Bulletin
2007 / 4 – 13 September 2007
The 42nd meeting of the Financial Reporting Council (FRC) was held in Melbourne on 5 September 2007. Main issues considered at the meeting were:
- the annual report of the FRC and the associated reports and financial statements of the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB);
- the preparation of the FRC’s 2006‑07 auditor independence report;
- 2008 appointments to the AASB and AUASB; and
- reports from standard setters and committees.
Annual Reports and Financial Statements
The FRC considered the draft annual reports of the FRC, AASB and AUASB for 2006‑07 and agreed to finalise and approve the reports out-of-session.
The FRC also approved the financial statements of the AASB and AUASB for the year ended 30 June 2007, subject to a number of minor technical amendments.
Auditor Independence functions
A progress report was given to the Council on the preparation of the FRC’s auditor independence report for 2006‑07. The FRC noted the timetable for finalising the report, which must be with the Minister by 31 October. The timetable includes a period of consultation with the bodies with which the FRC has signed Memoranda of Understanding concerning the exchange of information.
The FRC gave further consideration to the most appropriate means of progressing work associated with the consultancy reports prepared by The Allen Consulting Group and The Banarra Trust. The FRC decided that, following completion by their respective authors, both documents should be published on the FRC’s website as discussion papers.
The FRC also agreed to call tenders for an auditor independence consultant to assist the Council in the performance of its auditor independence functions. The existing auditor independence consultancy contract, which commenced in late 2004, ends in December 2007.
Appointments to AASB and AUASB
The FRC considered the procedures to be followed for filling vacancies on the AASB and AUASB that occur up to the end of June 2008.
Expressions of interest for filling vacancies on the two Boards will be sought by way of public advertisement.
Reports from standard setters and committees
The FRC received reports from the Chairmen of the AASB, AUASB, FRC Finance Committee, FRC Nominations Committee and FRC Audit Independence Committee. A report was also received from the Chairman of the Trans-Tasman Accounting and Auditing Standards Advisory Group.
In addition to the matters mentioned above, issues addressed in, or arising from, these reports included:
- The making of amendments to auditing standards during June 2007 to require a statement of compliance with International Financial Reporting Standards to be included in the auditor’s report.
- The issue of whether a single body should be responsible for the two standards dealing with quality control of audit work (currently, the AUASB is responsible for AUS 206 Quality Control for Audits of Historical Financial Information while the Accounting Professional and Ethical Standards Board is responsible for APES 320 Quality Control for Firms). This issue is to be considered at a future meeting of the Council.
- The approval of a minor amendment to the Charter of the Audit Independence Committee.
- The endorsement of a proposal for full Commonwealth Government funding for the FRC, AASB and AUASB from 2008‑09 onwards.
The FRC also had a preliminary discussion about the form of periodic reporting by the AASB and AUASB that was most appropriate to the needs of the FRC. It was noted that while the current reporting by the Boards largely satisfied the FRC’s needs in terms of information needed for the governance of the Boards, it may not meet the FRC’s needs when considering issues associated with the strategic directions of the Boards. Further consideration will be given to this issue at the Council’s December 2007 meeting.
Other matters
The Chairman expressed his appreciation for the contribution to the work of the Council made by Mr Richard Humphry, who recently retired from the Council. The Chairman also acknowledged the significant contribution made to the work of the Council by Ms Elizabeth Alexander, who would retire prior to the Council’s December meeting.
Ms Michelle Frenkel, who was recently appointed communications manager for the FRC, AASB and AUASB, made a presentation to the FRC outlining her vision for the position and the role she would perform in assisting the three bodies.
As the FRC’s meeting coincided with a meeting of the AASB, the opportunity was taken for members of the AASB to join with members of the FRC for an informal discussion of a range of issues of mutual interest to the two bodies.
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. A list of the current FRC membership is on the FRC’s website.
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.
Ms Suzanne Howarth
Ph: (02) 6263 3144 Fax: (02) 6263 2770
E-mail: frcsecretary@frc.gov.au or visit the FRC’s website at www.frc.gov.au.