Accountants and accounting practices that are compliant with the relevant standards set out within the IPA’s Professional Standards Scheme often tend to be high performers, says Andrew Best, Manager of Professional Standards at IPA.
“When they’re compliant, they shine,” he says. “You can see by the work they do, by the way they present their business, and by the way they communicate. They’re smart people who are proud of the work they do and who are doing well.”
On the other hand, accountants and businesses that operate outside the regulations of the Professional Standards Scheme sometimes appear uninterested, he says.
A Professional Standards Scheme increases expectations around the qualifications, behaviours, experience and knowledge of its members. That all comes together to create stronger businesses, more satisfied clients and improved consumer protection.
Not just an exercise in compliance
Several years ago, when the IPA was making an application to the Professional Standards Authority – an independent, statutory body that promotes, monitors and enforces professional standards schemes on behalf of the Professional Standards Councils – an enormous amount of work was done to be awarded a new, five-year scheme.
Part of that process was the disclosure of the IPA’s member risk management framework, including demonstrating how the organisation does what it says it’s going to do.
The scheme must be designed to constantly improve consumer protection, member practice operations and risk management, and the accounting profession as a whole.
“The Professional Standards Councils demand an extremely high standard of member regulation,” Best says. “Every five years we need to apply for a new professional standards scheme.”
It’s a very big task and it takes a lot of time, Best explains.
“The most recent application was three years ago, and it came to 1,000 pages and took 12 months to put together.”
How professional standards benefit accountants
By improving risk management, IPA’s Professional Standards Scheme has minimised the risk of litigation and provided a higher level of consumer protection.
For that reason, the Scheme now requires two caps – $2 million and $10 million – determined by income/turnover and covered by the mandated levels of Professional Indemnity (PI) insurance. Members can apply for a higher cap if their income/turnover exceeds $10 million.
Individuals and companies, which can each be covered separately and should be insured as such, can opt for a higher level of cover if they’re conducting work that might attract a higher level of risk. But most of the IPA’s members operate within these specified caps, Best says.
This purpose of the Scheme is to limit liability in the event that a Scheme participant is found to be negligent. In return, consumers benefit from a higher standard of professionalism.
A rising tide lifts all boats
The IPA’s role is to continuously improve the professionalism of its members, which it does, for instance, by enforcing the Continuing Professional Development (CPD) requirements.
“You can’t just do technical CPD and meet the requirements. We now have three CPD competency areas – technical, ethics and governance, and business management/ interpersonal skills,” Best says, explaining that members must complete at least 20 hours per annum from each competency area.
“With 120 hours of CPD to do every three years, we need 75% of it to be verified CPD, such as a structured course. The unverified component can be self managed, such as reading relevant articles.”
Of the minimum 20 hours per competency area, at least 15 must be verified.
Best is always open to suggestions from members regarding new CPD topic areas and courses. He often fields such suggestions, assessing the merits of each with the CPD team at IPA before adding potential topics and providers to the list.
Through the annual Professional Standards Declaration, the IPA audits practitioner members for CPD compliance. To make it easier to track CPD activity, the IPA provides a simple CPD Records Feature for members. Otherwise, Best recommends, it’s easy to keep track on a simple spreadsheet with separate columns for each CPD competency area.
Compliance with the Professional Standards Scheme provides greater consumer protection by lifting the overall professionalism of Scheme participants. Over time, the IPA has seen major improvements in the operation of its members’ practices, including their approach to risk management.
“I see the Scheme improving our members’ businesses on a daily basis,” Best says. “It’s a powerful motivator and an excellent protection mechanism.”
Find out more about the IPA 2022–26 Professional Standards Scheme.
