CPAs may be at risk of huge malpractice suits

Following government regulator Professional Standards Councils’ refusal of the CPA’s application for a new professional standards scheme, practitioner members of the CPA could face a gap in cover from October.

The CPA has reportedly made an application for a new scheme, but “for reasons of concern about conflicts of interest arising from the establishment and structure of CPA Australia Advice, and other elements of consideration for approval of a Professional Standards Scheme, the Professional Standards Councils did not direct that the CPA’s draft scheme instrument progress to public notification”.

This follows reports of ongoing turmoil around the accounting body’s management.

The Professional Standards Councils (PSC), which assess and approves applications for professional standards schemes, has confirmed that the current CPA Professional Standards Scheme, that operates in all mainland jurisdictions, will expire on 7 October this year.

An approved Professional Standards Scheme requires associations to monitor, enforce and improve the professional standards of their members; and in doing so members have their civil liability limited.

The CPA scheme participants include nearly 7,000 members who have a CPA Public Practice Certificate.

What does this mean for CPAs?

Unless a new scheme is created and approved in time, all public practitioner members of the CPA will lose the protection of their Professional Standards Scheme, says the PSC.

It directs CPA members to advise their insurers of changed circumstances regarding limitation of liability and potentially purchase new insurance policies.

What does this mean for insurance brokers?

If brokers have clients that may be impacted by this change, it may be timely to proactively review their levels of professional indemnity insurance and approaches to risk management to avoid any gap in cover.