Appendix B
FRC’s performance of its auditor independence functions
To facilitate the performance of the auditor independence functions, the FRC has:
- established an Audit Independence Committee to deal with day-to-day matters associated with the performance of the function;
- signed MOUs with the professional accounting bodies, ASIC, ASX and APRA (MOU bodies);
- met with the MOU bodies and selected accounting firms;
- appointed a consultant to provide guidance and advice to the FRC in the performance of the function; and
- engaged a number of short-term consultants to perform specific tasks associated with its auditor independence functions.
Audit Independence Committee
The Audit Independence Committee held nine meetings during 2006-07.
Members of the Committee during the year were Ms Elizabeth Alexander AM (Chairman), Mr John Gethin-Jones (from 26 September 2006), Mr David Jackson, Mr Charles Macek and Ms Catherine Walter AM.
The Committee’s Charter provides that the Committee will assist the FRC by:
- making recommendations to the FRC concerning the engagement of a person, or persons, to assist the FRC in the performance of the functions conferred on it under subsection 225(2B) of the ASIC Act (the auditor independence consultant);
- performing, either alone or in conjunction with the auditor independence consultant, the work needed to ensure the FRC meets the obligations imposed on it by subsection 225(2B) of the ASIC Act;
- making recommendations to the FRC Chairman concerning the notices that should be given by the Chairman pursuant to section 225A of the ASIC Act; and
- preparing, for the consideration of the FRC, a draft of the report the FRC is required to prepare under section 235BA of the ASIC Act.
Memoranda of Understanding
The FRC has MOUs with the three professional accounting bodies (CPA Australia, the ICAA and the NIA), ASX, APRA and ASIC in order to facilitate the efficient exchange of information between the MOU bodies and the FRC.
In addition, the FRC has a letter of understanding with the CALDB concerning the exchange of information.
Meetings with MOU bodies and audit firms
For the 2006-07 year, meetings were held with the APRA, ASIC, CPA Australia, the ICAA and the NIA. In addition, meetings were also held with the AQRB, the CALDB, the Big Four audit firms and a number of firms in the group immediately below the Big Four.
Appointment of consultants
Mr William Bartlett’s contract to undertake the FRC’s auditor independence consultancy continued throughout 2006-07.
In addition, during 2006-07 the Treasury, acting on behalf of the FRC, entered into contracts with the following people for the provision of short-term consultancy services:
- The Allen Consulting Group Pty Ltd to review recommendations on quality review programmes and disciplinary procedures of the professional accounting bodies made to the FRC by two short-term consultants engaged during 2005-06 (the statement of work for this consultancy is at Appendix D);
- The Banarra Trust to undertake an evaluation of how professional and business ethics are applied in practice by accounting firms (the statement of work for this consultancy is at Appendix E).