Forty-Eighth Meeting
3 September 2008
Outcomes of the meeting held on 3 September 2008 at the offices of the Australian Securities Exchange, 20 Bridge Street, Sydney. The meeting commenced at 9.00 am and concluded at 1.00 pm.
FRC Members:
Mr Jeffrey Lucy AM (Chairman)Professor David Boymal
Mr Bruce Brook
Mr Michael Coleman
Mr Mark Coughlin (by phone)
Mr Warwick Hunt
Ms Merran Kelsall
Mr Eric Mayne
Mr Jim Murphy
Mr John Stanhope
Mr John Trowbridge
Ms Jan West AM
Mr Lee White
Mr Stuart Wilson
Mr Klaus Zimmermann
Invitees:
Mr Tim Youngberry
Ms Kate Spargo
Ms Judith Downes (by phone)
Mr Warren McGregor (by phone)
FRC Secretariat:
Ms Suzanne Howarth (FRC Secretary)
Ms Heather Sturgiss
Ms Amanda Kirby
Apologies:
Ms Kathryn Campbell
Mr Don Challen
Mr John Gethin-Jones
Ms Catherine Walter AM
Agenda Item 1 - Apologies and Welcome
The FRC Chairman, Mr Jeffrey Lucy AM, welcomed FRC members and other attendees to the 48th meeting of the Council. The Chairman particularly welcomed Mr Stuart Wilson to his first Council meeting.
(a) Declarations of interest
Members advised the meeting of the following changes to their entries in the register of interests circulated by the Secretariat:
- Mr Lucy is now a director of Ride On Entertainment Pty Ltd and an honorary member of the CPA.
- Newly appointed members of the Council, Professor David Boymal, Ms Merran Kelsall and Mr Stuart Wilson, will need to complete their declarations of interest.
(b) Confirmation of Minutes of Previous Meeting
The minutes of the 46th meeting, held in Canberra on 11 June 2008, were approved, with one minor amendment.
The minutes of the 47th meeting, held in Sydney on 12 August 2008, which was attended by Sir David Tweedie, were also approved.
(c) Matters Arising from previous meeting
The meeting noted the Secretariat paper on matters arising from the minutes of the 46th meeting.
Agenda Item 2 - Recent Stakeholder Engagement/international developments
(a) Update from Chairman
The Chairman reported on his recent meeting with the Minister for Superannuation and Corporate Law and the Minister's interest in accounting and auditing standards. There was a discussion around the use of the term AIFRS. The Chairman also noted recent international developments including the US moves to adopt IFRS (see item 2e).
(b) Update on Australia/US mutual recognition of securities agreement
Mr Lee White provided the Council with an overview of the historic mutual agreement between Australia and the United States on mutual recognition of securities. The agreement allows retail investors in Australia to access the US market directly through Australian brokers. Australia is the first jurisdiction with which the US has sought such an arrangement.
(c) Update on New Zealand Audit Regulation
Mr Warwick Hunt provided an overview of developments in New Zealand audit regulation including auditor liability reform and public sector issues. Mr Hunt informed the meeting that he will be leaving the Accounting Standards Review Board of New Zealand at the end of 2008.
(d) IFRS experience workshop
The Council noted the success of the IFRS experience workshop which was jointly sponsored by the Council and the G100 to coincide with Sir David Tweedie's visit on 11 August 2008. The G100 members of the Council indicated that the process had proved very valuable. Council members received copies of the report that was prepared for the IFRS workshop.
(e) Developments in US adoption of IFRS
The Council discussed the significance of the decision by the US Securities and Exchange Commission to adopt a roadmap for the possible mandatory adoption of IFRS.
(f) Developments in financial reporting - PricewaterhouseCoopers discussion paper
The PwC discussion paper was noted by the Council.
(g) SAC - Judith Downes
Ms Downes reported to the meeting on the new procedures for selecting SAC members. The Council's nominations will be progressed through TTASSAG.
(h) IFRIC - Ruth Picker
Ms Picker's report was noted by the Council.
Agenda Item 3 - Update from Chair of APESB (Kate Spargo)
Ms Kate Spargo gave a presentation on the role of the Accounting Professional and Ethical Standards Board (APESB). Ms Spargo outlined the two main roles of the APESB: setting standards and influencing ethical behaviour. The APESB is equally funded by the three accounting bodies and is an independent body. The APESB endeavours to develop standards that are user friendly and leave scope for professional judgment.
Agenda Item 4 - Standard Business Reporting Update - outline paper
The Council noted the Treasury paper on Standard Business Reporting. Mr Paul Madden of Treasury will discuss issues raised in the paper at the next Council meeting on 26 November 2008.
Agenda Item 5 - Reports from FRC subcommittees
(a) Audit Independence Committee
The FRC noted the draft Audit Independence Report and agreed to provide any comments to the Secretariat by 12 September 2008.
(b) Finance Committee
The Council approved the 2007‑08 financial statements for the two boards, with one minor change.
A resolution was passed by the Council to disband the Finance Committee on account of the new governance arrangements for the AASB and the AUASB from 1 July 2008. The Chairman praised Mr Bruce Brook and the members of the Finance Committee for completing this role with distinction.
(c) Nominations Committee
The Chair of the Nominations Committee, Mr Klaus Zimmerman, noted the response rate for the peer reviews of the boards. The Council noted that job advertisements for the two boards will be released on Saturday 13 September 2008. The advertisements, together with an information piece outlining the work and importance of the two boards, are in the process of being finalised.
Agenda Item 6 - FRC Peer Review
The Chairman will be discussing the FRC peer reviews individually with board members.
Agenda Item 7 - Report from Chair of TTAASAG
Mr Lucy noted the last TTAASAG meeting held in Melbourne on 27 June 2008 was informative and useful. He particularly noted that the introduction of external representatives giving presentations at TTAASAG had been very successful (the last presentation was provided by Mr Ian McPhee).
Agenda Item 8 - Report from Chair of AASB
The Chair of the AASB, Professor Boymal, submitted documentation on the activities of the AASB. Professor Boymal noted the high usage rates of the AASB website with over 59,000 hits in July. The Chairman requested that the AASB continue to update the Council on the usage rates at each Council meeting.
There was a discussion of the accounting standards matrix the AASB has compiled and the Chairman's vision that this be a living document. The AASB will undertake further work on the matrix to match the AASB's work program with IASB's and IPASB's work programs.
The Council noted that it was Professor Boymal's last meeting as his tenure with the AASB finishes on 4 November 2008. The Chairman formally acknowledged the significant contribution Professor Boymal has made to accounting standards particularly noting his role in Australia's smooth conversion to IFRS. The Council all praised Professor Boymal's efforts over the last five years.
Agenda Item 9 - Report from Chair of AUASB
The Chair of the AUASB, Ms Kelsall, outlined the board's work programme, which includes a new standard for prospectuses. Ms Kelsall and Ms Spargo discussed opposition from the professional bodies to the AUASB's decision to adopt the proposed ‘clarity' version of the International Standard on Quality (ISQC1). The Council agreed that a small group, consisting of Mr White, Mr Zimmerman, Mr Mark Coughlin and Ms Jan West would consider this issue further and provide a recommendation to the FRC if there continued to be a conflicting view.
Ms Kelsall also discussed auditing of water usage with the Secretariat to provide an update on the current state of play at the next meeting.
Agenda Item 10 - Other matters
(a) Emissions Trading
The Council noted the importance of ensuring an operable accounting standard for emissions trading by 2010. The Council noted that this issue was discussed during Sir David Tweedie's recent visit to Australia. The Council also noted the Chairman's letter to Sir David dated 28 August 2008.
(b) Public sector accounting issues
Mr Tim Youngberry, First Assistant Secretary with the Department of Finance and Deregulation, lead a discussion on public sector accounting issues. The Council has scheduled a workshop with key participants for 5 November 2008. The meeting discussed key issues of importance for the workshop including transaction neutrality, ex‑post versus ex‑ante reporting and Government Finance Statistics (GFS) reporting requirements.
The meeting appointed a small group Chair Messrs Challen, White, Coleman and Zimmerman to develop an issues paper in preparation for the workshop. The group will be assisted by the FRC Secretary and the Department of Finance and Deregulation.
(c) Update on AASB Chair Appointment (Jim Murphy)
Mr Murphy advised that Treasury had established a panel to recommend to the Government the next AASB Chairman. The panel consists of the Public Service Commissioner, Ms Lynelle Briggs, Mr Murphy and Mr Lucy.
Agenda Item 11 ‑ Correspondence
Correspondence was noted.
Agenda Item 12 - Next Meeting
The next meeting of the FRC will be in Melbourne on Wednesday, 26 November 2008, commencing at 9.00 am.