Fourth Meeting
28 February 2000
Outcomes of meeting held at Level 42, 242 Exhibition Street, Melbourne on 28 February 2000.
Attendance
Members:
Mr Paul Rizzo (Chairman)
Ms Elizabeth Alexander, AM
Mr Don Challen
Mr Leigh Hall, AM
Mr David Jackson
Mr Jeffrey Lucy
Mr Charles Macek
Ms Jan McCahey
Mr Graeme McGregor, AO
Mr Robert Nottle, CBE
Mr Gary Potts
Mr Michael Ullmer
Dr Diana Wright
FRC secretariat:
Mr Michael Kooymans
Mr Les Pascoe
Adoption of agenda
The proposed agenda was adopted.
Confirmation of minutes of 16 November 1999 and 9 February 2000 meetings
The minutes of the meetings of the Council held on 16 November 1999 and 9 February 2000 were confirmed.
Agenda item 1: Confirmation of decisions taken prior to 6 January 2000
The Council confirmed decisions it had taken - reflected in the minutes of FRC meetings held on 25 October and 16 November 1999 - prior to the formal appointment of FRC members on 6 January 2000 under the Australian Securities and Investments Commission Act 1989. These appointments followed the commencement on 1 January 2000 of the accounting standard setting provisions of the Corporate Law Economic Reform Program Act 1999.
Agenda item 2: FRC Charter
The Council considered a secretariat paper on this issue, together with a revised draft of the FRC Charter and agreed to defer finalisation of the Charter until details of the FRC's relationship with the AASB are settled.
The Council also agreed that, in the meantime, there was an urgent need to progress thinking on how the FRC would fulfil its functions under the legislation. A Sub-Committee was established comprising Mr Lucy (Chair), Mr Macek, Ms McCahey, Mr Nottle and Dr Wright to prepare a paper, focussing on the issues covered in clauses 5(a), 5(c), 6, 7 and 11 of the draft Charter, for consideration by the Council at a meeting to be scheduled for around mid-April.
Agenda item 3: FRC operations - keeping members informed; communications with stakeholder bodies
The Council agreed on the importance of members being kept fully informed of developments in national and international standard setting, including by way of:
- information sharing among FRC members;
- information and advice from stakeholder bodies;
- information and advice from the AASB, including as part of its formal working
relationship with the FRC;
- an important information source will be the attendance at FRC meetings of the AASB Chair (or Deputy Chair) for appropriate agenda items;
- links between the FRC and the Australian/regional IASC Trustees; and
- relevant material and briefing notes from the FRC secretariat.
It was agreed that the FRC secretariat would prepare periodic reports for each `regular' FRC meeting on the work of international organisations, including the IASC and IOSCO, and of national accounting standard setting bodies. It was also agreed that the FRC secretariat would provide FRC members with general background information on a weekly basis.
It was agreed that the secretariat would provide views on possible sources of public relations advice to the FRC, having regard to cost and other factors.
It was also agreed that the secretariat would prepare a paper containing basic material and messages for use by FRC members in speaking to stakeholders and others about the FRC. It was also agreed that members would advise the Chairman in advance of forthcoming speaking engagements.
It was agreed that agenda papers for FRC meetings would be annotated by the secretariat, in consultation with the Chairman, where it was considered appropriate for them to be circulated to stakeholder bodies as part of the consultation process between members and relevant stakeholders.
Agenda item 4: FRC relationship with AASB
It was agreed that the Chairman would write to the incoming Chair of the AASB formally conveying decisions of the FRC made to that time and setting out issues on which the FRC will want initial advice from the AASB, and timelines for that advice.
Ms McCahey reported to the FRC on ASIC's role in the process leading to the disallowance by the Senate on 17 February 2000 of two provisions of accounting standard AASB 1015, `Acquisition of Assets'. It was agreed that the Sub-Committee chaired by Mr Lucy would consider options for reducing the risk of disallowance of standards in the future. It was also agreed that the FRC Bulletin to be issued following the meeting would note that the FRC had agreed to return to these issues as part of its broader consideration of policies and procedures of the new Board. Ms McCahey disclosed her interest in the matter.
It was agreed that the FRC would arrange to meet with the new AASB (once the Chair is appointed) at a social occasion immediately following a future FRC meeting.
Dr Wright undertook to seek input from the Remuneration Tribunal and report back to the FRC on the question of remuneration of AASB members (other than the Chair).
Agenda item 5: AASB secretariat and funding arrangements
The meeting noted a report by the secretariat on progress in establishing the new AASB secretariat.
It was noted that funding for the remainder of 1999-2000, including the one-off costs of establishing the AASB in its new premises, was covered by existing stakeholder commitments. On the question of ongoing funding for the new accounting standard setting arrangements, it was noted that funding commitments for the three year period beginning 1 July 2000 had been received from the Commonwealth ($1.5m a year), the States and Territories ($0.5m a year), and the Australian Stock Exchange (rent-free accommodation for the AASB).
Mr Jackson asked that the minutes record that the Australian Shareholders' Association has declined to contribute funding for the new standard setting arrangements.
Mr Nottle advised that, in addition to its accommodation offer, the Australian Stock Exchange had $115,000, raised for the harmonisation program, that it was prepared to contribute to the new arrangements provided the funds could be used in a manner consistent with their original purpose.
Mr Lucy advised that the accounting bodies would be contributing funding but preferred to see what other stakeholders were prepared to contribute before indicating a figure.
It was agreed that the Chairman, Mr Lucy, Mr McGregor and Mr Ullmer would meet at an early opportunity to progress the funding question.
Agenda item 6: observer status at AASB meetings
It was agreed that this issue would be further considered as part of the work of the Sub-Committee on FRC functions.
Agenda item 7: Urgent Issues Group - draft Charter and possible nominations
It was agreed that the Chairman would write to the Chairman of the current Urgent Issues Group (with copies to the accounting bodies) advising that the FRC expects the UIG to continue under its existing charter as if it were a committee of the AASB, pending a review by the AASB of the UIG's composition and charter, and FRC consideration of the Board's advice on the matter.
Agenda item 8: Other business
The meeting noted a paper, `The Group of 100 and International Harmonisation', provided to the Chairman by the National President of the Group of 100 and circulated to members.
Ms McCahey reported on progress in IOSCO's consideration of whether to endorse a core set of IASC standards for cross-border raisings and listings, noting that an announcement was likely at the IOSCO Conference to be held in Sydney in May.
It was agreed that the secretary would contact members, on the Chairman's behalf, to canvas views on the Deputy Chairmanship of the FRC, as a basis for the Chairman making a recommendation to the Council.
The secretariat reported to the Council on the outcome of the ballot conducted on 15 February 2000 by the General Counsel of Telstra to determine the terms of appointment of members of the AASB, in accordance with the decision on AASB appointments taken at the FRC meeting on 9 February 2000. As a result of the ballot and earlier FRC decisions the terms of appointment of AASB members are as follows:
Chair (to be appointed by the Treasurer) - the FRC has recommended a three
year term
Mr Batten - two years
Mr Carter - three years
Dr Conn - three years
Ms Curran - three years
Mr Mackintosh - two years
Dr McTaggart - two years
Professor Peirson - two years
Ms Picker - two years
Mr Ward - three years.
Instruments of appointment for the nine FRC-appointed members were signed by the Chairman on 15 February 2000, the date on which the appointments took effect.
It was agreed that the next meeting of the Council would be held around the middle of April 2000.