Overview
Oversight by Financial Reporting Council
The key functions of the Financial Reporting Council (FRC) are to determine the broad strategic direction of the Australian Accounting Standards Board (AASB) and to advise the Government on the process of setting accounting standards and on developments in international accounting standards.
In performing its functions, the FRC takes into account the objectives of standard setting specified in the ASIC Act - aiming to facilitate the development of high quality accounting standards, to facilitate the Australian economy, and to maintain investor confidence.
Direction-setting activities of the FRC
- announced the objective of adopting Australian accounting standards with accounting standards issued by the International Accounting Standards Board (IASB) by 1 January 2005, subject to the Government's support at the appropriate time for any necessary amendments of the Corporations Act;
- pursued as an urgent priority the harmonisation of Government Financial Statistics (GFS) and Generally Accepted Accounting Principles (GAAP) in order to achieve an Australian accounting standard for a single set of Government reports which are auditable, comparable between jurisdictions and in which the outcome statements are directly comparable with the relevant budget statements;
- consulted extensively with the private sector concerning financial contributions to the standard-setting process, taking into account business' desire for clear performance assessment;
- continued the process of raising funds from the private sector for international and Australian standard setting;
- considered the AASB's broad strategic direction; proposed budget and staffing arrangements for 2003-04; and endorsed the broad shape of the AASB's proposed business plan for 2003-04; and
- reviewed, with the AASB Chairman, approaches to improving the operation and output of the AASB.
Other activities of the FRC
The FRC made 4 new appointments to replace members who had resigned from the AASB.
The FRC's work on international accounting standards is outlined separately below.
Standard setting
The AASB held 9 meetings in 2002-03 for a total of 16 meeting days, at which it addressed significant standard setting and administrative issues.
A total of two new accounting standards, one accounting interpretation and 8 exposure drafts requesting comments were issued by the AASB in 2002-03.
The Urgent Issues Group (UIG) met 8 times in 2002-03 and issued 6 new abstracts and 3 revised abstracts during that period.
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 2002-03, the FRC:
- continued consultation with key private sector representatives as well as consultation with government agencies;
- liaised closely with international standard setting stakeholders;
- issued 4 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, IFAC PSC, and IFRIC - respectively, Mr Ken Spencer, Mr Warren McGregor, Mr Ian Mackintosh and Mr Wayne Lonergan; and
- used the www.frc.gov.au website to facilitate consultation.
- met once with its Consultative Group - made up of representatives of industry, business, investor, academic, regulatory and professional bodies;
- used its website (www.aasb.com.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.
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;
- further the development of a single set of accounting standards for world-wide use with appropriate regard to international developments; and
- 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 July 2002, the FRC gave a strategic direction to the AASB to work toward the adoption of IAS in Australia. The FRC is continuing to monitor the adoption of IAS both in Australia and overseas.
The FRC also continues to monitor 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.
Accountability
The former Chairman, Mr Jeffrey Lucy AM, appeared before the Senate Economics and Legislation Committee in 2002-03.
Australian accounting standard setting
Figure 1: Structure of institutional arrangements
