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Issue

Action

156-157

The report states that the implications of advice from AGS is that the FRC should extend the scope of its work beyond Corporations Act audits.

The Parliamentary Secretary to the Treasurer has advised the FRC Chairman that the FRC should remain focused on independence issues associated with Corporations Act audits for at least the next 12 months.

161

The FRC acknowledged ASIC comments about the differing policies of firms concerning the holding of a financial interest in audit clients and expressed the view that it would be appropriate for firms to further consider this issue.

Raised in 2006 meetings with stakeholders. Also being examined as part of the international comparisons project.

162

The FRC considered that it is appropriate for firms to take into account public perceptions in relation to auditor independence when deciding to offer non-audit services.

Raised in 2006 meetings with stakeholders. Also being examined as part of the international comparisons project.

162/169

The FRC acknowledged that there could be some anomalies reflecting unintended consequences from the CLERP 9 legislation.

The Treasury has informed that only a few minor matters remain outstanding.

162

The FRC is of the view that it would be unfortunate if the audit independence framework made it more difficult to hire appropriate personnel. This is an area the FRC will be focusing on in 2005-06 with a view to considering whether recommendations for any legislative changes might be considered appropriate.

Raised in 2006 meetings with stakeholders. FRC still has to consider its response. Might be a bit premature to suggest specific changes at this stage.

164

The report states that the FRC will be monitoring, in 2005-06, the amount of resources allocated to the quality review programmes to ensure a comprehensive review is conducted at the audit firms.

Covered as part of the terms of reference of the consultancy on the quality review programmes of the professional accounting bodies.

165

The report states that the FRC will be reviewing the extent and quality of the reviews of the big four accounting firms as part of its 2005-06 work programme.

FRC appointed a consultant to undertake work on the quality review programmes of the professional accounting bodies.

165

The report states that the FRC will be reviewing disciplinary procedures in detail in 2005-06. The report also indicates that in 2005-06 the FRC will investigate whether in some instances the reasons for resignation from a professional body should be made public.

FRC appointed a consultant to undertake work on the disciplinary procedures of the professional accounting bodies.

166

The report indicates that in 2005-06 the FRC will attempt to establish in broad terms the quantum of auditors who are not members of an accounting body.

This task will be finalised during the first half of 2007.

167

The report states that the FRC will be undertaking a detailed examination of the audit-related disclosure requirements as part of its 2005-06 work programme.

Information has been provided by ASIC and ASX to assist in this task.

167

The report states that the FRC plans to undertake an in-depth examination of information about the profession’s courses on business and professional ethics during 2005-06.

FRC appointed a consultant to undertake work on the teaching of ethics by the professional accounting bodies.

168

The report states that, in 2005-06, the FRC intends to research Australia’s requirements on auditor independence compared with those applicable in other major jurisdictions worldwide.

The Treasury has undertaken this work for the FRC.

170

The report states that in 2005-06 the FRC will investigate in more detail whether disciplinary action can be taken against an audit firm.

As noted in the 2004-05 report, the Australian legal system does not allow for action to be taken against a firm.

170

The report indicates that the FRC will be looking at the audits of self-managed superannuation funds in more detail in 2005-06.

The Parliamentary Secretary to the Treasurer has advised the FRC Chairman that the FRC should remain focused on independence issues associated with Corporations Act audits for at least the next 12 months.

171

The report states that the professional bodies are upgrading their quality control, independence monitoring, and disciplinary procedures and that the FRC will be paying special attention to these upgrades in 2006.

Addressed through meetings with stakeholders and consultancies.

171

The report indicates that, in 2005-06, the FRC while continuing to monitor the functions covered in 2004-05, an increased emphasis will be placed on monitoring the teaching of ethics, compliance by companies with audit-related disclosure requirements and research into best practice worldwide with respect to auditor independence requirements.

Teaching of ethics and auditor independence being considered by consultant and Treasury respectively. Work on disclosure requirements will be based on material from MOU bodies.