Financial Reporting Council
Chairman’s report
The past year has seen the Financial Reporting Council (FRC) focus on its new responsibilities arising from the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act (CLERP 9), along with implementation issues associated with the adoption of international financial reporting standards (IFRS) by Australian businesses for financial years commencing on or after 1 January 2005.
The expansion in the FRC’s role to include oversight of the setting of auditing standards and of the promulgation of auditor independence requirements has broadened its mandate to promote the integration of Australian businesses into the global economy, thereby contributing to Australia’s attractiveness as a destination for domestic and international investment. The FRC, with support from its Committees and the Secretariat, has worked to implement this mandate effectively in 2004-05. In doing so, it has laid the foundations for the critical work in the years ahead to further align Australian standards with those used internationally, and to contribute to the development of international standards.
New Financial Reporting Council responsibilities under the CLERP 9 legislation
Auditing standard setting
Since 1 July 2004, the FRC has held legislative responsibility for the oversight of audit standard setting, including the operations of the AUASB. This includes appointing its members (other than the Chair), monitoring its business plans and budgets, and providing it with a broad strategic direction on the process of making auditing standards.
Previously, auditing standards had been made by a body (also called the Auditing and Assurance Standards Board, or AuASB) which was constituted and funded by the accounting profession. To ensure a degree of continuity, the FRC agreed initially to appoint all of the members of the former AuASB to the AUASB. Some of those appointments only covered the period to the end of 2004, which allowed the FRC to conduct an assessment and selection process during the second half of 2004. Subsequently, at the FRC meeting in December 2004, four new members were appointed and three existing members re-appointed to the AUASB. An overarching aim of the selection exercise was to ensure that the membership of the AUASB reflected a diversity of professional backgrounds, and included academics, practising auditors from both large and medium sized firms, auditors with public sector experience and those working for the corporate sector.
As part of its new remit, the FRC commenced monitoring the AUASB’s budget and business plans, as it has done in relation to the AASB’s budget and business plans for the last few years. The AUASB Audit Committee assisted the FRC with much of this work.
At the FRC meeting in April 2005, following extensive public consultation with stakeholders, the FRC agreed on a strategic direction for the AUASB. The AUASB was directed to develop standards that have primarily a clear public interest focus. The AUASB should use as a base the International Standards on Auditing developed by the International Auditing and Assurance Standards Board. However, when appropriate and in the public interest, the AUASB should incorporate additional requirements in its auditing standards. The direction also stipulates that it will be necessary for standards to conform with the Australian regulatory environment and statutory requirements, and be capable of enforcement under the requirements of the Corporations Act 2001 by 30 June 2006. In addition to this function the AUASB was directed to develop, as required, auditing and assurance standards for non-financial information and other guidance on auditing and assurance matters. The FRC encouraged the AUASB to participate in audit research that benefits its standard-setting activities, and allows it to provide leadership in audit standard setting at both a domestic and international level.
Auditor independence
The commencement of the CLERP 9 legislation represented an important milestone in the development of the FRC as it saw the Council change from being a body with primarily an oversight role to one which performed both oversight roles and a key operational function: monitoring the effectiveness of auditor independence requirements in Australia and giving the Minister reports and advice about those requirements.
During 2004-05, in preparation for the performance of its expanded role, the FRC:
- established an Audit Independence Subcommittee to assist the Council in the performance of the independence function;
- entered into Memoranda of Understanding with the professional accounting bodies and relevant regulatory bodies (collectively referred to as the MOU bodies); and
- appointed a consultant, Mr William Bartlett, to provide guidance and advice to the Council in the performance of the function.
In performing this function, the FRC has met with, and gathered information from, the MOU bodies and selected accounting firms. In 2004-05, the FRC’s work focused on gaining an understanding of the role of various stakeholders’ attitudes and monitoring systems and processes in relation to independence and quality control as it relates to the CLERP Act.
The work conducted by the FRC revealed that there is an open approach to the significant changes required of all stakeholders by CLERP 9. As outlined in the separate report on auditor independence presented in conjunction with this report, a number of issues have been identified that warrant attention in the upcoming year, but no systemic deficiencies have been identified.
Transition to International Financial Reporting Standards
The FRC has considered a number of key issues that have been raised by various stakeholders in Australia regarding the transition to the use of IFRS. These have included the preparedness of small and medium sized enterprises (SMEs) for the required changes, the treatment of intangible assets and issues associated with the funds management industry. Some of the concerns raised in Australia have also been raised in other jurisdictions which are implementing IFRS, and the FRC is keeping watch on how these issues are being dealt with.
While the FRC remains committed to the implementation timetable and to Australian equivalents of IFRS fully applying to all reporting entities, it supports initiatives to ensure a successful transition, for example, by facilitating access by smaller companies to professional advice.
On an international level more generally, it is apparent that some key issues on the direction of IFRS are going to be decided over the next year or two. This includes the extent of convergence of IFRS with standards issued by the Financial Accounting Standards Board of the United States. European countries are working more closely together to provide early and considered input to the global standard setting process, and this highlights the need for Australia and other countries in the Asian region to do likewise. In this respect, the initiative for a regional policy forum on IFRS later in 2005 is to be commended.
Stakeholder liaison
Liaison with a broad range of domestic and international stakeholders continues to play a core role in informing the deliberations of the FRC. In 2004-05, the implementation of formal MOUs in relation to the co-operation and sharing of information on auditor independence added a significant dimension to the FRC’s liaison functions.
At the international level, the FRC continues to take a strong interest in the broader structure and activities of the IASCF. The FRC provided submissions to the IASCF’s review of its constitution, and acted to support the quality of Australian representation on various committees which convene under the auspices of the IASCF and IASB. Members of the IASB have expressed appreciation of the efforts being made by Australia (and New Zealand) to encourage the take-up of IFRS in the Asian region, and of the commitment demonstrated by practical involvement and funding which facilitates the development of IFRS.
In conjunction with the FRC Secretary, Mr Jorge del Busto, and the General Manager of the Corporations and Financial Services Division of Commonwealth Treasury, Mr Mike Rawstron, I undertook two sets of international visits with a range of standard setting, regulatory and professional accounting bodies. Those visits allowed us to enhance our understanding of the different views on some of the paramount issues bedevilling international financial reporting, such as IAS 39 on financial instruments, the impact of IFRS on SMEs, convergence between IFRS and US GAAP, the control over the development of auditing standards for international use and the extent of detail that should be contained in them. It was apparent that while the process of convergence will take some years, 2005-06 will see a number of critical decisions being made in respect of international accounting standards and hence, it will be important for Australia to be actively involved in discussions at the international level. The FRC will also need to be aware of prevailing international concerns with the tendency towards increased regulation in recent years. These concerns mirror similar concerns that have been raised by the accounting profession and the business community in Australia.
Locally I have met with the professional accounting bodies, regulatory bodies including Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA), and other stakeholders including the Group of 100. In March both Mr Warwick Hunt and I spoke at the Third New Zealand IFRS Summit in Auckland.
Members of the Auditor Independence Subcommittee met with representatives from the United States’ Public Company Accounting Oversight Board (PCAOB) in early March. The main issue of discussion was the respective roles to be undertaken by the PCAOB, ASIC and the FRC in relation to the inspection of auditors and the monitoring of auditor independence.
New Zealand
The relationship between the Council and its New Zealand equivalent, the Accounting Standards Review Board (ASRB) was substantially strengthened during the course of the year. This was facilitated by my appointment to the ASRB and the appointment of Mr Warwick Hunt, Chair of the ASRB, to the FRC. In addition to this, the Chairs of the AASB (Professor David Boymal) and of New Zealand’s Financial Reporting Standards Board (Ms Joanna Perry) were appointed to each other’s Board. These cross-appointments were made at the recommendation of the Trans-Tasman Accounting Standards Advisory Group (TTASAG), established by the Australian and New Zealand Governments early in 2004.
There was an increase in co-operation between the FRC and the ASRB in respect of dealings with the IASB. Via TTASAG, the FRC has been involved in preparations for a forum to bring together policy makers and accounting standard setters from the Asia Pacific region, to be held late in 2005. The FRC also contributed to a TTASAG submission to a review by the New Zealand Government of that country’s Financial Reporting Act. It is hoped that as a result of that review, the institutional arrangements governing standard setting in the two countries will become more closely aligned, thereby facilitating greater co-operation in the adoption and implementation of IFRS.
Operations review
During the year the FRC reviewed aspects of the FRC structure and functions. Comments were sought from key stakeholders as well as from FRC members. Three of the issues considered were the opening of FRC meetings to the public, the composition of the Council and the structure of its Secretariat.
In accordance with the view of the majority of FRC members, attendance at FRC meetings continues to be ‘by invitation only’ to maintain high levels of frankness and quality of discussion. Nevertheless, FRC members were unanimously supportive of initiatives aimed at enhancing the transparency of the FRC’s decision-making processes and ensuring that stakeholders and the public are able to provide comment on key policy proposals under consideration by the FRC. The prompt release of FRC Bulletins following FRC meetings is one initiative adopted to enhance transparency. Following this Operations Review, the FRC determined to improve its consultative arrangements by seeking public comment on key policy proposals under consideration by the FRC. The process followed in the lead-up to the issuing of the strategic direction to the AUASB, which included the publication of a discussion document on the FRC website, was an example that the FRC will endeavour to follow in the future.
The FRC considered that there was no need to recommend any changes to current arrangements in respect of the composition of the Council or the structure of the Secretariat in the short term. However, the FRC agreed to a proposal to conduct an assessment by members of the performance of the Council. That assessment process commenced during June 2005.
Funding for standards setting activities
The FRC has the task of securing the funding needed to ensure effective standard setting by the AASB and AUASB.
For a number of years, the FRC has employed a tri-partite funding model which has included contributions from the Commonwealth, State and Territory Governments, the professional accounting bodies, and the corporate sector. As a result of the extra responsibilities endowed to the FRC under CLERP 9, the Commonwealth announced substantial extra funding for the FRC and standard setting activities in the 2004-05 Budget. A firm commitment from the professional accounting bodies and from the States and Territories has also been secured for 2005-06. In view of the additional funding provided by the Commonwealth, there was no need to directly appeal for voluntary contributions from the corporate sector.
In keeping with the need for Australia to show its tangible support for international standard setting activities, the FRC agreed to a 2004-05 contribution to the IASCF of $1 million. The FRC also developed a protocol governing the use of funds available to meet the costs of overseas travel by FRC representatives attending official international meetings and other Australians attending IASB or IAASB related activities. The protocol has been made available on the FRC web site.
The FRC has decided to fund a memorial to Mr Ken Spencer, a former member of the FRC and a trustee of the IASCF, who passed away in 2004. Further details on this will be announced during 2005-06.
Committees of the Financial Reporting Council
The Committees have again played a vital role assisting the FRC in the detailed consideration of important matters. Committees which met during 2004-05 were:
- the FRC Finance Committee;
- the AASB Audit Committee;
- the AUASB Audit Committee;
- the Nominations Committee;
- the Audit Independence Subcommittee; and
- the AUASB Strategic Directions Taskforce.
During 2004-05, the FRC/AASB Audit Committee was superseded by three new Committees, the FRC Finance Committee, the AASB Audit Committee and the AUASB Audit Committee. The new committees have common membership and are chaired by Mr Graeme McGregor AO. The Finance Committee provides advice to the FRC on the funding and expenditures of the FRC and its constituent bodies, the AASB and AUASB, while the Audit Committees assist the directors of the AASB and AUASB (the members of the FRC) in discharging their responsibilities under the Commonwealth Authorities and Companies Act 1997. Charters for the three committees were approved by the FRC on 20 September 2004.
The Nominations Committee, chaired by Mr Phillip Prior, undertook a comprehensive selection exercise for both AASB and AUASB membership, culminating in a series of appointments at the FRC meeting held on 6 December 2004. Further appointments to the AASB were made during the first half of 2005. The Nominations Committee has also been involved in assessing the operations of the FRC.
The Audit Independence Subcommittee, chaired by Ms Elizabeth Alexander AM, is a standing committee of the FRC established to assist the FRC perform its auditor independence functions. A charter for the Subcommittee was approved by the FRC on 20 September 2004.
The AUASB Strategic Directions Taskforce was established to consider the work of the AUASB ahead of the CLERP 9 Bill coming into force at the start of 2004-05. It met for the final time in July 2004, when it agreed on the key themes for consideration as part of the strategic direction.
I express my gratitude to the Chairs and members of these committees who have given their time and contributed their expertise in carrying out these critical functions.
Support
In view of the increased workload brought about in part by the need to operationalise the CLERP 9 requirements, I express my gratitude to all members of the FRC for their commitment to the work of the Council and its committees. A number of members departed the FRC during the course of the year. This includes Mr John Langoulant, Ms Karen Hamilton and Mr Greg Pound. The Council thanked them for their contribution and wished them all the best in their future endeavours.
Sadly, another former member of the Council, Mr Lewis Ting, passed away late in 2004 shortly after his resignation. The Council acknowledged his contribution over nearly two years as a Council member.
Last year the FRC decided that members could appoint proxy members to vote on their behalf on an individual meeting basis. As a consequence, there is no further need for the appointment of alternate members to the FRC. Mr James Kerwin and Mr Greg Larsen, who were alternates to Mr Phillip Prior and Mr Graeme McGregor respectively, were not re-appointed when their terms expired. I thank them for their interest in FRC matters.
On a positive note, I welcomed Mr Richard Humphry AO, Mr Warwick Hunt and Ms Jan West to the Council. Mr Humphry was appointed as a Trustee on the IASCF at the start of 2005, following in the footsteps of the late Mr Ken Spencer. Ms West’s nomination was supported by The Institute of Chartered Accountants in Australia, and followed Mr Ting’s resignation. I have already referred to Mr Hunt’s appointment and the important role it plays in enhancing co-operation with New Zealand on financial reporting matters. Four members — Ms Elizabeth Alexander, Mr Don Challen, Mr David Jackson and Mr Graeme McGregor — were reappointed to further terms on the Council.
Professor David Boymal has had his first full year as Chairman of the AASB. As well as coping with a heavy workload focusing on the implementation of IFRS, Professor Boymal has been of great assistance to the Council and its committees in respect of various AASB matters, including the appointment of members to the AASB and providing advice on the AASB’s budget and work programme.
In August 2004, Ms Merran Kelsall was appointed by the Treasurer as Chairman of the AUASB. Ms Kelsall has wide experience in accounting and corporate governance, including regulation, which will hold her in good stead as she steers the AUASB in its formative years. Ms Kelsall has kept the FRC informed of developments with respect to the AUASB and its staff, and has provided valuable advice to the FRC and its committees in relation to AUASB and auditing issues. Mr Bill Edge, the Chairman of the former AuASB and interim Chairman of the AUASB, helped to ensure a smooth transition to the new audit standard setting arrangements.
The FRC Secretariat, under the stewardship of Mr Jorge del Busto, has continued to provide a reliable service while contending with a large paper flow and a sometimes complex myriad of requirements. The effective work of AASB and AUASB staff is also evident to the FRC and I extend my gratitude to them as well.
In implementing the new responsibilities under the CLERP 9 legislation, the FRC and the two boards were presented with many challenges. Meeting these has made for a very productive year, and allows us to look forward to facing future demands with a heightened sense of optimism.
SIGNED
Charles Macek
Chairman of Financial Reporting Council
16 September 2005
Financial Reporting Council governance
Establishment, functions and powers
The Financial Reporting Council (FRC) is a statutory body under the Australian Securities and Investments Commission Act 2001 (ASIC Act). The Government’s Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004, amended the ASIC Act and expanded the functions of the FRC, which is now responsible for providing broad oversight of the process for setting both accounting and auditing standards as well as monitoring the effectiveness of auditor independence requirements in Australia and giving the Minister reports and advice on these matters.
Specific accounting and auditing standard setting functions for which the FRC is responsible include:
- appointing the members of the AASB and AUASB (other than the Chairmen, who are appointed by the Treasurer);
- approving and monitoring the AASB’s and AUASB’s priorities, business plans, budgets and staffing arrangements (including level, structure and composition of staffing);
- determining the AASB’s and AUASB’s broad strategic directions;
- giving the AASB and AUASB directions, advice or feedback on matters of general policy and on the AASB’s and AUASB’s procedures;
- furthering the development of single sets of accounting and auditing standards for world wide use with appropriate regard to international developments;
- promoting the continued adoption of international best practice in the Australian accounting and auditing standard setting processes if doing so would be in the best interests of both the private and public sectors in the Australian economy;
- monitoring:
- the development of international accounting and auditing standards and the accounting and auditing standards that apply in major international financial centres;
- the operation of accounting and auditing standards to assess their continued relevance and their effectiveness in achieving their objectives in respect of both the private and public sectors of the Australian economy and the effectiveness of the consultative arrangements used by the AASB and AUASB; and
- monitoring and periodically reviewing the level of funding, and the funding arrangements, for the AASB and AUASB and seeking contributions towards the costs of the Australian accounting and auditing standard setting processes.
Specific auditor independence functions for which the FRC is responsible include:
- monitoring and assessing the nature, overall adequacy and effectiveness of:
- the systems and processes used by Australian auditors to ensure compliance with auditor independence requirements;
- the systems and processes used by professional accounting bodies for planning and performing quality assurance reviews of audit work undertaken by Australian auditors to the extent to which those reviews relate to auditor independence requirements;
- the action that Australian auditors who have been subject to such quality assurance reviews have taken in response to the reports prepared as a result of those reviews;
- the action taken by professional accounting bodies to ensure that Australian auditors who have been subject to such quality assurance reviews respond appropriately to the reports prepared as a result of those reviews; and
- the investigation and disciplinary procedures of professional accounting bodies as those procedures apply to Australian auditors.
- monitoring the overall compliance by companies, registered schemes and disclosing entities with the audit related disclosure requirements of the Corporations Act and the accounting and auditing standards;
- giving the Minister and the professional accounting bodies reports and advice on the above matters;
- monitoring international developments in auditor independence, assessing the adequacy of the Australian auditor independence requirements in the light of those developments and giving the Minister, and professional accounting bodies, reports and advice on any additional measures needed to enhance the independence of Australian auditors; and
- promoting, and monitoring the adequacy of, the teaching of professional and business ethics by, or on behalf of, professional accounting bodies to the extent to which the teaching of those subjects relates to auditor independence.
The FRC operates within a framework set out in the ASIC Act. The Act sets out core objectives for accounting and auditing standard setting in Australia.
- Accounting standards should facilitate the Australian economy by reducing the cost of capital and enabling Australian entities to compete effectively overseas and should maintain investor confidence in the Australian economy, including its capital markets.
- Accounting and auditing standards should facilitate the Australian economy by having accounting and auditing standards that are clearly stated and easy to understand.
The ASIC Act expressly limits the FRC’s ability to become involved in the technical deliberations of the AASB and AUASB. It provides that the FRC does not have power to direct the AASB or AUASB in relation to the development, or making, of a particular standard, or to veto a standard formulated or recommended by the AASB or AUASB. This provision is designed to ensure the independence of the standard setters.
Membership and meetings
Under section 235A of the ASIC Act, the members of the FRC are appointed by the Treasurer and hold office on terms and conditions determined by the Treasurer. Most members of the FRC have been appointed on the basis of nominations put forward by key stakeholder groups.
A full list of members during 2004-05, and the stakeholders who nominated them is in Appendix A. In addition, a list of alternate members, appointed to be able to participate in FRC meetings when FRC members for whom they have been nominated as alternates are unable to attend, is also in Appendix A. As members are now able to appoint proxies on a meeting-by-meeting basis, no alternate members were appointed in 2004-05, and it is not expected that further alternate members will be appointed in the future.
Operations and activities
Appointments to the Australian Accounting Standards Board and the Auditing and Assurance Standards Board
The Nominations Committee is responsible for recommending appointments to the AASB and AUASB. In making recommendations, the Committee reviews written applications, interviews candidates, and takes into consideration the past performance and future needs of the two Boards. The Committee is also given other tasks from time to time; for example, in 2004-05, the Committee advised the FRC on its operational review and self-assessment of the FRC’s performance.
In 2004-05, the Chairman of the Nominations Committee was Mr Phillip Prior. The other members of the Nominations Committee were the FRC Chairman, Mr Charles Macek, Mr Don Challen and Mr Klaus Zimmermann. The Nominations Committee formally met five times during the year.
The FRC appointed Mr Bruce Porter, Ms Kris Peach, Ms Joanna Perry, Mr Des Pearson, and Mr Frank Palmer, and re-appointed Ms Judith Downes (who subsequently retired due to increased work commitments) and Professor Ken Leo to the AASB during 2004-05. The appointment of Ms Perry, who is Chair of New Zealand’s Financial Reporting Standards Board, was made at the recommendation of the Trans-Tasman Accounting Standards Advisory Group.
To facilitate a smooth transition from the AuASB to the statutory-based AUASB, the existing members of the AuASB retained their membership to at least the end of 2004. Subsequently, the FRC appointed Mr Kim Smith, Ms Dianne Azoor Hughes, Professor Christine Jubb, and Mr Jon Tyers, and re-appointed Mr Kevin Neville, Mr Bob Sendt, and Mr Clive Mottershead to the AUASB.
Overseeing the Australian Accounting Standards Board and the Auditing and Assurance Standards Board
The FRC’s responsibilities include reviewing and approving the AASB’s and AUASB’s priorities, business plan, budget and staffing arrangements.
During 2004-05, the FRC Finance Committee, meeting as the AASB Audit Committee and the AUASB Audit Committee, undertook the detailed reviewing of the budgets, business plans and work programmes of the two Boards. Further information on the work programme for the AASB is contained in Appendix E. Further information on the work programme for the AUASB is contained in Appendix F.
The FRC considered the AUASB’s broad strategic direction in the development of Australian auditing standards, and issued a directive in April 2005.
The Chairmen of both the AASB and AUASB provided updates on the operations, including staffing matters, at each meeting of the FRC.
Audit independence
Under amendments made to the ASIC Act by the CLERP 9 legislation, the FRC has been given responsibility for monitoring the effectiveness of auditor independence requirements in Australia and giving the Minister reports and advice about those requirements.
A detailed report on the FRC’s performance of the auditor independence functions, prepared in accordance with section 235BA of the ASIC Act, is presented in conjunction with this Annual Report.
Consultation
The FRC regularly issues bulletins that communicate decisions taken at its meetings and other important developments in accounting and auditing standard setting. These bulletins are distributed to the media and stakeholders. These bulletins are available on the FRC website.
During the year, FRC Chairman, Mr Charles Macek and other members of the FRC consulted extensively with representatives of corporations, business organisations, other stakeholder bodies and accounting and auditing organisations. The FRC Chairman travelled overseas and consulted widely with executives from corporate and accounting bodies on matters relating to international accounting and auditing standards, developments in respect of accounting and auditing standards, and matters regarding auditor independence.
Financial Reporting Council consultant
On 23 December 2004, the FRC Chairman announced that Mr William Bartlett had been engaged to undertake the Council’s auditor independence consultancy, to assist the FRC in the performance of the auditor independence functions conferred on the Council by the CLERP 9 legislation. Mr Bartlett, who retired as a partner of accounting firm Ernst & Young in June 2003, has spent 35 years working in the accounting field, including as auditor of a number of firms in the financial services industry.
Finances
The 2003-04, 2004-05 and 2005-06 Commonwealth Budgets each contained measures designed to strengthen the financial position of the FRC and the standard setting bodies it oversees. In brief, these measures were:
- The 2003-04 Budget provided $4,000,000 over four years to support the expanded functions of the FRC under the CLERP 9 reforms;
- In the 2004-05 Budget, an additional $3,400,000 million was provided to assist with the implementation of the expanded role of the FRC under CLERP 9, including the reconstitution of the Auditing and Assurance Standards Board, and for the establishment of the Financial Reporting Panel. In addition, a provision was aside in the contingency reserve for the forward years, with the level of ongoing funding to be determined in the context of the 2005-06 Budget; and
- The 2005-06 Budget provided additional funding of $19,200,000 over four years to support the FRC in its expanded role of overseeing auditor independence and audit standards-setting arrangements and for the continuation of the Financial Reporting Panel (which does not fall under the oversight of the FRC).
The additional funding provided in the 2005-06 Budget is funded out of consolidated revenue, which includes the fees and charges paid to the Australian Securities and Investments Commission by members of the business community. In view of this additional funding, there was no need for the FRC to continue to rely on voluntary contributions from the business community.
As a consequence of these measures, the Commonwealth provided total funding of $4,400,000 in 2004-05 and will provide funding of $5,800,000 in 2005-06 and 2006-07. A review of ongoing Commonwealth funding for the FRC will be undertaken by October 2006 as part of the planning for the 2007-08 Budget.
In addition, the States and Territories provided $500,000 for the financial year ended 30 June 2005 and have committed to provide a further $500,000 during 2005-06. As noted in previous reports, this funding is subject to the proviso that the current tripartite funding model continues and the professional accounting bodies renew their funding commitments in a similar manner.
In 2004-05, the professional accounting bodies provided contributions totalling $1,750,000. CPA Australia (CPAA), and the Institute of Chartered Accountants in Australia (ICAA) contributed $750,000 each while the National Institute of Accountants contributed $250,000. On 11 May 2005, the bodies agreed to contribute a further $1,750,000 for the year ended 30 June 2006, with some variations in the amount to be contributed by each body.
During 2004-05 the FRC approved payments to the IASCF totalling $1,000,000 per year for calendar years 2004 and 2005. The payment in 2004 was made out of the funds that had been allocated in 2003-04 to the AASB from the Financial Institutions Development Account. The 2005 payments were made out of the funds allocated by the Commonwealth to the FRC in 2004-05. Subject to the FRC’s budgetary situation at the time, consideration will be given to making further contributions in the future.
As noted above, in 2004-05 the Government provided $4,400,000 to support the role of the FRC and to contribute towards the activities of the bodies it oversees. In 2004-05, a total of $1,799,471 of FRC’s own expenditure was paid by Treasury out of this appropriation. This consisted of:
- $1,000,000 of 2005 contributions to the IASCF;
- $446,720 in staffing costs;
- $59,395 on consultants;
- $76,076 on the Chairman’s salary (including superannuation);
- $15,318 in sitting fees for FRC members (other than the Chairman);
- $158,977 on travel; and
- $42,985 on overheads.
The 2004-05 appropriation from the Commonwealth Government was also used to supplement the funding of the AASB (as noted in the adjunct 2004-05 AASB financial report) and allowed to meet certain costs associated with the reconstitution of the AUASB and the establishment of the Financial Reporting Panel.
Freedom of information
The FRC Secretariat, on behalf of the FRC, maintains possession of the following documents:
- FRC meeting agenda papers;
- administrative and technical papers concerning the FRC’s functions and its performance in regard to those functions;
- copies of minutes and bulletins issued by the FRC; and
- correspondence between the FRC, stakeholder groups and members of the public.
Requests under the Freedom of Information Act 1982 for access to documents in the possession of the FRC can be directed to the FRC Secretariat at the contact details below.
One application under the Freedom of Information Act 1982 was received by the FRC during the year.
Contacting the Financial Reporting Council
Post: |
The Secretary |
Telephone: |
(02) 6263 3144 |
Facsimile: |
(02) 6263 2770 |
E-mail: |
frcsecretary@treasury.gov.au |