Senator grills IPA about ongoing membership of CADB-banned auditor

The CADB concluded that O’Shea was not a ‘fit and proper’ person to be registered as an auditor after he had continuously failed to investigate companies’ related party dealings, including investments in 15 property developments which totalled $93 million in the 2023 financial year, five of which were related to the company’s directors.

Despite losing his auditor status, O’Shea has retained his IPA membership. At the time of reporting, he is also still listed as a registered tax agent with the Tax Practitioner’s Board (TPB).

During the Parliamentary Joint Committee on Corporations and Financial Services hearing last Friday, O’Neill questioned IPA group executive of advocacy and policy, Vicky Stylianou, about how O’Shea had retained his membership of the professional body.

“He's still able to hang out his shingle and go out and use your logo while you investigate him, and he's still able to operate in the way that I think has been revealed to be profoundly at odds with the expectations of the sector,” O’Neill said.

Stylianou said that O’Shea had become a member in 2023, prior to the CADB decision. When ASIC advised the IPA of the CADB’s decision to cancel his registration, this spurred an ongoing internal IPA investigation.

“Once we were notified by ASIC, we started our own process,” she said.

“I can't pre-empt the decision of our independent Professional Conduct Committee, but our recommendation is that he be forfeited. That's in train at the moment as we speak.”

She added that O’Shea had been offered time extensions during the internal investigation for the sake of procedural fairness and natural justice.

During the hearing, Senator O’Neill also questioned the robustness of checks conducted when a member transferred from one professional accounting body to another, especially those that were subject to ongoing investigations.

Stylianou said the IPA typically did not seek proof that a prospective member was acting ethically before they were accepted into the body. The assumption was that if they were a current member of another professional body, they were a fit and proper person.

O’Neill also asked Stylianou why professional bodies did not communicate with each other regarding ongoing investigations.

“What's to prevent like-minded entities that are supposedly collectively upholding professional standards of accountants and auditors in this country from communicating at the point of knowledge that an inquiry is on foot,” O’Neill said.

Stylianou said that the professional bodies were typically only notified about external disciplinary proceedings after a decision had been made, often months or years after the investigation had been launched.

“One of the things is that a proceeding will start, and it could take months. It could take years until it gets to a conclusion. Usually, we're notified at the end of the process,” she said.

Senator O’Neill said these time lags allowed dodgy practitioners to fall through the cracks and continue to operate while proceedings were underway.

“There have been some lengthy, lengthy considerations by the disciplinary boards of these people, and that there is a time lag,” O’Neill said.

“It looks to me like there's a big, dark, dangerous space where nobody's able to see what's happening in terms of the movement of these individuals around and amongst the organisations; yours, CPA and CA ANZ.”