Which of the following statements best defines compliance monitoring?

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 4th 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 profession and the public interest.

This document represents the Corporate Governance Statement as of 31 December 2021.

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 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.

The Governance structure of the Company is set out on page 4 of the CPA Australia Integrated Report 2021. The Board is appointed by the Appointments Council which is comprised of one Divisional Councillor from each Divisional Council. 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 later in this Corporate Governance 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.

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 is 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;
• 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 and balance of future meeting agendas.

During 2021, the Board, together with its Committees, considered a wide range of issues across all areas of the business, including:

• long-term strategic planning encompassing oversight of the education, IT and brand strategies;
• climate change risk and a commitment to setting a roadmap for Net Zero;
• oversight of financial performance of the organisation to support long-term sustainability;
• supporting members through the impacts of COVID-19 and other events and assisting with the development of appropriate recovery plans;
• compliance with government, regulators and industry standard-setters;
• oversight of priorities arising from member research;
• the review and sign-off of CPA Australia’s 2020 Integrated Report and Financial Statements;
• 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 (MMF) program;
• appraisal of the independent internal auditor’s performance and function in consideration of re-appointment;
• oversight of the process to develop organisational values;
• monitoring compliance with COVID-19 requirements and regulations for CPA Australia offices and workplaces;
• oversight and approval of the process to develop the 2023 onwards organisational strategy;
• the development and publication of CPA Australia’s first Modern Slavery Statement;
• ongoing member outreach; and
• discussion of the future of work, including digitisation of the profession and cybersecurity.

During 2021, COVID-19 continued to impact the Board’s discussions. CPA Australia’s initiatives relating to the pandemic and the timeliness of their delivery continued to be well-received by our members. More information on the Board’s response to COVID-19 can be found on pages 6, 9 and 36 of the CPA Australia Integrated Report 2021.

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 or for which they require clarification prior to the CEO and management joining the Board meeting. 

In 2018, the Board approved the new three-year Strategy (2019 – 2021) which was extended by one year in 2020 to be in place until 2022 due to the impact of COVID-19. The Board oversees and monitors management’s implementation of the Board-approved CPA Australia’s Strategy, its risk and compliance framework, policy initiatives and operations. In 2022, the Board will work with management and our members to co-design our next strategy.

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. As from 1 January 2022, the Finance and Investment Committee was dissolved and the work of the Committee has been assumed by the Board and the Audit, Risk and Compliance 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) 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.

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 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. 

Performance Management

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, including improving member satisfaction through focused activities aligned to the organisational 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 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.

Wellbeing, Inclusion and Diversity

We continued to support our people throughout 2021 as many continued to work from home where restrictions were in place. Throughout the pandemic, individual health, safety, and wellbeing have been a priority. In recognition of this, we reviewed our original inclusion and diversity strategy that was created in 2018. In 2021, the Board endorsed a framework that includes wellbeing, inclusion and diversity.

The new framework will continue to build on the foundations of the original 2018 strategy, enabling us to build a place where all people at CPA Australia can do their best work and feel like they belong.  

The framework aims to help us achieve:

• a people-centred workplace that is safe, equitable, inclusive, and values all of our diversity;
• an environment where people are supported and set up to succeed in both their professional and life goals; and
• a place where people want to come to work.

The framework will support a best practice inclusion and diversity program that recognises mental health and individual wellbeing as an ongoing priority, as well as an effective program that is able to accommodate the unique and diverse needs of our people. For more information on our activities in this area see pages 36 to 37 and 59 to 61 of the CPA Australia Integrated Report 2021.

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. In 2021, the Company continued to elevate wellness and to celebrate diversity and a culture of inclusion through continued support of its employees, including of its LGBTIQ+ employee network, PRISM. It responded to the impacts of COVID-19 by producing both employee and member events focusing on mental health and wellbeing challenges being experienced by the community during the pandemic. The Company’s ‘Wellbeing Fridays’ initiative delivered over 20 wellbeing, inclusion and diversity events with over 3,000 total attendees (employees and members).

Further information relating to inclusion and diversity may be found on pages 36 to 37 and 59 to 61 of the CPA Australia Integrated Report 2021. 

With the successful completion of CPA Australia’s first Reconciliation Action Plan (RAP) – the Reflect RAP – in February 2021, we have been developing our next level RAP to be released in early 2022 – an Innovate RAP.

Our Innovate RAP will focus on three key areas:

• increase the number of Aboriginal and Torres Strait Islander people in the accounting profession through education and career pathways;
• promote the value that accounting creates for First Nations communities and supporting self-determination; and
• continue to build our internal capability through ongoing awareness and education.

We will also create an Indigenous Advisory Group made up of a range of First Nations members representing Indigenous voices to support and guide us during this two-year RAP.

Three notable initiatives during 2021 included:

• an Artwork Project where the Company worked with each Division to engage with the local community to source an artwork depicting the land and traditional owners of that land on which each office resides; 
• a successful Reconciliation Week webinar event featuring a panel of some of CPA Australia’s First Nations members representing a diversity of location, age and gender and who brought first-hand experiences about their professional journeys and what Reconciliation meant to them; and
• awarding five annual scholarships to Aboriginal and Torres Strait Islander university students to enter the CPA program each year as part of the CPA Australia Indigenous Scholarship initiative. So far, 38 scholarships have been awarded. We also awarded two Maori scholarships in New Zealand.

To learn more about CPA Australia’s RAP and progress please visit the website and/or see pages 36 to 37 of CPA Australia’s Integrated Report 2021.