Forty-First Meeting
1 June 2007
Outcomes of the meeting held on 1 June 2007 at the Australian Securities Exchange, 20 Bridge Street, Sydney. The meeting commenced at 9:00 am and concluded at 2.15 pm.
Attendance
FRC Members:
Mr Charles Macek (Chairman)
Ms Elizabeth Alexander, AM
Mr Bruce Brook
Ms Kathryn Campbell
Mr Michael Coleman
Mr Mark Coughlin
Mr Don Challen (by telephone)
Mr John Gethin-Jones (by telephone)
Mr Richard Humphry, AO
Mr Warwick Hunt
Mr David Jackson
Mr Eric Mayne
Mr Jim Murphy
Mr John Stanhope
Ms Catherine Walter, AM
Ms Jan West
IASB:
Mr Warren McGregor
AASB:
Prof. David Boymal (AASB Chairman)
AUASB:
Mr Richard Mifsud (Principal Executive, AUASB)
Invitees:
Mr Doug Niven (Deputy Chief Accountant, ASIC)
Ms Ruth Picker (Member, IFRIC – agenda item 1) (by telephone)
Mr Bill Bartlett (Consultant - agenda item 5)
Mr Richard Boele (Consultant – agenda item 5)
Ms Melissa Skilbeck (Consultant – agenda item 5) (by telephone)
FRC Secretariat:
Mr Jorge del Busto (FRC Secretary)
Ms Suzanne Howarth (FRC Secretary-designate)
Mr Les Pascoe
Ms Gabriela Sermeno
Ms Joanne Lau
Apologies:
Ms Merran Kelsall
Mr Lee White
Mr Klaus Zimmermann
Agenda item 1: Introduction by FRC Chairman
The FRC Chairman, Mr Charles Macek, welcomed FRC members and other attendees to the 41st meeting of the Council.
Declarations of interest
Ms Jan West advised the meeting that she was recently appointed to the Professional Conduct Tribunal of The Institute of Chartered Accountants in Australia.
The FRC Chairman, Mr Chares Macek, informed the meeting that he is no longer a member of the Victorian Council of the Australian Institute of Company Directors.
Minutes
The minutes of the 39th and 40th meetings, held in Melbourne on 19 February and 6 March 2007 respectively, were approved.
Matters arising
The Secretariat paper on matters arising from previous FRC meetings was noted.
Updates on meetings
- Mr Macek provided an update on:
- his attendance at the CPA Australia conference in March; and
- his recent visit to Europe and North America, during which he met with senior representatives of kindred bodies to discuss key issues on financial reporting.
Stakeholder issues
The meeting noted a report by Ms Ruth Picker, a member of IFRIC, on recent work of the Committee.
No other stakeholder issues were raised at the meeting.
Agenda item 2: Report from Chair of the AASB
The FRC noted a report by Prof. David Boymal, Chair of the AASB, on the activities of the Board since the FRC meeting on 6 March 2006.
Agenda item 3: Report from Chair of the AUASB
The FRC noted the report provided on behalf of Ms Merran Kelsall, Chair of the AUASB.
The meeting endorsed the AUASB’s intended course of action in relation to it’s follow up on the topic of Auditing Small and Medium Sized Entities (SMEs), including:
- continuing liaison with the International Federal of Accountants (IFAC) Small and Medium Practices (SMP) Committee and examining their explanatory guide to ISAs for use in SME audit engagements - the ISA Guide (once it is issued in the second half of 2007). The AUASB will then use the ISA Guide, together with guides issued by The Accounting Practices Board (APB) in the United Kingdom and the Canadian Institute of Chartered Accountants (CICA), to formulate guidance in the Australian context;
- examining the feasibility of developing guidance explaining the differences between audit and review engagements;
- issuing a Bulletin to inform stakeholders of constituents’ comments received on Auditing SMEs and planned action to address identified issues; and
- continuing liaison with the three Professional Accounting Bodies.
During discussion on this item, Mr Richard Mifsud informed the meeting that the AUASB had the results of a survey on the awareness and understanding of the legally enforceable auditing standards by registered company auditors in smaller accounting firms. The meeting decided that the results of this survey should be circulated to all FRC members.
Agenda item 4: Report from Chair of the TTAASAG
The FRC noted the report by Mr Warwick Hunt, Chair of TTAASAG, on the meeting held in Auckland on 8 March 2007 and the issues considered at that meeting.
Agenda item 5: Report from Chair of Audit of Independence Committee
Ms Elizabeth Alexander, Chair of the Audit Independence Committee, reported on the work of the Committee since the FRC meeting on 6 March 2007.
The FRC noted that the final report Review of recommendations about Quality Review Programmes and Disciplinary Procedures of the Professional Accounting Bodies had been received from the Allen Consulting Group. Council members were invited to provide any comments they had on the report to the Chair of the Committee.
The FRC also noted a progress report on the consultancy being undertaken by Mr Richard Boele of The Banarra Trust. The consultant informed the meeting that he had completed its first stage of research and had commenced liaising in more detail with the audit firms. During its consideration of Mr Boele’s report, the FRC decided that clarification should be provided to the audit firms being examined by Mr Boele about the relationship of the consultancy to the FRC’s functions on auditor independence and the nature of its expected output.
Following consideration of the Chair’s report, the FRC:
- agreed that:
- the 2006-07 Report on Auditor Independence should be presented to the Minister as a separate document to the FRC/AASB/AUASB annual reports;
- the basic framework used for the 2005‑06 independence report should also be used for the 2006‑07 report; and
- the final consultancy report by The Allan Consulting Group should be bound in with the independence report; and
- noted the indicative timetable for the preparation of the report.
Agenda item 6: Report from Chair of the Finance Committee
Mr Bruce Brook, Chair of the Finance Committee, presented a report on the Committee’s work since the FRC meeting on 6 March 2007.
After consideration of the report, the FRC:
- noted the expenditures against the respective budgets of the FRC, AASB and AUASB for the period to 31 March 2007 and their projected expenditures for the year ended 30 June 2007;
- approved the draft budgets and business plans for the FRC, AASB and AUASB for 2007‑08;
- agreed to transfer to the AUASB in June 2007 approximately $300,000 from the projected surplus funds in the 2006-07 FRC budget, with the final amount to be determined by the FRC Chairman in consultation with the Australian Treasury;
- agreed that the AASB will provide in June 2007 an additional contribution of $200,000 to the International Accounting Standards Committee Foundation; and
- noted the draft timetable and responsibilities for the preparation of the 2006‑07 FRC, AASB and AUASB annual reports.
In addition, Council:
- agreed to undertake a funding review of the FRC, AASB and the AUASB budgets with a medium term focus, as background to the 2008-09 Budget and the preparation of the Compliance Report to the Finance Minister by 15 October 2007;
- agreed that the Secretariat should circulate to Council members a table showing total funding available for the FRC, AASB and AUASB; and
- decided that the FRC Chairman should write to the Professional Accounting Bodies proposing that their funding contribution for 2007‑08 be maintained at the same level as in 2006‑07.
Agenda item 7: Report from the Chair of Nominations Committee
The FRC noted a report presented on behalf of Mr Klaus Zimmermann, Chair of the Nominations Committee.
It was agreed that the 2007 peer assessment review of FRC, AASB and AUASB members be undertaken, using the survey/evaluation forms recommended by the Nominations Committee, which include a new rating scale.
The FRC Secretariat will distribute, collect the completed forms and inform FRC members of the results of the surveys at the next FRC meeting on 5 September 2007.
Agenda item 8: FRC Secretariat paper on international developments
The FRC noted a Secretariat paper on the work of relevant international organisations and national standard setting bodies, and other material relevant to the international regulatory environment, that had been circulated for the information of members.
The FRC also noted that the Secretariat would shortly resume distribution of a monthly update of material of relevance to the work of the Council and its Committees.
Agenda item 9: Other business
A Secretariat paper providing particulars of correspondence received or sent by the FRC for the period 28 February 2007 to 25 May 2007 was noted.
The FRC considered a Secretariat paper about a speaker suggested by The University of Melbourne for the 2008 Ken Spencer Memorial Lecture. The FRC decided that Sydney should be the venue for the 2008 Ken Spencer Memorial Lecture and that the lecture venues be alternated between Melbourne and Sydney going forward. The FRC also decided that the FRC Chairman should thank the University for its suggestion and that the Secretariat should contact the suggested speaker to ascertain if he would be available to give the lecture in Sydney in late May 2008.
The FRC Chairman informed the meeting that the meeting would be the last to be attended by Jorge del Busto, who had been Secretary of the FRC since September 2003, and took the opportunity to thank him for the work he had undertaken for the Council.
No other matters of other business were raised at the meeting.
At the conclusion of the formal agenda, the FRC met with Mr Tom Honan, National President of the Group of 100 (G100), to discuss a range of issues of mutual interest to the FRC and the G100.