Eighth Meeting
19 December 2000
Outcomes of meeting held on 19 December 2000 at the offices of Telstra Corporation Limited, Level 40, 242 Exhibition Street, Melbourne.
Attendance
Members:
Mr Paul Rizzo (Chairman)
Mr Michael Ullmer (Deputy Chairman)
Mr Don Challen
Mr Leigh Hall, AM (participating by phone)
Mr David Jackson
Mr Jeff Lucy
Mr Charles Macek
Ms Jan McCahey
Mr Robert Nottle, CBE
Mr Gary Potts
Mr Neil Walker (informal Alternate for Mr McGregor)
Dr Diana Wright
AASB:
Mr Keith Alfredson (Chairman)
FRC secretariat:
Mr Michael Kooymans
Apologies:
Ms Elizabeth Alexander, AM
Mr Graeme McGregor, AO
Adoption of agenda
The proposed agenda was adopted with the addition of an item concerning a request for access to FRC documents under the Freedom of Information Act 1982.
Confirmation of minutes of 8 September 2000 meeting
The minutes of the meeting held on 8 September 2000 were confirmed with two amendments:
- first, under the heading Board policies relating to voting in agenda item 1, to clarify that the AASB had endorsed the FRC's decision that the approval or making of a standard should formally require the affirmative votes of 7 members; and
- secondly, under agenda item 6, to add the following words at the end of the final paragraph: `This would provide a basis for an early strategic discussion by the FRC of Australia's future role in standard setting, domestically and internationally, including implications for funding of Australian as against IASC activities and stakeholder funding overall.'
Request under the Freedom of Information Act
The Chairman advised FRC members that he was the decision maker in relation to a request under the Freedom of Information Act 1982 for access to certain FRC documents: the minutes of FRC meetings held to date; any document detailing how the FRC proposed to deal with procedural issues in the context of its statutory functions; and any document detailing specific criteria and processes for the selection of members of the AASB.
Following discussion, FRC members supported the Chairman's intention to respond to the request by providing the applicant with:
- copies of past minutes of FRC meetings, with minor deletions of material involving the disclosure of personal information and information about the business, commercial or financial affairs of an organisation;
- copies of a letter dated 3 May 2000 from the then Acting Chairman of the FRC to the Chairman of the AASB, together with two attachments - one summarising decisions taken by the FRC up to 28 April 2000 and the other setting out how the FRC proposed, subject to feedback from the AASB (since obtained), to undertake its statutory functions;
- advice that, apart from some references in FRC minutes which were being released to the applicant, criteria for appointment to the AASB have been set out in only one document - the FRC's Bulletin 2000/1 of 14 February 2000 - which is already public; and
- additional background on the criteria for AASB appointments.
The FRC agreed that minutes of future FRC meetings would be made available on the FRC website (when established) and that the document on the FRC's statutory functions would also be posted on the website as an interim working document that will be subject to revision and update in the light of developments.
Agenda item 1: Report by Chairman of AASB
The AASB Chairman's report was supported by papers he had circulated to the FRC on: publications policy; staff superannuation for employees with defined benefits; consultation and survey of key constituents and AASB members; risk management program; meetings with AASB constituents and other activities; AASB timetable; the `new IASC'; and general report. Specific outcomes are recorded below.
Key AASB priorities
The AASB Chairman updated the FRC on the substantial progress made on key Board priorities and indicated that he would formalise this advice in a report to the next FRC meeting.
Staff superannuation for employees with defined benefits
The FRC approved the AASB's proposal to establish an accumulated benefits superannuation plan for AASB staff members who currently have defined benefits under the CPA Australia Superannuation Fund. The Chairman advised that the proposal would save additional costs associated with defined benefit plans and, by utilising target benefit funding, not disadvantage employees.
Consultation and survey of key constituents and AASB members
Consistent with the importance it places on consultation with stakeholders in the accounting standard setting process, the FRC strongly supported the AASB's proposal to conduct a survey of its key constituents as input to the Board's draft 2001-02 business plan. It was noted that the results of the survey would be presented to a AASB Consultative Group meeting scheduled for May 2001.
Risk management program
The FRC welcomed the AASB's proposal to develop a Risk Management Program and to bring this to the FRC for approval. It was agreed that it would be appropriate for the draft Program to be considered by the AASB Audit Committee in the first instance.
Agenda item 2: Appointment of AASB member
The FRC agreed to appoint Mr Kevin Stevenson as a member of the AASB for a three year term to fill the vacancy created by the resignation of Mr Ian Mackintosh. This followed consideration of a strong field of candidates nominated by stakeholders.
The FRC also agreed to establish a Nominations Committee, comprising Mr Ullmer (Chair), Mr Challen, Mr Nottle and the AASB Chairman, to make recommendations to the FRC on future Board appointments. It was further agreed that Mr Ullmer would bring to the next FRC meeting a paper on how the Nominations Committee proposed to undertake its work.
Agenda item 3: Revenue in the out-years
The FRC noted advice from the AASB Chairman that, at current levels of stakeholder funding, the Board may face budget constraints in the out-years, but that this could depend on the extent of any additional costs incurred by the Board arising from the operations of the new International Accounting Standards Board. It was agreed that the secretariat would investigate possible sources of additional funding on a contingency basis.
Agenda item 4: Directors of AASB - follow-up legal advice
FRC members expressed concern about the potential personal liability implications of legal advice that they may be held to be the directors of the AASB for purposes of the Commonwealth Authorities and Companies Act 1997, while at the same time being (quite properly) precluded under the Australian Securities and Investments Commission Act 1989 from influencing the technical activities of the Board. It was felt that the directors' and officers' insurance available under the Commonwealth's Comcover arrangements may not provide adequate cover in some circumstances. It was agreed that the FRC Chairman would write to the Treasurer seeking Commonwealth indemnities for FRC members in their capacity as directors of the AASB, and exploring the possibility of indemnities also being provided to AASB members.
Agenda item 5: Conflict of interest guidelines for FRC members
The FRC considered draft guidelines on the handling of any conflicts of interest that may arise for FRC members either in their FRC capacity or as directors of the AASB for purposes of the Commonwealth Authorities and Companies Act 1997. It was agreed that the secretariat would revise the draft guidelines to provide additional context on the relationship between the FRC and AASB and bring them back to the FRC for further consideration.
Agenda item 6: Report by Chair of AASB Audit Committee
The FRC noted a report by the Chair of the AASB Audit Committee, Ms Elizabeth Alexander, on a meeting of the Audit Committee held on 6 October 2000 to consider the AASB's draft 1999-2000 financial statements.
Agenda item 7: FRC consultation with stakeholders and AASB members
The FRC discussed ways to intensify its consultation with stakeholders and AASB members. It was agreed that small groups of Chief Financial Officers (including from the public sector) would be invited to address some future FRC meetings. Members welcomed an offer from the Securities Institute of Australia that they make a presentation to the next FRC meeting on the results of a survey of analysts on accounting issues affecting financial reporting.
Agenda item 8: International issues
The FRC noted a paper prepared by the secretariat reporting on recent developments in international accounting standard setting.
Agenda item 9: Other business
It was noted that, since the FRC meeting held on 8 September 2000, the Treasurer had made two appointments of Alternate FRC members with effect from 2 October 2000: Mr Stephen Harrison, AO was appointed as Alternate member for Mr Jeffrey Lucy and Mr Tom Pockett as Alternate for Mr Michael Ullmer. In addition, the Treasurer had received two resignations of Alternate members: following his resignation as Chief Executive Officer of CPA Australia, Mr David Edwards, AM has resigned as Alternate for Mr Graeme McGregor; and, due to her move to another area of the Department of Finance and Administration, Ms Anne Morant has resigned as Alternate to Dr Diana Wright.
FRC members noted forward meeting dates for 2001 suggested by the secretariat along with broad topics for those meetings. Members agreed that they would confirm their availability within the suggested periods with a view to establishing a pre-determined meeting schedule.
The FRC noted a secretariat report on progress in establishing an FRC website.