Corporate governance statement

CPA Australia Ltd (CPA Australia) is committed to best practice in corporate governance and to advancing trusted and valued accounting and business professionals who enhance and support their communities. This commitment is reflected in our adoption of the 4^th edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (CGPR) released in February 2019. CPA Australia is an unlisted public company limited by guarantee (Company) and is not formally required to report against the CGPR. We choose to do so as a benchmark to best practice and we have implemented these Principles as far as they are relevant to us as a membership-based organisation.

CPA Australia seeks to send a strong message to our members , their clients, the professional and business community, and the public, that it is committed to upholding high standards for the benefit of the accounting, financial, and business advisory professions generally and in the public interest.

This document represents the Corporate Governance Statement as at 31 December 2022 (Statement).

Principle 1: Lay solid foundations for management and oversight

Board of Directors

The Board of Directors (Board) is the governing body of CPA Australia. The Board independently and objectively assesses the Company’s decisions and oversees the performance and activities of management against a risk management framework. This creates a disciplined process for effectively managing risk to enable the achievement of the Company’s strategic objectives. More information on risk management and CPA Australia’s approach to it is set out under Principle 7 in this Statement.

The Board is responsible for a number of decisions, including:

• setting, approving and overseeing implementation of CPA Australia’s strategy (Strategy), direction and financial objectives;
• appointing the President and Deputy Presidents;
• approving financial statements;
• appointing the CEO and evaluating the CEO’s performance; and
• making and amending By-Laws.

Appointment of Directors

The Governance structure of the Company is set out on page 4 of the CPA Australia Integrated Report 2022. The Board is appointed by the Appointments Council which is comprised of one Divisional Councillor from each of the 13 Divisional Councils. The selection process has due regard to:

• the required skills, knowledge, experience and other capabilities required of the Board;
• diversity and the mix of skills;
• competencies;
• ability to deal with new and emerging business and governance issues; and
• attributes recommended by the Board (having regard to succession planning).

Details of the Appointments Council are set out at Principle 2 in this Statement.

The Nomination Committee assists the Board and the Appointments Council in the effective discharge of their respective responsibilities so that the Board and its Committees comprise individuals who are best able to discharge their responsibilities as Directors and Committee members having regard to the law, the highest standards of governance and the diversity of the membership.

Details of the Nomination Committee are set out at Principle 2 in this Statement.

As part of the due diligence process, all Directors undergo Australia, New Zealand and country of origin police checks before their appointment.

All Directors are appointed subject to the provisions of the Constitution of CPA Australia (Constitution) and the provisions of the Corporations Act 2001 (Cth).  All Directors are formally appointed to office by the Company by way of a formal letter of appointment.

The Board and each Board Committee reviews its respective performance regularly throughout the year.  A peer and self-assessment review is undertaken annually by all Directors and Board Committee members.  Every third year there is an independent review of the Board.

The Board’s Oversight

The Board is responsible for the overall governance of CPA Australia. The Board has adopted a formal Charter setting out its functions and responsibilities, which it reviews annually. Matters specifically reserved to the Board and not delegated to a Board Committee are set out in its Charter. The Board approves its Charter which is available on the website.

The Board has delegated a range of its powers, duties and responsibilities to its Committees, management, Divisions and Disciplinary Tribunals. The Board reviews each delegation at least annually.

Each Board meeting agenda includes the business of the meeting and:

• statutory matters;
• governance matters;
• reports focussing on member matters (including communications to members) in alignment with CPA Australia’s Strategy;
• management reports, which include reports on strategic risks, strategic projects, operational items (including employee matters) and regular reports from the CEO and the CFO; and
• a forward rolling agenda to assist with the structure, business and balance of future meeting agendas.

During 2022, the Board, and its Committees, considered a wide range of issues across all areas of the business, including:

• long-term strategic planning including oversight of the education, IT and brand strategies;
• climate change risk and approving CPA Australia’s commitment to our Net Zero Emissions Pathway (including targets);
• oversight of financial performance of the organisation to support long-term sustainability;
• the ongoing incorporation of environmental, social, and governance (ESG) considerations into all CPA Australia’s activities in order to meet the present and future needs of our members, employees and other stakeholders to support long-term ESG performance;
• continued support of members through the ongoing impacts of COVID-19 and other events (including the impact of natural disasters) and assisting with the development of appropriate recovery plans; 
• policy input to government, regulators and industry standard-setters;
• oversight of priorities arising from member research; 
• the review and sign-off of CPA Australia’s 2021 Integrated Report and financial statements;
• approval of contracts with external partners and suppliers;
• engagement with Divisional Councils, including Board outreach, development of member engagement plans and Council elections; 
• approval of nominations and appointments to the International Federation of Accountants (IFAC), international and national standard-setting boards, Centres of Excellence, and Advisory and Compliance Committees; 
• oversight and approval of major projects including the website and the member management and finance (MMF) project;
• appraisal of the independent internal auditor’s performance and function;
• approval of organisational values reflected in The CPA Australia Way;
• continued monitoring and compliance with COVID-19 requirements and regulations for CPA Australia offices and workplaces; 
• input into and approval of the organisational strategy and its implementation; 
• the development and publication of CPA Australia’s Modern Slavery Statement 2021;
• the development and approval of CPA Australia’s Human Rights Policy 2022;
• ongoing member outreach; and
• the future of work, including digitisation of the profession, technological developments and cyber security.

During 2022, the Board continued to focus on the wellbeing of CPA Australia’s people to enable us to respond to the ongoing challenges and changing nature of today’s post-pandemic world of work.  CPA Australia’s initiatives relating to the pandemic and the timeliness of their delivery also continued to be well-received by our members.  More information on the Board’s response is set out on pages 33 and 34 of the CPA Australia Integrated Report 2022.

The Board has in-camera sessions at each Board meeting where the Board meets without the CEO and management being present. These sessions allow Directors to raise or explore any issues of concern prior to the CEO and management joining the Board meeting. 

Strategy

In 2022, the Board approved the organisation’s Strategy for 2022 – 2027 having worked with our members, management and our people.  The Board oversees and monitors management’s implementation of the Board-approved CPA Australia Strategy, its risk and compliance framework, policy initiatives and operations.  

The Board approves annual Key Performance Indicators (KPIs) drawn from and assessed against the Strategy with priorities, direction and performance targets for CPA Australia within the parameters of the Strategy.  Monthly performance reports are prepared by management for ongoing monitoring by the Board.  

The Council of Presidents (comprising the Presidents of each of the 13 Divisional Councils) has the responsibility to facilitate two-way engagement between the Board and Divisional Councils.  The Council of Presidents has a formal Charter approved by the Board which is available on the website.

CEO

The CEO is appointed by the Board and is responsible for the management of CPA Australia in accordance with the Board-approved Strategy, policies and delegated authority framework. The CEO is responsible for the Board being provided with relevant strategic options, policies and financial issues on which to deliberate, and with the necessary administrative support to enable the Board to work effectively.

The Board may invite the CEO and management to attend Board or Committee meetings at its discretion. The CEO is not a Director and is not entitled to vote.

The CEO, the CFO, the Company Secretary and members of the Executive Leadership Team (ELT) each enter into a formal written agreement with CPA Australia which sets out their terms of appointment and job descriptions.

The Company Secretary

All Directors have access to the Company Secretary who is appointed by the Board. The Company Secretary reports to the CEO and is accountable to the Board, through the Chair, on governance matters. 

Performance Management

All Executive Leaders have formal, written agreements with CPA Australia that set out the terms of their appointment.

The Executive Leaders are responsible for supporting the implementation of the Strategy and reinforcing the organisation’s values, The CPA Australia Way.

All employees and management, including the ELT of CPA Australia, are subject to annual performance planning and reviews.  They are assessed against achievement of their job specifications and key performance goals, contribution towards specific business and strategic objectives, including enhancing member satisfaction through focused activities aligned to the Strategy, and adherence to CPA Australia’s values and culture.

The Board has ultimate approval of remuneration changes that have been prepared by management and benchmarked by external consultants.  The Board approves the remuneration of the CEO and the CEO’s direct reports.

Along with the organisation’s people, all Executive Leaders of CPA Australia including the CEO, have an at-risk component of their remuneration that is tied to both their own performance and that of the Company.

Wellbeing, Inclusion and Diversity

At CPA Australia we are actively committed to diversity, equality and inclusion for employees, members, and the community. Throughout the pandemic, individual health, safety, and wellbeing were also a priority and we have provided on-going support to our people throughout 2022 as many continued to work from home. 

The Company’s Inclusion and Diversity Policy applies to:

• CPA Australia’s Board;
• membership committees appointed by either the Board or management;
• all CPA Australia’s workplace participants; and
• persons seeking employment with the Company.

CPA Australia values a workforce that reflects the diversity of its membership and the general population.  Different perspectives, views and ideas add strength to its ability to deliver value to members.  

In 2022, the Company continued to elevate wellness and to celebrate diversity and a culture of inclusion through continued support of its employees including of its LGBTQIA+ employee network, PRISM.  Through its wellbeing initiatives and events, for example, CPA Australia participated in raising awareness for its people and members about domestic and family violence, supported RUOK? Day and Mental Health month.  

More specifically, the organisation introduced a new Wellbeing, Inclusion and Diversity strategic framework, which was developed to build a culture of belonging and to enable us to respond to the ongoing challenges and changing nature of today’s post-pandemic world of work.

The focus is on four key areas:

• fostering wellbeing, through supporting our peoples' health and wellbeing, promoting greater engagement, inclusion, and the ability for our people to thrive;
• leading with inclusion, through creating a people-centred culture  where people feel safe, respected, included, and valued, and a positive and productive workplace where people feel they belong and are supported to succeed in their work and life goals;
• empowering a diverse workforce, by levering our vast range of identities, experiences, knowledge, and perspectives, to deliver innovative outcomes and quality experiences for our members, the profession, and our people; and
• community and advocacy, leading the profession in equity, and partnering with members to enhance the profession and our communities.

To support this, in 2022 we:

• commenced the transformation of our employee networks to be inclusive of our members and the community;
• prioritised the wellbeing of our people through specific programs on mental health and adapting to flexible ways of working; and
• continued to celebrate and recognise days of significance with our people.

Highlights for 2022 included:

• the introduction of a policy commitment to 40/40/20 gender representation on the ELT which is also encouraged on the Board;
• building a holistic and sustainable wellbeing program that supports all our people to feel safe, well, connected and engaged;
• the launch of our Innovate Reconciliation Action Plan (RAP), endorsed by Reconciliation Australia;
• successful completion of the 2022 Workplace Gender Equality Act external annual compliance report;
• introducing diversity, equity and inclusion (DEI) topics to members through participation in awareness and education events;
• providing bespoke DEI education for our Board, ELT, Senior Leaders and Member Councils; and
• continuing to celebrate and support diversity through our employee-led networks and their goals.

For more information on our activities in this area see pages 33 to 34, 61 to 63 and page 86 of the CPA Australia Integrated Report 2022.

Reconciliation

The CPA Australia Innovate Reconciliation Action Plan (RAP)  reflects the organisation’s ongoing commitment to social responsibility and reconciliation between Australia’s First Peoples and the broader Australian community. 

With the successful completion of CPA Australia’s Reflect RAP in 2021, we released our Reconciliation Australia endorsed Innovate RAP in February 2022, which outlines actions for achieving an organisation’s vision for reconciliation. 

An Innovate RAP focuses on developing and strengthening relationships with Aboriginal and Torres Strait Islander peoples, engaging employees and stakeholders in reconciliation, and developing and piloting innovative strategies to empower Aboriginal and Torres Strait Islander peoples.

Key actions in 2022 included:

• creation of an Indigenous Advisory Group made up of First Nations members, ensuring the voice of our Indigenous members is front and centre, to support and guide us during this RAP;
• partnering with Charles Darwin University for an accounting and finance pre-enablement program designed to attract Aboriginal or Torres Strait Islander students towards studying and entering the profession;
• a collaboration with the University of Tasmania to develop a mentoring program aimed at providing First Nations students with support to transition from study into the accounting profession;
• tailored cultural awareness education for our Board, and over 70 members who are our Australian Divisional Council representatives; and
• delivery of a joint employee and member awareness event celebrating Reconciliation Week.

In 2022, we also awarded one Pacific scholarship and three Indigenous scholarships in Australia and New Zealand.

In 2023, our Divisions will continue to engage with members and their communities to investigate and develop programs that support and promote reconciliation across our three priority areas.

To learn more about CPA Australia’s RAP and progress please visit the website and/or see pages 6 and 33 to 37 of CPA Australia’s Integrated Report 2022. 

Principle 2: Structure the Board to be effective and add value

The Constitution of CPA Australia provides that the Board consists of a maximum of 10 independent non-executive Directors (as defined by the CGPR) and must have at least two external Directors (who are neither members nor employees). The President and Deputy Presidents of CPA Australia must be members. A diagram of the governance structure in place at year end is available on page 4 of the CPA Australia Integrated Report 2022.

Generally, Directors are appointed for a term of three years and are eligible to serve for up to two further terms of three years each.  Directors are ineligible to serve more than three consecutive terms. Directors will only be appointed for a third term where they have performed strongly, and weight is given to the overall composition of the Board with emphasis on balancing the need for continuity with the need for continual refreshment of talent and thinking.

The Board annually assesses the independence  of each Director.  Directors make a declaration of independence each year and must disclose to CPA Australia any matter which may affect their independence as soon as they become aware of it.  The Director membership of the Board is set out on pages 87 to 90 of the CPA Australia Integrated Report 2022.  All Board members are requested to disclose related-party transactions on an ongoing basis.  A summary of related-party transactions for each Director is disclosed in the notes to the financial statements on pages 128 to 132 of the CPA Australia Integrated Report 2022.

As set out in Principle 1, Directors are appointed by the Appointments Council. The skills mix of the Board and its Committees is outlined on pages 35 to 36 of the CPA Australia Integrated Report 2022. Further information on Directors’ skills, expertise and their terms of office, is set out on pages 86 to 90 and page 128 of the CPA Australia Integrated Report 2022.

The Board has a number of Committees as set out below under this Principle 2, including the Nomination Committee and the Member Engagement and Culture Committee.

Appointments Council

The Appointments Council’s role is to elect the Board. It does this by applying the election procedure set out in the By-Laws and is assisted in its role by the Nomination Committee. The Appointments Council comprises a representative from each of the 13 Divisional Councils. The Appointments Council works with the Board and the Nomination Committee to determine the mix of skills required on the Board and identifies candidates of suitable professional standing. When casting their votes for candidates, Appointments Councillors consider the current skills matrix, performance assessment criteria and continuing professional development requirements for the Board. The Charter of the Appointments Council approved by the Board is available on the website. 

Nomination Committee

The Nomination Committee assists the Board in determining the skills required on the Board and the criteria for appointment to the Board.  The skills and experience mix of the Board as of 31 December 2022 is at pages 35 to 36 and pages 86 to 90 of the CPA Australia Integrated Report 2022.  The  Nomination Committee assists the Appointments Council in selecting appropriate candidates for appointment to the Board by reviewing candidates and making recommendations to the Appointments Council.  The Appointments Council must have due regard to, but is not bound by, the recommendations of the Nomination Committee.    

The Nomination Committee also considers diversity issues when making its recommendations to the Appointments Council.  For further information relating to diversity, refer to the Wellness, Inclusion and Diversity section earlier in this Statement under Principle 1.

The Nomination Committee also advises the Board and the Appointments Council on succession plans for the Board.  The Nomination Committee is comprised of two members of the Board, two members of the Appointments Council and two independent non-Director appointees.

The Charter of the Nomination Committee is approved by the Board and is available on the website.

The composition of the Nomination Committee and meeting attendance are set out in the Directors’ report on page 96 of the CPA Australia Integrated Report 2022.

Member Engagement and Culture Committee

The Member Engagement and Culture Committee assists the Board in the discharge of its responsibilities for effectively reviewing the Strategy and monitoring progress of how CPA Australia engages with its members.  The Committee also oversees the strategic matters relating to organisational culture, wellness, equality and inclusion.  The Member Engagement and Culture Committee consisted of five Directors in 2022 and was chaired by the Chair of the Board.  Its meetings and attendance are set out on page 97 of the CPA Australia Integrated Report 2022.  

The Member Engagement and Culture Committee has a formal Charter approved by the Board which is available on the website.

Director Induction and Education

New Directors receive information outlining their duties and responsibilities and undertake formal induction with the Chair of the Board, other Directors and senior executives including the CEO.  All Directors participate in the annual management/employee compliance training program to support a high-level understanding of the Company’s key legal and compliance obligations. Directors also regularly receive current knowledge updates including from external providers.  

Access to Information

Executive Leaders provide the Board with information to allow it to make decisions on an informed basis. They attend meetings at the request of the Chair.

Directors are entitled to obtain reimbursement of the reasonable costs of any independent advice obtained in respect of their office.  If a Director wishes to obtain independent external advice, they must notify the Board before seeking that advice and obtain the prior approval of the Chair, whose approval shall not be unreasonably withheld.

Board and Board Committees

The respective composition and meeting attendance details of the Board and Board Committees are set out in the Directors’ Report on pages 96 to 97 of the CPA Australia Integrated Report 2022.  Minutes of Committee meetings are provided to the Board at its next meeting.  

The Board had four Board Committees in 2022:

• Nomination;
• Audit, Risk and Compliance;
• Member Engagement and Culture; and
• Education, Policy and Innovation.

Each Board Committee has a Charter (approved by the Board) outlining its role and composition.  The Charters are reviewed annually so that the role and responsibilities of each Committee are consistent with CPA Australia’s strategic objectives and remain fit for purpose in helping the Company to achieve those objectives.  

The Charters of the Committees (as appropriate) also importantly reflect the Board’s commitment to ESG and sustainability principles - having regard to both the UN 2030 Agenda for Sustainable Development and the UN Global Compact Principles - in the Company’s aspirations for its operations and policies to suitably respond over time to global efforts towards meeting environmental and social challenges.

Net Zero Emissions Pathway

In October 2021, CPA Australia joined with 13 other professional accounting bodies from around the globe in signing a commitment to achieve Net Zero greenhouse gas (GHG) emissions within each of our organisations and to encourage and support members to do the same. 

The commitment involves setting a roadmap for how we will achieve Net Zero and reporting against our roadmap. We also committed to supporting members with the tools, resources, policy and advocacy they need to play a role in tackling climate change in their own organisations.

This commitment is reflected in our Net Zero Emissions Pathway which encompasses CPA Australia’s actions with respect to transitioning to green energy, reducing waste and improving energy efficiency in our places of work, tracking emissions generated through travel and in our supply chains, and promoting sustainability as a principal component of financial reporting.  It also forms an integral part of our ESG strategy as well as CPA Australia’s Strategy.  For more information see pages 6, 19 and 30 to 32 of the CPA Australia Integrated Report 2022.

ESG

CPA Australia’s ESG strategy aims “to incorporate ESG considerations into all our activities in order to meet the present and future needs of our members, employees and other stakeholders to support long-term environmental, social and governance performance”.

We do this by:

• providing education, guidance and resources that help members  future-proof their skills and integrate and implement environmental, social and governance initiatives;
• working with partners and suppliers who share our core values and objectives, and act ethically and responsibly to create long-term value;
• becoming an organisation that is resilient to climate change, in-line with our commitment to Net Zero;
• educating our employees to improve ESG outcomes in their work and life; and
• implementing regular ESG monitoring, reporting and assurance to enable continual improvement.

Our Net Zero Emissions Pathway is consistent with the objectives which underpin Recommendation 7.4 of the CGPR whereby all companies, regardless of size and operational complexity, have both an ethical obligation and an operational imperative to identify and suitably manage their environmental and social risks.  More details on our ESG strategy can be found on our website and on pages 30 to 38 of the CPA Australia Integrated Report 2022.  

CPA Australia is committed to acting lawfully, ethically and responsibly (refer to Principle 3 below) in relation to its human rights and employment practices.  The Company released its second Modern Slavery Statement 2021  (in May 2022) in compliance with the Modern Slavery Act 2018 (Cth).  Our Modern Slavery Statements are supported by an in-depth gap analysis and roadmap through to 2023 which identifies actions and functional responsibility supporting continuous improvement in practices in key areas such as procurement and risk.  The Company has also established a Modern Slavery and Human Rights Working Group which oversees the overall implementation of the roadmap and the implementation of specific roadmap recommendations.

In 2022, the Board of CPA Australia approved its Human Rights Policy, under which CPA Australia makes a commitment to respect human rights.  We implement our commitment to respect human rights across our business, including through initiatives such as our Reconciliation Action Plan, LGBTQIA+ employee network, commitment to achieve net zero greenhouse gas emissions, and modern slavery reporting.

CPA Australia also commits to respecting all internationally recognised human rights and implementing the UN Guiding Principles on Business and Human Rights (UNGPs), including by exercising human rights due diligence.

Principle 3: Instil a culture of acting lawfully, ethically and responsibly

CPA Australia is one of the world's largest accounting bodies with a global membership of more than 172,000 members (as of 31 December 2022) in more than 100 countries and regions around the world. 

The Company’s objective is to promote integrity amongst our members and the accounting, financial, and business advisory professions generally who enhance their communities.  CPA Australia is committed to maintaining an organisational culture where the Company acts lawfully, ethically and responsibly and does so within a framework which places a premium on agreed values and standards both internally and externally. 

Directors, members, senior executives and employees of CPA Australia are required to act lawfully, ethically and responsibly in accordance with the highest standards of honesty and integrity in such a way as to safeguard and protect the reputation of the Company. 

Codes of Conduct

The Directors’ Code of Conduct, the Board Committee Members’ Code of Conduct (Non-Directors) and the Employee Code of Conduct, which amongst other things set out expected standards of behaviour, are approved by the Board, and are given to all new Directors, Board Committee members and employees respectively. The APES 110 Code of Ethics for Professional Accountants  (including the Independence Standards) set by the Accounting Professional and Ethical Standards Board applies to CPA Australia members and is upheld by the Company.  

Members serving on Divisional Councils, the Appointments Council, the Council of Presidents, Advisory and Compliance Committees and Centres of Excellence are also expected to adhere to behavioural standards and cultural values in their engagement with each other and the organisation as reflected in the CPA Australia Volunteer Code of Conduct.

Organisational Values – The CPA Australia Way

The CPA Australia Way is the name of our organisational values. These are:

• Create opportunity
• Pursue excellence
• Achieve together.

The CPA Australia Way is the heartbeat of our organisation.  It is our commitment to each other and a way of working and is the foundation of our success, experienced and lived by our people, and felt by members.  We demonstrate our values through our behaviours, which in turn creates and defines our organisational culture. 

CPA Australia’s Strategy meets the stated objects as set out in the Company’s Constitution.  It builds on the progress we have made with our previous strategy (2018-2022) and positions CPA Australia to push the boundaries and help shape the future of the global accounting profession through education and advocacy.  As with the previous strategy, the new Strategy has been co-designed in close collaboration with members, and with the needs of members as the guiding principle in setting CPA Australia’s goals.  The strategic goals include building members’ interdisciplinary and contemporary skills to accelerate their career success and connecting with our ecosystem of members and strategic partners to promote the designation.

The Member Engagement and Culture Committee of the Board monitors the Company’s progress in how it engages with its members and the organisational culture CPA Australia creates for its people (including their remuneration).  The Committee considers and approves culture against the Company’s strategies and objectives to reflect CPA Australia’s values as set out in The CPA Australia Way and to ensure that we act lawfully, ethically and responsibly.  

The Committee also plays an important role in assisting the Board to fulfil its commitment to Principle 3 of the CGPR and to its statutory, corporate governance and oversight responsibilities relating to the people, remuneration and culture of CPA Australia. 

Policies

CPA Australia’s Whistleblower Policy underlines the Company’s intolerance of any corrupt, illegal or other undesirable conduct by its personnel.  This includes the victimisation of an individual who intends to report, or has reported, such conduct under protected disclosure in accordance with the Policy. 

Fraud or corruption is not tolerated in any jurisdiction. CPA Australia’s Fraud and Corruption Policy reflects its commitment to maintaining a robust culture of integrity and ethical behaviour. 

CPA Australia’s second Modern Slavery Statement builds on the strong foundation laid down in its first Statement and sets out our ongoing efforts to prevent and address any involvement we may have in modern slavery.  

Our approach to modern slavery is guided by three key principles:

• considering risk to individuals as being paramount to all other risks;
• actively seeking to identify the risk of modern slavery in our operations and supply chains even if we do not find instances of modern slavery; and 
• recognising that assessing modern slavery risk and taking actions to address those risks is the right thing to do, and drives commercial and social value for CPA Australia, which results in value for members.

The actions that CPA Australia has taken to mitigate the risk of modern slavery in its supply chains and operations in 2022 included:

• the development of a Human Rights Policy which articulates CPA Australia’s commitment to respecting human rights;
• the development of the CPA Australia Supplier Code of Conduct which sets the agreed behavioural standards required of all CPA Australia suppliers in relation to business and ethical conduct within the framework of laws and regulations, human rights, health and safety, the environment, privacy, integrity, and inclusion and diversity; 
• engaging with the Australian Government’s three-year review of the Modern Slavery Act;
• the development of an ESG intranet page for CPA Australia employees that brings together key policies, resources and other relevant information including on modern slavery; 
• the delivery of a member webinar in October 2022 to discuss dealing with modern slavery considerations in Australia and offshore; and
• the delivery of an annual event with external speakers which was held in late November for all CPA Australia staff to mark the International Day for the Abolition of Slavery (2 December 2022).

The Company’s second Modern Slavery Statement 2021, published in 2022, may be viewed on the CPA Australia website.

Principle 4: Safeguard integrity in corporate reports

The Board has processes to verify the integrity of its corporate reports. 

CPA Australia believes integrated reporting represents an important opportunity for the Company’s members to play a pivotal role in ensuring that integrated thinking on the capitals described under the Integrated Reporting Framework (financial, manufactured, intellectual, human, natural, social and relationship) feeds into the Strategy, business management and reporting.  Since 2013, the Company has produced an integrated report using the International Integrated Reporting Council Framework and containing the Company’s financial and non-financial performance metrics. 

CPA Australia’s Integrated Report 2022 has been prepared in accordance with the fundamental concepts, guiding principles and content elements of the Integrated Reporting Framework and it has received Limited Assurance on this basis.  Our materiality processes and approach have obtained reasonable assurance.  The financial section at the end of the Report is a general purpose financial report that has been prepared in accordance with the Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 (Cth).

Audit, Risk and Compliance Committee

CPA Australia has an established Audit, Risk and Compliance Committee to verify and safeguard the integrity of the Company’s financial and non-financial reporting. The Audit Risk and Compliance Committee assists the Board in the areas of statutory reporting, internal control systems, risk management systems, insurance and legal proceedings, and the internal and external audit function.  In 2022, the Committee consisted of up to five independent Directors with a mix of accounting and business expertise and knowledge to enable it to discharge its responsibilities effectively.  In keeping with the ASX CGC Recommendation 4.1 under Principle 4, the Chair of the Board is not the Committee Chair as reflected in the Committee’s Charter.   

Reporting

Specifically, the Audit, Risk and Compliance Committee assists the Board to discharge its responsibilities for external reporting, including assurance over the Company’s Integrated Report, external and internal audit and internal control and risk management. It does this by bringing an independent review process to oversee and make recommendations to the Board in relation to external reporting. 

The Committee’s work on the verification of the integrity of the Company’s corporate reports may also include examining non-financial reporting on matters to assist in important areas such as:

• maintenance of brand reputation;
• provision of a consistent and positive member experience;
• promotion of continuous improvement;
• managing the health and wellbeing of CPA Australia workplace participants;
• the availability of data and functional systems;
• minimising and guarding against privacy breaches; and
• the maintenance of appropriate corporate governance frameworks and minimising the risk of legal and regulatory action.

Non-financial reporting leads to:

• greater transparency;
• improved management decisions;
• improved stakeholder confidence;
• improved operations;
• early identification of some forms of risk; and
• increased credibility and trust within the community. 

The Audit, Risk and Compliance Committee has a formal Charter approved by the Board and its meetings and attendance are set out on page 96 of the CPA Australia Integrated Report 2022.

Internal Auditors

The internal audit function is fully outsourced to RSM Australia which reports directly to the Audit, Risk and Compliance Committee.  RSM Australia attends all Audit, Risk and Compliance Committee meetings and is directly available to advise all members of that Committee, independent of management.  Audit plans are approved by the Audit, Risk and Compliance Committee.

The scope of internal auditing includes the examination and evaluation of the adequacy and effectiveness of CPA Australia’s governance, risk management and internal controls, as well as the quality of performance in carrying out assigned responsibilities to achieve the Company’s stated goals and objectives.  For more information please see page 39 of the CPA Australia Integrated Report 2022.

Receipt of Financial Statements

Each year before financial statements are approved, management provides a representation letter to both the Board and KPMG, the external auditors, expressing an opinion as to whether, in accordance with the Corporations Act 2001 (Cth):

• the financial records have been properly maintained;
• the financial statements (and notes) for the financial year comply with both Australian and International Accounting Standards;
• the financial statements give a true and fair view of CPA Australia’s financial position and performance; and
• the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 

External Auditors

KPMG was appointed as CPA Australia’s external auditors in 2018. The performance of the external auditors is reviewed annually by the Board with advice from the Audit, Risk and Compliance Committee.

An analysis of fees paid to the external auditors, including a breakdown of any non-audit fees paid or received by the auditors, is provided in the notes to the financial report on page 133 of the CPA Australia Integrated Report 2022. The Audit, Risk and Compliance Committee has developed principles for the supply of non-audit services.  The external auditors provide an annual declaration of their independence to the Audit, Risk and Compliance Committee.  A representative from the external auditors attends the AGM and is available to answer audit-related questions.

The Audit, Risk and Compliance Committee undertakes a review of the terms of engagement of the external auditors and the rotation of external audit engagement partners, before deciding to re-appoint the existing audit firm or to seek tenders on the open market.

Principle 5: Make timely and balanced disclosure

CPA Australia does not issue shares, and accordingly does not report on share-trading activity or policies. The Company’s financial activities are otherwise fully set out in CPA Australia’s Integrated Report 2022.

Executive and Director remuneration is also disclosed, including key terms and conditions for the CEO. 

The Board, however, has committed to improved disclosure and communication to provide greater transparency to members. These assist members to continue to be engaged in their member organisation with respect to issues of relevance to the profession. 

During the course of 2022, Board Updates kept members informed on the progress of projects including the finalisation of the present Strategy and the continued delivery of services to members. 

These included:

• the continuation of online examinations;
• providing resources, guidance and information to support members and their clients during the COVID-19 pandemic, including resources to support the physical and mental wellbeing of members, their teams and clients;
• providing advice, resources and strategies in relation to preparing for the financial risks associated with extreme weather events and in managing disaster recovery, including, for example, the reconstruction of financial records;
• the successful tax time campaign (including Tax Tips 22) so that members had access to the tools, resources and information they needed to support businesses and their clients as well as educating the public about tax time considerations;
• the progression of the MMF project – one of CPA Australia’s largest strategic initiatives undertaken - to create digital and organisational capabilities that enable the Company to personalise members' experiences across all touchpoints; 
• the successful delivery of CPA Australia’s Public Practice Virtual Conference in August;
• the virtual CPA Congress in October;
• the release of CPA Australia’s 2021 Integrated Report (including the financial statements), the holding of the 2022 AGM and the approval by the members at the AGM of CPA Australia’s refreshed Constitution; 
• the publication of CPA Australia’s second Modern Slavery Statement; 
• the publication of CPA Australia’s Human Rights Policy 2022; and
• the provision of quality CPD offerings for members. 

Policy positions, guides and submissions relevant to the accounting profession were issued on a regular basis and covered both national and international topics or issues including:

• CPA Australia’s Net Zero Emissions Pathway;
• responses to consultation papers issued by international and national standard-setters, such as the:
  • International Accounting Standards Board;
  • International Auditing and Assurance Standards Board;
  • International Ethics Standards Board for Accountants;
  • International Public Sector Accounting Standards Board;
  • International Sustainability Standards Board;
  • Australian Accounting Standards Board;
  • Australian Auditing and Assurance Standards Board;
  • Accounting Professionals and Ethics Standards Board; and
  • External Reporting Board;
• CPA Australia’s ESG strategy;
• responses, sometimes jointly with other professional organisations, with respect to taxation, superannuation and financial advice issues, such as the Australian government’s response to the Taxation Practitioners Board review, the Quality of Advice Review, and the proposed changes to reporting requirements for superannuation funds;
• pre-budget submission and budget coverage in Australia, New Zealand, and several Asian jurisdictions, such as Malaysia and Hong Kong; and
• a collaborative guide on navigating the new for profit financial reporting framework in Australia. 

More information and examples of activities, initiatives and services supporting members can be found, for example, on pages 33, 44 to 45, 58 to 60 and 65 to 73 of the CPA Australia Integrated Report 2022. Pages 9 and 75 to 79 of the Report set out further details of the Company’s support of members in the policy and advocacy context.

The CPA Australia Integrated Report 2022 includes detailed financial and non-financial reporting.

Principle 6: Respect the rights of security holders (members)

CPA Australia provides its members with timely access to information about its performance, governance, activities and changes in legislation that may affect the accounting, financial, and business advisory professions generally.  CPA Australia’s principal communication channels with members include its Integrated Report, the monthly e-publication, INTHEBLACK, the weekly e-newsletters, CPA Update and TaxNews, and the Company’s website.  Board Updates are issued regularly.

In 2022, the Notice of the AGM was provided to all members and also posted on the Company’s website.  The meeting was held on 11 May 2022 at 5:30pm (AEST), at the Four Seasons Hotel, 199 George Street, Sydney, New South Wales.  The Board conducted a hybrid AGM using technology to enable members the greatest opportunity to participate.  Members (and their representatives) were encouraged to submit their proxies online.

In view of the removal of government restrictions on travel more members were able to attend the physical venue of the AGM in person in May 2022, together with the Directors, and CPA Australia employees working at the AGM.  

For those who could not be physically present, members were also able to view, listen to and ask questions at the AGM in real time with the assistance of live webcasting.  Questions were posed in text format online and as in 2021, members were able to dial in and ask questions by voice online during the AGM.  Members entitled to vote at the meeting could:

• attend the meeting physically and vote or vote online; or
• prior to the AGM, appoint a proxy to attend the meeting either at the physical venue or online and to vote at the meeting. 

 Voting on the special resolution to adopt a new Constitution was conducted by Poll.

At the AGM, members approved by special resolution and adopted a refreshed Constitution which:

• removed unnecessary transitional provisions;
• simplified the language; 
• removed Branch Councils; 
• enabled entities to be Members if the Board so resolves; and 
• aligned the Constitution with developments under the Corporations Act including enabling the Company to hold wholly virtual meetings of Members.

Members can elect to receive information from, and send information to, CPA Australia electronically.  This has been further facilitated by the provision of a Board email address, [email protected] and the Divisional President email addresses for members to be able to communicate directly with their local representative members - in addition to being able to contact CPA Australia staff in their local office or relevant line area for operational enquiries and support. Members can also contact the Appointments Council at a dedicated email address, [email protected]

Detailed information about the Company including the Constitution, By-Laws, Charters, the Integrated Reports, the Corporate Governance Statement, the Board, Committees, the Appointments Council and the Council of Presidents, Advisory and Compliance Committees and Centres of Excellence, media statements and profiles of the Directors and Executive Leaders are available online at the CPA Australia website.

Member Engagement and Culture Committee

The Member Engagement and Culture Committee oversees matters involving engagement with all of CPA Australia’s members by:

• providing advice to the Board on matters relating to members;
• providing advice to the Board on member services and product (at a strategic level); 
• advising on and maximising the effectiveness of communications with members and other key stakeholders; and 
• doing all it reasonably can to protect and enhance the external reputation of CPA Australia.

The Strategy reflects the evolving professional environment in which we operate.  It equips CPA Australia to tackle the major issues shaping the profession with initiatives to stimulate tertiary study of accounting and finance, attract new members from related fields, and empower members to adapt to new technologies and develop interdisciplinary skills.

Education, Policy and Innovation Committee

The Education, Policy and Innovation Committee assists the Board in fulfilling its statutory, corporate governance and oversight responsibilities relating to CPA Australia’s education, research and innovation strategies. It has oversight of the education strategy relating to the CPA Australia professional programs, the innovative practices and technologies agenda of the organisation, particularly considering the rapidly changing environment in which CPA Australia operates and any impact on its strategic plans, and advising the Board in relation to organisational policy responses and thought leadership.

Principle 7: Recognise and manage risk

Risk management is a key aspect of CPA Australia’s governance arrangements.  The goal of its risk management processes and structures is to maximise opportunities to achieve objectives and goals without exposing the Company to unnecessary risk. 

The Board has overall responsibility for the oversight of risk management including determining the risk appetite for CPA Australia and the approval of the Risk Management Framework and related policies.

The Audit, Risk and Compliance Committee assists the Board in providing objective, non–executive review and oversight of the approved Risk Management Framework and related policies so that risks are being actively managed within risk appetite, that compliance obligations are being met and that the Company’s insurance program is adequate, given the insurable risks associated with its business.  

CPA Australia has a Board-approved Risk Appetite Statement that is reviewed and updated annually as well as when significant events occur.  The Statement articulates the amount of risk the Company is prepared to accept or avoid in pursuit of strategy.  The Risk Appetite Statement enables the Board and management of CPA Australia to be aligned on risk management and to identify, assess and treat risks related to the achievement of objectives while remaining within the Board’s approved appetite for those risks.

This includes:

• making decisions that reflect the taking of appropriate risk for appropriate reward leveraging the right controls;
• providing timely monitoring and reporting on risks to all stakeholders;
• creating a sound risk culture that is embedded throughout the Company;
• continually improving and maturing the management of risk; and
• satisfying corporate governance and regulatory requirements at all times.

Throughout 2022, CPA Australia continued to further enhance and consolidate its Risk Management Framework and practices including:

• further embedding a risk management culture across the organisation;
• reviewing and updating the Risk Appetite Statement, Risk Management Framework and Risk Management Policy;
• management setting key risk indicators to help monitor performance against our risk appetite; and
• Board oversight of risk management activities with quarterly reporting to the Audit, Risk and Compliance Committee and an annual Board and Executive workshop for the formal assessment of existing, new and emerging risks.

CPA Australia follows the three lines of defence model in its business operations and approach to risk management:

Line 1: management and internal controls;
Line 2: risk management and compliance monitoring and reporting; and
Line 3: internal audit.

CPA Australia’s internal auditors are RSM Australia.  In 2021, the Board endorsed the recommendation of the Audit, Risk and Compliance Committee to re-appoint RSM Australia as CPA Australia’s internal auditors for a further three years.

A three-year internal audit plan reviewed annually, is approved by the Audit, Risk and Compliance Committee and the internal auditors report to the Committee five times per year.

Internal audit has access to the Audit, Risk and Compliance Committee at any time.

The internal audits for 2022 were framed on the basis of CPA Australia implementing a new Strategy for 2022 - 2027.  The internal audit plan for 2022 had an increased focus on integrity and compliance reviews for the year, to free up capacity in the forward agenda to focus on strategic priorities, aligned to the new Strategy. This included:

• reviewing the implementation of a new compliance and regulatory management system across CPA Australia; and
• reviewing foundational integrity and compliance obligations in relation to fraud and corruption controls, privacy compliance and the Tax Compliance Framework.

In addition to the above, internal audit also focussed on:

• IT operational audits, including managing third party risks and IT strategy; and 
• project management controls.

Enterprise Risks

The table on pages 40 to 42 of the CPA Australia Integrated Report 2022 shows the key enterprise risks relevant to our Strategy in order of priority.  Priority order has been determined by consideration of the residual likelihood of the risk occurring and the consequences of that risk on the Company’s ability to create value for the Company and its members.  

Our risk management approach is underpinned by a risk culture that supports decision-making in accordance with CPA Australia’s values, objectives and risk appetite.  CPA Australia has in place cyclical and strategic planning and evaluation processes that form part of its response to managing risks.  We also engage external advisers with specific expertise, as and when required, and have an enterprise project management office that provides oversight and reporting over strategic projects and their associated risks.  The table on pages 40 to 42 also shows the key specific responses to each individual risk.  For external risks and opportunities please refer to pages 16 to 17 of the CPA Australia Integrated Report 2022.

The four Committees of the Board in 2022 shared responsibility for decision-making on economic, environmental and social impacts and risks.  These risks are disclosed throughout the CPA Australia Integrated Report 2022.  The Audit, Risk and Compliance Committee reviews the Integrated Report covering all material issues and recommends the Report to the Board for approval.

Principle 8: Remunerate fairly and responsibly

Directors

Article 42 of the Constitution provides that total Director remuneration cannot exceed a “Pooled Amount”.  In accordance with Article 42, where the number of Directors is nine or less, the Pooled Amount is $1,037,864.62 as of 1 October 2022 and is indexed to CPI annually.  If the number of Directors appointed under the Constitution is ten, then the Pooled Amount is $1,124,352.71 as of 1 October 2022 and is indexed to CPI annually. 

In 2022, not all of the pool was used.  Director fees for each Director are set out on pages 148 to 149 of the CPA Australia Integrated Report 2022. Directors’ fees are inclusive of superannuation payments. 

The Pooled Amount can only otherwise be increased by members passing an ordinary resolution at a general meeting of the Company. 

Within the Pooled Amount, Directors collectively determine the remuneration to be paid to each individual Director, having regard to their duties and responsibilities.  The amount of remuneration paid to, and divided amongst, the Directors may be less than or equal to the Pooled Amount.  If the Directors do not reach an agreement, the Pooled Amount is to be divided equally amongst them.

From 1 July 2021 to 30 October 2021, Director Michaela Browning was paid Director fees and then from 1 November 2021, Director Michaela Browning performed her CPA Australia director duties on a pro bono basis until she ceased to be a Director on 30 April 2022.

Directors do not receive retirement benefits. From their Director fees, CPA Australia pays superannuation to the Directors’ nominated superannuation funds in accordance with Company policy and legal requirements. 

Management

The Board independently and objectively assesses the Company’s decisions and oversees the performance and activities of management under the Board-approved Strategy.

The Board has the responsibility to appoint the CEO and to approve their terms of appointment.

The CEO has personal performance indicators and is eligible for an incentive payment, subject to the approval of the Board, after its evaluation of the performance of the CEO.  This evaluation involves an assessment of a range of factors, including the overall performance of CPA Australia and the achievement of predetermined goals.

In 2022 the Board considered overall management remuneration and approved remuneration for all Executive Leader positions.  The Board approved the salary bands for management and any increases, based on external advice from qualified specialists and with a view to safeguarding member value.  Under the terms of CPA Australia’s incentive scheme, attainment of demanding KPIs can result in a reward being approved by the Board and paid to staff who reach organisational and individual performance targets.  CPA Australia’s Strategy includes a set of performance indicators that place member value and satisfaction at the heart of management’s focus. 

The Member Engagement and Culture Committee reviews and approves CPA Australia’s remuneration framework and associated policies for all employees (including incentive methodology and annual movements in salary scales).  

Overview

This Statement sets out the governance structure underpinning the framework against which our Strategy and business objectives are set, our operations are monitored and the risks we face are managed.  It provides a clear framework for our decision-making, accountability, our culture and the standards of behaviour we uphold and expect of each other.

Within the framework of systems, policies and processes we have set out in this Statement, CPA Australia will continue to strive for the highest standards in delivering value for our members and all the stakeholders in the CPA Australia community.  

We review this Statement annually to keep pace with current and emerging corporate governance developments of relevance to our organisation, market practice, regulatory changes as appropriate and the expectations of our members. We seek to be transparent and strive for overall continuous improvement each year.