Do Professional Societies care about the Public or only their Members?

Yesterday I was horrified when I made a phone call to CPA Australia asking if a) someone had been a member and b) if they'd ever been the subject to Disciplinary action or complaint, especially around 2004.

The answer given I found shocking:

That information is Private, it's part of the "Member Record". You have to get their permission to release that information. [In response to question on 'serial offenders' and 'irregularities' in Association accounts well over $1M.] This is our Policy. If you want to pursue this, you can write to our Legal Department who probably won't respond to you.

Compare that to Aviation, not just Pilots...

Not only do they have the best Quality and Safety systems of any Industry and Profession, they take it as a given that Open and Transparent Governance, including professional discipline matters, is fully public.

Sunshine is the best antiseptic for corruption, negligence and incompetence.

Today I wrote to a TV current-affairs program with:

If you thought Dr Death of Bundaberg and the Butcher of Bega weren't bad enough, what do other Professional Societies do that's different?
Nothing...
Members First, stuff the public!
Unlike Aviation, they are there to keep the Sins of their Members secret.
2 stories: IT Recruiters and Accountants (CPA)

Links

IT Recruiting (ITCRA).
If you complain about a recruiter, whatever they decide about the compliant is a secret. Probably the same with general recruiting [the GM of ITCRA used to work for that Association. Commented they got many, many more complaints.]

My Story:
http://stevej-on-it.blogspot.com/2012/12/recruiting-fail-non-response-of-itcra.html
http://stevej-on-it.blogspot.com/2012/09/recruiting-fail-part-3-itcra-complaint.html
http://stevej-on-it.blogspot.com/2012/09/recruiting-fail-how-to-foul-up-employee.html

CPA Australia:
What happens when you ask if a CPA has ever been disciplined?
 ITS A SECRET...
Even if you think they're part of a 20yr conspiracy, potentially a swindle, worth $1-2MM...

The Association Investigation: NSW Assoc Y0133609.

NOTE: the Association is NOT the subject of this commentary on Professional bad behaviour and are known for being litigious. I will not name them and ask others to maintain this confidentiality although the registered name appears on the official documents and their Journal referenced. [I do have the technology to black-out the information in PDF's.]

RL was the Public Officer Y0133609 from  21 July 1997 to 10 December 2009 according to the official Association Extract.  He was also Treasurer, though the period is uncertain as the historical Committee Register of Y0133609 is not available on-line.

These Association returns, fully public, were procured from the NSW Associations Register and contain the name and address of the Public Officer, RL, at Heysen Close, Pymble:

Y0133609 1996 Return.pdf

Y0133609 1999 Return.pdf

What's NOT in the forms that four years returns (1996-1999) were submitted on the one day, triggering at least two penalty clauses of the 1984 Act:

• s54(1)(f) - Forced winding up on failure to lodge returns for 3 financial years
• s27 - Lodge statements within 1 month of AGM.

The accounts, in my opinion, violate s26(6) in that they don't give a "True and Fair view" of the financial affairs of Y0133609. If I'd been at the AGM those accounts were presented, I and everybody I've known in a Professional Association, would've rejected those accounts.

RL gave a Business Hours number on the Public 1996-1999 returns, identifying his then employer:  "CCS Partners" in the City. CCS used to be Calligeros, Cassim & Simos.
http://www.ccspartners.com.au/Home

CCS confirmed RL once worked there but would provide no other details, not even if he'd been a member of CPA Australia or the Institute of Charted Accountants.

There is a current White Pages listing for RL at 3 Ellendale Rd, Kenthurst NSW 2156.

The gross irregularities in Y0133609 accounts that I wanted to follow-up with CPA Australia is $1.25MM missing from the 1996-1999 Accounts attested to as correct by this upstanding, presumably registered, Accountant.

A large bequest was left to Y0133609 by Stanley Whaley of Queensland, except that it never appears in the Association accounts. The money was transferred to a Trust which under s26(6)(d) they were obliged to report as well, but never did.

Images of relevant Journal pages publicly declaring the Bequest and its movement to a Trust:

Y0133609 Journal 1995 #2 pg3
Y0133609 Journal 1995 #2 pp 5 & 6
Y0133609 Journal 1996 #4 pp 63-64

Full-text PDF on-line:

Y0133609 Journal 1995 #2

Y0133609 Journal 1996 #4

But the matter doesn't end there...

The Public Officer is seen under the Act as having special responsibilities, they are the official representative and where notices for the Association will be served by the Registrar. Under s23 of the Act the Committee has just 14 days to advise of a change of Public Officer and the new address to serve notices. It appears RL left Y0133609 5 or 6 years before the Registrar was notified.


RL is in the Journal of Y0133609 at the end of 2003, but never heard from again after that. He is still listed as being on the committee at the end of 2004 and there's no mention of him in mid-2005. After being a major "mover and shaker" within the Association, he's suddenly gone without trace.
Y0133609 Committee Nov 2004
Y0133609 Committee, Jun 2005
Y0133609 Journal 2003 #4

Yet he was still listed as Public Officer until 2009 when the Registrar took the highly unusual step of involuntarily cancelling the registration of Y0133609 for failing to lodge mandatory annual returns for 10 years.

After that little lapse of not filing returns for 4 years in 1996-1999, RL had never filed another one!
The official Association Extract shows Y0133609 didn't file a return in 2000-2003 nor any official documents until 07-May-2010.
After a period of almost a year, when accounts and returns for 2003-2009 were filed together, very strangely the Registrar, under s54A(2), reinstated Y0133609's registration as if nothing had ever happened. No penalties were levied, at least not according to the list of official documents available. Y0133609 were allowed to continue trading while formally deregistered, which makes me wonder "Why bother with the Act and registration at all?". I find this strange...

But this is about RL and his behaviour as a Professional Accountant.

Why were no accounts or returns filed by Y0133609 for the 4 years, 2000-2003?

The reason isn't on public record, but can't be related to a "7 year statute of limitations", nor to 5 years.

What we do know is that RL stopped writing in Y0133609's Journal in 2004.

What we see with the non-lodgement of the accounts is consistent with RL doing a massive Dummy Spit in early 2004 and withdrawing completely from Y0133609 and, we can guess, in a fit of temper deleting all records and files relating to them from his personal and work computers. If he'd felt this way, he also would not have felt a responsibility to inform the Registry of the Public Officer vacancy either. [Under the new Act of 2009, this is now an offence, with a penalty, for the Public Officer, but not then.]

As an Accountant acting as their Treasurer and responsible for filing BAS statements [noted in the Journal], he would've been handling the bookkeeping on a computer. Recreating that work from paper records would've been deemed too hard by both the incoming Treasurer and later by the Registrar.

I've been involved with a number of small Professional Associations and sometimes, in spite of the requirements under the Act, volunteers move on and records, especially 'the books' are lost forever.

It gets better yet, still.

In late 1999, the past-president of the "Victorian Branch", after years of confronting the Committee of Y0133609 and RL (still Treasurer), wrote about the events and misbehaviour in detail.

RL's actions were deliberate and intentional hiding this large bequest entirely from the Regulators and the Committee either went along with it or were involved.

The Victorian tried to publish his detailed account of the goings on at Y0133609 in the Journal of another well known and respected Society, but that editor withdrew the piece after threats of a defamation action.

Y0133609 was known for being litigious and for using Mr Whalley's money to back court cases. In its 1996 Report on Activities (the only one produced publicly), ~$180,000 was given to an individual for a failed lawsuit they'd followed closely, even reporting daily on. (The case was rumoured to have cost north of $500,000). This case, heard and appealed in the Federal Court, produced some much cited Case Law for the Trade Practices Act. The academic who took the action, a Professor, sold up and moved to Adelaide to pay his legal debts.

So, when there is strong Public Interest involved, why don't "Professional" Bodies automatically provide full public disclosure of complaints and disciplinary action?

Why are major and "serial offenders" in Law, Medicine and Accounting not publicly named and shamed to protect hapless victims that these people are known to prey upon but whom the Profession is sworn to serve?? How can these "Professional" Bodies, through deliberate action of suppressing information, not be held accountable for subsequent civil or criminal offences? How can they not have Public Interest as their first Duty of Care?

"Full Disclosure" is proven to work in all aspects of Aviation, so why do these other "professions" insist on still putting the interests of themselves and members ahead of the Public whom they supposedly serve?

My only conclusion, a personal opinion based on the evidence I can find, is:

That like RL, they are rorting the public and they know it...

Professions/Professionals: Conflicts of Interest

Consistent Altruism is a rare human commodity, probably impossible over a life-time, yet that's the standard implied by: Learned Professions owe a Fiduciary Trust to their clients.
That's All Clients, All the time.

It's simply stated and tested: Are Client Interests always placed before the Practitioner and Organisations? Yet its impossible without sustained, conscious, deliberate and co-ordinated effort by the whole Profession.

As a client or user of Professions, that's a reasonable standard for them to be held to.
As a Practitioner, Professional Organisation or Profession, it's a profound and never-ending challenge.

The overwhelming human behaviour is self-interest: often expressing as greed or avarice, but also in other "temptations", including sex, power and influence.
People may start with good intents, even living up to their ideals for a long time, but as Hollywood amply demonstrates, the road to hell is paved with good intentions.

Most people exhibit Altruism some of the time and often only towards related groups. How can that be leveraged to impeccable Professional Standards? It's not just a hard problem, but a diabolical one.

It's impossible for ordinary people to keep others interests before your own for an entire career, in the face of all direct temptations and, more importantly, preventing gradual, imperceptible declines especially in the face of "but everyone is doing it".

This is exactly what got the USA from a well regulated banking system in 1999 following the repeal of the 1933 Glass–Steagall Act, to a record financial collapse in well under 10 years.

All Professions have to address this central issue: How to monitor and deal with Conflicts of Interests.

The Iron-Cald Law of Quality applies: You cannot check your own work.

Which means ever Profession that needs to meet a Fiduciary Duty has to design, implement, staff and fund third party checking, investigation and monitoring systems (i.e. Governance and Audit), create Licensing, Compliance and Regulatory Bodies with real teeth and constantly train and check its Practitioners and Professional Organisations against those standards of Knowledge, Performance and Practice.

I'd argue that this Governance and Compliance function is more important for "Fiduciary Duty" Professions than Competency Testing and Licensing:

Without an absolute trust of Clients for the Profession's Services, it is fatally compromised and incapable of delivering good, let alone Adequate or Best Practice Services. If the Public won't come to you and don't trust you, it undermines your Mission/Purpose, devalues the Profession and pushes the Public to find substitutes.

In "mid standard" Professions two factors operate that limit the excesses increasingly found in Professions such as Banking, Finance, Financial Advice and Financial Audit which led to the record collapses of 2007/2008 requiring Public Bailouts:

• By definition, only "high standard" Professions owe a Fiduciary Duty to their clients, the rest only owe "normal commercial and contractual responsibilities.
• Consumer Protection bodies and legislation (ACCC and TPA/ACC in Australia) offer common law remedies (protections) to consumers against unscrupulous practitioners and organisations.
• The Consumer Protection bodies actively monitor the business world (practitioners and organisations) for illegal or 'sharp' behaviour.
• Cartels and price-fixing is illegal and is aggressively pursued by the ACCC.

• There is seldom, in "mid standard" Professions, a Natural Monopoly of Practitioners, Professional Organisations or Professional groupings/Associations.
• There are commonly large numbers of "best quality" practitioners and organisations for consumers to choose between:
• The operation of a large Free Market prevents prices ratcheting up faster than inflation.
• Market forces (Supply and Demand) act to regulate the number of Practitioners and Organisations offering the Service, including per location.
• Sometimes there can be a "race to the bottom" caused by new entrants (e.g. Chinese Dental Laboratories) that undermine demand even for high-quality local practitioners.
• Consumers often can find adequate Service Substitutes, either direct or within the Profession.
• When the Service is only offered by a sole supplier, often the Public Service or a single Government Licensee, a Natural Monopoly and market competition cannot keep Service, Quality, Safety and Price in check.
• Often in these situations, Audit and Governance ("Industry Watchdogs") organisations are formed in an attempt to restrain outrageous excesses.

So what's needed of Practitioners, Professional Organisations and Profession Groupings/Associations in "high standard" Professions?

The New Oxford Dictionary defines "Fiduciary" as:

involving trust, esp. with regard to the relationship between a trustee.

I use a more colloquial formulation:

Put the clients interests ahead of your own, every time, and in every way.

In Law, Business and Accounting, this problem is known as Agency Theory: How do you get an 'Agent', such as an employee, trustee or representative, to always put your Best Interests first, even to the detriment of theirs, either directly or through "Opportunity Loss" a.k.a. Insider Trading?

"High standard" Professions suffer multiple problems:

• They are Natural Monopolies without good substitutes (think Law, Medicine and Public Service).
• Where can the Public go if they don't like the Professions' Services? Nowhere...
• The rich always have more options like privileged access to other countries and systems, which creates its own special Conflicts of Interest in both countries.

• If they don't internally regulate, who can or will regulate them?
• Nobody else can properly assess their performance, errors, omissions and over-servicing.

• Because they are Natural Monopolies:
• The Monopoly is usually explicitly granted by the State.
• meaning there are Registration Boards and Licensing Examinations.
• They are highly desirable as a choice of Work: well paid, "protected" jobs for life,
• Numbers are tightly controlled,
• There is intense competition for admission, often on criteria irrelevant to good Professional Practice, such as Academic prowess.
• There is usually little effort in identifying desirable High Performer Professional characteristics and less effort or attention in selecting or evaluating against those criteria.
• All emphasis is placed on The Barrier to Entry, gaining a License, close to none is spent on ensuring All Licences are of Equal Value (a 1910 notion of Flexner's), which implies frequent full competency checking, against all current Knowledge and Best Practices, to retain a license.

• The traditional Learned Professions are backed by an extensive heritage of Common Law and Statues that create especial problems:
• They usually embody, explicitly or tacitly, a No Harm or No Fault clause:
• Medical Doctors, even unqualified frauds, are generally regarded as not ever having criminal intent to harm patients.
• This unfolded in Australia with the "Dr Death" of Bundaberg case. Whilst strict Academic-quality Evidence indicted him with causing many deaths and huge numbers of injuries, the legal system requires direct causal Evidence, reducing the criminal charges to "harming" a very few patients and a 5- or 7-year sentence. For any "mid standard" professional acting this way, they would've been found guilty of multiple counts of murder and received a probable life sentence.
• The 2011 sentencing of the "Butcher of Bega" underlines the on-going nature of this problem and jurisdictional inconsistencies.

• If the Profession in a country systemically fails to regulate itself against Conflicts of Interest, particularly Financial, then you end up with the US Healthcare system:
• 18% of GDP is spent on US Healthcare, versus 9% of GDP in Australia.
• In 1960, the US spent 5% of ts GDP on Healthcare, almost a quarter current levels.
• But Australians have universal Medical care access, out-live and have better health outcomes that US citizens, except for "Rescue Care", where the USA beats everyone.
• Arnold Relman and Marcia Angell, editors from 1977-2000 of the New England Journal of Medicine, have run a very long campaign against Medical Profession "Conflicts of Interest", starting in 1980 with Relman's, "The New Medical Industrial Complex".
• Despite unequivocal data and many high-powered, highly influential internal voices/activists, the US steadily increases the proportion of its whole economy spent on Healthcare and the proportion of uninsured people who are uninsured continues to climb.
• Perhaps in-line with the increasing disparity between the Rich (top 1%) and the bottom 30-50%.

My observations on "high standard" Professions achieving near a uniform, on-going delivery of Fiduciary Duty to Clients are:

• It's a war without end, every new generation has to discover their own solutions to the constantly evolving challenges. The Internet Changes Everything, including how Professions now experience Conflicts of Interest and the methods to address them.

• Perfection in managing Conflicts of Interest, like Quality, Security and Safety, is a journey, not a destination.
• If a Profession's Monitoring and Reporting systems are detecting nothing, they have failed.
• Human Nature hasn't changed in the 400 years since Shakespeare, it's not changing soon.
• The US "Medical Industrial Complex" that Relman and Angell have spoken against for 30 years versus the inexorable rise in Healthcare costs is definitive proof that without strong external intervention (from Politicians, pushed by the general public) a whole Profession can be wilfully blind to serious Conflicts of Interest.
• Without specific Agencies with real teeth, nothing changes.
• Simple, unequivocal definitions and tests are needed for the Qualitative Tests.
• Absolute and rarely changed quantitative measures are needed to convert Qualitative goals to measurable, reliable data.

• The NTSB/FAA example of separate, well-funded Investigation and Compliance, Licensing and Testing organisation staffed by selected dual-experts: they have to be both amongst the most Competent and Knowledgeable Practitioners and expert in Governance, Quality and Safety.
• These organisations and their staff also take care to constantly monitor, test and train themselves, with periodic "refreshes", or systemic re-examination and redesign.

• Initial Practitioner Selection and Testing and then through on-going Training, Testing and ReCertification regimes are necessary to even start to achieve high, uniform standards of "Fiduciary Duty" amongst Practitioners and Professional Organisations, along with Competency, Knowledge and Practices.
• Initial Practitioner Selecting and Training needs to be targeted at selecting for High Performance Practitioner Traits and Characteristics.
• Which implies they must be first researched, documented then kept current.
• And explicitly not to default to mere Academic Prowess as the sole entrance test.

• Fully public, Open and Transparent reporting of all Professional issues, Conflict of Interest and Practice of Individuals and Organisations is a minimum requirement.
• Without full data, the Profession internally cannot know "how it is travelling" and be able to take corrective actions as necessary.
• Without full public access, nepotism, cronyism and lax standards are inevitable and unavoidable. "We discipline our own, in private" is the hallmark of a Failed Profession.
• It also invariably leads to a pernicious and pervasive Inversion of Loyalty and Duty: Professionals swap their perceived Duty to Clients to a Duty to Protect the Profession at the expense of the Public they serve.
• This attitude of "We look after our own" is an absolute corruption of a Profession.  
• Professions with strong Duty and Safety Cultures and full disclosure don't need expensive and embarrassing Royal Commissions or Courts of Inquiry: they are doing the job of ensuring Good, Competent Practice and reinforcing the Culture each and every day.

• Structural elements have to be in place to prevent putting people in the way of temptation or compromise:
• Laws and Regulations allocating Blame and Liability to individual Practitioners for Ordinary Accidents and Failures must be replaced with Indemnifying Individuals within Organisations, provided they have acted properly and followed all relevant processes and procedures.
• Practitioners who exhibit unprofessional behaviours, should be stripped of all Professional protections and indemnities and be subject to stiffer Criminal charges and Penalties than the general public.
• Failing in your Professional and Fiduciary Duty is not an extenuating circumstance, it calls for harsher treatment. Those taking more Responsibility must be held to higher standards.
• Any Practitioner who self-reports Errors early on should be indemnified from censure for that event, though not for unprofessional action, such as repeating Known Errors, Faults and Failures.
• Any Practitioner who fails to self-report or report anothers' Error should be metered out harsh penalties. The Professional Mandate requires everyone involved to "own up" to their mistakes - and to make sure everyone else does as well. "No Error goes unreported, ever."
• Professional Organisations, and their managers, must be Criminally and Civilly liable for malpractice and failures in their Fiduciary Duties.
• In order to Indemnify individuals within Organisations who act properly and professionally, legal liability and Onus of Responsibility have to transfer somewhere.
• There also have to be powerful incentives for non-Practitioner Managers and Administrators to uphold the Professions' Fiduciary Duties, Competence, Knowledge and Practice standards and adherence to Quality and Performance Improvement.

Failed Professions: Definition, Impact, Consequences

I'd like to assert that (Australian) Medicine, Banking and Finance & Investment Advisors and Information Technology (I.T.) are Failed Professions.

The fields of Management and Politics, whilst notable for their egregious actions and errors and not just failing expectations of good governance, but actively harming or exploiting the general public, are not Professions: they fail the basic tests of "Body of Knowledge" and "Entrance Requirements".

What do I mean by a "Failed Profession"?
How do I support that view?

A Theory of Professions

Here I attempt to lay out a Theory of Professions that can be used to guide and inform practitioners, Professional Bodies, Regulators, Governments and the general Public.

The original contribution here is an attempt to layout a framework to categorise Professions by their Duty to Others and suggest that these duties apply at multiple levels: Practitioners, Organisations, Whole Profession.

Describing Professions in this way makes discourse easier and more focussed, allows reasonable expectations to be set and may inform Policy makers and Regulators when judging if Professions or their parts are succeeding or failing.

The Real Deal on Not-for-Profit enterprises

Philip Greenspun in a piece on Early Retirement neatly summarises my experience with a multitude of Not-for-Profits...

Non-profit organizations exist to provide their staff with great jobs and the fun of making decisions and spending money.

The folks who work at a non-profit organization are very interested in drawing a salary higher than their skills and working hours would command at a for-profit enterprise subject to competition.

They are not especially interested in efficiency or accomplishment.

If you've come from the commercial world, in which McDonald's must be ruthlessly efficient for fear of being destroyed by Burger King, working with or in the typical non-profit organization will likely drive you to insanity.

Funnily enough, this aspect, nor the consequential intense internal politiking, doesn't appear in the definitive book on the subject, The The Complete Guide to Nonprofit Management by Smith, Bucklin & Associates.

The Complete Nuts-and-Bolts Guide to Managing Today's Bottom-Line Oriented Nonprofit Organizations

This significantly revised and expanded Second Edition of the highly popular how-to book identifies and addresses the unique concerns of nonprofit organizations. Cutting through the morass of mere theory, the experts at Smith, Bucklin & Associates, Inc., a leading nonprofit management firm, get right to actual practice with dozens of real-world examples and case studies, and up-to-date, vital, "combat-tested" strategies and techniques for dealing with virtually every nonprofit business management issue, including:
* The daily role of boards of directors
* Fund development and marketing
* Public and government relations
* Educational programs and certification
* Information services
* Human resources management
* Using the Internet