Home > Minutes > 2007 > FRC Meeting Minutes - 6 December 2007

Forty-Third Meeting
6 December 2007

Outcomes of the meeting held on 6 December 2007 at the offices of the Australian Prudential Regulation Authority, Level 26, 400 George Street, Sydney.  The meeting commenced at 9.04 am and concluded at 1.15 pm.

Attendance
FRC Members:            
Mr Charles Macek (Chairman)
Mr Bruce Brook
Ms Kathryn Campbell
Mr Michael Coleman
Mr Mark Coughlin
Mr Don Challen
Mr John Gethin-Jones
Mr Warwick Hunt
Mr David Jackson
Mr Eric Mayne (by telephone)
Mr Jim Murphy
Mr John Stanhope
Ms Catherine Walter AM
Ms Jan West AM
Mr Lee White

IASB:
Mr Warren McGregor

AASB:
Prof. David Boymal (AASB Chairman)
Ms Litsa Pillios (AASB Administration Director)

AUASB:
Ms Merran Kelsall (AUASB Chairman)
Mr Richard Mifsud (AUASB Principal Executive)

Invitees:
Mr Jeffrey Lucy AM (FRC Chairman-designate)
Mr Robert Sharma (APRA)
Ms Judith Downes (by telephone) (agenda item 1(e))
Mr Bede Fraser (Australian Treasury) (agenda items 1-3)
Ms Ronita Ram (Australian Treasury) (agenda items 1-3)
Mr Robin Slater (Australian Treasury) (agenda items 1-3)
Mr William Bartlett (agenda item 4)

FRC Secretariat:
Ms Suzanne Howarth (FRC Secretary)
Mr Les Pascoe
Mr Warwick Walpole

Apologies:
Mr Klaus Zimmermann

Agenda item 1: Introduction by FRC Chairman

The FRC Chairman, Mr Charles Macek, welcomed FRC members and other attendees to the 43rd meeting of the Council.

Membership

The meeting noted that Mr Macek’s term of appointment as FRC Chairman will end on 10 December 2007.  He will be succeeded by Mr Jeffrey Lucy AM, who has been appointed for a term of three years commencing on 11 December 2007.

The meeting also noted that Mr Warwick Hunt’s current term of appointment will end prior to the FRC’s next meeting on 12 February 2008.

Declarations of Interest

Members advised the meeting of the following changes to their entries in the register of interests circulated by the Secretariat:

1. Mr Macek has ceased to be a director of Living Cell Technologies Ltd;
2. Mr Jackson has ceased to be a member of the ASIC Consumer Advisory Panel; and
3. Ms Campbell’s employer is now known as the Department of Finance and Deregulation.

No declarations of interest concerning agenda items for the meeting were raised by members.

Minutes

The minutes of the 42nd meeting, held in Melbourne on 5 September 2007, were approved.

Matters arising

The meeting noted the Secretariat paper on matters arising from the minutes of the 42nd meeting.

Updates of meetings

Mr Macek briefed the meeting on his visit to Europe in early October.  During the visit he met with representatives of oversight and standards setting bodies in London, Brussels and Paris.

The meeting noted Ms Judith Downes’ report on the Standards Advisory Council meeting held in London on 8‑9 November 2007.

Agenda item 2 –Treasury presentation on Uhrig reforms

Mr Bede Fraser and Ms Ronita Ram of the Australian Treasury briefed the FRC on progress with implementation of the proposed governance reforms for the AASB and AUASB and the implications of those reforms for the FRC.

The FRC noted the briefing and Mr Fraser’s advice that the proposed reforms would need to be considered by the new Government.

Agenda item 3 –Treasury presentation on Standard Business Reporting

Mr Robin Slater of the Australian Treasury provided the FRC with a status report on the development of standard business reporting (SBR).

SBR is a multi-agency programme which has the objective of reducing the regulatory reporting burdens for business.  The objectives of the programme are to eliminate unnecessary reporting, eliminate duplicated reporting and improve the electronic interface between business and government agencies.  The project currently covers the period 2007 to 2010 and its scope is limited to the Financial Reporting domain.

Work being undertaken within the current scope includes: harmonisation of reporting terms; creation of a ‘reporting taxonomy’; mapping the reporting taxonomy to a business’ accounts; developing SBR core services; connecting government agency systems to the core services; and educating and two-way communication with business, software developers and business intermediaries.

Agenda item 4 – Report from Chair of Audit Independence Committee

The meeting noted the report by the Chair of the Audit Independence Committee, which was introduced by Mr Macek.  In introducing the report, Mr Macek acknowledged the significant contribution Ms Elizabeth Alexander had made to the work of the Committee during her term as Chair of the Committee.

The FRC:

1. agreed to the appointment of Ms Catherine Walter AM as Chair of the Committee;
2. noted that the FRC’s 2006‑07 report on auditor independence had been completed and approved by the FRC in an out-of-session vote; and
3. was given a status report on the proposals to engage consultants to undertake the auditor independence consultancy and the development of a conceptual framework for the structural arrangements for financial reporting requirements.  The meeting noted that the role of these consultants will be progressed in consultation with the new FRC Chairman and the new Chair of the Committee.

In concluding consideration of this item, Mr Macek noted that Mr Bartlett’s contract as auditor independence consultant would end in late December and, accordingly, took the opportunity to thank Mr Bartlett for his work on auditor independence issues during the last three years.

Agenda item 5 – Report from Chair of Finance Committee

The meeting noted the report presented by Mr Bruce Brook, Chair of the Finance Committee.

In speaking to his report, Mr Brook:

1. indicated that ensuring adequate funding for Australia’s involvement in the international and domestic standards setting processes continues to be a concern.  In this regard, the meeting noted the Finance Committee’s call for work to be progressed on a paper arguing for full government funding of the standards setting bodies;
2. commended Ms Litsa Pillios, AASB Administration Director, for the quality of the AASB and AUASB financial statements included in the 2006‑07 annual report of the FRC, AASB and AUASB;
3. updated the meeting on arrangements for the Ken Spencer Memorial Lecture, which will be presented by Professor Stephen Zeff on 28 May 2008 at KPMG’s Sydney Auditorium.  The meeting agreed that, prior to the lecture, it would be appropriate for Professor Boymal to speak to Professor Zeff to give him some background information about the target audience for the lecture;
4. noted that the Australian Treasury had adopted new financial reporting arrangements for its portfolio agencies (including the AASB and AUASB) and that in future the financial statements provided to the FRC by the standards setters would also be copied to Treasury; and
5. drew attention to the fact that three matters that would normally be considered by the Committee prior to the December meeting of the FRC (stocktake of functions, review of sitting fees for members of the AASB and AUASB and review of charters of the Committees) would be addressed early in 2008.

Agenda item 6 – Report from Chair of Nominations Committee

The meeting noted the report presented by Ms Kathryn Campbell on behalf of the Nominations Committee. 

The FRC agreed to make the following appointments and re-appointments to the AASB and AUASB:

1. re-appointments to the AASB: Mr Bruce Porter for a term commencing on 1 January 2008 and ending on 31 December 2010; and Mr Frank Palmer for a term commencing on 7 June 2008 and ending on 31 December 2010;
2. appointments to the AASB: Mr Mark Jenkin for a term commencing on 1 January 2008 and ending on 31 December 2010; and Mr Robert Williams for a term commencing on 7 June 2008 and ending on 31 December 2010;
3. re-appointments to the AUASB: Professor Christine Jubb and Mr Jon Tyers for terms commencing on 1 January 2008 and ending on 31 December 2010; and
4. appointments to the AUASB: Ms Valarie Clifford and Mr John Gavens for terms commencing on 1 January 2008 and ending on 31 December 2010.

The FRC also noted the following developments concerning appointments to relevant international bodies:

1. Mr Jeffrey Lucy has been appointed as a trustee of the International Accounting Standards Committee Foundation for a three-year term commencing January 2008; and
2. the Council was unsuccessful in its nomination of an Australian for appointment as a public member of the International Federation of Accountants’ International Public Sector Accounting Standards Board.

Agenda item 7 – Report from Chairman of AASB

The meeting noted the report by Professor David Boymal, Chairman of the AASB.

Agenda item 8 – Report from Chairman of AUASB

The meeting noted the report by Ms Merran Kelsall, Chairman of the AUASB.

Agenda item 9 – Report from Chair of TTAASAG

The report by Mr Hunt, Chairman of TTAASAG, was noted.

Mr Hunt informed the meeting that that afternoon’s TTAASAG meeting would be his last as Chair of the Group.  He indicated that the new Chair would be Mr Geoff Miller of the Australian Treasury.

Agenda item 10 – FRC Secretariat paper on international developments

The FRC noted the Secretariat paper on the work of relevant international organisations and national standards setting bodies and other material relevant to the international regulatory environment.

Agenda item 11 – Other business

A Secretariat paper providing particulars of correspondence received or sent by the FRC during the period from 31 August 2007 to 27 November 2007 was noted.

The meeting noted a Secretariat paper concerning proposed FRC meeting dates during 2008 and agreed that meetings should be held on the following dates at the places shown:

• Tuesday, 12 February, in Melbourne;
• Wednesday, 9 April, in Melbourne;
• Wednesday, 11 June, in Canberra;
• Wednesday, 3 September, in Sydney; and
• Wednesday, 26 November, in Melbourne.

The meeting also considered a proposal that the FRC be one of the sponsors of a research project by Professors Roger Simnett and Ken Trotman on the meaning and measurement of ‘audit quality’.  The meeting agreed that the proposal should be referred to the Audit Independence Committee for urgent consideration and report back to the Council out-of-session.

The FRC Secretary informed the meeting that two additional staff are about to join the Secretariat: Mr Marcus McKillop would commence in mid December while Ms Annie Lam would arrive in early January. In addition, Mr Macek noted that the meeting would be the last one to be attended by Mr Les Pascoe of the FRC Secretariat and thanked him for his work over the last few years.

The meeting concluded with Mr Lucy thanking, on behalf of FRC members, Mr Macek for his contribution to the work of the Council over the last eight years, including a period of almost five years as Chairman.