Financial Reporting Council
Australian Accounting Standards Board
Auditing and Assurance Standards Board
Annual Reports
2004-05
Financial Reporting Council
Report on Auditor Independence 2004-05
© Commonwealth of Australia 2005
ISBN 0 642 74266 9
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23 September 2005
The Hon Peter Costello MP
Treasurer
Parliament House
CANBERRA ACT 2600
Dear Treasurer
I have pleasure in presenting the annual reports of the Financial Reporting Council (FRC), Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) for the year ended 30 June 2005. In conjunction with these reports I also present the report of the FRC on its auditor independence functions.
The reports have been prepared in accordance with sections 235B and 235BA of the Australian Securities and Investments Commission Act 2001 (ASIC Act), and section 9 of the Commonwealth Authorities and Companies Act 1997 (CAC Act), which applies to both the AASB and the AUASB.
Subsection 235B(1) of the ASIC Act requires the FRC, by 31 October each year, to prepare a report on its operations and those of the AASB and the AUASB during the year, and on the achievement of the objects of Part 12 of the ASIC Act relating to accounting and auditing standards. Under subsection 235B(4) of the ASIC Act, the report must be tabled in each House of the Parliament as soon as practicable.
Subsection 235BA(1) of the ASIC Act requires the FRC, by 31 October each year, to prepare a report on its performance of its auditor independence functions, the findings and conclusions reached by the FRC in performing those functions, and the actions (if any) taken by the FRC in respect of those findings and conclusions. Under subsection 235BA(3) of the ASIC Act, the report must be tabled in each House of the Parliament as soon as practicable.
Subsection 9(1) of the CAC Act requires the directors of the AASB and the AUASB to each prepare, by no later than 15 October, an annual report for the past financial year which includes a report of operations, financial statements and the Auditor-General’s report on those financial statements. Under subsection 9(3) of the CAC Act, these reports must be tabled in each House of the Parliament as soon as practicable.
As the AUASB came into being as a statutory body on from 1 July 2004, and the FRC’s responsibilities in relation to auditing standards and auditor independence also commenced on 1 July 2004, this is the first occasion on which the relevant reports have been presented.
Yours sincerely
SIGNED
Charles Macek
Chairman
Contents
Abbreviations
Contact officer
Part 1: Annual Reports 2004-05
Overview
Oversight by the Financial Reporting Council
Activities of the Financial Reporting Council
Accounting standard setting
Auditing standard setting
Audit independence function
Consultation
International
Accountability
Australian accounting and auditing standard setting in 2004-05
Financial Reporting Council
Chairman’s report
Financial Reporting Council governance
Operations and activities
Freedom of information
Contacting the Financial Reporting Council
Australian Accounting Standards Board
Chairman’s report
Australian Accounting Standards Board Directors’ report of operations
Australian Accounting Standards Board publications
Freedom of information
Commonwealth fraud control guidelines
Commonwealth disability strategy
Contacting the Australian Accounting Standards Board
Auditing and Assurance Standards Board
Chairman’s report
Auditing and Assurance Standards Board Directors’ report of operations
Freedom of information
Commonwealth fraud control guidelines
Commonwealth Disability Strategy
Contacting the Auditing and Assurance Standards Board
Financial Reports
Australian Accounting Standards Board
Auditing and Assurance Standards Board
Appendices
Appendix A Members of the Financial Reporting Council 1 July 2004 to 30 June 2005
Appendix B Members of the Australian Accounting Standards Board 1 July 2004 to 30 June 2005
Appendix C Members of the Auditing and Assurance Standards Board 1 July 2004 to 30 June 2005
Appendix D Attendance at meetings
Appendix E Australian Accounting Standards Board Work Programme
Appendix F Auditing and Assurance Standards Board Work Programme
Appendix G Pronouncements of the Standards Setting Bodies as at 30 June 2005
Part 2: Report on Auditor Independence 2005-05
Report on Auditor Independence 2005-05
Introduction
FRC’s Auditor Independence Functions
Scope of auditor independence function
Performance of functions
FRC’s findings and conclusions
Overall conclusion
Abbreviations
The following abbreviations are used throughout this report:
AARF |
Australian Accounting Research Foundation |
AASB |
Australian Accounting Standards Board |
AGS |
Australian Government Solicitor |
APRA |
Australian Prudential Regulatory Authority |
AQEM |
Audit Quality Enhancement Monitor |
ASIC |
Australian Securities and Investments Commission |
ASIC Act |
Australian Securities and Investments Commission Act 2001 |
ASRB |
Accounting Standards Review Board — New Zealand |
ASX |
Australian Stock Exchange |
AuASB |
Auditing and Assurance Standards Board (to 30 Jun 2004) |
AUASB |
Auditing and Assurance Standards Board |
CAC Act |
Commonwealth Authorities and Companies Act 1997 |
CALDB |
Companies Auditors and Liquidators Disciplinary Board |
CDS |
Commonwealth Disability Strategy |
CLERP |
Corporate Law Economic Reform Program |
CLERP 9 Act |
Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 |
CPAA |
CPA Australia |
FRC |
Financial Reporting Council |
FRLI |
Federal Register of Legislative Instruments |
FRSB |
Financial Reporting Standards Board — New Zealand |
GAAP |
Generally Accepted Accounting Principles |
GFS |
Government Finance Statistics |
GST |
Goods and Services Tax |
HOTARAC |
Heads of Treasuries Accounting and Reporting Advisory Committee |
IAASB |
International Auditing and Assurance Standards Board |
IAS |
International Accounting Standards |
IASB |
International Accounting Standards Board |
IASCF |
International Accounting Standards Committee Foundation |
ICAA |
The Institute of Chartered Accountants in Australia |
IFAC PSC |
International Federation of Accountants Public Sector Committee |
IFRIC |
International Financial Reporting Interpretations Committee |
IFRS |
International Financial Reporting Standards |
IPSASB |
International Public Sector Accounting Standards Board |
ISA |
International Standards on Auditing |
MOU |
Memorandum of Understanding |
NIA |
National Institute of Accountants |
NSS |
National Standard Setters |
PCAOB |
Public Company Accounting Oversight Board (United States) |
SAC |
Standards Advisory Council (of the IASB) |
SEC |
Securities and Exchange Commission (United States) |
SME |
Small and medium-size enterprises |
UIG |
Urgent Issues Group |
Contact officer
The contact officer for these reports is the Financial Reporting Council Secretary, who may be contacted at:
Post: |
Secretary |
Telephone: |
(02) 6263 3144 |
Facsimile |
(02) 6263 2770 |
frcsecretary@treasury.gov.au |