Functional requirement

Section

Point

How to be addressed

1. General functions

Providing broad oversight of the process for setting accounting and auditing standards and ministerial reports.

1.1

The FRC will oversee the accounting and auditing standard setting arrangements by appointing members (other than the Chairmen, who are appointed by the Treasurer) to the Australian Accounting Standards Board (AASB) and the Australian Auditing and Assurance Standards Board (AUASB); approving and monitoring AASB and AUASB priorities, business plan, budget and staffing arrangements; determining the broad strategic direction of the AASB and the AUASB; providing directions, advice or feedback on matters of general policy and its procedures to the AASB and the AUASB; and monitoring the effectiveness of the AASB and the AUASB consultative arrangements.

Monitoring the effectiveness of auditor independence requirements in Australia

1.2

The FRC Auditor Independence Subcommittee will assist the FRC in the preparation of its annual report to the Government on the effectiveness of auditor independence framework in Australia.

Required reports

1.3

The FRC will publish an FRC/AASB/AUASB annual report and as part of this process will approve an accounts preparation timetable to assist in the planning process.

1.4

The FRC will prepare reports to the Government in a timely manner, and where necessary utilise the assistance of its committees and relevant consultants.

Establishing appropriate consultative mechanisms

1.5

Only the Chairman and Deputy Chairman shall publicly speak on behalf of the FRC. The FRC Chairman will have an active role in conveying to the public key FRC decisions.

1.6

FRC members will receive advanced copies of all FRC meeting agenda papers and where possible these advanced copies will be sent out at least one week prior to the FRC meeting. All FRC meetings will include a standing item whereby the Council is updated on stakeholder issues. Stakeholder groups represented on the FRC will be consulted regularly by the FRC member they have nominated. FRC members, subject to the confidentiality provisions of the Australian Securities and Investments Commission Act 2001 (ASIC Act), will be responsible for keeping their respective stakeholders informed of FRC developments and will bring to FRC meetings the views of their stakeholders as they consider appropriate. The FRC Chairman will hold regular meetings with stakeholders and the results of these meetings will be discussed with the Council.

1.7

The FRC Bulletin that reports on the main outcomes of an FRC meeting will be posted on the FRC website within five business days of its corresponding FRC meeting. Simultaneously, the FRC minutes from the previous FRC meeting will be posted on the FRC website.

1.8

FRC meetings will be held in private as has been agreed by the FRC. However the FRC will undertake periodic internal reviews of operations which will continually reassess the appropriateness of closed session meetings as well as other matters.

1.9

Occasionally, key guests will be invited to FRC meetings to provide updates on topics relevant to the FRC’s functions. For example, to provide updates on international developments including the work programmes of relevant international bodies and to assist in the understanding of the potential impact of the adoption of international standards on Australian businesses.

1.10

When appropriate, the FRC will engage consultants to assist it in carrying out its functions. These consultants will be technical experts in their respective consultancy fields, and will advise the FRC in the context of its functions. These consultants will provide, in accordance with the FRC approved terms of reference, objective research and analysis with regard to particular areas of FRC responsibility, and feedback received from liaising with key stakeholders.

1.11

The FRC will take note of, and where appropriate act in accordance with, recommendations made by the Trans-Tasman Accounting Standards Advisory Group, which has been established by the Australian and New Zealand Ministers to promote the alignment of Australian and New Zealand financial reporting requirements.

Report for ministerial direction

1.12

The FRC Chairman will maintain regular contact and reporting with the Treasurer and the Parliamentary Secretary to the Treasurer. This will include briefing and advising the Government on key FRC decisions.

2. Specific accounting standards functions

Appointing AASB members

2.1

The FRC Nominations Committee is responsible for recommending to the FRC appointments to the AASB. In carrying out its functions, the FRC Nominations Committee will meet at least semi-annually, and more frequently as required. The FRC Nominations Committee will periodically advertise widely seeking expressions of interest from persons interested in being considered for appointment to the AASB. At least annually, the Committee will consider and report to the FRC on the performance review of the AASB which may serve as input for AASB succession planning.

2.2

The FRC will approve all appointments to the AASB, other than the Chair.

Approving and monitor AASB priorities, business plan, budget and staffing arrangements.

2.3

The FRC Finance Committee will assist the Council in performing its functions by, amongst other things, advising on the FRC’s budget, including the distribution of funds between the FRC, the AASB and the AUASB. The AASB has a separate Audit Committee independent of the FRC Finance Committee, to meet its auditing requirements under the CAC Act.

2.4

In monitoring AASB priorities, business plan, budget and staffing arrangements the FRC Finance Committee will have full authority to investigate all matters that fall within the terms of reference of its Charter, which is approved by the FRC and posted on the FRC website. As needed, the Finance Committee may request from the FRC Chairman the use of FRC funds to obtain independent professional advice in discharging its functions. In carrying out its functions, the FRC Finance Committee will meet at least three times a year and more frequently as required.

2.5

The FRC will approve AASB priorities, business plan, budget and staffing arrangements.

- Standing FRC item on AASB

2.6

The AASB Chairman will provide regular updates on the progress of the AASB business plan, and work priorities at FRC meetings.

- Half-yearly report from AASB

2.7

Formal reports will be regularly received from the AASB Chairman at FRC meetings.

- Priority setting and feedback

2.8

The FRC and the AASB will make priorities publicly available through media releases and the publication of their annual report. Feedback on priorities from stakeholders will be provided by FRC members at the regular meetings of the Council.

2.9

The AASB business plan will describe how the AASB intends to address set priorities with a detailed work programmes.

- Required business plan content

2.10

The FRC Finance Committee will review the AASB’s annual business plan, which will subsequently be reviewed by the FRC.

2.11

The FRC will approve the AASB’s annual business plan.

- Budget and staffing process

2.12

The AASB business plan will include the number and composition of AASB staff and secondments. The FRC will anticipate the AASB adopting responsible commercial business techniques in preparing the Board’s budget and staffing arrangements.

Determining the AASB’s broad strategic direction

2.13

When appropriate, the FRC will issue strategic directions to the AASB that formally endorse proposed courses of action or goals. FRC members will bring to the FRC the views of their stakeholders as they consider appropriate.

2.14

The FRC Chairman will hold regular meetings with stakeholders and the results of these meetings will be provided to the FRC. The FRC Secretariat will supply background papers to assist discussions concerned with potential strategic directions when appropriate. Agenda papers that monitor relevant international financial reporting developments will be provided to every quarterly FRC meeting.

2.15

The strategic direction issued to the AASB by the FRC must be consistent with the legislation. The FRC will periodically assess that it continues to be appropriate and it will be reaffirmed in a letter from the FRC Chairman to the AASB Chairman following the corresponding FRC decision.

Giving the AASB direction or feedback on general policy or procedures

2.16

The AASB annual business plan and forward work programmes will reflect the strategic policy directions set by the FRC. The AASB Chairman will provide reports at FRC meetings, which will allow the FRC to provide feedback on general policy or procedures.

2.17

The FRC will monitor the AASB continuing to promote transparency and an open, consultative approach through utilising its due process for developing accounting standards. This process includes: using written publications; meeting with stakeholders; inviting public comment on its policies, procedures, and standards; issuing media releases; and maintaining a web site (www.aasb.com.au).

Monitoring international accounting standards, further a single set of international standards, promote best practice in Australia

2.18

The FRC will promote the development of the highest quality accounting standards. The FRC will ensure that the resource allocation for the adoption of the Australian equivalents of International Financial Reporting Standards (IFRS) is outlined in the AASB business plan and budget, which is reviewed and approved by the FRC. The FRC will encourage the AASB to continue to influence the development internationally of a single set of accounting standards. The FRC Chairman and members will, where appropriate, contribute to international forums intended to advance the concept of a single set of international accounting standards. In areas where Australia has a comparative advantage, the FRC will encourage the AASB and other Australian entities to provide leadership in the development of a single set of international accounting standards in the private, public and not-for-profit sectors. The FRC will work with the Trans-Tasman Accounting Standards Advisory Group to promote IFRS in the region by promoting links with other relevant accounting standard and policy organisations.

2.19

The FRC will facilitate assistance for Australian representatives to continue to work with the International Accounting Standards Board (IASB) and its committees in the development and improvement of specific IFRS. The Australian representative on the IASB has a standing invitation to all FRC meetings.

2.20

The FRC Chairman, FRC Secretary and other interested parties (eg overseas Treasury posts) will engage in periodic overseas visits and consult key parties in regard to furthering a single set of IFRS, promoting best practice in Australia and monitoring international developments.

2.21

The FRC Secretariat will provide a regular mailout on international developments to FRC members and a quarterly agenda paper on international developments.

Monitoring the operation and effectiveness of Australian accounting standards and consultative arrangements

2.22

Ongoing reports will be received from the AASB Chairman at every FRC meeting. The AASB Chairman will also report on this topic as part of the FRC/AASB/AUASB annual report. In addition, the FRC Secretariat will report to the FRC in summary form on the nature and frequency of communications it has received from the business community, public sector and not-for-profit sector about the impact and effectiveness of accounting standards in meeting the objectives of Part 12 of the ASIC Act. Comment will be restricted to issues that are material and of significance to the work of the FRC and AASB.

2.23

This function will be primarily undertaken by the FRC Chairman and by FRC members with their own constituent bodies. A standing item for FRC meetings, ‘stakeholder issues’, provides a key mechanism to convey the information gained from these consultations to FRC members.

2.24

The FRC will encourage the AASB to have extensive consultation and communication processes. The AASB will report on consultation measures and due process on its website and in its annual report.

Seeking contributions for the cost of Australian accounting standard setting

2.25

The FRC will seek funds from all sources encapsulated by the tri-partite funding model to meet the costs of Australian accounting and auditing standard setting. As part of this process the FRC will seek long-term funding commitments from all sources of funding encapsulated by the tri-partite funding model. The FRC will approach stakeholders to encourage them to meet their funding component under the tri-partite funding model and will advise the Government of any potential funding shortfalls.

2.26

The FRC will seek the Government’s assurances that it will not allow a shortfall in the sources of funding to undermine its objective of strengthening domestic accounting and auditing standards and their oversight arrangements and it will ensure that FRC funding is adequate and sustainable, through the adoption of a robust and effective funding model.

Monitoring and reviewing the level of funding and funding arrangements for the AASB

2.27

The AASB budget and business plan will be reviewed by the AASB at least twice a year and will be reviewed more regularly by both the AASB Audit Committee and the FRC Finance Committee. The AASB Chairman will be required to report to the FRC on a half-yearly basis, and to advise the FRC Chairman promptly of any anticipated significant departure from the approved arrangements. The FRC will monitor and review whether the approved AASB budget is prepared in accordance with the approved AASB business plan.

3. Specific auditing standards functions

Appointing of AUASB members

3.1

The FRC Nominations Committee is responsible for recommending to the FRC appointments to the AUASB. In carrying out its functions, the FRC Nominations Committee will meet at least semi-annually, and more frequently as required. The FRC Nominations Committee will periodically advertise widely seeking expressions of interest from persons interested in being considered for appointment to the AUASB. At least annually, the Committee will consider and report to the FRC on the performance review of the AUASB, which may serve as input for AUASB succession planning.

3.2

The FRC will approve appointments to the AUASB, other than the Chair.

Approving and monitor AUASB priorities, business plan, budget and staffing arrangements.

3.3

The FRC Finance Committee will assist the Council in performing its functions by, amongst other things, advising on the FRC’s budget, including the distribution of funds between the FRC, the AASB and the AUASB. The AUASB has a separate Audit Committee independent of the FRC Finance Committee, to meet its auditing requirements under the CAC Act.

3.4

In monitoring AUASB priorities, business plan, budget and staffing arrangements the FRC Finance Committee will have full authority to investigate all matters that fall within the terms of reference of its Charter, which is approved by the FRC and posted on the FRC website. As needed, the Finance Committee may request from the FRC Chairman the use of FRC funds to obtain independent professional advice in discharging its functions. In carrying out its functions, the FRC Finance Committee will meet at least three times a year and more frequently as required.

3.5

The FRC will approve AUASB priorities, business plan, budget and staffing arrangements.

- Standing FRC item on AUASB

3.6

The AUASB Chairman will provide regular updates on the progress of the AUASB business plan, and work priorities at FRC meetings.

- Half-yearly report from AUASB

3.7

Formal reports will be regularly received from the AUASB Chairman at FRC meetings.

- Priority setting and feedback

3.8

The FRC and the AUASB will make priorities publicly available through media releases and the publication of their annual report. Feedback on priorities from stakeholders will be provided by FRC members at the regular meetings of the Council.

3.9

The AUASB business plan will describe how the AUASB intends to address set priorities with a detailed work programme.

- Required business plan content

3.10

The FRC Finance Committee will review the AUASB’s annual business plan, which will subsequently be reviewed by the FRC.

3.11

The FRC will approve the AUASB’s annual business plan.

- Budget and staffing process

3.12

The AUASB business plan will include the number and composition of AUASB staff and secondments. The FRC will anticipate the AUASB adopting responsible commercial business techniques in preparing the Board’s budget and staffing arrangements.

Determining AUASB’s broad strategic direction

3.13

When appropriate, the FRC will issue strategic directions to the AUASB that formally endorse proposed courses of action or goals. FRC members will bring to the FRC the views of their stakeholders as they consider appropriate.

3.14

The FRC Chairman will hold regular meetings with stakeholders and the results of these meetings will be provided to the FRC. The FRC Secretariat will supply background papers to assist discussions concerned with potential strategic directions when appropriate. Agenda papers that monitor relevant international financial reporting developments will be provided to every quarterly FRC meeting.

3.15

The strategic direction issued to the AUASB by the FRC must be consistent with the legislation. The FRC will periodically assess that it continues to be appropriate and it will be reaffirmed in a letter from the FRC Chairman to the AUASB Chairman following the corresponding FRC decision.

Giving AUASB direction or feedback on general policy or procedures

3.16

The AUASB annual business plan and forward work programme will reflect the strategic policy directions set by the FRC. The AUASB Chairman will provide reports at FRC meetings, which will allow the FRC to provide feedback on general policy or procedures.

3.17

The FRC will monitor the AUASB continuing to promote transparency and an open, consultative approach through utilising its due process for developing auditing standards. This process includes: using written publications; meeting with stakeholders; inviting public comment on its policies, procedures, and standards; issuing media releases; and maintaining a web site (www.auasb.gov.au).

Monitoring international auditing standards, further a single set of international standards, promote best practice in Australia

3.18

The FRC will promote the adoption of international best practice and will ensure that the required resource allocation is outlined in the AUASB business plan and budget.

3.19

The FRC will facilitate assistance for Australian representatives to continue to work with the international auditing and assurance standard setters in the development and improvement of specific international standards.

3.20

The FRC Chairman, FRC Secretary and other interested parties (eg overseas Treasury posts) will engage in periodic overseas visits and consult key parties in regard to furthering a single set of international auditing and assurance standards, promoting best practice in Australia and monitoring international developments.

3.21

The FRC Secretariat will provide a regular mailout on international developments to FRC members and a quarterly agenda paper on international developments.

Monitoring the operation and effectiveness of Australian auditing standards and consultative arrangements

3.22

Ongoing reports will be received from the AUASB Chairman at every FRC meeting. The AUASB Chairman will also report on this topic as part of the FRC/AASB/AUASB annual report. In addition, the FRC Secretariat will report to the FRC in summary form on the nature and frequency of communications it has received from the business community, public sector and not-for-profit sector about the impact and effectiveness of auditing standards in meeting the objectives of Part 12 of the ASIC Act. Comment will be restricted to issues that are material and of significance to the work of the FRC and AUASB.

3.23

This function will be primarily undertaken by the FRC Chairman and by FRC members with their own constituent bodies. A standing item for FRC meetings, ‘stakeholder issues’, provides a key mechanism to convey the information gained from these consultations to FRC members

3.24

The FRC will encourage the AUASB to have extensive consultation and communication processes. The AUASB will report on consultation measures and due process on its website and in its annual report.

Seeking contributions to cost of Australian audit standard setting

3.25

The FRC will seek funds from all sources encapsulated by the tri-partite funding model to meet the costs of Australian accounting and auditing standards setting. As part of this process the FRC will seek long-term funding commitments from all sources of funding encapsulated by the tri-partite funding model. The FRC will approach stakeholders to encourage them to meet their funding component under the tri-partite funding model and will advise the Government of any potential funding shortfalls.

3.26

The FRC will seek the Government’s assurances that it will not allow a shortfall in the sources of funding to undermine its objective of strengthening domestic accounting and auditing standards and their oversight arrangements and it will ensure that FRC funding is adequate and sustainable, through the adoption of a robust and effective funding model.

Monitoring and review the level of funding and funding arrangements for the AUASB

3.27

The AUASB budget and business plan will be reviewed by the AUASB at least twice a year and will be reviewed more regularly by both the AUASB Audit Committee and the FRC Finance Committee. The AUASB Chairman will be required to report to the FRC on a half-yearly basis, and to advise the FRC Chairman promptly of any anticipated significant departure from the approved arrangements. The FRC will monitor and review whether the approved AUASB budget is prepared in accordance with the approved AUASB business plan.

4. Specific auditor independence functions

FRC’s information gathering powers

4.1

The FRC Chairman, acting on behalf of the FRC, may give a professional accounting body a written notice requiring the body to provide the FRC with information with respect to professional codes of conduct, quality assurance reviews, or investigation and disciplinary procedures. Similarly, information can be sought from an Australian auditor with respect to auditor independence matters.

Monitoring and assessing the nature and overall adequacy of:

- the systems and processes used by Australian auditors to ensure compliance with auditor independence requirements;

- the systems and processes used by professional accounting bodies for planning and performing quality assurance reviews of audit work undertaken by Australian auditors to the extent to which those reviews relate to auditor independence requirements;

- the action that Australian auditors who have been subject to such quality assurance reviews have taken in response to the reports prepared as a result of those reviews;

- the action taken by professional accounting bodies ensure that Australian auditors who have been subject to such quality assurance reviews respond appropriately to the reports prepared as a result of those reviews.

- the investigation and disciplinary procedures of professional accounting bodies as those procedures apply to Australian auditors;

4.2

The FRC with the assistance of an auditor independence consultant will establish the scope of action and the steps that will be required in order to meet the target of providing the Minister with a report on auditor independence.

4.3

As part of its monitoring of auditor independence issues, the FRC will enter into Memoranda of Understanding (MOU) with a number of organisations involved in the regulation or oversight of auditors, including the three main professional accounting bodies, the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulatory Authority (APRA) and the Australian Stock Exchange (ASX).

4.4

The MOUs with ASIC and APRA will facilitate liaison, co-operation, assistance and the exchange of information between the agencies. As part of the MOU process, ASIC will provide regular reports to the FRC identifying:

• Systemic issues noted by ASIC in relation to auditor independence that may be relevant to FRC’s assessment of auditor independence requirements and compliance with those requirements; and
• Matters arising from its financial reporting or audit surveillance activities in relation to compliance by auditors with the auditor independence requirements and/or compliance by auditors and companies with the independence disclosure requirements in the ASIC Act.

4.5

Any suspected breaches of the law that the FRC becomes aware of in conducting its auditor independence functions will be referred to ASIC.

4.6

Representatives of the FRC will meet periodically with the bodies with which it has entered into MOUs, including: ASIC, the professional bodies (CPA Australia, ICAA, NIA) APRA and the ASX, to assist in leveraging their resources, facilitating cooperation and avoiding overlaps of responsibilities. Representatives of the FRC will also meet with the Companies Auditors and Liquidators Disciplinary Board (CALDB) with regard to the exchange of letters between the FRC and CALDB on auditor independence matters.

4.7

The FRC will present its recommendations on the effectiveness of auditor independence requirements in Australia in its annual report to the Government.

4.8

The FRC will allocate the necessary resources to satisfy the scope of its auditor independence work. This will include the engagement of an auditor independence consultant to assist it in monitoring and assessing the effectiveness of auditor independence requirements in Australia.

4.9

The Commonwealth Treasury, acting on behalf of the FRC, will enter into a contractual agreement with an auditor independence consultant, and publicly announce the appointment of such a consultant in a special bulletin to be posted on the FRC website.

4.10

The FRC auditor independence consultant will work part-time with FRC Secretariat staff and the FRC Auditor Independence Subcommittee, advising on all related audit independence matters that fall under the oversight of the FRC and participating in meetings of the FRC Auditor Independence Subcommittee.

Monitoring the overall compliance by companies, registered schemes and disclosing entities with the audit-related disclosure requirements of the Corporations Act and the accounting standards;

4.11

The FRC will consider what type of information it would like to gather itself in light of what other key parties are doing. In this context, the FRC may decide to test firms on a few key issues (for example, how auditors deal with particular independence issues such as financial/employment relationships). This testing could be done with some large and middle tier firms and its scope will be determined on the basis of advice provided by an auditor independence consultant.

4.12

The FRC will enter into discussions with Australian auditors to get an understanding and receive information on their systems and processes used to ensure compliance with auditor independence requirements, the reports issued by these processes and their follow-up on Quality Review programmes that they have been subject to.

4.13

The focus of the FRC’s work will be on the general practices and procedures adopted by firms to ensure auditor independence. While the FRC may choose to test how firms apply these practices and procedures at a practical level, the FRC will not test the application of those practices and procedures for every audit conducted by the firm.

4.14

The FRC will selectively obtain information regarding companies’ compliance with audit related disclosure requirements.

4.15

Overall, the FRC will monitor and advise on the state of auditor independence and whether the framework in Australia encourages compliance with auditor independence requirements.

Giving the Minister reports and advice about the matters referred to in paragraphs (a) and (b) of section 225(2B) of the ASIC Act; and

4.16

The FRC will provide the Government with a source of advice on the performance of Australia’s audit profession as it relates to the issue of independence.

Giving professional accounting bodies reports and advice about the matters referred to in subparagraphs (a)(ii)(iii)(iv) and (v).

4.17

The MOU with each accounting body will recognise that the FRC and the body each have a role to play in promoting a robust system of auditor independence within Australia. The MOU will provide that wherever possible and mutually beneficial, the body and the FRC will collaborate on issues relating to the independence requirements of Australian Auditors.

4.18

As part of the MOU process, the professional accounting bodies will provide regular reports to the FRC with regard to their Quality Review programmes, their disciplinary processes and courses dealing with auditor independence.

Monitoring international developments in auditor independence, assessing the adequacy of the Australian auditor independence requirements provided for in:

- the Corporations Act; and

- codes of professional conduct;

in the light of those developments and giving the Minister, and professional accounting bodies, reports and advice on any additional measures needed to enhance the independence of Australian auditors;

4.19

The FRC, with the assistance of the Audit Independence Consultant, will monitor and review international developments in auditor independence, assessing the adequacy of the Australian auditor independence requirements.

4.20

Where appropriate, the FRC Chairman will take the opportunity during his overseas visits to meet with senior representatives of audit standard setting and audit oversight bodies.

Promoting, and monitoring the adequacy of, the teaching of professional and business ethics by, or on behalf of, professional accounting bodies to the extent to which the teaching of those subjects relates to auditor independence.

4.21

The FRC will promote and monitor the adequacy of the teaching of ethics by or on behalf of the professional accounting bodies and by educational institutions to the extent that they relate to auditor independence in consultation with the professional accounting bodies and educational institutions.

5. Annual reports

As soon as practicable after 30 June in each year, and in any event before 31 October, the FRC must give the Minister a report on:

- the operations of: the FRC and its committees and advisory groups; the AASB and AUASB and its committees, advisory panels, and consultative groups.

- the achievement of the objects set out in section 224; during the year that ended on 30 June in that year.

5.1

The FRC will ensure that the FRC/AASB/AUASB annual report contains a comprehensive overview of the main operations and achievements of the FRC, AASB and AUASB with regard to the applicable financial year.

5.2

The FRC will approve the FRC/AASB/AUASB annual report, incorporating financial accounts and reports from the standard setting boards and coverage of the FRC’s responsibilities in relation to auditor independence, at its annual September (or closest meeting to 15 October (see below) post 30 June) meeting.

5.3

Under subsection 9(1) of the Commonwealth Authorities and Companies Act 1997 (CAC Act) the directors of the AASB and AUASB are required to provide an annual report to the Minister by 15 October each year. This report will be incorporated in the FRC/AASB/AUASB annual report. The members of the FRC are the directors of the AASB and AUASB for the purpose of this section of the CAC Act.

The annual report must include details of any changes to the AASB’s or AUASB’s priorities or business plans that were made as a result of action taken by the FRC.

5.4

The FRC/AASB/AUASB annual reports will include up-to-date work programmes of the AASB and AUASB that outline any amendments to AASB or AUASB priorities or business plans.

As soon as practicable after 30 June in each year, and in any event before 31 October, the FRC must give the Minister a report on:

- the performance by the FRC, during the year that ended on 30 June in that year, of its functions under subsection 225(2B) of the ASIC Act (the auditor independence functions);

- the findings and conclusions that the FRC reached in performing those functions; and

- the actions (if any) that were taken by the FRC in respect of those findings and conclusions.

The report may be given to the Minister separately or included in the report given to the Minister under section 235B.

5.5

In most cases, the FRC will provide the Minister with all the reports it is obliged to produce, in one single report given to the Minister under section 235B, as soon as practicable after 30 June each year and in any event before 31 October (or 15 October for the AASB and AUASB reports), the FRC will provide reports on:

a) the operations of:

i) FRC and its committees and advisory groups;
ii) the AASB and its committees, advisory panels and consultative groups; and
iii) the AUASB and its committees, advisory panels and consultative groups; and the achievement of the objectives as set out in section 224.

b) monitoring accounting, auditing and auditor independence issues as determined appropriate by the FRC Chairman. These reports may consider contentious stakeholder issues and/or an update on sectoral and systemic issues.

6. Confidentiality

FRC, AASB and AUASB to protect confidential information

6.1

The FRC will comply with the confidentiality requirements in its Rules of Procedure, posted on the FRC website, which state that ‘..The Council must take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence, in accordance with section 237 of the Australian Securities and Investments Commission Act 2001..’. In addition, the FRC Secretariat will be bound by the Commonwealth Department of Treasury security guidelines, and will evoke security classifications for all sensitive material.

6.2

The FRC will advise the AASB and AUASB to maintain confidentiality guidelines for participants in its Project Advisory Panels and Consultative Groups.