CPA Australia Ltd (CPA Australia) is committed to adopting best practice in corporate governance and to that end has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (CGPR). This approach has been adopted despite the fact that CPA Australia is an unlisted public company limited by guarantee and as such is not formally required to report against the CGPR. CPA Australia uses the CGPR as a benchmark to best practice and has implemented these principles as far as they are relevant to it as a membership-based organisation.
CPA Australia reports against the CGPR in this Corporate Governance Statement as part of its commitment to advancing trusted and valued accounting and business professionals who enhance and service their communities.
In preparing this Statement, CPA Australia has considered the 4th edition CGPR following its release in February 2019 and, where appropriate, has reported against the 4th edition CGPR for the Corporate Governance Statement 2020.
This document represents the Corporate Governance Statement as at 31 December 2020.
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. The Board is responsible for a number of decisions including:
- setting and approving the Company's Strategy, direction and financial objectives;
- appointing the President and Deputy Presidents;
- approving financial statements;
- evaluating the CEO's performance; and
- making and amending By-Laws.
The Governance structure of the Company is set out on pages 4 to 5 of the CPA Australia Integrated Report 2020. The Board is appointed by the Appointments Council, comprising one Divisional Councillor from each Divisional Council. The Appointments Council’s role is to appoint the Board. The selection process has due regard to the required skills, knowledge, experience and other capabilities required of the Board with due regard to 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 later in this Corporate Governance 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 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 are undertaken annually by all Directors and Board Committee members. Every third year there is an independent review of the Board.
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 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;
- a forward rolling agenda to assist with the structure and balance of future meeting agendas; and
- management reports, which include reports on strategic risks, strategic projects, operational items and regular reports from the CEO and the CFO.
During 2020, the impacts of COVID-19 were at the forefront of the Board’s discussions. More information on the Board’s response to the pandemic can be found on page 27 of the CPA Australia Integrated Report 2020. The Board and its Committees were active throughout 2020 and considered a number of issues across all areas of the business, including:
- long-term strategic planning including oversight of the education, IT and brand strategies;
- oversight of financial performance of the Company ensuring long-term sustainability;
- ensuring compliance with government regulators and industry standard setters;
- oversight of priorities arising from member research;
- approval of CPA Program education initiatives, including the digital finance micro-credential offer;
- review and sign-off of CPA Australia’s 2019 Integrated Report and financial statements;
- approval of online system upgrades to enable employees to work remotely;
- approval and oversight of the online exam model for ASA members;
- approval of investment in, and the model for, the online member engagement platform, CPA Member Connect;
- oversight of the move of INTHEBLACK from paper to digital format;
- approval of contracts with external partners and suppliers;
- oversight of engagement with Divisional Councils, including Board Outreach, development of member engagement plans and Council elections;
- approval of appointments to IFAC, Centres of Excellence, Advisory and Compliance Committees;
- approval of investment for major projects, website and the member management and finance systems;
- assessment and refreshment of the quality review program for public practitioners with the design of the CPA Best Practice Program with a member support model at its core; and
- oversight of the activities of the Internal Auditors.
The Board has in-camera sessions at each Board meeting where the Board meets without the CEO and management being present.
In 2018, the Board approved the new three-year Strategy (2019 – 2021). In 2020 the Strategy was extended by one year to be in place until 2022 due to the impact of Covid-19 (Strategy). Management of CPA Australia’s operations and the implementation of CPA Australia’s Strategy, risk and compliance framework and policy initiatives are the responsibility of the CEO and management.
The Board approves annual Key Performance Indicators (KPIs) 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 most recent report is made available to the Finance and Policy Committee meetings and at each Board meeting. As from 1 January 2021, the Finance and Policy Committee will be reconstituted as the Finance and Investment Committee.
Following the Annual General Meeting (AGM) in 2018, the Council of Presidents was established. The Council of Presidents (comprising the Presidents of each of the Divisional Councils) advises the Board on strategic issues and opportunities, drawing on the views of the members. The responsibility of the Council of Presidents includes the facilitation of two-way engagement with Divisional and Branch Councils and the Board. The Council of Presidents has a formal Charter approved by the Board.
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 ensuring that the Board is 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 Management Team 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.
All senior executives have written agreements with CPA Australia that set out the terms of their appointment.
All staff and management including the senior executives 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 and adherence to CPA Australia’s values and culture.
The Board has ultimate approval of remuneration changes that have been assessed, advised and benchmarked by management, and approves remuneration of the CEO and direct reports.
Along with all staff, all executives 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.
Inclusion and Diversity
CPA Australia values and promotes an inclusive and diverse culture by fostering an environment that focuses on:
- gender equality;
- celebrating diversity and promoting a culture of inclusion; and
- creating a flexible workplace.
It does this through the Company’s Inclusion and Diversity Policy which applies to:
- CPA Australia’s Board;
- membership committees appointed by either the Board or management;
- all CPA Australia’s employees and contractors; and
- persons seeking employment with the Company.
CPA Australia also values a workforce that reflects the diversity of its membership and the general population so that different perspectives, views and ideas add strength to its ability to deliver value. In 2020, the Company continued to celebrate diversity and a culture of inclusion through continued support of its LGBTIQ+ employee network, PRISM. It responded to the impacts of COVID-19 by producing both employee and member events focusing on supporting the LGBTIQ+ community with mental health and wellbeing challenges being experienced by the community during the pandemic.
Further information relating to inclusion and diversity may be found on pages 58 - 59 of the CPA Australia Integrated Report 2020.
CPA Australia is committed to social change and reconciliation between Aboriginal and Torres Strait Islander peoples and the broader Australian community.
The Reflect Reconciliation Action Plan (RAP), August 2019 to February 2021, reflects the Company’s commitment to reconciliation and social change between Australia’s First Peoples and the broader Australian community. The Reflect RAP, developed in partnership with Reconciliation Australia, provides a framework to build greater engagement with Aboriginal and Torres Strait Islander peoples, as CPA Australia seeks to develop and foster genuine understanding and respect of First Nations people and their cultures.
The Reflect RAP focuses on two areas:
- raising internal organisational capability, awareness and understanding; and
- beginning to make external connections and building community relationships.
To learn more about CPA Australia’s Reflect RAP and progress please visit the Reconciliation Action Plan page and/or page 26 of CPA Australia’s Integrated Report 2020.
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) but 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 2020.
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 strongly performed, and weight should be 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 included on pages 80 to 83 of the CPA Australia Integrated Report 2020. 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 118 to 122 of the CPA Australia Integrated Report 2020.
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 30 to 31 of the CPA Australia Integrated Report 2020. Further information on Directors’ skills, expertise and their terms of office, is set out on pages 88 to 89 and page 118 of the CPA Australia Integrated Report 2020.
The Board has a number of Committees as set out below under this Principle 2, including the Nomination Committee and the Member Engagement Committee. The Nomination Committee assists the Board in determining the skills required on the Board and the criteria for appointment to the Board.
The Appointments Council’s role is to appoint 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 take into account 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 Councils and Committees page.
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 at 31 December 2020 is found on page 31 of the CPA Australia Integrated Report 2020. 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 Nomination Committee also considers diversity issues when making recommendations to the Appointments Council for appointments to the Board. For further information relating to diversity, refer to the Inclusion and Diversity section earlier in this Statement.
The Appointments Council must have due regard to, but is not bound by, the recommendations of the Nomination Committee. 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 Councils and Committees page.
The composition of the Nomination Committee and meeting attendance is set out in the Director’s report on page 89 of the CPA Australia Integrated Report 2020. The same pages (88 to 89) set out Directors’ attendances at Board and other Board Committee meetings.
Member Engagement Committee
The Member Engagement Committee assists the Board in the discharge of its responsibilities for effectively reviewing Strategy and monitoring progress of the manner in which CPA Australia engages with its members. The Member Engagement Committee consists of five Directors. It is chaired by a Director nominated by the Board. The Member Engagement Committee’s meetings and attendance are set out on page 89 of the CPA Australia Integrated Report 2020. From 1 January 2021, the Member Engagement Committee will be reconstituted as the Member Engagement and Culture Committee. It will assist the Board to discharge its above responsibilities in relation to members and will also monitor progress of the organisational culture CPA Australia creates for its people. It has a formal Charter approved by the Board.
Director Induction and Education
New Directors receive information outlining their duties and responsibilities and attend a formal induction meeting with the Chairman of the Board, other Directors and senior executives including the CEO. All Directors undertake the annual management/staff compliance training program to ensure 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
Senior executives provide the Board with information to allow it to make decisions on an informed basis and attend meetings at the request of the Chairman.
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 Chairman, whose approval shall not be unreasonably withheld.
The respective composition and details of meeting attendance of the Committees are set out in the Directors’ Report on pages 88 to 89 of the CPA Australia Integrated Report 2020. Minutes of Committee meetings are provided to the Board at its next meeting.
The Board had five Board Committees in 2020:
- Audit, Risk and Compliance;
- Finance and Policy;
- Member Engagement; and
- People, Remuneration and Culture.
In December 2019, the Board agreed to wind up the Independent Review Implementation Committee as its work had been completed. During 2020, the Board restructured its Committees to better align their respective areas of responsibility to meet the challenges of the future.
Effective from 1 January 2021, the new Board Committees are:
- Audit, Risk and Compliance;
- Finance and Investment;
- 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 to ensure 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.
In 2020, the Charters of the Committees (as appropriate) also importantly reflect the Board’s commitment to sustainability - 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 these challenges. These include the Company’s commitment to act lawfully, ethically and responsibly (refer to Principle 3 below) in relation to its human rights and employment practices. CPA Australia also remains committed towards positive engagement in policy and public debate about an effective response to the economic and social transformation challenges of climate change. Committees may co-opt members who, whilst they are not Directors, bring particular experience to the Committees.
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 168,736 members (as at 31 December 2020) in more than 100 countries around the world.
The Company’s purpose is to advance trusted and valued accounting and business professionals who enhance their communities. CPA Australia is committed to maintaining an organisational culture where the Company acts lawfully, ethically and responsibly.
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.
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 Independence Standards) applies to CPA Australia members and is upheld by the Company.
CPA Australia’s Strategy ensures that the stated objects as set out in its Constitution are met. The strategic goals include the protection, promotion and enhancement of the designation. One of the objectives for this goal is to strengthen the internal quality assurance and risk frameworks to ensure integrity and transparency.
The People, Remuneration & Culture Committee of the Board also plays an important role in assisting the Board in fulfilling its commitment to Principle 3 and to its statutory, corporate governance and oversight responsibilities relating to the people, remuneration and culture of CPA Australia. On and from 1 January 2021, the work of this Committee will be undertaken by the Member Engagement and Culture Committee.
CPA Australia’s Whistleblower Policy underlines CPA Australia’s intolerance of any corrupt, illegal or other undesirable conduct by its personnel including the victimisation of an individual who intends to report or has reported such conduct under protected disclosure in accordance with the Policy.
CPA Australia is committed to maintaining a robust culture of integrity and ethical behaviour. CPA Australia will not tolerate fraud or corruption within any part of the organisation (whether in Australia or elsewhere).
CPA Australia is taking action to address modern slavery in its operations and supply chains to uphold human rights, protect against possible harm to the Company’s business, improve the integrity and quality of the Company’s supply chains, increase profitability, maintain and further enhance member confidence and develop greater access to business opportunities.
PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF 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 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 2020 has been prepared using the Integrated Reporting Framework and incorporates the audited Annual Accounts. The 2020 Report has been prepared with reference to the fundamental concepts, guiding principles and content elements of the International Integrated Reporting Council’s (IIRC) Integrated Reporting (IR) Framework. The Report also represents the first time the Company has received assurance under the entire IR Framework, with CPA Australia’s 2019 Report being assured under the content elements only. This will make CPA Australia only one of a few companies globally to be assured under the entire IR Framework.
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 Committee consists of five independent Directors with a mix of accounting and business expertise and knowledge to enable it to discharge its responsibilities effectively. The Committee Chair is nominated by the Board. The Chair of the Board shall not be the Committee Chair.
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 by bringing an independent review process to oversee and make recommendations to the Board in relation to external reporting. The Committee plays an important role in the verification of the integrity of CPA Australia’s corporate reports.
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 such as failure to maintain brand reputation, inability to provide a consistent and positive member experience, failure to promote continuous improvement and also to adequately manage the health and wellbeing of CPA Australia employees, loss of data and systems availability, privacy breaches, inability to maintain appropriate corporate governance frameworks and legal and regulatory action. Non-financial reporting not only leads to greater transparency but also to 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 88 of the CPA Australia Integrated Report 2020.
The Internal Audit function is fully outsourced to RSM Australia and reports directly to the Audit, Risk and Compliance Committee. The internal audit provider, 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.
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, and whether the financial statements (and notes) for the financial year comply with both Australian and International Accounting Standards and give a true and fair view of CPA Australia’s financial position and performance, and that 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, were 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 122 of the CPA Australia Integrated Report 2020. 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 seek tenders on the open market.
Apart from the Audit, Risk and Compliance Committee the following Committees assist in the integrity of financial and corporate reporting.
Finance and Policy Committee
The Finance and Policy Committee consists entirely of Directors and assists the Board to discharge its responsibility to manage the business planning, budgeting processes and general financial management of CPA Australia. The Committee consists of five Directors and is chaired by a Director nominated by the Board. The Finance and Policy Committee reviews, assesses and advises the Board on the Company’s financial and economic strategies pursuant to its organisational Strategy. The Finance and Policy Committee’s meetings and attendance are set out on page 88 of the CPA Australia Integrated Report 2020. Effective from 1 January 2021, the Finance and Policy Committee will be reconstituted as the Finance and Investment Committee. It has a formal Charter approved by the Board.
People, Remuneration and Culture Committee
The People, Remuneration and Culture Committee’s responsibilities are to assist the Board in fulfilling its statutory, corporate governance and oversight responsibilities relating to the people, remuneration and culture of CPA Australia including approving and appraising the culture against the strategies and objectives to achieve a culture of acting in accordance with Company values lawfully, ethically and responsibly. The Committee comprises five Directors and is chaired by a Director nominated by the Board who is not the Chair of the Board. The People, Remuneration and Culture Committee’s meetings and attendance are set out on page 89 of the CPA Australia Integrated Report 2020. On and from 1 January 2021, the People, Remuneration and Culture Committee will be reconstituted as the Member Engagement and Culture Committee. It has a Charter approved by the Board.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
CPA Australia does not hold securities and accordingly does not report on share-trading activity or policies. 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 2020, Board Statements and daily briefings updated members on the ongoing impact and response to the COVID-19 pandemic as well as the continued delivery of services to members. These included:
- the successful delivery of online examinations;
- the Road to Recovery initiative on CPA Australia's COVID-19 web hub designed to resource and assist businesses in navigating the stages towards recovery;
- the development and launch of Member Connect, a member engagement platform;
- an online member survey to ascertain attitudes to government responses to COVID-19 to better inform the Company’s ongoing policy and advocacy activities;
- the virtual Public Practice Conference;
- the CPA virtual Congress; and
- tools and resources to support the mental health of members during the pandemic.
Policy Bulletins were issued on a regular basis. Bulletins covered both national and international topics or issues including:
- the Federal Government’s Economic and Fiscal Update 2020;
- the evolving connectivity of financial and non-financial reporting in the preparation of Integrated Reports;
- CPA Australia’s Federal Budget Member Report 2020-21; and
- CGT exemption changes impacting foreign residents.
The disclosure of executive and Director remuneration includes key terms and conditions for the CEO.
The CPA Australia Integrated Report 2020 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 profession. Its three principal communication channels with members are the monthly publication, INTHEBLACK, the weekly e-newsletter CPA Update and the Company’s website. In addition, Board Statements and Policy Bulletins are issued regularly.
The Notice of the AGM is provided to all members and is also posted on the Company’s website. CPA Australia and the Board ordinarily encourage members to attend the AGM and vote in person. However, in view of the government restrictions on travel, the size of public gatherings and the management of public health and safety surrounding the outbreak of COVID-19 and in line with the Statement from the Board of CPA Australia dated 20 April 2020, members (and their representatives) were not able to attend the physical venue of the AGM in person in April 2020, other than members who were Directors, or CPA Australia staff working at the AGM. All those present at the AGM were required to adhere to strict safety and social distancing requirements. The Board conducted a hybrid Annual General Meeting using technology to enable members to participate. As members (and their representatives) were not able to attend the physical venue of the AGM in person, they were encouraged to submit their proxies online.
Members were also able to view, listen to and ask questions at the AGM in real time with the assistance of live webcasting without having to be physically present. Questions were posed in text format online, and in 2020, for the first time – members were able to dial in and ask questions by voice online during the AGM.
Members may 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 and Branch 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, Integrated Reports, the Corporate Governance Statement, the Board, Committees, the Appointments Council and the Council of Presidents, media statements and profiles of the Directors and senior executives is available online at the CPA Australia website.
The Member Engagement Committee’s role is to assist the Board in relation to matters involving engagement with all CPA Australia’s members. Effective from 1 January 2021, the Member Engagement Committee will be reconstituted as the Member Engagement and Culture Committee.
The Company’s governance structure is shown on pages 4 to 5 of the CPA Australia Integrated Report 2020.
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 Board has established the Audit, Risk and Compliance Committee to assist in providing objective, non–executive review and oversight of the approved risk management framework and related policies to ensure that risks are being actively managed within risk appetite, that compliance obligations are 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 or 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 these risks.
- making decisions that reflect the taking of appropriate risk for appropriate reward, leveraging, 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 2020, CPA Australia has continued to further enhance and consolidate its risk management strategy and practices including:
- further embedding a risk management culture across the organisation;
- reviewing and updating the risk appetite statement and risk management policy;
- improving alignment of business continuity planning to strategic objectives; and
- overseeing risk management activities by quarterly reporting to the Audit, Risk and Compliance Committee and an annual workshop for the formal assessment of existing, new and emerging risks.
CPA Australia follows the three lines of defence model in its approach to risk management:
- management and internal controls;
- risk management and compliance monitoring and reporting; and
- internal audit.
CPA Australia’s internal auditor is RSM. A yearly internal audit plan is approved by the Audit, Risk and Compliance Committee and the Internal Auditor reports to the Committee five times per year.
Internal audit has access to the Audit, Risk and Compliance Committee at any time.
Areas selected for internal audit in 2021, amongst others, included the Company’s member feedback and complaints handling process, Whistleblower Policy review and IT controls.
The table on pages 34 to 35 of the CPA Australia Integrated Report 2020 shows the key inherent risks most relevant to 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. CPA Australia has in place cyclical and strategic planning and evaluation processes that form part of its response to managing risks. It also engages external advisers with specific expertise, as and when required, and has an enterprise project management office that provides oversight and reporting over strategic projects and their associated risks. The table on pages 34 to 35 also shows the key specific responses to each individual risk. For external risks and opportunities refer to pages 14 to 15 of the CPA Australia Integrated Report 2020.
The five Committees of the Board in 2020 shared responsibility for decision-making on economic, environmental and social impacts and risks. These risks are disclosed throughout the CPA Australia Integrated Report 2020. This shared responsibility will continue during 2021 with the five reconstituted Committees of the Board. The Audit, Risk and Compliance Committee reviews this Report and ensures that all material issues are covered. The Audit, Risk and Compliance Committee recommends the Report to the Board for approval.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Article 45 of the Constitution provides that total Director remuneration cannot exceed a “Pooled Amount”. In accordance with Article 45, where the number of Directors is nine or less, the Pooled Amount is A$939,082 as at 1 October 2020 and will be indexed to CPI annually. If the number of Directors appointed under the Constitution is ten, then the Pooled Amount is A$1,017,339 as at 1 October 2020 and will be indexed to CPI annually.
The weighted average pool where for part of the year from 1 October 2020 there were nine Directors and from 31 December 2020 ten, is A$997,775.
In 2020, not all of the pool was used. Director fees for each Director are set out on pages 138 to 139 of the CPA Australia Integrated Report 2020. 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 will 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 will be divided equally amongst all of the Directors.
Director Ric De Santi performed his CPA Australia Director duties on a pro - bono basis, effective 16 November 2018.
Directors do not receive retirement benefits.
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 approve the terms of the CEO’s 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 2020 the Board considered overall management remuneration and approved remuneration for all Executive and General Manager 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 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.
During 2020 to support the Company’s response to COVID-19 the CEO and the Executive Management Team have voluntarily forgone their entitlement to an incentive payment in 2020.
The People, Remuneration and Culture Committee:
- reviews and makes recommendations to the Board relating to the appointment, terms of engagement, and ongoing remuneration reviews for senior executives; and
- the remuneration framework and associated policies for all staff (including incentive methodology and annual movements in salary scales).
This Committee will be reconstituted effective from 1 January 2021 as the Member Engagement and Culture Committee.
The Board appoints the CEO and approves their terms of appointment.