Bulletin
2004/4– May 2004
The Financial Reporting Council (FRC) met in Sydney on 19 May 2004. A list of the current FRC membership is attached.
The meeting considered the following main issues:
Report from Nominations Committee Chair
The FRC meeting approved the recommendation from the Nominations Committee that Mr Wayne Cameron be re-appointed to the AASB for a further term of one year, commencing on 7 June 2004. Mr Wayne Cameron’s initial appointment to the AASB, for a three year period, commenced on 7 June 2001.
Report from AASB Chair
The meeting approved, as an interim measure, revisions to the UIG Charter and agreed that further consideration of the UIG role will be undertaken by the FRC in six months.
The AASB Chairman indicated that GAAP-GFS harmonisation will be a high priority of the AASB post 30 June 2004, with the objective of having the corresponding standards ready by June 2005.
FRC funding
The Chairman noted a Secretariat paper indicating that FRC funding had been addressed in the 2004-05 Commonwealth Budget. Business contributions remain a part of the FRC funding model, with FRC funding to be considered again as part of the 2005-06 Commonwealth Budget. It was also noted that the provisions set aside in the contingency reserve for 2005-06 to 2007-08 allows Treasury, on behalf of the FRC, to enter into long-term commitments associated with implementation of CLERP 9 reforms.
Mr Bill Edge, Chairman of the AuASB and Mr Richard Mifsud, Executive Director of the Australian Accounting Research Foundation provided an update on the proposed AUASB Budget for 2004-05.
The meeting noted that in line with the updated indicative requirements of the AUASB in 2004-05, the on-going support from the government and business and the fact that currently the accounting bodies are funding the operation of the AuASB, it would be appropriate for the accounting bodies to maintain their current level of overall funding in 2004-05. Consequently, the meeting agreed that the FRC Chairman will be writing to the accounting bodies requesting from them contributions consistent with their current funding of the audit standard setting process and their contributions to the FRC. Confirmation of the commitment from the States and Territories will also be sought.
The meeting also agreed that prior to the 18 June FRC Meeting, the Audit Committee will meet to discuss an updated business plan and 2004-05 budget for the AASB, and an updated indicative business plan and 2004-05 budget for the AUASB. It also agreed that the Audit Committee will discuss the 2004-05 FRC’s own budget.
AUASB staffing and accommodation arrangements
The meeting noted a Secretariat paper and agreed that the AASB enter into a lease with the ASX in regard to transferring to Level 4 of the ASX Building, 530 Collins Street, Melbourne.
The FRC Chairman established a small AUASB Strategic Direction Taskforce to consider any future strategic directions that the FRC may issue to the AUASB.
This Taskforce will meet prior to the scheduled 18 June 2004 FRC Meeting and report to it. Staffing issues will be considered in the context of the Audit Committee budget discussions.
Report on progress of MOUs
The meeting considered the progress report from the Secretariat on the individual draft MOUs progressed with a number of parties in order to assist the FRC in the performance of its expanded functions regarding the oversight of auditor independence requirements under the CLERP 9 Bill. The Chairman noted that he will hold further consultations with the Institute of Chartered Accountants under the general objective of having a common MOU with the professional accounting bodies.
The meeting agreed that the FRC should seek legal advice in regard to the MOUs to ensure that their wording does not limit in any way the functions and powers of the FRC and is consistent with the wording of the CLERP 9 Bill. The meeting also agreed that all MOUs should have a common commitment to agree to further revision in light of implementation experiences. It was also noted that in cases where organisations cannot legally enter into MOUs with the FRC, an exchange of letters of agreement may be used as an alternative.
Report on CLERP 9 taskforce meeting
The meeting noted the draft Minutes from the CLERP 9 Taskforce Meeting held on 6 May 2004 and continued the discussions of the expanded FRC role under CLERP 9 in view of the recommendations contained in the report prepared by the consultant Mr Robert Lynn. It was agreed that Treasury will prepare a paper for the FRC to facilitate further discussions on this topic by setting out the FRC’s role on auditor independence and how it fits within the overall oversight and compliance framework. The CLERP 9 taskforce will hold a meeting in the week starting on 24 May to discuss this paper and report to the FRC at the 18 June 2004 FRC Meeting.
Other business
The Chairman foreshadowed a proposed agenda item for the 18 June 2004 FRC meeting in regard to an internal review of the functioning of the FRC, including a stock-take of its operations.
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 and 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.