4.1 Introduction

The ASIC Act confers on the FRC specific functions associated with the development of international standards:

• monitoring the development of international accounting and auditing standards as well as the accounting and auditing standards that apply in major international financial centres; and
• furthering the development of single set of accounting and auditing standards for world-wide use with appropriate regard to international developments.

In addition the FRC has been highly cognisant of the call by the G20, from the Action Plan of 2008 (and subsequent years) that ‘[the] key global accounting standards bodies should work intensively toward the objective of creating a single high-quality global standard’.

4.1.1 Stakeholder engagement

During 2013-14, key engagements with the international standard setter community included:

• The Chairman of the International Accounting Standards Board, Hans Hoogervorst, presented the 2014 Ken Spencer Memorial Lecture, with the title ‘Building Trust in Financial Markets: Accounting and Moral Hazard’ on 10 April 2014 in Sydney.
• Attendance by Monsieur Michel Prada, Chairman of the Trustees of the IFRS Foundation, at the 11 April 2014 FRC meeting, following on from chairing the first ever meeting of the IFRS Foundation Trustees held in Australia. He briefed the FRC on international developments relating to the adoption of IFRS globally, the IASB move to deal with standard setters multilaterally, the focus on implementation of IFRS, and the management of the IFRS institutions. Monsieur Prada also discussed the IFRS Foundation’s relationship with work on international public sector accounting standards.
• Meeting with Ian Mackintosh on 9 August 2013 to discuss: updates on Australia and IASB; the April 2014 meeting of the IFRS Trustees; the Ken Spencer Memorial Lecture; the G20; integrated reporting and Public Sector Reporting. Mr Mackintosh also attended the Ken Spencer Memorial Lecture and the 11 April 2014 FRC meeting.
• Meeting with Jorgen Holmquist IESBA Chairman on 19 September 2013.
• Meeting with Fayez Choudhury CEO of International Federation of Accountants (IFAC) on 25 September 2013.

4.1.2 Monitoring and influencing global convergence

In accordance with its governing legislation, the FRC seeks to support and further the adoption of a single set of global financial reporting standards. The only internationally accepted set of accounting standards are IFRS issued by the IASB for use in the preparation of general purpose financial statements. IFRS have been adopted by over 100 countries around the world, including all the members of the European Union (EU) and increasing numbers of countries in the Asia-Oceania region. Australia was one of the earliest adopters of IFRS, which have had force of law under the Corporations Act since 2005. The Australian Government, through the FRC, provided financial support to the work of the IASB through a grant of $1 million to the IFRS Foundation in the period covered by this report. Fourteen of the G20 jurisdictions have adopted IFRS for all or most companies in their public capital markets. Of the remaining G20 jurisdictions:

• three permit IFRSs on a limited voluntary basis for domestic and/or foreign issuers (India, Japan, United States);
• one (Saudi Arabia) requires IFRS on a limited basis (banks and insurance companies only);
• one (China) has substantially converged its national standards to IFRS; and
• one (Indonesia) has adopted some IFRS but has not announced a plan or timetable for full adoption, although it has announced plans to increase the pace of convergence with IFRS.

On 1 January 2014 the then FRC Chairman, Lynn Wood, commenced her appointment as an IFRS Foundation Trustee for an initial period of three years. The IFRS Foundation Trustees oversee the work of the IASB. The FRC looks forward to working with Ms Wood over coming years. Ms Wood succeeded Jeffrey Lucy AM, also a former FRC Chairman, as an IFRS Foundation Trustee. The FRC would also like to record its appreciation of the work of Mr Lucy as a Trustee, and notes his role in having the Trustees meet in Australia for the first time in 2014. Australia also uses the IAASB’s International Standards on Auditing (ISAs) as the basis for Australian Auditing Standards (ASAs). Over 90 jurisdictions now use or are committed to using in the near future ISAs, including the following jurisdictions in our region: China; Hong Kong; India; Indonesia; Japan; Malaysia; New Zealand; Philippines; Singapore; Republic of Korea; and Thailand. Merran Kelsall, AUASB Chairman, and an FRC member, is also a member of the IAASB.

4.1.3 Monitoring and influencing regional convergence

IFRS Regional Policy Forum

The IFRS Regional Policy Forum was hosted by India in March 2014, and attended by then FRC member, Kevin Stevenson (in his capacity as AASB Chairman). The Forum heard presentations from many speakers, including Hans Hoogervorst (IASB Chairman). The Forum is the one of the most important international events for policy makers, regulators, national standards setters, preparers and users to share their experiences and discuss IFRS-related policy issues. It also provides a platform to the policy makers in the region to keep abreast of the developments in IFRS with a view to facilitate smooth implementation and convergence with the IFRS in the region.

Asian-Oceanian Standards Setters Group (AOSSG)

The AOSSG was established in 2009 as a forum to:

• promote the adoption of, and convergence with, IFRSs by jurisdictions in the region;
• promote consistent application of IFRSs by jurisdictions in the region;
• coordinate input from the region to the technical activities of the IASB; and
• cooperate with governments and regulators and other regional and international organisations to improve the quality of financial reporting in the region.

The AOSSG is a member of the Accounting Standards Advisory Forum (ASAF) of the IASB. The AOSSG has been very active in 2013-14 in making submissions to the IASB on a variety of exposure drafts, and is one of the key recognisable regional groupings of standards setters, lending greater weight to the views of the region.

4.1.4 Trans-Tasman harmonisation

New financial reporting framework

In New Zealand the External Reporting Board’s (XRB) structure contains three entities, the Board of the XRB and two standards setting boards, the New Zealand Accounting Standards Board (NZASB) and the New Zealand Auditing and Assurance Standards Board (NZAuASB). The FRC Chairman is a member of the XRB as part of the arrangement for cross-appointments between Australia and New Zealand. The former Chairman of the XRB, Kevin Simpkins was a long-standing member of the FRC and finished his term as an FRC member at the end of February 2014. Graeme Mitchell is now the Chairman of the XRB, and has been appointed as a member of the FRC. During 2013-14, the FRC Chairman attended two XRB meetings by teleconference, and attended two XRB meetings in person. To facilitate harmonisation of Trans-Tasman standard setting, the Chairman of NZASB and AASB are each a member of their counterpart board, as is the Chairman of NZAuASB and AUASB.

Trans-Tasman Accounting and Auditing Standards Advisory Group (TTAASAG)

Successive FRC Chairmen have been members of TTAASAG, which was established in 2004 to advise the Australian and New Zealand Governments and accounting and auditing standards setters on ways to reduce costs and improve efficiency by aiming for single sets of accounting and auditing standards to apply in both jurisdictions. TTAASAG has not been active during 2013-14.

Cross-memberships with NZ bodies

Following its establishment, TTAASAG proposed that cross-memberships between relevant standard setting and oversight bodies of Australia and New Zealand would be a desirable step in the process of reducing costs and improving efficiency of businesses operating in both jurisdictions. A more recent review of the role of cross-appointees conducted by TTAASAG concluded that they are contributing to the standard setting process by facilitating cooperation and communication.

4.1.5 Key International Meetings

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