The Financial Reporting Council (FRC) is the peak body responsible for overseeing the effectiveness of the financial reporting framework in Australia. Its key functions include the oversight of the accounting and auditing standards setting processes for the public and private sectors, monitoring the effectiveness of the auditor independence regime, and advising the Minister on these matters.
The FRC has a wide range of stakeholders, including a broad spectrum of preparers and users of financial statements, the Australian, State and Territory governments, and other government bodies such as standards setters and regulators. Key stakeholder bodies are represented on the FRC as Members (Attachment B). In addition, the Australian and New Zealand governments have established cross-appointment arrangements to promote closer economic relationships between the two countries. The FRC accordingly has a New Zealand representative as one of its Members.
As part of its role of overseeing the standards setting processes, the FRC's responsibilities include appointing the members (other than the Chairmen) of the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB), and determining the broad strategic directions of the AASB and AUASB. The FRC's responsibilities also include giving advice or feedback to the AASB and AUASB on their priorities, business plans and procedures and to the Offices of the AASB and AUASB on their budgets and staffing arrangements.
The AASB deals with the setting of accounting standards for the public and private sectors of the Australian economy, while the AUASB focuses on the development and setting of auditing and assurance standards and guidance. Both Boards are agencies for the purposes of the Financial Management and Accountability Act 1997 and are preparing separate annual reports for the Minister concerning their operations during 2010-11.
Under the auditor independence function, the FRC is responsible for monitoring the systems and processes used by Australian auditors to ensure their compliance with auditor independence requirements. The FRC also monitors the professional accounting bodies' planning and performance of quality assurance reviews of audit work undertaken by Australian auditors to the extent to which those reviews relate to auditor independence requirements.
In the performance of these functions, the FRC is assisted by a Secretariat which is located at the Treasury. The FRC meets at least once each quarter. Its funding is provided through an Australian Government appropriation.