Bulletin
2004/3 – April 2004
The Financial Reporting Council (FRC) met in Melbourne on 23 April 2004. A list of the current FRC membership is attached.
The Chairman noted that Mr Ken Spencer had passed away the day before the last FRC Meeting held on 31 March 2004. The Council agreed with the Chairman in expressing their deep appreciation and acknowledgement of Mr Ken Spencer’s contribution to the current framework of international accounting standards and that he will be sorely missed by the FRC, accounting profession and IASC. The FRC agreed unanimously to establish a commemoration in Mr Ken Spencer’s memory.
The meeting considered the following main issues:
Transition to 2005
The Council heard an update from FRC members on their consultations with stakeholders following their in-principle agreement on 31 March 2004 to proceed with the current Australian timetable for adoption of international accounting standards from 1 January 2005. It was acknowledged that announcement of the agreement had provided certainty on the timing for implementation in Australia, particularly in relation to IAS 39, and therefore alleviated many of the concerns on the timing schedule. Stakeholders appeared broadly supportive of the decision, provided the AASB would be able to meet its work program deadline by 30 June 2004.
The AASB Chairman, Professor David Boymal, confirmed that the international accounting standards released by 31 March 2004 by the IASB met the AASB’s requirements and that the AASB will be able to make available on its website the corresponding versions of Australian standards by 30 June 2004.
APRA member Mr Steve Somogyi, advised the Council that APRA will continue with its work program to revise prudential standards in line with the international accounting standards to be adopted by Australia and noted that challenges remained in raising awareness and managing operational risk particularly amongst small and medium sized businesses in the finance and insurance sectors.
The FRC also noted advice from the Chair of the IASB on developments in Europe indicating that the adoption of International Financial Reporting Standards (IFRS) from 1 January 2005 was on schedule. The European Commission cannot delay implementation of approved IFRS without proposing a new regulation. While there remains uncertainty whether the European Commission will endorse IAS 39 as part of the 2005 timetable, the UK Accounting Standards Board is proposing the adoption of IAS 32 for all companies and IAS 39 for all listed companies. It was also noted that both the European Central Bank (ECB) and the European Financial Reporting Advisory Group (EFRAG), subsequent to the completion of the final batch of IAS on 31 March 2004, have recommended adoption of all standards including IAS 39.
Following the presentations the Council unanimously agreed to ratify and make final its decision regarding the adoption of international accounting standards by Australia from 1 January 2005. The Council also noted the need to monitor preparations for adoption and agreed that the FRC Chairman should contact the professional accounting bodies and other stakeholder groups to request them to elevate awareness amongst their members and clients. It was also agreed that the FRC Chairman will formally inform the Government and the AASB of the Council’s decision on the timetable for adoption of international accounting standards by Australia.
Report from FRC Audit Committee Chair
Following a presentation by the FRC Audit Committee Chair, Ms Elizabeth Alexander AM, in regard to the Audit Committee meeting held on 18 March, the Council agreed that:
- A discussion of FRC’s 2004-05 Budget issues, including preliminary budgets for the AASB and AUASB will be held at the FRC meeting on 19 May 2004;
- The FRC Chairman will write to Mr Paul Volcker, Chairman of the IASC, advising the FRC’s decision to contribute to the IASB a further $300 000, which will complete the $1 million the FRC originally indicated it would contribute for 2002-03. The decision on the additional contribution to the IASB was based on the satisfactory progress on copyright negotiations, as advised by the AASB Chairman. The FRC Chairman would also write to Mr Volcker submitting Australian candidates to be considered by the IASC as a potential replacement for Mr Ken Spencer; and
- The AASB Chairman will be authorised to exceed the budgeted figure for fixed asset expenditure by up to $50 000 per year and for operating expenditures for up to $70 000 per year without prior approval by the FRC.
Other Business
The FRC noted information papers presented by the Secretariat in regard to the AUASB 2004-05 Budget and in regard to the progress on preparations for the implementation of the FRC’s expanded responsibilities under CLERP 9. The Council also noted a paper prepared by Mr Robert Lynn containing his advice to the Council on Auditor Independence functions and agreed to discuss it at its 19 May meeting, following an anticipated discussion by the FRC CLERP 9 task force.
The Council also agreed to amend its rules of procedures to allow voting by proxies.
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 and investing communities, 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.
Mr Jorge del Busto
Ph: (02) 6263 3144
Fax: (02) 6263 2770
E-mail: jdelbusto@frc.gov.au
or visit the FRC’s website at www.frc.gov.au.
ATTACHMENT
Members of the Financial Reporting Council
Members:
- Mr Charles Macek, Company Director — FRC Chairman (appointed as Chairman by the Treasurer and nominated as an FRC member by the Securities Institute of Australia);
- Ms Elizabeth Alexander, AM, Adviser to Blake Dawson Waldron — FRC Deputy Chairman (appointed as Deputy Chairman by the FRC and nominated as an FRC member by the Australian Institute of Company Directors);
- Mr Don Challen, Secretary, Tasmanian Department of Treasury and Finance — nominated by Heads of State and Territory Treasuries;
- Ms Karen Hamilton, Chief Integrity Officer, Australian Stock Exchange — nominated by the Stock Exchange;
- Mr David Jackson, Director, Australian Shareholders’ Association — nominated by the ASA;
- Mr John Langoulant, Under Treasurer, WA Department of Treasury and Finance;
- Mr Graeme McGregor, AO, Company Director — nominated by CPA Australia;
- Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury — nominated by the Commonwealth;
- Mr Tom Pockett, Chief Financial Officer, Woolworths Limited — nominated by the Business Council of Australia;
- Mr Greg Pound, Chief Accountant, Australian Securities and Investments Commission — nominated by ASIC;
- Mr Phillip Prior, First Assistant Secretary, Budget Group, Department of Finance and Administration — nominated by the Commonwealth;
- Mr Brian Scullin, Special Adviser to Head of Deutsche Asset Management, Asia-Pacific – nominated by Investment & Financial Services Association (IFSA);
- Mr Lewis Ting, Retired Ernst & Young Partner, Company Director — nominated by The Institute of Chartered Accountants in Australia;
- Ms Catherine Walter, AM, Company Director and Solicitor; Chair of the Business Regulation Advisory Group;
- Mr Klaus Zimmermann, Chief Executive Officer, Eldercare Incorporated and National President, National Institute of Accountants — nominated by the NIA.
Alternate members:
- Mr Roger Cotton, Chief Executive Officer, National Institute of Accountants; alternate member to Mr Klaus Zimmerman — nominated by the NIA;
- Mr Stephen Harrison, AO, Chief Executive Officer, The Institute of Chartered Accountants in Australia; alternate member to Mr Lewis Ting — nominated by ICAA;
- Mr Jim Kerwin, First Assistant Secretary, Commonwealth Financial Reporting Unit, Department of Finance and Administration; alternate member to Mr Phillip Prior — nominated by the Commonwealth;
- Mr Greg Larsen, Chief Executive Officer, CPA Australia; alternate member to Mr Graeme McGregor, AO — nominated by CPA Australia;
- Mr Michael Rawstron, General Manager, Corporations and Financial Services Division, Department of the Treasury; alternate member to Mr Jim Murphy — nominated by the Commonwealth.