Trans-Tasman Accounting Standard Advisory Group – Minutes

9.00-11.30am, Friday 5 May 2006

PrcicewaterhouseCoopers, Level 22, PricewaterhouseCoopers Tower, 188 Quay Street, Auckland

Participants

Warwick Hunt (Accounting Standards Review Board) – Chair

Professor David Boymal (Australian Accounting Standards Board)
Joanna Perry (Financial Reporting Standards Board)
Bill Palmer (Institute of Chartered Accountants of Australia)
Simon Lee (New Zealand Institute of Chartered Accountants) standing in for Garry Muriwai (New Zealand Institute of Chartered Accountants)
Jim Murphy, Geoff Miller, Bede Fraser (Australian Treasury)
Peter Mumford, Geoff Connor, Ashley Tomlinson (Ministry of Economic Development)

On speakerphone:

Roger Cotton (National Institute of Accountants)
Mark Shying (Certified Practising Accountants of Australia)
Stephen Powell, Michael Johnston (Australian Treasury)

Apologies

Charles Macek (Financial Reporting Council)

Agenda Items

Agenda Item 1: Preliminaries

Minutes of the previous meeting

The minutes of the previous meeting of the Group held in Melbourne on Tuesday 21 February 2006 had been circulated for comment prior to being placed on the Trans-Tasman Group web page at the FRC and ASRB websites.  No comments were received.

Action points from previous meeting

  • 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). Completed / Discussed under Agenda Item 2
  • 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. Discussed under Agenda Item 2
  • Publish the responses of all consenting jurisdictions in two months’ time. Completed / Discussed under Agenda Item 2
  • 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. Discussed under Agenda Item 5
  • 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. Completed
  • The Ministry of Economic Development will update the TTASAG terms of reference to reflect the addition of NZICA and NIA to the Group. Completed

Agenda Item 2: The next International Financial Reporting Standards Regional Policy Forum

The Group discussed preparations for the next regional forum. The main points discussed were as follows:

  • Representatives from the Australian Treasury and the FRC will be travelling to China, Japan, and Singapore in early June to discuss, amongst other things, whether they would be prepared to host the next regional forum in 2007.
  • The Australian Treasury has posted the questionnaire responses on the internet from those jurisdictions that have agreed to this.
  • Chinese Taipei is running a meeting of its own. Some Australian and New Zealand organisations with representatives on TTASAG had been invited but none will be attending.
  • India and some other South Asian countries are looking to arrange a regional forum and operate together for greater influence. These countries have asked China to join but not Australia and New Zealand. The group agreed that Australia and New Zealand should seek to be involved.

Actions Points

  1. New Zealand and Australia will suggest to the host of the next IFRS regional policy forum that the new South Asian grouping be contacted about the possibility of members of this new grouping attending the forum. Jim Murphy and Charles Macek to raise this if appropriate during their forthcoming visit to China, Japan, and Singapore.
  2. The Australian Treasury will contact the four jurisdictions (which did not confirm that their questionnaire responses could be published on the internet) to advise them that the responses from the other jurisdictions attending the Forum have been published on the internet..

Agenda Item 3 (new item): Joint meeting between the AASB and the FRSB

The joint meeting between the AASB and FRSB on 3/4 May 2006 was discussed. The main points arising out of this discussion were as follows:

  • The Chairs of the Australian Accounting Standards Board and the Financial Reporting Standards Board have signed a protocol for co-operation between their respective boards
  • The AASB and the FRSB discussed the possibility of releasing joint exposure drafts for Australia and New Zealand. The group agreed that joint exposure drafts would be a positive idea.
  • The group agreed it would encourage ongoing cooperation between the AASB and the FSRB. Ideas discussed included developing an integrated work programme, sharing staff resources, and collaboration on IPSASB issues.

Actions Points

  1. Joint meetings and work between the AASB and the FRSB will be a standing agenda item at future TTASAG meetings.
  2. For the consideration of Ministers Dalziel and Costello, MED and the Australian Treasury will prepare a joint Ministerial press release congratulating the AASB and the FRSB on finalising the protocol.

Agenda Item 4: An update of the New Zealand Financial Reporting Act 1993

MED summarised progress on changes to the financial reporting system in New Zealand. The main points of this summary were:

  • Decisions made by Cabinet in December 2005 are going to be implemented in an omnibus Bill, subject to the agreement of all parties in Parliament. A decision on whether the omnibus Bill can proceed will be made at the end of May 2006 by Parliament’s Business Committee. A copy of the Cabinet paper that was considered in December 2005 can be found at http://www.med.govt.nz/templates/MultipageDocumentTOC____14984.aspx
  • Subject to Cabinet approval, a discussion document will be released later this year dealing with 1) auditor regulation, 2) financial reporting by charities, 3) filing requirements for large overseas non-issuer companies, 4) preparation requirements for small companies, and 5) a number of institutional matters.

The summary of changes to New Zealand’s financial reporting structure were then discussed. The main points arising out of this discussion were as follows:

  • It may be useful for the discussion document to ask whether audit standards should have the force of law.
  • It may be appropriate for the Group to broaden its terms of reference to include auditing issues. It was noted that this would require the addition of new members to the group from the relevant audit standards bodies.
  • The Australian Treasury will be consulted on the draft discussion document, and the Group will respond to the discussion document during the formal consultation process.

Action point

  1. Subject to consultation with the chairs of the AUASB and the PPB, the Australian Treasury and MED will jointly prepare a proposal to Ministers to expand the group’s Terms of Reference to cover audit issues.
  2. The Australian Treasury and MED will produce a comparative table setting out the differences between the Australian system for auditor regulation and auditing standards setting and the position contained in MED’s draft discussion document. This table will be discussed at the next meeting of the group.

Agenda Item 5: Australia and New Zealand’s Financial Reporting Frameworks

The Australian Treasury presented a paper on the potential for Australia to adopt a system of differential reporting similar to that operating in New Zealand. This paper was then discussed by the group. The main points arising out of the discussion were as follows:

  • There is a need for further research in this area to understand the differences in the financial reporting requirements in Australia and New Zealand particularly as they apply to large non-issuer/proprietary companies.
  • Sir David Tweedie has sought advice from TTASAG on the pre-release exposure draft of the IASB’s SME project.

Action point

  1. The Australian Treasury and MED will produce a paper describing the differences between the two countries reporting requirements focusing on large non-issuer/proprietary companies. This paper will be considered at the next meeting of the group.
  2. The AASB and the FRSB will prepare a submission for Sir David Tweedie on the pre-release exposure draft of the IASB’s SME project by 26 May 2006. The submission will then be circulated to the group for comment before being sent to Sir David.
  3. The TTASAG Chair will discuss differential reporting issues with Charles Macek.

Agenda Item 6: Prospective Financial Information

The AASB, FRSB, Australian Securities and Investments Commission, and the Securities Commission met on 4th May 2006 to discuss the possibility of a joint Australia / New Zealand standard on prospective financial information. No decisions were made. The four bodies will continue to discuss this topic.

Agenda Item 7: Report back on Sir David Tweedie / Warren McGregor visit 14-15 March 2006

The TTASAG Chair reported back to the group on the visit of Sir David Tweedie to New Zealand in March 2006. The main points raised in this summary were as follows:

  • Sir David expressed strong support for the IFRS regional forum and would like a date for the next forum so that he can attend.
  • Work on the convergence between IFRS and US GAAP is ongoing. The IASB’s goal is that by 2007 the SEC will agree that financial statement preparation in accordance with IFRS will not need to be reconciled with US GAAP
  • Sector neutrality is not high on the IASB’s agenda.

Agenda Item 8: General Business

It was noted that Charles Macek would be meeting with Sir David Tweedie and the IASB Trustees shortly.

Next Meeting

The next meeting of the group will be in Melbourne on the afternoon of 5th September 2006 (to be confirmed).