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Review finds CPA constitution 'outdated, ambiguous, open to abuse'

A review into CPA Australia's operations has found serious flaws in parts of the CPA Australia constitution, and has recommended a range of fixes which will be up to the incoming board to assess and implement. 

Professional Development Katarina Taurian 30 November 2017
— 1 minute read

Corporate governance was a principal focus of a review into the operations of CPA Australia, chaired by former auditor-general Ian McPhee. Several items in the association’s constitution were found to not be conducive to good governance, and in fact had the potential to create “undue board influence, are outdated, ambiguous or may be open to abuse.”


For example, one provision allows the chief executive to attend board meetings, but doesn’t include a carve-out to allow the board to discuss matters in-camera.

Another allows the board to appoint initial members of a new division council, and another allows the board to appoint up to 49 per cent of representative councillors from a body, group or committee of the board.

Mr McPhee’s panel made a series of recommendations for the new CPA Australia board to consider, including ensuring in-camera sessions are built into the board’s agenda, increasing the president’s term to a maximum of three years, and changing the composition and structure of various committees including the nomination and remuneration committee.

Remuneration and notice periods

Former chief executive Alex Malley’s contractual termination period was adjusted twice during his reign, and the $4.9 million payout he received after he was sacked in June is equivalent of three years’ salary.

The former CPA Australia board approved Mr Malley’s notice period increase of two years to three years. This decision was made in an in-camera session of the board. Mr Malley wasn’t present at the meeting, and it appears the background to the decision recorded by the board was limited. 

“The board decisions and papers do not provide any further background on the decision to extend the notice period. This reflects very poorly on the former board, given the size of the termination payment being well above any comparable benchmark,” the report said.

CPA Australia was also found to have “misunderstood” its disclosure requirements in relation to executive remuneration, which was first revealed in June, and then an updated schedule to include overseas subsidiaries was released in July.

“While the two disclosures, read together, satisfy the requirements of section 202B, the failure to include overseas subsidiaries in the initial disclosure does not reflect well on CPA Australia given its leadership role in the accounting profession,” the report said.

The panel has made a range of recommendations to bring pay in line with member expectations, and ensure increased transparency for members.



Review finds CPA constitution 'outdated, ambiguous, open to abuse'
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