The FRC's engagement with domestic stakeholders and other interest groups is addressed in a number of ways, including through liaison between stakeholders and their respective nominees on the Council, presentations at FRC meetings on issues of relevance to the Council and its stakeholders, and periodic meetings between the FRC Chairman and a wide range of stakeholders.
During the year, the FRC was privileged to have the then Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, in attendance for part of the February meeting. The Minister thanked Council members for their efforts and their continued commitment to financial reporting issues during the current economic climate.
Issues which the FRC considered during the year included:
- the role of the APESB;
- the Government's proposals for auditing under the National Greenhouse and Energy Reporting Act 2007 and the Carbon Pollution Reduction Scheme;
- progress towards implementing standard business reporting in Australia;
- current financial reporting issues facing the public sector; and
- the current work by the IASB and the IPSASB in developing their respective conceptual frameworks.
Provision is also made in the agendas of most FRC meetings for Council members to raise issues of concern to their stakeholder bodies.
During 2008-09, as during the previous year, the FRC Chairman met with a range of organisations including accounting firms, professional accounting bodies, industry groups and regulatory bodies.
In addition, the FRC arranged two workshops on issues of relevance to stakeholder groups. Information about these workshops, which dealt with IFRS and public sector accounting, appears below.
On 11 August 2008, the FRC and G100 jointly sponsored a workshop on the Australian IFRS experience. The workshop was attended by Sir David Tweedie, Chairman of the IASB, and Mr Warren McGregor, IASB board member.
The workshop considered a report collated by PricewaterhouseCoopers, which was commissioned by the FRC and the G100. The report documented the results of a survey of G100 members on their experiences adopting IFRS. The results from the survey provide strong support for a principles-based approach to standard setting. The costs and benefits of adopting IFRS are documented in the report.
Sir David invited workshop participants to assist the IASB in developing a set of principles to be considered when the IASB determines the type and nature of disclosures to be included in an IFRS.
The G100 subsequently retained PricewaterhouseCoopers to assist in preparing principles for the development and application of disclosure requirements in financial reports. The principles are expected to be completed during the second half of 2009, after which they will be tested by a sample of companies. The statement of principles and the results of their testing will both be submitted to the IASB.
Public sector accounting workshop
A public sector accounting workshop was held in Canberra on 5 November 2008. The workshop considered issues raised in a number of papers on public sector accounting prepared by the Department of Finance and Deregulation, the AASB and the FRC Secretariat.
Workshop participants agreed on a number of high-level messages, including the need for one set of Australian accounting standards and one Australian standard setter. There was no enthusiasm among workshop participants for moving to either a 'two boards' or 'committees' model of standard setting.
The workshop participants were also of the view that there should be a review of AASB 1049 Whole of Government and General Government Sector Financial Reporting to address implementation and other issues associated with the standard.
Since 2002, successive FRC Chairmen have visited overseas regulatory and professional bodies that perform functions of direct relevance to the FRC's own functions. During 2008-09, the FRC Chairman made two overseas visits: to China and Japan in October 2008 and North America, Europe and China in March and April 2009. In each case, the visits were undertaken in conjunction with attendance at meetings of the IASC Foundation and international or regional conferences.
Meetings of the IASC Foundation
The IASC Foundation is an independent not-for-profit, private sector organisation committed to developing, in the public interest and through its standard-setting body, the IASB, a single set of high-quality, international financial reporting standards for general purpose financial statements. The Foundation has 22 Trustees, who have senior executive experience and who come from diverse geographical and professional backgrounds in both the private and public sectors.
In his capacity as a Trustee of the IASC Foundation, the FRC Chairman attended Trustees' meetings in Washington DC, Beijing, New Delhi and London during 2008-09. Costs associated with the FRC Chairman's attendance at these meetings are met by the IASC Foundation.
Having an Australian as a Trustee of the IASC Foundation provides significant benefits for Australia, as it enables issues of concern to us to be raised for consideration at meetings of the Foundation. It also alerts us to developments that may have consequences for Australia's financial reporting framework.
Visit to China and Japan
The visit to China and Japan during October 2008 coincided with the meeting of the IASC Foundation held in Beijing and a jointly sponsored Chinese Ministry of Finance, IASB and PricewaterhouseCoopers conference, 'IFRS in Asia — Driving Capital Markets of Tomorrow', which was attended by over 430 delegates from 17 countries.
In both countries, meetings were held with government officials, regulatory bodies and representatives of the accounting profession. Chinese organisations with which meetings were held included the Ministry of Finance, the China Securities Regulatory Commission and the Chinese Institute of Certified Public Accountants, while the Japanese bodies included the Financial Services Authority, the Tokyo Stock Exchange, the Financial Accounting Standards Foundation, the ASBJ, the Certified Public Accountants and Auditors Oversight Board and the Japanese Institute of Certified Public Accountants.
A strong sense of goodwill and respect for Australia and the Australian policy and regulatory perspective was present at all meetings with Chinese and Japanese Government officials and senior Japanese business figures.
In the view of the FRC Chairman, there is a keen desire for further engagement and exchange in relation to accounting and auditing issues and for a more collaborative approach to formulation of the regional perspective. Australia seems well placed to work collaboratively with both China and Japan in these areas.
Visit to North America, Europe and China
Meetings with key international stakeholders were arranged in North America and Europe during late March/early April 2009 to coincide with a meeting of the International Accounting Standards Committee Foundation (IASC Foundation) in London at the start of April and two other meetings, the IFRS Regional Policy Forum and a preparatory meeting for the establishment of the AOSSG, held in Beijing in mid-April. (Further information about the Beijing meetings is contained in section 1 of this report.)
Organisations with which meetings were held included: the SEC, the PCAOB and the IMF in Washington DC; the International Federation of Accountants (IFAC) in New York; the IASB, UK Financial Reporting Council, UK Accounting Standards Board and the Financial Services Authority in London; and EFRAG in Brussels.
From Australia's perspective, key messages from the meetings included:
- the increasing recognition of international financial reporting standards and international auditing standards, especially in North America; and
- the potential for Australia to take a more significant international role in relation to public sector accounting and auditing developments.
These meetings provided significant benefits to the FRC by enabling it to engage relevant stakeholders in post-crisis discussions concerning policy and administration following recommendations arising from the G-20 meetings and through assisting it to maintain its international stakeholder networks.