DRIVING A COMPETITIVE FUTURE CPA AUSTRALIA 2013 INTEGRATED REPORT WE VALUE YOUR FEEDBACK ON THIS REPORT AND ANY ENQUIRIES ABOUT OUR POLICIES OR PRACTICES. FOR MORE INFORMATION, CONTACT CPA AUSTRALIA CHIEF EXECUTIVE, ALEX MALLEY, AT [email protected] CPA AUSTRALIA 2013 INTEGRATED REPORT | 1

ABOUT THIS REPORT

The scope and boundaries of This report is structured to provide The financial section at the end of this this report covers the activities of readers with a comprehensive picture report is a general purpose financial CPA Australia Ltd (CPA Australia) of how CPA Australia has created value report that has been prepared in and its controlled entities, and is through its business model and how we accordance with the Accounting inclusive of office locations in Australia, intend to do so for the short, medium Standards, Interpretations and other Asia, Europe and New Zealand and long term. It has been informed by authoritative pronouncements of the for the calendar year 1 January to our materiality review (see page 2) and Australian Accounting Standards Board 31 December 2013. features the following main sections: and the Corporations Act 2001. This report has been prepared in • Our members – including service, Accounting Standards include accordance with the fundamental certification and the CPA Program, Australian equivalents to International concepts, guiding principles and broadening our audience and access Financial Reporting Standards (A-IFRS). content elements set out in the to knowledge Compliance with A-IFRS ensures that International Integrated Reporting • Public interest and the profession financial statements and notes of Council’s (IIRC) Integrated – including representation and the consolidated entity comply with Reporting Framework released on advocacy, supporting accounting International Financial Reporting 9 December 2013. education, professional standards Standards (IFRS). Integrated Reporting represents an and community We have also used the Global important opportunity for CPAs to • How we do business – including our Reporting Initiative (GRI) 3.1 play a pivotal role in ensuring that people, environment and governance Sustainability Reporting Guidelines in integrated thinking on the capitals preparing the report to Application • How we manage our financial (financial, manufactured, intellectual, Level C+. The Application Level C+ resources and reporting – this forms human, natural, social and relationship) has been checked by the GRI and part of how we do business, but has feeds into business management independently assured by Deloitte its own section, given the priority of and reporting. Our Chief Executive, Touche Tohmatsu Ltd. Please see the information to our members and Alex Malley, is a member of the IIRC, page 107 for the independent limited other stakeholders driving our commitment to integrated assurance statement and page 106 reporting from the top. More details This structure also reflects our strategic for the Application Level check. For on the IIRC and the framework can be objectives, including key initiatives and more information about the GRI, the found at www.theiirc.org related activities for 2013. guidelines and Application Levels As an integrated report this document The principal audience for this report please visit www.globalreporting.org also covers our sustainability is our membership, but the information There have been no significant changes information. At CPA Australia, the term will also be of value to our other from previous reporting periods in “sustainability” covers our management stakeholders including our committees, scope, boundary or measurement of the relevant capitals for our business. prospective members, staff, key methods of our financial or non- As a business, we are committed influencers (including regulators, financial performance. There are no to reporting on the environmental, governments and their agencies), material exclusions from this report. employers, professional industry social and financial context of our The CPA Australia full integrated bodies, academic institutions and organisation. Our decision to move report in English, and a concise version research partners. towards a whole-of-business view of in Chinese are available online at operations means changing behaviours, cpaaustralia.com.au/annualreport systems and processes to manage our impact on resources and the relationships that support this. 2 | DRIVING A COMPETITIVE FUTURE

WHAT MATTERS FOR CPA AUSTRALIA

iv

viii High

i v vi ii vii xii iii xiii x ix xi

xiv Business impact Low Low Stakeholder importance High

DETERMINING MATERIALITY CPA Australia’s 2012 Annual Report This year, we have not included a FOR CPA AUSTRALIA against the IIRC Draft IR Framework. separate section on our supply chain, We used these issues to form the As part of the development of this as this information is not a priority for basis of the structure of the 2013 report, we engaged Beca Pty Ltd to our stakeholders. Information on our Integrated Report. undertake a materiality determination key supplier partnerships can be found in the sections representing our key process. The aim was to determine KEY BUSINESS ISSUES significant issues that are relevant for products and services, in particular, The key business issues for CPA Australia, by incorporating: Certification and the CPA Program. CPA Australia in overall order of While environmental issues are also • Issues of most importance to significance, taking into account the of relatively low importance to our external stakeholders importance of issues to stakeholders stakeholders and have limited impact • Issues that have the most potential and the potential business on our operations as a business, as a to impact the business impact, are as follows: professional body representing the Our engagement of stakeholders to i Service – member engagement interests of accountants who may develop this report was done via a one- ii Access to knowledge be called on to account for energy on-one interview program, internal and iii An independent board and environmental use in varying external stakeholder workshops and jurisdictions, we believe it is important iv Certification and the material issues ranking process. that we continue to measure and CPA Program External stakeholders included member report our environmental impact. representatives from across industry v Professional standards sectors and of mixed social and vi Broadening the audience demographic backgrounds. Internal vii Representation and advocacy stakeholders represented key business viii Financial sustainability areas and processes. A continuing challenge for CPA Australia into ix Community the future is to engage with a wider x Supporting accounting education range of stakeholders in determining xi Leading on integrated reporting materiality. xii Stable and motivated workforce In addition to external and internal xiii Efficient and rewarding stakeholder engagement, reviews supplier relationships were undertaken of CPA Australia’s risk registers, peer reports and xiv Environment CPA AUSTRALIA 2013 INTEGRATED REPORT | 3

CONTENTS

About this report 1 FINANCIAL REPORT 65 What matters for CPA Australia 2 Report of the Board of Directors 66 President’s report 5 Overview of financial results 69 Chief Executive’S report 7 Discussion and analysis of 2013 highlights and challenges 8 the financial results 2013 70 2013 performance and 2014 targets 10 Statement of profit or loss and other comprehensive income 72 Our Business model 12 Statement of financial position 73 How CPA Australia creates value 13 Statement of changes in members’ funds 74 Our strategy 14 Statement of cash flows 75 Risks and opportunities 15 Notes to the financial statements 76 Our future outlook 16 Directors’ declaration 99 OUR MEMBERS 17 Independent Auditor’s Report 100 Service 18 GRI index 102 Certification and the CPA Program 22 GRI Application Level Check 106 Broadening the audience 24 Independent Limited Assurance 107 Access to knowledge 28 Office locations 110 PUBLIC INTEREST AND THE PROFESSION 31 Representation and advocacy 32 Supporting accounting education 35 Professional standards 37 Community 39 HOW WE DO BUSINESS 41 Our people 42 Executive Management Group 46 Environment 47 Governance 49 Board of Directors 50 Corporate Governance Statement 2013 55 Managing Risk 59 Councillors and committees 60 Acronyms 64 4 | DRIVING A COMPETITIVE FUTURE

THIS YEAR WE INVESTED HEAVILY IN OUR INFRASTRUCTURE AND DIGITAL COMMUNICATIONS TO BUILD THE FUTURE CAPABILITIES OF OUR ORGANISATION. CPA AUSTRALIA 2013 INTEGRATED REPORT | 5

PRESIDENT’S REPORT

Over the course of 2013, we completed We have sustained a continuing CPA Australia’s financial position a series of major infrastructure emphasis on broadening our audience continues to go from strength to upgrades and expanded our digital and strengthening the reach and strength, giving us the foundation communication capabilities to better influence of the CPA Australia brand. we need to build our organisational engage and serve nearly 150,000 In 2013, we took innovation to a new capabilities and invest in the members across 121 countries around level to acquire new members and CPA Program and a range of digital the world. engage existing CPAs. The Bottom platforms to grow and enhance our These new platforms are part of Line television series, broadcast business in new and innovative ways. CPA Australia’s corporate plan to build around Australia on the Nine Network, On behalf of the Board, I would like to the capability of our organisation, positioned CPA Australia at the heart thank all employees for their invaluable deliver world’s best service standards of the leadership conversation and contribution in helping CPA Australia to members, broaden our audience, generated interest in the organisation deliver on its key strategic objectives. provide a CPA Program of the highest like never before. The Naked CEO, I would also like to thank my Board quality, and protect and advance our integrated social media series colleagues and those members the public interest. This is how we for students reached the remarkable who contribute their time, energy create value. milestone of more than one million site and expertise to the Representative The roll-out of our new Customer visits since inception. And our first-of- Council, Divisional and Branch Councils, Relationship Management system its-kind business gaming application, Advisory Committees, Centres of was a significant achievement for Boardroom Tycoon, saw more than Excellence, member representative the business. While the scale and 10,000 downloads in the first week forums, discussion groups and complexity of the project presented a of its release. task forces. number of challenges, impacting our I am proud to report that we were Lastly, I thank our broader membership ability to serve members during the fortunate enough to be honored with for their commitment to the quality and transition, we are confident this change major awards for both The Bottom Line ideals of the CPA designation. will revolutionise the way we work with and The Naked CEO as well as for our Our vision is for CPA Australia to be our members in the future. We thank new website. known as the world’s best member both our members and our staff for their The value of the CPA designation service organization and I thank you for patience during this year. continues to be recognised across your support and commitment to an A great deal of work also went into the world, and is reflected in our exceptional organisation that ensures that the design and delivery of our new, demographics. Collectively, about one day our vision will become reality. award-winning, corporate website. 17 per cent of our members hold The new platform will truly bring us into senior leadership roles, including the 21st century and is accessible from more than 21,000 members at CEO or any web-enabled device, and delivers CFO level, or in business ownership or content and products that are tailored partner roles. to members’ needs. Recognising that more than one-third of Penny Egan fcpa visits to our websites are from overseas President and Chairman of users, our new Become a CPA site now the Board of Directors delivers content in Chinese, Vietnamese CPA Australia and Bahasa Indonesian, so that we can more effectively engage with members and prospective members in these countries. 6 | DRIVING A COMPETITIVE FUTURE

OUR VISION IS TO BE KNOWN AS THE WORLD’S BEST MEMBER SERVICE ORGANISATION. CPA AUSTRALIA 2013 INTEGRATED REPORT | 7

CHIEF EXECUTIVE’S REPORT

This year’s integrated report reflects Our innovative work on competitiveness We created a number of new strategic an organisation delivering on its has been complemented by similarly relationships to grow the number of strategic vision through initiatives that successful advocacy outcomes, working Recognised Employer Partners by a have built our business, strengthened on behalf of our members and the further 30 per cent and significantly our member service offering and laid profession to influence changes enhanced our Members Benefits+ the foundations for future success in regulatory environments across program to include a greater range and growth. the globe. of personal and business benefits Over the course of the year, we This has been a year of important for members. achieved a great deal for our members, milestones for CPA Australia. This report represents an important the broader community and our We significantly expanded our milestone for us. It is our first fully business by continuing to invest in our infrastructure, digital communication integrated report, prepared in technology, people, the value of our and social media capabilities – all with accordance with the International brand and the CPA designation, as well a view to better serving the changing Integrated Reporting Framework, as providing leadership and advocacy needs of our members. This included where we provide a whole-of-business on behalf of the profession. the delivery of our new Customer picture as to how we are performing A priority area of public policy for Relationship Management system, against our goals, embedding key CPA Australia continues to be the shift multi-currency gate-way, telephony drivers across all parts of our business, in the centre of global economic gravity upgrade, new corporate website and and creating value, now and into to the Asia Pacific region and the ability the accompanying release of our new the future. of countries in the region to compete Become a CPA multi-lingual websites. The emerging field of integrated in the Asian Century. The release of We also entered into strategic, long- reporting represents an important our landmark research publication term partnerships with Pearson Vue and opportunity for CPAs, and I am proud Australia’s Competitiveness: From DeakinPrime to innovate and increase to represent CPA Australia on both Lucky Country to Competitive Country the flexibility of the CPA Program, and the International Integrated Reporting positioned CPA Australia as a leader in grow our range of digital blended Council and HRH The Prince of public and political debate about an learning options. Wales’ Accounting for Sustainability issue central to our economic future. (A4S) project. We will maintain our highly visible I would like to thank our members, advocacy throughout 2014 and beyond partners and friends for contributing to to ensure decision makers in business, our success in 2013. I would especially politics and the community capitalise like to thank our people for their on this major research and use the dedication, innovation and hard work findings to confront the challenges of in striving to achieve everything we set creating a competitive country capable out to do to grow the capability of our of creating the high paying jobs of organisation and deliver world class the future. service to members.

Alex Malley fcpa Chief Executive CPA Australia 8 | DRIVING A COMPETITIVE FUTURE

2013 HIGHLIGHTS AND CHALLENGES

HIGHLIGHTS • Representing the accounting • Challenging views on key issues Successfully taking our message to profession and the views of our including tax reform, the burden of a broader audience by: membership through positions excess regulation and red tape, and on councils for IFAC, the IIRC, and driving debate on the effectiveness • Launching The Bottom Line HRH Prince of Wales Accounting for of the superannuation and leadership interview series on Sustainability project retirements savings model network television across Australia with more than 1.7 million viewers Demonstrating leadership and • Producing this, our first fully across two seasons challenging views by: integrated report • More than doubling our social media • Launching our ground breaking Engaging with our members and audience to engage with more than research Australia’s Competitiveness: potential members through innovative 175,000 across various platforms and From Lucky Country to Competitive new products by: channels Country at the National Press Club in • Entering into long-term strategic Canberra, Australia • Securing one of only two strategic partnerships with DeakinPrime sponsorships for the Financial Review • Influencing and impacting regulatory and Pearson VUE to innovate Sunday to further position our brand and legislative outcomes for the and increase the flexibility of the as a dominant player in the business profession CPA Program and finance community CPA AUSTRALIA 2013 INTEGRATED REPORT | 9

• Taking The Naked CEO global and Significantly growing our service CHALLENGES driving over one million visits to offering and digital communication • Rolling out major infrastructure the site with fresh content that is capabilities by: upgrades in a complex and changing published daily • Implementing Member First, business environment • Launching a first of its kind business which included our new Customer • Staying ahead of rapid changes in gaming App Boardroom Tycoon, Relationship Management (CRM) technology and education delivery which received global reach with over system, which allows us to better • Political uncertainty in Australia and 58,000 downloads in four months serve members and streamline the changing nature of the regulatory our processes A strong CPA designation and brand environment reflected by membership of just under • Launching our new personalised • Continuing to meet the needs of a 150,000 including: corporate website, where content geographically and demographically can be accessed on any device and is • Solid growth in key markets and diverse membership a membership in Asia in excess more tailored to member needs • Managing operations in an of 35,000 • Launching our Become A CPA increasingly competitive marketplace website in Bahasa Indonesian, Chinese and Vietnamese to better • Achieving all our growth targets in an meet the needs of a broader range of uncertain economic environment stakeholders • Increasing our Recognised Employer Program by 30 per cent from 2012 10 | DRIVING A COMPETITIVE FUTURE

2013 PERFORMANCE AND 2014 TARGETS

FINANCIAL CAPITAL Table 1: Overview of economic value generated In 2013 we continued to deliver for the year ended 31 December 2013 a strong operating performance FY 2013 FY 2012 increasing our revenue through an Direct economic value generated $‘000s $‘000s increase in members and CPA Program sales. We continued to expand our Membership fees 70,774 67, 276 digital communication channels and Education and training revenue 74,928 75,141 upgraded our member facilities in Other 11,540 11,606 Canberra, Indonesia and Vietnam. We also finalised our upgrades to Total direct economic value generated 157, 242 154,023 core business systems including Economic value distributed $‘000s $‘000s CRM, multi-currency payment Employee wages and benefits 57,039 54,383 gateway and corporate website. Our exact targets for economic value Operating costs 97,897 91,406 generated and surplus before tax Payments to providers of capital – – for 2014 are considered commercial Payments to government – – in confidence but are set to be broadly in line with 2013 results. Community investments – – Total economic value distributed 154,936 145,789 FY 2013 Surplus before tax 2,306 8,234

Table 2: CPA Australia – Revenue and costs by geographic region for the year ended 31 December 2013 Total Total Surplus revenue costs before tax $‘000s $‘000s $‘000s Total Australia 120,363 138,922 (18,559) New Zealand 1,286 1,329 (43) Europe 1,116 737 379 Malaysia 8,757 1,937 6,820 Singapore 7,015 3,448 3,567 Hong Kong 11,082 3,749 7,333 China 3,762 3,129 633 Vietnam 812 1,299 (487) Indonesia 240 374 (134) Other overseas 2,809 12 2,797 Total overseas 36,879 16,014 20,865 Total CPA Australia 157, 242 154,936 2,306

Overhead costs such as corporate services, marketing and product development are not allocated to regions outside of Australia. CPA AUSTRALIA 2013 INTEGRATED REPORT | 11

Table 3: Statement of financial position as at 31 December 2013 NON-FINANCIAL CAPITAL FY2013 FY 2012 To realise our vision of being known as the world’s best member service $‘000s $‘000s organisation, we measure a number Total current assets 48,029 55,697 of non-financial metrics. One way we Total non-current assets 97,3 42 79,518 do this is by undertaking an annual benchmarking study*, which captures Total assets 145,371 135,215 our members’ views as to how we are Total current liabilities 67,79 0 64,026 performing in relation to delivering an Total non-current liabilities 6,491 6,708 offer they value. Total liabilities 74,281 70,734 These studies show that our members’ assessment on how we have performed Net assets 71,090 64,481 has been consistent over the past three Total members’ funds 71,090 64,481 years with a general trend upwards. We also recognise that how we go Table 4: Non-financial capital about our business and create value for our members has an impact on Goals and measures 2011 2012 2013 2014 the communities in which we operate, target our staff, our stakeholders and on the Goal: A sustainable business environment. Many of these measures are detailed in the GRI Index, which Greenhouse gas emissions (ky tCO2E) 40.6 45.8 31.6 <35 can be found on pages 102 to 105. Staff turnover** <17% <14% <15% <15% A key selection of these metrics are Goal: Protecting the public interest and furthering the profession also highlighted left. Enabling members to demonstrate 6.95 7.0 0 7.07 >7.0 0 This year we have also included our to others a commitment to high 2014 targets. professional and ethical standards* Showing leadership in the field* 6.76 6.76 6.8 >6.70 Goal: Member engagement CPA Program enrolments (%growth YOY) 1.9% 5.2% 2.5% 4.5% Engagement through key online channels • CPA Australia website visits >2.6m >2.8m >2.7m 3.1m • Social media channel audience 27,000 80,000 175,000 225,000 Value of membership* 6.46 6.48 6.63 >6.60 Member engagement* 7.05 7.0 4 7.07 >7.0 0

* Survey methodology: The survey was run as an online survey by Beaton Research and Consulting in November 2013, 38,171 members were contacted via email and a response rate of 10 per cent was received (3840 responses). Members were asked to assess their overall view of CPA Australia’s performance over the last 12 months on a scale of 0-10 where 0 is extremely poor. Results for 2011 and 2012 are from the previous year’s surveys that followed the same methodology. ** Staff turnover is regretted turnover, which is defined as employees that have separated from the organisation via a resignation, excluding employees that are on fixed term contract, have been made redundant or who have been under performance management. 12 | DRIVING A COMPETITIVE FUTURE

OUR BUSINESS MODEL

INPUTS

OUR VISION CPA Australia is known for being the world’s best member VALUE service organisation. ACTIVITIES OUR GOAL To maximise the share of people who want a career built on professional accounting skills.

OUTCOMES OUTPUTS

EXT NT ERNAL ENVIRONME CPA AUSTRALIA 2013 INTEGRATED REPORT | 13

HOW CPA AUSTRALIA CREATES VALUE

Founded in 1886, CPA Australia INPUTS OUTPUTS is one of the world’s largest professional accounting and finance • Financial resources: • High calibre accounting bodies, representing close to 150,000 –– Membership fees professionals that add value to their members and business professionals –– Payments for products and services organisations and communities in 121 countries. • People: • A strong service oriented culture Our core services to members –– Members • Thought leadership on matters that include education, training, –– Employees impact the accounting and broader knowledge exchange, technical • Intellectual capital: business communities support, networking and advocacy. –– Our brand • Strong brand value and recognition Our major sources of funding are –– CPA Program • A capable workforce that is membership fees and payments for –– Our knowledge and expertise passionate about CPA Australia the products and services we deliver. • Infrastucture: and the value CPAs deliver Our sphere of operations covers –– A network of 19 offices staffed offices in all states and –– Our IT and digital infrastructure territories of Australia as well as • Partners: OUTCOMES in China (including Hong Kong), –– Suppliers Indonesia, Malaysia, New Zealand, –– Accountancy bodies • Protection of the public interest Singapore, the United Kingdom –– Governments and regulators • A sustainable organisation and Vietnam. –– Higher education sector • World class member service We believe the work of professional • A stronger accounting profession accountants is fundamental to the • Global demand for those who stability, efficiency and sustainability BUSINESS ACTIVITIES hold the CPA Australia designation of individual companies, financial markets and the economies of entire • Delivering the highest quality countries. Ultimately, their work CPA Program that meets the VALUE CREATED enables capital to flow to the most changing needs of candidates productive projects and ensures that and employers standards of living increase. • Consistency, comparability and • Providing access to high quality transparency of financial information The work we do is supported by knowledge and resources that drives better business decisions our strong governance and values. • Producing high quality advocacy • Stable capital markets Governance is fundamental to on behalf of the profession and • Sustainable businesses CPA Australia’s activities and our our members Board of Directors ensures strong • Public confidence • Being committed to providing the adherence to the principles of good world’s best member service standards corporate governance. • Ensuring all members comply with Our core values are respect, a professional code of conduct empowerment, accountability, • Broadening the audience of those cooperation and honesty. Our who take an interest in: people live these values as they –– What a CPA does support the organisation to deliver –– CPA Australia on its objectives. • Continuing to develop a strong brand • Recruiting, retaining and developing high quality people 14 | DRIVING A COMPETITIVE FUTURE

OUR STRATEGY

CPA Australia has a corporate plan that GROWTH KNOWLEDGE sets out our goals for 2012 to 2014. It As professional bodies consolidate and Our members have diverse career outlines the strategies we are pursuing form strategic alliances, our scope of and knowledge needs that extend to meet our vision of being the world’s influence and scale will be important beyond core accounting skills. As the best member service organisation to ensure CPA Australia and our knowledge needs of our members and our goal of maximising the share members remain relevant in a global expand and as we increasingly have of people who want a career built on environment. members located outside Australia and professional accounting skills. A key component of our strategy is our in regional areas, we are focused on Our strategy is focused on key themes engagement with Asia. CPA Australia delivering new ways for our members to that are represented in our business is committed to ensuring our members access the knowledge they need. model: service, growth, certification, benefit from the full spectrum of DEVELOPING knowledge and organisational opportunities that will emerge in ORGANISATIONAL capability. the coming years with the rise of the Throughout the year our progress is Asian Century. CAPABILITY We look to build the capability of reported through the performance As we grow, we look to broaden the the organisation in those areas that contract that is agreed with the board, audience of those who take an interest will best enable us to meet our goals which uses a balanced scorecard in what a CPA does and in CPA Australia and objectives. In particular we are approach to highlight key metrics in and we vigorously defend and develop focused on attracting and retaining the achieving our strategic aims. our brand and reputation. right people and ensuring a pool of SERVICE CERTIFICATION leadership talent into the future. As a member body, service is at the The CPA Program is the key product heart of what we do and we continue to we deliver and our strategy is to ensure build on our capability to deliver service a high quality, flexible CPA Program that is world class in standard. This that meets the needs of candidates means delivering the right service, at and employers. The high quality of the the right time, in a way that adds value Program is evidenced in the strategic to our members and the organisations leadership and business roles our and communities they work within. We members hold; about 17 per cent of recognise that the way our members our members hold senior leadership and stakeholders wish to interact with roles, this includes more than 21,000 us is changing and we are focused members at CEO or CFO level, in on building our digital capabilities to business ownership or partner roles. better service our customers.

WITH CLOSE TO 150,000 MEMBERS ACROSS 121 COUNTRIES AND MORE THAN 127 YEARS OF LEADERSHIP, CPA AUSTRALIA IS AT THE FOREFRONT OF THE GLOBAL ACCOUNTING PROFESSION. CPA AUSTRALIA 2013 INTEGRATED REPORT | 15

RISKS AND OPPORTUNITIES

Risk management is a key aspect Broadening our audience Member engagement of CPA Australia’s governance CPA Australia seeks to broaden the CPA Australia’s vision is to be known for arrangements. Our risk policy audience of those who take an interest being the world’s best member service and framework provides a formal in what CPAs do and what CPA Australia organisation. This means delivering the process for all employees to follow in does in order to increase the value of right service, at the right time, in a way identifying, evaluating, mitigating and our brand and increase interest in the that adds value to our members and monitoring the key risks that have the CPA designation. the organisations and communities potential to impact on the achievement they work within. of organisational objectives. Details Financial sustainability of this framework can be found CPA Australia aims to maintain its Technology on page 59. long term financial viability and its As technology increasingly plays a part The goal of our risk management overall financial strength. As a body in the products and services we deliver, processes and structures is to maximise representing professional accountants risks associated with its use have the opportunities to achieve our objectives we take a robust approach to financial potential to impact CPA Australia’s and goals without exposing the management to ensure our long assets and processes and to lead organisation to unnecessary risk. term success. to CPA Australia’s reputation being damaged in the marketplace. We The risks and opportunity areas below Stable and motivated workforce continue to invest in technology and cover our material issues (page 2) and CPA Australia aims to value, support, in the appropriate management also the key trends (page 16) that we develop and utilise the full potential of that technology to support our see impacting CPA Australia now and of our employees to ensure the organisational goals. into the future. organisation is an employer of choice OPPORTUNITY AND RISK and a safe place to work. An independent board AREAS FOR CPA AUSTRALIA Good corporate governance is Access to knowledge fundamental to CPA Australia’s Reputation and professional CPA Australia seeks to provide credibility as a professional accounting standards members with access to knowledge association. We take a robust approach It is critical that CPA Australia preserves and resources that keep their skills to governance issues to ensure its high reputation and the public trust current and relevant through both the ongoing sustainability of the in the quality of the CPA designation. the CPA Program and our broader organisation. knowledge offer. This is core to the Furthermore, as a professional value we offer and we continually work Environmental sustainability organisation representing the interests to ensure ongoing quality. Analysing environmental risks is part of close to 150,000 accountants and of our risk management process and business professionals, it is vital that Growth while this shows that the environment high standards of compliance and The scope of influence and scale of has a low impact on CPA Australia and ethical behavior are maintained by the CPA Australia directly relates to our in turn our business has a low impact organisation, employees and members. ability to remain relevant in a global on the environment, we will continue to environment. We seek to grow to monitor our environmental risks in order ensure the ongoing relevance of the to support best practice. This year a full CPA designation and to ensure the review was done of our environmental benefits that professional accounting risks, more information can be found skills bring are available to those that on page 47. need them. 16 | DRIVING A COMPETITIVE FUTURE

OUR FUTURE OUTLOOK

In 2014 our board and senior management will set our corporate plan for the years 2015–2017. As part of our ongoing planning, the key trends in our operating environment are regularly reviewed. These trends and our planned responses to them form the basis of our future strategies.

EXTERNAL TRENDS OUR RESPONSE

Globalisation More association bodies are entering the markets in Continuing to develop and defend our brand. which we operate and there are increasing levels of Using innovative approaches to promote the discussions between bodies around consolidation CPA designation and the career benefits it offers. and partnerships.

Investing in infrastructure and technology to support Rapid changes in technology the needs of our current and future members. Rapid technological changes are impacting many facets Implementing our digital strategy to move towards an of business and society more broadly. integrated self-service model to make it easier Our members and potential members increasingly wish for members and prospective members to engage with to interact with us through multiple channels. us in a manner that suits them regardless of where they are located.

Changing education and knowledge market The rapid pace of technology change has impacted Continuing to develop our internal expertise and also the education space and led to the emergence of partnering with high quality suppliers to increase the multiple forms of higher education providers with range of education and knowledge options we provide. differing capabilities.

Changing views of the profession Broadening the audience to educate the wider community The view of accounting as a profession has the potential on what CPAs do and the value they bring. to undergo both positive and negative changes. Financial Certifying, regulating and assisting our members to crises can weaken public trust, and younger generations deliver advice to the highest standards. have less interest in long term traditional careers.

Continuing to influence and lead the debate on matters of interest to our members and the broader public. Changing regulatory environment Further developing our strong and enduring relationships The work our members do is impacted by the changing with policy-makers, regulators and the wider business reporting, regulatory and political environments in the community in both Australia and overseas. markets in which we and our members operate. Continuing to drive and influence the uptake of integrated reporting. CPA AUSTRALIA 2013 INTEGRATED REPORT | 17

OUR MEMBERS

Our members are at the heart of what we do. As an organisation we are focused on delivering innovative products and services that our members value and that help them add value to their organisations and the communities in which they work. The following section outlines how we have performed in delivering key services to our members, and those who wish to be members of CPA Australia, and contains information on the following material issues:

i Service – member engagement ii Access to knowledge iv Certification and the CPA Program vi Broadening the audience 18 | our members

SERVICE

BEING PASSIONATE ABOUT, AND • Assisting members through our 2013 CHALLENGES COMMITTED TO, PROVIDING THE dedicated member service advisers, • Dealing with the complexity of WORLD’S BEST MEMBER SERVICE which included: multiple stakeholders, offices STANDARDS. –– Making more than 43,000 and products and services while OUR APPROACH outbound phone calls to assist upgrading our infrastructure members with a range of needs, Engaging with our members is the • Meeting our high member service including the CPA Program, their expectations within our targets most valuable activity our staff do. As membership, and continuing a membership body, service is core to while undergoing extensive professional development infrastructure upgrades our operations. obligations • Selecting the right time to release CPA Australia’s service culture is –– Achieving call queue times of defined by three pillars: our new corporate website and 38 seconds against a target of ensuring its seamless integration 1. Fostering strong and engaging 120 seconds with our infrastructure upgrades relationships with members –– Upgrading our member and staff • Moving towards multi-lingual 2. Providing high quality advice and facilities in Canberra, Indonesia websites to more effectively information, responses and solutions and Vietnam serve and engage with our global 3. Providing service in a timely and • Launching our new CPA Australia membership demographic responsive manner website which: • Determining the right level of As well as providing first class face-to- –– Can be accessed on any device investment required to improve face and phone service we are growing and allows us to better tailor service levels to members our digital communication capabilities content and products with to make it easier for members to members’ personal needs engage with us in a manner that best –– Was awarded ”Business and suits them. Professional Services – Best 2013 HIGHLIGHTS Site” at the Sitecore Site of the Year Awards for Australia and • Implementing a series of major New Zealand infrastructure updates across the organisation, which included: • Launching our Become a CPA website in Bahasa Indonesian, –– Member First, including our Chinese and Vietnamese, which: new CRM system, to provide the foundation for us to improve –– Allows us to better engage with our systems and processes and our members and prospective better serve members members in the South East Asian region –– Our multi-currency gateway, which gives members in • Bringing on eight new partners to Australia, Hong Kong, Malaysia, significantly expand ourMember New Zealand and Singapore the Benefits+ program ability to transact with us online in their own currency

DELIVERING ON OUR BUSINESS MODEL CPA AUSTRALIA 2013 INTEGRATED REPORT | 19

TOTAL MEMBERSHIP OF JUST UNDER MEMBERSHIP BY LOCATION* 150,000 74% Australia 54% 46% Male Female 2012: 55% 2012: 45%

10% China

6% Malaysia

2013 2012 Australia 74% 74% China 10% 11% Indonesia <1% <1% Malaysia 6% 6% New Zealand 1% 1% Singapore 5% 5% UK and Europe 1% 1% Vietnam <1% <1% Other overseas 2% 2% * Figures have been rounded and may not equal 100%. 20 | our members

WARWICK ISAACS FCPA “Working with the people who INVESTING IN SERVICE Director, Christchurch Central designed the new city blueprint has After significant investment and Development Unit (CCDU) been an incredible experience, and much collaborative hard work across and Deputy Chief Executive, it’s certainly an exciting challenge the organisation, CPA Australia Implementation at Canterbury for us to implement the blueprint in implemented a new CRM system Earthquake Recovery the best possible way,” he says. in May 2013. Authority (CERA) Constant aftershocks and tremors, The project involved a complete On 22 February 2011, a devastating and pressure from the general overhaul of CPA Australia’s systems 6.3 magnitude earthquake shook New public have proved challenges and processes, and impacted all Zealand’s Christchurch to the core. It along the way, but Warwick says that parts of the business. claimed 185 lives and wrought havoc leadership, teamwork and planning The significance of the transition across the city, inflicting most of its have been vital in ensuring the meant that we could not always damage in just 20 seconds. project remains on track. “Without deliver the high service standards planning, things won’t work as Chief executive of the Timaru District that we have come to expect of smoothly as you might hope. I have Council, Warwick Isaacs FCPA, was on ourselves, and we recognise that also learnt that all opinions are hand soon after the quake hit. the changeover of our core systems valuable and potentially useful as With a background in accounting, inconvenienced some members. the big decisions are made. administration, auditing, and local During the implementation, our Warwick says that the Christchurch government management, Warwick staff worked around the clock to get rebuild is an evolving process and made sure the demolition process the project over the line to limit the much of the key work will take up post-quake was organised and impact to members. We thank both to 5–10 years to complete. “We are carried out as safely and practically our staff and our members for their working as quickly as we can but as possible. patience during this period. we are being thorough so that we Almost a year later, he stepped into create a city that our children and This is the most significant the role of managing the rebuild, and their grandchildren will be proud transformation project that continues in this role today – dedicated to live in.” CPA Australia has undertaken to to ensuring future generations have a date, and it will provide us with a city they can consider innovative, safe solid platform to continue to grow and exciting to live in. our business and deliver world class service to members. CPA AUSTRALIA 2013 INTEGRATED REPORT | 21

PERFORMANCE DETAILS Member Benefits+ program Improving the CPA Australia website Our Member Benefits+ program This year marked the launch of our new Member service provides members with easy access corporate website, which allows us CPA Australia has a dedicated team to a number of special offers. to better tailor content and products of member advisers whose role it is to Over the course of 2013, we significantly with members’ personal needs. We answer the queries of our members expanded our offer to include eight also released Become a CPA websites and prospective members. In 2013, we new partners as well as both personal in Bahasa Indonesian, Chinese and received more than 250,000 telephone benefits and business benefits for those Vietnamese, to engage with members enquiries, and made more than 43,000 working in public practice and small-to- and prospective members in their local outbound phone calls to members. medium enterprises (SMEs). New offers language. These calls assisted members to included frontline human resources Our new corporate website was progress through the CPA Program, and employment law support, banking, awarded “Business and Professional renew their membership, access insurance, telecommunications, wine Services – Best Site” at the Sitecore Site available products and services and and office products. of the Year Awards for Australia and meet their continuing professional New Zealand. development obligations. Member engagement See cpaaustralia.com.au Due to the impact of our infrastructure We strive to actively engage our upgrades we missed our target of members in the manner that best less than 4 per cent of calls being suits them. In 2013, we held close to abandoned (caller hangs up before 270 events which included intimate connecting to a member service boardroom luncheons, networking, adviser), with just over 7 per cent of information sessions, expos and calls being abandoned. member celebrations. We also doubled our social media audience to more than Service training 175,000 people. Throughout 2013, we undertook extensive training for all our staff to enable them to best utilise our new CRM system. An online CRM 101 module was offered to all staff with tailored training then delivered as appropriate. Training was focused on ensuring our member service advisers were equipped to use the systems for key activities from day one in order to deliver service to our members.

DELIVERING ON OUR BUSINESS MODEL 22 | our members

CERTIFICATION AND THE CPA PROGRAM

THE HIGHEST QUALITY • Maintaining ISO 9001 certification Professional level CPA PROGRAM, WHERE • Further expanding learning support The syllabus for the professional FLEXIBILITY IN ITS DESIGN to candidates by continuing to level focuses on strategy, leadership AND DELIVERY MEETS increase the tuition provider network and international business alongside THE CHANGING NEEDS developing technical accounting skills. OF CANDIDATES AND 2013 CHALLENGES Content is globally relevant, with a THEIR EMPLOYERS. • Ensuring that the CPA Program focus on providing flexibility of learning professional level continues to OUR APPROACH and delivery modes. The distance meet the needs of our diverse learning education component, Our members continue to tell us membership and the changing along with the practical experience that they join and remain members needs of employers requirement, ensures that candidates of CPA Australia for the professional • Successfully delivering the achieve a balance of work-ready skills recognition that comes with carrying CPA Program to candidates on completion of the program. the CPA designation. To deliver this, during a period of significant CPA Australia provides a world class In addition to entering into new supplier change, including: education program that provides arrangements with Pearson VUE and candidates with work-ready skills to –– The transitioning of supplier DeakinPrime, we also commenced a meet the changing needs of employers. arrangements major update of all learning materials –– The implementation of our and undertook a comprehensive review 2013 HIGHLIGHTS new CRM system and update of our exam database to • Entering into long-term strategic ensure the ongoing high academic • Understanding the demands for partnerships with DeakinPrime and quality of the program. additional learning resources for Pearson VUE to deliver continued different demographics innovation and flexibility to the Transitioning supplier arrangements CPA Program • Balancing the latest developments In 2013, we focused on transitioning our in technology with current supplier arrangements to develop and • Delivering large volumes of exams in candidate demands deliver the CPA Program professional multiple countries, including: level in a way that offers greater –– Just under 7000 foundation level PERFORMANCE DETAILS innovation and flexibility to candidates exams across 60 countries Foundation level and will allow us to be more agile in –– More than 54,000 professional The foundation level of the making future changes to support the level exams across 70 countries CPA Program allows candidates who needs of candidates and employers. and overseas territories do not have a traditional accounting To do this, we entered into new long- • Gaining positive feedback for the background to demonstrate the term supplier arrangements where: on-demand model we introduced knowledge and solid grounding • Pearson VUE will be responsible for for the foundation level in 2012, required to undertake the professional all assessment related services including: level of the CPA Program. • DeakinPrime will be responsible for –– The option to sit exams over In 2013, we increased the flexibility of the development of the professional weekends the foundation level by introducing level study guides –– An improved exam weekend exam options, with 23 per scheduling process cent of exams being booked on weekends. CPA AUSTRALIA 2013 INTEGRATED REPORT | 23

THE CPA PROGRAM MICHELLE “I took on the CPA Program, as I was The CPA Program is an integrated ANTONIOUS CPA looking for a fresh challenge and felt ready to progress my career to the education and professional Financial Planning Analyst next level. experience program with Virgin Australia exceptionally high standards, Michelle Antonious completed “I found the CPA Program to be a and is recognised with ISO 9001 her CPA qualification in October rewarding experience, which helped certification for our quality 2012 and has since moved from open the door to a new role at Virgin management system. Melbourne to Brisbane to take on Australia,” says Michelle. Contributors to the CPA Program a financial planning analyst role for Michelle describes her current role are senior-level academics, expert Virgin Australia. at Virgin Australia to be both a industry practitioners and our Michelle says that gaining the challenging and exciting one. highly qualified staff, who regularly CPA designation provided much “One of the best aspects of my role update content to ensure that satisfaction and helped lead to is that I get to engage with so many members gain work-ready skills and her new role. different parts of the business such understanding, irrespective of the “I initially studied engineering as Fleet Planning through to Network stage of their career or where they at university before switching to Planning to facilitate the Group’s long are located. commerce at Monash University, as term strategic financial plan. I wanted a greater business focus. “It’s also very much a forward looking “I was fortunate to be successful in role where I provide financial analysis to gaining a position with the Qantas help other areas make business critical Graduate Program, which began a decisions.” two year tenure that provided me with wide exposure to the financial, operation, service and product areas of the airline.

DELIVERING ON OUR BUSINESS MODEL 24 | our members

BROADENING THE AUDIENCE

DELIBERATELY BROADENING 2013 HIGHLIGHTS • Driving significant engagement THE AUDIENCE OF PEOPLE WHO • Successfully launching The Bottom through our strategic use of social TAKE AN INTEREST IN WHAT CPAs Line leadership interview series on media, including: DO, AND WHAT CPA AUSTRALIA network television across Australia –– More than doubling our social DOES, TO ENHANCE THE –– Reaching more than 1.7 million media audience to more than VALUE OF OUR BRAND AND viewers over two seasons 175,000 across various platforms INCREASE INTEREST IN THE such as: Facebook, Twitter and –– Winning gold for ”Best integration CPA DESIGNATION. LinkedIn or brand storytelling (non- BEING BETTER AT PROMOTING fiction)” at the 2013 Asia Pacific • Attaining a greater than 30 per OUR BRAND SO THAT WE (APAC) Branded Content and cent increase in the number of ATTRACT HIGH CALIBRE PEOPLE Entertainment Awards Recognised Employer Partners TO ENTER THE PROFESSION AND • Being an early adopter of a global ADD VALUE TO THE COMMUNITY. • Growing the The Naked CEO to reach an audience of more than one pilot content campaign with OUR APPROACH million people, which involved: LinkedIn to reach new audiences, which involved: The size and influence of CPA Australia –– Creating and publishing content directly benefits our members on all business days to create –– Achieving an overall engagement by increasing the relevance and ongoing engagement rate that was four times higher profile of their designation in the than the standard LinkedIn pilot –– Reaching out to more than 6000 marketplace. We constantly seek to engagement rate students with appearances on innovate and explore new ways of campus and at career expos across –– Winning bronze in the “Native communicating with members and Australia, Hong Kong, Malaysia advertising category” at the the broader community to promote and Singapore 2013 APAC Branded Content the CPA Australia brand and create and Entertainment Awards meaningful relationships through all our –– Providing the opportunity for communication channels. students to ask questions of 2013 CHALLENGES our Chief Executive, with more • Staying at the forefront of than 41,000 video plays of these social media channels that are questions constantly evolving • Launching the first of its kind • Continuing to listen to our business gaming App Boardroom audience to ensure that our Tycoon, which achieved: content is on target –– Global reach with more than • Moving towards multi-lingual 58,000 downloads in under websites to more effectively engage four months with our diverse membership • Redeveloping The Naked CEO to publish new content daily CPA AUSTRALIA 2013 INTEGRATED REPORT | 25

HONOURING OUR FIRST PERFORMANCE DETAILS Connecting students with the 60 YEAR MEMBER IN accounting profession The Bottom Line SINGAPORE CPA Australia runs a global network The Bottom Line series positions of close to 180,000 students and In 2013, CPA Australia was CPA Australia at the heart of the delighted to honour, for the first young professionals, helping them leadership debate – aligning the brand connect with internship and graduate time, a 60-year member in the with high-profile names from across Singapore division. employment opportunities, utilise business, politics and the community. career, leadership and study resources, Mr Ong Tiam Seng FCPA (Aust.) The series supports and extends build an outstanding CV and stand out became a member in 1953, a CPA Australia’s positioning across in interviews. year before CPA Australia was mainstream and business media as In 2013, we helped facilitate more incorporated as a business in a commentator on leadership and Singapore. than 700 internships offered globally the issues affecting members, the through our recognised employers When he joined as a member, broader community and Australia’s and other partners in order to continue Mr Ong was an accountant with economic future. to grow the number of people who the Australian firm Wilson, In 2013 the series completed two seek a career based on professional Bishop & Henderson. seasons on the Nine Network Australia, accounting skills. Mr Ong’s illustrious career has reaching more than 1.7 million viewers. Growing The Naked CEO spanned a number of roles in Feature interviews included Australian Australia and Singapore. This of the Year Ita Buttrose, former The Naked CEO is an online mentoring includes more than 20 years in a Australian Olympic Gold Medalist series, where the Chief Executive of Singapore-based shipping firm and, Cathy Freeman, award winning author CPA Australia, invites students and in more recent years, as a broker the late Bryce Courtenay, current young professionals to join him behind with local investment firm UOB Kay Federal Communications Minister the scenes with global leaders and Hian where he retired in 2004. Malcolm Turnbull and trucking magnate brands to impart key insights and At CPA Australia’s annual President’s Lindsay Fox. success strategies. Dinner in Singapore in 2013, Mr Judged by a panel of eminent In 2013, we gained exclusive interviews Ong was honoured with an award marketing, branding and advertising with leaders of highly recognisable to recognise his six decades as a experts, The Bottom Line scored global brands, including IBM, Air member of our organisation. gold for “Best integration or brand Asia X, Deloitte and McDonalds, and We look forward to celebrating the storytelling (non-fiction)” at the released supporting guides to help 60 year history of our Singapore 2013 APAC Branded Content and students find out how to get jobs with office with all our members in 2014. Entertainment Awards. these world-leading companies. For more information, visit We also started uploading daily content thebottomlinetv.com.au to meet the job seeking, career building and study skill needs of our target student market. This change was well received and helped grow The Naked CEO audience to more than 100,000 per month within the first two months of re-launch. 26 | our members

THE NAKED CEO Boardroom Tycoon Growing our social media network Demara Roche, Towards the end of 2013, we launched CPA Australia now connects with more student guest Boardroom Tycoon – a new, first-of-its- than 175,000 people across social University of Technology Sydney kind virtual App that gives players the media platforms including LinkedIn, Finance and Accounting student opportunity to experience big business Facebook and Twitter, delivering Demara Roche was fortunate by building their very own company ongoing valuable conversations and enough to be chosen as the first from the ground up. interaction. In 2013, we consistently student guest to appear on The The game was initially released to achieved engagement levels for all Naked CEO in 2013, gaining a business students in September and channels that were above accepted money-can’t-buy mentoring by year-end had grown to have more industry benchmarks. experience. than 58,000 aspiring entrepreneurs Sponsoring Financial Review Sunday learning more about financial literacy As student guest, Demara not Australia’s leading financial newspaper, only spent one-on-one time with and business decision making in a competitive way. Top countries for The Australian Financial Review (AFR) CPA Australia Chief Executive Alex in partnership with the Nine Network Malley, but also with Catriona Noble, downloads include: Australia, the United Kingdom, Singapore, North in Australia launched a new television Chief Executive of McDonald’s program, Financial Review Sunday. Australia. America, Malaysia, Netherlands, Germany, India, New Zealand To position our brand as a dominant Demara was then given the and Brazil. player in the business community, opportunity to spend time at the The game combines the challenge CPA Australia secured one of two highly McDonald’s Australia headquarters, sought after program sponsorships. gaining an insight into life as a of running a business with important The sponsorship provides us with graduate at McDonalds. lessons in leadership, strategy and risk management, where players can significant opportunities to promote “My experience as student guest hire and fire staff, complete deals, key messages relevant to CPA Australia with The Naked CEO not only attempt takeovers and acquire income- members and the broader community. gave me direct access to business generating assets to increase share In 2013, the program attracted a total leaders, but it opened my eyes prices and battle for a place at the top audience of more than 8.3 million. A to all the different facets of an of the leaderboard. further 2.6 million people were also organisation, something I wasn’t reached via newspaper advertising, aware of before,” said Demara. For more information, visit thenakedceo.com/boardroomtycoon digital advertising on the AFR website The Naked CEO website has and iPad App. become an invaluable resource for Demara as she nears the end of her study – offering networking opportunities, business ideas, and answering those important ‘life- post-university’ questions. “At uni, we focus on the theoretical aspects of finance and accounting, whereas The Naked CEO website offers practical, real life examples for how to best take our skills to market, and this you can’t find DELIVERING anywhere else.” ON OUR BUSINESS MODEL CPA AUSTRALIA 2013 INTEGRATED REPORT | 27

Advertising the CPA Australia Expanding our Recognised Achieving high global designation and brand Employer Program engagement rates with We continue to use major media The Recognised Employer Program LinkedIn sponsored content to highlight the benefits of the (REP) provides a comprehensive The LinkedIn audience group actively CPA Australia designation to members, assessment and validation of an seeks professional content to get prospective members and to the employer’s professional development ahead in their careers, making it broader community. This advertising methods and approach. This enables an ideal fit for CPA Australia. helps position CPA Australia as organisations to demonstrate to current In 2013, we agreed to be part of the designation of choice and to and future employees their strong, a sponsored global pilot content communicate the value CPAs bring ongoing commitment to learning campaign with LinkedIn to reach to their organisations. Advertising and development and adds to their new audiences. The campaign channels included: television, outdoor, attraction as a premium employer. delivered an overall engagement lifts in key buildings in major cities, print At the end of 2013, we successfully rate which was about four times mediums, events and online. We also increased our Recognised Employers higher than the standard LinkedIn began work on refreshing our brand, by more than 30 per cent. pilot engagement rate. which will be launched to the market Some of our high profile recognised This achievement was recognised in early 2014. employers now include: Amatil, at the 2013 APAC Branded Content American Express, ANZ, BP, Coca-Cola, and Entertainment Awards, where Commonwealth Bank, Credit Suisse The Naked CEO took home AG, DHL, HSBC Bank, NAB, Nestle bronze for the sponsored content Oceania, Qantas, Standard Chartered campaign with LinkedIn in the Group and Telstra. “Native advertising category.” A full list of our partners can be found at cpaaustralia.com.au

“ It’s fantastic to see CPA Australia achieving some of the highest global engagement rates we have seen since the launch of LinkedIn Sponsored Updates. “ This is a real testament to the effective way that CPA Australia has used LinkedIn to amplify their content to engage and build relationships with a professional audience.” Matt Tindale, Director of LinkedIn Marketing Solutions 28 | our members

ACCESS TO KNOWLEDGE

PROVIDING MEMBERS AND • Continuing to deliver a quality 2013 CHALLENGES POTENTIAL MEMBERS WITH CPA Congress, which: • Providing knowledge and ACCESS TO KNOWLEDGE AND –– Included live streaming for the content that meets the needs RESOURCES THAT KEEP THEIR first time, allowing members who of a geographically broad and SKILLS CURRENT AND RELEVANT. couldn’t attend key sessions to diverse membership base OUR APPROACH experience them in real time • Having the right technology –– Attracted more than 9000 Part of the professionalism that comes infrastructure in place to support delegates with carrying the CPA designation is the expansion of our blended our members’ commitment to lifelong –– Featured a range of high-profile learning programs learning. We support this by creating speakers, including: Michael Smith • Continuing to manage the impact and facilitating information-rich OBE, Chief Executive Officer and economic instability has on training conferences, networking events, face- Executive Director, ANZ; Rt Hon. budgets for spending on professional to-face workshops, self-paced blended Lord Malloch-Brown KCMG PC, development activities learning and online libraries and Former United Nations Deputy • Appropriately managing the communities. Secretary General; Ruslan Kogan, amount of natural resources used Founder and Chief Executive at our events 2013 HIGHLIGHTS Officer, Kogan Technologies; • Fully understanding the professional • Achieving solid audience growth for Benjamin Roberts-Smith VC MG, development needs of our members itbdigital.com, which involved: Victoria Cross recipient; and the and employer partners –– Consistent engagement of founder of kikki.K stationery, about 46,000 visits per month Kristina Karlsson –– Winning the Outstanding • Expanding our range of digital and Achievement Award in the blended learning programs magazine category at the • Taking our management accounting Interactive Media Awards in programs to Singapore and Hong November 2013 Kong with localised content • Publishing Australia’s widest • Producing 17 targeted and circulating business magazine, relevant podcasts, with both “SME INTHEBLACK which included: governance” and “Estate planning” –– Launching our first series of events reaching number one in the iTunes entitled INTHEBLACK Presents the Business News podcast category Strategists at CPA Congress –– Offering 16.5 hours of free continuing professional development (CPD) through INTHEBLACK assessments, with around 4400 members taking up this offer

DELIVERING ON OUR BUSINESS MODEL CPA AUSTRALIA 2013 INTEGRATED REPORT | 29

CPA AUSTRALIA – PERFORMANCE DETAILS Congress and conferences DIGITISING ARCHIVAL CPA Congress is the largest event INTHEBLACK magazine RECORDS of its kind and is held in Australia, Fiji, CPA Australia’s award-winning Our digital archiving project is Hong Kong, Malaysia, New Zealand, publication, INTHEBLACK, is Australia’s Singapore, and the United Kingdom. about preserving and improving highest-circulating business magazine. The theme of CPA Congress for 2013 access to documents that highlight It provides in-depth stories and analysis was A world of opportunity, where we our rich history and the contribution on issues shaping business around the brought together a number of experts our members have made. world. In 2013 we reached a significant from a variety of fields to help equip These materials include: milestone launching our first series of participants with the strategic insights • The Deed of Articles dating events entitled INTHEBLACK Presents and tools needed to succeed in our to the 1880s the Strategists at CPA Congress increasingly interconnected world. in Melbourne and Sydney and via • The first handwritten minutes live streaming. Throughout the course of the year, we of the group that conceived also delivered multiple conferences the Incorporated Institute of itbdigital.com and education programs to support Accountants in Victoria on itbdigital.com targets both members members in different industries and 12 April 1886 and the broader business community. stages of their career, including: • Materials relating to students The site includes content from Australian Mining and Energy, who were studying during World INTHEBLACK magazine, as well as CFO Advance, Not-for-Profit, Public War I and World War II, including original stories, news, opinion and Practice and Self-Managed Super fundraising for war brochures analysis, photos, videos and podcasts. Funds (SMSFs). • Documents showing our early In its second year, itbdigital.com For more information on CPA Congress, library, which was started with achieved solid audience growth visit cpacongress.com.au 91 books brought back from to reach around 46,000 visits per the UK by Joesph Flack, the first month, and received the Outstanding honorary secretary Achievement Award in the Magazine • A video advertisement in Category at the Interactive the late 1970s where a young Achievement Awards. member spruiks the benefits of For more information, visit membership to “meet women” itbdigital.com These documents are now very old and at risk of deterioration. We are working with the University of Melbourne, Deakin University, the National Archives and the Australian National University through an ARC Linkage grant to preserve and ensure there is easy access to our rich history in years to come. 30 | our members

Member-focused professional Podcasts and webcasts, available Both “SME governance” and development from the CPA Australia website and “Estate planning” reached number We know that our members have busy iTunes, cover technical accounting one in the iTunes Store Business lives, so we offer a range of continuing skills, as well as broader leadership News podcast category. professional development options and management. In 2013 we recorded Following research into members’ for them to select from. This year we 17 podcasts that featured in iTunes professional development needs in extended our learning offering with What’s Hot in Business and Business 2013 we will continue to develop a a range of blended learning options, News categories, with the top five more tailored and focused professional and easily accessible podcasts podcasts being: development offer in 2014. and webcasts. • Succession planning Our blended learning solutions now • ASIC’s top focus areas bring together related content in one • SME governance package and offer a range of learning options including interactive online • Estate planning resources, learning manuals, videos • Business in Japan of conferences sessions and recorded webinars. Topics covered in our initial release included management accounting, budgeting and business performance.

Alex Malley (right) interviews the Chief Executives of the Big 4 accounting firms. From Left: Luke Sayers, CEO, PwC Australia; Gary Wingrove, CEO, KPMG Australia; Rob McLeod, Oceania CEO and Managing Partner, Ernst & Young; and Giam Swiegers, CEO, Deloitte Australia. CPA AUSTRALIA 2013 INTEGRATED REPORT | 31

PUBLIC INTEREST AND THE PROFESSION

CPA Australia actively protects the public interest by: • Advocating on behalf of our members • Ensuring all members comply with a professional code of conduct • Promoting the highest standards for those members who provide accounting services to the public • Demonstrating thought leadership and effectively influencing the broader education sector • Attracting the best people who aspire to a career built on professional accounting skills The following section details our activities and performance in these areas and covers the following material issues: v Professional standards vii Representation and advocacy ix Community x Supporting accounting education 32 | PUBLIC INTEREST AND THE PROFESSION

REPRESENTATION AND ADVOCACY

ADVOCATING ON BEHALF • Representing the public interest GROWING OUR OF OUR MEMBERS. at various Joint Parliamentary PRESENCE IN Committees, including audit, NEW ZEALAND OUR APPROACH registration of financial planners CPA Australia takes a leading role in under the tax agents’ regime, Providing the profession with influencing major issues, policies and governance, performance and another alternative regulations that impact the markets accountability of the Australian CPA Australia first established our members work in. We are opinion Government an office in New Zealand eight leaders with strong and enduring years ago and since that time has relationships with policymakers, 2013 CHALLENGES worked closely with the New Zealand regulators and the wider business • Effectively influencing policy makers Government and profession community in both Australia and on key issues that impact the markets to provide accountants in New overseas. our members work in Zealand with more choice as to the professional designation they 2013 HIGHLIGHTS • Uncertainty surrounding Australia’s minority government (pre-election) wish to obtain. • Growing our media influence across and Australia’s federal election CPA Australia is now recognised as TV, online, radio and print to drive • The changing regulatory an Approved Adviser Group with the our key messages, including: environment Inland Revenue Department and –– Regular media commentary on we are accredited by the Financial • Providing appropriate advocacy policy issues supported by full Markets Authority under the across the diverse regions and Auditor page advertisements on our in respect industries our members work in Regulation Act 2011 (NZ) competitiveness agenda in leading of auditor licensing and regulation daily newspapers PERFORMANCE DETAILS in New Zealand for auditors of –– Front page coverage in The issuers. We continue to work with Influencing the development Australian Financial Review of stakeholders and regulators to of tax policy our superannuation research, augment existing practice pathways and ongoing coverage of this Over the course of 2013, we continued for our New Zealand members. to advocate for a range of tax reforms important policy debate As part of our continuing including modernising the taxation –– Increasing CPA Australia’s commitment to New Zealand we of trusts, and the maintenance of presence in international media, actively promoted the opportunity self-education deductions to ensure with appearances on Bloomberg for members of the New Zealand Australia has a highly skilled workforce TV and commentary in the China Institute of Chartered Accountants that can compete in the Asian Century. Daily and the New Zealand Herald to join CPA Australia. • Successfully launching our landmark Twenty years of the superannuation research Australia’s Competitiveness: guarantee: The verdict From Lucky Country to Competitive This second report on Australia’s Country at the National Press Club in compulsory superannuation system Canberra, Australia received significant media coverage • Providing guidance and training to and helped stimulate public debate on members and effectively liaising a major area of public policy during the with ASIC during the SMSF auditor election campaign. registration process CPA AUSTRALIA 2013 INTEGRATED REPORT | 33

Integrated reporting and LONG TERM VISION AND DECISIVENESS sustainability reporting THE BEST POLICY APPROACH In 2013, we continued to help influence China Daily, 12.01.2013 positive developments with integrated reporting and sustainability reporting, with our Chief Executive appointed TRANS-TASMAN TALKS to the Accounting and Sustainability Project (A4S) Advisory Council, set up NEED BOLD LEADERSHIP by HRH the Prince of Wales. NZ Herald, 09.02.2013

Asia Pacific Small Business Survey The survey results for our fifth annual COMPETITIVENESS KEY Asia Pacific Small Business Survey TO PROSPERITY were revealed in November 2013 and The Australian, 03.06.2013 provided a comprehensive snapshot of small business confidence for the year ahead across Australia, Hong Kong, SMALL BUSINESS SECTOR NEEDS Indonesia, Malaysia, New Zealand, and MORE POLICY, LESS POLITICS Singapore. The survey results received The Australian, 02.07.2013 extensive media coverage across local online, television, press and radio in each of those jurisdictions. POLITICAL PING-PONG ERODES Extending our media COMMUNITY CONFIDENCE reach and influence Daily Telegraph, 0 5.07. 2 013 In 2013 we achieved strong media positioning for our key messages across competitiveness, CUTTING RED TAPE superannuation, reducing regulatory THE TOP PRIORITY burden, tax issues, and other key The Australian, 12.07.2013 policy positions in the lead up to the Australian Federal election. Our Chief Executive provided commentary in a LEARNING, NOT LUCK, variety of forums, including: opinion IS WHAT CUTS IT columns in major national daily The Australian, 25.07. 2 013 newspapers, such as The Australian, The Australian Financial Review, The Daily Telegraph; appearances TURNBULL’S NBN STANCE on Bloomberg TV, Financial Review Sunday, ABC TV News Breakfast, Paul A BREATH OF FRESH AIR Murray Live, The Today Show; as well as AFR, 30.09.2013 regular contributions on 2GB radio, and Sky Television. REFORM OF GST THE ELEPHANT IN ROOM The Australian, 11.10.2013

34 | PUBLIC INTEREST AND THE PROFESSION

AUSTRALIA’S To highlight the importance of COMPETITIVENESS Australia’s competitiveness we provided copies of this book to In May 2013, our Chief Executive every Australian politician and launched the landmark publication business, academic, community and Australia’s Competitiveness: From Lucky opinion leader around the country Country to Competitive Country, at the as a framework for policy discussion National Press Club in Canberra. and formulation. The launch was broadcast live around Throughout the year, the Australia on ABC 1, ABC 24 and Sky competitiveness theme was picked News and generated significant up in speeches by both of the major and widespread media coverage Australian political parties, including across print, broadcast, online and speeches by the Prime Minister, the social media. Minister for Financial Services and It was followed by a series of Workplace Relations, the Shadow boardroom briefings held in Sydney, Treasurer and the Leader of the Melbourne, Brisbane and Perth to Opposition. promote the research and encourage In 2014, we will keep the pressure on debate on competitiveness. to ensure that Australia capitalises on The book Australia’s Competitiveness: this major research to transform into From Lucky Country to Competitive the competitive nation it needs to be Country is the most comprehensive if we are to take full advantage of all study Australia has seen on its economic and cultural opportunities international competitiveness to date. offered by the rise of China, India, It involved surveying more than 6000 Indonesia and the other powerhouse decisionmakers in both Australia economies of Asia. and overseas, and analysing 76 key attributes of the Australian economy and industry. CPA AUSTRALIA 2013 INTEGRATED REPORT | 35

SUPPORTING ACCOUNTING EDUCATION

BUILDING LONG TERM MUTUALLY 2013 HIGHLIGHTS PERFORMANCE DETAILS REWARDING RELATIONSHIPS • Forming strong relationships and Global Research WITH ACADEMICS AND signing six significant co-operation Perspectives Program UNIVERSITIES. agreements to support the CPA Australia supports the accounting accounting profession OUR APPROACH profession, members and the academic CPA Australia recognises that high • Funding six research projects community through our annual research quality accounting education is through the Global Research grants program. We support bold and an important input into successful Perspectives Program innovative research into issues such as businesses and communities. We • Hosting the International Governance sustainability and business reporting, support accounting education globally and Performance (IGAP) forum on accounting education, tax systems through the creation and delivery of the integrated reporting and reform and global economic CPA Program and broader advocacy • Sponsoring the 2013 Business Higher challenges. and communication. We actively Education Round Table (B-HERT) In 2013 we funded six research promote thought leadership and award for Excellence in Accounting projects from the following universities: innovation through education policy Teaching Collaboration The University of New South Wales, debates and our research programs. • Hosting CEDA’s Higher Education Deakin University, Swinburne University, Forum: Ranking, Ratings and Macquarie University, RMIT University Reputation – Higher Education and and Multimedia University Malaysia. Global Competition In addition to this, we also supported a major research project “Transforming 2013 CHALLENGES the accounting profession for the • Adapting to the rapid change of carbon challenge” through an pace in tertiary education delivery Australasian Research Council (ARC) throughout the world Linkage Grant. • The shifting regulatory regime and funding challenges that impact the higher education sector • Changing international student flows

DELIVERING ON OUR BUSINESS MODEL 36 | PUBLIC INTEREST AND THE PROFESSION

International Governance and 2013 International Forum for SUPPORTING THE Performance (IGAP) Research Centre Academics – Transformative PROFESSION IN IGAP’s mission is to be an Higher Education THE ASIAN REGION internationally recognised research This forum brings together 75 heads In 2013, we deepened our hub in strengthening and supporting of school, from universities and higher connections in the Asian region by the development of best practice education providers across Australia, signing cooperation agreements in governance processes, reporting China, Hong Kong, Indonesia, Malaysia, with the following institutions and regimes and performance measures. New Zealand, Singapore, and Vietnam organisations: As a founding sponsor, CPA Australia to address key issues facing leaders in supports research projects, the academic accounting community. China international visitors, PhDs and The purpose of this year’s International • The Guangdong Provincial an annual forum. Forum for Academics was to explore Institute of CPAs Keynote speakers at this year’s forum the possibilities and challenges of • The Guangzhou Institute of CPAs were Dr Simon Longstaff, Executive globalisation, privatisation and digital • The Shenzhen Institute of CPAs Director of the St James Ethics technologies. Attendees had the Centre and Vice-Chairman of the GRI opportunity to gain different insights • The Jiangsu Institute of Certified Board and Dr Jeanne Ng, Director of from a number of experts on these Public Accountants Environmental Affairs for the China key aspects affecting the higher • Ruihua Certified Public Light and Power Energy Group and education sector. Accountants, the largest a member of the Working Group local CPA firm in China for the IIRC. Platinum sponsorship of the Accounting and Finance Indonesia Business Higher Education Association of Australia and • Indonesia Banking School, Jakarta Round Table (B-HERT) Awards New Zealand (AFAANZ) • Trisakti University, one of the B-HERT is a not-for-profit organisation AFAANZ represents the interests of largest private universities in established in 1990 to strengthen the accounting and finance academics in Indonesia relationship between business and education and research across Australia higher education. Its membership and New Zealand. CPA Australia We also accredited: encompasses leaders in higher is a major sponsor of the AFAANZ • The Master of Professional education, business, industry bodies conference, which was held in Perth, Accounting at the University and research institutions. CPA Australia and celebrated the PhD and Honours of International Business and is a sponsor of the Award for Excellence research students that we support. Economics, Beijing in Accounting Teaching Collaboration, • The Master of Professional which recognises partnerships Accounting at Central University between Australian university of Finance and Economics, Beijing accounting departments and industry. This partnership aims to increase • The accounting program of excellence in teaching and improve Xiamen University graduate outcomes. CPA AUSTRALIA 2013 INTEGRATED REPORT | 37

PROFESSIONAL STANDARDS

PROMOTING THE HIGHEST • Introducing a new SMSF APES 230 STANDARDS FOR THOSE specialisation In April 2013, the Accounting MEMBERS WHO PROVIDE • Undertaking more than 1000 public Professional and Ethical Standards ACCOUNTING SERVICES TO practice quality reviews Board (APESB) approved APES 230 THE PUBLIC. Financial Planning Services, effective ENSURING THAT ALL MEMBERS 2013 CHALLENGES 1 July 2014 with transitional provisions COMPLY WITH A PROFESSIONAL • Effectively influencing the changing for some requirements commencing CODE OF CONDUCT. nature of the regulatory environment from 1 July 2015. • Assisting members with transitioning The standard introduces higher OUR APPROACH through a range of reforms impacting levels of professional service and CPA Australia promotes the highest practitioners disclosure than the law, while balancing standards for members who provide • Monitoring the impact and these obligations with the evolving accounting services to the public. opportunities that the increasing environment in which financial planning We do this by actively influencing trend for outsourcing accounting and credit advice are provided to government and regulatory policy services has on the profession consumers. positions and supporting members The issuing of the new standard is through a range of reforms to help • Balancing member and public the result of a successful five-year create ongoing, sustainable practices. interest to ensure fair outcomes for APES 230 consultation. We actively support the All CPA Australia members commit important role that accountants play to upholding the reputation of the PERFORMANCE DETAILS in providing high levels of professional CPA designation by adhering to the financial advice. obligations spelt out in CPA Australia’s Renewing our professional Constitution and By-Laws, the Code of standards scheme Introducing a new SMSF Professional Conduct and applicable Following extensive consultation and specialisation regulations. an independent actuarial review, new In 2013, we launched a new SMSF professional standards schemes were specialisation for members who 2013 HIGHLIGHTS approved in Australia. These schemes provide advice, support and services • Renewing our professional allow eligible CPA Australia Public to SMSFs. It is designed to help standards scheme and continuing Practice Certificate holders to cap members who specialise in SMSF to provide limited liability for public their occupational liability. In return, and wish to differentiate themselves practitioners CPA Australia and its public practice as SMSF experts. The specialisation • Achieving an appropriate outcome certificate holders must maintain acknowledges a members’ commitment for the Accountant’s Exemption and appropriate professional standards to enhancing their skills and expertise APES 230 Financial Planning Services and risk management practices. through additional post-graduate to improve standards of financial education and ongoing professional Accountants’ Exemption advice to consumers development. CPA Australia is proud to have • Providing a pathway for members To further support members, we held influenced the successful outcome of wishing to obtain a Limited Australian our first annual SMSF Conference in the Accountants’ Exemption. In July Financial Services Licence (AFSL), Sydney and Melbourne. More than 200 2013, we conducted a national road including a new RG 146 compliance members attended to hear the latest show on the Accountants’ Exemption program and knowledge resources news and developments for SMSF from reform and released a range of government, regulators and leading educational material to help members industry experts and to network with apply for the new limited AFSL. their peers. 38 | PUBLIC INTEREST AND THE PROFESSION

BRIDGETTE PRETTY CPA “I have been lucky in that my Providing a pathway to Director, Pretty Accounting, business has grown quickly a Limited AFSL Nelson, New Zealand through referrals from family, In 2013, we launched a new RG 146 friends and clients. Bridgette Pretty opened her practice compliance solution program to enable in early 2013 and is one of the first New “I have been able to manage this members to meet the education Zealand accountants to hold a CPA growth by creating what I call a ‘lean’ requirements for the new Limited AFSL. Public Practice Certificate. business model where I can take on The resources provided to members good contractors relatively quickly included information guides, a licensing Being a person who likes to embrace and be nimble enough to expand kit and draft compliance manuals. change, Bridgette says that one of the during busy times. most challenging parts of setting up a Promoting public practice “The ongoing challenge is to do successful new practice mostly involved in New Zealand what I suggest my clients try to do learning to manage the fast pace of CPA Australia supports the New – maintain a healthy distinction and growth that her business experienced Zealand Government’s Accounting balance between work and play,” from day one. Infrastructure Reform Bill. Changes says Bridgette. “I have quite a unique background for proposed in this reform bill will allow an accountant in a public practice as Bridgette also reflects that choosing recognised members of accredited I have spent half my working career to brand as a CPA practice in bodies, such as CPA Australia, to on the other side of the fence inside New Zealand was an easy one perform accounting-related statutory private and publicly listed companies. that she took with great pride. roles and most statutory audits that I think this has helped create a key “I have been a CPA Australia were previously restricted. point of difference for clients. member for close to 20 years. Over the course of the year, we also During this time I have received supported a trans-tasman approach invaluable support and many to the regulation of public accounting opportunities through CPA Australia. services by delivering public practice This has led me to become distance learning and residential passionate about promoting the programs to New Zealand for the brand in New Zealand.” first time.

Quality assurance Each year, our quality assurance teams undertake quality reviews to monitor compliance with professional and ethical standards, help educate our members about best practice, and check the efficiency of their processes. In 2013, we introduced a new reporting framework, which benefited members by reducing the time it takes to complete a quality review. CPA AUSTRALIA 2013 INTEGRATED REPORT | 39

COMMUNITY

SUPPORTING CREATING MUTUALLY 2013 CHALLENGES FINANCIAL LITERACY REWARDING LONG TERM • Responding effectively to fast-paced To help support financial literacy we RELATIONSHIPS WITH THE regulatory changes to ensure the not- released the following guides that COMMUNITIES IN WHICH for-profit sector continues to have were well received: WE OPERATE. access to qualified, trusted advisers • A guide to understanding OUR APPROACH • Supporting smaller charities and auditing and assurance: We have a strong duty of care to the not-for-profits that are particularly Listed companies communities that we and our members impacted by regulatory changes • A guide to understanding the are part of. We encourage both our • Ensuring that members can ex-ante and ex-post financial staff and our members to lend their provide strategic advice that helps statement reporting of the skills to activities that benefit the community organisations innovate Australian Government broader community. This can be in for a sustainable future both a paid and pro-bono capacity, • Charities: A guide to PERFORMANCE DETAILS understanding financial reporting with an emphasis on building financial and assurance requirements management capabilities and strong Mentor the Treasurer governance across communities. • Valuation and depreciation: The Mentor the Treasurer program is an A guide for the not-for-profit 2013 HIGHLIGHTS initiative where qualified CPA Australia members help small volunteer-run and public sector under accrual • Launching the “Mentor the organisations and not-for-profits based accounting standards Treasurer” initiative, where more build the skills and capacities of than 250 CPA Australia members their treasurers. registered their interest to participate in the program and 105 signed on as CPA Australia members benefit participants by broadening their personal and professional networks, and gaining • Facilitating international volunteering valuable insights into different not-for- positions by partnering with profit organisations and activities. Accounting for International Development, a United Kingdom Pro Bono Australia based group that supports charities Our partnership with Pro Bono and community based organisations Australia helps our members access • Providing practical experience and professionally relevant employment guidance on not-for-profit reform or voluntary work with not-for-profit proposals with conferences held organistions. The 2013 VolunteerMatch in Victoria, New South Wales, “make a difference with your Queensland and Western Australia professional skills” campaign with Pro • Engaging our people in Steptember Bono Australia provided more than where 45 CPA Australia teams 240 voluntary accounting and finance completed an outstanding 46.6 roles, which represented 26 per cent million steps of the total available VolunteerMatch positions. More than 55 per cent of these positions were at a Board or Board Committee level. 40 | PUBLIC INTEREST AND THE PROFESSION

Volunteering work FORMING NETWORKS Later in the year, CPA Australia As part of our employee value THAT BENEFIT THE Celebrated International Accountants proposition, CPA Australia encourages COMMUNITY Day, with an outdoor carnival in Singapore, where one of the key our people to give back to the CPA Australia is committed to activities involved a book donation community by giving all staff two paid bringing people together in new drive for under-privileged children. volunteer leave days each year. Staff and innovative ways to create can identify suitable organisations networking opportunities that With some 3000 accounting and they would like to volunteer with that benefit the broader community in finance professionals turning out in are aligned to their own community the Asia Pacific region. force, CPA Australia staff and members interests. In addition to this, led the accounting profession to In 2013, this involved winning the CPA Australia supported and promoted secure a place in the Singapore Book Guinness World Records title for the Steptember to raise awareness and of Records for the ‘most number of largest Business Speed Network money for Cerebral Palsy Alliance. people donating books in one location’ Event in Hong Kong. category. Indigenous Accountants project The event was convened to The Singapore team brought together CPA Australia, the Institute of celebrate the Chinese Mid-Autumn 27 supporting organisations, which Chartered Accountants in Australia Festival, with the serious aim of represented every quarter of the and the Institute of Public Accountants giving 400 mentors and mentees the Singapore accounting profession. are collaborating to address the opportunity to share professional underrepresentation of Indigenous advice and ideas. In addition to this, attendees also worked to profile and support 25 Australians in the accounting Peter Lee, Divisional President charities – including 11 children’s profession. – Greater China, says the event homes that were the recipients of The project aims to promote was a huge success that inspired the thousands of books donated on accounting as a professional career participants to share stories and this occasion. path for Indigenous Australians through make new connections. engaging with staff and students at “It’s the first time an accounting secondary schools, TAFE colleges and body has organised such an event, universities, as well as with Indigenous- and the first time that CPA Australia run organisations, corporations and has used this innovative approach to local communities. engage members and students. In 2013 the official website was “It was a terrific night and beating launched and marketing collateral the previous record held by Kansas rolled out to raise awareness of the City was an added bonus,” says Lee. campaign within the target audience. As part of CPA Australia’s commitment, we awarded four Aboriginal and Torres Strait Islander scholarships, helping recipients meet the educational requirements for CPA status. CPA AUSTRALIA 2013 INTEGRATED REPORT | 41

HOW WE DO BUSINESS

CPA Australia recognises that the way in which we go about our business is just as important as the results that we achieve. We endeavour to have the right structures and policies in place to support and develop our people, manage our impact on the environment and our supply chain, and ensure that appropriate governance is in place. Material issues represented in this section include: iii An independent board and active membership xi Leading on integrated reporting xii Stable and motivated workforce xiv Environment 42 | how we do business

OUR PEOPLE

A STABLE AND MOTIVATED 2013 CHALLENGES Building our capability WORKFORCE THAT IS • Managing significant change Throughout the year, we supported PASSIONATE ABOUT WHAT across the organisation with the the organisation with the uptake of CPA AUSTRALIA DOES. implementation of infrastructure our major infrastructure upgrades, upgrades including face-to-face workshops, OUR APPROACH webinar-based training and also a peer • Balancing business as usual activities We value and recognise our employees support network with “Super Users” alongside the implementation of and encourage opportunities for acting as local experts in their regions. professional development to help large programs of work We also developed a capability achieve organisational goals. In 2013, • Communicating consistent messages framework to drive positive we focused on building the capabilities to our people across our global performance and help structure career and culture of our organisation, as we network of 19 offices planning in order to ensure we have the work towards becoming the world’s • Updating our policies and right talent pool to deliver on our goals. best member service organisation. procedures to ensure our business is aligned with changing legislation and 2013 HIGHLIGHTS Building our culture educating leaders and employees The culture of an organisation drives its • Further building the capability of across the business success. In 2013, we continued with our our organisation through: PERFORMANCE DETAILS Pulse program to drive the following –– The successful management of three agreed signature behaviors: our infrastructure upgrades Our people • Service –– The development of a capability Our global presence gives us a diverse • Product knowledge framework for employees workforce, with a wide range of • Personal accountability –– Improving the induction of new nationalities, age groups, backgrounds employees into the organisation and skills that bring broad perspectives Our third Pulse survey results indicated an increase in the positive • Continuing to build a positive culture and enrich the workplace. demonstration of these signature and implementing our third Pulse In 2013, all hiring was done on behaviours, with an overall score of culture survey, which: a local basis to ensure that all 75 per cent, compared to 72 per cent current employees including senior –– Saw a 92 per cent response rate, in November 2012 and 66 per cent management (general managers and representing one of the highest in July 2012. recorded levels of organisational above) have been hired locally. participation CPA Australia supports a flexible –– Indicated a 3 per cent increase in workforce with more than 8 per cent of the display of our three signature staff working part-time. behaviours across the organisation Across all countries, 69 per cent of our • Continuing to improve regretted staff are female and 31 per cent male. turnover of leaders and employees with regretted turnover at just under 15 per cent in 2013 CPA AUSTRALIA 2013 INTEGRATED REPORT | 43

81% 4% Full time Maternity and paternity leave 7% 7% Part time Casual

TABLE 5: STAFF BY EMPLOYMENT TYPE 2013 2012 Male Female Total Male Female Total Full time 38% 62% 81% 34% 66% 84% Part time 7.5% 92.5% 7% 7% 93% 8% Casual 34% 66% 7% 43% 57% 5% Maternity and paternity leave 0% 100% 4% 0% 100% 3%

TABLE 6: STAFF BY EMPLOYMENT CONTRACT 2013 2012 Male Female Total Male Female Total Permanent 33% 67% 87% 30% 70% 88% Fixed term 42% 58% 6% 38% 62% 7% Casual 34% 66% 7% 43% 57% 5%

TABLE 7: STAFF BY REGION 2013 2012 Male Female Total Male Female Total Australia 37% 63% 81% 33% 67% 81% China 14% 86% 8% 13% 87% 7% Malaysia 13% 87% 4% 17% 83% 5% Singapore 29% 71% 3% 29% 71% 3% Other 33% 67% 4% 32% 68% 4% Total 34% 66% 100% 31% 69% 100%

Figures in all tables are rounded and may not equal 100% 44 | how we do business

TABLE 8: DEPARTURE OF PERMANENT STAFF BY SERVICE YEARS Training and development 2013 2012 In 2013, we invested in enhancing our corporate induction program to Male Female Total Male Female Total ensure all employees understand the 0-1 years 21% 79% 27% 40% 60% 37% important role we all play in supporting 1-3 years 24% 76% 48% 25% 75% 35% our members and their journey with CPA Australia. This included training on 3-5 year 30% 70% 8% 32% 68% 15% how we engage and acquire members, 5-10 years 24% 76% 14% 42% 58% 9% the CPA Program, professional 10+ years 40% 60% 4% 20% 80% 4% development and our digital communication strategies. Total 24% 76% 100% 33% 67% 100% We also continued to provide all employees with compliance training TABLE 9: DEPARTURE OF PERMANENT STAFF BY AGE through our eComply training program. 2013 2012 This program helps employees develop an understanding of regulations Male Female Total Male Female Total that relate to privacy, occupational 20-29 14% 86% 23% 26% 74% 27% health and safety, equal opportunity 30-39 25% 75% 48% 31% 69% 43% employment, obligations for dealing with credit card data and competition 40-49 38% 62% 21% 48% 52% 20% and consumer laws. 50+ 11% 89% 7% 31% 69% 10% See Table 11.

TABLE 10: NEW HIRES BY REGION IN 2013 Remuneration CPA Australia pays employees market- Departures of new hires 2013 competitive remuneration based on within a year capacity, performance, knowledge, Male Female Total Male Female experience and effectiveness in Australia 38% 62% 79% 5% 18% the role. Each year CPA Australia benchmarks staff, Chief Executive China 27% 73% 12% 7% 20% and Director remuneration against Malaysia 0% 100% 3% 0% 25% the marketplace through a process Singapore 25% 75% 3% 0% 25% conducted by the independent Other 25% 75% 3% 0% 25% Hay Group. Under the GRI framework, Total 35% 65% 100% 5% 19% CPA Australia reports on the ratio of average female remuneration to TABLE 11: COMPLETION RATES FOR COMPLIANCE TRAINING average male remuneration across Completion % a range of different organisational levels. While the statistics in table 13 39 Management* level staff required to complete 38 97% opposite show slight variation between additional module on director’s duties the genders across the organisation, 466 Non-management staff 455 98% CPA Australia is comfortable that this is not due to any systemic bias. *Management level refers to staff at the General Manager level and above Figures in all tables are rounded and may not equal 100% CPA AUSTRALIA 2013 INTEGRATED REPORT | 45

Data represents Australian data only, TABLE 12: NEW HIRES BY AGE IN 2013 as our international offices are all Departures of new hires small, and therefore we do not have 2013 within a year enough data to provide meaningful remuneration ratios across each Male Female Total Male Female location and level. These offices have Below 20 50% 50% 2% 0% 0% a higher representation of females 20-29 30% 70% 36% 2% 13% to males across the levels, and remuneration ratios are generally 30-39 41% 59% 45% 5% 19% positive where both genders are 40-49 32% 68% 15% 11% 26% represented. 50-59 0% 100% 2% 0% 100% The executive ratio has improved year 60+ 0% 100% 1% 0% 0% on year from 0.85 in 2012 to 0.91 in 2013. This data includes the two Chief Total 35% 65% 100% 5% 19% Operating Officer roles, which are more senior and both male, thereby TABLE 13: FEMALE SALARY AS A PERCENTAGE OF MALE SALARY impacting the executive ratio. 2013 2012 Technology roles are currently paying Administrator & Support Staff 0.99 1 at a premium and have a higher proportion of males impacting Supervisor, Base Level Professional & Technical Specialist 0.95 0.97 the ratios at the supervisor base Professional Specialist, Manager 0.91 0.91 level professional and technical Executive 0.91 0.85 specialist and professional specialist, manager levels. See Table 13. TABLE 14: RATES OF INJURY, OCCUPATIONAL DISEASE, ABSENTEEISM AND FATALITIES Health and safety 2013 2012 CPA Australia promotes the health, Male Female Male Female safety and welfare of our employees, members and other stakeholders Injury (not defined) 0 5 0 0 that interact with our operations. Injury (journey / Vehicle) 0 1 0 2 CPA Australia’s Occupational Health Injury (equipment / damage) 0 2 2 3 and Safety committee meets each quarter and provides a joint forum for Near miss / no injury 0 3 0 1 consultation between management and Occupational illness / disease 1 0 1 3 employees to enhance workplace safety Non-occupational illness / disease 0 1 1 0 and ensure that all employees globally have implemented best practice initiatives. Rates of injury remain low and consistent year on year. See Table 14.

Figures in all tables are rounded and may not equal 100% 46 | how we do business

EXECUTIVE MANAGEMENT GROUP Members of the Executive Management Group From left: 4. Alex Malley FCPA head up each of the key strategic areas of the 1. Jeff Hughes FCPA Chief Executive company. These executives represent our people, Chief Operating Officer 5. Craig Laughton and can take issues and recommendations raised Member Services Executive General Manager by the organisation, and its members to the Board 2. Murray Chenery and General Counsel and its Committees. The monthly integrated report Executive General Manager Brand 6. Lisa Carroll compiled by management and staff is reviewed and Integrated Marketing Executive General Manager by the Board and its Committees, and includes 3. Adam Awty CPA Communication, Content and disclosures of GRI indicators and key KPIs. Chief Operating Officer Commercial, Publishing Chief Financial Officer and 7. Robert Thomason Company Secretary Executive General Manager Business Development CPA AUSTRALIA 2013 INTEGRATED REPORT | 47

ENVIRONMENT

BUILDING THE SUSTAINABILITY 2013 HIGHLIGHTS Engaging our people to reduce OF THE ORGANISATION • Embedding environmental our environmental impact THROUGH AN APPROPRIATE sustainability questions into our In 2013, we ran a series of staff FOCUS ON OUR USE OF tendering process and introducing communication campaigns with NATURAL RESOURCES. quarterly supplier sustainability four goals: to reduce printing, turn reporting off computers, switch off lights and OUR APPROACH recycle waste. In 2013, CPA Australia’s direct impacts • Continuing to educate members on on the environment, through our sustainability via the CPA Program Greenhouse gas inventory electricity use, travel and waste, did • Reducing greenhouse gas (GHG) The 2013 GHG inventory was prepared not emerge as material issues in our emissions by 29 per cent largely using the following legislative and materiality review (see page 2 for more through reduced air travel km reporting frameworks, the NGER act, information). However, we continue • Signing up with COzero, investing ISO 14064 and the NCOS program. to monitor our environmental risks in $45,000 to off-set our GHG emissions This inventory includes emissions from order to support best practice and our electricity consumption, air travel, taxi commitment to integrated reporting. 2013 CHALLENGES travel, waste generation and office This year we undertook an independent • Ensuring the currency and uptake of paper usage. Our major sources of GHG review to identify where and how we can sustainability education material in emissions are staff air travel and office have the most positive impact. such a rapidly evolving area electricity consumption and these will be the areas where we continue to focus The review identified the following • Maintaining staff momentum our efforts in 2014 and beyond in order environmental risks, in overall to improve our environmental to reduce our emissions. order of priority: performance across locations • There was a 29 per cent reduction • Influencing members’ • Measuring and improving our in GHG emissions from 2012, as a environmental performance environmental impacts across all our office locations result of a 42 per cent decrease in air • Influencing suppliers’ travel emissions. This was due to a environmental performance PERFORMANCE DETAILS reduction in total flights of 15 per cent • Robustness of environmental and mileage decreases across both Embedding sustainability into our data collation processes domestic and international flights. procurement activities • Staff travel (flights, taxis) resulting In 2013, we embedded sustainability • While there is a recorded 24 per cent in GHG emissions questions into our tendering reduction in GHG emissions relating • Office electricity use (computers, process and introduced quarterly to office paper use this is due to lighting) resulting in GHG emissions supplier sustainability reporting revised emission factors for office paper which are 25 per cent lower • Office paper use for printing for relevant suppliers. The tender process now helps us to determine if than the ones used previously. As • Catering waste from member events potential suppliers have appropriate the updated emission factor has only In the coming years we will focus sustainability policies, reporting a small impact on our emissions we on influencing our members’ and and targets, can provide innovative have not restated last year’s inventory. suppliers’ environmental performance, approaches to help us lower our • The total waste generated by particularly where environmental issues environmental impact, and have an CPA Australia increased by are material to their organisations. We ongoing commitment to environmental approximately 18 per cent in 2013. will also continue to monitor our own and broader sustainability concerns. This increase in waste came mostly environmental performance to ensure from the Queensland, New Zealand we are “walking the talk” ourselves. and Singapore offices. See Table 15 on page 48. 48 | how we do business

Electricity usage TABLE 15: GREENHOUSE GAS INVENTORY Electricity usage declined again in 2013, tCO2E by source 2013 2012 this is a result of the continuing impact Electricity 1573 1606 of changes we made in 2011 including using energy consumption as criteria Supply of electricity* 218 194 when selecting new premises, office Flights 2638 4539 equipment and servers. Taxis 127 133 CPA Australia uses no gas in any of Waste 150 128 its operations. See Tables 16-17. Office paper 21 27

In 2013, we signed an agreement with tCO2E total 4728 6628 COzero to reduce our carbon footprint Total kg tCO2E per member 31.6 45.8 and support renewable energy. As part of this, we applied $45,000 AUD to offset TABLE 16: CPA AUSTRALIA TOTAL ELECTRICITY** USAGE 2009-2013 100 per cent of our carbon emissions in Victoria, New South Wales and South Gigajoules (GJ) 2013 2012 2011 2010 2009 Australia. This figure equates to 75 per by country cent of greenhouse gas emissions from Australia 4,793 4,816 5,083 6,541 5,522 our Australian electricity usage. China 379 402 388 394 344 Waste from catering Malaysia 144 158 175 187 171 2013 saw us reduce the amount of Singapore 108 142 209 255 242 food delivered to CPA Australia Other*** 327 327 295 227 244 in Melbourne, by consolidating our suppliers and reducing stock Total 5,752 5,845 6,150 7,6 0 4 6,524 levels. We also recycled old catering equipment for alternative uses. Food TABLE 17: ENERGY CONSUMPTION BY COUNTRY wastage for 2013 was similar to 2012 with just over 4 per cent wastage per Country 2013 2012 2011 month being recorded. Australia 83% 82% 83%

Financial implications China 7% 7% 6% of climate change Malaysia 3% 3% 3% The financial risks of climate change Singapore 2% 2% 3% to CPA Australia remain low because Other 6% 6% 5% we are not subject to regulatory risk. For example, we are not a liable entity under Australia’s carbon tax. The cost impact of the carbon tax is immaterial due to our low GHG emissions profile Figures in tables have been rounded so may not exactly equal total and our relatively low electricity and * The slight increase in Scope 3 electricity emissions is because of including a scope 3 emission transportation costs as a percentage factor for international operations, where this was unavailable in previous years. The impact on of total overheads. Such a cost impact emissions is small so previous year’s figures have not been restated. may reduce should the Australian ** All of CPA Australia’s electricity is purchased directly from the grid Government be successful in repealing *** Other includes New Zealand and the United Kingdom the carbon tax. CPA AUSTRALIA 2013 INTEGRATED REPORT | 49

GOVERNANCE

INTEGRATED REPORTING AN INDEPENDENT BOARD The Board of Directors is appointed In 2011 CPA Australia produced a AND ACTIVE MEMBERSHIP by the Representative Council. combined annual and sustainability THAT IS REPRESENTATIVE OF CPA Australia also has various councils report for the first time, and since THE DIVERSITY AND TALENT and committees that offer members an then we have been progressively OF OUR MEMBERS. opportunity to support the organisation and represent members from their moving towards producing a fully OUR APPROACH integrated report. location or industry sector. The Board of Directors is the governing CPA Australia’s Board regularly CPA Australia is a leading advocate body of CPA Australia. The Board of sound corporate governance and reviews the information contained independently and objectively in this report through monthly we are committed to best practice assesses the organisation’s decisions, in this area. integrated reports prepared by and oversees the performance and We follow the Corporate Governance management and has oversight of activities of management. The Board is Principles and Recommendations key milestones in development, with responsible for a number of decisions (CGPR) developed by the Australian sign off on the report contents via including: the Audit and Risk Committee. Stock Exchange Corporate Governance • Setting and approving the It is the Board’s opinion that this Council (ASXCGC) as far as they are organisation’s strategy, direction and relevant to a membership organisation. report is presented in accordance financial objectives with the International Integrated As such, this section of the report • Appointing the President and Reporting Framework, and follows a different structure to Deputy-Presidents represents an important milestone preceding sections. in being CPA Australia’s first • Approving financial statements integrated report. • Evaluating the Chief Executive’s Integrated reporting represents performance an important opportunity for CPAs • Making and amending by-laws and to play a pivotal role in ensuring other regulations that integrated thinking on the • Overseeing our integrated reporting capitals (financial, manufactured, (which includes our sustainability intellectual, human, natural, social reporting) and relationship) feeds into business management and reporting. We hope our own journey provides inspiration for other organisations, who are yet to embark on integrated reporting.

DELIVERING ON OUR BUSINESS MODEL 50 | how we do business

From left: 4. Deborah Ong FCPA BOARD OF 1. Tim Ebbeck FCPA Director, BAcc (Hons), Director, B. Ec, FAIM, MAICD, MACS FCA (Singapore) DIRECTORS 2. Mark Grey 5. Graeme Wade FCPA Director, BA, CPM, GDACG, ACIS, Director, Deputy President, FAMI, FAICD, FAIM, AIAMA BBus (Acc) 3. Bruce Trebilcock FCPA Director, MBA, FAICD, FCIS CPA AUSTRALIA 2013 INTEGRATED REPORT | 51

6. Penny Egan FCPA 9. Tyrone Carlin FCPA 11. Peter Dowling AM FCPA Director, President and Chairman Director, BCom, LLB (Hons), Director, Deputy President, of the Board, BBus (Acc), GAICD MCom (Hons), LLM, PhD BA (Acc), FAICD 7. Jim Dickson FCPA 10. Richard Petty FCPA (Life), 12. Kerry Ryan Director, GAICD Director, BCom (Hons, 1st Class, Director, LLB, BA, FAICD 8. Christina Foo FCPA University Medal), MCom (Hons), Director, BBus (Acc), CA (Msia) PhD, FAICD 52 | how we do business

BOARD OF DIRECTORS Peter was appointed a Board Director from 2007 to 2011, a New South Wales in 2010. He is a past Chair of the Divisional Councillor and a member Penny Egan FCPA Policy Governance Committee and is of the Representative Council from Director, President and currently the Chair of the Audit and Risk 2009 to 2011. Chairman of the Board Committee. Peter was also a Member BBus (Acc), GAICD and Chair of CPA Australia’s Taxation Jim Dickson FCPA Penny Egan is the Chief Executive Centre of Excellence from 1985 to 2007. Director Officer of Cancer Council Tasmania. GAICD She is the former CFO of the Graeme Wade FCPA Jim Dickson has vast experience and Department of Health and Human Director, Deputy President interest in supporting the accountancy Services in Tasmania and the CFO of BBus (Acc) profession and its development, both in Forestry Tasmania. She has had more Graeme Wade has operated at partner Australia and internationally, including than 20 years’ experience in industry level in public practice for more working with international, regional and and commerce, principally within the than 25 years. He holds a number of national accountancy bodies. forestry industry. non-executive directorships and has He is Chair of the International Penny has served on the Tasmanian consulted widely across the private Federation of Accountants’ (IFAC) Divisional Council and was President sector, specialising in mergers and Compliance Advisory Panel and a of that division. Penny was appointed a acquisitions and the agribusiness longstanding advocate for monitoring Board Director in 2005 and was elected sector. Graeme has also provided and improving the standards of the as a Deputy President in 2010 and held advice to the Australian Government profession globally. for many years. that position until 2012. She is a former Jim was appointed a Board Director in Chair of the Audit and Risk and Finance Graeme has served on the Victorian 2010. He is currently a member of the Committees and currently serves on Divisional Council and was President of Policy Governance and the Nomination the Nomination and Remuneration that division. He was appointed a Board and Remuneration Committees. He Committee. Director in 2006 and was elected as also represents CPA Australia with the Deputy President in 2011. He is a past ASEAN Federation of Accountants. Peter Dowling AM FCPA Chair of the Policy Governance and Audit Director, Deputy President and Risk Committees. He is the current Tim Ebbeck FCPA BA (Acc), FAICD Chair of the Finance Committee. Director Peter Dowling holds a number of B. Ec, FAIM, MAICD, MACS Tyrone Carlin FCPA directorships in the finance, insurance, Tim Ebbeck is Managing Director, Director health and education sectors. He is Australia and New Zealand of Oracle BCom, LLB (Hons), also the Chair or Member of the Audit Corporation. Prior to this role, he was MCom (Hons), LLM, PhD and Risk Committees for several major Chief Commercial Officer of NBN Co government organisations. Tyrone Carlin is Professor of Financial and has over 30 years’ experience in Peter is a former partner of international Reporting and Regulation and Pro commerce in a range of industries accounting firm Ernst & Young in the Vice Chancellor (Education Operations) and roles. at the University of Sydney. He has Tax and Business Advisory area. He Tim was previously CEO of SAP in served in a number of senior leadership is a Member of the Order of Australia Australia and New Zealand, and positions within the Australian higher and a Centenary of Federation Medal between 2008 and 2012 he led the education sector. recipient for services to accounting and SAP business to its four largest years the community. Peter has also been Tyrone was appointed a Board Director ever, including successes in all major made a Distinguished Alumni of his in 2011 and is currently the Chair of industry segments and enabling some alma mater, Canberra University and the Policy Governance Committee. of the largest business transformations is the Queensland Honorary Consul He was a member and Chair of the ever undertaken in Australia and for Botswana. International Advisory Committee New Zealand. CPA AUSTRALIA 2013 INTEGRATED REPORT | 53

Tim was a member the Business Council of Australia (BCA) and the BCA’s Sustainable Growth Taskforce. He was also an inaugural BCA Women C-Suite Mentor. His thought leadership focus includes many public speaking engagements including addressing THE BOARD the Commonwealth Business Forum in Representative Perth in 2011. Council Tim is a member of the Board of Trustees of the Powerhouse Museum and Chair of the Finance sub-Committee. Tim was appointed a Board Director in 2013 and serves on the Policy BOARD Audit and Risk Governance Committee. COMMITTEES Finance Christina Foo FCPA Nomination and Remuneration Director Policy Governance BBus (Acc), CA (Msia) Christina Foo is Managing Director and Co-Founder of Priority One, a consulting firm providing strategic business building solutions. Christina has more than 28 years’ ADVISORY International experience in professional services and COMMITTEES Professional Qualifications the private sector. She is formerly a Public Practice Director of Ernst & Young in Malaysia. Quality Review Christina has served on the Malaysian Divisional Council and was a past President. She was also the Vice- President of the Malaysian Institute of Accountants, a Board Director of the Confederation of Asia and MEMBER Disciplinary Panel Pacific Accountants and a member of COMPLIANCE IFAC’s Small and Medium Practices COMMITTEES Committee. Christina was appointed a Board Director in 2007 and serves on the Finance Committee. 54 | how we do business

Mark Grey Deborah is Deputy Chairman of Richard was appointed a Board Director Director National Parks Board and Ngee Ann in 2006, served as Deputy President BA, CPM, GDACG, ACIS, Polytechnic Council, and is Chair of its from 2007 to 2009 and as President FAMI, FAICD, FAIM, AIAMA Audit Committees. In addition, as a from 2009 to 2010. He is presently Chair Mark Grey has a background in member of the Lee Kong Chian School of the Nomination and Remuneration international marketing and was of Medicine Governing Board, she Committee. Richard was made a life formerly managing director of chairs the Audit and Risk Committee. member of CPA Australia in 2010. Clemenger BBDO in Brisbane and later She has recently been appointed to the CEO of Pan Asian marketing service Singapore Accountancy Commission. Kerry Ryan Director group Batey Redcell in Hong Kong and Deborah was appointed a Board LLB, BA, FAICD China and Global Communications Director in 2013 and serves on the Director for the Singapore Airlines Audit and Risk Committee. She has Kerry Ryan has a background in business. been a member of the Singapore commercial law and is a former partner at international law firm, Norton Rose He is Chairman of Livingstones Divisional Council since 2009 and was Fulbright. Kerry’s broad-ranging legal Australia, an industrial relations and President of that division in 2011 and experience includes five years working employment law group, Chairman of 2012. She has also served as a member in Jakarta and an in-house counsel VPSC, Melbourne’s private eye & ear of the Representative Council in 2011 role with Publishing and Broadcasting hospital, Chairman of the advisory and 2012, and was a member of the Limited in India. board of risk mitigation group Verifact Professional Qualifications Advisory and Chairman of R&D ocular drug Committee from 2009 to 2013. Kerry has held directorship roles in company EyeCo. several other government, not-for- Richard Petty FCPA (Life), profit and private companies, and He is a member of the Asia Advisory Director has recently been appointed as a Board of the Global Coalition for BCom (Hons, 1st Class, University director of AFL club, the Richmond Efficient Logistics in Malaysia and is also Medal), MCom (Hons), PhD, FAICD Football Club. a director of Guide Dogs Queensland. Richard Petty is Professor of Kerry has been a director since Mark was appointed a Board Director Management (Accounting and Finance) 2007 and sits on the Audit and Risk in 2007 and sits on the Audit and and Executive Director International and Nomination and Remuneration Risk Committee and the Finance at Macquarie Graduate School of Committees. Committee. Management. He is Chairman of the Australian Chamber of Commerce Bruce Trebilcock FCPA Deborah Ong FCPA Hong Kong & Macau, and Chairman or Director Director Director of several other companies. MBA, FAICD, FCIS BAcc (Hons), FCA (Singapore) Richard has been involved in the Bruce Trebilcock has more than 40 Deborah Ong is Partner, Risk and Quality establishment, management and years’ experience across a number of Leader in PricewaterhouseCoopers sale of a range of businesses. He industries including manufacturing, Singapore. She was previously the started practice with Ernst & Young. food and agribusiness, banking and firm’s Human Capital Partner. He is author or co-author of several finance, defence contracting and Deborah has more than twenty years of books and monographs and he has electronics. public accounting experience providing published extensively in academic and Bruce served on the South Australian audit and advisory services to local professional journals. Divisional Council and was President and US-listed, multinational companies of that division. Bruce was appointed a and Singapore statutory boards. She is Board Director in 2007. He previously currently the lead partner for a portfolio sat on the Audit and Risk Committee of the firm’s largest clients. and is a current member of the Policy Governance Committee. CPA AUSTRALIA 2013 INTEGRATED REPORT | 55

CORPORATE GOVERNANCE STATEMENT 2013

CPA Australia Ltd (CPA Australia) While the Board has overall control and administrative support to enable the is a leading advocate of sound management of CPA Australia, it has Board to work effectively. corporate governance. It is committed delegated a range of its powers, duties The CEO attends Board and Board to best practice and is a member and responsibilities to its committees, committee meetings; however, he is not of the Australian Stock Exchange management, divisions and the a Director and is not entitled to vote. Corporate Governance Council disciplinary tribunals. The Board reviews Senior executives including the CEO, (ASXCGC) that developed the each delegation at least annually. the Company Secretary, and the Corporate Governance Principles Each Board meeting agenda includes Chief Operating Officers (COOs) and Recommendations (CGPR). statutory matters, governance and have formal job descriptions. As an unlisted company limited by management reports, which include guarantee, CPA Australia is not required strategic risks, strategic projects Performance management to report against the CGPR. However, and operational items. Time is often All staff and management including CPA Australia uses the CGPR as a guide scheduled for the Board to meet the senior executives of CPA Australia to best practice, and has implemented without management. (Executive Management Group) are these principles as far as they are Management of CPA Australia’s subject to annual performance planning relevant to it as a member organisation. operations and the implementation of and reviews. The performance of each CPA Australia reports against the CGPR corporate strategy and policy initiatives executive is assessed by the CEO, who in this corporate governance statement are the responsibility of the Chief is their immediate supervisor. They as part of its commitment to preserving Executive (CEO) and management. are assessed against achievement stakeholder confidence. In December 2011, the Board approved of their job specifications and goals, contribution towards specific PRINCIPLE 1: LAY SOLID a 3-year corporate plan (Corporate business and strategic objectives, FOUNDATIONS FOR Plan) for 2012-2014 established by management. The Board approves and adherence to CPA Australia’s MANAGEMENT AND REACH (Respect, Empowerment, OVERSIGHT an annual performance contract setting the priorities, direction and Accountability, Cooperation and Honesty) values. Board of Directors performance targets for CPA Australia The Board of Directors (Board) is within the parameters of the corporate Upon commencement at CPA Australia, the principal governing body of plan. Monthly performance reports all senior management take part in a CPA Australia and is appointed by are prepared by management and the leadership on-boarding program which a Representative Council. Details of most recent report is made available to assists in accelerating our new leaders’ the council are set out later in this the Board at each Board meeting and transition into our organisation. The document. Finance Committee meeting. program is designed to integrate the new leader into the organisation’s The Board is responsible for the overall CEO culture, to assist them in understanding governance of CPA Australia. The Board The CEO is appointed by the Board. strategy as well as process, establishing has adopted a formal charter detailing He is responsible for the management relevant networks, and navigating its functions and responsibilities, of CPA Australia in accordance political frameworks. which is reviewed annually. Matters with approved strategy, policies, specifically reserved to the Board are Along with all staff, all executives performance contract and delegated set out in its charter (available on the of CPA Australia including the CEO authority framework. He is responsible CPA Australia website). have an at risk component of their for ensuring that the Board is provided remuneration that is tied to both with the relevant strategic options, their own performance and that policy and financial issues on which of the organisation. The Board is to deliberate, and with the necessary remunerated as a percentage of the 56 | how we do business

Australian Auditor-General’s annual The Nomination and Remuneration The Nomination and Remuneration total salary package, as set out in the Committee regularly considers diversity Committee consists entirely of Constitution (Article 45). The Board issues and they are consciously Directors. The Chair is a Director. benchmarks Director remuneration managing the diversity of the Board The composition of the committee annually in determining the percentage and its committees. The Board and meeting attendance is set out in to be applied. recommends that, a minimum of 25 the notes to the financial statements per cent of Directors on the Board PRINCIPLE 2: STRUCTURE (page 67). The same note sets out should be female, which is reflected in Directors’ attendances at Board and THE BOARD TO ADD VALUE the current composition. For further other Board committee meetings. The Board consists of 12 independent information relating to diversity, refer to A copy of the committee’s charter is non-executive Directors (as defined by the People section of this report. available on our website. the CGPR), ten member Directors and Representative Council two external Directors (who are neither Board performance members nor employees). Directors are appointed by the The Board reviews its performance Representative Council. The A diagram of the governance structure and that of each Director regularly Representative Council is comprised in place at year end is included on throughout the year. In 2012 the Board of members selected by the divisions page 53. implemented a new assessment for and advisory committees, and other The Board assesses annually the Board and Director performance. The members representing various independence of each Director. Board Pulse Program is run three times groups as selected by the Nomination Directors must disclose to over a 12 month period to provide and Remuneration Committee. Its CPA Australia, any matter which may continuous assessment and feedback charter is available on our website. affect their independence as soon as to Directors and the Board as a whole. Under the Constitution the they become aware of it. All Board The Nomination and Remuneration Representative Council’s only direct members are requested to disclose Committee recommends to the Board power is to appoint the Board. related party transactions on an the skills and competencies required annual basis and a summary of related Nomination and Remuneration on the Board, and assesses the extent party transactions for each Director is Committee to which those skills are represented disclosed in this report (see notes to the on the Board. The Nomination and Remuneration financial statements on page 89). Committee assists the Representative Induction and education The Chair is an independent Director, Council in selecting appropriate New Directors receive information and is not the CEO. Directors are candidates for appointment to the outlining their duties and selected on the basis of their skills, Board. It reviews candidates and responsibilities. New Directors attend experience and other relevant makes recommendations to the a formal induction meeting with the capabilities with due regard to the mix Representative Council. The council Executive Management Group. of skill recommended by the Board must have due regard to, but is not and to proper succession planning. bound by, the recommendations of Access to information Directors’ skills, expertise and their the Nomination and Remuneration Senior executives supply the Board terms of office, are set out on Committee. It also advises the with information to allow it to make pages 52-54. Board and the Representative decisions on an informed basis, and The Board has adopted an organisation Council on succession plans for the regularly attend meetings. diversity and inclusion policy, a copy of Board. It recommends to the Board which is available on our website. appointments for all membership committees. CPA AUSTRALIA 2013 INTEGRATED REPORT | 57

The Board and the Each committee has a charter CPA Australia is a member organisation Company Secretary describing its role and composition limited by guarantee and does not All Directors have access to the (see website). The charters are have securities (shares etc.) so does Company Secretary who is appointed reviewed regularly to ensure that not report on share trading policies. by the Board. The Company Secretary the role and responsibilities of is accountable to the Board, through each committee are consistent PRINCIPLE 4: SAFEGUARD the Chair, on governance matters. with CPA Australia’s strategic and INTEGRITY IN FINANCIAL operational objectives. The Audit REPORTING Information required by Principle 2 and Risk, and Finance Committees Audit and Risk Committee Directors are entitled to serve a may co-opt members who, whilst CPA Australia has established an maximum of two terms consisting of they are not Directors, bring particular Audit and Risk Committee to verify three years each. The Board is moving experience to the committees. and safeguard the integrity of the to a rotational model of one-third of the The Board committees are each Company’s financial and non-financial Board, so during a transitional period, scheduled to meet approximately reporting. The committee consists of some Directors will have longer terms four times per year. Attendance at four independent Directors. It is chaired to effect the transition. Full information Board committee meetings is set by an independent Director who is not on this transition is located in the out on page 67. the Chair of the Board. Constitution. Specifically, the Audit and Risk Directors are entitled to obtain PRINCIPLE 3: PROMOTE Committee assists the Board to reimbursement of the reasonable costs ETHICAL AND RESPONSIBLE discharge its responsibilities for of any independent advice obtained DECISION MAKING external reporting, external and in respect of their office. If a Director Directors, members and employees internal audit and internal control wishes to obtain independent external of CPA Australia are required to act in and risk management. There is a mix advice, then he or she must notify accordance with the highest standards of accounting, legal and business the Board before seeking that advice of honesty and integrity (see codes of professionals currently serving on and obtain the prior approval of the conduct for Directors, members and the committee. Chair, whose approval shall not be employees on our website). The Audit and Risk Committee has unreasonably withheld. The respective codes of conduct, as a formal charter (see website) and approved by the Board, are given to Board Committees its meetings and attendance are set all new Directors, volunteer members The respective compositions and out on page 67. and employees, which among other details of meeting attendance of things set out expected standards the committees are set out in the External Auditors of behaviour. Directors’ Report on page 67. Minutes Deloitte Touche Tohmsatsu Ltd has CPA Australia promotes diversity of committee meetings are provided been CPA Australia’s external auditor across the organisation with regards to to the Board at its next meeting. since 2005. The performance of the age, gender, ethnicity and the cultural external auditor is reviewed annually The Board currently has four Board background of its Directors, committee by the Board with advice from the Audit committees: Nomination and members and employees. For further and Risk Committee. Remuneration, Audit and Risk, information relating to diversity, refer Finance, and Policy Governance. An analysis of fees paid to the external to the Organisational Diversity and auditor, including a breakdown of Inclusion Policy, which is available any non-audit fees paid or received on our website, and pages 42-45 of by the auditor, is provided in note this report. 18 to the financial reports. The Audit and Risk Committee has developed principles for the supply of non-audit 58 | how we do business

services which have been endorsed PRINCIPLE 7: RECOGNISE PRINCIPLE 8: REMUNERATE by the Board. It is the policy of the AND MANAGE RISK FAIRLY AND RESPONSIBLY external auditors to provide an annual CPA Australia has a risk management declaration of their independence to Directors framework, risk policy and risk the Audit and Risk Committee. The The Constitution of CPA Australia management program. The principal Audit and Risk Committee undertakes a provides that the Board may approve objectives of the risk management full review of the terms of engagement payments to Directors based on program are to protect the reputation of the external auditor and the rotation percentages of the Auditor-General’s and financial standing of CPA Australia of external audit engagement partners, salary. Directors do not receive and its membership and to optimise before deciding to re-appoint the retirement benefits. service to members. existing audit firm or seek tenders on the open market. The Board is provided with regular Management reports on risk through the Audit The Nomination and Remuneration Finance Committee and Risk Committee. In addition, the Committee approves the salary bands The Finance Committee consists Board discusses strategic and major for management and increases, based entirely of Directors and assists the operational risks as part of its regular on external advice from qualified Board to discharge its responsibility meeting agenda. specialists. to manage the business planning, The internal audit function has The Board has the responsibility budgeting processes and general established and implemented a system to approve the terms of the CEO’s financial management of CPA Australia. for identifying, assessing, monitoring appointment. The Finance Committee has a formal and managing material risks throughout The CEO has personal performance charter (available on the CPA Australia CPA Australia and is independent of indicators and is eligible for a bonus website). the external auditor. payment subject to the approval PRINCIPLE 5: MAKE The strategic risk profile, including of the Board after its evaluation of identification and treatment of risks TIMELY AND BALANCED the performance of the CEO. This and mitigating controls, is regularly DISCLOSURE evaluation involves an assessment of reviewed and approved by the Board. a range of factors including the overall As CPA Australia is not a listed The internal auditor and Executive performance of CPA Australia and the company; it is not bound by the Management Group continuously achievement of predetermined goals. requirement for continuous disclosure. monitor the risk profile and report any The Nomination and Remuneration risks to the Board via the Audit and PRINCIPLE 6: RESPECT THE Committee considers overall Risk Committee. RIGHTS OF SHAREHOLDERS management remuneration. Under (MEMBERS) the terms of CPA Australia’s annual performance contract, attainment CPA Australia provides its members of demanding performance targets with timely access to information about can result in a performance bonus its activities and changes in legislation being approved by the Board and that may affect the profession. Its three paid to staff who reach individual principal communication channels with performance targets. The Finance members are its monthly publication, Committee approves the amount of INTHEBLACK, its weekly e-newsletter bonus pool available under the annual CPA Update and its website, performance contract. cpaaustralia.com.au CPA AUSTRALIA 2013 INTEGRATED REPORT | 59

MANAGING RISK

OUR APPROACH The Code of Conduct applies to all CPA Australia has zero tolerance to As mentioned in Principle 7 on Directors, employees and volunteers. any form of fraud and corruption. page 58, CPA Australia has a risk All employees are encouraged to We strive to prevent all forms of management framework, risk policy report any breaches of the Code. international corruption as outlined in and risk management program, which All employees are assessed on their the Criminal Code Amendment (Bribery includes formal processes to update adherence to the Code of Conduct as a of Foreign Public Officials) Act 1999, the Board through the Audit and Risk part of their performance reviews. or the equivalent laws of any country Committee. The framework, policy All CPA Australia personnel have a where we operate. Management has and management program are used responsibility to report improper interpreted the GRI Guidelines on throughout the organisation. conduct, as defined by the Code, corruption as referring to abuse of in accordance with CPA Australia power, legal and moral wrongdoing, RISK MANAGEMENT Whistleblower Policy, which is and employees’ dealings with external FRAMEWORK reviewed by the Board of Directors stakeholders for the purpose of gaining Our risk management framework every two years. an advantage for the organisation and/ or the individual. provides a system of internal controls to In addition to supporting minimise risk of fraud and corruption, CPA Australia’s adoption of the Fraud and corruption risk is analysed which includes: GRI reporting guidelines, management at a corporate level and not at an • The CPA Australia Code of Conduct developed a Fraud and Corruption individual business unit level, so we are unable to report on the number/ • Regular internal audits Policy which was adopted by the Board in December 2010. The policy reflects percentage of business units analysed • Web-based compliance training international regulations and covers for corruption. • Annual internal controls how issues of fraud will be addressed, The internal auditor regularly reviews, questionnaire for executive managed and reported. There were no on a rotational basis, key areas of the managers, as part of the annual incidents reported in 2011, 2012 or 2013. business where fraud and corruption is financial statements more likely to occur. ZERO TOLERANCE FOR Risk management and anti-corruption We are committed to maintaining an FRAUD AND CORRUPTION practices are governed by the organisational culture which ensures CPA Australia Code of Conduct, which CPA Australia endeavours to ensure that effective fraud and corruption prohibits conflicts of interest, gifts and all staff understand ethical business prevention is an integral part of our gratuities, and requires all employees practices. As such, yearly complaince day-to-day operations. and volunteers to ensure that their training includes a module on fraud behaviour is in compliance with all laws and corruption. Completion rates for and regulations relevant to the legal compliance training can be found jurisdictions in which we operate. on page 44.

DELIVERING ON OUR BUSINESS MODEL 60 | how we do business

COUNCILLORS AND COMMITTEES

COUNCILLORS FOR 2013 Northern Territory Tasmania Nathan Morsillo CPA, President Carolyn Harris FCPA, President Australian Capital Territory Andrew Green FCPA, Deputy President Rob Luciani FCPA, Deputy President Tony Marks FCPA, President Helen Crafter FCPA Chris Stennard FCPA, Deputy President Simon Ash FCPA, Deputy President Belinda Howie FCPA Stephen Allen FCPA Hawari Badri FCPA, Deputy President Hwei Yuin Yong CPA Jason Browne FCPA Michael Burton FCPA Christine Kendrick CPA Ric De Santi FCPA Jill Divorty FCPA Gregory Marlow FCPA Robert Eastoe FCPA Sean Ferrari CPA Valentin Markez CPA Anne-Marie Martin CPA Greg Field FCPA Jocelyn Nathanael-Walters FCPA Gary O’Donovan FCPA Geoff Hine FCPA Meeta Ramkumar CPA Andrew Pearce CPA Michelle Kafer CPA Natalie Scott CPA Susan Shoobridge FCPA Peter Kerr FCPA Jyoti Vemuri FCPA Malcolm Stevens CPA Gerry Lillicrap FCPA Monir Mir FCPA Queensland Victoria Ian Davies FCPA, President Craig Edwards FCPA, President New South Wales Simon Brodie FCPA, Deputy President Dallas Beeston FCPA, Deputy President Gail Fraser FCPA, President Karen Bullock FCPA, Deputy President (to August 2013) John Fara FCPA, Deputy President Daniel Abrahams FCPA Jennifer Lang FCPA, Deputy President Simon Chhoeu FCPA Peter Best FCPA (from August 2013) Shirley Cho FCPA Craig Dalzell FCPA Brendan O’Connell FCPA, Deputy John Corrigan FCPA Terry Daubney FCPA President Andrew Crawford FCPA Gerry Maguire FCPA Peter Batten FCPA Suresh Cuganesan FCPA Stephen Maitland OAM FCPA Chris Braithwaite CPA Rosalie Degabriele FCPA Stephen McGrory FCPA Terence Brooks FCPA Eric Davis FCPA Troy Morgan CPA Anthony Connelly CPA Lisa Gray FCPA Pamela Pointon FCPA Lindsay Doig FCPA Paul Harris FCPA Louise Kloot FCPA John Horder FCPA South Australia Paul Mather FCPA Jennifer Kent FCPA Steven Woolhouse FCPA, President Paul McInerney FCPA Sharon Portelli FCPA Bryan Howieson FCPA, Deputy President Justin Naylor CPA Scott Stanton FCPA David Lawlor FCPA, Deputy President David Spong FCPA Scott Varker FCPA Andrew Blaskett FCPA Srini Vasan FCPA Rhonda Wheatley FCPA Ivana Bosio CPA Amy Wong FCPA Andrew Johnson FCPA Jodie Lindsay FCPA Joe Princi FCPA Mike Richards FCPA Amanda Taylor CPA Julie Van Der Velde FCPA Thomas Zollo FCPA CPA AUSTRALIA 2013 INTEGRATED REPORT | 61

Western Australia China – Shanghai Committee New Zealand Terrence Cheong FCPA, President Danny Tong FCPA, President Mark Stinson FCPA, President Lisa Bayakly FCPA, Deputy President Kenny Lam FCPA, Deputy President Rod Marvin FCPA, Deputy President Tim Blackburn FCPA, Deputy President Alison Wong CPA, Deputy President Chandan Ohri CPA, Deputy President Claire Bickford FCPA Cao Jing CPA Stephen Bell CPA Tony Chong FCPA John Hung FCPA Andrew Dickeson CPA John Evans FCPA Lawrence Lau FCPA Brad Gatehouse CPA Phillip Hancock FCPA Annie Li CPA Chye Heng FCPA Mark Hunter FCPA Tom Lin FCPA Anil Narayan FCPA Sandra Pigdon FCPA Dick Tang CPA Bridgette Pretty CPA Joanne Stampalia FCPA Charles Yang CPA Priyan Rajapaksa FCPA Dale Wilcox FCPA Margaret Yang CPA Scott Scoullar FCPA Shane Yensch FCPA Carolyn Stringer FCPA Europe China – Beijing Sean Lam FCPA, President Singapore Kevin Ng FCPA, President Anne Cutting FCPA, Deputy President Themin Suwardy FCPA, President Lily Chen FCPA, Deputy President Greg Cristofani FCPA Philip Yuen FCPA, Deputy President Sun Cui FCPA, Deputy President Kristy Eden-Green FCPA Chew Tong Gunn FCPA Derek Chan CPA David Graydon FCPA Lee Wee Jean FCPA Henry Chan FCPA Keith Irwin FCPA Lisa Liew FCPA Michael Liu CPA Michelle Kelly CPA Steven Lim FCPA Wilson Liu FCPA Rachael Meakins FCPA Low Weng Keong FCPA Lu Wei CPA Benjamin Wong FCPA Chaly Mah FCPA Rebecca Mak FCPA Deborah Ong FCPA Zhao Guilin CPA Malaysia Ong Pang Thye FCPA Zhuang Xiaoming FCPA Alex Ooi Thiam Poh FCPA, President Teo Chee Khiang FCPA Teresa Chong Dee Shiang FCPA, Christopher Wong FCPA China – Greater China Deputy President Peter Lee FCPA, President Wong Chin Aik FCPA, Deputy President BOARD COMMITTEES Charles Wong FCPA, Deputy President Nadzirah Abd Rashid FCPA AS AT 31 DECEMBER 2013 Ronald Yam FCPA, Deputy President Shamsul Nahar Abdullah FCPA Audit and Risk Committee Ivan Au CPA Sharman Arumugan CPA Peter Dowling AM FCPA, Chair Sebastian Bombaci CPA Shaun Lee Chong Leng CPA Mark Grey Jeffrey Chan FCPA Edward Lim FCPA Deborah Ong FCPA Kenneth Chen CPA Normah Omar CPA Kerry Ryan Tatyana Klauzner FCPA Josephine Phan Su Han FCPA Derek Lai FCPA Gabriel Teo Chun FCPA Finance Committee Bernard Poon FCPA Angelina Yee Seow Voon CPA Graeme Wade FCPA, Chair Thomas Wong FCPA Peter Dowling AM FCPA Patrick Yeung FCPA Christina Foo FCPA Mark Grey 62 | how we do business

Nomination and Remuneration Public Practice Advisory Committee DISCIPLINARY PANEL CHAIR Committee Malcolm Stewart CPA, Chair AS AT 31 DECEMBER 2013 Richard Petty FCPA, Chair Robert Eastoe FCPA Daryl Chipperfield FCPA, Chair Jim Dickson FCPA Lawrence Lam FCPA Gaye Mason FCPA, Deputy Chair Penny Egan FCPA Lisa Liew FCPA James Syme, Deputy Chair Kerry Ryan Ian Raspin FCPA Graeme Wade FCPA Arthur Tateossian FCPA LIFE MEMBERS Gabriel Teo FCPA AS AT 31 DECEMBER 2013 Policy Governance Committee Tanya Titman CPA Tyrone Carlin FCPA, Chair Joseph Abraham AM FCPA Jim Dickson FCPA Quality Review Advisory Committee Patrick Barrett AO FCPA Tim Ebbeck FCPA Ian Dunn, Chair Allan Barton FCPA Bruce Trebilcock FCPA Sharlene Anderson CPA David Baulch FCPA David Lissauer FCPA Brian Blood FCPA ADVISORY COMMITTEES Muriel Oliver CPA David Boymal AM FCPA AS AT 31 DECEMBER 2013 Thomas Zollo FCPA John Cahill FCPA Denis Cortese FCPA International Advisory Committee REPRESENTATIVE COUNCIL Ronald Cotton AM FCPA Andrew Genrich FCPA, Chair AS AT 31 DECEMBER 2013 Mark Coughlin FCPA Teresa Chong FCPA Laurence Crockett FCPA John Cahill FCPA, Chair Nigel Finch FCPA Clyde Dickens AM FCPA Peter Batten FCPA Tatyana Klauzner FCPA Kenneth Eastwood AM FCPA Timothy Blackburn CPA Lim Chui Phing CPA Scott Henderson AM FCPA Simon Brodie FCPA Irving Low FCPA Robert Jeffery FCPA John Corrigan FCPA Kevin Ng FCPA Jim Kropp FCPA Anne Cutting FCPA Ferdinand Sadeli CPA Kenneth Levy RFD FCPA Ric De Santi FCPA Loh Hoon Sun FCPA Professional Qualifications Lindsay Doig FCPA Low Weng Keong FCPA Advisory Committee Greg Field FCPA Alex Malley FCPA Albert Ho FCPA Kim Langfield-Smith FCPA, Chair Graeme McGregor AO FCPA John Horder AM FCPA Foo Yin Fah FCPA Paul Meiklejohn FCPA Kim Langfield-Smith FCPA Steven Hui FCPA John Miller AO FCPA Chui Phing Lim CPA Bryan Howieson FCPA Joycelyn Morton FCPA Edward Lim FCPA Warwick Spargo FCPA Geoff Orr AM FCPA Richard Mifsud FCPA Srini Vasan FCPA Graham Paton AM FCPA Julie O’Brien CPA Kim Watty CPA Des Pearson FCPA Sharon Portelli FCPA Richard Petty FCPA Ian Raspin FCPA Patrick Ponting FCPA Michael Richards FCPA Poon Wing Cheung FCPA Themin Suwardy FCPA Trevor Russell AM FCPA Srini Vasan FCPA Len Spencer FCPA Patrick Yueng FCPA Brian Waldron OAM FCPA Bernard Wright FCPA CPA AUSTRALIA 2013 INTEGRATED REPORT | 63

CENTRE OF OTHER BOARDS International Ethics Standards EXCELLENCE CHAIRS AND COMMITTEES Board for Accountants (IESBA)* AS AT 31 DECEMBER 2013 AS AT 31 DECEMBER 2013 Alice McCleary FCPA

Environmental, Social and ASEAN Federation IFAC Compliance Advisory Panel* Governance Centre of Excellence of Accountants* Jim Dickson FCPA Mike Sewell FCPA, Chair Jim Dickson FCPA IFAC Nominating Committee* External Reporting Confederation of Asian Margaret Parker FCPA Centre of Excellence and Pacific Accountants (CAPA)* Jeffrey Luckins CPA, Chair Geoffrey Applebee FCPA IFAC Professional Accountants in Business Committee (PAIB)* Retirement Savings HRH The Prince of Wales’ John Cahill FCPA Centre of Excellence Accounting for Sustainability Noelle Kelleher CPA, Chair (A4S) project IFAC Small and Medium Practices Alex Malley, FCPA Board (SMP)* Taxation Centre of Excellence Stuart Black FCPA Andrew O’Bryan FCPA, Chair International Federation of Accountants (IFAC) Board* International Integrated Rachel Grimes FCPA Reporting Council Alex Malley FCPA International Auditing and Assurance Standards Board (IAASB)* International Public Sector Merran Kelsall FCPA Accounting Standards Board (IPSASB)* IFAC International Accounting Tim Youngberry FCPA Education Standards Board (IAESB)* Kim Langfield-Smith FCPA Joint Accounting Bodies Peter Wolnizer FCPA John Cahill FCPA Paul Drum FCPA Alex Malley FCPA

*CPA Australia shares representation on this committee with other parties. 64 | how we do business

ACRONYMS

AASB Australian Accounting Standards Board CRM Customer relationship management AAT Association of Accounting Technicians, Australia FCPA Fellow of CPA Australia AFAANZ Accounting and Finance Association FTE Full-time equivalent of Australia and New Zealand GHG Greenhouse gas AFA ASEAN Federation of Accountants GRI Global Reporting Initiative AFR Australian Financial Review HRH His Royal Highness AFSL Australian Financial Services Licence IAASB International Auditing and Assurance Standards Board A4S Accountants For Sustainability IAESB International Accounting Education Standards Board A-IFRS Australian Equivalents to International ICAA Institute of Chartered Accountants Australia Financial Reporting Standards IESBA International Ethics Standards Board for Accountants APAC Asia Pacific IFAC International Federation of Accountants APES Accounting Professional and Ethical Standards IFRS International Financial Reporting Standards APESB Accounting Professional and Ethical Standards Board IGAP International Governance and Performance ARC Australasian Research Council IIRC International Integrated Reporting Council ASAE Australian Standard on Assurance Engagements IPA Institute of Public Accountants ASIC Australian Securities and Investments Commission IPSASB International Public Sector Accounting Standards Board ASXCGC Australian Stock Exchange Corporate Governance Council IR Integrated reporting AUASB Auditing and Assurance Standards Board KPI Key Performance Indicator B–HERT Business and Higher Education Roundtable NGER National Greenhouse and Energy Reporting CAPA Confederation of Asian and Pacific Accountants NCOS National Carbon Offset Standard CEDA Committee for Economic Development of Australia PAIB Professional Accountants in Business CEO Chief executive officer REP Recognised Employer Program CFO Chief financial officer SME Small-to-medium enterprise CGPR Corporate Governance Principles and Recommendations SMP Small and medium practice

CO2 Carbon dioxide COO Chief operating officer CPA Certified Practising Accountant CPD Continuing professional development CPA AUSTRALIA 2013 ANNUAL REPORT | 65

FINANCIAL REPORT

CPA Australia continues to be committed to best practice financial reporting and as such is guided by the Australian equivalents to International Financial Reporting Standards (A-IFRS) in the to preparation of this report. All new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to our operations and effective for the current annual reporting period are adopted. 66 | Financial report

REPORT OF THE BOARD OF DIRECTORS

DIRECTORS CONSOLIDATED RESULTS SUBSEQUENT EVENTS The Directors submit the annual financial The consolidated surplus before income No matter or circumstance has arisen report of CPA Australia Limited (the tax for the year was $2,306,000 (2012: since the end of the previous financial “Consolidated Entity”) and its controlled $8,234,000). The consolidated surplus year to the date of this report that has entities for the financial year ended after tax for the year was $2,999,000 affected, or may significantly affect, the 31 December 2013. In order to comply (2012: $8,232,000). activities of the Consolidated Entity, the with the Corporations Act 2001 and the results of those activities or the state of Australian Accounting Standards, the REVIEW OF OPERATIONS affairs of the Consolidated Entity in the Directors present the report as follows. A review of the operations of the ensuing or any subsequent financial year. The Directors in office at the end of the Consolidated Entity during the financial financial year are set out on pages 52-54 year and the results of those operations FUTURE DEVELOPMENTS of the Annual Report, together with their is contained in the discussion and Likely developments in the activities qualifications, experience and special analysis of the financial results – see of the Consolidated Entity are noted responsibilities. Details of meeting pages 70-71. elsewhere in the annual report, with the attendance are set out opposite and Consolidated Entity working successfully their remuneration is included in Note 17 CORPORATE GOVERNANCE towards the achievement of its on page 89. The Board of CPA Australia comprises objectives and maintaining a breakeven ten independent non-executive or surplus position in 2014. COMPANY SECRETARY Directors and two independent The Company Secretary, Adam Awty, non-executive Directors who are also ROUNDING OF AMOUNTS BBus (Acc), CPA was appointed on 9 non-members. During 2013, it met six CPA Australia is a company of the kind April 2010. He is also Chief Operating times, primarily in Melbourne with one referred to in ASIC Class order 98/100 Officer – Commercial and Chief meeting held in Brisbane. As at the end dated 10 July 1998. In accordance with Financial Officer and is responsible for of 2013, there are four Board committees the class order amounts in the Directors’ the company secretarial, finance and of Directors. Further information on the report and the financial report are administration, planning, technology governance of the Company is included rounded off to the nearest thousand legal and compliance functions, people in the Corporate Governance Statement dollars, unless otherwise indicated. and culture, and professional programs on pages 55-58. and pathways functions. INDEMNIFICATION OF CHANGES IN OFFICERS AND AUDITORS PRINCIPAL ACTIVITIES STATE OF AFFAIRS During the year CPA Australia paid The principal activities of the During the financial year there was professional indemnity and Directors’ Consolidated Entity and its controlled no significant change in the state of and officers’ liability insurance for all of entities during the financial year affairs of the Consolidated Entity, other its Directors and officers. The nature remain unchanged and were as an than that referred to in the financial of the insurance contract providing this association representing financial, statements or notes thereto. cover does not allow CPA Australia to accounting and business advisory disclose either the extent of cover or the professionals: providing high standards DIRECTORS’ MEETINGS premium paid. of professional entry and continuing The tables on page 67 set out the education, stimulating informed number of Board and Board Committee AUDITOR INDEPENDENCE debate on issues within the areas of meetings held and the number of The auditor’s independence declaration professional competence, setting and meetings attended by each Director. is included on page 68 of the maintaining the highest professional and annual report. technical standards and promoting the role of its members for the benefit of the community. CPA AUSTRALIA 2013 INTEGRATED REPORT | 67

Meetings Meetings Board of Directors Held Eligible Attended Finance Committee Held Eligible Attended Penny Egan FCPA, Chair* 6 6 6 Graeme Wade FCPA, Chair* 5 5 4 John Cahill FCPA, Chair** 6 4 4 Penny Egan FCPA, Chair** 5 3 3 Tyrone Carlin FCPA 6 6 5 Peter Dowling AM FCPA*** 5 2 2 Jim Dickson FCPA 6 6 6 Christina Foo FCPA 5 5 5 Peter Dowling AM FCPA 6 6 6 Mark Grey 5 5 5 Tim Ebbeck FCPA*** 6 2 2 Nomination & Held Eligible Attended Christina Foo FCPA 6 6 6 Remuneration Committee Mark Grey 6 6 6 Richard Petty FCPA, Chair 6 6 6 Low Weng Keong FCPA** 6 4 3 John Cahill FCPA** 6 5 5 Richard Petty FCPA 6 6 6 Jim Dickson FCPA*** 6 1 1 Deborah Ong FCPA*** 6 2 2 Penny Egan FCPA 6 6 6 Kerry Ryan 6 6 6 Kerry Ryan 6 6 6 Bruce Trebilcock FCPA 6 6 6 Graeme Wade FCPA*** 6 1 1 Graeme Wade FCPA 6 6 6 Policy Governance Committee Held Eligible Attended Audit & Risk Committee Held Eligible Attended Tyrone Carlin FCPA, Chair* 4 4 4 Peter Dowling AM FCPA, Chair* 4 2 2 Peter Dowling AM FCPA, Chair** 4 3 3 Graeme Wade FCPA, Chair** 4 2 2 Jim Dickson FCPA 4 4 4 Mark Grey 4 4 4 Tim Ebbeck FCPA*** 4 1 1 Kerry Ryan 4 4 4 Bruce Trebilcock FCPA 4 4 3 Deborah Ong FCPA*** 4 2 2 Bruce Trebilcock FCPA** 4 2 2

*Chair effective 1 October, 2013 **Ceased 30 September, 2013 ***Effective 1 October, 2013 Signed in accordance with a resolution of the Directors made pursuant to s298 (2) of the Corporations Act 2001 on behalf of the Directors.

Penny Egan FCPA Graeme Wade FCPA Director Director 21 February 2014 68 | Financial report

Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78B Melbourne VIC 3001 Australia DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 The Board of Directors www.deloitte.com.au CPA Australia Limited Level 20, 28 Freshwater Place Southbank VIC 3006

21 February 2014

Dear Board Members CPA Australia Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of CPA Australia Limited.

As lead audit partner for the audit of the financial report of CPA Australia Limited for the financial year ended 31 December 2013, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Peter A. Caldwell Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited CPA AUSTRALIA 2013 INTEGRATED REPORT | 69

OVERVIEW OF FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

The Controlled Entity and the Company operate in seven Business segments 2013 2012 reportable business segments which are Membership and $'000s $'000s member value; Training and development; Education; Brand, Membership and Revenue 71,777 68,151 ethics and the profession; Business development; Corporate services; and Corporate governance and committees, member value Cost (32,286) (31,989) as shown left. Result 39,491 36,162 Membership and member value’s core activities are delivery Training and Revenue 17,55 0 19,903 of the membership offer including administration and development Cost (16,847) (18,264) assessment of members’ admissions and advancements; library services; INTHEBLACK, CPA Update and member Result 703 1,639 retention. Education Revenue 57,378 55,238 Training and development’s core activity is the development Cost (19,655) (19,401) and delivery of professional development products that meet Result 37,723 35,837 the needs of members and potential members. Brand, ethics Revenue 1,479 1,752 Education’s major activities are the development and examination of the CPA Program and Public Practice and the Cost (21,594) (18,753) profession Program, along with the development and delivery of Result (20,115) (17,0 01) the practical experience requirement program. This area Business Revenue 5,087 4,240 also includes activities associated with the assessment of overseas qualifications for recognition by the Department of development Cost (15,951) (13,565) Immigration and Citizenship. Result (10,864) (9,325) Brand, ethics and the profession’s core activities include Corporate Revenue 3,836 4,381 managing and developing the brand, promotion, policy services Cost (42,017) (37,613) and research, advocacy and government relations, support for the profession locally (AASB, AUASB and APESB) and Result (38,181) (33,232) internationally (IFAC, AFA, CAPA etc.), external affairs, Corporate Revenue 135 117 professional standards and quality assurance. governance and Cost (6,586) (6,204) Business development's major activities are to create committees Result (6,451) (6,087) meaningful and effective relationships with employers, recruiting agencies, academics and others in the higher Total Revenue 157, 242 153,782 education sector converting awareness of CPA Australia into CPA Australia Cost (154,936) (145,789) new members. In addition to this, business development Net gain on – 241 looks for opportunities to develop new geographical and sale of property functional markets. Tax credit/ 693 (2) Corporate services provides internal support to the (expense) organisation that includes management, finance, legal, procurement, property management, technology, Result 2,999 8,232 organisational development, human resources and planning. Other comprehensive 3,610 2,457 Corporate governance and committees represents the income/(expense) activities associated with the Board, Board Committees, for the year, net of tax the Representative Council, Board secretariat, internal Total comprehensive income 6,609 10,689 audit, divisional councils, investigation and discipline and for the year advisory committees. 70 | Financial report

DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS 2013

INCOME STATEMENT The 2013 financials reflected a strong operating performance across the organisation delivering an operating surplus before tax of $2.3m (2012: $8.2m) and an overall comprehensive income of $6.6m after tax, defined benefit, FX and unrealised gain on investments (2012: $10.7m). The surplus was underpinned by increases in revenue from the core business areas of membership and education. 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 REVENUE Overall revenue increased by $3.5m or 2.2 per cent during 2013. Continued growth in membership and an increase in CPA Program professional level sales were the key drivers behind this result. Revenue from our training and development products continued to be softer in 2013. The organisation ended the year with close to 150,000 members. This strong result was driven by new member growth and member retention levels consistent with 2012. 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 The increase in member numbers resulted in an increase in membership revenue of $3.5m or 5.2 per cent. Revenue from the CPA Program was also higher with sales for the professional level exceeding last year’s result. EXPENDITURE Expenditure before tax was $9.1m or 6.3 per cent higher than 2012. The increases were driven by our investment in new initiatives such as a brand refresh which is due for release in early 2014, the sponsorship of the Financial Review Sunday program and further investment in expanding our digital communication channels. Our staff turnover remained low by CPA Australia are classified for income tax purposes in in 2013, resulting in a higher than average headcount for the accordance with income tax legislation. year. During 2013 we also finalised our property refresh with CPA Australia’s tax credit for 2013 is $0.7m. This is attributable the upgrade to member facilities in Canberra, Indonesia to a small taxable loss for 2013 largely due to lower non- and Vietnam. Depreciation costs were higher than 2012 mutual income, and the franking credits received from following the completion of the property upgrades and the organisations investment portfolio. It is expected that the implementation of our new core business systems, CPA Australia will continue to operate on a tax mutual basis. including membership CRM, multi-currency gateway and corporate website. FOREIGN EXCHANGE Subscription fees, where a foreign currency option is available, TAXATION are adjusted on a monthly basis to reflect exchange rate In assessing its income tax liability, CPA Australia applies the movements. Foreign currency cash holdings are also limited to principles of mutuality to revenues and expenses. Revenue the requirements for the funding of local operations to minimise in the form of member receipts represents mutual income CPA Australia’s exposure to fluctuations in exchange rates. and is not subject to income tax. Expenses associated with The depreciation of the Australian dollar against the currencies such mutual activities are not tax deductible for income where substantial cash is held contributed to a foreign exchange tax purposes. All other receipts and payments to or made gain of $0.3m for the full year. CPA AUSTRALIA 2013 INTEGRATED REPORT | 71

CASH FLOW Intangible assets are higher than 2012 by $7m which has CPA Australia’s cash flow and liquidity remained strong in resulted from our investment in the final phase of our core 2013. Overall cash and cash equivalents decreased by $9.8m, business systems upgrade including our membership CRM, net cash flows from operating activities for the year were multi-currency gateway and new corporate website, which $9m. The net decrease in cash and cash equivalents was was completed during 2013. Intangible assets were previously due to an increase in our investment portfolio and capital classified as property, plant and equipment in 2012. purchases during 2013. In real terms, the operating cash Other non-current assets are in line with 2012. balance is $41.1m (when subscriptions and other income Trade and other payables were lower by $0.3m than the received in advance are excluded from cash and equivalents), previous year. plus other financial assets. Both short and long term provisions ended the year $0.8m INVESTMENTS higher than 2012. This is the result of the higher leave provision required at year end and an increase in the make CPA Australia’s investment portfolio continues to perform good provision for our property portfolio. strongly returning $3.6m in revenue and an unrealised capital gain of $3.1m in 2013. This is directly due to the strengthening Other current liabilities were higher by $3.8m, which is of the Australian equity market during 2013 and a change attributable to price increases associated with CPA Program, in the asset allocation of the investment portfolio to a Membership and Public Practice paid in advance for 2014 higher percentage of capital growth assets (this has been compared to the prior year. The timing of payments by recognised directly in equity). members is in line with last year. Other non-current liabilities have reduced when compared BALANCE SHEET to 2012 as part of the lease incentive received in prior years CPA Australia’s balance sheet continues to strengthen has been amortised to the Statement of comprehensive with net assets increasing by $6.6m or 10.2 per cent, which income during 2013. is attributable to the surplus delivered in 2013 and the unrealised capital gain in our investment portfolio. Cash and cash equivalents have decreased by $9.8m which is due to the movement from shorter cash based investments to more long term assets and the investment in our core business systems and property upgrades in South East Asia as previously outlined. Trade and other receivables are $0.2m higher. All outstanding revenue is expected to be received early in 2014. Other current assets are $1.9m higher than the prior year due to higher prepaid expenses. Non-current other financial assets are higher than 2012 by $10.1m which is directly attributable to an increase in investments expected to be held for greater than one year and unrealised gains in the portfolio during 2013. Property, plant and equipment has increased by $0.1m when compared to 2012 which is attributable to property upgrades in Canberra, Indonesia and Vietnam. 72 | Financial report

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

Consolidated 2013 2012 Note $'000s $'000s Revenue 3(a) 153,640 149,658 Investment revenue 3(b) 3,602 4,124 Gain on sale of property 3(b) - 241 Service expenses (71,087) (68,780) Marketing, promotion and publication expenses (26,375) (24,702) Occupancy expenses (13,174) (12,526) Administration expenses (43,182) (38,504) Finance costs (14) (35) Net foreign exchange gain/(loss) 64 (66) Other expenses (1,168) (1,176) Surplus before income tax 4 2,306 8,234 Tax expense 5(a)(b) 693 (2) Surplus for the year 2,999 8,232 Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Actuarial gain on defined benefit plan 20 189 252 Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations 323 (17) Net gain on available-for-sale assets 3,098 2,222 Other comprehensive income/(expense) for the year, net of tax 3,610 2,457 Total comprehensive income for the year 6,609 10,689

CPA Australia 2013 financial statements The Statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 76-98 CPA AUSTRALIA 2013 INTEGRATED REPORT | 73

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2013

Consolidated 2013 2012 Note $'000s $'000s Current assets Cash and cash equivalents 6 39,181 48,950 Trade and other receivables 7 3,427 3,186 Other financial assets 9 500 500 Other assets 8 4,921 3,061 Total current assets 48,029 55,697 Non-current assets Deferred tax assets 5(c) 1,696 912 Other financial assets 9 53,952 43,844 Property, plant and equipment 10 20,615 20,717 Intangible assets 11 20,729 13,694 Other assets 8 350 351 Total non-current assets 97,3 42 79,518 Total assets 145,371 135,215 Current liabilities Trade and other payables 12 11,670 12,019 Provisions 13 4,081 3,758 Other liabilities 14 52,039 48,249 Total current liabilities 67,790 64,026 Non-current liabilities Provisions 13 2,356 1,876 Other liabilities 14 4,135 4,832 Total non-current liabilities 6,491 6,708 Total liabilities 74,281 70,734 Net assets 71,090 64,481 Members' funds Reserves 4,773 1,352 Retained surplus 66,317 63,129 Total members' funds 71,090 64,481

CPA Australia 2013 financial statements The Statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 76-98 74 | Financial report

STATEMENT OF CHANGES IN MEMBERS’ FUNDS FOR THE YEAR ENDED 31 DECEMBER 2013

Consolidated Investment Foreign Retained Total revaluation currency earnings reserve translation reserve $'000s $'000s $'000s $'000s Balance at 1 January 2012 (798) (55) 54,645 53,792 Total comprehensive income for the year 2,222 (17) 8,484 10,689 Balance at 1 January 2013 1,424 (72) 63,129 64,481 Total comprehensive income for the year 3,098 323 3,188 6,609 Balance at 31 December 2013 4,522 251 66,317 71,090

CPA Australia 2013 financial statements The Statement of changes in members’ funds is to be read in conjunction with the notes to the financial statements set out on pages 76-98 CPA AUSTRALIA 2013 INTEGRATED REPORT | 75

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013

Consolidated 2013 2012 Note $'000s $'000s Cash flows from operating activities Receipts from operations 157,017 163,257 Payments to suppliers and employees (148,009) (138,005) Net cash inflows from operating activities 22 9,008 25,252 Cash flows from investing activities Payment for property, plant and equipment and intangible assets 10 & 11 (15,648) (10,791) Net receipts for bank bills less than one year but greater than 90 days – 150 Net receipts for bank bills greater than one year – – Proceeds from sale of property, plant and equipment – 839 Net proceeds from sale of investment securities 136 15 Purchase of investment securities ( 7,0 0 9) (1,226) Investment interest received 3,744 4,838 Net cash outflows from investing activities (18,777) (6,175) Cash flows from financing activities – – Net cash flow from financing activities – – Net increase/decrease in cash and cash equivalents held (9,769) 19,077 Cash and cash equivalents at the beginning of the financial year 48,950 29,873 Cash and cash equivalents at the end of the financial year 6 39,181 48,950

CPA Australia 2013 financial statements The Statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 76-98 76 | Financial report

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

1. ADOPTION OF NEW AND REVISED c) Basis of consolidation ACCOUNTING STANDARDS The consolidated financial statements incorporate the CPA Australia adopts all of the new and revised Standards financial statements of the Company and entities controlled and Interpretations issued by the Australian Accounting by the Company. Control is achieved where the Company Standards Board (AASB) that are relevant to the operations has the power to govern the financial and operating policies and effective for the current annual reporting period. For of an entity so as to obtain benefits from its activities. the reporting period to 31 December 2013, CPA Australia All inter-group transactions, balances, income and expenses adopted the revised AASB 119 Employee Benefits. are eliminated in full on consolidation.

2. SUMMARY OF SIGNIFICANT d) Income tax ACCOUNTING POLICIES In assessing its income tax liability, CPA Australia applies the principles of mutuality to its revenues and expenses. a) Basis of preparation Revenue in the form of member receipts represents The financial report has been prepared on an accruals basis mutual income and is not subject to income tax. Expenses and is based on historical costs and does not take into associated with such mutual activities are not tax deductible account changing money values or, except where stated, for income tax purposes. All other receipts and payments current valuations of non-current assets. Cost is based on the of CPA Australia are classified for income tax purposes in fair values of the consideration given in exchange for assets. accordance with income tax legislation. The accounting policies have been consistently applied, Deferred income tax is provided on all temporary differences unless otherwise stated. at the balance sheet date between the tax bases of assets The report is presented in Australian Dollars and all values and liabilities and their carrying amounts for financial are rounded to the nearest thousand dollars ($’000) unless reporting purposes. otherwise stated under the option available under ASIC Deferred income tax liabilities are recognised for all taxable Class Order 98/100. temporary differences. b) Statement of compliance Deferred income tax assets are recognised for all deductible The financial report is a general purpose financial report temporary differences, carry-forward of unused tax assets that has been prepared in accordance with the Accounting and unused tax losses, to the extent that it is probable that Standards, Interpretations and other authoritative taxable surplus will be available against which the deductible pronouncements of the Australian Accounting Standards temporary differences and the carry-forward of unused tax Board and the Corporations Act 2001. Accounting standards assets and unused tax losses can be used. include Australian equivalents to International Financial The carrying amount of deferred income tax assets is Reporting Standards (A-IFRS). CPA Australia is a not-for-profit reviewed at each balance sheet date and reduced to the entity that complies with A-IFRS which ensures that financial extent that it is no longer probable that sufficient taxable statements and notes of the Consolidated Entity comply surplus will be available to allow all or part of the deferred with International Financial Reporting Standards (IFRS). income tax asset to be utilised. CPA Australia is not applying paragraphs specific to Deferred income tax assets and liabilities are measured at Not-For-Profit entities. the tax rates that are expected to apply to the year when CPA Australia is limited by guarantee and domiciled the asset is realised or the liability is settled, based on tax in Australia. rates (and tax laws) that have been enacted or substantively The financial statements were authorised by the Board enacted at the balance sheet date. of Directors on 21 February 2014. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement. CPA AUSTRALIA 2013 INTEGRATED REPORT | 77

e) Goods and services tax (GST) g) Revenue Revenues, expenses and assets are recognised net of the Revenue is recognised to the extent that it is probable that amount of GST except: the economic benefits will flow to CPA Australia and that it • where the GST incurred on purchases of goods and can be reliably measured. services is not recoverable from the taxation authority, in Member fees and subscriptions which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as The subscription year runs 1 January to 31 December. applicable Subscriptions are payable annually in advance. Only those membership fees and subscription payments that are • receivables and payables are stated inclusive of GST attributable to the current financial year are recognised The net amount of GST recoverable from, or payable to, as revenue. Fees and subscription payments that relate the taxation authority is included as part of receivables or to future periods are shown in the Statement of financial payables in the balance sheet. position as subscriptions and fees in advance under the Cash flows are included in the Statement of cash flows on heading of Current liabilities – other. a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable Interest from, or payable to, the taxation authority, are classified as Interest revenue is accrued on a time basis, by reference to operating cash flows. the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated Commitments and contingencies are disclosed net of future cash receipts through the expected life of the financial the amount of GST recoverable from, or payable to, the asset to that asset’s net carrying amount. taxation authority. Income from investments f) Foreign currency Revenue is recognised when the income is earned. All foreign currency transactions are shown in Australian dollars. Sale of non-current assets The net gain/(loss) of non-current asset sales are included as Foreign currency transactions revenue/(expenses) at the date control passes to the buyer, Transactions in foreign currencies are initially recorded in the usually when an unconditional contract of sale is signed. functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated The net gain or loss on disposal is calculated as the in foreign currency are retranslated at the rate of exchange difference between the carrying amount of the asset at the ruling at the balance sheet date. Non-monetary assets and time of disposal and the net proceeds on disposal. liabilities carried at fair value that are denominated in foreign Assets which satisfy the criteria in AASB 5 as assets held currencies are translated at the rates prevailing at the date for sale are transferred to current assets and separately the fair value was determined. disclosed as non-current assets held for sale on the face Exchange differences are recognised in profit and loss in the of the Statement of financial position. These assets are period they occur. measured at the lower of carrying amount and fair value less costs to sell. These assets cease to be depreciated from the Foreign currency operations date on which they satisfy the “held-for-sale” criteria. The assets and liabilities of CPA Australia’s overseas operations are translated at the exchange rates prevailing at Grants the reporting date. Income and expense items are translated Revenue is recognised when control of the contribution or at the average exchange rate for the period unless exchange right to receive the contribution is received. rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in the profit and loss. 78 | Financial report

h) Receivables Lease restoration The terms of trade are 30 days from invoice date. Trade The initial cost of an asset includes an estimate of the cost receivables, loans and other receivables that have fixed or of dismantling and removing the item and restoring the determinable payments that are not quoted in an active site on which it is located. This is particularly relevant to market are classified as “loans and receivables". Loans restoration provisions in property leases taken up by the and receivables are measured at amortised cost using the Consolidated Entity where there exists an obligation to effective interest rate method less impairment. An estimate restore the property to its original condition. These costs are for doubtful debts is made when collection of the full included in the value of the leasehold improvements with a amount is no longer probable. Bad debts are written off corresponding provision for the ‘restoration’ taken up. when identified. j) Impairment of other tangible assets i) Property, plant and equipment At each reporting date, the Consolidated Entity reviews All classes of assets are stated at cost less accumulated the carrying amounts of its tangible assets to determine depreciation and any impairment. whether there is any indication that those assets have Depreciation is calculated on a straight line basis over the suffered an impairment loss. If any such indication exists, estimated useful life of the assets (excluding Freehold Land) the recoverable amount of the asset is estimated in order to as follows: determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent Buildings 50 Years from other assets, the Consolidated Entity estimates the Strata title 50 Years recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis Property, plant and equipment 3-13 Years of allocation can be identified, corporate assets are also Information technology assets 3 Years allocated to individual cash-generating units, or otherwise Computer hardware classified as Property, plant and they are allocated to the smallest group of cash-generating equipment in the Statement of financial position units for which a reasonable and consistent allocation basis Library books 5 Years can be identified. Recoverable amount is the higher of fair value less costs to Impairment sell and value in use. In assessing value in use, the estimated The carrying values of property, plant and equipment future cash flows are discounted to their present value are reviewed for impairment when events or changes in using a pre-tax discount rate that reflects current market circumstances indicate the carrying value may not be assessments of the time value of money and the risks specific recoverable. If such an indication exists and where carrying to the asset for which the estimates of future cash flows have values exceed the recoverable amount, the asset is written not been adjusted. down to the recoverable amount. Recoverable amount is the If the recoverable amount of an asset (or cash-generating greater of fair value less costs to sell and value in use. unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is Land and buildings reduced to its recoverable amount. An impairment loss is Valuations are obtained biennially and were obtained in recognised in profit or loss immediately, unless the relevant 2012. All valuations received were in excess of their recorded asset is carried at fair value, in which case the impairment loss value at balance date. They reflect independent assessments is treated as a revaluation decrease. of the open market value of land and buildings based on existing use. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount CPA AUSTRALIA 2013 INTEGRATED REPORT | 79

does not exceed the carrying amount that would have been where another systematic basis is more representative of determined had no impairment loss been recognised for the the time pattern in which economic benefits from the leased asset (cash-generating unit) in prior years. A reversal of an asset are consumed. impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which m) Investments and financial assets case the reversal of the impairment loss is treated as a Controlled entities revaluation increase. Investments in controlled entities carried at lower of cost and k) Intangible assets net recoverable amount in the parent company’s individual At each reporting date, the Consolidated Entity reviews financial statements. the carrying amounts of its intangible assets to determine Held to maturity investments whether there is any indication that those assets have Investments such as bonds and term deposits that are suffered an impairment loss. intended to be held to maturity are initially measured at fair Intangible assets with finite lives that are acquired separately value less cost and are subsequently measured at amortised are carried at cost less accumulated amortisation and cost using the effective interest method. The effective accumulated impairment loss. Amortisation is recognised interest rate method is a method of calculating amortised on a straight-line basis over their estimated useful lives cost of a financial asset and of allocating interest income over as follows: the relevant period.

Core business systems 5 Years Financial instruments Website 3 Years Financial instruments such as non-derivative financial Other software 3 Years assets available-for-sale are recorded at fair value through comprehensive income. Revaluation is accumulated in an The estimated useful life and amortisation method are investment revaluation reserve in equity. reviewed at the end of each reporting period, with the All financial assets are recognised and derecognised on trade effect of any changes in estimate being accounted for on date where the purchase or sale of a financial asset is under a prospective basis. a contract whose terms require delivery of the financial asset l) Leased assets within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction Leases, where substantially all the risks and benefits costs, except for those financial assets classified as at fair incidental to the ownership of the asset, but not the legal value through comprehensive income, which are initially ownership, are transferred to the company are classified as measured at fair value. finance leases. Finance leases are capitalised. Assets and liabilities are recorded at the present values of the minimum Financial assets are classified into the following categories: lease payments, including any guaranteed residual values at “held-to-maturity” investments, “available-for-sale” financial date of inception. assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is Lease payments for operating leases, where substantially all determined at the time of initial recognition. the risks and benefits remain with the lesser, are charged as expenses in the periods in which they are incurred. n) Payables Trade creditors represent liabilities for goods and services Lease incentives provided to the Consolidated Entity prior to the end of In the event that lease incentives are received to enter into the financial year and which are unpaid. The amounts are operating leases, such incentives are recognised as a liability. unsecured and are usually paid within 30 days of recognition. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight line basis, except 80 | Financial report

o) Derivative financial instruments past service cost, net of the fair value of plan assets. Any It is not current CPA Australia policy to enter into foreign asset resulting from this calculation is limited to the past exchange contracts to hedge foreign currency commitments. service cost, plus the present value of available refunds and reductions in future contributions to the plan. The plan is no p) Employee benefits longer open to new members as of 31 December 1999. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid. Defined contribution superannuation Employee benefits payable later than one year have been Contributions to defined contribution superannuation plans measured at the present value of the estimated future cash are expensed when paid. outflows to be made for those benefits. Discount rate used reflects national government securities that most closely q) Cash and cash equivalents match the terms of maturity of the related liabilities. Cash and cash equivalents comprise cash on hand, cash in banks, at call deposits and bank bills maturing within less Annual leave than 90 days from the date of inception. The provision for annual leave represents the amount which CPA Australia has a present obligation to pay resulting r) Comparative amounts from employees’ services provided up to balance date. The When a change in accounting policy is applied provision has been calculated at the amounts expected to be retrospectively in accordance with Australian Accounting paid when the liability is settled and includes on-costs. Standards, we have adjusted the opening balance of each affected component of equity for the earliest prior period Long service leave presented and the other comparative amounts disclosed for The liability for employee benefits for long service leave each prior period presented as if the new accounting policy represents the present value of the estimated future had always been applied. cash outflows to be made by the employer resulting from employees’ services provided up to the balance date. s) Website costs The primary focus of the CPA Australia website is as In determining the liability for employee benefits, account an advertising, branding and information tool for the has been taken of future increases in wage and salary rates, organisation and its members. All maintenance and and CPA Australia’s experience with staff departures. operational expenditure have been treated as expenses Related on-costs also have been included in the liability. incurred in the period. Defined benefit plan t) Critical judgements in applying the entity’s A small percentage of staff participates in the CPA Australia accounting policies defined benefit plan. The following are the critical judgements that management Mercer Benefit Services has provided actuarial calculations of has made in the process of applying the Group’s accounting the current benefit of the defined benefit liability. policies and that have the most significant effect on the Actuarial gains and losses are recognised in full, directly in amounts recognised in the financial statements: retained earnings, in the period in which they occur, and presented in the statement of comprehensive income. Employee entitlements Past services cost is recognised immediately to the extent Management judgement is applied in determining the that the benefits are already vested, and otherwise amortised following key assumptions used in the calculation of long on a straight-line basis over the average period until the service leave at balance date: benefits become vested. • future increases in wages and salaries; The defined benefit obligation recognised in the Statement • future on-cost rates; and of financial position represents the present value of the • experience of employee departures and period of service. defined benefit obligation, adjusted for unrecognised CPA AUSTRALIA 2013 INTEGRATED REPORT | 81

3. REVENUE 4. SURPLUS AND MEMBERS' FUNDS Consolidated Consolidated 2013 2012 2013 2012 $'000s $'000s $'000s $'000s (a) Revenue from Surplus before income tax expense operating activities Surplus before income tax expense Member subscriptions 70,772 67, 276 has been arrived at after charging/ Education and CPA Program 57, 233 55,100 (crediting) the following: Professional development 17,537 19,973 Finance costs: Other services 1,730 1,215 Interest charged on 14 35 restoration provisions Marketing, promotion 6,352 6,072 and publications Depreciation: Property 16 22 Depreciation 8,714 5,602 153,640 149,658 Net (gain)/loss: (b) Other revenue Net (gain) on sales of property, – (240) plant and equipment Interest revenue on: Net foreign exchange (gain)/loss (64) 66 AAT Loan 12 15 Employee benefits: Bank deposits 250 395 Defined contribution 3,790 3,519 Financial assets (held to maturity) 954 895 Defined benefit plan 62 80 Dividends and distributions 2,386 2,819 Salaries and other benefits 49,093 46,278 Gain on sale of property – 241 3,602 4,365 Total revenue 157, 242 154,023 82 | Financial report

5. TAXATION (b) Reconciliation of prima facie income tax The assessable income of CPA Australia for income tax (a) Tax expense/(income) comprises: purposes comprises only certain income deemed to be Income tax recognised Consolidated derived from non member activities. Conversely, allowable in income statement 2013 2012 deductions for income tax are limited to certain expenses and statutory deductions. $'000s $'000s The prima facie income tax expense on pre-tax accounting Deferred tax expense/(income) (782) (67) surplus from operations reconciles to the income tax expense relating to the origination and in the financial statements as follows: reversal of temporary differences Consolidated Tax loss not previously recognised – – 2013 2012 Refer (c) below (782) (67) $'000s $'000s Tax expense overseas entities 89 69 Surplus from operations 2,306 8,296 Total tax expense/(income) (693) 2 Income tax expense calculated at 30% 692 2,489 Surplus attributable to mutual (1,385) (2,487) activities and foreign branch expenditure – exempt income (693) 2 The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with that of the previous reporting period. * Surplus from operations has been adjusted for income tax paid by overseas entities. CPA AUSTRALIA 2013 INTEGRATED REPORT | 83

(c) Deferred tax assets/(liabilities) arise from the following:

2013 Consolidated Opening Charged Closing Charged Closing balance 2012 to income balance 2012 to income balance 2013 Assets Property, plant and equipment (377) 38 (339) 42 (297) Employee benefits 171 4 175 (24) 151 Provisions 440 (175) 265 (62) 203 Tax losses 880 (48) 832 808 1,640 1,114 (181) 933 764 1,697 Liabilities Accrued income (269) 248 (21) 20 (1) 845 67 912 784 1,696

(d) Other comprehensive income items in the Statement of profit or loss and other comprehensive income have no tax effect

6. CASH AND CASH EQUIVALENTS Consolidated 2013 2012 $'000s $'000s Current Cash on hand, at bank and short term bank bills (90 days or less) 39,181 48,950 39,181 48,950 84 | Financial report

7. TRADE AND OTHER RECEIVABLES 8. OTHER ASSETS Consolidated Consolidated 2013 2012 2013 2012 $'000s $'000s $'000s $'000s Current Current Trade and other receivables 3,482 3,219 Defined benefit plan 432 264 Less allowance for doubtful debts (109) (158) Prepayments 4,489 2,797 3,373 3,061 4,921 3,061 Other receivables: Non current Accrued interest on bank deposits 50 40 Loan to related parties 350 350 Accrued interest on financial (at amortised cost) 4 85 assets (held to maturity) Security deposit and other – 1 54 125 350 351 3,427 3,186 9. OTHER FINANCIAL ASSETS The consolidated entity has recognised an allowance for doubtful debts of 100% against all receivables over 90 days except for those debtors/ Consolidated members who at balance date have committed to pay. Historical 2013 2012 experience has been that receivables that are past due beyond 90 days are difficult to recover. $'000s $'000s

Ageing of past due but not impaired Current 60 - 90 days 458 129 Bank bills less than 1 year 500 500 but greater than 90 days 90 - 120 days 433 409 500 500 Total 891 538 Non current In determining the recoverability of a trade receivable, the consolidated Bank bills greater than 1 year – – entity considers any change in the credit quality of the trade receivable to maturity (at amortised cost) from the date credit was initially granted up to the end of the reporting period. Trade receivables consists of a large number of members and Available for sale assets customers, spread across diverse industries and geographical areas. The carried at fair value: consolidated entity does not have any significant credit risk exposure to any single party or group of counter parties having similar characteristics Listed non-derivative financial assets 48,922 39,750 and the maximum exposure to credit risk is equal to the value of our held for trading receivables. No interest is charged on trade receivables. Non-listed non-derivative financial 5,030 4,094 Movement in the allowance assets held for trading for doubtful debts 53,952 43,844 Balance at the beginning of the year 158 210 Bank bills must be held in an authorized deposit taking institutions with a Allowances taken up as doubtful 9 4 minimum S&P credit rating of BBB+ (or Moody’s / Fitch equivalent). Amounts written off as uncollectible (58) (56) Balance at the end of the year 109 158 CPA AUSTRALIA 2013 INTEGRATED REPORT | 85

10. PROPERTY, PLANT AND EQUIPMENT Consolidated Building Plant and Library Capital Total at cost equipment books work in at cost at cost progress $'000s $'000s $'000s $'000s $'000s Gross carrying amount Balance at 1 January 2012 4,653 30,893 345 175 36,066 Additions – 1,151 22 1,563 2,736 Disposals (853) (4,547) (98) – (5,498) Balance at 1 January 2013 3,800 27,497 269 1,738 33,304 Additions – 2,646 22 2,823 5,491 Disposals – (11) (91) – (102) Transfers to/from asset class – 1,323 – (1,323) – Balance at 31 December 2013 3,800 31,455 200 3,238 38,693 Accumulated depreciation, amortisation and impairment Balance at 1 January 2012 (1,305) (11,111) (178) – (12,594) Disposals 255 4,538 98 – 4,891 Depreciation (90) (4,725) (69) – (4,884) Balance at 1 January 2013 (1,140) (11,298) (149) – (12,587) Disposals – 11 91 – 102 Depreciation (76) (5,463) (54) – (5,593) Balance at 31 December 2013 (1,216) (16,750) (112) – (18,078) Net book value Property, plant and equipment 2,660 16,199 120 1,738 20,717 as at 31 December 2012 Property, plant and equipment 2,584 14,705 88 3,238 20,615 as at 31 December 2013

All items of property, plant and equipment are held by the parent. 86 | Financial report

11. INTANGIBLE ASSETS Intangible Capital work Total assets at cost in progress – intangible assets $'000s $'000s $'000s Gross carrying amount Balance at 1 January 2012 5,144 4,074 9,218 Additions 423 7,631 8,054 Disposals (2,452) – (2,452) Balance at 1 January 2013 3,115 11,705 14,820 Additions 8,137 2,019 10,156 Disposals – – – Transfers to/from asset class 11,703 (11,703) – Balance at 31 December 2013 22,955 2,021 24,976 Accumulated depreciation, amortisation and impairment Balance at 1 January 2012 (2,860) – (2,860) Disposals 2,452 – 2,452 Depreciation (718) – (718) Balance at 1 January 2013 (1,126) – (1,126) Disposals – – – Depreciation (3,121) – (3,121) Balance at 31 December 2013 (4,247) – (4,247) Net book value Intangible assets as at 31 December 2012 1,989 11,705 13,694 Intangible assets as at 31 December 2013 18,708 2,021 20,729

All intangible assets are held by the parent. Intangible assets have been reclassified from plant and equipment. CPA AUSTRALIA 2013 INTEGRATED REPORT | 87

12. TRADE AND OTHER PAYABLES Consolidated 2013 2013 2012 $'000s $'000s $'000s Reconciliation of restoration Current of leased properties Trade creditors and accruals 11,670 12,019 Balance at 1 January 2013 1,183 11,670 12,019 Additional provisions recognised 276 Unwinding of discount and effect (12) CPA Australia Terms & Conditions of Purchase state payment terms of of changes in the discount rate 30 days from date of invoice. CPA Australia has financial risk management policies in place that seek Balance as at 31 December 2013 1,447 ensure that all payables are paid within the credit terms (refer Note 21).

13. PROVISIONS Consolidated Consolidated 2013 2012 2013 2012 Employee numbers $'000s $'000s Average number of full time equivalent employees (FTE's) during the 473 470 Current financial year Employee benefits 4,081 3,758 Restoration of leased properties – – 14. OTHER LIABILITIES 4,081 3,758 Consolidated Non current 2013 2012 Employee benefits 909 693 $'000s $'000s Restoration of leased properties 1,447 1,183 Current 2,356 1,876 Subscriptions and fees 51,341 47,551 received in advance 6,437 5,634 Lease incentive 698 698 The provision of employee benefits represents annual leave and vested long service leave entitlements accrued and compensation claims made 52,039 48,249 by employees. Non current Lease incentive 4,135 4,832 4,135 4,832 56,174 53,081 88 | Financial report

15. PARENT ENTITY DISCLOSURES

Financial position 2013 2012 Commitments 2013 2012 for expenditure $'000s $'000s $'000s $'000s Assets (a) Non-cancellable operating lease commitments Current assets 45,851 54,023 Aggregate amounts contracted Non-current assets 97,0 43 79,296 for at balance date but not Total assets 142,894 133,319 recognised as liabilities: Liabilities Not later than one year 9,976 9,494 Current liabilities 67,5 62 63,878 Later than one year but not later than 27,5 0 8 27,793 Non-current liabilities 6,479 6,702 five years Total liabilities 74,041 70,580 Later than five years 4,974 9,723 Members' funds 42,458 47,010 Retained surplus 65,848 62,847 In respect of non-cancellable operating leases the following Reserves liabilities have been recognised: Investment revaluation reserve 4,523 1,424 Current Foreign currency translation reserve (1,518) (1,532) Lease incentive 698 698 Total members' funds 68,853 62,739 Non current Financial performance Year Year Restoration of leased properties 1,447 1,183 ended ended 2013 2012 Lease incentive 4,135 4,832 $'000s $'000s 6,280 6,713 Surplus for the year 2,924 8,105 (b) Other commitments Other comprehensive 3,167 2,190 Not later than one year – 338 (expense)/income net of tax Later than one year but – – Total comprehensive 6,091 10,295 not later than five years income for the year – 338

Leasing arrangements (c) CPA Australia will continue to support in 2014 the Non-cancellable operating lease commitments relate to following organisations: Australian Accounting Standards property rental and outgoings leases, technology hardware Board (AASB), Auditing and Assurance Standards Board leases and novated leases. (AUASB), Australian Professional and Ethical Standards Board (APESB) and the International Federation of Accountants (IFAC). However, the funding requirements have not been determined at balance date and are not included in the above. CPA Australia has provided support in 2013 to IFAC in the pursuit of their objectives. The contribution for the year 2013 was $538,564 (2012: $531,429). CPA AUSTRALIA 2013 INTEGRATED REPORT | 89

As part of the undertakings with APESB, CPA Australia, the Compensation of Directors Institute of Chartered Accountants in Australia (ICAA) and Directors’ remuneration is approved annually by the Board the Institute of Public Accountants (IPA) contribute funds in accordance with the article 45 of the Constitution. All necessary for the pursuit of the objectives of APESB. The payments are deemed to be compensation for the purpose contributions for the year 2013 were $442,907 (2012: $427,617). of this disclosure. At balance date, all 2013 short-term employee benefits for Directors had been paid and are 16. LIMITATION OF MEMBERS’ LIABILITY recognised in the aggregate key management personnel CPA Australia is a company limited by guarantee and, in component below. accordance with the Constitution, the liability of members in the event of CPA Australia being wound up would not exceed Key management personnel compensation $10 per member. The aggregate compensation made to key management 17. RELATED PARTIES personnel of CPA Australia is set out below: The following were key management personnel of 2013 2012 CPA Australia Limited during the reporting period and unless $'000s $'000s otherwise indicated were key management personnel for the entire period: Short-term employee benefits 4,523 3,938 Post-employment benefits 267 261 Non-Executive directors Termination benefit – 282 Mrs P Egan Mr T Ebbeck* 4,790 4,481 President* Ms C Foo Mr J Cahill** Mr M Grey Loans to key management personnel Mr G Wade Mr W K Low*** There are no loans between key management personnel and Deputy President Ms D Ong* CPA Australia. Mr P Dowling Prof R Petty Deputy President* Other transactions of key management personnel Ms K Ryan Prof T Carlin and key management personnel related entities Mr B Trebilcock In 2007, CPA Australia entered into a memorandum of Mr J Dickson understanding with two other accounting bodies, IPA and * Effective 1 October 2013 ICAA to jointly promote the Association of Accounting ** Presidential term completed effective 30 September 2013 Technicians (AAT) as the peak organisation representing *** Ceased 30 September 2013 the para-professional segment of the accounting profession Executives through the provisions of loan funds. Non current loan Mr A Malley Mr M Chenery receivable from AAT is $350,000 before interest which is Chief Executive Officer Executive General charged monthly at the rate of 0.5 per cent per annum above the 90 day Bank Bill Rate. Interest income earned on the Mr A Awty Manager – Brand loan in 2013 was $11,567. Repayment terms for the loan were Chief Operating Officer – Mr J Hughes extended in 2012, with the first instalment now due in 2016 Commercial/Chief Financial Chief Operating Officer – and the loan to be fully paid by June 2021. Nicholas Diss, Officer/Company Secretary Member Services General Manager Finance & Administration and Jeff Hughes, Ms L Carroll Mr C Laughton Chief Operating Officer – Member Services (effective 31 Executive General Manager General Counsel October 2013) are members of the AAT Board. Paul Drum, – Communication, Content Mr R Thomason Head of Business-Investment Policy, resigned as a member of & Publishing Executive General Manager the AAT Board effective 31 October 2013. – Business Development 90 | Financial report

No expenses have been recognised in the period for bad Any activity which involves the engagement of the company and doubtful debts in respect to the amounts owed by auditor must adhere to the Board endorsed principles related parties. and require the prior approval of the Board Audit and Risk Adam Awty, Chief Operating Officer – Commercial and Committee to ensure there is no conflict of interest. As a Company Secretary, Jeff Hughes, Chief Operating Officer – general principle, the use of the external auditors is limited Member Services and Priya Dharshini A/P Terumalay, General to the provision of statutory audit work and non-discretionary Manager Malaysia, are Directors of CPA Australia (Malaysia) audit-related work. Where the statutory auditor is deemed Sdn Bhd. to be the most appropriate to carry out professional development, article authoring or CPA Program authoring Robert Thomason, Executive General Manager – Business and support at program workshops, this is to be documented Development, Jeff Hughes, Chief Operating Officer – and provided to the Board Audit and Risk Committee for Member Services, Deborah Leung, General Manager Hong endorsement quarterly. Kong, and Nicholas Diss, General Manager – Finance and Administration (effective 16 January 2013) are Directors During 2012 the Board, after a formal procurement process, of CPA Australia (Shanghai) Ltd. Professor Richard Petty, approved the appointment of Deloitte to assist with the Director CPA Australia Ltd and Alex Malley, Chief Executive overall website strategy and future website development into Officer, resigned as Directors effective 16 January 2013. 2013. As part of this process, adequate safeguards were put in place to ensure Deloitte’s independence is maintained. During the year, CPA Australia paid professional indemnity and Directors’ and officers’ liability insurance in respect of its There are no commercial sponsorships in Australia, Malaysia Directors. The insurance contract providing this cover does or Shanghai (where Deloitte is also the local auditor). not allow CPA Australia to disclose either the extent of cover However, offshore divisions can enter into sponsorships with or the premium paid. their local Deloitte office where PriceWaterhouseCoopers, Ernst & Young and KPMG will also be represented. 18. REMUNERATION OF AUDITOR Sponsorships can be raised for member awards where the Consolidated member is the direct recipient of the cash benefit. 2013 2012 During 2013, CPA Australia received revenue in the form of sponsorship from Deloitte Hong Kong for the CPA Australia $ $ Career Expo, CPA Australia 2013 Congress Hong Kong and Audit Services World’s largest speed networking event Hong Kong, and Auditor of parent entity Deloitte Malaysia provided sponsorship for CPA Australia 2013 Congress Malaysia. Audit of financial report 145,425 138,500 Other assurance services 28,500 28,500 Non-audit services 1,876,378 138,066 Affiliated firms Audit of financial reports for foreign 30,914 24,447 subsidiaries and branches 2,081,217 329,513

The auditor of the company is Deloitte Touche Tohmatsu. CPA AUSTRALIA 2013 INTEGRATED REPORT | 91

19. INVESTMENT IN CONTROLLED ENTITIES

Class of Share Entity Interest Amount of Investment 2013 2012 2013 2012 Controlled Entity % % $ $ CPA Australia (M) Sdn. Bhd. Ordinary 100 100 160,127 160,127 CPA Australia (Shanghai) Ltd Ordinary 100 100 1,206,987 1,206,987

The amount of investment represents the historical capital performed for each defined benefit superannuation fund invested into each entity, which may be different to the fair every three years, or every year if the fund pays defined value of that investment. benefit pensions. CPA Australia Sdn. Bhd. is incorporated in Malaysia in order Governance of the fund to facilitate the provision of services to members in Malaysia. CPA Australia (Shanghai) Ltd is incorporated in China in order The Fund’s Trustee is responsible for the governance of the to facilitate the provision of services to members in Shanghai. Fund. The Trustee has a legal obligation to act solely in the best interests of Fund beneficiaries. The Trustee has the 20. SUPERANNUATION AND DEFINED BENEFIT PLAN following roles; Employees have the choice to contribute either to the • Administration of the Fund and the payment to the CPA Australia Superannuation Plan of OnePath Corporate beneficiaries form Fund assets when required in Superannuation (‘the plan’) or their own nominated accordance with the Fund rules fund. Employees may contribute to the funds at various • Management and investment of the Fund assets; and percentages of their total salary cost. • Compliance with superannuation law and other The plan provides both accumulation and defined benefit applicable regulations divisions. Eligibility to enter the defined benefit divisions ceased on 31 December 1999. The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises regulated Accounting policy superannuation plans. Actuarial gains and losses are recognised immediately Risk through the Statement of comprehensive Income in the year in which they occur. There are a number of risks to which the Fund exposes the Employer. The more significant risks relating to the defined Fund information benefits are: Defined benefit members receive lump sum benefits on • Investment risk – the risk that investment returns will be retirement, death, disablement and withdrawal. The defined lower than assumed and the Employer will need to increase benefit section of the fund is closed to new members. contributions to offset this shortfall All new members receive accumulation benefits only. At • Salary growth risk – the risk that wages or salaries (on 31 December 2013, the defined benefit plan had 5 members. which future benefits amounts will be based) will rise more rapidly than assumed, increasing defined benefit amounts Regulatory framework and thereby requiring additional employer contributions The Superannuation Industry Supervision (SIS) legislation governs the superannuation industry and provides the • Legislative risk – the risk is that legislative changes framework within which superannuation funds operate. could be made which increase the cost of providing the The SIS Regulations require an actuarial valuation to be defined benefits 92 | Financial report

• Timing of members leaving service – as the Fund has Reconciliation of the fair value of fund assets only a small number of members, if members with large Financial year ended 31 Dec 31 Dec benefits to groups of members leave, this may have an 2013 2012 impact on the financial position of the Fund, depending on the financial position of the Fund at the time they leave. $'000s $'000s The impact may be positive or negative, depending upon Fair value of fund assets 1,564 1,485 the circumstances and timing of the withdrawal. at beginning of the year The defined benefit assets are invested in the Legg Mason Interest income 42 46 Balanced investment option. The assets are diversified Actuarial return on fund 203 207 within this investment option and therefore the Fund has assets less interest income no significant concentration of investment risk. Employer contributions 41 71 Significant events Contributions by fund participants 8 19 There were no fund amendments affecting the defined Benefits paid 872 242 benefits payable, curtailments or settlements during the year. Taxes, premiums and expenses paid (14) (22) Reconciliation of the net defined benefit liability/(asset) Fair value of fund assets 972 1,564 Financial year ended 31 Dec 31 Dec at end of the year 2013 2012 $'000s $'000s Reconciliation of the defined benefit obligation

Net defined benefit liability/ (264) (21) Financial year ended 31 Dec 31 Dec (asset) at start of year 2013 2012 OCI adjustment following – (31) $'000s $'000s adoption of revised AASB 119 Present value of defined benefit 1,300 1,433 Customer service cost 71 82 obligations at beginning of the year Net Interest (9) (2) Current service cost 71 82 Actuarial return on fund 203 207 Interest cost 33 44 assets less interest income Contributions by fund participants 8 19 Actuarial (gains)/losses arising from (115) – Actuarial (gains)/losses arising from (115) – changes in financial assumptions changes in financial assumptions Actuarial (gains)/losses arising 129 (14) Actuarial (gains)/losses 129 (14) from liability experience Benefits paid 872 242 Employer contributions 41 71 Taxes, premiums and expenses paid (14) (22) Net defined benefits liability/ (432) (264) (asset) at end of year Present value of defined benefit 540 1,300 obligations at end of the year

CPA AUSTRALIA 2013 INTEGRATED REPORT | 93

Reconciliation of the effect of the asset ceiling The asset ceiling has no impact on the defined benefit liability/(asset). Fair value of fund assets as at 31 December 2013

Asset Category Quoted prices Significant Unobservable in active market for observable inputs identical assets inputs Total Level 1 Level 2 Level 3 $'000s $'000s $'000s $'000s Cash and cash equivalents – – – – Equity instruments – – – – Debt instruments – – – – Derivatives – – – – Real estate – – – – Investment funds 972 – 972 – Legg Mason Balanced Trust Asset–backed securities – – – – Structured debt – – – – Total 972 – 972 –

The percentage invested in each asset class at the Significant actuarial assumptions at the reporting date reporting date is: Financial year ending 31 December 2013 2012 As at 31 December 2013* 2012 Assumptions to determine $'000s $'000s defined benefit cost Australian equity 44% 44% Discount rate 3.3% p.a. 3.3% p.a. International equity 21% 21% Expected salary increase rate 4.0% p.a. 4.0% p.a. Fixed income 18% 18% As at 31 December 2013 2012 Property 9% 9% Assumptions to determine DBO Alternatives/other 5% 6% Discount rate 4.6% p.a. 3.3% p.a. Cash 3% 2% Expected salary increase rate 4.0% p.a. 4.0% p.a.

*Asset allocation as at 31 December 2013 is currently unavailable. Asset allocation at 30 September 2013 has been used. Sensitivity analysis The defined benefit obligation as at 31 December 2013 Fair value of entity’s own financial instruments under several scenarios is presented below. The fair value of Fund assets includes no amounts relating to: Scenario A and B relate to discount rate sensitivity. Scenario • any of the employer’s own financial instruments C and D relate to expected salary increase rate sensitivity. • any property occupied by, or other assets used by, the employer 94 | Financial report

• Scenario A: 0.5% p.a lower discount rate assumption Expected contributions

• Scenario B: 0.5% p.a. higher discount rate assumption Financial year ended 31 Dec 2013 • Scenario C: 0.5% p.a. lower assumed salary increase $'000s rate assumption Expected employer contributions 36 • Scenario D: 0.5% p.a. higher assumed salary increase rate assumption Maturity profile of defined benefit obligation Base Scenario The weighted average duration of the defined benefit Case A B C D obligation is approximately 13 years Discount rate (%p.a.) 4.6 4.1 5.1 4.6 4.6 Expected benefit payments $’000s Salary increase rate (%p.a.) 4.0 4.0 4.0 3.5 4.5 for the financial year ending on Defined benefit 540 587 498 503 581 31 December 2014 4 obligation* ($’000s) 31 December 2015 4

*Includes defined benefit contributions tax provision. 31 December 2016 5 The defined benefit obligation has been recalculated 31 December 2017 5 by changing the assumptions as outlined above, whilst 31 December 2018 5 retaining all other assumptions. Following 5 years 460 Asset-liability matching strategies CPA Australia is not aware of any asset and liability matching 21. FINANCIAL RISK MANAGEMENT, strategies adopted by the fund. OBJECTIVES AND POLICIES The Consolidated Entity’s activities expose it primarily to the Funding arrangements financial risks of changes in foreign currency exchange rates, The financing obligations adopted at the 31 December interest rates and equity markets. 2010 actuarial investigation of the Fund, in a report dated The purpose of the Investment policy is to ‘protect and grow’ 22 December 2011, is to maintain the value of the Fund’s the capital base within a defined risk tolerance over the asset at least equal to: medium to long term and to generate an annual return that • 100% of accumulation account balances plus is in excess of what could be achieved through a risk adverse • 100% of vested benefits for defined benefit members strategy. The policy allows CPA Australia to invest directly or via Managed Funds in both Australian and international In that valuation, it was recommended that CPA Australia equities, fixed interest investments including corporate contributes to the Fund as follows: debt and cash. Benefit category Contribution rate CPA Australia's financial instruments consist mainly of bank (% salary) bills, cash, equities, bonds and hybrids that are traded 1 and 2 (defined benefit section) 10% of salaries* in an active market. The main purpose of these financial instruments is to invest surplus member funds in order 3,4 and 5 (accumulated section) At required rate to maximise returns while not exposing the organisation * If a member’s ordinary time earnings exceeds their plan salary, the to a high level of risk. Investment of funds is in line with employer should contribute an amount equal to the SG% of the excess CPA Australia's investment policy. of ordinary time earnings over plan salary. Other financial assets and liabilities are trade receivables and trade payables which arise directly from the Consolidated Entity’s operations. Policies for managing the main risks are summarised below: CPA AUSTRALIA 2013 INTEGRATED REPORT | 95

(a) Foreign currency risk management (c) Interest rate risk exposures It is not CPA Australia policy to utilise off-balance sheet Exposures to interest rate risk are limited to assets and derivative instruments as a means of managing exposure liabilities bearing variable interest rates. The majority of to fluctuations in foreign exchange rates. Foreign exchange financial assets are equities and bank bills held to maturity exposure is continuously monitored by the Consolidated with fixed interest rates and term. Entity’s Finance business unit and reported to the relevant operation of the Consolidated Entity through management (d) Capital risk management reports which analyse exposures by degree and magnitude The Consolidated Entity manages its capital to ensure that of risks. In 2013, the weakening of the Australian dollar the Consolidated Entity will be able to continue as a going against the currencies where substantial cash is held resulted concern. The Consolidated Entity’s overall strategy remains in a foreign exchange loss of $64,304 for the full year. unchanged from 2012. The capital structure of the Consolidated Entity consists of (b) Credit risk exposures equity comprising reserves and retained earnings. Credit risk refers to the risk that a counterparty will default The Consolidated Entity is not subject to any externally on its contractual obligations resulting in financial loss imposed capital requirements. to the Consolidated Entity. The Consolidated Entity has adopted a policy of only dealing with creditworthy counter (e) Maturity profile of financial instruments parties as a means of mitigating the risk of financial loss from The maturity profile of financial assets and liabilities held by defaults. The Consolidated Entity’s exposure is continuously the Consolidated Entity are detailed on page 96. monitored and limits reviewed annually. Trade receivables consist of a large number of members and customers, spread across diverse industries and geographical areas. The Consolidated Entity does not have any significant credit risk exposure to any single party or any group of counter parties having similar characteristics. The credit risk on liquid funds and bank bills is mitigated by ensuring the authorised deposit taking institutions have a minimum S&P credit rating of BBB+ (or Moody’s/Fitch equivalent). The credit risk on financial assets of the Consolidated Entity which have been recognised on the Statement of financial position is generally the carrying amount, net of any provisions for loss. Use of off balance-sheet financial instruments is not part of current policy. Trade receivables are concentrated in Australia and the concentration of credit risk arises mainly in the following industries: • Advertising and sponsors • Accounting practices • Credit services 96 | Financial report

Weighted average Floating interest rate <1 year 1-2 years Total interest rate $'000s $'000s $'000s $'000s 2013 Financial assets Cash and cash equivalents 2.13% 36,506 2,675 – 39,181 Bank bills < 1 year 4.60% – 500 – 500 Bank bills > 1 year 0.00% – – – – Equities Non-interest bearing – 25,353 – 25,353 Property funds Non-interest bearing – 2,599 – 2,599 Securities Non-interest bearing – 9,872 – 9,872 Hybrids Non-interest bearing – 16,128 – 16,128 Receivables Non-interest bearing – 3,427 – 3,427 Loan to related parties Interest Bearing – – 350 350 Defined benefit plan Interest Bearing – – 432 432 36,506 60,554 782 97,842 Financial liabilities Payables Non-interest bearing – 11,670 – 11,670 Subscriptions and fees in advance Non-interest bearing – 51,341 – 51,341 – 63,011 – 63,011 Net financial assets/(liabilities) 36,506 (2,457) 782 34,831 2012 Financial assets Cash and cash equivalents 2.99% 40,930 8,020 – 48,950 Bank bills < 1 year 4.73% – 500 – 500 Bank bills > 1 year 0.00% – – – – Equities Non-interest bearing – 18,541 – 18,541 Property funds Non-interest bearing – 5,372 – 5,372 Securities Non-interest bearing – 14,859 – 14,859 Hybrids Non-interest bearing – 5,073 – 5,073 Receivables Non-interest bearing – 3,186 – 3,186 Loan to related parties Interest Bearing – – 350 350 Defined benefit plan Interest Bearing – – 234 234 40,930 55,551 584 97,0 65 Financial liabilities Payables Non-interest bearing – 12,019 – 12,019 Subscriptions and fees in advance Non-interest bearing – 47,551 – 47,551 – 59,570 – 59,570 Net financial assets/(liabilities) 40,930 (4,019) 584 37,495 CPA AUSTRALIA 2013 INTEGRATED REPORT | 97

(f) Net fair value of financial assets and liabilities Financial assets at fair value through Level 1 The Directors consider that the carrying amount of statement of comprehensive income financial assets and financial liabilities recorded in the $'000s financial statements approximates their fair value. Equities 25,353 Property funds 2,599 (g) Liquidity risk management Ultimate responsibility for liquidity risk management rests Securities 9,872 with the Board of Directors, who have built an appropriate Hybrids 16,128 liquidity risk management framework for the management 53,952 of the Consolidated Entity’s short, medium and long-term funding and liquidity management. The Consolidated Entity There were no financial assets in Level 2 or 3 in the period. manages the liquidity risk by maintaining adequate cash Level 1 fair value measurements are those derived from quoted prices reserves, and by continuously monitoring forecast and actual (unadjusted) in active markets for identical assets or liabilities. cash flows while matching the maturity profiles of financial Level 2 fair value measurements are those derived from inputs other than assets and liabilities. CPA Australia invests in equities that quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). are traded in an active market on the Australian Securities Level 3 fair value measurements are those derived from valuation Exchange and that can be readily disposed of. All financial techniques that include inputs for the asset or liability that are not based liabilities, namely trade and other payables, are due for on observable market data (unobservable inputs). settlement within three months and are non-interest bearing. Given the current surplus cash assets, liquidity risk is minimal. (i) Capital risk management CPA Australia manages its capital to ensure that it will be able (h) Market risk management to continue as a going concern while maximising the return Market risk is the risk that the fair value of future cash flows on investments. of a financial instrument will fluctuate because of changes The capital structure of CPA Australia consists of cash and in market prices. CPA Australia manages the financial risks cash equivalents and members’ funds, comprising reserves relating to its investments set out in accordance with the and retained earnings. CPA Australia Cash and Investment Policy. The policy has a number of thresholds that can not be exceeded, including CPA Australia has a global presence and operates through weighting for asset classes and individual limits within branches in the United Kingdom, New Zealand and Asia. No each asset class. operations of CPA Australia are subject to external imposed capital requirements.

(j) Sensitivity analysis The below table details the group's sensitivity to shifts in interest rates and foreign exchange rates. The exposures are based on management's best estimates of the possible adverse effects of changes in interest rate and foreign exchange rates as at 31 December 2013.

Annual risk by risk type Minimum Average Maximum 2013 2012 2013 2012 2013 2012 $'000s $'000s $'000s $'000s $'000s $'000s Foreign exchange 93 41 472 207 852 373 Interest rate 91 102 228 256 365 409 98 | Financial report

Interest rate analysis is based on balances of financial assets 22. NOTES TO THE STATEMENT OF CASH FLOWS not exceeding 1 year, which are all at variable rates. Minimum Reconciliation of profit Consolidated and maximum exposures are calculated at increases of after income tax to net cash 25 basis points and 100 basis points respectively. An equal 2013 2012 reduction in interest rates would result in an equivalent $'000s $'000s fall in net profit. Inflow from operating activities CPA Australia is mainly exposed to Singapore dollars, Hong Surplus after income tax 2,999 8,232 Kong dollars, Chinese yuan and Malaysian ringgits. Foreign exchange sensitivity analysis is based on outstanding foreign Plus/(minus) non-operating items: currency denominated intercompany loan amounts and Interest income received (3,744) (4,838) revenues and expenses for the year 2013. Minimum and Plus/(minus) non-cash items: maximum exposure is calculated at shifts of 1 per cent and 10 per cent change in exchange rate respectively. An equal Foreign exchange translation 322 (3) decline in the exchange rate would result in an equivalent fall Depreciation and amortisation 8,714 5,602 in net profit. Net gain on sale of property, – (241) The Consolidated Entity is exposed to equity price risks plant and equipment arising from equity investments. Equity investments are held Realised (gain)/loss (136) 15 for strategic rather than trading purposes. The Consolidated Entity does not actively trade these investments. Change in assets and liabilities: (Increase)/decrease in receivables (241) 477 Equity price sensitivity analysis (Increase)/decrease in inventories – – The sensitivity analysis has been determined based on the exposure to equity price risks at the end of the reporting (Increase)/decrease in other assets (2,642) (1,013) period. If equity prices had been 5 per cent higher/lower Increase/(decrease) in payables (349) 3,415 equity reserves would have increased/decreased by $2.4m as Increase in subscriptions and 3,790 13,889 a result of the fair value of the available-for-sale shares. fees in advance (Decrease) in other liabilities (697) (441) Increase/(decease) in provisions 803 (94) Change in items in equity Amounts recognised in equity 189 252 relating to defined benefit plan Net cash inflow from 9,008 25,252 operating activities

23. SUBSEQUENT EVENTS No matter or circumstance has arisen since the end of the financial year to the date of this report, that has affected or may significantly affect the activities of the consolidated entity, the results of those activities or the state of affairs of the Consolidated Entity in the ensuing or any subsequent financial year. CPA AUSTRALIA 2013 INTEGRATED REPORT | 99

DIRECTORS’ DECLARATION

The Directors declare that: (a) in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; (b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with Australian Accounting Standards and giving a true and fair view of the financial position and performance of the consolidated entity; and (c) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2 (b). Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations Act 2001. On behalf of the Directors

Penny Egan FCPA Graeme Wade FCPA Director Director 21 February 2014 INDEPENDENT AUDITOR’S REPORT

100 | Financial report

Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia Tel: +61 3 9671 7000 Fax: +61 9671 7007 www.deloitte.com.au

Independent Auditor’s Report to the Members of CPA Australia Limited

We have audited the accompanying financial report of CPA Australia Limited, which comprises the statement of financial position as at 31 December 2013, the statement of profit or loss and other comprehensive income, the statement of cash flows and the statement of changes in members funds for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages 72 to 99.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Auditor’s Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of CPA Australia Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited CPA AUSTRALIA 2013 INTEGRATED REPORT | 101

Opinion

In our opinion:

(a) the financial report of CPA Australia Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2013 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 2.

DELOITTE TOUCHE TOHMATSU

Peter A. Caldwell Partner Chartered Accountants Melbourne, 21 February 2014 102 | Financial report

GRI INDEX

GRI GRI Description Report Section Page Indicator Status Standard disclosures: strategy and analysis 1.1 Statement from the CEO and President Full President’s report 5 CEO’s report 7 1.2 Description of key impacts, Full What matters for CPA Australia 2 risks and opportunities Risk and opportunities 15 Standard disclosures: organisational profile 2.1 Name of organisation Full About this report 1 2.2 Primary brands, products Full How CPA Australia creates value 13 and/or services Our strategy 14 2.3 Operational structure of organisation Full How CPA Australia creates value 13 Our strategy 14 2.4 Location of organisation’s headquarters Full Outside back cover OBC 2.5 Number of countries of operation Full How CPA Australia creates value 13 2.6 Nature of ownership and legal form Full Governance 55 2.7 Markets served Full How CPA Australia creates value 13 Our members: Service 19 2.8 Scale of the reporting organisation Full 2013 performance at a glance: Tables 1 and 2 10 How CPA Australia creates value 13 Notes to the financial statement: Note 13 87 2.9 Significant changes to the organisation Full About this report 1 during the reporting period President’s report 5 2.10 Awards Full President’s report 5 Standard disclosures: report parameters 3.1 Reporting period Full About this report 1 3.2 Date of most recent previous report Full About this report 1 3.3 Reporting cycle Full About this report 1 3.4 Contact point for the report Full Inside front cover IFC 3.5 Process for defining report content Full About this report 1 What matters for CPA Australia 2 3.6 Boundary of the report Full About this report 1 3.7 Limitations on the scope/boundary Full About this report 1 3.8 Reporting on joint ventures, other entities Full About this report 1 CPA AUSTRALIA 2013 INTEGRATED REPORT | 103

GRI GRI Description Report Section Page Indicator Status 3.10 Explanation of re-statements Full GRI Index: There are no re-statements 103 3.11 Significant changes to reporting Full About this report 1 3.12 Table of standard disclosures Full GRI index 102-105 3.13 External assurance Full About this report 1 Independent limited assurance statement 107 Standard disclosures: governance commitments and engagement 4.1 Governance structure Full Governance: Diagram; Board of Directors 53 Corporate Governance Statement: Principle 2 56-57 and Principle 4 4.2 Chair of the highest governance body Full Governance: Board of Directors 52 4.3 Independent and/or non-executive Full Governance: Board of Directors 52 Board members 4.4 Mechanisms to provide recommendations Full Corporate Governance Statement: Principle 1 55 to the Board Executive Management Group 46 4.5 Linkage between Board remuneration Full Corporate Governance Statement: Principle 8 58 and organisational performance 4.6 Avoiding conflict of interest on the Board Full Corporate Governance Statement: Principle 2 56 4.7 Process for determining Board, Council Full Corporate Governance Statement: Principle 2 56 and Committee composition 4.8 Internally developed mission statements, Full How CPA Australia creates value 13 values, codes of conduct and principles Our strategy 14 4.9 Procedures for overseeing, identifying Full Corporate Governance Statement: Principle 7 58 and managing risks and opportunities Governance: Managing risk 59 4.10 Board performance evaluation Full Corporate Governance Statement: Principle 2 56 4.11 Application of the precautionary principle Full What matters for CPA Australia 2 Risks and opportunities 15 Our future outlook 16 4.12 Externally developed charters, Full Public interest and the profession: 32 principles or initiatives Representation and advocacy Corporate Governance Statement 55 4.13 Membership of associations Full Other boards and committees 63 Notes to the financial statement: 14 (c) 88 4.14 List of stakeholder groups Full About this report 1 104 | Financial report

GRI GRI Description Report Section Page Indicator Status 4.15 Basis for identification and selection Full About this report 1 of stakeholders What matters for CPA Australia 2 4.16 Approaches to stakeholder engagement Full What matters for CPA Australia 2 Our Members: Our approach 18 4.17 Key stakeholder topics and concerns Full What matters for CPA Australia 2 Economic: disclosures on management approach EC DMA Disclosures on management approach Full Governance 49 Corporate Governance Statement 55 EC1 Economic value generated for the year Full 2013 Performance at a glance: 10 Financial capital: Table 1 EC2 Financial implications and other Full Risks and opportunities 15 risks of climate change Environment: Performance details: Financial 48 implications of Climate change EC7 Procedures for local hiring and proportion Full Our People: Performance details, Table 7 42 of senior management hired from the local community at significant operations Environment: disclosures on management approach EN DMA Disclosures on management approach Full Environment: Our approach 47 EN4 Indirect energy consumption by Full Environment: Performance details: 48 primary energy source Energy usage; Table 16 and 17 EN16 Total direct and indirect greenhouse Full Environment: Performance details: 48 gas emissions Greenhouse gas inventory; Table 15 Labour practices: disclosures on management approach LA DMA Disclosures on management approach Full Our People: Our approach 42 LA1 Total workforce by employment type, Full Our People: Performance details: 43 employment contract and region Tables 5, 6 and 7 LA2 Total number and rate of employee Full Our People: Performance details: 44 turnover by age group, gender and region Tables 8, 9 and 10 LA7 Rates of injury, occupational diseases, lost Full Our People: Performance details: 44 days, and absenteeism, and number of Table 14 work-related fatalities by region L A11 Programs for skills management and Full Our People: Performance details: 44 lifelong learning that support the continued Training and development employability of employees and assist them in managing career endings CPA AUSTRALIA 2013 INTEGRATED REPORT | 105

GRI GRI Description Report Section Page Indicator Status LA12 Percentage of employees receiving Full Our People: Training and development 44 regular performance and career Governance: Managing risk: 59 development reviews LA13 Composition of governance bodies and Full Our People: Performance details 43-45 breakdown of employees per category Governance: Board of Directors 52 according to gender, age, minority group membership, and other diversity indicators LA14 Ratio of basic salary of men to women Full Our People: Performance details: Table 13 45 by employee category Society: disclosures on management approach SO DMA Disclosures on management approach Full Our members: Our approach 18 Public interest and the profession: 39 Community: Our approach SO2 Percentage and total number of business Partial Corporate Governance Statement 2013: 57 units analysed for corruption risk Principle 3: Governance: Managing risk 59 SO3 Percentage of employees trained in Full Our People: Performance details: Table 11 44 anti-corruption policies and procedures Governance: Managing risk: 59 SO4 Actions taken in response to incidents Full GRI Index: No incidents or concluded legal 105 of corruption cases in the reporting period SO5 Public policy positions and participation in Full Public interest and the profession: 32 public policy development and lobbying Representation and Advocacy PR4 Total number of incidents of non- Full GRI Index: No incidents of non-compliances in 105 compliance with regulations and codes the reporting period PR5 Practices related to customer satisfaction Full 2013 Performance at a glance: Table 4 11 including results of surveys measuring it

Report Against GRI Indicators The GRI 3.1 Sustainability Reporting Guidelines represent an internationally recognised, voluntary sustainability reporting framework. CPA Australia has developed this annual report to meet an Application Level of C+ with the GRI, where a ‘C’ indicates the number and status of indicators addressed in the report , and the ‘+’ indicates that the report has been independently assured. GRI APPLICATION LEVEL CHECK

106 | Financial report INDEPENDENT LIMITED ASSURANCE

CPA AUSTRALIA 2013 INTEGRATED REPORT | 107

Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 Box 78 Melbourne VIC 3001 Australia DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent limited assurance report to the Directors of CPA Australia Ltd on the sustainability contents of its Annual Report 2013

What we looked at: scope of our engagement

CPA Australia Ltd (‘CPA Australia’) has prepared sustainability content for its Annual Report 2013 (the ‘Report’) in accordance with the requirements of the Global Reporting initiative (‘GRI’) Sustainability Reporting Guidelines (‘GRI Guidelines’). We have been engaged by CPA Australia to conduct a limited assurance engagement over its self-declaration on page 105 that the Report has been prepared at GRI application level ‘C+’ (the ‘GRI self-declaration’).

What standards we used: basis of our work and level of assurance

We carried out our procedures to provide limited assurance in accordance with Australian Standards on Assurance Engagements ASAE 3000 ‘Assurance Engagements Other than Audits or Reviews of Historical Financial Information’, issued by the Australian Auditing and Assurance Standards Board.

The evaluation criteria used for this limited assurance engagement are based on the GRI Guidelines and related information, publicly available at GRI’s global website at www.globalreporting.org, in particular the requirements to achieve GRI application level ‘C+’ in the ‘GRI Application Level’ publication.

Our engagement provides limited assurance as defined in ASAE 3000. A limited assurance engagement is substantially less in scope than a reasonable assurance “audit” conducted in accordance with ASAE 3000 and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance “audit”. Accordingly, we do not express an audit opinion providing reasonable assurance.

What we did: key assurance procedures

Considering the risk of material error, we planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusion. Key procedures included:

• Interviewing the process owners responsible for the preparation of the GRI self-declaration and the Report

• Performing an evaluation of the implementation of key controls of the GRI self-declaration and the Report

• Analysing and inspecting on a sample basis the key systems, processes and procedures relating to the collation, validation, presentation and declaration covers approval process of the information that the GRI self-declaration covers

• A comparison of the content of the Report against the criteria for a GRI self-declaration at ‘C+’ level in accordance with the GRI Application Level publication.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited © 2014 Deloitte Touche Tohmatsu 108 | Financial report

CPA Australia’s responsibilities

The Directors of CPA Australia are responsible for the preparation of the Report in accordance with the GRI Guidelines at application level ‘C+’, for the GRIs self-declaration, the information and statements contained within the Report, and for maintaining adequate records and internal controls that are designed to support the sustainability reporting process in line with the GRI Guidelines. There are currently no prescribed requirements relating to the preparation, publication and assurance of sustainability reporting.

Deloitte’s responsibilities

Our responsibility is to express a conclusion as to whether we have become aware of any matter that causes us to believe that the self-declaration contained on page 105 of the Report has not been prepared, in all material respects, in accordance with the requirements of the GRI Sustainability Reporting Guidelines at application level ‘C+’.

This report is made solely to CPA Australia in accordance with our engagement letter dated 12 December 2013. We disclaim any assumption of responsibility for any reliance on this report to any person other than the Directors of CPA Australia or for any purpose other than that for which it was prepared.

In conducting our engagement, we have complied with the independence requirements of the Australian professional accounting bodies.

What we found: our limited assurance conclusion

Based on the procedures performed, nothing has come to our attention that causes us to believe that the GRI self-declaration contained on page 105 of the Report has not been prepared, in all material respects, in accordance with the requirements of the GRI Guidelines at application level ‘C+’.

DELOITTE TOUCHE TOHMATSU

PR Dobson Partner Melbourne, 21 February 2014

OFFICE LOCATIONS

Australia Western Australia Macau* Malaysia Head office / Victoria Level 17 Aluvion Rua Dr Pedro Jose Lobo 1 – 3A Suite 10.01, Level 10 (and registered office) 58 Mounts Bay Road Luso International Bank Building The Gardens South Tower Level 20, 28 Freshwater Place Perth WA 6000 14th floor, room 1404 – 1405, Mid Valley City Southbank VIC 3006 PO Box 7378 Macau Lingkaran Syed Putra GPO Box 2820 Cloisters Square P: +853 2838 9207 59200 Kuala Lumpur Melbourne VIC 3001 Perth WA 6850 F: +853 2857 9238 P: +603 2267 3388 Free call: 1300 737 373 (Australia only) E: [email protected] F: +603 2287 3030 E: [email protected] Europe Shanghai E: [email protected] Australian Capital Territory United Kingdom Suite 4003-4004 Singapore Level 5, CPA Australia Building The Australia Centre CITIC Square 1 Raffles Place 10 Rudd Street The Strand 1168 Nanjing West Road 31-01 One Raffles Place Canberra ACT 2601 London WC2B 4LG Shanghai 200041 Singapore 048616 GPO Box 3260 United Kingdom China P: +65 6671 6500 Canberra ACT 260 P: +44 20 7240 8266 P: +8621 2213 9850 F: +65 6671 6550 F: +44 20 7240 3452 F: +8261 5292 5589 E: [email protected] New South Wales E: [email protected] E: [email protected] Level 3, 111 Harrington Street Oceania Sydney NSW 2000 Hanoi Asia Locked Bag 23 Suite 1201A, Level 12, Tower A Fiji* Grosvenor Place NSW 1220 Beijing Handi Resco Building Neil Underhill and Associates Unit 307-308B, 3/F Office, 521 Kim Ma Street 25 Wailada Road (Fiji Coffee building) Northern Territory Tower C2 Oriental Plaza Ba Dinh, Vietnam Wailada, Lami, Suva Level 3, 62 Cavenagh Street No. 1 East Chang An Avenue P: +84 4 6250 0077 Fiji Islands Darwin NT 0800 Dong Cheng District F: +84 4 6250 0200 P: +679 336 3968 GPO Box 1633 Beijing 100738 China E: [email protected] F: +679 336 3948 Darwin NT 0801 P: +8610 8518 5575 Ho Chi Minh City E: [email protected] Queensland F: +8610 8518 7001 Suite 501, Level 5, Metropolitan Tower New Zealand Level 29, 10 Eagle Street E: [email protected] 235 Dong Khoi Street Level 16, HSBC House Brisbane QLD 4000 Guangzhou District 1 1 Queen Street GPO Box 1161 Room 2504 Tower A, GT Land Plaza Ho Chi Minh City, Vietnam Auckland 1011 Brisbane QLD 4001 85-87 Huacheng Avenue P: +84 8 3520 8338 New Zealand South Australia Zhujiang New Town Tianhe District F: +84 8 3520 8339 PO Box 105-893 Auckland Level 10, 420 King William Street Guangzhou China 510623 E: [email protected] New Zealand 1143 Adelaide SA 5000 P: +86 20 8393 0610 Indonesia P: +64 9 913 7450 GPO Box 2574 F: +86 20 8393 0614 Suite 07-01C, Level 7 F: +64 9 914 8790 Adelaide SA 5001 E:[email protected] Mayapada Tower E: [email protected] Tasmania Hong Kong JI. Jend. Sudirman Kav. 28 Papua New Guinea* Level 2, 54 Victoria Street 20/F Tai Yau Building Jakarta 12920 Level 2, Armit Street Hobart TAS 7000 181 Johnston Road Indonesia Port Moresby NCD 121 GPO Box 906 Wanchai, Hong Kong P: +62 21 521 2001 Papua New Guinea Hobart TAS 7001 P: +852 2891 3312 F: +62 21 521 2065 PO Box 1937 Victoria F: +852 2832 9167 E: [email protected] Port Moresby NCD 121 Refer to head office location E: [email protected] Papua New Guinea P: +675 321 3644 F: +675 320 0469 E: [email protected]

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