed by professionals. Us in the know understand beter. Top dollars are paid to get the letterhead of the international accounting firm saying all it good. They send the kids at first yar grad rates to tick and flick, the partners do lunch with the client and piss in each others pockets and audit all clear is released.

The truth is these kids have no real commercial experience to do anything approaching a decent audit

Time4Change
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Time4Change » Mon Jul 17, 2017 11:00 am

I have to agree. Most of the junior members have not understanding of accounting standards and an audit opinion is not a real view of any wronging happening as they just take a sample to test. CPA Australia and CPA Advice is a case study that auditors once again failed their duties and responsibilities.

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Brett Stevenson
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Brett Stevenson » Wed Jul 19, 2017 8:53 pm

I need to go back into the standards but I'm sure in the foundational or conceptual framework one (can't think of the correct title) there is the covering principle that ensuring a true and fair view is the critical driver with the standards. So, if sticking to the standards distorts or doesn't give a true and fair view, then it is okay (even mandatory I would think) to depart from them so long as that is clearly explained.
I wonder if the Deloitte auditor considered this?

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nakedadmin
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by nakedadmin » Thu Jul 20, 2017 7:59 am

Deloitte allowed their name as auditor to be used on a document that was a s202B disclosure that did not contain 2 subsidiaries, altered basis of preparation etc. This document was proven to be wrong and then a new document was released for the 2 missing subsidiaries only, so that document also did not contain 2 of the companies. Meaning both documents are wrong and payments have been potentially missed and not disclosed on either document. Deloitte did not comply with the standard and audit it as a s202B disclosure.

A complaint has been made to Deloitte and it is being investigated.
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Red_Ferrari
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by Red_Ferrari » Wed Aug 23, 2017 3:02 am

.   
Deloitte have denied they made a mistake! CPAA can simply start as many subsidiaries as it likes and thus by-pass/ignore the limits on directors remuneration ... and what exactly do those dudes at ASIC do? The silence from ASIC is deafening.

Deloitte denies wrongdoing in CPA Australia audits
by Edmund Tadros

Deloitte has denied any wrongdoing over its audits of CPA Australia in an ongoing battle with two disaffected members over the accuracy of disclosures made by the nation's largest accounting body. The members, accountants Andrew North and Greg Angelo, both made separate formal complaints to Deloitte about aspects of its CPA audits. The men are on a mission and have taken issue with the accounting firm for signing off on what they consider to be an incomplete director pay disclosure and for not highlighting alleged overpayments of CPA directors.

Deloitte, which is CPA's long-time auditor, has rejected any wrongdoing over its work and told the men it will take no further action over their complaints. For its part, CPA also continues to maintain its disclosures satisfy the legal requirements of the Corporations Act and that payments to directors are valid within its rules.

Deloitte's denial goes to the heart of the exact role an auditor plays and how much it should investigate the information produced by management. The firm, which referred questions to CPA, believes that it has properly carried out its auditing duties. The issues, including how much CPA directors are paid and whether their level of pay is within CPA's own rules, were key aspects that drove a member rebellion at CPA that has seen CEO Alex Malley sacked with a $4.9 million golden parachute and the remainder of the existing board set to exit by the end of the year.

In his complaint to Deloitte, Mr North alleged that Deloitte's audit of CPA's initial director pay disclosure was inadequate. The disclosure, produced in late May after a request from members citing Corporations Act section 202B, compelled CPA to disclose the remuneration of each director at "the company and its subsidiaries". The initial 202B disclosure, signed off by Deloitte audit partner Mark Stretton, limited the disclosure to payments made to directors of CPA and subsidiary CPA Australia Advice.

CPA was then compelled to issue a supplementary 202B disclosure, also signed off by Mr Stretton, to include CPA's Malaysia and Shanghai subsidiaries. "There would have been no reason to issue a supplementary disclosure rather than a corrected full disclosure if all the information was on it," Mr North said in his complaint letter. "Deloitte is culpable for letting the issued audit reports represent to members that the first s202B disclosure was in satisfaction of the requirement of 202B. Even CPA Australia admit it was deficient."

Mr North believes that the initial 202B disclosure may omit further payments made to directors for purposes other than being a director of CPA and CPA Advice and wants a single, all-inclusive, disclosure to be made by CPA. One complicating factor is that the 202B disclosure is rarely used and limiting the scope to what members were most worried about, CPA and CPA Advice, might have not seemed unreasonable to the auditor. Mr North also said that Mr Stretton should have brought to the attention of members the alleged breach of Article 45 of CPA's constitution, which limits the maximum payments that directors are allowed to receive. "Deloitte should have qualified the audit report for this non-compliance with the constitution by the directors," Mr North said.

Mr Angelo also took issue with the audit treatment of the alleged Article 45 breach. "It is clear from its constitution that CPA Advice is a subordinate institution to CPA Australia as the 'holding company' and that the authority for directors' fees comes from that holding company," Mr Angelo wrote to Deloitte.

The complaints officer at Deloitte, partner Heather Park, sent responses to both Mr North and Mr Angelo rejecting their allegations and referred both men back to CPA. "All remuneration paid to directors, whether it is paid to the director in relation to their capacity as director or another capacity has been included in the section 202B schedules prepared by the company and audited by us," Ms Park wrote in a July response to Mr North. She said that CPA "has complied with Article 45 of its constitution", which deals with the maximum pay of directors, arguing "the constitution of CPA Australia does not apply to CPA Australia Advice".

"CPA Advice has its own constitution, with Article 6.5 dealing with directors' remuneration, which we note is uncapped," Ms Park said. She also took issue with the tone of the allegations. "Our investigation has shown that these allegations have no basis and we strongly refute them. We believe, and our investigation has confirmed, that Deloitte and Mark Stretton as the audit partner have throughout these engagements acted in a professional manner," she wrote. The firm believes it has done nothing wrong by allowing CPA to limit the scope of the original 202B statement and that its role was merely to ensure the information provided was accurate.

Mr North and Mr Angelo will not give up. They remain unhappy with the response from Deloitte and have written further complaint letters to the firm about its CPA audit. Mr North plans to make a new 202B director pay request for the majority refreshed board that is due to start from October 1.
http://www.afr.com/business/accounting/ ... 817-gxy9h2

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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by nakedadmin » Wed Aug 23, 2017 2:54 pm

Article 45 says the amount paid must be less than the relevant percentages. So to argue it is not paid by CPA Australia because it is paid by a subsidiary is just rubbish. The Directors have full control over the subsidiary and the subsidiaries constitution.

Article 45 is:
(b) Subject to Article 45(i), the amount paid to a Director (other than the
President or the Deputy Presidents), the employer of such a Director or a
Practice Entity with which such a Director is Closely Associated (as
applicable, and when and where permissible) pursuant to Article 45(a) (for
the avoidance of doubt, excluding any amounts paid pursuant to Articles
45(e) or (f)), in any calendar year will be determined by the Board for the
relevant calendar year but must not exceed 15% of the total annual salary
package of the Auditor-General of Australia, as prevailing at the date of the
Board determination. The amount paid to a Director (other than the
President or Deputy Presidents) will be prorated for any period where the
Director is not entitled to be paid fees by reason of Article 45(g) or serves as
a Director for a period of less than 12 months in a calendar year.
Deloitte is really digging their heals in. I noticed that they did not say that the first s202B was compliant just that they did not have an obligation to make sure it complied with s202B, just as per the basis of preparation provided by the client. But then they go on to say CPA Australia has complied with s202B. But how is that possible when the first document was not audited for compliance with s202B!
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The Nude CPA
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Re: CPA, Deloitte forget to mention $1.2m in exec pay

Post by The Nude CPA » Thu Aug 24, 2017 11:28 am

It's interesting, for want of a better word, that Alex Malley now describes himself as a "startup investor"...

Perhaps he had a few more (startup) subsidiaries planned for CPA Australia?

And why not, since CPAA Advice has been such a raging success... :roll:

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