Trans-Tasman Accounting and Auditing Standards Advisory Group
2009 Report to Ministers

1. Overview

In 2009, the main activities and achievements of the Trans-Tasman Accounting and Auditing Standards Advisory Group (TTAASAG) were:

  • contributing to the development of a set of outcomes under the Closer Economic Relations (CER) and Single Economic Market (SEM) agendas. In August 2009, the Australian and New Zealand Governments agreed to an outcomes framework to progress a wide range of cross border economic initiatives. The outcomes framework includes five matters relating to accounting and auditing1. The outcomes framework applies reciprocally and once achieved will further align frameworks in Australia and New Zealand with the aim of benefiting both countries and increasing harmonisation. The accounting and auditing outcomes are:
    1. for-profit entities are able to use a single set of accounting standards and prepare only one set of financial statements; and Trans-Tasman companies have to prepare only one set of financial statements to one set of standards;
    2. not-for-profit entities are able to use a single set of accounting standards and prepare only one set of financial statements;
    3. auditors registered in one country can operate in the other country; and
    4. financial reporting standards bodies in Australia and New Zealand have functional equivalence.
  • considering a range of policy issues to inform policy development in relation to the accounting issues that have arisen out of the global financial crisis. This included participating in meetings of international agencies and contributing to the development of more effective financial reporting policies to prevent similar crises occurring in the future;
  • promoting regional engagement including through TTAASAG members attending and reporting back from the International Financial Reporting Standards (IFRS) Regional Policy Forum held in Beijing in April 2009 and being instrumental in the Formation of the Asian-Oceanian Standard-Setters Group (AOSSG);
  • considering the potential application of an international accounting standard for non publicly accountable entities as a means of reducing the financial reporting burden on small and medium sized entities in Australia and New Zealand;
  • implementing strategies to promote the profile and influence of Australia and New Zealand at international forums and on international accounting and auditing bodies. Examples include inviting guest presenters from domestic and international bodies to TTAASAG meetings to enable TTAASAG members to better understand the work and functions of these bodies;
  • continuing to promote greater trans-Tasman collaboration of auditing standard setting bodies and financial reporting standard setting bodies, including considering the possibility of cross-appointments between auditing standard setting bodies and continuing cross appointments between financial reporting standards bodies; and
  • exploring opportunities to formalise the established collaborative processes that exist between the professional bodies in Australia and New Zealand, and to enhance mechanisms for reporting back to TTAASAG members.

In 2010, the main objectives of the Group will be to:

  • continue to monitor and provide guidance on regulation and reforms in Australia and New Zealand to enable the SEM outcomes agreed upon by the two Governments to be achieved within proposed timeframes;
  • discuss and provide further guidance on the proposed reform of the financial reporting framework and the introduction of auditor regulation and oversight in New Zealand. These reforms will aim to further align the financial reporting and audit regulation frameworks in both countries in line with the outcome frameworks;
  • continue to work together, and with international agencies, to consider the accounting and assurance issues that have arisen in the context of the global financial crisis, and where possible, contribute to work being undertaken at an international level as part of the broader response to the global financial crisis;
  • facilitate greater engagement with the Asia-Pacific region by considering ways to expand and continue the IFRS Regional Policy Forum, in terms of issues considered at the Forum, the jurisdictions represented at the Forum and future locations of the Forum. The next IFRS Regional Policy Forum is scheduled to be held in Singapore in May 2010;
  • monitor the development of International Public Sector Accounting Standards (IPSAS). These standards are being developed by the International Public Sector Accounting Standards Board (IPSASB) and are being considered for adoption in New Zealand for public sector entities. Australia will continue to monitor the progress of IPSAS and assess whether they would be appropriate for implementation;
  • continue to enhance the profile and influence of Australia and New Zealand in the international arena through the work of the Group's Nominations Sub‑committee. In 2010, the Sub-committee will continue to identify and support suitable candidates, and continue to invite guest presenters from international bodies to TTAASAG meetings; and
  • continue to pursue opportunities for collaboration between audit and assurance standard setting bodies in Australia and New Zealand. New Zealand is looking to restructure its accounting and auditing standards setting framework to a system that is more aligned with Australia. This represents an optimal time to further explore opportunities for cross appointments.

2. Background

On 30 January 2004, the then Australian Treasurer and the then New Zealand Minister of Finance announced the formation of TTAASAG. 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 the development of 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 countries to increase trans‑Tasman business activity including by harmonising accounting standards.

The overriding goals of TTAASAG are to advise the respective Governments and standard-setters on ways to reduce business costs and improve efficiency while still maintaining high quality accounting and auditing standards in both countries. TTAASAG seeks to achieve this 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; and
  • Identifying areas where audit and assurance standards and auditor regulation create impediments to trans-Tasman business activity, and assisting in the removal of those impediments.

The other major goal of TTAASAG is to enhance the influence of the two countries in the development of international accounting, audit and assurance standards.

TTAASAG has been involved in a number of initiatives that have benefited both Australia and New Zealand. These include:

  • promoting trans-Tasman cross appointment opportunities on both audit and financial reporting standard setting bodies;
  • contributing to further alignment of Australian and New Zealand financial reporting frameworks;
  • contributing to the development of international financial reporting standards;
  • organising the inaugural IFRS Regional Policy Forum in 2005 and contributing to subsequent Policy Forums;
  • contributing to the review of auditor regulation in both countries; and
  • contributing to the work to identify ways of facilitating mutual recognition of auditors between New Zealand and Australia.

Terms of Reference

TTAASAG is given the task of providing advice under four broad headings:

  • 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 and assurance standards in light of the adoption of international accounting and auditing standards;
  • 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, amongst other things, a consistent approach is taken to the application, monitoring and enforcement of accounting and assurance standards where appropriate;
  • Joint institutions – advice primarily to the Australian and New Zealand governments on the specific institutional arrangements that might be established over time to ensure 1) that the objective of a single set of trans‑Tasman accounting standards is achieved and maintained effectively and efficiently; and 2) audit and assurance standards and auditor regulation do not create unnecessary impediments to Trans-Tasman business activity; and
  • 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 and international standards on auditing through involvement in relevant forums, such as the International Accounting Standards Board (IASB).

TTAASAG includes representatives from Australia's Financial Reporting Council (FRC), Australian Accounting Standards Board (AASB), and Audit and Assurance Standards Board (AUASB), and New Zealand's Accounting Standards Review Board (ASRB), Financial Reporting Standards Board (FRSB), and Professional Standards Board (PSB), as well as representatives from the professional accounting bodies in Australia and New Zealand, and officials from the Australian Treasury and the New Zealand Ministry of Economic Development (MED).

TTAASAG met on four occasions in 2009. These meetings were chaired by a representative of Australian Treasury.

Information on TTAASAG's work has also been placed on its website at www.treasury.gov.au/ttaasag.

3. Major Activities and Achievements in 2009

  • Contributing to the development of a set of outcomes under the Closer Economic Relations (CER) and Single Economic Market (SEM) agendas. The Australian and New Zealand Governments agreed to an outcomes framework with five relating to accounting and auditing matters. The outcomes framework applies reciprocally and once achieved will further align frameworks in Australia and New Zealand with the aim of benefiting both countries and increasing harmonisation.

In 2009, the Governments of Australia and New Zealand decided upon an outcomes framework that will further align both countries frameworks. These outcomes are in line with the Closer Economic Relations and Single Economic Market objectives. The outcomes framework covers a number of different economic areas. Five outcome frameworks relate to the accounting and auditing profession. TTAASAG compressed these five initial outcomes into four because of the similar characteristics of two outcomes. These outcome agreements are:

  1. for-profit entities are able to use a single set of accounting standards and prepare only one set of financial statements; and Trans-Tasman companies have to prepare only one set of financial statements to one set of standards;

The Ministry of Economic Development's (MED) current review of the financial reporting framework in New Zealand, is proposing to further align New Zealand's financial reporting framework with Australia's. While the two countries financial reporting frameworks will not be identical under the proposal, it is expected that a for-profit entity operating in both countries will only need to prepare a single set of financial reports to satisfy both countries reporting requirements.

TTAASAG worked with MED officials to provide advice and guidance on the development of the review. A number of TTAASAG members were also on the MED's steering group that initially outlined the parameters of review. The Australian members of TTAASAG provided input on the reciprocality of the proposed policies with the existing Australian framework.

  1. not-for-profit entities are able to use a single set of accounting standards and prepare only one set of financial statements;

Not-for-profit entities fall within the scope of the MED's review of the financial reporting framework. Work is also being undertaken by the Australian Treasury which has the potential to further align the not-for-profit sectors of both countries. TTAASAG has been a focus point of discussion and liaison between Australian and New Zealand authorities on developments in the reporting requirements for not-for-profit entities.

  1. auditors registered in one country can operate in the other country; and

MED is currently working through implementing regulation and oversight of auditors in New Zealand. Australia already regulates auditors. TTAASAG played a key role in providing input and advice on MED's initial and subsequent proposals. TTAASAG has provided insights into the Australian system of regulating auditors and whether the MED's proposed oversight system will allow auditors to operate in both countries.

  1. financial reporting standards bodies in Australia and New Zealand have functional equivalence.

TTAASAG consists of members from the financial reporting bodies from Australia and New Zealand. Discussions at TTAASAG were open between the financial reporting bodies which allowed suggestions and ideas on how to best achieve functional equivalence. Stemming from these discussions, the MED's review of the financial reporting framework includes a section on reconstituting the Accounting Standards Review Board (ASRB) and modifying the standard-setting arrangements in New Zealand in a manner which will facilitate achievement of functional equivalence between the financial reporting standards bodies in Australia and New Zealand.

  • Considering a range of policy issues to inform policy development in relation to the accounting issues that have arisen out of the global financial crisis. This included participating in meetings of international agencies and contributing to the development of more effective financial reporting policies to prevent similar crises occurring in the future.

With the brunt of the global financial crisis gripping the global economy in late 2008, there was a huge strain put on global markets and the accounting standards that regulate them.

TTAASAG discussed the responses made to the crisis by international financial standards bodies and how these responses affect Australian and New Zealand entities. TTAASAG members provided comments on relevant exposure drafts released by the IASB on how the amendments to standards and policies would suit the economic conditions in Australia and New Zealand.

  • Promoting regional engagement, including through TTAASAG members attending and reporting back from the International Financial Reporting Standards (IFRS) Regional Policy Forum held in Beijing in April 2009.

The Regional Policy Forum was held in April 2009 in Beijing. A number of TTAASAG members from both Australia and New Zealand attended this meeting. Topics and developments from the policy forum were discussed at TTAASAG meetings. One significant development to emerge from the Policy Forum was the formation of the Asian-Oceanian Standard-Setters Group (AOSSG). The AOSSG held a preparatory meeting on 17 April 2009 and held its first meeting on the 4th and 5th of November 2009. The main topics of discussion at the first meeting revolved around financial instruments, financial statement presentation and revenues. Working groups were set up in these areas with Australia and New Zealand being represented on all three groups.

Members discussed how TTAASAG could influence future forums and the AOSSG through attendance, participation and submission of papers.

  • Considering the potential application of an international accounting standard for non publicly accountable entities as a means of reducing the financial reporting burden on small and medium sized entities in Australia and New Zealand.

The IASB published the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) in July 2009. TTAASAG members have discussed this standard and its implications for small and medium-sized entities. TTAASAG will continue to consider and discuss the response to the IFRS for SMEs. Members have discussed the possibility of jointly developing a differential reporting framework between Australia and New Zealand. Such discussions are continuing.

  • Implementing strategies to promote the profile and influence of Australia and New Zealand at international forums and on international accounting and auditing bodies. Examples include inviting guest presenters from domestic and international bodies to TTAASAG meetings to enable TTAASAG members to better understand the work and functions of these bodies.

In 2009, TTAASAG invited four members from various international and domestic accounting and auditing bodies to make presentations at meetings. The presentations provided TTAASAG members with recent updates on developments in policy, standard setting and auditing and accounting standards. These presentations allowed TTAASAG members to further understand the functions and responsibilities of the various organisations represented and the importance of their work for accounting and auditing standards development in Australia and New Zealand.

The four presentations in 2009 were:

  1. Liz Hickey on the International Accounting Standards Board (IASB) / Financial Accounting Standards Board (FASB) Financial Crisis Advisory Group;
  2. Paul Madden, of Australian Treasury, and Harm Jan Van Burg, of the Ministry of Finance in Netherlands, on standard business reporting;
  3. Ken Warren on the International Public Sector Accounting Standards Board (IPSASB); and
  4. Kate Spargo on the Accounting Professional and Ethical Standards Board (APESB).
  • Continuing to promote greater trans-Tasman collaboration of auditing standard setting bodies and financial reporting standard setting bodies, including considering the possibility of cross-appointments between auditing standard setting bodies and continuing cross appointments between financial reporting standards bodies.

Prior to 2009, there were four cross appointments between Australian and New Zealand standards bodies. The Chair of the Financial Reporting Council (FRC) is a cross appointed member of the Accounting Standards Review Board (ASRB), and vice versa. The Chair of the Australian Accounting Standards Board (AASB) is a cross appointed member of the Financial Reporting Standards Board (FRSB), and vice versa.

TTAASAG has continued to support these cross appointments and has also considered the possible benefits of similar cross appointments between the auditing standards approval bodies. At the December meeting of TTAASAG, members noted measures agreed to by the Auditing and Assurance Standards Board (AUASB) and the Professional Standards Board (PSB) to facilitate further collaboration and co-operation between the two boards.

  • Exploring opportunities to formalise the established collaborative processes that exist between the professional bodies in Australia and New Zealand, and to enhance mechanisms for reporting back to TTAASAG members.

The professional bodies of TTAASAG currently collaborate to produce consolidated updates on their activities. This procedure has been a helpful exercise to keep all the professional bodies and other TTAASAG bodies up to date on their individual activities and projects.


1. Note that as two of the statements are closely related they are considered together in this Report.