The Institute of Chartered Accountants in Australia 2008 Report to members
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The Institute of Chartered Accountants in Australia
2008 Report to members
Including full financial statements
charteredaccountants.com.au
2
About the Institute
The Institute of Chartered Accountants in Australia is the
professional body representing Chartered Accountants. Our
reach extends to over 60,000 members and aspiring members
– more than 48,000 Chartered Accountants and more than
12,000 candidates currently enrolled in our postgraduate
Chartered Accountants Program.
Our members work in diverse roles across commerce and
industry, public practice, academia and government throughout
Australia and in 119 countries around the world.
The Institute is a founding member of the Global Accounting
Alliance (GAA), an international accounting coalition of the
world’s premier accounting bodies. The GAA has more than
700,000 members and membership of the eight global institutes
is automatically available to members of the Institute in Australia
without the requirement of further study. Leading the
The Institute was constituted by Royal Charter in 1928 and
now operates under a Supplemental Royal Charter, granted
profession
by the Governor-General on behalf of Queen Elizabeth II since
1928
on 19 August 2005.
The Institute of Chartered Accountants in Australia, Incorporated In Australia Members’ Liability Limited.
ABN 50 084 642 571. Job Number 0708-11
Published by: The Institute of Chartered Accountants in Australia
Address: 33 Erskine Street, Sydney NSW Australia 2000
2008 Report to members: including full financial statements
ISSN 1834-0423
©The Institute of Chartered Accountants in Australia
2008 Report to members
3
Contents
President’s message .............................. 5
CEO’s review .......................................... 6
Highlights . .............................................. 8
Strategic initiatives ................................. 9
The year in review
Relevance to members
and stakeholders................................... 10
Leadership and competitive
positioning............................................. 14
Growth to ensure
a sustainable future............................... 19
Global positioning.................................. 22
Ensuring the Institute is fit
for the future.......................................... 24
People and culture................................. 26
Sustainability review.............................. 27
Environment.......................................... 28
Social...................................................... 29
Corporate governance
The Board ............................................. 35
Board and advisory committees........... 37
Corporate Governance Statement........ 39
Risk management and audit................. 40
Financial statements
Financial statements contents.............. 44
Financial statements.............................. 46
Contact details....................................... 77
©The Institute of Chartered Accountants in Australia
2008 Report to members
4
Vision
Leading the profession
The Institute will be:
> A visionary organisation
with respected thought
leadership and key
business partnerships
> Setting the benchmark Purpose Organisational core values
for the highest ethical and Through its leadership,
P Play it straight
educational standards the Institute enhances
> Providing a Chartered and promotes the reputation R Respect builds success
Accountants brand which and role of Chartered
I Improve and innovate
is the passport for lifelong Accountants, both individually
career success and collectively, and ensures D Deliver to win together
the highest professional
> Representing and leading E Expect the best
quality of its current and
the members nationally
future members, for the
and influencing regionally
benefit of the business
and globally.
community and the
public interest.
©The Institute of Chartered Accountants in Australia
2008 Report to members
5
President’s message
Business leaders are under more scrutiny proposed system. We are also identifying
and are more accountable than ever potential opportunities to use tax policy
before. An integral part of our vision of to drive behavioural change that reduces
leading the profession is to lobby on behalf emissions usage.
of our members to reduce over-regulation
The Institute’s strategic plan details our
and help businesses interpret the latest
response to the current and long-term
international reporting standards.
issues facing the Institute and sets out
Over the last year, the Institute has the initiatives that will help us achieve
published 10 leadership reports and hosted our vision of leading the profession.
a range of workshops, forums and debates
These will ensure the Institute becomes
on issues such as ethics, differential auditing
even more relevant to members, maintains
and extended performance reporting.
its influence with governments and
A welcome success for the Institute this regulators, is more competitive both here
year was the introduction of a national and globally, has a sustainable and growing
framework of schemes that limit the liability membership and is able to attract and
of our members. After 20 years of recruit the best staff.
negotiation with state, territory and federal
To ensure the Institute is on the right track,
governments, we have secured a first for
the Board undertook a substantial strategic
any Australian profession and a first among
review during the year. This review
the accounting profession globally. This
confirmed our overall strategic plan and and eliminates the need for a bridging
was a significant outcome for us, and for
made necessary amendments to take us course. Globalisation is a key part of
you, our members.
through to 2010. business today and the GAA ensures our
Thanks to the approval we secured in all members’ transition to GAA countries
These amendments reflect the changing
states except Tasmania, the schemes are knows no boundaries.
environment, a greater focus on leadership
operative under state law. Commonwealth
positioning nationally and globally and the In 2008 the Institute celebrates its 80th
approval means that members are covered
need for improved processes and year and we reflect on all that has been
against claims made under the Trade
infrastructure to better respond to achieved since 1928 when His Majesty
Practices Act as well.
members’ needs. King George V constituted the Institute
Another area of major international of Chartered Accountants in Australia by
Assessing progress against delivery of the
regulatory significance is sustainability and Royal Charter. We are justifiably proud of
six objectives in our strategic plan is the
the need for businesses to be accountable our heritage, our currency and our vision.
best way to measure the Institute’s success
for their environmental footprint.
in 2008, and we have structured the report
Australia is playing an important role in to give members an understanding of
international activities that are leading to how we have performed against our
emissions trading, the permanent storage strategic goals.
of emissions through sequestration,
As a founding member of the Global Andrew Arkell
and development of carbon credit
Accounting Alliance (GAA), we continue to President
offset activities.
work closely with our international peers in
With the focus on an Australian Emissions professional accounting bodies in shaping
Trading System for 2010, the Institute is the profession on a global scale.
developing a number of projects in this
The Institute has recently completed work
area. For example, we worked with a
to confirm our full mutual recognition of
member firm to prepare a report that
eight GAA institutes’ qualifying programs
will help the government identify the tax
with our Chartered Accountants Program.
implications and develop tax incentives
This ensures the process of going overseas
by assessing whether the existing tax
with an Australian qualification is seamless
framework will cope effectively with the
©The Institute of Chartered Accountants in Australia
2008 Report to members
6
CEO’s review
After an eventful year, I can report with Serving the national interest
pleasure that the Institute is well placed While we remain responsive to the
to continue fulfilling its charter to serve concerns of members, we understand that
members, engage meaningfully with as a peak body in a vital services sector
regulators and the community and we have a responsibility to put forward
contribute to excellence in standards proposals that are in the national interest
of accounting. as well as our own. To that end the areas
As our many successful initiatives on which we maintain special focus are
demonstrate, our voice is being heard. taxation, superannuation, corporate
This is particularly true in areas in which governance and ethics, regulatory and
we have actively sought to influence the workplace reform.
regulatory environment to maximise the In our pre-budget submission to the federal
contribution the accountancy profession government, for instance, we placed
can make to building robust Australian business tax reform high on the agenda.
businesses and by contributing to the As an initial step we have asked that
efficiency and integrity of the public sector. certain tax measures already in train by
We will maintain this momentum by the previous government be dealt with
allocating additional resources to these as a priority, to underpin a competitive
efforts in the year ahead – a year in which tax system which is vital to attract venture
conditions are likely to remain volatile. capital and long-term investment.
Why do we find ourselves in such a strong We continue to develop the Chartered
Spreading the word
position? A prime reason has been our Accountants Program to ensure its Meanwhile other programs like our
continued focus on maintaining standards relevance to today’s business needs. This ‘Achiever Work Experience’ and ‘Meet
and building on good existing relationships postgraduate diploma continues to attract the Business Leader’ are helping broaden
with government. The Institute has the highest quality students and helps young people’s knowledge of our
contributed in a constructive way to public prepare them to be tomorrow’s business profession and further boosting its image.
policy development in the year under advisors and leaders. Enrolments in the The coming year will see us maintaining
review by engaging actively with policy Chartered Accountants Program go some the momentum of these endeavours,
makers through, inter alia, written way to alleviating the accounting skills which are more appropriate than ever in
submissions and appearances before shortage which continues to challenge an era of unprecedented skills shortages.
parliamentary committees. Australian business. A key issue for our profession at
I am delighted that the excellent work After years of considering the best means universities and high schools remains
of our representatives in lobbying and of broadening the entry pathway to the a general lack of understanding about
providing thought leadership on tax, audit, Chartered Accountants Program, the accountancy. In some areas it is still
accounting and financial planning has Institute has recently introduced pathways perceived to be a ‘brown cardigan and
delivered real benefits for members and for non-accounting graduates to be eligible calculator’ profession rather than a
is helping to ensure a prosperous future for the Chartered Accountants Program. dynamic one with exciting possibilities.
for our profession. The Graduate Certificate of Chartered Indeed we are determined to change those
Accounting Foundations (GCCAF) is perceptions and are working hard to do so.
Our thought leadership initiatives have
been supported by a broad variety of a one-year online Graduate Certificate, For example, an online campaign on the
papers for commercial and professional presently offered by Deakin University. social networking site Facebook was
disciplines on areas of particular interest. We also offer an entrance exam for introduced to engage students in a deeper
A good example was the recent paper, non-accounting graduates with industry conversation on their career opportunities
The Benefits of Assuring Carbon experience to enter the Program. This and the value of the Chartered Accountant
Emissions Disclosures, which outlined signifies a new era of accounting, where designation. Similarly, the online Student
the case for a global assurance standard diversity in the profession, both in the role Challenge, which attracted more than
on this issue and the benefits of having and the people it attracts, is being 11,000 visitors, was designed to introduce
these disclosures assured by an encouraged and nurtured. students to practical accounting at a critical
independent expert. time in their career decision process.
©The Institute of Chartered Accountants in Australia
2008 Report to members
7 CEO’s review (continued) New premises I look forward to another interesting and Our staff have been settling in well in our challenging year, in which the Institute can new buildings in Sydney, Brisbane and build on strong foundations to aggregate Canberra. These offices, along with the further its relevance and importance to the existing space in Melbourne, Perth, Australian economy and to provide Adelaide and Hobart, provide excellent, leadership in many areas that will impact hi-tech conference and meeting room the future wellbeing of the accounting facilities for members. profession, both locally and globally. Community links Finally, I would like to thank wholeheartedly everyone who has worked so willingly in our business and community involvement programs and who have cheerfully given Graham Meyer their time to help make a difference. Our Chief Executive Officer Business Leader Awards, which recognise excellence in the business community, our sponsorship of the Transparency Awards, and our workplace giving program ‘Everybody Counts’ have been unqualified successes. I commend these efforts once again and seek ongoing support for them. The Institute is in the process of setting clearer targets and indicators against which we can measure and report our performance, including in the environmental area, to ensure we are able to deliver the best practice standards that we advocate. ©The Institute of Chartered Accountants in Australia 2008 Report to members
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Highlights
> Delivered some 700 workshops, > Completed 480 reviews of different
forums, debates and events on issues sized practices under the Institute’s
such as ethics, differential auditing, Quality Review Program and undertook
extended performance reporting, 259 investigations into formal
legally enforceable auditing standards, complaints or other issues concerning
standard legislative framework for tax the conduct of members
agents and anti-money laundering > Redesigned the practical experience
> Introduced two new conferences: an component of the Chartered
accounting conference focusing on Accountants Program in consultation
financial reporting and management with candidates, mentors and employers
accounting and a self managed > Broadened the entry pathway for non-
superannuation funds (SMSFs) accounting graduates with the Graduate
conference, both of which exceeded Certificate of Chartered Accounting
registration and revenue targets Foundations offered by Deakin
> Launched an audit manual to help University and the entrance exam for
auditors, particularly those dealing graduates with extensive on-the-job
with small to medium sized entities; experience working for an Institute-
a Business Software Guide that approved employer
provides information on 45 tailored > Recorded an all-time high candidate
business software solutions; and a and employer satisfaction rate, with
refreshed library service called the candidates at 75 per cent in December
Knowledge Centre 2007 and employers at 87 per cent in
> Expanded the Institute’s in-house June 2008
training and grew client engagement by > Engaged with 19,423 students
an average of 89 per cent compared with 9828 at the same time
> Piloted a practical Graduate last year through careers marketing
Development Program in response to events and initiatives
demand from members > Secured places for 210 first-year
> Further strengthened the Institute’s students in more than 100 accounting
lobbying, advocacy and thought organisations during the 2007/2008
leadership role with involvement in: summer break as part of the Institute’s
– the Henry Review of Australia’s Achiever Work Experience program
taxation system > Gained recognition for the Chartered
– the introduction of a carbon emissions Accountants Program and reciprocal
trading scheme membership with seven institutes in
– liability capping schemes Canada, Hong Kong, South Africa,
England and Wales, Ireland, Scotland
– the Government’s review of
and South Africa
governance of self managed
superannuation funds > Successfully completed the sale of
the York Street premises, relocated to
– the disclosure regime for not-for-profit
Erskine Street in Sydney and negotiated
organisations
new leases of premises in Brisbane
– anti-money laundering legislation
and Canberra.
– a non-product based fee-for-service
model for the financial planning
industry.
©The Institute of Chartered Accountants in Australia
2008 Report to members
9
Strategic initiatives
Relevance to members Global positioning
and stakeholders > Influencing the initiatives of the
> A differentiated segmentation strategy Global Accounting Alliance
which delivers value to members > Thinking globally and acting locally
throughout their life cycle
> Supporting the development of
> Effective and valued interaction the profession globally
with members
> Ensuring participation in Asia and
> Ongoing development and revision international forums is relevant
of products and services to ensure and targeted.
value to members
> Mutually beneficial partnerships Ensuring the Institute is fit
with leading industry bodies and for the future
1920s
stakeholder groups. > A sound financial base to enable
investment in key strategic issues
Leadership and
> Appropriate infrastructure and
competitive positioning
processes to be responsive to
> A focused leadership strategy which The early days of regulation
member needs
ensures influence nationally, regionally
> A nimble governance structure It’s 1925 and the Sydney Stock
and internationally
> Targeted and relevant committees Exchange calls on companies to
> Effective, visionary and well-publicised publish balance sheets and profit
providing quality input
thought leadership initiatives which and loss accounts. A few years
profoundly and positively impact > Strategic thinking which identifies later the granting of a Royal Charter
business and the accounting profession and responds to emerging trends sees the Institute of Chartered
and markets. Accountants begin operations
> A well-recognised and differentiated
at Currie Street, Adelaide.
Chartered Accountants brand People and culture
> Continuing regard for the importance > A culture which is proactive, responsive
of discipline, ethics and conduct for and innovative with strong leadership
the profession.
> Best practice in recruitment, retention
Growth to ensure a sustainable and rewards
future for the Institute and > Rigorous succession planning with high
Chartered Accountants achievers identified and mentored for
> Ongoing review of the Chartered staff and committees
Accountants Program to ensure > Key people recognised as experts
relevance and pre-eminence in their fields.
> Innovative and influential careers
marketing to ensure the attractiveness
of a professional career in
chartered accounting
> Ongoing brand promotion to attract Ensuring the Institute is fit for the
new members
> Addressing the skills shortage and
future via strategic thinking which
ensuring ongoing recruitment and
retention of members.
identifies and responds to
emerging trends and markets.
©The Institute of Chartered Accountants in Australia
2008 Report to members
10
Relevance to members and stakeholders
How we delivered in 2008
Interacting effectively with Also successful were our Public Practice Publications
our members conferences, attendance at which nearly Charter magazine, e-Bulletins and other
The Institute interacts with members doubled this year. corporate communication channels
through events, conferences, roadshows, provide useful tools to inform and update
Tools
website, print and broadcast media, members, with 87 per cent of our
The Institute recently launched an audit
e-Bulletins and technical newsletters, membership claiming to be satisfied
manual to help auditors, particularly those
manuals, toolkits, guides, Charter magazine, with the communications received.
dealing with small to medium sized entities
Institute updates and training sessions.
(SMEs), apply the current Australian The fortnightly e-Bulletins provide relevant
During 2008 the Institute delivered some Auditing Standards (ASAs). information and news to members who
700 workshops, forums, debates and work in the Big 4, public practice, business
The manual is based on the International
events on issues such as ethics, differential and government. Many topical issues were
Federation of Accountants (IFAC) Guide to
auditing, extended performance reporting, covered during the year including the
using international standards. It is freely
legally enforceable auditing standards, implications of carbon emissions trading,
available on the Institute website and is
standard legislative framework for tax the liability capping scheme, the launch
supplemented by a toolkit, complete with
agents and anti-money laundering. of the new CPP tool, and regular lobbying
forms, checklists and programs necessary
updates. In addition, Chartered Accountants
More than 4700 accounting and business for conducting an audit, and training
Local News, an essential tool used by
professionals across all major capital cities sessions in several states. This has been
members in all regions for local information
attended our popular Business Forums, widely accepted as a significant step in
and updates, was successfully relaunched.
while our Force of Law national roadshow assisting practitioners to maintain
events attracted more than 300 delegates. consistently high auditing standards The three technical e-newsletters, CA Tax
and practices. Bulletin, Accounting and Assurance Today,
The Institute’s Public Sector Forum,
and the relaunched Chartered Accountants
designed to present contemporary To help Chartered Accountants find
Superannuation Bulletin, continue to
management issues to members who their way through the myriad of software
provide relevant information to subscribers,
work in, or closely with, government was choices available, the Institute introduced
and member satisfaction levels are
again well received. Initially targeted at a Business Software Guide that provides
high (88 per cent, 86 per cent and 85
middle management, the forum now information on 45 tailored business
per cent respectively).
attracts a broader audience from the public software solutions. This comprehensive
sector, with attendance averaging between tool, which allows members to Charter, the Institute’s flagship publication,
80 and 100 for the five-program event. cross-reference by industry and continues to attract new readers with
function, was distributed to all circulation now totalling more than 48,000.
A combination of quality content and
members with Charter magazine. The magazine’s quality, credibility and
speakers, together with a robust marketing
targeted reach also make it attractive
strategy and excellent teamwork
to advertisers.
contributed to the success of the
1 Charter
Institute’s conferences this year. 2 CA Tax Bulletin
3 Accounting & Assurance Today
A new Accounting Conference was
4 Chartered Accountants Superannuation Bulletin
introduced and held in Sydney, Melbourne,
Brisbane and Perth, focusing on financial
reporting and management accounting.
It attracted 572 delegates, exceeding
registration targets by 43 per cent and
revenue targets by 30 per cent. The
inaugural SMSFs Conference held in
Sydney attracted 223 delegates, 50 per
2 3 4
cent over registration targets and 30 per
cent ahead of revenue targets.
1
©The Institute of Chartered Accountants in Australia
2008 Report to members11
Relevance to members and stakeholders (continued)
Revising and developing our Training Graduate Development Program
products and services The decision taken in 2007 to expand our The Institute has recognised and
As a leading body in the financial services in-house training has yielded positive responded to a demand from members
industry, the Institute delivers relevant results, with client engagement growing and developed a powerful and practical
educational products and services to keep by an average of 89 per cent. The mix of program to which candidates have
members up to date with the evolving clients now includes large corporations responded favourably.
global environment. such as Seven Network, Medibank,
With a mix of soft skills and technical
Australian Capital Equity and additional
The Institute’s library service was recently knowledge, this program was developed
federal and state government departments.
reviewed and updated. Now called the as a pilot with three firms in 2007 and
We have also signed our first national
Knowledge Centre, it offers members and provides an alternative product in the
contract with Grant Thornton for the
candidates the information they need, market to help candidates as they
delivery of tax training.
when and where they need it – online, undertake the Chartered Accountants
via telephone or in person at our Sydney Of particular note was the launch of the Program. The feedback to date has
office. With access to some of the most full accounting and audit offering including been positive.
comprehensive business and accounting Audit of SMSF, Audit Conference and DVD,
A key benefit is the ability for candidates
hard copy and online resources available, Accounting and Auditing for Aged Care
to tailor the program to suit non-traditional
the Knowledge Centre’s team takes Industry, Audit Update for AFS Licensees
public practice firms such as insolvency,
information from around the world, and Seminar, and Accounting for Income Tax
and merger and acquisition firms. It is also
delivers it via desktop or in hard copy. workshops. With the large demand and
well placed to service firms that do not
high satisfaction from members and firms,
Changes included the addition of an online specialise in particular areas within the
the range will continue to expand.
news articles service from the electronic Chartered Accountants Program, such
journals provider EBSCO, available direct Total registrations including events as audit firms needing extra help in the
to members via the website. A team of and in-house training tax area.
dedicated experts is also available to
(*!%%% The program will be fully launched in the
complete searches for customers. The
third term of 2008 with the potential to
Knowledge Centre can be contacted (%!%%% offer a public program at the beginning
on 1800 809 828 or
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knowledge@charteredaccountants.com.au
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©The Institute of Chartered Accountants in Australia
2008 Report to members12
Relevance to members and stakeholders (continued)
Establishing mutually beneficial Academic partnerships Business Leader Awards
partnerships with industry The Institute has had a long and mutually In March, the Institute announced Leighton
and stakeholders beneficial relationship with the university CEO Wal King as the 2008 Chartered
Engagement with both state and federal sector for some years. Over time the Accountants Business Leader Award winner.
governments continues to be an ongoing relationship has been strengthened by our
Now in its ninth year, the award attracted
focus for the Institute. continued support as Platinum sponsors of
nominees representing a wealth of business
the Accounting and Finance Association of
In partnership with the Department of talent in Australia who were judged on their
Australia and New Zealand (AFAANZ). This
Finance and Administration, we developed ability to demonstrate visionary leadership,
support not only provides essential funds
an interactive budget and financial exhibit best practice, show innovation, take
for the accounting and finance academics’
essentials course to give members working risks, foster positive employee relations and
annual conference but in particular awards
in government agencies a deeper insight contribute to the community.
PhD scholarships to candidates whom the
into the government’s financial framework
Institute has a role in selecting. The Michael Ullmer, Deputy Chief Executive
so they can better understand their
success of this scheme is demonstrated by Officer, National Australia Bank and winner
obligations and responsibilities
the high number of scholarships that lead of the Outstanding Chartered Accountant in
under legislation.
to PhD completion and, as importantly, Business award said: ‘Receiving the award
give impetus to successful academic was very much a surprise and a great
careers. Other contributions made during honour. I think it is a really good initiative
the year include direct funding of research for the Institute to be seen to be reaching
and a significant involvement of Institute out to business, both in the context of
staff and members to projects aimed at recognising Chartered Accountants in
improving the relevance of undergraduate business and as a good opportunity to host
accounting degrees. CFOs from key clients, who were pleased
to participate in the event’.
Throughout the year, the Institute
continued with the university accreditation Other winners on the night included
process. As part of this we visited a Andrew Mohl, former Chief Executive
number of universities, where interaction Officer, AMP who won in the Banking
from vice chancellor level to front line and Finance sector and Owen Hegarty,
accounting lecturers and students enables Managing Director and Chief Executive
the alignment and articulation of learning Officer, Oxiana, who won the Mining
objectives between undergraduate courses and Resources sector.
and the Chartered Accountants Program.
The success of the PhD scholarship
scheme is demonstrated by the
high number of scholarships that
lead to PhD completion.
Business Leader
Awards 2008
collatoral
©The Institute of Chartered Accountants in Australia
2008 Report to members13
1930s
A new era of taxes
The Income Tax Assessment Act 1936,
weighing in at just 120 pages, heralds
a new era of federal tax collections.
The need to prepare statements
spurs greater demand for accounting
professionals. In response, the
Institute issues its first Code of Ethics
to all members and its first statement
on accounting practice.
©The Institute of Chartered Accountants in Australia
2008 Report to members14
Leadership and competitive positioning
How we delivered in 2008
Leadership activities are designed to Lobbying Simplifying business for SMEs
increase our influence with government The Institute focuses its lobbying efforts In June 2008, the Minister for Small
and regulators and position the Institute on advocating public policy that is not only Business Craig Emerson announced that
as leaders in the profession and the wider in the interests of members and the the government would consider two new
business community. By partnering with accounting profession but also in the measures to simplify taxation and reduce
key stakeholders in public practice, the national interest. This year saw a change compliance costs for small business.
corporate world and academia on joint of federal government and the opportunity
One, the entity flow-through (EFT) taxation
leadership activities we build relationships to engage with new ministers and political
regime, developed jointly by the Institute
and enhance our leadership positioning. stakeholders on their policy priorities.
and Deloitte, has been referred to
Raising our brand profile The government has initiated several major government as part of the Australia’s
During the year, the Institute invested in policy reviews which are still ongoing. Future Tax System review, headed by
an advertising campaign designed to Some of these, such as the Henry Review Treasury Secretary Ken Henry.
attract young people into the profession of Australia’s taxation system and the
This was a major win for the Institute,
and address the skills shortage. introduction of a carbon emissions trading
given that we have long advocated for the
scheme, have potentially wide-reaching
Through a multi-channel advertising simplification of tax laws and easing of the
and long-lasting impacts on our economy.
campaign we were able to heavily promote compliance burden for small and medium
The Institute is an active participant in
our ‘Riddle’ advertisement which enterprises (SMEs).
these reviews and is also involved in the
showcased the prestige of the Chartered work that the government has initiated We have also been active on other fronts
Accountants brand. This was boosted on the governance of SMSFs and the in the financial reporting area. Earlier in the
by the launch of a new digital campaign. disclosure regime for not-for-profit year, we produced a report, in conjunction
Media coverage is another important organisations. with CPA Australia and the National
method of growing our brand and profile. Institute of Accountants, calling on the
Liability capping schemes International Accounting Standards Board
During the year, we achieved a record 1536
Members received the good news that the (IASB) to further reduce the burden on
media hits, largely attributable to the
schemes had received Commonwealth SMEs in its Proposed International
stronger relationships we have developed
prescription in all states and territories Financial Reporting Standards for SMEs.
with key journalists, particularly in the
except Tasmania. The field tests of the proposed international
broadcast media, and the quality of our
spokespeople who provided insightful Commonwealth prescription makes the SME standard, commissioned by the three
commentary. The ongoing skills shortage schemes effective in relation to claims bodies and conducted by mid-tier
debate in the press also gave us the under the Trade Practices Act 1974 (Cwlth), accounting firm Moore Stephens, actually
opportunity to raise the profile of the as well as in relation to any state-based reviewed three entities in Australia and
Chartered Accountants Program. claim, something that will give members converted them into the newly proposed
and the public added peace of mind. Financial Reporting Standard for SMEs.
Undertaking thought The report summarised the outcome of
This represents the final stage in the
leadership initiatives these tests.
establishment of an effective national
The benefits of our lobbying and All three accounting bodies agree that the
framework for limitation of liability for
thought leadership activities were proposed IFRS for SMEs (or IFRS for
the schemes in Queensland, Victoria,
in evidence this year with a number private entities, as it is now known) raises
South Australia, the Northern Territory,
of important developments. issues for some enterprises who may not
Western Australia, New South Wales,
and the Australian Capital Territory. have the skills or capacity to transition to
the proposed standard without some
We will continue to lobby to achieve
external assistance.
the legislative reform that will allow
a consistent scheme to be approved
in Tasmania.
©The Institute of Chartered Accountants in Australia
2008 Report to members15
Leadership and competitive positioning (continued)
The field tests were conducted in addition The Institute also hosted the first of two We believe the adoption of a genuine,
to the separate submissions made earlier round table forums on the topic of non-product-based fee-for-service model
this year by each of the professional bodies ‘Assurance on Disclosures of Carbon would improve the professionalism of the
to the IASB and the Australian Accounting Emissions Information’, which were financial planning industry and the trust
Standards Board (AASB) with regard to the conducted under the auspices of the between financial advisers and their clients.
proposed standard, demonstrating the International Auditing and Assurance This in turn would lead to less prescriptive
commitment of the Australian accounting Standards Board to hear from users, legislation, lower costs for advice, and wider
profession to have a voice in the preparers and assurance providers. access to affordable, independent advice.
international and Australian debates. The intention is to inform the planned
Sub-prime mortgage market and
development of an International Standard
These submissions, as well as the report international reporting standards
or Practice Statement on assuring carbon
based on the field tests, and our In April, the Institute released a report
emissions information.
submission on the Australian differential on the Collapse of the United States
reporting proposals, argue that the burden We responded to the Garnaut Report sub-prime mortgage market and the
on SMEs will only be reduced if the with a submission in April and in the same impacts under International Financial
proposed reporting standards significantly month released a leadership paper, Reporting Standards (IFRS).
reduce the disclosure requirements. produced jointly with Ernst & Young, on the
The report detailed how the collapse
tax treatment of carbon emissions trading.
Further activity on reducing the burden occurred and affected the financial
on small business has seen the Institute This paper argued that the existing regime statements of banks, other financial
become involved in the government’s would not properly deal with an emissions institutions and investors in mortgage-
Standard Business Reporting (SBR) trading scheme. Consideration should be backed securities around the world.
initiative; and in fact become a key member given to amending legislation relating to A number of lessons can be learned from
of the Business Advisory Forum. The income tax, the GST, Petroleum Resources the experience in areas of regulation and
Business Advisory Forum acts as a reality Rent Tax, state stamp duties and other legislation, financial reporting, bank lending
check on the activities of the SBR team, taxes and charges. It also identified practices, indebtedness of individuals and
ensuring effective communication with potential tax incentives to reduce the in the area of investment decision making.
the business community and ensuring it burden on business of the significant Discussions are already in progress at both
remains on track to meet its objective of capital expenditures and adjustments that the International Accounting Standards
reducing the reporting burden on business. will be required following the introduction Board (IASB) and the Financial Accounting
of mandatory targets and an emissions Standards Board (FASB) to improve
Carbon emissions trading
trading scheme. financial reporting and disclosures in the
The release of an Institute leadership report
areas impacted by the credit crisis.
shortly after year end calling for the Financial planning industry
inclusion of a global assurance framework In July, the Institute released a white paper Anti-money laundering
for carbon emissions disclosures was the following a financial planning industry The latest in a number of meetings
latest in a suite of leadership and lobbying forum we facilitated to discuss Reinventing between the Institute and government took
initiatives we undertook in 2008 in the area financial planning, a paper we had place in May this year. These discussions
of carbon emissions trading. The report, commissioned. The forum brought together are helping to shape the second tranche
entitled The Benefits of Assuring Carbon industry associations, consumer advocates, of anti-money laundering legislation, which
Emission Disclosures, was produced in regulators, product manufacturers, ‘dealer’ should be released later this year.
association with Professor Roger Simnett, groups and practitioners.
Head of Accounting at the Australian
School of Business, and argued for
generally accepted international reporting
criteria to ensure consistency between
jurisdictions and facilitate understanding
of the depth of the issues.
©The Institute of Chartered Accountants in Australia
2008 Report to members16
Leadership and competitive positioning (continued)
Government procurement In February this year, the Institute, Threshold for unlisted
The Institute instigated and drove the in association with CPA Australia Limited public companies
development of a submission to address and the National Institute of Accountants, We continue to hold talks with Treasury
ongoing procurement issues within developed and released a set of on the subject of introducing a threshold
government. We hosted several roundtable competency requirements that clarify for financial reporting and auditing
events attended by senior government the skills auditors need to ensure trustees requirements for unlisted public
officials, key stakeholders and members are fulfilling their legal obligations. companies, including companies limited
in the Big 4. The submission was by guarantee, similar to that used for
These requirements prescribe the
presented to the Department of Finance proprietary companies. Last year, the
competencies for members of the three
and Administration in November 2007. Institute, with the other professional
professional accounting bodies who audit
The Department has acknowledged accounting bodies, made a submission to
SMSFs. They provide clarification,
receipt of the submission and negotiations Treasury supporting a reduction in red tape
guidance and assistance to auditors of
are continuing. in this area.
SMSFs, and are expected to contribute
Governance of superannuation funds greatly to the assurance that trustees, The submission supported the introduction
A survey undertaken by the Institute and beneficiaries and the regulator gain. of differential lodgment which would
Deloitte between October and December eliminate the need for entities under a
This was followed in April by a forum
2007 to understand the governance of prescribed threshold to prepare general
which discussed the key recommendations
super funds and recommend further purpose financial reports. However, it also
made in a discussion paper entitled Review
improvements, found most industry encouraged Treasury to set up a
of the existing regulatory and governance
experts believe governance practices governance structure for these smaller
framework. We used the issues raised at
and standards had improved. unlisted public companies to maintain
the forum, and in the discussion paper,
public accountability.
The drive for continuous improvement in to develop policy positions in a submission
governance practices is important given to Senator the Hon Nick Sherry in the Auditing standards and registration
that funds under management have same month. The submission also The IAASB is on track with its upcoming
almost doubled in three years, growing included data collected from a recent ‘Clarity Project’, which entails revising and
from $631bn in July 2004 to $1,187bn member questionnaire. reissuing all of the International Auditing
towards the end of 2007 when the survey Standards using the new clarified drafting
Legislative Instruments Act
was initiated. style by December 2008. We maintain
In May this year, the Institute, with the
regular communication with the AUASB
Moreover, the forecast is for this figure other professional accounting bodies,
regarding changes to Australian Standards,
to more than triple by 2021, reaching in lodged a joint submission on the review
which are planned to be effective for
excess of $4,000bn. An Institute report of the Legislative Instruments Act 2003.
financial reporting periods from 1 January
based on the survey, The Governance of Since the Australian Auditing Standards
2010. We are also engaged in discussions
Superannuation Funds – three years on Board (AASB) and the Auditing and
on auditor registration with relevant
from trustee licensing, identified three Assurance Standards Board (AUASB)
government stakeholders and will keep
areas where training was required: the standards are legislative instruments, this
members informed as meetings progress.
need to understand the difference review affects those involved in financial
between directing and managing; reporting and assurance.
alternative investments; and the value
The submission suggested ways of
of risk management.
streamlining the process of reviewing
Self-managed superannuation legislative instruments to provide certainty
funds (SMSFs) for those wishing to adopt standards based
The self-managed funds industry has on international equivalents earlier than
enjoyed significant growth over the past their mandatory applicable date. The
year. There are now 372,000 SMSFs in review is still in progress.
Australia representing the interests of
718,000 individuals. Assets grew to
$300.2bn in the last year alone.
©The Institute of Chartered Accountants in Australia
2008 Report to members17
Leadership and competitive positioning (continued)
Highlighting the importance of Results have been analysed and are available in the 2008 Annual Report on the Quality
discipline, ethics and conduct Review Program.
The Institute educates and continually
Number of reviews completed 2008 2007 2006 2005 2004
updates members about their ethical and
480 478 482 480 472
professional obligations.
Quality Review Program Professional conduct
During the year we completed 480 reviews In addition to reviewing the quality control policies and procedures of practices, we also
of different sized practices under our rigorously enforce the ethical, technical and professional obligations of members by
Quality Review Program. This program investigating complaints and, where necessary, imposing sanctions.
is a key feature of the co-regulatory
In the year to 30 June 2008, the Institute undertook 259 investigations into formal
framework. It was established to ensure
complaints or other issues concerning the conduct of members. Of these, 27 members
members in practice have quality control
were called to appear before the Professional Conduct Tribunal, which imposed sanctions
policies and procedures in place to
ranging from expulsion from membership to a mandated quality review.
comply with accounting, auditing and
professional standards. More information is available in our 2008 Annual Report on Professional Conduct.
As reported in our 2007 Annual Report Investigations into formal complaints
on the Quality Review Program, particular or other issues concerning members’
conduct 2008 2007 2006 2005 2004
attention was paid to practices’
259 317 298 407 394
implementation of APES 320, a standard
making it mandatory for every firm to
adopt a quality control system. Compliance Members called to appear before the
Professional Conduct Tribunal 2008 2007 2006 2005 2004
with ‘force of law’ auditing standards was
27 11 31 21 44
also a focus.
The comprehensive, interactive Quality
Control Guide (issued by the Institute to
help members adapt to these new and
updated quality control standards) met
with a favourable response.
Of the 480 reviews undertaken, 29 per
cent were practices that conduct audits
which are subject to the Corporations
Act 2001 (Cwlth) (Corporations Act). As at
30 June 2008, another 510 practices were
under review.
During the year, the following reports
were issued:
> No departures from professional
standards: 16.5 per cent
> Departure(s) from professional
standards, not classified as serious:
72 per cent
> Follow-up review required: 11 per cent
> Referral to the Institute’s disciplinary
processes for investigation: 0.5 per cent.
©The Institute of Chartered Accountants in Australia
2008 Report to members18
1940s
War and taxes
New war and payroll taxes roll
out during the 1940s while the
Commonwealth begins collecting
all income tax on a uniform basis.
Pay-As-You-Earn and provisional
tax systems come into effect and
the Institute begins issuing formal
accounting guidance to its members.
©The Institute of Chartered Accountants in Australia
2008 Report to members19
Growth to ensure a sustainable future
How we delivered in 2008
Uniquely among professional accounting Broadening the pathway to enter the Skilled Migration Internship
bodies, the Institute is an accredited higher Program retains the quality and standing Program – Accounting
education provider. This means that the of Chartered Accountants, while extending In a further move designed to ease the
Chartered Accountants Program earns the pool of talent available to employers current skills shortage in accounting, the
candidates a Graduate Diploma of Chartered who have found it challenging in recent Institute, with other accounting bodies,
Accounting – a qualification that can be years to fill accounting roles. responded to a request from the
used to gain exemptions to Masters degrees Department of Immigration and Citizenship
More importantly, this also realises the
offered by universities around Australia. (DIAC) to develop a Skilled Migration
Institute’s long-held view that a Chartered
Internship Program.
Ensuring the relevance of the Accountant qualification should be
Chartered Accountants Program available to all high achieving graduates The objective of the Program is to help
who wish to qualify as accountants, rather international accounting graduates gain
In 2008 the Institute successfully gained
than being available only to high achieving the business communication skills required
re-accreditation of the Graduate Diploma
accounting graduates who wish to qualify for the Australian workplace. It will be
of Chartered Accounting in all
as accountants. This represents a delivered by existing educational
Australian states.
significant step forward for the profession institutions with the professional bodies
A new approach to in Australia and is in alignment with taking responsibility for approving suitable
practical experience global practice. providers and overseeing the provision
In consultation with candidates, mentors of the Program.
From 2007, prospective candidates from
and employers, the Institute redesigned
non-accounting degrees are offered two Enrolments
the practical experience component of the
additional pathways. A relatively modest increase (2.9 per cent)
Chartered Accountants pathway. This
meets international standards set by the Graduate Certificate of Chartered in new enrolments this year partly reflects
International Federation of Accountants Accounting Foundations (GCCAF) static growth in domestic students
requiring a competency-based, structured The Graduate Certificate of Chartered graduating from accounting degrees. To
approach to developing professional Accounting Foundations offered by Deakin address this and increase the available pool
knowledge and skills in the workplace. University meets all the academic entry of talent, we expect the broadened entry
requirements of the Institute. Strong pathway to the Chartered Accountants
Another reason for the redesign was Program to make an impact from next year.
support for the GCCAF has come from all
to fulfil candidate and mentor requests for
segments of the membership. More than Candidate and employer satisfaction
more information and guidance on their
416 students enrolled in the eight unit
roles and responsibilities during the Candidate and employer satisfaction with
online course this year. The Graduate
three-year practical experience period. the Chartered Accountants Program is at
Certificate enables students to acquire a
an all-time high, with candidates at 75 per
The new Practical Experience Program basic grounding in financial accounting,
cent in December 2007 and employers at
came into effect for all candidates who management accounting, finance, taxation,
87 per cent in June 2008. Advocacy,
commenced their first module from the audits and corporations law, so that they
defined as ‘likely to’ or ‘proactively to’
third term of 2007. are eligible to enrol in the Chartered
recommend the Chartered Accountants
Accountants Program.
Addressing the skills shortage Program, is also at a very high level:
The Institute is a leader in enabling Entrance exam employers at 94 per cent and candidates
non-accounting graduates to enter the at 86 per cent.
The entrance exam is targeted at
profession. The broadening of the entry non-accounting graduates currently
pathway is providing solutions for employed by an Institute-approved
addressing the skills shortage. employer who have extensive on-the-job
experience. The entrance exam assesses a
candidate’s readiness for the Program and
identifies any further study they may need.
A total of 60 applicants sat the entrance
exam in the first 12 months, a number of
whom immediately enrolled in the Program.
©The Institute of Chartered Accountants in Australia
2008 Report to members20
Growth to ensure a sustainable future (continued)
Candidate program satisfaction The online campaign commenced with a Events included the Chartered Accountants
ratings 2006 – 2008 (latest measure social networking site on Facebook, and Employment Evening and Achiever Work
as at December 2007) was designed to engage students in a Experience programs, as well as the
Overall Would deeper conversation around their career Chartered Accountants Cadetship evening
satisfaction recommend Advocacy choice and the brand. It emphasised how and Chartered Accountants Vacation
Year % % %
a quality qualification can help them Evening in New South Wales, Victoria,
2006/2007 65 88 71
achieve success in their careers. Phase two Western Australia and Queensland. Overall,
2007/2008 75 86 70
involved the launch of an online application as at July 2008 student engagement stood
(calendar) for students and phase three at an impressive 19,423 compared with
Employer program satisfaction
saw the launch of a student challenge. 9828 at the same time last year.
ratings 2006 – 2008 (latest measure
as at June 2008) In a series of three challenges, the Chartered Accountants
competition allowed students to develop Employment Evening
Overall
satisfaction Advocacy real-life business solutions for three global Employment evenings are aimed at
Year % % not-for-profit organisations, introducing third-year university students. The event
2006/2007 79 88 them to practical Chartered Accounting was held for the first time in the Australian
2007/2008 87 94 at a critical time in their career Capital Territory. This year, in Western
decision process. Australia attendance numbers were up, but
Attracting new members and in all other states there was a decrease,
The online challenges were exceptionally
recruits to the profession reflecting changing recruitment practices
well received with over 11,106 visitors
The skills shortage in the accounting by employers.
to the site.
profession is an ongoing issue that
Achiever Work Experience
continues to be felt by practices and Recent research has shown that we have
This year 210 first-year students secured
commerce nationwide. The Institute has positioned the Chartered Accountants
places in more than 100 accounting
been working to ensure students recognise brand as the ‘preferred postgraduate
organisations during the 2007/2008
the Chartered Accountant brand as accounting qualification’ and ‘the
summer break as part of our Achiever Work
the pre-eminent accounting designation qualification best for your career’ with
Experience, the Institute’s annual initiative
in Australia. the target student community.
that recognises outstanding up and coming
Brand campaign Careers marketing accounting talent across Australia.
One of the more high profile initiatives was Careers marketing events and initiatives
The program helps marry students chasing
a brand campaign, developed out of were used to great effect during the year
work experience opportunities and
student focus groups, which used multiple to promote accounting as a career and
employers attempting to secure new
channels including television and a ‘Chartered Accountant’ as the premier
accounting talent early on in their
dedicated online program to reach our designation of choice to university and
development so they are less reliant on
target audience. school students and such key influencers
competitive graduate recruitment periods.
as academics, employers, career advisors
The television campaign targeted key The placements are from two to 12 weeks
and teachers.
programs viewed by our youth with Institute-accredited firms ranging
demographic and showcased the career Initiatives included the recruitment of 11 from the Big 4, small to mid tier public
opportunities that can be achieved through student brand champs who worked on practice firms, government and
a career as a Chartered Accountant. This campus to help secure registrations, and commerce organisations.
annual television campaign was coupled the launch of the Day in the Life interactive
with a three-phase online campaign. DVD targeted at high school students,
teachers and careers advisors, and which
profiles five Chartered Accountants
working in diverse industries.
©The Institute of Chartered Accountants in Australia
2008 Report to membersYou can also read
