Purpose/ Objectives (ASIC Act s224)

  • To facilitate the development of accounting standards.
  • To facilitate the development of auditing and assurance standards.
  • To facilitate the Australian economy by:
    • reducing the cost of capital
    • enabling Australian entities to compete effectively overseas
    • having accounting and auditing standards that are clearly stated and easy to understand.
  • To maintain investor confidence in the Australian economy (including its capital markets).

Broad Functions of the FRC (ASIC Act s225 (1))

  • Oversight of the processes for setting accounting standards.
  • Oversight of the processes for setting auditing and assurance standards.
  • Give the Minister reports and advice on the above and on audit quality.

Environmental Analysis

Global Australia
  • COVID-19 pandemic has caused significant economic damage, internationally and in Australia.
  • Concern over audit quality internationally, particularly arising from corporate collapses in United Kingdom leading to reports by CMA, Kingman and Brydon.
  • International interest and recognition of the need for a standard-setter to develop an appropriate framework and standards for reporting of non-financial information, particularly New Zealand.
  • Continued explosion of information due to technological advancements.
  • Monitoring Group recommendations for setting of auditing standards and ethical standards.
  • Some concern over timelines of development of international standards.
  • New President of the USA expected to impact global economics.
  • Consistent with global developments, COVID-19 pandemic has caused low economic growth, difficulties for corporate and small business, and high public sector debt.
  • Concerns over audit quality lead to PJC Inquiry into Regulation of Auditing.
  • Increasing calls for reporting on non-financial information, leading to greater use of supplementary reports distinct from financial reports.
  • Significant back log in requests for legislative change in Australia, particularly following Royal Commission into Financial Services.
  • Low cost of capital, impacted by record low RBA cash rate.
  • Complexity of Australian Reporting Framework, and particularly complexity of general purpose financial reports for large corporate entities.
  • Significant number of class actions and associated increase in director insurance premiums.


Areas of focus   Strategic Objectives   Specific Actions
Accounting and Auditing Standards
  • To promote initiatives to improve the financial reporting system for both the public and private sectors (including the not-for-profit sector as well as the for-profit sector).
  • To make financial reports more useful, less complex and relevant.
  • To contribute to the development of a single set of accounting and auditing standards worldwide.
  • To facilitate excellence and effectiveness in financial reporting.
  • To support the Australian Financial Reporting Framework Project.
  • To continue the work of the FRC Public Sector Working Group.
  • To address, in conjunction with the AASB and AUASB, current and emerging issues eg cyber security, digital reporting, use of Alternative Profit Measures.
  • To monitor the AASB/AUASB Corporate Plan 2020-21.
Audit Quality
  • To promote initiatives to improve the quality of audits carried out by Australian auditors.
  • To continue to implement the FRC Audit Quality Action Plan.
  • To implement Government responses to the PJC Inquiry on Regulation of Audit in Australia.
  • To monitor, in conjunction with ASIC and the Professional Bodies, the adequacy of the number of Registered Company Auditors.
International Influence
  • To influence international accounting and auditing developments, particularly by promoting suitably qualified Australians and New Zealanders for appointment to key international boards.
  • To nominate suitable Australian or New Zealand candidates for all key international positions.
  • To monitor and respond to the developments of key overseas jurisdictions, and of work plans of international bodies.
Reporting Framework
  • To examine external reporting initiatives, specifically reports on non-financial information.
  • To address the issue of Alternative Profit Measures being provided outside the reporting framework.
  • To monitor and work with standards-setting bodies internationally and locally with respect to reporting on non-financial information.
Stakeholder Engagement
  • To enhance interaction with stakeholders, including users, preparers and auditors of financial reports.
  • To engage with stakeholders individually and at relevant forums, receive Stakeholder Reports for each FRC meeting and to continue to distribute FRC Communiques to stakeholders.
  • To continue with ACC and Investor Surveys.

What Would Success Look Like?

  • Continuously improving audit quality.
  • Standards and guidance considered appropriate, timely and in the public interest.
  • Improved external reporting, including non-financial information.
  • Reduced complexity in the Australian Reporting Framework.
  • Timely addressing of current and emerging issues.