Bulletin
2005/1 – 21 February 2005
The Financial Reporting Council (FRC) met in Melbourne on 21 February 2005. This meeting was additional to the regular quarterly meetings, with the main purpose being to deal with operational and procedural issues. A list of the current FRC membership is attached.
The meeting considered the following main issues:
Membership
The Chairman informed the Council that a former member of the FRC, Mr Lewis Ting, passed away late in 2004, and that Ms Karen Hamilton resigned from the FRC following the last meeting. The Council expressed its appreciation for the contributions made by Mr Ting and Ms Hamilton.
The Chairman reported that the Treasurer appointed Mr Warwick Hunt, Chair of the Accounting Standards Review Board of New Zealand, to the Council for three years with effect from 9 February 2005. The Treasurer has also appointed Mr Richard Humphry and Ms Jan West to the Council with effect from 7 March 2005 for a period of three years. The Treasurer has re-appointed Ms Elizabeth Alexander, Mr Don Challen, Mr David Jackson and Mr Graeme McGregor to the Council for a period of 18 months, with effect from 7 March 2005.
Report from the Chair of the Australian Accounting Standards Board (AASB)
The Council noted an update on AASB issues provided by the AASB Chairman including the tabling of the report of the Parliamentary Joint Statutory Committee on Corporations and Financial Services on its Inquiry into the Australian Accounting Standards tabled in compliance with the Corporations Act 2001 on 30 August and 16 November 2004, which included the recommendation not to disallow any of the tabled accounting standards. Other issues dealt with in the report from the AASB Chairman include GAAP/GFS Convergence and liaison with the International Accounting Standards Board (IASB). The Council noted and provided feedback on amendments to the AASB’s Governance Guidelines, which were made necessary due to the increased size of the AASB.
Mr Steve Somogyi noted that APRA would shortly be issuing a series of discussion papers on the implication of IFRS implementation for prudential standards.
Report from the Chairman of the Auditing and Assurance Standards Board (AUASB)
The AUASB held its first meeting for the year on 3 February. Matters discussed included the agenda for the International Auditing and Assurance Standards Board (IAASB) / National Auditing Standards Setters meeting in London, the drafting of auditing standards as disallowable instruments, and the audit reporting implications of the AASB project to develop an accounting standard for financial reports for the general government sector.
The AUASB will give detailed consideration to the AUASB strategic direction paper at its March meeting, with a view to framing recommendations to the FRC on its strategic direction for auditing standards setting.
The Council noted recent legal advice received from the Australian Government Solicitor, which confirmed their preferred view that for the purposes of the CAC Act, the FRC is the governing body of the AASB and the AUASB. On the basis of this advice, the FRC decided to endorse current arrangements.
Report from the Chair of the Audit Independence Subcommittee
Mr William Bartlett, who has been appointed by the FRC to assist the Council on its audit independence functions, outlined his proposed work programme for the next few months, including meetings with key stakeholders with which the FRC has entered into Memoranda of Understanding. The immediate priority is to prepare the FRC’s report on audit independence for 2004-05 and establish the scope of action and steps that would be required to achieve this objective.
Review of Operations
Members considered a number of matters pertaining to the operation of the FRC. There was unanimous support for enhanced consultative arrangements, such as seeking public comment on key policy proposals under consideration by the FRC, but the majority of members were not supportive of opening FRC meetings to the public. Members were of the view that opening up FRC meetings to the public risked having an adverse impact on the frankness and quality of discussion and consequently on the ability of the Council to take appropriate decisions.
The FRC also decided that it would consider a number of other measures which had been suggested by members during the course of the review which would enhance the capacity of stakeholders to provide input into the work of the FRC.
Other matters
The FRC agreed to provide up to $50,000 to assist with the staging of a regional forum on International Financial Reporting Standards (IFRS), to be held in Sydney in October 2005.
The FRC also agreed to a protocol governing the payment of travel expenses for overseas travel by FRC representatives attending official international meetings and by other Australians attending IASB or IAASB related activities. The protocol is available on the FRC website.
Advertisements seeking a consultant on sector neutral accounting standards were placed in major newspapers during January. A committee consisting of Mr Charles Macek, Mr Phillip Prior, Mr Don Challen and Ms Catherine Walter will consider applications received for the position.
The next FRC meeting will be held on Monday 4 April 2005.
The FRC is the peak body responsible for the broad oversight of the accounting and auditing standard setting process for the private and public sectors, as well as monitoring the effectiveness of auditor independence requirements in Australia. It comprises key stakeholders from the business and investing communities, the professional accounting bodies, governments and regulatory agencies. The FRC advises the Government on the accounting and auditing standard setting process and on the development of international accounting and auditing standards. It determines the broad strategic direction of the standard setters, the Australian Accounting Standards Board and the Auditing and Assurance 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;
- Mr Warwick Hunt, Chairman, Accounting Standards Review Board of New Zealand – nominated by the New Zealand Minister of Finance;
- Mr David Jackson, Director, Australian Shareholders’ Association — nominated by the ASA;
- 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, Company Director – nominated by Investment & Financial Services Association (IFSA);
- 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 (no longer a member) — nominated by ICAA;
- 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.