Strategic Objective 4
Competence and professionalism of members:
‘To investigate and adopt quality assurance mechanisms’
Practice reviews
| Practice reviews | 2006 | 2007 | 2008 |
|---|---|---|---|
No. undertaken | 321 | 310 | 567 |
| Average hours | 13 | 18.5 | 13 |
| Passed | 92% | 91% | 93% |
Reviews of public practitioners are an essential element in the regulation of the profession. The increase in the number of reviewers has meant we are very close to achieving our aim of 500 new reviews and 100 re-reviews in each financial year. We have also made significant inroads into the number of re-reviews that were outstanding.
Associated Finance Entities
In early October 2007 Practice Review wrote to all public practitioners requesting information to assess whether they operated, or were associated with, an Associated Finance Entity (AFE). This was in response to the amendments to PS-2: Client Monies and Members Trust Accounts, effective from 1 October 2008. We have since evaluated all information, including financial statements, provided to us and have written to all members who have an AFE to alert them to the impending changes. Practice Review will continue to monitor compliance of members in this area.
Complaints
The number of complaints received in the 2008 financial year totals 70, revealing a further steady decrease from previous years. At the same time, there has been a relative increase in the number of technical complaints from the Practice Review Board and other government regulators. Professional Conduct has continued to aim to resolve complaints in a timely manner, with 90% of closed complaints being resolved within six months of being received.
The Professional Conduct Committee met ten times during the period, during which it referred 11 members to the Disciplinary Tribunal. In addition, the Professional Conduct team continue to successfully mediate many other less serious potential complaints. No complaints were made to the Reviewer of Complaints Procedures during the 2008 period.
Complaints process
| 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|
| No. received | 111 | 94 | 92 | 70 |
| Resolved as at 30 June 2007 | 99% | 100% | 58% | 43% |
| Of the above, resolved within 6 months | 69% | 86% | 93% | 90% |
Disciplinary action
| 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|
| No. of referrals to Disciplinary Tribunal | 11 | 12 | 12 | 12 |
Nature of complaints received
| Description | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|
| Criminal conviction/charges | 2 | 3 | 1 | 1 |
| Bankruptcy | 1 | 1 | 3 | 1 |
| Operation of trust accounts/client monies | 8 | 10 | 8 | 7 |
| Fee matters/disputes | 4 | 2 | 2 | 2 |
| Integrity/objectivity/independence | 23 | 16 | 7 | 17 |
| Professional competence/due care/timeliness | 23 | 15 | 13 | 20 |
| Technical competence | 21 | 17 | 26 | 7 |
| Professional behaviour/conduct | 27 | 21 | 23 | 7 |
| Confidentiality | 0 | 0 | 2 | 1 |
| Operation of a CA practice | 0 | 7 | 6 | 4 |
| Withholding information and records | 2 | 2 | 1 | 3 |
| 111 | 94 | 92 | 70 |
Professional Standards
Setting ethical and professional standards and related guidance for its members is an important way for the Institute to meet its obligations under the Act as a self-regulating body. In particular, the ethical and professional standards that regulate the performance of auditing and assurance engagements performed by Institute members are an important part of the overall financial reporting framework in New Zealand.
During the 2008 financial year, Professional Standards has undertaken a number of consultations and developed various Institute pronouncements which are set out below.
- A consultation was undertaken in the area of professional standards for financial advisory engagements, including the release of a Consultation Paper
- Exposure Drafts totalled 15 (1 for the Code of Ethics (limited amendment); 1 for Professional Standards (PS-2); 11 for ISAs(NZ); and 2 for other pronouncements (Explanatory Foreword + Framework for Assurance Engagements)
- Approved Standards/other pronouncements issued totalled 11: 8 ISAs (NZ), 1 Professional Standard (PS-2); 2 other pronouncements (Explanatory Foreword + Framework for Assurance Engagements)
- Professional Standards has also made 25 submissions/comment letters made to IFAC and its various standard setting boards.
Professional Support
The Professional Support team has continued to provide support to members on professional matters where practicable. The number of enquiries has been steadily increasing, but the additional involvement of the team on amendments to the Institute’s Rules during the 2008 financial year has meant that fewer enquiries could be actioned.
Listed below are the number of enquiries received by Professional Support and nature and source of those enquiries.
| Category/nature of enquiry | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|
| Accountant recommendation | 20 | 24 | 30 | 35 |
| Technical assistance | 179 | 213 | 158 | 160 |
| Audit | 84 | 118 | 77 | 78 |
| Insolvency | 17 | 17 | 13 | 19 |
| Fee disputes | 62 | 83 | 107 | 137 |
| Complaints | 23 | 48 | 52 | 41 |
| Ethics | 127 | 165 | 118 | 183 |
| Public practice rules | 144 | 171 | 178 | 223 |
| Client records and transfers | 58 | 54 | 66 | 61 |
| CPD and education | 6 | 5 | 7 | 3 |
| Practice admin and review | 26 | 34 | 35 | 35 |
| Client monies | 13 | 12 | 14 | 13 |
| Standard forms, disclaimers engagement letters, wordings | 53 | 55 | 34 | 30 |
| Practice sale and purchase | 15 | 13 | 9 | 22 |
| Sundry | 43 | 49 | 42 | 52 |
| 870 | 1061 | 940 | 1092 |
| Source of enquiry | 2005 | 2006 | 2007 | 2008 |
|---|---|---|---|---|
| Members in public practice | 589 | 665 | 538 | 685 |
| Members in corporate/government/NPF sectors | 128 | 137 | 122 | 107 |
| Members total | 717 | 802 | 660 | 792 |
| From non-members | 153 | 259 | 280 | 300 |
| | 870 | 1061 | 940 | 1092 |
Membership
Progressing to membership
In 2008, we have seen a further significant increase in future members undertaking PCE1, PAS and PCE2, continuing a trend of the past three years. This bodes well for the future of the Institute and the profession.
Progressing to membership
| 2006 | 2007 | 2008 | |
|---|---|---|---|
| Registrations for PCE 1 | 1097 | 1264 | 1549 |
| Registrations for PAS/PCE 2 | 773 | 775 | 809 |
| Applications for provisional membership | 1143 | 1389 | 1696 |
Attracting new members
| New registrations | 2006 | 2007 | 2008 |
|---|---|---|---|
| Provisional membership | 1121 | 1384 | 1856 |
| AT full membership | 90 | 74 | 52 |
| ACA full membership | - | 202 | 497 |
| CA full membership | 600 | 687 | 743 |
The decline in the number of Accounting Technician members is partly explained, and substantially outweighed, by a substantial increase of Associate Chartered Accountant members to nearly 500, up from just over 200 in 2007. Over 1000 trainees registered as new provisional Chartered Accountant members, an increase of 20% on 2007 registrations, boding well for the future health of the Chartered Accountants College.
ACA special entry route
The Associate Chartered Accountant special entry route provides an opportunity for people with several years’ experience in accounting and accounting-related roles to have their experience recognised for membership purposes. Experience was assessed by volunteer member panels in Wellington and Auckland. 33 panel meetings were convened for this purpose and 21 member assessors offered their expertise to accomplish this task.
647 special entry route applicants were successful in being admitted to provisional or full ACA membership in the year ended 30 June 2008. Applications to the special entry route close in November 2008. Those admitted to provisional ACA membership will then have until 1 November 2009 to complete PCE 1 and transfer to full membership.
Review of CA/ACA admission policy
A review of the CA and ACA admissions policy was a key project of the Admissions Board this year. The objective of the review is to ensure the CA brand remains highly competitive in both national and international marketplaces and the ACA brand attractive to New Zealand students and their future employers. Draft proposals are to be exposed for stakeholder, including member, comment before finalisation and presentation to Council for approval.
Review of CPD policy
A review of CPD policy to align with international standards and best practice commenced. Draft proposals will be exposed for member comment in late 2008. Developmental work also began on an online electronic CPD log for members to enter and retain with ease a record of their personal CPD activity. The online log will be offered as an optional service.
CPD compliance
CPD is vital for the ongoing competence of members. Review and investigation of members’ compliance is undertaken by the Membership Division. Several members have been found by the Admissions Board to be in serious breach of CPD obligations and one member has been referred to the Professional Conduct Committee. This is the first year in which members have been referred to the Admissions Board for CPD non-compliance.