Overview
Oversight by FRC
- Key functions of the FRC are to advise the Government on the accounting standard setting process and the development of international accounting standards, and to determine the broad strategic direction of the AASB.
- In performing its functions, the FRC has careful regard to the objectives of standard setting set out in the ASIC Act 2001 - with regard to facilitating the development of high quality accounting standards, facilitating the Australian economy, and maintaining investor confidence.
- During the year the FRC, amongst other things:
- approved the AASB's revised 2000-01 budget of $2.9 million and the AASB's proposed policy on publications and subscriptions;
- approved the AASB's proposed standard setting priorities for 2001-02 without change;
- considered the AASB's broad strategic direction and proposed budget and staffing arrangements for 2001-02, and endorsed the broad shape of the AASB's proposed business plan for 2001-02;
- approved guidelines proposed by the AASB, which collate and codify the AASB's governance arrangements and approved a risk management program for the AASB as proposed by the Board;
- approved a Charter for the Urgent Issues Group;
- established an Audit Committee to assist the AASB and its directors to comply with their statutory obligations;
- made two appointments of members of the AASB to replace members who had resigned from the Board;
- established a Nominations Committee to make recommendations to the FRC on the composition of, and criteria for appointment to, the AASB; and
- recommended to the AASB that the approval required to make an accounting standard should formally require the affirmative vote of seven out of ten members of the AASB.
- The FRC also acted to facilitate and extend consultation by the FRC and AASB with stakeholders in the standard setting process.
This issue and the FRC's work on international accounting standards are outlined separately below.
Standard setting
- The AASB held 9 meetings in 2000-01 for a total of 17 meeting days, where it progressed some significant standard setting and administrative issues.
- A total of 7 new or revised accounting standards were made by the AASB in 2000-01.
- The Urgent Issues Group issued 9 new or revised Abstracts during 2000-01.
Consultation
- The FRC and AASB are jointly and individually seeking to ensure maximum consultation with, and input from, stakeholders on particular standards and the standard setting process.
- In 2000-01, the AASB:
- established a Consultative Group, which met twice during the year;
- in February 2001, conducted a survey of its Consultative Group members and other constituents regarding the Board's 2001-02 work program priorities;
- used its website (www.aasb.gov.au) to provide information about the Board, its meetings and activities, and its work program;
- issued media releases to announce when new or revised accounting standards had been made; and
- issued an AASB Action Alert after each AASB meeting to summarise the proceedings of the meeting.
- In 2000-01, the FRC:
- issued 7 Bulletins about decisions taken at its meetings and other important developments in the accounting standard setting process;
- maintained a close liaison with Australia's international representatives on the IASC, IASB and IFAC PSC - respectively, Mr Ken Spencer, Mr Warren McGregor and Mr Ian Mackintosh;
- extended its consultation processes through meetings with business groups, company representatives and other stakeholders; and
- has been developing a website (www.frc.gov.au), planned for release in the near future, to further facilitate consultation.
International
- The FRC has a statutory obligation: to monitor the development of international accounting standards and accounting standards that apply in major international financial centres; to further the development of a single set of accounting standards for world-wide use with appropriate regard to international developments; and to promote the adoption of international best practice accounting standards in the Australian accounting standard setting process if doing so would be in the best interests of both the private and public sectors in the Australian economy.
- In accordance with its statutory obligations, the FRC is considering the policy implications for Australia of developments including the recent changes to the IASC, including its restructuring as the IASB, and progress by national securities commissions in adopting the recommendation of IOSCO that, subject to a range of supplementary requirements, IOSCO members permit incoming multinational issuers to use 30 core international accounting standards to prepare financial statements for cross-border offerings and listings. The FRC is also monitoring the work of the European Commission, IFAC PSC and national accounting standard setting bodies in Canada, France, Germany, Japan, New Zealand, the United Kingdom and the United States.
- Australians have been successful in obtaining appointment to both the IASB and the SAC. In addition, several Australians have been employed by the IASB's technical secretariat. Particulars of these appointments appear later in this report.
Accountability
- Mr Michael Ullmer, the FRC's Deputy Chairman, and Mr Keith Alfredson, the AASB's Chairman, separately appeared before the Senate Economics Legislation Committee during June 2001.
Australian Accounting Standard Setting
Structure of institutional arrangements
