APESB’s new challenge: to stay relevant
Given the manner in which the financial planning and accounting communities have been pushed even more closely together by factors such as Future of Financial Advice (FOFA) legislation and the Tax Agent Services Act (TASA), it is worth reflecting upon the role and relevance of the Accounting Professional and Ethical Standards Board (APESB).
It was, of course, the APESB which gave rise to APES 230 – the professional standard designed to be followed by accountants delivering financial planning services in the context of the FOFA legislation.
It is now history that the APESB’s first iteration of APES 230 caused deep consternation among accountant/planners who were members of the big three accounting organisations – CPA Australia, the Institute of Chartered Accountants (ICAA) and the Institute of Public Accountants (IPA) - because it sought to impose requirements extending significantly beyond the terms of the FOFA legislation.
The level of consternation created by the first iteration of APES 230 was such that some accountant/planners actively canvassed ending their membership of CPA Australia and the ICAA.
Those who were members of the IPA were less agitated because, constitutionally, that body had the capacity to disagree with the APESB and therefore set its own standards.
Notwithstanding the fact that a period of concerted lobbying by the major accounting organisations saw the APESB suitably amend APES 230, the IPA last week did deliver its own, alternative standard – Pronouncement 11 – which it said provided certainty to its members.
In announcing the IPA’s promulgation of Pronouncement 11, IPA chief executive Andrew Conway said his organisation had kept the APESB informed of its intentions and stressed that “the APESB has been made well aware of the IPA’s constitutional power to issue a pronouncement in place of an APESB standard where it is in the interests of IPA members to do so”.
Conway’s comments regarding his organisation’s constitutional rights made it all the more interesting when the APESB issued a statement declaring that it had encouraged the IPA not to issue its alternative standard and “advised that each of the three professional accounting bodies was expected to support all APESB standards to maintain a strong and effective co-regulatory framework”.
The APESB also claimed that the IPA’s Pronouncement 11 represented a “lesser standard”.
All of which raises the question of whether accounting-focused bodies such as the APESB or Tax Practitioners Board (TPB), as they are currently constituted, are entirely suited to the rapidly evolving environment around the delivery of financial advice.
The APESB undoubtedly does excellent work with respect to reviewing and setting accounting standards, but its handling of APES 230 suggests that its expertise did not at that time sufficiently extend to the commercial coalface of delivering financial advice.
The energy expended by the APESB in huffing and puffing about the IPA’s Pronouncement 11 might have been better focused on determining how it can remain relevant in a rapidly evolving industry.
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