2:00-4:15 pm, Tuesday 21 February 2006
AASB offices, Level 4, 530 Collins Street, Melbourne
Warwick Hunt (Accounting Standards Review Board – New Zealand) – Chair
Charles Macek (Financial Reporting Council – Australia)
Professor David Boymal (Australian Accounting Standards Board)
Joanna Perry (Financial Reporting Standards Board – NZ) – Speakerphone
Bill Palmer (Institute of Chartered Accountants of Australia)
Simon Lee (New Zealand Institute of Chartered Accountants) – Speakerphone
Sepi Roshan (CPA Australia)
Roger Cotton (National Institute of Accountants – Australia)
Jim Murphy, Geoff Miller and Kerstin Wijeyewardene (Treasury – Australia)
Peter Mumford, Geoff Connor and Amber Gillespie (Ministry of Economic Development – New Zealand)
Stephen Powell (Treasury – Australia) – Speakerphone
Agenda Item 1: Preliminaries
Minutes of the previous meeting
The minutes of the previous meeting of the Group held in Auckland on 26 August 2005 had been circulated for comment prior to being placed on the TransTasman Group web page at the FRC and ASRB websites. No comments were received.
Action points from previous meeting
- Work to continue on the regional forum on IFRS, including follow-up with the Forum facilitator, speakers, panel members and participants (FRSB, Treasury and MED) – Completed
- Work to continue on other administrative matters including the venue, compiling questionnaires and media coverage (Treasury and MED) – Completed
- Following the Forum, a Report to Ministers on the activities of TTASAG to be drafted (Treasury and MED) – Completed
- Background papers to be prepared for the next meeting setting out the state of play in Australia and New Zealand in relation to the use of “projections” and “forecasts” in financial reports (AASB and FRSB) – Discussed under Agenda Item 5 (see below)
- Background papers to be prepared for the next meeting setting out Australia’s and New Zealand’s current financial reporting requirements (AASB and FRSB) – Discussed under Agenda Item 4 (see below)
- The next meeting to be held in the morning of Tuesday 6 December to coincide with that month’s AASB meeting in Melbourne, Australia (MED) – Deferred until 21 February
- The next meeting is to be chaired by Warwick Hunt subject to the approval of the Board of Partners of PricewaterhouseCoopers (Warwick Hunt) – Confirmed
Agenda Item 2: Outcomes from International Financial Reporting Standards (IFRS) Regional Policy Forum
The Group agreed that the Forum held in October 2005 was very positive and worthwhile and had achieved the main aim of starting a regional dialogue. The key observations to come out of the Forum were as follows:
- The participating jurisdictions are at very different stages of IFRS implementation. All participants were adopting, converging and harmonising their standards with IFRS to some greater or lesser degree. However, it was evident that further dialogue would be needed before a common understanding of the meaning of the words “adoption”, “harmonisation” and “convergence” could be developed.
- A common theme was that jurisdictions were experiencing IFRS implementation issues for small and medium-sized enterprises. This issue could be a major theme for the next IFRS forum.
- There should be more forums. Ideally they should be run annually, with the next forum taking place no later than February 2007.
- Should one of China, Japan or Singapore be unable to host the next forum, serious consideration would be given to either New Zealand or Australia doing so.
- Australian Treasury to prepare a letter inviting China, Japan and Singapore to express interest in hosting the next forum, including setting the scene for the theme (i.e. SME issues).
- Four jurisdictions are yet to confirm that their questionnaire responses can be published on the internet. Australian Treasury to seek their agreement to do so.
- Publish the responses of all consenting jurisdictions in two months’ time.
Agenda Item 3: Review of the New Zealand Financial Reporting Act 1993
A paper had been circulated to the Group with an outline of progress to date. The key matters confirmed were as follows:
- Drafting of the Bill to implement the decisions made by Cabinet in December 2005 is well advanced. The aim is to have the Bill introduced into Parliament in April with a view to enactment before the end of 2006.
- Subject to ministerial approval, the Ministry of Economic Development will issue a further discussion document later in 2006. The major issues will relate to the regulation of auditors, the process for making audit standards and institutional issues.
Agenda Item 4: Australia and New Zealand’s financial reporting frameworks
Australian Treasury and MED prepared a paper in advance describing each countries’ financial reporting frameworks for companies. The main points discussed were as follows:
- There are significant differences between the two countries’ frameworks. The main reason is that the two countries have quite different legal concepts of a company. The Australian Corporations Act provides for public companies and proprietary companies, while the New Zealand Companies Act makes no such distinction.
- Australia has a “reporting entity” concept modelled on, but not the same as the concept appearing in IFRS 3 (see Appendix A in AASB 3). New Zealand does not take this approach.
- New Zealand employs an intermediate tier called the Differential Reporting Framework, which provides some concessions from full IFRS compliance for some companies that are not issuers. Australia has no equivalent.
- In Australia, companies do not have preparation requirements if they do not have filing requirements. In New Zealand all companies have preparation requirements, including those without filing requirements (This matter is to be partly addressed in the forthcoming MED discussion document).
- The TTASAG Chair invited the AASB to consider the potential benefits of a differential reporting-type system for Australia. It was agreed that the AASB and FRSB would consider the potential benefits of such an approach and report back to the next meeting.
Agenda Item 5: Prospective financial information
The ASRB has recently approved a standard (FRS 42) that replaces an earlier standard (FRS 29) on prospective financial information. This approach is unique. Other countries rely on securities commission and stock exchange rules in relation to prospective financial information to be included in IPOs. Further discussions are to be held by the AASB, FRSB, ASIC and the Securities Commission on how to promote rule consistency in Australia and New Zealand.
Agenda Item 6: Review of the Report to Ministers on the activities of TTASAG 2005
The report was circulated to the Group.
Agenda Item 7: Protocol of Co-operation between AASB and FRSB
The Protocol has been finalised.
- The Chairs of the AASB and FRSB will sign the Protocol at the joint AASB/FRSB meeting to be held in Auckland on 3-4 May 2006.
Agenda Item 8: Sir David Tweedie/Warren McGregor visit 14-15 March 2006
The paper circulated to TTASAG members was noted.
Agenda Item 9: General Business
Update to the Terms of Reference
The Ministry of Economic Development will update the TTASAG terms of reference to reflect the addition of NZICA and NIA to the Group.
Farewell and Thanks
This was Kerstin Wijeyewardene’s last meeting. The Group thanked her for her input, particularly in relation to the IFRS Forum and wished her well for the future.
The next meeting to be held in Auckland on the morning of 5 May 2006.