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The critical failing of CPA Australia plus a way forward

What kind of things would members actually want CPA Australia to focus on vs what are they actually doing
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Brett Stevenson
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The critical failing of CPA Australia plus a way forward

Post by Brett Stevenson » Tue Jun 12, 2018 8:27 pm

CPA Australia as a professional membership organisation has lost its way in many ways. Many of these failings have been exposed before the ‘watching world’ and I hardly need to repeat them again (weak governance, scandalous remuneration, poor strategy and marketing, opaque and minimum disclosure/reporting, unaccountable leadership etc.). You could summarise the failings at CPA Australia as being an abuse of power by the leadership, and as unpleasant as it is to say it, many of the fundamental problems remain.

Professional development
But let us step back and ask just what would be a critical indicator of whether a professional membership organisation like CPA Australia was doing its job properly or not?
Is there a key performance indicator (kpi) or measure that would identify that this organisation has major problems, and is failing at a fundamental level?
What do you think?
Well I believe there is a critical indicator which should have been obvious to us all for a long time. I would go so far as to say it is possibly the key indicator for any professional membership organisation. It all centres on our reason for existence which is that we are a profession and need to maintain professional standards.
What could indicate whether professionals are maintaining high standards to warrant the trust (and monopolistic rights) given us by our society?
Surely the answer must be that we maintain our (hopefully) high professional standards.
And how can we measure that?
Well, I suggest it is by measuring the professional development our membership organisations provide and are utilised by the membership.

The example of CPA Australia
Let me illustrate how this is a very clear indicator of the failure of CPA Australia.
For the last three years (2015-2017) our total revenue has been around $180m p.a. Of which $17m is received for providing professional development for members. With a steady full membership of 120,000 that means the average spend per member per year on professional development is just $142. Given that we are required to achieve 120 professional development hours every triennium (40 hrs p.a.), that means the member (on average) spends a mere $3.50 ($142/40) per hour of professional development with CPA Australia.
That is so low it is almost pathetic.
The immediate conclusion you can draw from that is that the members are looking elsewhere to gain their professional development.
When you consider that most of the professional development courses/services offered by CPA Australia average out at between $70-$100 per hour, you can see there is a disconnect here somewhere between the professional development offered and what the membership see as important for their development.
By default I would lean toward the members being more aware of their professional needs than the CPA Australia head office thus they are looking elsewhere.

In other words the core function of CPA Australia to assist members maintain their professional standards and development is either being overpriced (which it certainly is - see below) and/or is seen as being irrelevant by the members.
You hardly need to be a financial whizkid to appreciate the enormous wasted opportunity for CPA Australia. If they were able to provide professional development services that touched the issues members faced and were seen as actually enhancing their profession and expertise then just to increase this average from $3.50/hr to say $15/hr (which is still pretty low so it is not aiming that high) then the annual revenue from professional development alone should increase from $17m to $72m. Now that is a phenomenal difference.

Obvious you might say but not to the CPA Australia leadership who still see professional development through the prism of charging high with increasingly ‘mickey mouse’ material such that the takeup by members is low. It’s a downward spiral of non-engagement by the members because they see their organisation as missing the obvious.

The additional benefit of increased member participation in professional development is that the members become engaged with the organisation and see it as serving a critical role for them and the profession. But the CPA Australia leadership just cannot fathom that. They are more interested in maintaining control and earning lots of remuneration for themselves and ensuring members do not speak up too loudly about problems.

A suggestion for the new CEO
But let me make a positive and proactive suggestion for CPA Australia with a strategic budget that focuses on the accounting profession and membership which after all is our raison d’etre. They will have trouble comprehending this as their focus is on membership global growth (numbers) and a strong balance sheet because they have this delusionary vision that they want to be the world's best members service organisation. (Can someone please tell them where the last decade of pursuing that vision has gotten us.) But I shall press on with my suggestion regardless.

Strategic Budget for CPA Australia going forward.
(oh, and no million dollar consulting fee required CPA Australia. Some of us members are still prepared to do some work voluntarily to improve the profession. What’s that? You don’t understand such a concept at Head Office. Oh, I see. Mmmm). Don’t worry I’ve left the balance sheet and cash flow for you to do but am happy to take some consultation fees if you want them done also.

  • to increase member engagement in our organisation
    to improve and encourage more relevant and cost effective professional development
enhance the accounting profession.
(N.B. I have not included to enrich the leadership, or to compete with overseas accounting organisations, or to set governance standards so low that even a lizard would have trouble crawling under them).

Primary drivers
  • reduce members subscription fees by 50%.
    reduce professional development costs by 50%.
    reduce marketing by 50%.
uce head office administration costs by 50%
(Yes, that is 50% - half of what they now are. Note I am not optimistic on this as we tried to reduce directors remuneration by 50% but they screamed ‘no-comprende’ so I’m thinking 20% is about the limit of their mathematical skills. But let’s press on regardless and encourage them to upskill eh!)
  • increase professional development costs by 100%
    increase accounting research grants by 100%
ease IT expenditure by 200% (to improve administration and professional development especially)

The strategic budget
(just a summary, the detailed one is in the spreadsheet seen below) ... =652363849

Oh, and by the way the surplus is still in double figures so that means you can provide more services to members, or think of other ways to enhance the profession rather than see it as an opportunity to increase your own remuneration.
The attached spreadsheet has all the relevant big picture comments and detail. Have allowed for 2018 to transition. C’mon Andrew this is your big chance to shine. Forget what they have done in the past or ignore those whisperings in your ear from the board. You are the CEO, not the Chairman. Strike out and really make a positive difference.
See attached for formatted version of below.
Actual 2017 Budget 2019
Revenue $184m $179m
Less Expenditure
Employees $69m $60m
Education/CPA program $20m $18m
Advertising & Promotion $13m $10m
Event Delivery $11m $22m
Professional Services $11.5m $8m
Printing & Communications $7m $5m
Travelling & Catering $6m $5m
Other $7.4m $7m
Rent & outgoings $13m $13m
Computer & IT $3.2m $10m
Dep’n and Amortisation $9.5m $10m
Sundry Others $1m $1m
Total Expenses $172m $169m
Surplus $12m $10m

It seems to me I am not Robinson Crusoe when it comes to my experience with overpriced and irrelevant professional development from CPA Australia. To improve it will lift not only the members skills but also their engagement with the organisation, and will enhance the accounting profession.
Thus the critical criteria for the new board and CEO of CPA Australia needs to be to lift the average spend of members from $3.50 per PD hour to at least $11 p.a. To make it a target with some challenge so rent seeking at Head Office does not continue I suggest membership fees need to be reduced by 50% also. For more detail see the attached strategic budget.

A quick glance at the annual reports of other professional membership organisations (accounting, legal, engineering, medical etc) would indicate that this methodology would not go astray with them also.

spreadsheet.png (78.82 KiB) Viewed 1922 times

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Re: The critical failing of CPA Australia plus a way forward

Post by Clogs » Wed Jun 13, 2018 4:47 pm

Fully agree Brett. I believe that next to improvement in CPD delivery there also should be an improvement in the communication CPA Australia has with its members. I work in a rural public practice and have been a CPA member for over 10 years. In this time a state representative of CPA Australia has not once paid a visit to our town with about 7 CPA Practices and many more members. Not one phone call either! I realise that there are many rural practices and visiting every single one of them is not always possible. But we receive regular visits from software providers and other accounting service providers to our town, why can CPA Australia not manage a visit even once in 10 years?

Changes have been promised but I have to see it to believe it!

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