Twelfth Meeting
3 December 2001
Outcomes of meeting held on 3 December 2001 in the Commonwealth Bank Boardroom, Level 2, 48 Martin Place, Sydney.
Attendance
Members:
Mr Jeffrey Lucy, AM (Chairman)
Mr Michael Ullmer (Deputy Chairman)
Ms Elizabeth Alexander, AM (participating by phone)
Mr Mark Armour (alternate to Mr Hall)
Mr Don Challen
Mr David Jackson
Mr Charles Macek
Mr Ian Mackintosh
Mr Des Pearson (informal alternate to Mr McGregor)
Mr Gary Potts
Mr Phillip Prior
Mr Robert Wylie (informal nominee of the Institute of Chartered Accountants
in Australia)
AASB:
Mr Keith Alfredson (Chairman)
FRC secretariat:
Mr Michael Kooymans
Apologies:
Mr Leigh Hall, AM
Mr Graeme McGregor, AO
Agenda item 1: Introduction by FRC Chairman
The proposed agenda was adopted.
The minutes of the meeting held on 28 September 2001 were confirmed without change.
There were no declarations of interest by members present.
The meeting noted a written report on the FRC Chairman's further meetings on 2 and 9 November 2001 with stakeholder representatives from the Investment and Financial Services Association, the Australian Institute of Company Directors, the Business Council of Australia, the Group of 100 and Qantas Airways Ltd, and his participation on 9 November 2001 in a meeting of the Emerging Accounting and Auditing Issues Discussion Group.
The Chairman noted that the Minister for Financial Services & Regulation had approved the 2000-01 FRC/AASB Annual Reports for tabling in both Houses of the Parliament, and that the secretariat will arrange to have the combined report placed on the FRC web site.
Agenda item 2: Report of small group on improving AASB operation and output
At the 28 September 2001 FRC meeting, it was agreed that a small group of FRC members comprising the Chairman, Ms Alexander, and Mr Potts would work with the AASB Chairman to develop strategies to improve the AASB's operation and output, and report to the 3 December FRC meeting.
It was noted that this issue had been discussed at the FRC workshop held earlier in the day. Members agreed to defer any decisions on the issue, and on other items on the workshop agenda, until the FRC's first meeting in 2002.
Agenda item 3: Report by Chairman of AASB
The FRC gave further consideration to the AASB's proposed budget for 2001-02 on the basis of revised estimates provided by the AASB Chairman. It was noted that the revised budget implied an operating deficit of $42,904, down from the $254,642 deficit estimated in September 2001. This change mainly reflected lower estimates of expenditure but also some anticipated increase in publications revenue.
It was noted that the revised operating deficit for 2001-02 was likely to be far exceeded by the available cash surplus. Against that background, and in view of indications of support from the business community for additional funding for the standard setting process, the FRC approved the AASB's proposed budget for 2001-02. The AASB Chairman advised the meeting that he was continuing to explore options for reducing AASB administrative expenses.
The meeting noted that, beyond 2001-02, there would nevertheless be a need for additional funding from the corporate sector. The FRC Chairman reported on the status of discussions with various stakeholder bodies aimed at securing this additional funding support.
The FRC noted that issues relating to the AASB's broad strategic direction for 2001-02 had been discussed at the FRC workshop earlier in the day. It was agreed that the FRC would return to the issue at its next meeting when it was expected that the AASB will have fully assessed stakeholder responses to AASB Exposure Draft 102, `International Convergence and Harmonisation'.
Agenda item 4: AASB appointments and remuneration - Nominations Committee report
The FRC considered a report by the FRC Nominations Committee concerning:
- a proposed amendment to the Nominations Committee charter to include as one of the Committee's functions the making of recommendations to the FRC on remuneration issues affecting part-time AASB members and the AASB staff;
- the desirable composition of the AASB following the resignation of Mr Kevin Stevenson and in light of the expiry on 14 February 2002 of the terms of appointment of three members;
- peer evaluations and self-evaluations of the performance of individual AASB members under the performance review process agreed by the FRC at its meeting on 4 June 2001;
- candidates for appointment or re-appointment to current and immediately prospective Board vacancies;
- candidates for inclusion on an ongoing list of people qualified for appointment to the Board, to be referred to when future vacancies occur; and
- the remuneration of AASB members.
The FRC approved an amendment to the Nominations Committee charter to include remuneration issues affecting part-time AASB members and the AASB staff.
The FRC carefully considered candidates for appointment or re-appointment to the Board, taking into account the desirable composition of the Board and the outcome of the regular performance review of existing Board members. The meeting agreed on a process for taking this consideration forward, with decisions to be taken out of session.
In the light of movements over the past year in daily sitting fees determined by the Remuneration Tribunal for part-time statutory office holders, the FRC approved a Nominations Committee recommendation that, with effect from 1 September 2001, part-time AASB members receive a daily sitting fee of $620, to be reviewed again in September 2002.
Agenda item 5: Stock-take of FRC activities
The FRC noted a paper prepared by the secretariat summarising actions taken by the FRC in meeting its statutory obligation to provide broad oversight of the standard setting process.
Agenda item 6: International issues
The FRC noted a paper prepared by the secretariat reporting on recent developments in international accounting standard setting.
Agenda item 7: FRC forward meeting dates
The FRC gave further consideration to meeting dates for 2002 and requested that the secretariat further refine these dates in the light of members' availability.
Agenda item 8: Other business
It was noted that, with the release and posting of the FRC/AASB annual report for 2000-01, the FRC web site at www.frc.gov.au was now live. Members were invited to provide the secretariat with feedback on the design and content of the site.
The secretariat circulated a brief paper outlining the state of play on the question of a proposed Commonwealth indemnity for FRC members in their capacity as directors of the AASB, including an immunity provision (section 246) of the Australian Securities and Investments Commission Act 2001 which applies to FRC members.