Notwithstanding infidelity and the infamous boys’ night out, the union of Dean and Tracey on Married at First Sight appears to be as functional as the marriage of Big Four peak body, the Institute of Chartered Accountants in Australia with its New Zealand bride … that is, not very functional at all.

For the uninitiated, the Institute of Chartered Accountants in Australia (ICAA), once known as merely “The Institute”, and its Trans-Tasman counterpart New Zealand Institute of Chartered Accountants (NZICA) were wedded in 2014 in a lavish ceremony agreed by their respective members. Together, the lovers formed CAANZ, an alluring acronym which stands for Chartered Accountants Australia and New Zealand. Though it might just as easily stand for Chartered Accountants Ambush by New Zealanders.

The great promise of this matrimony of professional bodies, as laid down in the nuptial documents, otherwise known as the Explanatory Memorandum to the merger, has not lived up to its vows.

Perhaps it is a case of haste to the alter. NZICA appeared only borderline solvent before the marriage. It was the ugly duckling which somehow married a swan, albeit a worn out old swan, with sweet talk and forget-me-nots in an Explanatory Memorandum. As the private equity turnaround merchants say: “You only have to look good for the wedding day.”

Since the nuptials,  the New Zealand bride seems to have been on a frolic with the marital credit card, spending up in the Shaky Isles and apparently taking liberties with joint possessions like the nominations and governance committee, fellowships awards and professional independence.

On a background note, CAANZ is the professional association for the world’s most powerful institutions, EY, KPMG, Deloitte and PwC – the four firms who collectively reaped $1.7 billion in advisory fees from the Federal Government over the past five years.

CAANZ also does PR and policy work for the Big Four, so you might say that, just as taxpayers fund the Big Four, and the Big Four fund CAANZ, the New Zealand frolic has effectively been sponsored by both CAANZ members and Australian taxpayers.

Rick Ellis is the new chief executive of CAANZ. Rick was formerly CEO of the National Museum of New Zealand Te Papa Tongarewa in Wellington, and he recently provided a Transformation Update for the strategic direction of the young union.

A new strategic direction. Was this something of a renewal of wedding vows as the previous strategic direction for the merger had not worked out?

Marriage Vows Rattled

The Explanatory Memorandum for the merger promised active full members of The Institute lower subscription fees but that vow is unlikely to survive for long. The merger model has been leaking cash and members will inevitably have to make up the shortfall.

CAANZ posted a deficit of $6.8 million for year to June 30, 2017, following a deficit of $8.2 million in the 2016 year. Of greater concern, CAANZ dropped $8 million (15.3 per cent) of its cash reserves from the start of the 2017 period. In the two years which preceded the Explanatory Memorandum for the merger, the Institute was cash-flow positive.

NZICA was always the one in the marriage less easy on the eye. It was recording deficits, losing cash and members funds, and increasing internally generated intangibles. And the Institute’s members were responsible for bringing the only significant physical asset to the party.

The marital home, the office block at 33 Erskine Street Sydney, was last valued at $62 million. This might be regarded as a $62 million dowry. Another thing was the level of compensation the New Zealanders managed to arrange for key management personnel – some $2.7 million for June 30, 2013, or a lusty 15.5 per cent of its members’ annual subscriptions.

Like Married at First Sight, the CAANZ merger was staged by a few experts and passed off to the siblings as a thing of beauty. The Explanatory Memorandum promised steady-state annual net cost savings of $15.8 million including $11.6 million of full-time equivalent staff cost savings.

This vow barely survived the honeymoon. Employee benefits expense and total expenses for 2016 and 2017 are at above the levels of the 2013 Explanatory Memorandum. The merger has actually increased costs.

This from the Explanatory Memorandum: “ICAA and NZICA have taken significant steps to identify specific cost savings and have prepared a detailed plan of how the savings would be achieved. This plan has been reviewed by EY as part of its Investigating Accountant’s Report, providing some comfort that the savings should be able to be realised”.

Members of what was once The Institute might take even more comfort in disclosure of the actual costs against the detailed plan. Anything which explains why the costs have gone up would be a good start. At least family friend EY is doing better out of the merger with a 50 per cent increase in its audit fees.

Members of the ICAA that voted for the deal based on promises of lower fees and cost savings may be feeling miffed like a contestant spurned in Married at First Sight but the point of Married is to humiliate contestants and the point of CAANZ is to benefit members.

New Zealand Takeover

Indeed, something of a takeover of CAANZ by the New Zealand minority interests appears to have occurred. Most things CAANZ seem to be happening in New Zealand these days even though it is the Australian members that do the heavy lifting financially. Australian members contributed roughly two thirds of the 2017 subscription revenue of $70 million.

The annual report for 2017 reveals an organisational lusting towards the New Zealand membership based on the following: (1) Fellowships awarded; (2) Office locations; (3) Nominations and governance committee; (4) New CEO; (5) AGM location; (6) Events focus; (7) Overlooking standards; and (8) Conflict of interest.

Fellowships awarded

In 2017, CAANZ conferred 61 Fellowships to members in New Zealand but only 60 to members in Australia. Fellowships are awarded for outstanding service to the accounting profession. One third of the subs but over half of the Fellowships is like posting too many credits on one side of the ledger. Previously, NZICA awarded 16 Fellowships to its members in 2012 and 23 in 2013. The merger has been nice . . . for some.

Office locations

In 2017, CAANZ had 11 office locations in New Zealand compared to only 6 in Australia. Geographically speaking, New Zealand would fit comfortably within a map of Queensland. The preponderance of branches and offices in New Zealand must be difficult to appreciate for members in Cairns and Townsville. In the 2017 period, the spend on fixtures and fittings in leasehold premises increased from $0.3 million to $3.0 million. Meanwhile office space at Erskine Street is being sublet. One could infer from this that the Australian income of CAANZ has been used to do up the 11 offices dotted between Te Kao and Invercargill.

Nominations and governance committee

In 2017, CAANZ had a nominations and governance committee of ten members notwithstanding the Explanatory Memorandum saying there would be only five committee members. The committee appears to have been stacked with Kiwis. Seven (70 per cent) of the committee members appear to be based in New Zealand.


New Zealander Rick Ellis was appointed as the new CEO in 2017. Rick previously ran the National Museum of New Zealand and is not an accountant. His CV on the CAANZ website forgets to mention his senior executive positions with the Ansett Airlines Group from 1995 to 1998 including as CEO of Ansett New Zealand.

Given Ansett went bust after the Air New Zealand takeover there is some poetry in Rick’s appointment but there is little chance CAANZ will bite the dust as it can always increase membership fees, shed staff (which it appears to be doing) or sell the Erskine Street property.


In 2017, the CAANZ Annual General Meeting for 2017 was held in the Wellington office.

Events Focus

In 2017, there were 538 events held in New Zealand and 985 events held in Australia and other locations. The 2017 annual report discloses the total number of events in New Zealand for the year, but Australia is not deemed worthy of separate disclosure and is lumped together with “Other”.

One event recently held in Australia was to celebrate Waitangi Day 2018, the 178th anniversary of the signing of the Treaty of Waitangi – an event described by CAANZ as an opportunity for all members to come together in union to celebrate the New Zealand community.

It will be interesting to see whether CAANZ plans reciprocal arrangements where members in Auckland come together to celebrate Australia Day in 2019, perhaps cheers for the Wallabies.


The 2017 annual report of CAANZ also has some disclosure practices which one would not normally expect form a professional accounting body. Contrary to accounting standard AASB 107, the statement of cash flows aggregates into one number the cash payments for property, plant and equipment, intangibles and capital work in progress assets.

Perhaps a cash flow statement showing two lines – cash in, cash out – is next on the cards. Contrary to accounting standard AASB 108, revenues have been reclassified in the comparative period without disclosure of the amounts involved.

Conflict of interest

Then there is the important matter of professional independence which means independence not only in fact but also in appearance. The Chairman of CAANZ for 2017, Murray Jack, was also the chair of the Financial Markets Authority of New Zealand. Imagine Greg Medcraft as the chair of ASIC and CAANZ at the same time. Having the same chair on separate regulatory organisations is not a good look, especially in light of the kowtowing of professional accounting bodies globally to the Big Four.

Finding real love

On Married at First Sight, contestants can at least get away if the combination is a mistake. Members of what was once The Institute don’t enjoy the same luxury. They appear to be stuck in a marriage with a domineering partner and must now be pining for their days on the singles circuit.

Ahem … told you so.

ICAA charts a mysterious course