Bulletin
2005 / 7– 21 December 2005
The Financial Reporting Council (FRC) met in Sydney on 16 December 2005. A list of the current FRC membership is attached.
The meeting considered the following main issues:
- International Financial Reporting Standards (IFRS) implementation;
- Auditor independence;
- AASB and AUASB membership; and
- Reports from the Chairmen of the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB).
International Financial Reporting Standards (IFRS) Implementation
The FRC noted that the Chairman had briefed the Treasurer following the last FRC meeting on issues raised by stakeholders on IFRS implementation. In addition, the AASB had written to the FRC responding to issues raised at the last FRC meeting.
The FRC agreed that legal advice be sought on the extent to which the requirements of the Australian Securities and Investments Commission Act 2001 (ASIC Act) conditioned the role of the AASB in its treatment of options and interpretations of IFRS, and that this matter be considered by the FRC following receipt of the advice. The FRC agreed that consideration of the strategic direction to the AASB be deferred pending progress with this issue, and receipt of the report from Mr Kevin Simpkins on sector neutral standards.
Auditor Independence
The Chair of the Auditor Independence Subcommittee reported on matters including the auditor independence work programme and meetings held with MoU stakeholders.
Progress was noted on the engagement of consultants to deal with matters during 2005-06, as agreed at the FRC meeting on 16 September 2005. It was agreed to not proceed at this stage with the engagement of a consultant on auditor independence issues in respect of non-Corporations Act audits, such as superannuation funds. It is anticipated that arrangements for the other consultancies will be finalised early in 2006 following a public tender process.
The FRC noted that the FRC report on auditor independence for 2004-05 was included in the same publication as the annual reports for the FRC, AASB and AUASB. Consideration will be given to the auditor independence report for 2005-06 being published separately from the annual reports.
AASB and AUASB Membership
The FRC noted that the results of peer evaluations carried out by AASB and AUASB members had been considered by the Nominations Committee, and the Committee is satisfied with the overall performance of individuals on both Boards. The Chairs of both Boards will discuss relevant matters with their Board members on an individual basis.
On the recommendation of the Nominations Committee, the FRC agreed to appointments to the AASB and AUASB. Notification of successful and unsuccessful applicants will be undertaken as soon as possible, and the names of successful applicants will be posted on the FRC website via a separate Bulletin.
Reports from the Chairmen of the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB)
The FRC noted an update on AASB issues, including IFRS adoption, the recent visit by International Accounting Standards Board (IASB) Chairman Sir David Tweedie, and the royalties payable to the IASB for the use of material related to IFRS.
The FRC agreed that the AASB should attach high priority to further progress on the GAAP / GFS harmonisation proposal and share with the FRC the feedback it has received from stakeholders on its exposure draft.
The FRC also asked to be briefed by the AASB on the feedback on its proposed new interpretations model, as well as the impact that this model would have on its budget and business plan. These matters will be considered at a future FRC meeting early in 2006.
The FRC noted an update on matters concerning the AUASB, including progress in the redrafting of Australian Auditing Standards, and international developments in auditing standards.
Other matters
The FRC approved revised budgets for the FRC, AASB and AUASB in 2005-06. The FRC agreed to pay sitting fees to FRC members for attendance at meetings of both standing committees of the FRC and ad hoc committees established by the FRC, and authorised the payment of up to $800,000 to the IASC Foundation during the first quarter of 2006.
Reports were provided on recent meetings, including that of the IASB Standards Advisory Committee in London, those by the FRC Chairman and Secretary during their visit to Europe and North America, and fora attended by the IASB Chairman Sir David Tweedie during his visit to Australia.
Mr Kevin Simpkins, who has been contracted to undertake research on the extent to which accounting standards can be made ‘sector neutral’, updated Council members on progress with the project, and provided an overall project plan for their consideration.
An update was provided on the activities of the Trans-Tasman Accounting Standards Advisory Group, including feedback from the IFRS Regional Policy Forum held in Sydney on 24 October 2005.
The meeting dates for the FRC in 2006 were agreed. These are:
- Monday 20 February (special strategy meeting)
- Monday 20 March
- Thursday 22 June
- Tuesday 26 September
- Friday 8 December
The venues for these meetings are yet to be finalised.
----------------------
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 Secretary 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 Richard Humphry, AO, Trustee, International Accounting Standards Committee Foundation;
- 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 Phillip Prior, First Assistant Secretary, Financial Management 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;
- Ms Jan West, Partner, Deloitte Touche Tohmatsu - nominated by The Institute of Chartered Accountants in Australia;
- Mr Klaus Zimmermann, Chief Executive Officer, Eldercare Incorporated and Director, 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 Ms Jan West — nominated by The Institute of Chartered Accountants in 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.