Profile: Mark Coughlin, exporting an Australian institute

In late October last year, as Eric Anstee and Steve Freer, the chief
executives of the ICAEW and CIPFA, were digesting a narrow defeat in their
attempt to merge their institutes, the president of an accounting institute
20,000km away in Australia was quietly putting the final touches to the launch
of a London office.

For rival institutes, the launch of an office so far from its Melbourne home
may have appeared a minor development, but for Mark Coughlin, president of CPA
Australia, the move signalled a watershed moment in his institute’s strategy to
cope with the rapidly changing needs of its members and the profession.

‘There can be no doubt that the profession is changing,’ says Coughlin as he
looks out onto the Strand from Australia House, where CPA Australia’s London
office will be located. ‘Accountants are becoming more mobile and more dynamic.
It is not enough to simply focus our efforts in our region.’

Of course, like CIPFA and the ICAEW, CPA Australia has had to endure the
onerous and costly process of merging rival institutes and changing names.

CPA Australia’s history stretches back more than a century to 1886 and a
series of antecedent bodies that merged in 1952 to form the Australian Society
of Accountants. After a sequence of name changes, the then Australian Society of
Certified Practising Accountants finally became the much more succint CPA
Australia in 2000.

With the mergers and nomenclature put to rest, CPA Australia has been freed
up to concentrate on what it sees as a crucial part of its development as a
diverse institute capable of serving a membership spread all over the world. The
next battleground for institutes, Coughlin believes, is a global one.

A look at the numbers confirms this conviction. The role of the accounting
institute has gone beyond serving members’ interests in their own backyard to
one which deals with accountants who have become globetrotters.

Coughlin heads the largest accounting body in Australia and the sixth largest
in the world. It boasts an annual turnover of $95m (£40m) and a membership of
107,000. Of those, 25,000 members are based abroad, including 9,000 in Hong Kong
and China. Between 1,200 and 1,500 are London residents. Apart from its London
office, CPA Australia also has offices in Beijing, New Zealand, Hong Kong,
Singapore, Malaysia, Papua New Guinea, Indonesia and Fiji.

Coughlin says the introduction of IFRS, new regulatory regimes and the
international reach of corporations have necessitated a global approach. ‘The
nature of the profession has changed so much in recent years and now with
Europe, the UK, Australia and so many other countries using a common base of
standards. The closeness of the profession is having an impact on how the
profession is operating globally,’ he says.

‘Now that the skills base is going to be fairly uniform in many respects on
statutory accounts, there is a major force bringing the profession closer
together than it has ever been before around the world.’

It is this trend that has driven CPA Australia’s international expansion. ‘We
have embarked on an international strategy, because of this globalisation of the
profession over the past three years,’ he says. ‘It is so important to ensure
there is still a connection between CPA Australia members working abroad and
their membership body. Every one of our members pays the same subscription fees
so there is no reason why they should receive a lesser service than anyone else
around the world.’

With expansion, however, comes stiff competition and although Coughlin
insists his institute has no intention of taking on the UK professional bodies,
he admits that the battle for members is taking place on other fronts. ‘The role
of the London office is not a competitive one. We are not competing against the
UK bodies, we’re not interested in that. But in other areas we do compete,’
Coughlin says.

‘It varies according to which part of the world we are operating in. We have
got different models. It depends what the need is. In Asia, accountants will
have the local designation, which is prescribed by government and then they will
have a UK, Australian or Canadian qualification so we compete with other bodies
on equal footing in Asia, Australia and New Zealand as we are more established
in those markets.’

‘There is no silver bullet answer for where we will be competing with other
institutes. It’s horses for courses. We are just focused on keeping the
profession attractive for newcomers,’ Coughlin says. ‘Bodies compete but capital
markets are not getting smaller, so the demand is always going to be there. The
biggest challenge for any institute is to keep delivering fully qualified
accountants.’

Even though competition for members may be hot between rival institutes,
Coughlin says it is crucial that institutes around the world work together.

‘Part of what we are hoping to do here in London is work more closely with
the institutes over here,’ Coughlin says. ‘What we try and achieve in countries
with significant capital markets is mutual recognition, so that accountants who
are going to be mobile can move from Hong Kong to Singapore to London or the US
and have a qualification that is recognised. That is our ultimate objective.’

He also emphasises the importance of sharing ideas and research between
institutes, especially given the similar challenges facing the profession around
the world. Coughlin says CPA Australia has compiled research and reports on IT
governance, sustainability, and public confidence in financial reporting –
issues any institute in the world will no doubt be grappling with.

‘We are working more closely with regulators and government in Australia and
there are similarities between the US and UK regulatory regimes that are
significant. We have had some corporation reform in Australia. Everyone has
followed the collapses of the Enrons and WorldComs,’ he says.

‘Every capital market is dealing with the same issues. There might be a
slight lag between markets but at the end of the day we can all learn from each
other. That is one of the key roles we want to play here. We want to find out
how can we help the bodies here and how can we learn from them.’

Winning the ear of the IASB

London has always been one of the largest and most important capital markets
in the world. Since April 2001, when the International Accounting Standards
Board was formed and headquartered in the capital, London has taken on a similar
role for the accounting profession.

This is one of the reasons CPA Australia president Mark Coughlin decided it
was high time his institute established a presence in London.

As the body responsible for setting accounting standards, the IASB has played
a crucial role in setting the accounting agenda and Coughlin wanted to make sure
that Australia’s voice was heard in the IFRS debate.

‘Australia has adopted international accounting standards and obviously, with
the standards setting body here in London, it’s important that we are a lot
closer to them than 11 hours away [because of the time difference] or 20 hours
on a plane. We need the capacity to engage with the IASB and its various arms
here in London,’ Coughlin says.

‘We have always had a good relationship with Sir David Tweedie, but with our
presence here that interaction is going be more constant. We are here to do
business.’

Australia has already adopted a slightly different version of IFRS to the
rest of world by limiting some of the accounting treatments that are permitted
in the global IFRS.

This is small but important difference, especially as it applies to FTSE100
heavyweights from Australia such as BHP Billiton, a mining giant with a £23bn
market cap, and Rio Tinto, its £30bn resources rival.

Coughlin feels it is important that the reasons for Australia developing a
tailormade version of IFRS are communicated to the standards-setters, and that
the Australasian region takes a more proactive role in the IFRS debate.

‘We are very conscious that there is Europe and there is the US influencing
the IFRS debate. The pacific region is a big entity in its own right and it is
important that we ensure co-ordination in that region and make our voice heard,’
Coughlin says.

As part of its participation in the development of IFRS, CPA Australia has
the led the formation of the Asia-Pacific Financial Reporting Advisory Group
(APFRAG). The group consists of CPA Australia members from its international
offices and compiles views on international accounting standards and exposure
drafts.

‘APFRAG is made up of selected senior members. They review exposure drafts
and standards coming out of the IASB. We use that group to give us advice as to
whether the standards are going to work in Australia, New Zealand, China or
Malaysia,’ says Coughlin. ‘We have taken a regional focus on the affects of IFRS
and that is what we will be working on with the IASB.’