Another entry was added to the rather sad chronicle of Ross Asset Management yesterday. David Ross, the founder, has been struck off by the New Zealand Institute of Chartered Accountants. It is pleasing that the Institute's rules have such provisions. Membership of a professional body should be obligatory for all practitioners, to provide consumers of the services rendered with confidence. However, it should not be a right. It should be reserved for those that satisfy specified entry criteria (through formal assessment)—and continue to do so. Membership and responsibility go together, including a commitment to on-going professional development and the upholding of professional standards, amongst others.
The Institute of Directors in New Zealand (IoDNZ) is partway through a process of professionalisation, to bring governance into line with other professions. The chartered director proposal includes a tiered membership structure and a commitment by members to the maintenance of standards and on-going professional development. This is timely, as some directors have been in the news in recent months, for all the wrong reasons. Members will vote on the proposal at the upcoming AGM.
The IoDNZ proposal seems to be sound, except the accountability component is somewhat weak. Actions and consequences should go together. The IoDNZ constitution includes provisions to strike off members who act fraudulently or bring the Institute into disrepute. However, if the IoDNZ is seriously committed to upholding governance standards, then a mechanism is required whereby members are held accountable for their ongoing compliance with the proposal. If a member fails to demonstrate a commitment to on-going professional development for example, then a downward adjustment of membership level may be appropriate. I hope members see fit to consider the inclusion of such an accountability amendment before the proposal is adopted.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.