Bulletin
2007 / 02 – 13 March 2007
The 40th meeting of the Financial Reporting Council (FRC) was held in Melbourne on 6 March 2007. A list of the current FRC membership is attached. The FRC was pleased to have Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), in attendance at the meeting.
The main issues considered at the meeting were:
- an update from the IASB Chairman;
- financial issues;
- scope of audit independence work;
- the appointment of a communications manager;
- an update on the Uhrig review and its implications for the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUASB) and FRC; and
- reports from standard setters.
Update from IASB Chairman
The FRC welcomed Sir David Tweedie, Chairman of the IASB, to the meeting. Sir David was accompanied by Mr Tom Seidenstein, Director of Operations at the IASB, and Mr Warren McGregor, IASB member.
Sir David provided a wide ranging overview of the IASB’s future direction. In particular, Sir David discussed the importance of principles based international accounting standards, which eliminate the need for unnecessary rules and complexity.
Sir David also noted that Australia had made a significant contribution towards the promotion and adoption of international accounting standards and expressed his appreciation for the work undertaken by Australia in this area.
Financial issues
The FRC considered a range of issues raised by the Finance Committee. Key decisions by the FRC included:
- approving the revised FRC Budget for 2006-07;
- noting the progress reports of the 2006-07 Budgets of the AASB and AUASB;
- authorising a payment to the International Accounting Standards Committee Foundation (IASC Foundation) in 2006-07 of $800,000;
- agreeing to consider a potential further payment of the IASC Foundation at its June meeting, following an update on the FRC, AASB and AUASB budgets for 2006-07; and
- noting the arrangements made by the Secretariat for the Ken Spencer Memorial Lecture held on 5 March 2007, and that, as a consequence of the professional accounting bodies’ agreement to co-sponsor the lecture, together with the Department of Accounting and Business Information Systems of The University of Melbourne, there was no need for the FRC to utilise the agreed funding of $25,000.
Scope of audit independence work
In its 2004-05 Report of Audit Independence, the FRC noted that the Australian Government Solicitor provided advice that whilst the FRC’s functions should be primarily directed to ensure that auditors are complying with auditor independence requirements in the Corporations Act 2001 audits, it would be open to the FRC, at least in some of its functions, to look at the issue of auditor independence more broadly, and to examine the non-Corporations Act audits of Australian auditors.
The FRC agreed that the FRC Chairman should write to the Parliamentary Secretary to the Treasurer recommending that the FRC should expand the scope of its auditor independence work to encompass independence issues in respect of non-Corporations Act audits (especially in the area of self managed superannuation funds).
Appointment of a communications manager
The FRC agreed in principle to the appointment of a full-time communications manager that would work for the Boards and the FRC to assist in enhancing awareness and understanding of financial reporting and auditing issues in the wider community. It was also agreed to delegate to the FRC Chairman, in consultation with the Chairs of the AASB and AUASB, the determination of the job description for the position and the oversight of the subsequent selection and hiring process.
This position will be considered by the Finance Committee at its May meeting as part of its examination of the 2007-08 budgets, with a corresponding recommendation put forward for the consideration of the FRC at its 1 June 2007 meeting.
Update on the Uhrig review and its implications for the AASB, AUASB and FRC
A report on the proposed structure of the Boards and the FRC in accordance with the Uhrig review was noted by the FRC. As outlined in the report, the Government is currently considering the proposed recommendations, but no changes to the current structure are expected before 1 July 2008.
Reports from standard setters
The FRC received reports from the Chairs of the AASB and AUASB. The FRC noted the AASB’s priorities for 2007 and concluded that they were aligned with the FRC’s expectations for increased attention to the financial reporting needs of the public sector and other not-for-profit sectors.
It was noted that the AUASB had received the clarification of its Strategic Direction and had commenced redrafting the appropriate auditing standard to ensure reference to IFRS will be made in relevant audit reports. The FRC also noted that the AUASB work programme will focus on revising Guidance Statements and the IAASB Clarity project.
The FRC agreed to nominate AASB member Mr Glenn Appleyard for a public member vacancy on the International Public Sector Accounting Standards Board, and to work jointly with the professional bodies in endorsing Australian candidates for other vacancies at IFAC related bodies.
Other matters
At the conclusion of the formal agenda, the FRC met with members of the Australian Institute of Company Directors (AICD) to discuss a range of issues of mutual interest to the FRC and the AICD.----------------------
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.
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.
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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 — nominated by the Commonwealth);
- Mr Bruce Brook, Company Director, Melbourne, Victoria — nominated by the Business Council of Australia;
- Ms Kathryn Campbell, Deputy Secretary, Financial Management Group, Department of Finance and Administration — nominated by the Commonwealth;
- Mr Don Challen, Secretary, Tasmanian Department of Treasury and Finance — nominated by Heads of State and Territory Treasuries;
- Mr Michael Coleman, Partner, KPMG — nominated by the Australian Institute of Company Directors;
- Mr Mark Coughlin, Development Manager, Origin Energy — nominated by CPA Australia;
- Mr John Gethin-Jones, General Manager, Queensland Investment Corporation — nominated by Investment & Financial Services Association;
- 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 Australian Shareholders’ Association;
- Mr Eric Mayne, Chief Supervision Officer, Australian Stock Exchange — nominated by the Australian Stock Exchange;
- Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury — nominated by the Commonwealth;
- Mr John Stanhope, Chief Financial Officer and Group Managing Director, Finance and Administration, Telstra Corporation Limited — nominated by the Group of 100 Inc;
- Ms Catherine Walter, AM, Company Director and Solicitor; Chair of the Business Regulation Advisory Group — nominated by the Commonwealth;
- Ms Jan West, Partner, Deloitte Touche Tohmatsu — nominated by The Institute of Chartered Accountants in Australia;
- Mr Lee White, Chief Accountant, Australian Securities and Investments Commission — nominated by ASIC;
- Mr Klaus Zimmermann, Chief Executive Officer, Eldercare Incorporated and Director, National Institute of Accountants — nominated by the NIA.