Strategic Plan 2021-24

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.

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.