Bulletin
1999/1 - 4 November 19991
The Financial Reporting Council (FRC) is a key element of the new institutional arrangements for accounting standard setting outlined by the Commonwealth Government in 1997 as part of its Corporate Law Economic Reform Program. Legislation to implement these arrangements was recently passed by the Parliament and is expected to come into operation in the near future.
The FRC is the peak body responsible for the broad oversight of the accounting standard setting process for the private and public sectors. It comprises key stakeholders from the business community, the professional accounting bodies, governments and regulatory agencies. Members of the FRC are appointed by the Treasurer.2
Key functions of the FRC are to advise the Government on the accounting standard setting process and the development of international accounting standards, and to determine the broad strategic direction of the standard setter, the Australian Accounting Standards Board (AASB). The FRC may give the AASB directions, advice and feedback on matters of general policy, and will be responsible for approving its priorities, business plan, budget and staffing arrangements. However, the FRC will not be able to influence the AASB's technical deliberations and hence the content of particular accounting standards.
The first meeting of the FRC was held on 25 October 1999. So that it can progress the work of establishing the new accounting standard setting arrangements, the Council will meet on an informal basis until its governing legislation comes into effect.
The meeting provided a very positive start to the Council's work, with members bringing a strong commitment to the task ahead.
The Council welcomed the passage through the Parliament of the Corporate Law Economic Reform Program Bill 1998.
The meeting gave initial consideration to: its own role; the composition of the new AASB and possible appointments to it; the AASB's technical and administrative support arrangements; and stakeholder contributions to funding of the new arrangements.
The FRC is responsible for appointing the members of the new AASB (except the Chair who will be appointed by the Treasurer). It is proposed that the new Board - which will replace the current AASB and Public Sector Accounting Standards Board - will be relatively small.
These appointments are an obvious priority on which the FRC has made good progress. The Council hopes to finalise its choices for the Board later this month. Subject to Council consideration, announcements could be made shortly thereafter.
The meeting approved the establishment of an Urgent Issues Group, as a committee of the AASB, as part of the new standard setting arrangements. The FRC will consider nominations for appointment to the UIG, and a proposed UIG Charter, at a later meeting. The meeting also agreed that Project Advisory Panels of relevant stakeholder interests should be established for each project being undertaken by the AASB.
Discussions are taking place with the main accounting bodies on the transfer of staff of the existing Australian Accounting Research Foundation to the AASB as a new, stand-alone secretariat. The new AASB Chair will also have a key role in these discussions when he or she is chosen. The staff represent a valuable resource and it is hoped that a relatively long period of uncertainty for them will soon come to an end.
The meeting gave preliminary consideration to the question of funding of the new accounting standard setting arrangements by stakeholders in the process.
Attending the meeting as observers were the current AASB Chairman, Mr Ken Spencer and the Chairman of the Public Sector Accounting Standards Board, Mr Ian Mackintosh, both of whom addressed the meeting.
The focus at present is on putting the new institutional arrangements in place. Once that task is achieved, the FRC will be able to turn to a detailed consideration of developments in national and international accounting standard setting. The Council promises to be an effective mechanism for ensuring that stakeholder views are taken into account in the standard setting process and that the Government has access to considered advice from stakeholders on relevant policy issues.
For further information, please contact the secretariat of the Financial Reporting Council, c/- The Treasury, Parkes Place, Parkes ACT 2600.
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Mr Michael Kooymans |
Mr Les Pascoe |
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Ph: |
(02) 6263 3984 |
Ph: |
(02) 6263 3978 |
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Fax: |
(02) 6263 2770 |
Fax: |
(02) 6263 2770 |
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E-mail: |
E-mail: |
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1 Issued with the authority of the Chairman of the Financial Reporting Council, Mr Paul Rizzo.
2 The members of the FRC are: Mr Paul Rizzo, Group Managing Director, Finance and Administration, Telstra Corporation Ltd (Chairman); Ms Elizabeth Alexander, AM, Partner, PricewaterhouseCoopers; Mr Don Challen, Secretary, Tasmanian Department of Treasury and Finance; Mr Leigh Hall, AM, Company Director; Mr David Jackson, Director, Australian Shareholders' Association; Mr Jeffrey Lucy, Managing Partner, PricewaterhouseCoopers (Adelaide); Mr Charles Macek, Chairman, County Investment Management; Ms Jan McCahey, Chief Accountant, Australian Securities and Investments Commission; Mr Graeme McGregor, AO, Executive Director, Finance, BHP; Mr Robert Nottle, CBE, Deputy Managing Director, Market Services, Australian Stock Exchange; Mr Gary Potts, Executive Director, Markets Group, Commonwealth Department of the Treasury; and Mr Michael Ullmer, Group General Manager, Financial and Risk Management, Commonwealth Bank. A second Commonwealth representative - a senior officer of the Department of Finance and Administration - is expected to be appointed shortly.