Accountant war breaks out

Craig Norgate, chief executive of the New Zealand Institute Of Chartered Accountants. 7 May 2013 New Zealand Herald Photograph by Brett Phibbs

CPA Australia is taking defamation action against The New Zealand Institute of Chartered Accountants, alleging its rival made false and defamatory statements, alleging "inferior" education standards, lack of global affiliations, misuse of membership fees and a "second-rate designation", according to a CPA statement of claim lodged with Wellington High Court.

The case, which also claims breaches of the Fair Trading Act, is set down for a seven-day trial in the Wellington High Court starting July 7. NZICA has since merged with the Institute of Chartered Accountants Australia as they faced increased competition from CPA, a rival professional accounting body.

In its statement of claim, CPA Australia, which claims a membership of more than 144,000 finance, accounting and business professionals in 127 countries, alleges NZICA chief operating office Kirsten Patterson told accounting professionals attending an industry event called RePublic in 2013 that CPA wasn't a member of the Global

Accounting Alliance because its education pathway isn't up to the same standard; that CPA Australia doesn't have the same beneficial global partnerships with accounting bodies; that CPA "wastes or misuses membership fees to pay for expensive television advertising", and that CPA Australia is a "second-rate designation that has undermined the accounting profession in New Zealand."

CPA Australia said the statements, detailed on two separate occasions in Christchurch and Wellington, were "false and defamatory", and as a result of their publication its reputation had been injured and it has been subjected to public odium, ridicule and contempt. The publication of the statements meant it had suffered or is likely to suffer pecuniary loss in the form of damage to goodwill, reduced applications for membership, and an increase in resignation numbers, it said.

CPA's solicitor Mai Chen of law firm Chen Palmer is seeking a declaration that the company has been defamed, costs and other relief as the court in its discretion deems appropriate without giving a specific figure for damages.

Further, CPA alleges the NZICA also breached the Fair Trading Act in a 2011 flyer it published for students comparing the rival organisations.

In the flyer, NZICA stated that the average annual salary for its members was $140,000, compared with $100,000 for Certified Practicing Accountants Australia, that CPA Australia has less rigorous standards and offers inferior training and mentoring upon graduation, and that CPA Australia is not part of an international accounting alliance, according to CPA Australia's statement of claim.

"The flyer is a misleading or deceptive comparison of the services offered," CPA Australia said in its claim. It says salaries on average are equal for memberships of both organisations, it requires extensive post-graduate experience and mentoring in addition to academic experience and online training, its designation is globally recognised, it is an accredited body and it has international alliances with a range of accounting bodies.

CPA Australia further cites a full-page advertisement published in the New Zealand Herald in October 2012 with a large-font heading stating: "In accounting, there's best practice and then there's second-best practice," which stated that only a member of the New Zealand Institute of Chartered Accountants had been exposed to the highest levels of industry training and development, which is why top CFOs and CEOs only employ chartered accountants.

The statements "give the misleading impression that a member of the plaintiff would be exposed to an inferior level of industry training and development than a member of the defendant and could therefore not be employed by a chief financial officer or chief executive officer," CPA Australia said in its claim.

It also cites comments by NZICA chief executive Craig Norgate in a National Business Review article in May 2013, which it said "gives the misleading impression that the plaintiff's, CPA Australia, designation is inferior to the defendant's chartered accountant designation because the plaintiff has less rigorous entry requirements."

The flyer, advertisement and article constitute misleading and deceptive conduct in trade under the Fair Trading Act, according to CPA Australia. As a result, students and other candidates are likely to give CPA Australia reduced consideration and it is likely to suffer pecuniary loss as damage to goodwill, reduced applications for membership and an increase in resignation numbers, it says.

CPA Australia is claiming damages of $50,000, costs and other relief at the discretion of the court.

Lawyers acting for NZICA declined a request for the statement of defence.