CPA Australia cuts staff in attempt to curb losses
A redundancy program underway since mid-year will hit every team and eventually affect member services, insiders say.
A rolling redundancy program at CPA Australia will cut at least 60–70 staff across the organisation in an attempt to curb losses amounting to more than $40 million over the past two years and cuts to member services are likely, sources say.
CPA Australia began issuing redundancy notices mid-year with some teams – legal, finance and professional conduct – suffering overall staff cuts of around 20 per cent and the public practice team disbanded, insiders say.
Executives had been forced to hose down rumours of 20 per cent staff cuts with an email that said the target was 10–12 per cent, but morale was “grim” as every week more of the 600-plus employees were given notice, sources said.
“It’s despondent, black humour is prevalent and there’s a lot of anger about how it’s been managed,” one said. “It's been a very elongated process and it reflects very poorly on the executives who have driven this.”
“All the teams will be hit in some way. The mood is grim and trust has broken down internally between the executive and general staff. It will eventually start to flow through to member services and member satisfaction.”
“They say it's to do with realignment to the new strategy, which is obviously part of it, but you look at the losses of the last few years, the declining revenue over the last five years – it's primarily financially driven.”
CPA Australia’s latest integrated report, issued in March, revealed a $12.4 million loss in 2021 blowing out to $31.3 million the following year against a target of -$26.2 million.
Overall revenue grew marginally in 2022 to $169.9 million but expenditure ballooned by more than 15 per cent to $201.2 million, partly thanks to "hardship discounts provided to members”, the report said.
The loss was also blamed on “substantial investment” in an IT project called Member Management and Finance, which was due to go live this year but would require further finance, CEO Andrew Hunter said in the report.
“The organisation is targeting a breakeven result in 2023, but with further investment required to complete the project, a deficit of $3–$5 million may be incurred,” he said.
Sources said the body’s 172,000 members had been poorly informed about changes to services, with no specific communication about the closure of the public practice team, for example.
The sources dated revenue declines to the tenure of Mr Hunter. He was brought in to restore member trust in the wake of Alex Malley, who was fired six years ago when members rebelled over his $1.8 million salary and alleged conflicts of interest.
“The board wanted to established member trust and satisfaction so they took services that were sold for a fee and gave them as complimentary. That's clearly eaten into revenue. You can't run businesses where revenue declines year on year. That's not a recipe for financial success.”
CPA Australia said it had communicated its organisational update to members earlier this year and denied the restructuring would have an impact on member services.
“The new operating model will support our strategic objectives of delivering outstanding member services, helping to shape government policy and being the leading voice of education and advocacy for the accounting profession,” a spokesperson said.
“We have taken a phased approach to implementing the new organisational structure to minimise any disruption to our teams and members.
“We recognise this is a period of change for CPA Australia staff members. We continue to work with individuals who have been impacted by these changes and thank them for their patience during this time.”
The body said it expected a return to surplus next year, in line with its integrated report.
Mr Hunter, whose remuneration amounted to $1.08 million in 2022, announced in July he would be leaving in March 2024 and a replacement has yet to be named.
However, the sources said any incoming CEO would bring a fresh set of goals and possibly clear out the executive team that had taken the body to this point.
“The new CEO is going to want to make changes,” an insider said. “Who in their right mind would take the job if they were told they could not make any changes?
“Everyone expects this cycle to finish in some time in the next few months and then the new CEO will obviously have ideas as well.”
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