As a member of the Australian accounting group Walker Wayland Australasia Limited, Walker Wayland NSW has had a change of name and will operate under a network structure rather than as an association.
The change of name and operating structure has come about due to the International Federation of Accountants (IFAC) imposing new guidelines for the definition of networks and associations among accounting groups worldwide.
The motivation for IFAC to introduce these changes is to ensure situations such as Enron and HIH do not happen again. In those situations, the quality and integrity of audit work was compromised due to the same firm receiving significant work and income for other services such as business advisory.
The new guidelines define a network of accounting firms as a group which shares common:
Under the new definition, a firm that is a member of a network is required to be independent, or free from conflict, with respect to audit and due diligence clients of all other firms within the network.
These new guidelines are supported by governing bodies around the world including the Institute of Chartered Accountants in Australia.
While each of the Walker Wayland member firms operate independently from each other, the extent of resource sharing, common branding and support draws the relationship under the definition of a network rather than an association.
This contrasts to the less active international relationships which exist via BKR International, which will operate as an association.
The network structure and name also formalises the inclusion of the three New Zealand firms – Walker Wayland Auckland, Cleland Hancox Limited (Hamilton) and Munro Benge Limited (Wellington).
Each firm will operate as a network structure in Australia and New Zealand and all firms will maintain their existing connections to BKR International.
Introducing the changes, Shaun Reeves, Chairman, Walker Wayland Australasia Limited, said apart from the internal changes imposed by the new guidelines, business relationships with clients and contacts would continue as usual at each of the individual firms.
“The extent of resource sharing, common branding and support among our member firms have been key ingredients in each member firm successfully supporting their clients, and we are not prepared to lose the strength of those relationships which being part of the group provides,” Shaun said. “As a group we support the intent and objectives behind the changes and recognise that the move to being a network structure provides an opportunity to further demonstrate our professional standards which is one of our points of difference in the market place.
“Given our commitment to quality and unbiased professionalism, we are happy to adapt ourselves to the IFAC changes and continue to build our strong name and reputation,” he said.
Individual member firms in Australia and New Zealand will be unable to use the “BKR” reference within their firm name and will instead start to use the “Walker Wayland” component of the network name, with individual firms transitioning to this over time.
For example, Walker Wayland NSW for the Sydney office, SRJ Walker Wayland for the Brisbane office and Walker Wayland SA for the Adelaide office.
“In reviewing the association vs network debate, we conducted a thorough review of our operations in Australia and connections with BKR firms in New Zealand and decided that we wanted to continue to build on the high level of interaction that exists between our member firms,” Shaun said.
“We believe this has an inherent value to us as individual firms and to our clients and as a result, this defines us as a network.
“We then needed to put in place a formal structure to reflect this, hence the decision to replace BKR Walker Wayland National Association Inc., with Walker Wayland Australasia Limited,” he says.
According to Shaun, the decision making process about choosing to operate as a network was very defining and liberating.
“For us, the debate had a sharper edge as BKR International advised during this process that it had decided to define itself as an association rather than a network,” said Shaun.
“We then had to focus on the best solution for us and our clients, particularly as we already had strong market recognition in Australia and New Zealand for independence and monitoring conflicts of interest.
“We believe we have chosen an operating structure that will enhance our reputation for best practice – our current high standards will continue to be maintained and be common to all existing and new members of our network.
“Our relationships are a business advantage we are proud of and these allow each firm to operate and express themselves independently, and at the same time provide a breadth of resources from likeminded practitioners which similar sized firms do not have access to,” Shaun said.
Walker Wayland’s focus has been to ensure that the high standards for which the group has been known are maintained under the new IFAC guidelines. To illustrate how this works, here are a couple of examples:
Example 1
Say the NSW office is working on an audit for Company X. Meanwhile, a director of Company X has his tax returns prepared by the WA office. Under the new guidelines, there has to be a documented trail identifying these links and an assurance that the WA office cannot be involved in the audit of Company X.
Example 2
Say the NSW office is undertaking due diligence work for a new enterprise based in Sydney. A director of this new enterprise is based in Melbourne and the Victorian office has provided tax advice to this director. Should the Victorian firm be called upon to provide advice under the due diligence contract, the specific staff members involved in providing tax advice to the director have to be identified and then excluded from being involved in the due diligence contract.
Under the new structure, each member firm of the Walker Wayland Australasia Limited network will maintain a central database which will be regularly monitored to identify potential conflicts of interest. Subject to the nature of any potential conflict, actions will be implemented to ensure independence is maintained.
All staff are required to confirm annually that each firm has robust procedures in place to provide assurance of independence.