Numbers game as losses lead to big cuts at Chartered Accountants ANZ

The behind-the-scenes financial drama around spending at CA ANZ has played out as the body's long-time CEO, Lee White, left last April and as Mr Ellis took on the leadership position in August.

It also has happened as rival accounting body CPA Australia experienced an unprecedented member uprising, mainly over the way member funds were used, that saw CEO Alex Malley fired, the entire board resign and a promise of wholesale reform from the new board

Despite this uprising, CPA's 2017 annual report showed the accounting body posting an increase in overall consolidated profit of $10.4 million, up from $8.2m in 2016.

In contrast, CA ANZ posted consecutive deficits of $8.2 million in 2015-16 and $6.8 million in 2016-17.

A key leg of the CA ANZ cost cutting is a radical reorganisation that will see dozens of staff cut from the organisation over time. Mr Ellis has brought in organisation design firm AlignOrg to consult on the new structure and distributed a preliminary plan to staff two weeks ago. Staff have since provided feedback on the plan, with many saying the cuts were too deep.

"The final input from our staff was basically the backend of [last] week and then we'll consider all of the inputs from staff, make adjustments where appropriate to the org design, then we'll share that with all staff and then we start to reshape," Mr Ellis said.

The final staffing plan, along with details of the planned cuts, will be provided to CA ANZ staff on Monday. Mr Ellis also flagged that the body would use outsourcing "where it makes sense".

"There will be aspects of our delivery of operations or delivery of services that we will outsource ... it's probably more in the member services area ... there will be some outsourcing in IT services. It's quite normal in any business where you outsource as opposed to have programming capability in-house," he said.

Mr Ellis also wants to reduce travel costs from $5 million last year to $3 million this year. The body also has not renewed the contracts of a number of temporary staff andhas put on hold a range of thought leadership projects.

IT spending

One of the key causes of the operating deficits is big spending on information technology, which totalled $15 million over the past four years. Two key projects highlighted as particularly expensive by a number people familiar with CA ANZ operations are a Deloitte Digital-designed website and the troubled Kairos data analytics platform.

Deloitte Digital was called in to develop a revamped website for CA ANZ, with the eventual cost of the project about $3 million, more than double the original $1.5 million budget.

A CA ANZ spokesman would not comment, saying the cost was commercial in confidence, but said the "website investment is delivering significant returns in members' satisfaction and usage which has increased dramatically ... the volume of unique visitors to the site has increased by 25.8 per cent".

Another issue is that the body continues to struggle to integrate its Salesforce member management system with the Deloitte Digital website, with Mr Ellis saying "we've made substantial progress in the last six months" but admitting "there are still some issues being resolved".

Then there is the much-hyped Kairos project. CA ANZ spent millions developing the cloud-based suite of programs and tools for small and medium accounting practices.

The laudable aim was to help smaller practices use more efficient technology in their businesses and to provide to members access to data-crunching capabilities.

But the loss-making service fell well short of plans to have about 3000 paying subscribers by last September and CA ANZ is now looking to have an IT partner market the service.

"We have not hit our targets, which led us to review Kairos," a spokesman said. "That review found that Kairos' functionality, purpose and capability all rated highly. However, our ability to market and sell Kairos was limited. To bridge this gap we are negotiating with an IT distribution partner who has much greater expertise than us in taking software to the market."

Second Road workshops

Consultant Second Road, which was bought by technology consultancy Accenture last year, has carried out about 100 workshops with CA ANZ staff and a range of members from different backgrounds and organisations to help inform the new strategy for the body.

"Second Road would tell us that we held more workshops than they've ever done before for any organisation," Mr Ellis said.

The three main findings from the workshops were that the body's education offering had to be delivered more flexibly and offer more variety to deal with the differing needs of members, the body needed to advocate for a wider range of members, and members wanted help in using the latest technology in their practices or business.

Mr Ellis said he planned to partner with digital start-up, incubation and acceleration hubs to co-develop services for members.

He defended his spending on external consultants, saying part of his responsibility was to "ensure we represent the interests of our members and the profession today and into the future".

"We engaged Second Road to ensure we thoroughly explored and defined the future needs of our diverse membership base," he said. "It is critical that we translated these needs into a contemporary forward looking organisation and therefore we engaged AlignOrg as specialists in this field.

"We will not comment on the costs associated as these are commercial in confidence, but we did significantly compress the time usually invested in these types of projects to ensure a quick and efficient outcome for the organisation and our members."

edmundtadros@afr.com.au