Forty-Fifth Meeting
9 April 2008
Outcomes of the meeting held on 9 April 2008 at the offices of the Australian Accounting Standards and Australian Auditing and Assurance Standards Boards, Level 7, 600 Bourke Street, Melbourne. The meeting commenced at 9.00 am and concluded at 2.10pm.
Attendance
FRC Members: Mr Jeffrey Lucy AM (Chairman)
Mr Bruce Brook
Ms Kathryn Campbell
Mr Mark Coughlin
Mr John Gethin-Jones (by phone)
Mr Warwick Hunt
Mr Eric Mayne
Mr Klaus Zimmermann
Other
Don Challen (by phone)
Judith Downes
Doug Niven (for Lee white)
Geoff Miller (for Jim Murphy)
Jan West
Invitees:
John Trowbridge (APRA)
Michelle Frenkel (AASB, AUASB, FRC Communications Manager)
AASB:
Prof. David Boymal (AASB Chairman)
AUASB:
Ms Merran Kelsall (AUASB Chairman)
FRC Secretariat:
Ms Suzanne Howarth (FRC Secretary)
Ms Heather Sturgiss
Ms Annie Lam
Apologies:
Mr Michael Coleman
Mr Jim Murphy
Mr John Stanhope
Mr Warren McGregor
Ms Catherine Walter AM
Lee White
Agenda Item 1 – Introduction by FRC Chairman
The FRC Chairman, Mr Jeffrey Lucy AM, welcomed FRC members and other attendees to the 45th meeting of the Council. The Chairman expressed the Council’s appreciation for the work done by outgoing Council member David Jackson, noting that Mr Jackson was an inaugural member of the FRC and represented well the interests of the Australian Shareholder’s Association.
The Chairman updated the meeting on various appointments to the Council that are awaiting Government approval.
Agenda item 2 – Declarations of interest
Members advised the meeting of the following changes to their entries in the register of interests circulated by the Secretariat:
- Jan West is now Chairman of the Professional Conduct Tribunal of the ICAA;
- John Gethin-Jones is no longer a Director of Allen and Buckeridge Limited and is now Chief Executive of Investments at Skandia/Intech Australia.
- Geoff Miller, attending on behalf of Treasury, noted that he is also the Chairman of the Trans-Tasman Auditing and Accounting Standards Advisory Group (TTAASAG).
- Doug Niven, attending on behalf of ASIC, advised that he is a member of the Institute of Chartered Accountants in Australia.
Agenda Item 3 – Confirmation of Minutes of Previous Meeting
The minutes of the 44th meeting, held in Melbourne on 12 February 2008, were approved.
Agenda Item 4 – Matters arising from Previous Meeting
The meeting noted the Secretariat paper on matters arising from the minutes of the 44th meeting and suggested that an additional column should be added to the paper to record items requiring further action.
- XBRL & SBR Paper
The FRC noted the contents of the paper prepared by Treasury. The FRC agreed to write to the manager of the Standard Business Reporting (SBR) Project indicating the FRC’s interest in the interaction of SBR and XBRL and to seek an update on the timetable for the introduction of SBR. - Auditors and Prospective Information
The FRC noted the paper by Treasury on the role of the auditor in relation to the prospectus of an audit client. The meeting agreed to refer the perceived incompatibility between the Australian due diligence committee arrangements and the US interpretation of the application of their auditor independence requirements to the Accounting Professional and Ethical Standards Board to seek an indication of whether this is an issue that the Standards Board would be willing to explore and on what time-line. - Proposed amendments to the AASB’s Board Governance Guidelines
The Council noted the proposed amendments to the AASB’s Board Governance Guidelines.
Agenda Item 5 – Update on Recent Stakeholder Meetings and Upcoming Events
Stakeholder Meetings
The Chairman circulated a confidential written report on the March round of stakeholder engagement meetings in Washington, London and Brussels as well as providing an oral update on key issues.
- In the context of this update the key role of the European Financial Reporting Advisory Group (EFRAG) in shaping debate on international standards was noted. The AASB were asked to provide the Council with regular updates on key topics being analysed by EFRAG, including their Pro-active Accounting Activities in Europe (PAAin E) programme.
The meeting discussed the proposal by the G100 to undertake a post implementation review of IFRS in Australia. The FRC agreed to host a workshop to discuss issues surrounding a possible review. The workshop would be timed to coincide with Sir David Tweedie’s visit to Australia in August. A discussion on whether or not a more comprehensive review should be undertaken will be reviewed after the workshop.
Judith Downes, member of the IASB’s Standards Advisory Council (SAC), updated the meeting on the most recent SAC meeting. Ms Downes also provided an update on the views of the International Banking Federation (Ibfed) on the use of fair value. Ibfed has released a paper summarising its position in response to the paper released by the IASB on reducing complexity.
The Council agreed to host an informal meeting during Sir David Tweedie’s visit at which a number of key issues would be discussed. Council members were invited to provide the Secretariat with a list of topics for discussion.
Draft IASB Article
The meeting agreed that the draft article encouraging accountants to gain international experience with the IASB be placed in the professional journals alongside an IASB job advertisement.
Agenda Item 6 – Report from Chair of TTAASAG
Mr Geoff Miller, TTAASAG Chair, presented an oral report on behalf of TTAASAG. Key issues discussed by TTAASAG at its March meeting included the role of TTAASAG, emissions trading (a standing agenda item for TTAASAG), fair value in thinly traded markets, New Zealand’s proposed review of its financial reporting framework, the role of TTASAG in identifying potential nominees for key international appointments and developments on upcoming IFRS Regional Policy Forums.
Agenda Item 7 – International Developments Paper
The FRC noted the Secretariat paper on international developments. It was agreed that future international updates be provided via email and that this matter be placed on the agenda for the next meeting to review whether these revised arrangements continue to meet Council’s needs.
Agenda Item 8 – Transition of the Boards to Financial Management and Accountability Act
Treasury provided an update on the transition of the AASB and the AUASB to the FMA Act. This is expected to come into effect from 1 July 2008. It was noted that under the revised governance arrangements the FRC’s role in setting strategic direction for the Boards will be unchanged.
Agenda Item 9 – Report from Chair of the Finance Committee
Mr Bruce Brook, Chair of the Finance Committee, gave an oral report on the Committee’s 3 April meeting. The meeting:
- noted the potential implications for the Boards’ finances of the projected superannuation shortfall arising from recent share market movements and that the FRC chairman intended to write to the Department of Finance and Deregulation in relation to this issue;
- asked the AASB and the AUAUSB to provide details of their existing staff structures, including comparisons with similar international organisations ahead of the FRC taking a final decision on whether to proceed with a skills review of the Boards.
- noted that the Secretariat would seek clarification on expenses relating to the Ken Spencer Memorial Lecture.
Agenda Item 10 – FRC, AASB & AUASB Draft Business Plans.
The Board’s provided oral updates on their business planning processes. Once finalised, both the AASB and AUASB draft business plans will be supported by more detailed documents prioritising their respective initiatives and setting out a work plan which allocates staffing and identifies timelines for the various initiatives and ultimately links to the Boards’ budgets.
It was noted that future reporting by the Boards to the FRC will be framed against their respective business plans.
Revised business plans for the AASB, the AUASB and the FRC incorporating comments at the meeting will be resubmitted to the next Finance Committee meeting. A key issue for the Committee is to determine whether the priorities identified by the Boards are the right ones.
Agenda Item 11 – Report from Chair of the Audit Independence Committee
The meeting noted the report by the Chair of the Audit Independence Committee. The Council agreed to defer consideration of previous audit independence consultancies until after the next Committee meeting.
The Audit Independence Committee was asked to come back to the Council with firm proposals in respect of the various recommendations flowing out of the previous consultancies.
Agenda Item 12 – Report from Chair of the Nominations Committee
The meeting noted the report presented by Mr Klaus Zimmerman, Chair of the Nominations Committee. The meeting agreed that the FRC Chair would invite Mr Lee White to join the Nominations Committee.
Agenda Item 13 – Report from Chair of AASB
The meeting noted the report by Professor David Boymal, Chair of the AASB and the proposed changes to the Board’s Interpretations Model.
Agenda Item 14 – Report from Chair of AUASB
The meeting noted the report by Ms Merran Kelsall, Chair of the AUASB. Ms Kelsall advised that at this stage the timing of adoption of revised international auditing standards overseas is uncertain and that she would be suggesting to the AUASB at its next meeting that consideration be given to a deferral of Australian adoption. The Chairman concurred and advised that Australia faces the risk of getting ahead of the international timetable.
On the basis of this advice, the AUASB were asked to provide the Council with observations on the implications for both accounting firms and corporate Australia of continuing with the current timetable for the adoption of revised auditing standards based on the Clarity format versions of the International Standards on Auditing. These observations will be discussed at the next meeting.
Agenda Item 15 – Other Business
No other business was raised.
Agenda Item 16 – Next Meeting
The next meeting of the FRC will be in Canberra on Wednesday, 11 June 2008, commencing at 9.00 am.