The Role of the Board: A Review of CPA Australia Governance Crisis

The CPA Australia governance saga constitutes the CPA board of directors and CEO Alex Malley. The crisis is an indication of the need for a new corporate governance code in Australia. Even though the CPA is not a publicly listed firm, it complies with the Australian Stock Exchange (ASX) which functions as the corporate governance (CPA Australia Independent Review, 2017). On 16th June 2017, the Board of CPA Australia formed an independent board to assess issues generated by members and other stakeholders. The board objectives were to review and address issues affecting the image of the company, the confidence of members and the value of accreditation.

Almost all companies are managed by a board of directors who are elected or nominated by the shareholders to operate the company on their behalf. This connotes that the shareholders are expected to give trust to the board since it acts on their behalf, and it has the ultimate power to deliver accordingly (Hay, Stewart & Redmayne, 2017). They are given the responsibility of providing directions hence they have impacts in all the elements of the organisation. Notably, the Board of Directors is the governing unit of CPA Australia.

Moreover, the Board objectively and independently examine the organisations resolutions and controls the performance and actions of management (Carson, Fargher & Zhang, 2017). In this case, the company appears to incorporate the stewardship theory. In that, it recognizes the effects of the more substantial influencing factors on the governance paradigm. As a consequence, this approach offers CPA Australia with the flexibility to figure out the correct levels of intensity of management mechanisms and processes to be formed and executed to attain effective governance.

The board is involved in several roles in decisions making which are in the best interests of the company as well as the membership at large. They comprise of:

Assessing the CEOs track record or rather his performance during his tenure.

Formulating and approving the companys strategy, financial, and direction objectives.

Legislating and amending by-laws and other policies.

Approving financial reports.

Electing the president and the deputy-presidents.

Nonetheless, the Board met during the CPA Australia crises to discuss some of the issues covered in the independent review process. Their role was to review the companys strategy keenly taking into account the findings of the independent review. The results were attained after holding consultations with CPA Australia staff, divisional and branch members. Additionally, the board approved the CEO search process through which they agreed that the hiring process would be carried out by an external executive and the advertisement for the post will appear in all the prime media outlets (Stapledon, G. (n.d.). Finally, the other role of the Board was to change the brand strategy, and it agreed that the CPA Australia brand would be the dominant brand. The new CEO attributes will reflect the change of strategy in the organization.

To sum up, the board must efficiently perform their functions for the CPA Australia to achieve its objectives successfully. For that reason, the board is expected to set up elements that will ensure that the company succeeds. Boards perform tasks that they largely set and describe for themselves. It is through the learning of the processes carried out by the body and linkages to specific functions and outputs that one is able to understand the board effectiveness. Therefore, the board is determined to develop a positive, harmonious and professional work environment for all the workers at CPA Australia.

References

Carson, E., Fargher, N., & Zhang, Y. (2017). Explaining auditors propensity to issue going-concern opinions in Australia after the global financial crisis. Accounting & Finance. doi:10.1111/acfi.12313.

CPA Australia Independent Review. (2017). 1-103. Retrieved January 28, 2018.

Hay, D., Stewart, J., & Redmayne, N. B. (2017). The Role of Auditing in Corporate Governance in Australia and New Zealand: A Research Synthesis. Australian Accounting Review, 27(4), 457-479. doi:10.1111/auar.12190.

Stapledon, G. (n.d.). The development of corporate governance in Australia. Handbook on International Corporate Governance. doi:10.4337/9781849808293.00024.