Trans-Tasman Accounting Standard Advisory Group – Minutes

10.00am-12.30pm, Wednesday 26th March 2008

MED Building, Level 8, 33 Bowen Street, Wellington

Present

Geoff Miller – Chair (Treasury - Aust)
Bruce Bennett (on behalf of Keith Wedlock) (NZ Institute of Chartered Accountants (NZICA) - NZ)
Alex Skinner (on behalf of Craig Fisher) (Professional Standards Board (PSB) - NZ)
Jon Tyers (on behalf of Merran Kelsall) (Audit and Assurance Standards Board (AUASB) - Aust)
Bill Palmer (Institute of Chartered Accountants Australia (ICAA) - Aust)
Geoff Connor (Ministry of Economic Development (MED) - NZ)
Peter Mumford (Ministry of Economic Development (MED) - NZ)
Ashley Tomlinson (Ministry of Economic Development (MED) - NZ)
Naomi Hamilton (Ministry of Economic Development (MED) - NZ)
Bede Fraser (Treasury - Aust)
Ronita Ram (Treasury - Aust)

Speakerphone:

Joanna Perry (Financial Reporting Standards Board (FRSB) - NZ)
David Boymal (Australian Accounting Standards Board (AASB) - Aust)
Mark Shying (Certified Practising Accountants (CPA) - Aust)
Andrew Conway (National Institute of Accountants (NIA) - Aust)
Jim Murphy (Treasury - Aust)
Suzanne Howarth (Financial Reporting Council Secretariat - Aust)
Heather Sturgiss (Financial Reporting Council Secretariat - Aust)

Apologies

Warwick Hunt (Accounting Standards Review Board (ASRB) - NZ)
Jeffrey Lucy (Financial Reporting Council (FRC) - Aust)

Agenda Items

1. Welcome.

The TTAASAG Chair, Mr Geoff Miller, welcomed TTAASAG members to the first meeting of the group in 2008.

2. Minutes from the meeting of 6 December 2007.

The minutes of the previous meeting, held in Sydney on 6 December 2007, were confirmed without alteration.

3. Action items from previous meetings.

The Group noted the action items arising from the previous meeting, and the relevant agenda item under which these action items would be addressed.

4. TTAASAG meetings moving forward.

Mr Miller provided an overview of the group’s objectives, and sought the group’s views on whether it could better serve these objectives. There was a general sense that the group was meeting these objectives and that this had resulted in an improved trans-Tasman financial reporting framework. It was also noted that there were opportunities to further engage with members to ensure that these objectives were met.

Action item

The group agreed that Australian Treasury and MED would prepare a summary of legislative and other key reforms recently undertaken in relation to financial reporting, for discussion at the next meeting. The objective of the summary is to compare recent reforms to the Corporations, Company and Financial Reporting legislation in Australia and New Zealand, with a view to identifying potential areas of difference and, where necessary, potential areas for further reform in both countries.

5. Accounting standard setters:

5.1. Report from the FRSB.

    Ms Joanna Perry provided an update on the current work activities of the FRSB. The key issues noted by the group included the FRSB’s role in New Zealand’s proposed review of its financial reporting framework, and reporting by the public sector and not-for-profit entities. The group also noted progress on the FRSB’s other domestic and international projects.

5.2. Report from the AASB.

    Professor David Boymal provided an update on the current work activities of the AASB. The key issues noted by the group included reporting by not-for-profit entities, emissions trading and the AASB’s comments on the IASB’s SME exposure draft. The group also noted progress on the AASB’s other domestic and international projects.

Action items

The FRSB and the AASB will prepare commonly formatted reports on their recent activities for the next meeting of TTAASAG.

The FRSB will prepare a paper for the next meeting of the group summarising issues relating to the adoption of IFRS in the New Zealand public sector.

6. Auditing standard setters:

6.1. Report from the PSB.

    Mr Alex Skinner provided an update on the current work activities of the PSB. The key issues noted by the group included reporting by auditors to trustees of an issuer of debt securities, guidance on the use of disclaimer of liability clauses, international convergence, and the PSB’s monitoring role in relation to New Zealand’s auditor regulation review. The group also noted progress on the PSB’s other domestic and international projects.

6.2. Report from the AUASB.

    Mr Jon Tyers provided an update on the current work activities of the AUASB. The key issues noted by the group included the board’s progress with the Clarity project, proposed amendments to broaden the scope of auditing standards on review engagements and feedback on the board’s consultative group meeting in December 2007. The group also noted progress on the AUASB’s other domestic and international projects.

Action items

The PSB and the AUASB will prepare commonly formatted reports on their recent activities for the next meeting of TTAASAG.

7. Common policy issues in Australia and New Zealand, including:

7.1. Emissions trading;

    An overview was provided on the proposed emissions trading schemes in Australia and New Zealand, and the key accounting and auditing implications of the schemes. The group agreed to monitor this issue.

    Action item

    Australian Treasury and MED will provide an update on the proposed emissions trading schemes at the next meeting of TTAASAG.

7.2. Asset valuation in thinly traded markets; and

    Due to time constraints, the group decided to defer discussion on this topic to the next meeting of the group.

    Action item

    The group will discuss asset valuation in thinly traded markets at the next meeting of TTAASAG.

7.3. Potential future topics.

    The group agreed to discuss dividends from profit and parent-entity financial statements at the next meeting.

    Action items

    Australian Treasury and MED will prepare a paper on the requirements on companies when making distributions for discussion at the next TTAASAG meeting.

    Australian Treasury and MED will prepare a paper on parent-entity financial statements for discussion at the next TTAASAG meeting.

8. New Zealand’s Financial Reporting Framework Review.

The group noted New Zealand’s proposed review of its financial reporting framework. The review will provide New Zealand with an opportunity to consider fundamental changes to its reporting framework. MED have established a steering group to assist in undertaking the review. The FRSB and the ASRB will also be assisting with the review and Australian Treasury will participate on the steering group.

Action item

MED will provide an update on New Zealand’s review of its financial reporting framework at the next meeting of TTAASAG.

9. Update on New Zealand’s review of its audit regulation framework (including mutual recognition of auditors).

The group noted MED’s progress with the review of its audit regulation framework. MED is currently undertaking a targeted consultation process with key stakeholders in order to finalise the proposals paper. MED will provide the proposals paper to TTAASAG members for comment in April 2008.

Action items

MED will write to the Chair of TTAASAG seeking comments on its proposals paper. The secretariat will circulate the paper to TTAASAG members for comment.

MED will provide an update on New Zealand’s review of its audit regulation framework at the next meeting of TTAASAG.

10. Report from the nominations sub-committee.

The group noted the establishment of the nominations sub-committee to identify potential candidates for international accounting and auditing bodies. The sub-committee is chaired by Mr Geoff Miller and also comprises of Mr Jeffrey Lucy, Mr Warwick Hunt and Mr Andrew Jackson.

The group noted the report of the nominations sub-committee. The inaugural meeting was held on 31 January 2008. At this meeting, the sub-committee agreed that its primary role would be to identify potential candidates, prioritise these candidates, advise the candidates of the sub-committee’s support and encourage them to consider applying. The sub-committee would also assist and support potential candidates, for example, by providing them with opportunities to raise their profile.

Importantly, it was noted that the role of the sub-committee was not to perform the role of a selection panel. The sub-committee also noted that it would be important to maintain a high level of discretion over potential names.

The timing for the next meeting of the sub-committee will be determined out of session.

10.1. Table of Australian and New Zealand representatives on international bodies.

    The group noted a table prepared by Australian Treasury and MED of Australian and New Zealand representatives on international bodies. The group agreed that further work is required to the table to assist in identifying upcoming vacancies, including removing the priorities column.

    The group agreed that it would write letters of support for identified candidates / nominees.

    Action item

    Australian Treasury and MED will revise the table of Australian and New Zealand representatives.

10.2. Correspondence with the International Accounting Standards Committee Foundation.

    The group noted correspondence with the International Accounting Standards Committee Foundation (IASCF). The sub-committee wrote to the IASCF on 27 February 2008 to advise them of the establishment of the sub-committee and its intention to encourage and support candidates. The IASCF responded on 7 March 2008 thanking TTAASAG for its participation in this area.

10.3. New Zealand’s IPSASB membership.

    The group noted a memorandum from the New Zealand Institute of Chartered Accountants (NZICA) informing TTAASAG of the steps NZICA has undertaken regarding nominating a New Zealand representative to the International Public Sector Accounting Standards Board (IPSASB).

    The group noted that NZICA intends to nominate Mr Ken Warren, Chief Accounting Advisor at the New Zealand Treasury, for a member position at the IPSASB. The group agreed to write a letter in support of Mr Warren.

    Action item

    The Chair of TTAASAG will write to Mr Keith Wedlock, in support of NZICA’s nominee to IPSASB, Mr Ken Warren.

11. International developments.

11.1. Update on IFRS Regional Policy Forum.

    The group noted developments on upcoming IFRS Regional Policy Forums. China has agreed to host the IFRS forum, but indicated that they would not be able to do so until March 2009. At the previous forum in March 2007, there was widespread agreement for conducting future forums on a regular basis. As such, Japan has offered to co-host a forum in 2008 with Australia.

    The group agreed that Australian Treasury would write to China outlining Japan’s offer to co-host a forum with Australia in late 2008. TTAASAG will await China’s response to this letter before progressing any arrangements for an earlier forum.

    Action item

    Australian Treasury will write to China outlining Japan’s offer to co-host a forum with Australia in late 2008.

11.2. General report back on international events / conferences.

    The group noted Mr Andrew Conway’s report back on his attendance at the Global Policy Symposium in the United States in January 2008.

    Action item

    The group agreed that this would become a standing agenda item to allow stakeholders, particularly the professional accounting bodies, to report back on relevant international events.

12. Other business.

The group noted that the 2007 Report to Ministers was finalised out of session. The report was noted by the Australian Treasurer on 15 February 2008. The New Zealand Minister of Commerce and Minister of Finance also noted the report on 15 February 2008.

13. Next meeting

The next meeting will be held on Friday 27 June 2008, at the AASB / AUASB Boardroom, Level 7, 600 Bourke Street, Melbourne.