Operational results and Financial security concerns

On this page

• Commentary on financial security risks

• Lack of detail in reporting

• Remuneration levels for executives and auditors

• Charts illustrating historical results

  • Accumulated results from ordinary operations

  • 5-year average of operating results

  • Liquidity ratio

  • Funds per member

  • Average member fees

  • Ratio of funds to operating expenses

Commentary on financial security risks

While CA ANZ does not exist to maximise profits, members nevertheless reasonably expect competent operational performance which does not risk financial security.

As noted on the Home page of this site, readers can form their own view on whether CA ANZ is justified in "considering that due process has been followed in connection with all of CA ANZ's conduct and operations; that all the allegations made are baseless; and CA ANZ denies the conduct alleged."

Since the amalgamation ten years ago, accumulated results from ordinary operations have declined from $54 million to around $16 million (pre tax and reserve transfers).

The liquidity ratio has dropped from 1.09 to below 0.9, which CA ANZ describes as “better than expected”.

Operating deficits have become regular, despite members being promised that the merger would result in annual cost savings of around $15 million (the average annual result for ICAA leading up to the merger was a $3 million profit, even after allowing for merger costs of around $8 million).

Key concerns are that member rights have been withdrawn as performance has declined, and CA ANZ may have difficulty dealing with another round of significant losses such as $7.7 million and $8.7 million for the 2022 and 2023 years.

The below charts illustrate performance history since the time of the amalgamation, and would be self explanatory for Chartered Accountants, except for the effective recycling of around $15 million of reported revenue following the retroactive adjustment made by CA ANZ revealed in its 2019 Annual Report. 

Recycled reported revenue

Despite the 2018 Annual Report asserting that CA ANZ did not anticipate adopting AASB 15 would have a material impact on the Group’s financial reporting, the 2019 Annual Report contained significant adverse retroactive adjustments.

This meant that previously reported revenue in the order of $15 million was adjusted though the balance sheet against accumulated results, but would reasonably be expected to be reported as revenue through the profit and loss account in future years in accordance with AASB 15.

CA ANZ does not disclose the extent that revenue reported during a year was also reported as revenue in a prior year.

To place this in context, reported net operating results after 2018 total around $7.7 million, and stakeholders are not aware of the extent that this includes any of the $15 million reported as revenue prior to the retroactive adjustment.

Lack of detail in reporting

Members may wish to compare the level of CA ANZ reporting with other organisations. Taking the Maroondah Council as a non-cherry-picked example, it is noted that:

• Multiple year results are displayed, especially for strategic indicators

• Results are shown against budgets

• Results are shown against programs

• Councillor allowances and expenses are shown to the cent for each councillor, including by categories such as travel and PD

It is submitted that no reasonable person could maintain a view that the operational demands of the Maroondah Council could be less onerous than faced by CA ANZ as a membership body, especially when analysing the pages listing the legislative environment, and programs operated.

Here is a link to the Maroondah Council Financial Report:

https://www.maroondah.vic.gov.au/files/assets/public/v/1/documents/about-council/reporting-on-our-progress/annual-report-2024-25.pdf

Remuneration levels for executives and auditors

Again taking Maroondah Council as an example, it is difficult to understand how the levels of executive remuneration and audit fees paid by CA ANZ could be justified.

For example, the CA ANZ CEO was paid over $1 million whereas the Council CEO responsible for similar if not greater levels of revenue, staff and operational challenges, was paid less than half that amount.

The top 5 Maroondah Council executives were paid around $2 million, compared with around $3.3 million for CA ANZ.

The audit fees for Maroondah Council were less than $170,000 (including $82,000 for internal), compared with more than twice that amount at around $368,000 (apparently not including internal audit costs), for the CA ANZ auditor who was appointed at the 2019 AGM in Wellington NZ. From comparing the financial reports, a reader might wonder why the audit fees are not the opposite.

Charts illustrating historical results

The CA ANZ financial reports have not included historical results, other than the obligatory prior year figures and two years of history for some KPIs, since 2018 when the CA ANZ CEO has no longer been a Chartered Accountant, 

From the charts below, readers can form their own view around why CA ANZ may prefer to keep members in the dark when it comes to disclosing operating performance in an historical context.