Core objectives of the FRC
The FRC operates within a framework set out in the Australian Securities and Investments Commission Act 2001 (the Act). The Act sets out core objectives for accounting and auditing standard setting in Australia. The objectives are that:
- Accounting standards should require the provision of information that:
- allows users to make and evaluate decisions about allocating scarce resources;
- assists directors to discharge their obligations in relation to financial reporting;
- is relevant to assessing performance, financial position, financing and investment;
- is relevant and reliable;
- facilitates comparability; and
- is readily understandable.
- Auditing standards should require the provision of information that:
- Provide Australian auditors with relevant and comprehensive guidance in forming an opinion about, and reporting on, whether financial reports comply with the requirements of the Corporations Act; and
- Require the preparation of auditors’ reports that are reliable and readily understandable by the users of the financial reports to which they relate.
- Accounting standards should facilitate the Australian economy by reducing the cost of capital and enabling Australian entities to compete effectively overseas.
- Accounting and auditing standards should facilitate the Australian economy by having accounting and auditing standards that are clearly stated and easy to understand.
- Accounting standards should maintain investor confidence in the Australian economy, including its capital markets.
The Act expressly limits the FRC's ability to become involved in the technical deliberations of the AASB and AUASB. It provides that the FRC does not have power to direct the AASB or AUASB in relation to the development, or making, of a particular standard, or to veto a standard formulated or recommended by the AASB or AUASB. This provision is designed to ensure the independence of the standard setter.