Bulletin
2006/6 – 4 October 2006
The 37th meeting of the Financial Reporting Council (FRC) was held in Melbourne on 26 September 2006. A list of the current FRC membership is attached.
The main issues considered at the meeting were:
- the annual report of the FRC and the associated reports and financial statements of the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB);
- the preparation of the FRC’s 2005-06 auditor independence report;
- engagement of a media consultant for the FRC;
- the procedures to be used for setting strategic directions for the AASB and the AUASB;
- 2007 appointments to the AASB and AUASB; and
- reports from standard setters and committees.
Membership
The Chairman welcomed Ms Kathryn Campbell, Mr Michael Coleman and Mr Mark Coughlin to their first Council meeting. He also congratulated Ms Elizabeth Alexander, Mr Don Challen and Mr David Jackson on their reappointment to the Council.
The Chairman also expressed his appreciation for the contribution to the work of the Council made by Mr Graeme McGregor and Mr Phillip Prior, both of whom recently retired from the Council.
With the changes to the membership of the FRC mentioned above, the Council approved the following consequential changes to the membership of its standing committees:
- Mr Bruce Brook was appointed Chair of the Finance Committee, with Mr Michael Coleman joining the Committee as an additional member;
- Mr Klaus Zimmermann was appointed Chair of the Nominations Committee, with Ms Kathryn Campbell and Mr Mark Coughlin joining the Committee as additional members; and
- Mr John Gethin-Jones was appointed as an additional member of the Audit Independence Committee.
Annual Reports and Financial Statements
The FRC approved the draft 2005-06 FRC/AASB/AUASB annual report, including the financial statements of the AASB and AUASB for the year ended 30 June 2006, subject to a number of minor technical amendments.
The FRC also approved the 2005-06 FRC stocktake of operations against its functions, and agreed to its publication on the FRC website.
Auditor Independence functions
A progress report was given to the Council on the preparation of the FRC’s auditor independence report for 2005‑06. The FRC noted that the timetable for finalising the report, which has to be with the Minister by 31 October, included a period of consultation with the bodies with which the FRC has signed Memoranda of Understanding concerning the exchange of information.
In other matters associated with the performance of the independence function, the Subcommittee directly responsible for the performance of this function has been renamed the Audit Independence Committee while minor changes to the Charter of the Committee were approved.
Media Consultant
The FRC decided to engage a consultant to assist it in enhancing the breadth and quality of media coverage of the work of the FRC, particularly in respect of the release of the report on auditor independence matters.
A separate announcement concerning the successful tenderer will be made at a later date.
Strategic Directions for AASB and AUASB
The FRC approved guidelines outlining the procedures to be used in the development of any broad strategic directions that the FRC proposes issuing to either the AASB or AUASB under section 225 of the ASIC Act.
The guidelines require the FRC to give the relevant Board adequate time to consider, and comment to the FRC on, a draft direction. The guidelines also require the FRC to consult with relevant stakeholders.
Appointments to AASB and AUASB
The FRC discussed the procedures to be followed for filling vacancies on the AASB and AUASB that occur up to the end of June 2007.
It was agreed that, in view of the increased focus of the work of the AASB on public sector issues, the strength of the Board in this area should be enhanced without increasing the size of the Board.
Expressions of interest for filling vacancies on the two Boards will be sought by way of public advertisement, with those for the AASB emphasising the desirability of applicants having public sector knowledge. Advertisements for the AUASB would emphasise the desirability of applicants having knowledge of issues pertaining to medium sized and smaller accounting firms.
Reports from standard setters and committees
The FRC received reports from the Chairmen of the AASB, AUASB, FRC Finance Committee, FRC Nominations Committee and FRC Audit Independence Committee. A report was also received from the Chairman of the Trans-Tasman Accounting and Auditing Standards Advisory Group.
In addition to matters mentioned above, issues addressed in, or arising from, these reports included:
In response to a request from the AASB for clarification about the extent to which the GAAP/GFS project should extend to whole of government, government departments, local government and other government entities, the FRC agreed that, in the first instance, it would be helpful for the AASB to make a presentation to update the FRC on the AASB’s progress and experience from its work relating to GAAP-GFS harmonisation from GGS perspective.
The Ken Spencer Memorial Lecture will be held annually. An annual lecture will provide opportunities for people of great repute to speak on topics of broad interest.
The possibility of the FRC providing a funding contribution to the International Public Sector Accounting Standards Board was discussed. The FRC concluded that it does not have the capacity to provide financial support. However, it was noted that ‘in kind’ support is provided to the IPSASB by the AASB, which undertakes work on a number of projects included on the IPSASB’s work programme.
The FRC endorsed the nomination of an Australian for appointment to the International Working Group on Accounting for Leases.
Other matters
Reports were provided on a number of recent meetings with stakeholders and other bodies, including:
- recent ICAA/NIA and CPA Australia seminars held in Canberra;
- a meeting between Charles Macek and the Parliamentary Secretary to the Treasurer;
- Ethics Forum held recently in Sydney;
- Financial Sector Advisory Council; and
- Charles Macek’s visit to North America and Europe in July 2006, during which he met with senior representatives of oversight bodies performing oversight functions equivalent to those performed by the FRC and relevant standard setting and professional bodies.
The FRC also noted that Japan will host a regional forum on IFRS implementation in March 2007.
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The FRC is the peak body responsible for the broad oversight of the accounting and auditing standard setting process for the private and public sectors, as well as monitoring the effectiveness of auditor independence requirements in Australia. It comprises key stakeholders from the business and investing communities, the professional accounting bodies, governments and regulatory agencies. The FRC advises the Government on the accounting and auditing standard setting process and on the development of international accounting and auditing standards. It determines the broad strategic direction of the standard setters, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board.
For further information, please contact the Secretariat of the Financial Reporting Council
c/- The Treasury, Langton Crescent, Parkes ACT 2600.
Mr Jorge del Busto
Ph: (02) 6263 3144
Fax: (02) 6263 2770
E-mail:jdelbusto@frc.gov.au
or visit the FRC’s website at
www.frc.gov.au
ATTACHMENT
MEMBERS OF THE FINANCIAL REPORTING COUNCIL
Members:
- Mr Charles Macek, Company Director — FRC Chairman (appointed as Chairman by the Treasurer and nominated as an FRC member by the Securities Institute of Australia);
- Ms Elizabeth Alexander, AM, Adviser to Blake Dawson Waldron — FRC Deputy Chairman (appointed as Deputy Chairman by the FRC — nominated by the Commonwealth);
- Mr Bruce Brook, Company Director, Melbourne, Victoria — nominated by the Business Council of Australia;
- Ms Kathryn Campbell, Deputy Secretary, Financial Management Group, Department of Finance and Administration — nominated by the Commonwealth;
- Mr Don Challen, Secretary, Tasmanian Department of Treasury and Finance — nominated by Heads of State and Territory Treasuries;
- Mr Michael Coleman, Partner, KPMG — nominated by the Australian Institute of Company Directors;
- Mr Mark Coughlin, Development Manager, Origin Energy — nominated by CPA Australia;
- Mr John Gethin-Jones, General Manager, Queensland Investment Corporation — nominated by Investment & Financial Services Association;
- Mr Richard Humphry, AO, Trustee, International Accounting Standards Committee Foundation;
- Mr Warwick Hunt, Chairman, Accounting Standards Review Board of New Zealand — nominated by the New Zealand Minister of Finance;
- Mr David Jackson, Director, Australian Shareholders’ Association — nominated by the Australian Shareholders’ Association;
- Mr Eric Mayne, Group Executive, Market Supervision, Australian Stock Exchange — nominated by the Australian Stock Exchange
- Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury — nominated by the Commonwealth;
- Mr John Stanhope, Chief Financial Officer and Group Managing Director, Finance and Administration, Telstra Corporation Limited — nominated by the Group of 100 Inc.
- Ms Catherine Walter, AM, Company Director and Solicitor; Chair of the Business Regulation Advisory Group — nominated by the Commonwealth;
- Ms Jan West, Partner, Deloitte Touche Tohmatsu — nominated by The Institute of Chartered Accountants in Australia;
- Mr Lee White, Chief Accountant, Australian Securities and Investments Commission — nominated by ASIC.
- Mr Klaus Zimmermann, Chief Executive Officer, Eldercare Incorporated and Director, National Institute of Accountants — nominated by the NIA.