2.00pm-4.30pm, Wednesday 10th December 2008
CPAA Building, Level 3, 111 Harrington Street, Sydney
Geoff Miller – Chair - (Treasury - Aust)
Jeffrey Lucy - (Financial Reporting Council (FRC) - Aust)
Joanna Perry - (Financial Reporting Standards Board (FRSB) - NZ)
Craig Fisher - (Professional Standards Board (PSB) - NZ)
Chris Hall (on behalf of Merran Kelsall) - (Audit and Assurance Standards Board (AUASB) - Aust)
Bruce Bennett (on behalf of Terry McLaughlin) - (NZ Institute of Chartered Accountants (NZICA) - NZ)
Denis Pratt - (Certified Practising Accountants (CPAA) - Aust)
Mark Shying - (Certified Practising Accountants (CPAA) - Aust)
Andrew Conway (on behalf of Roger Cotton) - (National Institute of Accountants (NIA) - Aust)
Bill Palmer - (Institute of Chartered Accountants Australia (ICAA) - Aust)
Judith Downes (until 2.45 pm) - Guest Presenter
Peter Mumford - (Ministry of Economic Development (MED) - NZ)
Ashley Tomlinson - (Ministry of Economic Development (MED) - NZ)
Bede Fraser - (Treasury - Aust)
Suzanne Howarth - (Financial Reporting Council Secretary - Aust)
Ronita Ram - (Treasury - Aust)
Angus Thomson (on behalf of Bruce Porter) - (Australian Accounting Standards Board (AASB) - Aust)
Warwick Hunt - (Accounting Standards Review Board (ASRB) - NZ)
Kevin Simpkins - (Accounting Standards Review Board (ASRB) - NZ)
Andrew Jackson - (Ministry of Economic Development (MED) - NZ)
Geoff Connor - (Ministry of Economic Development (MED) - NZ)
Jim Murphy - (Treasury - Aust)
The TTAASAG Chair, Mr Geoff Miller, welcomed TTAASAG members to the fourth meeting of the Group in 2008.
2. Minutes from the meeting of 10 September 2008
The minutes of the previous meeting, held in Sydney on 10 September 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. New Zealand’s new Government - implications for TTAASAG
MED updated the Group on New Zealand’s new Government and Ministry and the potential implications of the change of Government on the work of TTAASAG. The Group noted that the new Government is likely to deepen co-operation with Australia, and that there would be continued support for trans-Tasman harmonisation. More generally, the Group noted the new Government’s focus on measures to improve productivity and reduce red-tape.
5. Presentation by Ms Judith Downes
Ms Judith Downes delivered a presentation on her experiences as a member of the Standards Advisory Council (SAC). Ms Downes provided an overview of SAC’s role, its performance against its terms of reference, and possible opportunities for the Council to improve its effectiveness into the future. Ms Downes also agreed to provide SAC meeting papers to the New Zealand participants on a confidential basis.
Ms Downes also updated the Group on a recent report she prepared on behalf of the FRC on accounting issues emerging from the global financial crisis. The report was presented at the joint IASB and Financial Accounting Standards Board (FASB) roundtable meeting in Tokyo on 3 December 2008. The report is based on a survey of eight Australian Authorised Deposit-taking Institutions, including four of Australia’s largest banks. These four banks are also the parent entities of the four largest banks in New Zealand.
The Group noted that the report identified the following key areas for potential reform:
- the difference between the prudential and accounting models for provisioning of loans held at amortised cost;
- the accounting rules for hedging; and
- the measurement and reversal of impairment of available for sale securities.
Mr Angus Thomson noted that Mr Bruce Porter had attended the Tokyo roundtable on behalf of the AASB and that Mr Porter noted that the report was well received by participants.
The Group noted that the outcomes of the Tokyo roundtable, as well as other roundtables held in Europe and North America, would feed into the IASB’s consideration of these issues at its December meeting.
6. Possible legislative reforms to be considered jointly by Australia and New Zealand
The Group discussed some policy areas where both countries could provide input into each other’s possible legislative reforms. These areas included auditor regulation, auditor liability, requirements relating to the payment of dividends, IFRS branding and parent-entity financial statements. The Group noted a prioritised list of these issues and also agreed to identify these issues in the Group’s next report to Ministers. The Group also agreed to discuss IFRS branding as part of a policy discussion at the next TTAASAG meeting.
The Group also noted other areas in which co-ordination was already taking place, including New Zealand’s review of its financial reporting framework, which has an Australian representative on the steering committee.
Australian Treasury and NZ MED will prepare a joint paper on IFRS branding for discussion at the next TTAASAG meeting.
7. Common policy issues in Australia and New Zealand, including:
7.1 Response to the global financial crisis
In addition to the discussion under agenda item 5, Mr Miller updated the Group on the G-20 Leaders’ meeting in November 2008 at which the member nations agreed on a series of principles to reform the financial markets and an action plan to implement those principles. The Group noted that a number of accounting issues were identified in the action plan for both immediate action (to be completed by 31 March 2009) as well as medium term action. Mr Miller provided an overview of the proposed process moving forward, including the G-20 Finance Ministers’ meeting in March and the next Leaders’ meeting in April 2009. The Group also noted that all FRC members, including the New Zealand representative on the FRC, would be involved in providing input into Australia’s response to the action plan.
Australian Treasury and the FRC will update the Group on developments with the response to the G‑20’s action plan to address the global financial crisis at the next TTAASAG meeting.
7.2 Reporting by not-for-profit entities
Ms Ronita Ram and Mr Ashley Tomlinson provided an overview of the reporting requirements in Australia and New Zealand for the not‑for‑profit sector. The Group discussed possible reforms on this issue. The Group also noted that the Australian Senate Standing Committee on Economics recently released a report recommending the introduction of a tiered reporting framework for not-for-profit entities based on revenue thresholds.
Australian Treasury and NZ MED will continue to work together on potential reforms relating to reporting by not-for-profit entities.
7.3 Differential auditing
Mr Bede Fraser and Mr Ashley Tomlinson provided an overview of the audit and review frameworks in Australia and New Zealand. The Group discussed the distinction between an audit and a review, as well as international work being undertaken on review engagements. It was noted that domestic and international auditing standard setting bodies are of the view that ‘an audit is an audit’, and as such, the term ‘differential auditing’ is a misnomer.
Australian Treasury and NZ MED will work together on any proposals relating to the further use of review engagements in either jurisdiction.
7.4 Potential future topics
The Group agreed to discuss IFRS branding and standard business reporting at future meetings.
The Group will discuss IFRS branding and standard business reporting at future TTAASAG meetings.
8. Update on New Zealand’s audit regulation review
MED briefly updated the Group on progress with New Zealand’s review of its audit regulation framework and noted that this work would be progressed further in 2009. MED agreed to update the Group on progress with the review at the next TTAASAG meeting.
MED will provide an update on New Zealand’s review of its audit regulation framework at the next meeting of TTAASAG.
9. Report from the accounting standard setters
MED updated the Group on progress with New Zealand’s Financial Reporting Framework Review. As part of this review, MED has established a steering committee to consider proposed reforms and to inform development of a public consultation paper. Subject to Cabinet approval it is intended to publicly release this consultation paper for comment in the first half of 2009.
The steering committee comprises of representatives from MED, FRSB, ASRB and the Australian Treasury, and has met a number of times since the last TTAASAG meeting. During this time, the steering committee has developed a better understanding of which entities should be captured by the new framework and what the reporting requirements should be for these entities.
The Group noted that the final meeting of the steering committee is scheduled to take place in early 2009.
MED will circulate the steering committee’s draft paper on the financial reporting framework review for discussion at the next meeting of TTAASAG.
10. Update on IFRS Regional Policy Forum
Mr Bede Fraser provided an update on the next IFRS Regional Policy Forum to be held in Beijing. The Group noted that the forum is likely to be held on 15‑16 April 2009, although this date has not yet been confirmed. Australian Treasury agreed to keep the Group informed of any developments, including confirmation of the agenda and timing for the forum.
Australian Treasury will update TTAASAG on any further developments regarding the IFRS Regional Policy Forum.
11. Update on emissions trading
Mr Angus Thomson provided an update on the emissions trading project in Australia. The Group noted that the AASB would continue to monitor the IASB’s work in this area in case an international standard is not finalised in time to coincide with the commencement of a domestic emissions trading scheme in Australia in 2010. The Group noted that the IASB is expecting to release an exposure draft in 2009 and a final standard in 2010. If the IASB does not meet this timeframe, the AASB will consider its options, including resurrecting the Australian version of the withdrawn IFRIC Interpretation 3 Emission Rights.
12. Nominations sub-committee
12.1 Report from the nominations sub-committee
Mr Bede Fraser updated the Group on the most recent meeting of the nominations sub-committee, noting that the sub-committee intends to write to the IASCF to provide a list of potential candidates for future IASB appointments.
It was also noted that the International Accounting Standards Council Foundation (IASCF) recently dissolved SAC so that it could be reconstituted in a new and more representative form. The nominations sub-committee supported the applications of two candidates to this reconstituted body, one for a position as member and the other for the position of Chairman.
The nominations sub-committee will write to the IASCF to provide a list of potential candidates for future IASB appointments.
12.2 Role of cross appointees
The Group discussed a paper exploring the role of cross-appointees and whether changes to the voting rights of cross appointees was required. The paper noted that the current framework is functioning well and recommended retaining the status quo. The Group noted that cross-appointees contribute to the standard setting process by facilitating cooperation and communication, and agreed that the current framework should be maintained.
13. Professional accounting bodies
13.1 General report back on issues of relevance, including international events or conferences
Mr Andrew Conway noted that the NIA, ICAA and CPAA recently hosted Mr Tatsumi Yamada (IASB Member – Japan) and Mr Warren McGregor (IASB Member – Australia) for a series of roundtables with the profession and the academic community. The roundtables were held in Melbourne and Sydney in November 2008.
14. Auditing standard setters
14.1 Report from the PSB
The Group noted the PSB’s report on its recent activities. Key issues identified in the report include reporting by auditors to trustees of an issuer of debt securities and an update on auditor regulation oversight in New Zealand. The report also noted the PSB’s other domestic and international projects.
14.2 Report from the AUASB
The Group noted the AUASB’s report on its recent activities, including feedback from the AUASB’s recent consultative group meeting in Melbourne. Other key issues identified in the report included the audit issues arising from the global financial crisis. The Group also noted 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.
15. Accounting standard setters
15.1 Report from the FRSB
The Group noted the FRSB’s report on its recent activities. Key issues identified in the report included an update on the FRSB’s involvement in the financial reporting framework review and draft guidelines for modifying standards for Public Benefit Entities. The Group also noted progress on the FRSB’s other domestic and international projects.
15.2 Report from the AASB
The Group noted the AASB’s report on its recent activities. Key issues identified in the report included the AASB’s contribution to the FRC’s public sector workshop in November 2008, recent changes to accounting standard AASB 139 as a result of changes by the IASB to the international standard and the AASB’s attendance at the IASB roundtable in Tokyo in December 2008 on the global financial crisis. 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.
16. Other business
Mr Jeffrey Lucy noted that the Chair of the Public Company Accounting Oversight Board will speak at the next Ken Spencer Memorial Lecture in Melbourne on 11 March 2009.
As this was the final meeting for Warwick Hunt, Craig Fisher and Ashley Tomlinson, Mr Miller thanked these members, on behalf of the Group, for their contribution to TTAASAG and the policy deliberation they have brought to the Group. The Group noted that Mr Kevin Simpkins will be acting in Warwick Hunt’s position until a new Chair is appointed to the ASRB, and that Mr Neil Cherry will be replacing Craig Fisher as Chair of the PSB.
17. Next meeting
The Group noted that the meeting dates for 2009 would be circulated out-of-session.