Trans-Tasman Accounting Standards Advisory Group
Report to Ministers

1. Overview

The Trans-Tasman Accounting Standards Advisory Group's (the Group) main activities in 2005 were:

  1. organising the 2005 regional policy forum on International Financial Reporting Standards (IFRS); and
  2. working to further align Australian and New Zealand accounting standards.

In 2006 the main priorities of the Group will be to:

  1. further promote regional cooperation and communication on IFRS by exploring possibilities for a second regional policy forum on IFRS in 2006;
  2. investigate differences in the financial reporting frameworks between Australia and New Zealand and consider ways in which these frameworks could be further harmonised;
  3. review the regulatory frameworks in relation to auditing (in particular, the development of auditing standards) in Australia and New Zealand to potentially inform the further development of these frameworks; and
  4. consider ways to achieve convergence in the institutional arrangements for the setting of accounting standards in Australia and New Zealand.

2. Background

On 30 January 2004, the Australian Treasurer and the New Zealand Minister for Finance announced the formation of the Group. The announcement was made in the context of the business regulatory environment becoming an increasing focus for the Closer Economic Relations (CER) framework that has assisted to develop the Australia/New Zealand relationship since 1983. The Memorandum of Understanding (MoU) on the Coordination of Business Law, signed by the two Governments in 2000, and the special Ministerial forum held in August 2003 to mark the 20th anniversary of CER, affirmed the commitment of both Governments to increase trans-Tasman business activity including by harmonising accounting standards.

The overriding goal of the Group is to advise the respective Governments and accounting standard-setters on ways to reduce business costs and improve efficiency through identifying inconsistencies in the accounting standard-setting framework and assisting the move to a single approach to accounting standard-setting to apply in both jurisdictions. The other major goal of the Group is to enhance the influence of the two countries in the development of international accounting standards.

Terms of Reference

The Group was given the task of providing advice under four broad headings:

  1. Standard-setting advice primarily to the oversight and standard-setting bodies on achieving greater coordination and information exchange between the countries, including how to progress the alignment of Australian and New Zealand financial reporting standards in light of the adoption of international accounting standards;
  2. Policy coordination advice primarily to the Australian and New Zealand Governments on the broader policy and legal framework for financial reporting, with a view to ensuring that, where appropriate, a consistent approach is taken to the application, monitoring and enforcement of standards;
  3. Joint institutions advice primarily to the Australian and New Zealand governments on the specific institutional arrangements that might be established over time to ensure that the objective of a single set of trans-Tasman accounting standards is achieved and maintained effectively and efficiently; and
  4. International influence advice to both the Australian and New Zealand Governments and to the oversight and standard-setting bodies on strategies to maintain Australia's and New Zealand's influence in the development of international accounting standards through involvement with the International Accounting Standards Board (IASB) and other relevant fora.

Membership and Administration

Membership of the Group includes representatives from the Financial Reporting Council (FRC), Australian Accounting Standards Board (AASB), New Zealand 's Financial Reporting Standards Board (FRSB) and Accounting Standards Review Board (ASRB), the professional accounting bodies, and officials from the Australian Treasury and the New Zealand Ministry of Economic Development.

The Group met on three occasions in 2005. These meetings were chaired by the representative from Australian Treasury. The 2006 meetings will be chaired by the representative from the ASRB.

Information on the Group's work has been placed on the websites of the FRC and the ASRB.

3. Major activities in 2005

(a) The IFRS Regional Policy Forum

The Group has been working to maintain the influence of Australia and New Zealand by promoting greater communication and cooperation among countries in the Asian region (including Australia and New Zealand ) on issues of mutual concern associated with IFRS. This involves building relationships with other countries at a number of levels, including by governments, accounting oversight bodies, the standard-setters and the professional accounting bodies.

In October 2005 the Group hosted a regional policy forum on IFRS in Sydney . This was the first time that accounting representatives from 11 countries in the region and the IASB had been brought together to consider issues associated with the implementation of IFRS in the region and how the region could coordinate views to the IASB. Sixty delegates attended the forum including accounting standard setters, accounting oversight bodies, representatives from professional accounting bodies and senior financial reporting policy makers.

Delegates agreed that continued dialogue between jurisdictions would be useful. Following the forum, accounting standards setters in the region met to discuss technical issues relating to IFRS. During this meeting, procedures were formulated to encourage greater on-going communication between standard setters in the region. It was also agreed at the forum that there was scope for jurisdictions in the region, particularly those where the adoption of, or convergence with, IFRS was relatively advanced, to provide technical support to assist in the adoption and implementation of IFRS to other jurisdictions in the region.

A communiqué on the outcomes of the forum was sent to the Chairman of the IASB. The possibility of another jurisdiction hosting the next regional policy forum in 2006 is being explored.

(b) Further alignment of Australian and New Zealand accounting standards

In 2005, the Group continued the work it commenced in 2004 to help align Australian and New Zealand accounting standards. The Group developed a proposed protocol of co-operation between the FRSB and AASB to be used when working through each standard. This protocol sets out processes that will assist in:

  1. the minimisation of differences between accounting standards issued in Australia and New Zealand;
  2. ensuring that Australia and New Zealand present similar positions at international forums;
  3. the sharing of staff resources to the extent practicable and possible; and
  4. the maximisation of the contribution and thus the influence of Australia and New Zealand upon the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB).

It is expected that the Chairs of the FRSB and the AASB will sign the proposed protocol in early 2006.

The Group also organised the reappointment of the cross-appointments to the standard setting and oversight bodies in Australia and New Zealand . It was recognised by the Group that these cross-appointments have been useful and helping an understanding of the difference between the financial reporting frameworks between the countries.