An independent review into the deeply troubled accountancy organisation CPA Australia has found the former chief executive was overpaid, it had lost touch with its members and provided questionable value for money for the services it rendered.
- Independent review found CPA executive lost touch with members
- Board and executives overpaid and Alex Malley’s $4.9m severance payment well above what was considered standard
- Review notes interactions between staff and members “not always constructive and respectful”
While much of the interim report had elements of “tell us something we don’t know” for anyone following the implosion of the profile-obsessed professional body, it did make recommendations to overhaul corporate governance and practices.
The review, headed by former federal auditor general Ian McPhee, was established as the previous CPA board collapsed and before the under siege former CEO Alex Malley was shown the door with a $4.9 million pay out.
“It is fair to say that, over time, the Board and the then CEO lost touch with a large cohort of the membership of CPA Australia,” the review noted.
“When under pressure, the board and CPA Australia has commonly defaulted to the minimum standard of disclosure.
“This has occurred in response to significant issues raised by members and the media, rather than giving emphasis to transparency and the likely interests of the membership.”
In what is in the running for corporate Australia’s understatement of the year, the review found “the board could have handled things better”.
By the end of the debacle, seven of the twelve member board had quit, making it impossible to form a quorum at meetings.
Pay above expectations and comparable organisations
Despite these glaring failings, the review found the remuneration of the boards of CPA Australia and its new financial planning wing, CPA Advice, were “above the expectations of many members and those of benchmarked member-based organisations”.
The $4.9 million payout to Mr Malley — the equivalent to three years of an already healthy wage — was well above what would be considered standard for a CEO position while senior CPA executives were “paid more than comparable positions at other member-based organisations”.
While the review found the objectives and spending of the CPA’s $30 million marketing budget were compatible with other professional organisations, it questioned the wisdom of sponsoring large sporting such as the National Basketball League and the overemphasis on promoting Mr Malley.
CPA Australia members paid for Mr Malley’s commercial TV chat show and a heavily promoted autobiography featured in airport lobbies and on Melbourne trams.
It also questioned holding this year’s annual general meeting in Singapore where members did not have real-time participation despite live streaming being provided.
Misalignment between services and fees
The review also noted considerable disgruntlement with members about the value they received from fees paid.
“Some members have indicated that there is a misalignment between services and membership costs,” it said.
“In particular, that the cost of professional development and training is also perceived as being too high.”
It also noted, “on occasions, interactions between staff and members have not always been constructive and respectful and, at times, have been detrimental”.
The review suggested a charter explicitly governing standards of behaviour — common in other organisations — should be adopted.
It also recommended the maximum term for CPA directors be cut from nine years to six.
The final report from the review is expected to be released in December.