Sixth Meeting
3 July 2000
Outcomes of meeting held at Level 3, 530 Collins Street, Melbourne on 3 July 2000.
Attendance
Members:
Mr Paul Rizzo (Chairman)
Ms Elizabeth Alexander, AM
Mr Don Challen (participating by phone)
Mr Leigh Hall, AM
Mr Stephen Harrison, AO (informal Alternate for Mr Lucy; participating
by phone)
Mr David Jackson
Mr Charles Macek
Mr Graeme McGregor, AO
Ms Anne Morant (Alternate for Dr Wright)
Mr Robert Nottle, CBE
Mr Gary Potts
AASB:
Mr Keith Alfredson (Chairman)
FRC secretariat:
Mr Michael Kooymans
Apologies:
Mr Jeffrey Lucy
Ms Jan McCahey
Mr Michael Ullmer
Dr Diana Wright
Adoption of agenda
The proposed agenda was adopted.
Confirmation of minutes of 28 February 2000 and 10 April 2000 meetings
The minutes of the meetings held on 28 February 2000 and 10 April 2000 were confirmed.
Agenda item 1: Report by Chairman of AASB
The AASB Chairman provided a detailed report to the Council covering the following issues on which he had previously circulated papers to FRC members:
Interim Business Plan and Budget
The FRC approved, with two changes, the interim standard setting priorities recommended by the AASB (subject to consultation with key constituent bodies) in the paper `Interim Business Plan and Budget' The two changes, agreed by the AASB at its meeting on 28-29 June 2000, are as follows:
- the project `Public infrastructure disclosures' is moved from the `other priorities' list to `highest priority - other', under the project `Reconciliation of Government general purpose financial reporting with Government finance statistics reporting and issues relating to harmonisation';
- a new project, `Deprival value and fair value', is added to the list under a new caption `other priorities' below G4+1 Project - Position Paper `Accounting for share-based payment (including employee options)'. An associated topic `Discounting', will also be undertaken as part of the further consideration of concepts.
The AASB Chairman outlined the timescale for projects on the agreed list of priorities. It was agreed that this timescale would be made public by the Board.
The Board's participation in international standard setting was also discussed. It was agreed that the Board would prepare a paper for the next FRC meeting (or at the latest the one after) covering the Board's proposed policies with regard to participation in international bodies and attendance at international meetings. It was agreed that this meeting would also consider the appropriate relationship between Mr Ken Spencer, as IASC Trustee, and the FRC.
It was agreed that the AASB would identify names of suitable Australians who might be encouraged to apply, with FRC support, for positions on the IASC Technical Standards Board which it is understood will shortly be advertised in the press. It was further agreed that the Board and FRC would use Mr Spencer's good offices to the extent possible in this process.
The FRC also endorsed the AASB's proposal that a New Zealand representative be able to participate in AASB meetings as a non-voting observer.
The FRC deferred approval of the AASB's proposals to advertise and fill two additional technical positions - a project manager and an assistant project manager or two assistant project managers - until the budget position was clearer. The FRC agreed to the replacement of the present receptionist, who has resigned, with a contract position. It was further agreed that the administrative staff complement would be reviewed in the light of decisions on the Board's publications functions, on which the AASB Chairman indicated he would bring forward a paper shortly.
The FRC supported the direction of the proposed AASB budget for 2000-01 and agreed to consider the matter again when the details had been settled and in the light of further information on anticipated revenue for 2000-01. A sub-group of the FRC would be appointed if necessary to consider any difficult issues. Additional information was sought on UIG expenditure and the assumptions underlying expenditure on international activities, together with balance sheet information.
Urgent Issues Group Charter
The FRC considered the draft UIG charter provided by the AASB and, in the light of the discussion, sought the Board's considered view on:
- whether wording should be included to better delineate the respective roles of the UIG and ASIC;
- the size and composition of the UIG;
- whether appointments to the UIG should be made by the AASB in consultation with the FRC or by the FRC; and
- the process by which stakeholder bodies would nominate individuals to the UIG.
Consultative Groups
It was agreed that the AASB would proceed with the holding of a consultative meeting comprising representatives from the previous consultative groups of the AASB and PSASB and that the AASB would further consider proposed arrangements for consultation with stakeholders and provide the FRC with further advice.
Board policies relating to quorum, voting, agenda papers and dissenting views
The FRC supported the AASB's decision that six members (out of the present total of 10 members) would constitute a quorum for a meeting of the Board. The FRC considered that the approval or making of a standard should formally require the affirmative votes of 7 members and that a high level of consensus should be sought in the making of standards. The AASB Chairman undertook to take this issue back to the Board.
Ms Morant indicated that she had sought legal advice from the Australian Government Solicitor on whether, for purposes of the Commonwealth Authorities and Companies Act 1997, the directors of the AASB are AASB members or the members of the FRC.
Agenda item 2: Remuneration of FRC-appointed members of AASB
The FRC agreed, on the recommendation of the AASB Chairman and after considering an advisory opinion from the Remuneration Tribunal, that the AASB members appointed by the FRC (ie, all members other than the Chairman) would be remunerated as follows:
- a daily fee of $600, to be reviewed after one year; and
- reimbursement of travel expenses incurred up to the amounts applicable from time to time to Tier 1 public office holders under Remuneration Tribunal determinations.
The FRC also endorsed the AASB Chairman's proposal that travel be at economy standard except where travel time exceeds three hours when a business class standard will apply.
Agenda item 3: Funding
The secretariat reported on a potential gap between funding commitments provided by stakeholder bodies and the revenue assumption incorporated in the AASB's draft budget for 2000-01. It was noted that, with an additional contribution by the Australian Stock Exchange of $115,000 in 2000-01 from funds raised to assist the Board's harmonisation program, the gap could be reduced to about $100,000 on an accrual basis. It was agreed that the secretariat would further examine the issue and report back.
Mr Harrison reported that a recent meeting of the Foundation Board of Management had clarified the principles it considered should apply in relation to the financial settlement between the accounting bodies and the Commonwealth in the transition from the old to the new standard setting arrangements. It was hoped that an agreement could be reached soon. The AASB Chairman noted that this settlement would be crucial to the AASB draft accounts.
It was agreed that the AASB would settle with the Australian Stock Exchange a figure representing the fair market value of the office premises sub-leased to the Board by the Exchange on a rent-free basis, and that this figure would be shown as a revenue and expense item in the AASB budget, rather than being netted out.
Agenda item 4: International issues
The Council noted a paper prepared by the secretariat reporting on recent developments in international accounting standard setting.
Agenda item 5: Other business
The secretariat reported that the Treasurer had made the following appointments to the FRC:
- on the nomination of the Investment and Financial Services Association, Mr Mark Armour, Chief Executive, Funds Management, AXA as Alternate member for Mr Leigh Hall, AM; and
- on the nomination of CPA Australia, Mr David Edwards, AM, Chief Executive Officer, CPA Australia, as Alternate member for Mr Graeme McGregor, AO.
The appointments took effect on 19 April 2000 and expire on 31 December 2002, the expiry date of the appointments of Mr Hall and Mr McGregor.
It was tentatively agreed that the next meeting of the Council would be held on 14 August 2000.