CPA Australia’s health check

A NEW checklist from CPA Australia will enable investors and auditors to take a more pro-active role in the evaluation of companies’ financial health.

The corporate governance health checklist has been designed for use by company employees, clients and investors alike.

CPA Australia CEO Greg Larsen believes a company’s financial report provides an indication of its financial health at a certain point in time, but offers only a limited under-standing of how the management and board approach their duties, tackle ethical concerns and manage their relationships with external advisers.

Mr Larsen said most Australian companies already had good corporate governance policies in place.

“We can encourage these efforts by assisting companies that act responsibly, are vigilant in their management of relationships with analysts, advisers and auditors, and are constantly mindful of their responsibilities to stakeholders to reap the rewards,” Mr Larsen said.

The health check was developed by CPA Australia’s Corporate Governance and Ethics Centre of Excellence and included recommendations outlined in The Financial Reporting Framework – the way forward, issued by CPA Australia in April.

But the accounting body warns would-be company investigators that not all the points on the checklist would be easy to obtain.

“If the information is unavailable this may be an indicator of the company’s attitude to keeping its stake-holders adequately informed,” Mr Larsen said.

“The absence of key information is worth investigating and may warrant contacting the company directly.”

The National Institute of Accountants has joined the debate over monitoring and regulating companies and auditors.

The NIA gave its vision for the future of the accounting profession in its recent submission to the Parliamentary Joint Committee of Public Accounts and Audit.

NIA CEO Roger Cotton said the vision was drafted in light of the apparent failure of the profession to safeguard the public interest in a number of high-profile corporate collapses.

“Although the blame for such failures should not be placed exclusively on accountants and auditors, these events have caused the accounting and auditing profession, as with others, to review itself and consider where improvements, if any, can be made,” he said.

Mr Cotton said the biggest concern facing the industry was the ad hoc mix of government regulation and self-regulation by three different professional bodies.

The NIA believes these bodies and regulators need to be pulled together through a peak or umbrella body, with greater cooperation between the industry groups and all levels of government.

Another issue of concern raised in the submission was the fact that each professional body had its own separate disciplinary committee, each of which largely enforced the same professional standards.

There also are a number of disciplinary bodies established under legislation that review cases about the conduct of accountants in specific areas, such as the Company Auditors, the Liquidators Disciplinary Board and the Tax Agents Board.

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