Bulletin
2001/5 - 5 November 2001
The Financial Reporting Council (FRC) met on 28 September 2001, its eleventh meeting since it first convened in October 1999.
FRC appointments
The FRC welcomed the appointment by the Treasurer on 13 September 2001 of two new members and one Alternate member of the FRC for terms of three years.
- Mr Ian Mackintosh, Chief Accountant, Australian Securities and Investments Commission (ASIC), was appointed on the nomination of ASIC. Mr Mackintosh is also Chairman of the International Federation of Accountants-Public Sector Committee (IFAC-PSC), the body responsible for international accounting standard setting for the public sector.
- Mr Phillip Prior, Group Manager, Property Group, Department of Finance and Administration, was appointed on the nomination of the Commonwealth.
- Mr Jim Kerwin, Branch Manager, Commonwealth Financial Reporting Unit, Department of Finance and Administration, was appointed as Alternate member to Mr Prior.
The FRC also welcomed Mr Michael Ullmer's willingness to continue to serve as FRC Deputy Chairman.
The meeting ratified the appointment of two members to the FRC Audit Committee - Mr Graeme McGregor, AO and Mr Robert Nottle, CBE. These appointments were made as a result of two retirements from the Committee - Ms Jan McCahey, who resigned from the FRC on 31 March 2001, and Mr Jeffrey Lucy, AM, on his appointment as FRC Chairman from 17 July 2001.
AASB appointments and remuneration
A vacancy on the Australian Accounting Standards Board (AASB) is likely at the end of 2001 due to the appointment of Mr Kevin Stevenson to a senior position on the staff of the International Accounting Standards Board (IASB). In addition, the terms of appointment of three AASB members expire on 14 February 2002.
The FRC agreed to consider at its next meeting, scheduled for 3 December 2001, recommendations by the FRC Nominations Committee for appointment or re-appointment to these positions.
In making its recommendations, the Nominations Committee will consider responses to the FRC's press advertisement seeking expressions of interest in appointment to the AASB. The Committee will also compile a list of names of qualified candidates for use when future AASB vacancies occur.
Report by FRC Chairman on developments since his appointment as Chairman
The Chairman reported on his discussions with representatives of stakeholder bodies since his appointment as Chairman in July 2001. Stakeholders had expressed a high level of support for Australia's new accounting standard setting arrangements. There is a clear sense that the structures are right and are capable of producing standard setting outcomes of a consistently high quality, but also a sense that the FRC could do more to raise its profile in the business community and among users of financial statements. The discussions also covered the need for a greater contribution from the business sector to the funding of the arrangements. This issue - and the accompanying need for accountability and deliverables in terms of FRC/AASB performance - will be further explored with key stakeholders over the next two months.
The Chairman also reported on his recent discussions with the Minister for Financial Services & Regulation, the Hon Joe Hockey, MP, the Parliamentary Secretary to the Minister for Finance and Administration, the Hon Peter Slipper, MP, the Chairman of the International Accounting Standards Board, Sir David Tweedie, and the Chairman of the UK Financial Reporting Council, Sir Bryan Nicholson. It was clear from the international discussions that Australia is seen as having a key role in international standard setting, through the technical expertise of the AASB and Australia's unique position vis-à-vis the United States, the UK and Europe.
Proposed FRC workshop, Sydney, 3 December 2001
The FRC broadly endorsed a proposed draft agenda for a workshop session of the FRC scheduled for 3 December 2001. The workshop will enable FRC members to consider a range of issues in a less formal setting with the assistance of guests invited to address particular topics. Likely topics include the role and operations of the Urgent Issues Group, the AASB's business plan, including its involvement with the IASB and IFAC-PSC, funding of the standard setting arrangements, and the FRC's objectives and role.
It is proposed that the FRC also hold a brief formal meeting following the workshop session.
Accounting standard setting for the public sector
Mr Prior gave a presentation to the meeting on the importance of the public sector in the accounting standard setting process and circulated an information paper on accounting in the Commonwealth Government.
Report by Chairman of AASB
The FRC discussed approaches to improving the operation and output of the AASB, a key FRC accountability. A small group of FRC members will work with the AASB Chairman to develop strategies in this area and report to the FRC meeting proposed for 3 December 2001. It was noted that there would be increased opportunities in future for the Board to leverage off the work of the IASB.
The meeting considered the proposed AASB budget for 2001-02. This implied an operating deficit of $254,000, in part reflecting the change in the AASB's publications policy to cease the commercialisation of accounting standards and UIG abstracts and rationalise the subscription service. While the net cash deficit can be funded in 2001-02 by available cash, the FRC was not willing to approve a budget incorporating an ongoing level of expenditure not covered by stakeholder funding commitments. A revised budget will be considered by the FRC at its proposed 3 December 2001 meeting. While the FRC Chairman is working constructively to address the question of business funding for the standard setting arrangements, AASB expenditures may need to be reviewed.
At its 3 December meeting, the FRC will return to the issue of the AASB's broad strategic direction for 2001-02, following discussion of the Board's role in international standard setting at the FRC workshop planned for earlier that day and responses by stakeholders to AASB Exposure Draft 102, `International Convergence and Harmonisation'.
FRC / AASB draft Annual Report for 2000-01
The Annual Reports of the FRC and AASB for 2000-01 have been approved by the FRC and submitted to the Minister for Financial Services & Regulation in accordance with statutory requirements. The reports will be released publicly - including on the FRC's website which is expected to go `live' within the next few weeks - when the document has been approved for tabling.
Amended conflict of interest guidelines for FRC members
The FRC has approved amendments to its Rules of Procedure to incorporate conflict of interest provisions for FRC members. The amended Rules of Procedure will be placed on the FRC's website.
International issues
Mr Warren McGregor, IASB Liaison member for Australia and New Zealand (and an observer at AASB meetings), briefed the FRC on the operations of the IASB. He noted that the IASB has on its work program a solid core of complex projects with potentially significant impact around the world. The IASB was very happy with the AASB's role in relation to international accounting standards, with a AASB exposure draft setting out its proposed revised policy on international convergence and harmonisation being very well received. With regard to United States views on the IASB, there had so far been a positive response from US IASB representatives and a preparedness by the FASB to involve itself in joint projects.
Mr Ken Spencer, IASC Foundation Trustee, briefed the FRC on IASC developments, including funding of the international standard setting process and forthcoming appointments to the Standing Interpretations Committee. On funding, he noted that the Foundation was seeking commitments of around $US20 million a year world-wide and that he had approached some corporates in Australia for contributions.
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.
- 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.
For further information, please contact the secretariat of the Financial Reporting Council, c/- The Treasury, Langton Crescent, Parkes ACT 2600.
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Mr Michael Kooymans |
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Ph: |
(02) 6263 3984 |
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Fax: |
(02) 6263 2770 |
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E–mail: |
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