Bulletin
2001/6 - 19 December 2001
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The Financial Reporting Council (FRC) met in Sydney on 3 December 2001, its twelfth meeting since it first convened in October 1999. The minutes of the meeting will be placed on the FRC website when they have been confirmed.
The meeting was preceded by a workshop allowing FRC members to exchange views on a range of issues in a less formal setting. The discussion generated a number of worthwhile ideas. It was agreed however that, where firm conclusions were reached, formal decisions would be deferred until the first FRC meeting in 2002 to allow time for further reflection and any necessary consultation with stakeholders.
Issues discussed at the workshop included: the role and operation of the UIG, including its composition, chairmanship, governance arrangements and charter; ideas for improving the operation and output of the AASB; the statutory requirement for accounting standards to be subject to cost-benefit analysis; the AASB's consultation arrangements; the FRC and AASB relationship with international counterpart bodies, including the arrangements proposed in AASB Exposure Draft 102, `International Convergence and Harmonisation Policy' (which the AASB released in July 2001 for public comment); and the FRC's profile and objectives.
The FRC plans to repeat the very successful workshop format, perhaps later in 2002.
The main outcomes from the brief formal meeting of the FRC which followed the workshop are set out below.
Stakeholder consultation
As a body comprising nominees of key stakeholder bodies, and through its own consultation arrangements and oversight of the AASB, the FRC has an important role to play in maximising stakeholder involvement in the standard setting process.
The FRC noted a report on further meetings between the FRC Chairman and stakeholder bodies, completing the consultation round initiated by the Chairman following his appointment in July 2001. The latest meetings, held on 2 and 9 November 2001 in Sydney and Melbourne, involved representatives from the Investment and Financial Services Association, the Australian Institute of Company Directors, the Business Council of Australia, the Group of 100 and Qantas Airways Ltd. The Chairman also participated on 9 November in a meeting in Melbourne of the Emerging Accounting and Auditing Issues Discussion Group.
The FRC meeting was followed by a dinner involving FRC members, the AASB Chairman, and stakeholder representatives from the Australian Institute of Company Directors, the Securities Institute of Australia, and the Group of 100.
FRC/AASB Annual Reports
The Minister for Financial Services & Regulation recently approved the 2000-01 FRC/AASB Annual Reports for tabling in both Houses of the Parliament. The combined report has been placed on the FRC website.
Report of small group on improving AASB operation and output
At the 28 September 2001 FRC meeting, it was agreed that a small group of FRC members would work with the AASB Chairman to develop strategies to improve the AASB's operation and output, and report to the 3 December FRC meeting.
The issue was discussed at the FRC workshop where a number of proposals were put forward. Members agreed to defer any decisions on the issue (along with decisions on other items on the workshop agenda) until the FRC's first meeting in 2002.
Proposed AASB budget for 2001-02
The FRC further considered the AASB's proposed budget for 2001-02 on the basis of revised estimates provided by the AASB Chairman showing an operating deficit of $42,904, down from the $254,642 deficit estimated in September 2001. This change mainly reflected lower estimates of expenditure.
The meeting noted that the revised operating deficit for 2001-02 was likely to be far exceeded by the available cash surplus. Against that background, and in view of indications of support from the business community for additional funding for the standard setting process, the FRC approved the AASB's proposed budget for 2001-02. The AASB Chairman advised the meeting that he was continuing to explore options for reducing AASB administrative expenses.
Additional funding for the standard setting process
The meeting noted that, beyond 2001-02, there would be a need for additional funding from the corporate sector. The FRC Chairman reported on the status of discussions with various stakeholder bodies aimed at securing this additional funding support. The FRC will return to this important issue early in 2002.
AASB's broad strategic direction
Issues relating to the AASB's broad strategic direction for 2001-02 were discussed at the FRC workshop earlier in the day. It was agreed that the FRC would finalise its consideration of this issue in early 2002 when it was expected that the AASB will have fully assessed stakeholder responses to AASB Exposure Draft 102, `International Convergence and Harmonisation Policy'.
AASB appointments and remuneration
The FRC considered a report by the FRC Nominations Committee on:
- a proposed amendment to the Nominations Committee charter to include as one of the Committee's functions the making of recommendations to the FRC on remuneration issues affecting part-time AASB members and the AASB staff;
- the desirable composition of the AASB following the resignation of Mr Kevin Stevenson and in light of the expiry on 14 February 2002 of the terms of appointment of three members;
- peer evaluations and self-evaluations of the performance of individual AASB members under the performance review process agreed by the FRC at its meeting on 4 June 2001;
- candidates for appointment or re-appointment to current and immediately prospective Board vacancies;
- candidates for inclusion on an ongoing list of people qualified for appointment to the Board, to be referred to when future vacancies occur; and
- the remuneration of AASB members.
The FRC approved an amendment to the Nominations Committee charter to include remuneration issues affecting part-time AASB members and the AASB staff.
The FRC carefully considered candidates for appointment or re-appointment to the AASB, including those who had responded to the FRC's national press advertisements in August seeking expressions of interest in appointment to the Board. In doing so, the FRC took into account the desirable composition of the Board and the outcome of the regular performance review of existing Board members. The meeting agreed on a process for taking this consideration forward, with decisions to be taken out of session. It is expected that announcements will be made early in 2002.
In the light of movements over the past year in daily sitting fees determined by the Remuneration Tribunal for part-time statutory office holders, the FRC approved a Nominations Committee recommendation that, with effect from 1 September 2001, part-time AASB members receive a daily sitting fee of $620, to be reviewed again in September 2002.
Stock-take of FRC activities
The FRC noted a paper prepared by the secretariat summarising actions taken by the FRC in meeting its statutory obligation to provide broad oversight of the standard setting process.
International issues
The FRC also noted a paper prepared by the secretariat reporting on recent developments in international accounting standard setting.
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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