1.30pm-4.30pm, Friday 27th June 2008
AASB/AUASB Boardroom, Level 7, 600 Bourke Street, Melbourne
Geoff Miller – Chair - (Treasury - Aust)
Joanna Perry - (Financial Reporting Standards Board (FRSB) - NZ)
David Boymal - (Australian Accounting Standards Board (AASB) - Aust)
Merran Kelsall - (Audit and Assurance Standards Board (AUASB) - Aust)
Bruce Bennett (on behalf of Keith Wedlock) - (NZ Institute of Chartered Accountants (NZICA) - NZ)
Craig Fisher - (Professional Standards Board (PSB) - NZ)
Mark Shying - (Certified Practising Accountants (CPA) - Aust)
Andrew Conway - (National Institute of Accountants (NIA) - Aust)
Peter Mumford - (Ministry of Economic Development (MED) - NZ)
Ashley Tomlinson - (Ministry of Economic Development (MED) - NZ)
Bede Fraser - (Treasury - Aust)
Ronita Ram - (Treasury - Aust)
Ken Warren (on behalf of Warwick Hunt) - (Accounting Standards Review Board (ASRB) - NZ)
Jeffrey Lucy (until 4 pm) - (Financial Reporting Council (FRC) - Aust)
Suzanne Howarth - (Financial Reporting Council Secretariat - Aust)
Amanda Kirby - (Financial Reporting Council Secretariat - Aust)
Jim Murphy - (Treasury - Aust)
Bill Palmer - (Institute of Chartered Accountants Australia (ICAA) - Aust)
Andrew Jackson - (Ministry of Economic Development (MED) - NZ)
Geoff Connor - (Ministry of Economic Development (MED) - NZ)
The TTAASAG Chair, Mr Geoff Miller, welcomed TTAASAG members to the second meeting of the group in 2008.
2. Minutes from the meeting of 26 March 2008
The minutes of the previous meeting, held in Wellington on 26 March 2008, 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. Report from the nominations sub-committee
Mr Geoff Miller provided an update on the previous meeting of the nominations sub-committee held on 29 April 2008. At this meeting, the nominations sub-committee discussed a range of issues, including upcoming vacancies on the International Financial Reporting Interpretations Committee (IFRIC), the International Auditing and Assurance Standards Board (IAASB) and the International Public Sector Accounting Standards Board (IPSASB). The sub-committee also discussed future nominations priorities such as the International Accounting Standards Board (IASB), the Public Interest Oversight Board (PIOB), the IAASB and the Standards Advisory Committee (SAC).
The sub-committee also agreed that it would be useful to invite Australians and New Zealanders who are currently members of international boards to speak at future TTAASAG meetings. The group noted that the inaugural presentation would be provided later during the meeting by Mr Ian McPhee, Australian Auditor‑General and public member of the IAASB.
TTAASAG members also noted recent correspondence, sent on behalf of the group, in support of nominees to IPSASB and the IAASB.
Australian Treasury will identify possible international board members to deliver a presentation to the next meeting of the group.
4.1 Table of Australian and New Zealand representatives on international bodies
The group noted the updated table identifying Australian and New Zealand representatives on international bodies. The table will assist the nominations sub-committee to identify priority appointments and upcoming vacancies.
The group discussed some future nomination priorities which TTAASAG will need to monitor.
4.2 Voting rights of cross-appointees
The group noted the valuable role that cross-appointees perform in promoting communication and informing development of standards in both countries. In this context, the group discussed the role of cross-appointees and whether their role should be limited solely to ensure information flow, or whether it is appropriate for cross-appointees to be entitled to exercise full voting rights as a member of their counterpart board. The group also recognised, in the context of this discussion, the need to consider whether cross-appointees undertake equivalent functions on a comparable board.
Members of the group expressed a range of preliminary views including removing the voting rights altogether, retaining the voting rights but exercising it in limited circumstances, or retaining full voting rights. To assist TTAASAG’s consideration of this issue, the group agreed that a paper would be prepared for the next meeting exploring possible options on the voting rights of cross-appointees within the existing legislative frameworks. This paper would include an analysis of arrangements for other bodies, and would also identify differences in functions performed by counterpart boards.
Australian Treasury, in conjunction with MED, will prepare a paper for discussion at the next meeting considering the appropriate role of cross‑appointees and exploring possible options on the voting rights of cross-appointees within the existing legislative frameworks.
4.3 IASCF Constitution Review Proposals
The group noted that Australian Treasury and the FRC have provided comments on the International Accounting Standards Committee Foundation’s proposals relating to the first part of the Constitution Review. The group agreed that it would consider whether a consolidated response from TTAASAG was necessary following a meeting of the IASCF to be held next week.
Mr Jeffrey Lucy will update the group on this issue following the meeting of the IASCF.
MED will also contact Jane Diplock to obtain further information on this issue.
5. Presentation by Mr Ian McPhee
Mr Ian McPhee, Australian Auditor-General and public member of the IAASB provided a presentation to the group on the IAASB’s role and recent activities. Mr McPhee provided information on the purpose and composition of the International Federation of Accountants (IFAC), the IAASB and the PIOB. Other key issues noted by the group included the usage and support for International Standards on Auditing (ISAs), the revised standards and current projects being undertaken to enhance audit quality, an overview of the Clarity Project and the IAASB’s future strategy and focus areas for the period 2009 to 2011. In particular, Mr McPhee indicated that, in his view, there were positive signs emanating from the United States with respect to possible harmonisation with ISAs, although the timing was unclear.
The group thanked Mr McPhee for his informative presentation. Members commented that the presentation assisted the group to better understand the work of the IAASB.
6. Professional accounting bodies
6.1 General report back on issues of relevance, including international events or conferences
Mr Andrew Conway provided an update on the recent visit to Australia by Mr Robert Garnett, Chairman of IFRIC and member of the IASB. Mr Garnett participated as a guest speaker at a series of NIA financial reporting conferences, which had been well received.
Mr Mark Shying distributed a recent CPAA publication on emissions trading and national greenhouse regulation. Mr Shying also provided an update on CPAA’s joint work with universities on water resource accounting, sustainability auditing in relation to greenhouse gas emission issues, reporting of non-statutory information and auditing of micro‑entities.
Mr Bruce Bennett informed the group that Mr Terry McLaughlin’s commencement as the chief executive officer of NZICA is effective from 30 June 2008. The group also noted NZICA’s membership on the CAPA sustainability temporary taskforce, NZICA’s ‘fit for purpose’ review and an update on recent disciplinary decisions made in relation to two members.
7. Update on emissions trading
The group noted recent developments on the emissions trading scheme project, including the IASB’s revised work program, which indicates that an exposure draft will be released in 2009, with a standard expected to be developed by 2010. At this stage, it is unclear whether this standard will be developed in time for the commencement of domestic emissions trading schemes.
8. Update on IFRS Regional Policy Forum and possible establishment of a steering committee
The group noted recent developments regarding the IFRS regional policy forum. In March 2008, Australian Treasury wrote to China outlining Japan’s offer to co-host a forum in late 2008 (prior to China’s forum in 2009), and seeking China’s views on whether they would be prepared to hold their forum later in 2009. In response to this letter, China confirmed that they will be proceeding with their forum in March 2009. As a result, Australia and Japan have agreed that it is no longer practical to hold a forum in 2008.
The group also noted that Australian Treasury is exploring the possibility of establishing a steering committee to identify hosts for future forums.
9. Update on New Zealand’s Financial Reporting Framework Review
MED updated the group on progress with New Zealand’s Financial Reporting Framework Review. As part of this review, MED have established a steering committee to consider proposed reforms and to inform development of a public consultation paper, which it intends to release for comment in 2009. The steering committee comprises of representatives from MED, FRSB, ASRB and the Australian Treasury.
The first meeting of the steering committee was held on 23 May 2008. This meeting explored the objectives of the review, the scope of the review, and the specific problems or issues that will be considered during the review. The group agreed that MED would provide a summary of conclusions from this steering committee meeting. The next steering committee meeting will take place in early July.
As trans-Tasman considerations will be important to the review, it was noted that TTAASAG would be kept updated on progress with the review.
MED will provide a summary of conclusions from the first steering committee meeting for distribution to members.
MED will provide an update on the Financial Reporting Framework Review at the next meeting of TTAASAG.
The Australian representative on the steering committee will advise Australian constituents of relevant matters arising from the review as required.
10. Update on New Zealand’s review of its audit regulation framework (including auditor liability)
MED updated the group on progress with New Zealand’s review of its audit regulation framework. MED has undertaken targeted consultation with key stakeholders on the position paper previously distributed to members. MED is currently considering submissions received on the position paper, with a view to recommending an oversight model to their Minister in the near future. TTAASAG members expressed a range of views on the proposed model, including the importance of being mindful of international best practice oversight models.
MED will provide an update on New Zealand’s review of its audit regulation framework at the next meeting of TTAASAG.
11. Common policy issues in Australia and New Zealand, including:
11.1 Asset valuation in thinly traded markets
As Mr Jeffrey Lucy was unavailable for this agenda item, the group agreed to defer discussion on this topic to the next meeting of TTAASAG, in light of the FRC’s proposal to establish an Australian expert panel on this issue.
The FRC will update the group on the proposed Australian expert panel on valuations in an illiquid market at the next meeting.
11.2 Requirements relating to the payment of dividends
An overview was provided on the requirements in Australia and New Zealand relating the payment of dividends. The group noted that Australian Treasury is currently considering whether there are opportunities to allow greater flexibility on the payment of dividends.
Australian Treasury will consult with MED on any proposals relating to the payment of dividends.
11.3 Parent-entity financial statements
An overview was provided on the requirements in Australia and New Zealand relating the requirement to prepare parent-entity financial statements. The group also noted the possibility of the IASB developing a standard on this issue, which may impact on the need for the Australian and New Zealand legislative frameworks to deal with this issue.
The group noted that this issue is relevant in both Australia and New Zealand.
Australian Treasury will consult with MED on any proposals relating to parent-entity financial statements.
11.4 Potential future topics
Australian Treasury and MED will identify policy issues for discussion at the next meeting.
12. Auditing standard setters:
12.1 Report from the PSB
Mr Craig Fisher provided an update on the current work activities of the PSB. The key issues noted by the group included the PSB’s continued work to progress adoption of the IAASB’s International Standards and Framework for Assurance Engagements. Other issues currently being addressed by the PSB include reporting by auditors of registered banks, reporting by auditors to trustees of an issuer of debt securities, guidance on the use of disclaimer of liability clauses 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.
12.2 Report from the AUASB
Ms Merran Kelsall provided an update on the current work activities of the AUASB. The key issues noted by the group included the board’s transition to the Financial Management and Accountability Act 1997, the board’s progress with the Clarity Project, and the 2008-09 work plan. Other issues currently being addressed by the AUASB include the proposed audit requirements on greenhouse and energy reporting, performance engagements, and a guidance statement relating to self‑managed superannuation funds. The group also noted progress on the AUASB’s other domestic and international projects.
The PSB and the AUASB will prepare commonly formatted reports on their recent activities for the next meeting of TTAASAG.
13. Reporting by Public Benefit Entities
The group noted a paper providing an update on the ASRB’s proposals for a revised approach to setting financial reporting standards for Public Benefit Entities (PBEs). The results of consultations meetings on alternative approaches to developing standards for PBEs were also noted.
14. Accounting standard setters:
14.1 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 involvement in the financial reporting framework review, the board’s consideration of a modified sector-neutral standard setting process based on international financial reporting standards, and proposals for a revised approach to developing standards for PBEs. The group also noted progress on the FRSB’s other domestic and international projects.
14.2 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 an update on the IASB’s emissions trading project, the exposure draft on superannuation fund reporting, and the application of the SME standard. The group also noted progress on the AASB’s other domestic and international projects.
The FRSB and the AASB will prepare commonly formatted reports on their recent activities for the next meeting of TTAASAG.
15. Other business
No other business was raised.
16. Next meeting
The next meeting will be held on Wednesday 10 September 2008 at the ICAA Building, Level 1, 33 Erskine Street, Sydney.