At this meeting the Board discussed key issues relating to:

• financial reporting by superannuation entities
• financial reporting by not-for-profit entities within the general government sector - deciding not to proceed with the proposed way of enhancing the presentation of financial statements for not-for-profit entities within the general government sector (GGS)
• related party disclosures in the not-for-profit public sector
• income from transactions of not-for-profit entities
• control in the not-for-profit public and private sectors - an ED is expected to be finalised soon.

The Board also:

• progressed its review of AASB Interpretation 1039 relating to substantive enactment under AASB 112 Income Taxes (equivalent to IAS 12) - the Board asked staff to advise the IFRS Interpretations Committee of the apparent diversity in practice internationally with a view to ascertaining whether the issue of substantive enactment might be an issue needing that Committee’s attention
• considered a draft revised AASB 1048 Interpretation of Standards - a new version of this standard will be issued by the end of June 2012
• considered staff views on financial reporting implications of a carbon tax - staff papers, which are intended to draw out for constituents various financial reporting issues that may arise during the fixed price phase and possible accounting treatments in respect of those issues based on current Australian Accounting Standards, are intended to be published on the AASB website as soon as practicable
• continued to monitor IASB projects addressing: financial instruments, leases, revenue from contracts with customers and the post-implementation review of IFRS 8 Operating Segments
• received a report on the IFRS Interpretations Committee’s May 2012 meeting
• considered EFRAG’s Discussion Paper on income tax
• considered its approach to commenting on proposals for oversight of the IPSASB
• received a report from the Chair of the New Zealand Accounting Standards Board (NZASB) on developments in New Zealand
• discussed a draft AASB strategic plan.

Click for AASB Action Alert (link to AASB website).

Ms Wood began her speech with an endorsement of IFRS as the global standard, noting "with the current pace of globalisation, the movement to a global set of accounting standards is a logical transition".  She did however note two key challenges: the uncertainty as to whether the United States will adopt IFRS and the consistent application and enforcement of IFRS across jurisdictions.

In relation the adoption of IFRS in the United States, Ms Wood noted:

To not have the US adopt IFRS would significantly impact global comparability of financial performance. Moreover, it would limit to some degree the expertise available to develop IFRS in the future.

Ms Wood then moved onto the role of international regulators in "working towards a global set of accounting standards".  Ms Wood sees that regulators should participate in the standard-setting process both through the IFRS Monitoring Board and comment on specific proposals.  She however focused on the need for regulators to work towards global consistency  in interpretation.   She sees a strong role for regional regulators such as ESMA (for the EU region) and IOSCO (on a global scale) to coordinate enforcement action between the national regulators.

Ms Wood discussed the ISOCO database of enforcement decisions, and a similar database coordinated by ESMA for the European region - which she sees as a "useful source of information for standard-setters".  She further commented about the possibility of a similar database for the Asia-Pacific region:

Europe as a region has in place some good initiatives that we in the Asia-Pacific region should consider. AOSSG was created as a platform for jurisdictions within our region to discuss issues such as IFRS...  It would arguably also be beneficial for our region to have our regulators establish a database, or contribute to that of IOSCO, in a way that member countries can share the experiences of IFRS…in particular to share cases where judgment calls have to be made for interpretation of IFRS. That way, we can ensure that we, as a region, are consistently applying IFRS, and that any inconsistencies are immediately detectable and can be raised as an issue to the IASB.

The speech also included discussion of the G20 and Australia's approach to setting the accounting standard framework.

The full text of the speech is available on the FRC's website.   See also our summary of the outcomes of the 6th IFRS Regional Policy Forum.

In the speech, Mr Stanhope focused on the wish by users for "reporting that is simple, easy and valuable".  He included the following position statements:

• Integrated reporting is not incremental report
• Integrated reporting is not two reports in the same document. This is report consolidation
• Clarity is required about what exactly it is but it needs a conceptual framework that delivers consistency - the good news and the bad
• The Annual Report is the right location for reporting integration, linking the social and environmental activities to the financial statement outcome
• Complexity and volume must be reduced in the total reporting package
• Directors' liabilities must be addressed
• Assurance must be addressed.

The transcript of the speech is available on the FRC website.

Under Australia's corporate law, the FRC is responsible for overseeing the effectiveness of the financial reporting framework in Australia.

Ms Gibson was nominated by ASIC, of which she is the Deputy Chairman. Her responsibilities at ASIC include the supervision of corporations (and consequently their financial reporting practices), as well as the financial reporting and audit and insolvency practitioner teams within ASIC.

Mr Purchas was nominated by the Institute of Public Accountants. He is a Principal at RMG Partners Business Solutions, a Sydney-based insolvency and accounting practice, and is a Registered Liquidator and an Official Liquidator of the Supreme Court of NSW and Federal Court of Australia.

Click for press release (link to Australian Treasury website).

Under Australia's Corporations Act 2001 (Act), directors of companies are required to ensure that the financial statements are true and fair.  The Centro case, whilst not representing a change in law, serves to clarify the roles and responsibilities of directors of Australian public companies in relation to financial reporting.

The Centro case focused on the classification of liabilities and the disclosure of guarantees.  Justice Middleton found that in approving the financial statements, each director failed to take all reasonable steps required of them under the Act, noting they should have known the nature of the liabilities, should have been aware of the relevant accounting principles and should have made relevant enquiries.

The G100 publication provide background to the Centro decision, and identifies areas of focus for directors in the financial reporting process.  It also includes guidelines to assist CFOs in assisting the directors in the process.

Click for The Centro Experience — A wake up call for directors (link to G100 website).

The minutes of the meeting held on 9 March 2012 cover a diverse range of topics, including:

• the functions and performance of the FRC
• a report from the Australian Accounting Standards Board (AASB), including discussion of the AASB's research into financial reporting by private companies and other non-publicly accountable entities, which "was likely to raise issues concerning policy, enforcement and regulation in respect of financial reporting"
• a report from the Auditing and Assurance Standards Board (AuASB)
• reports from various stakeholders and other participants - of interest are observations from Mr Lucy (a IFRS Foundation Trustee) that there was "a loss of confidence by the investing community overseas in financial reporting, especially in the areas of material financial fraud and valuation issues associated with determining whether an entity is a going concern"
• Task force reports, including from the Integrated Reporting Task Force (IRTF) that "integrated reporting should not be inside the financial report" and for the Public Sector Financial Reporting Task Force (PSFRTF) to "develop ideas about promoting the use of high quality public sector financial reporting standards internationally

The FRC's survey on the financial literacy of company directors in Australia is split into two, one for directors themselves and one for financial professionals.  The surveys can be accessed at the following links:

• For directors: www.plenarionlinesurveys.com/asxresearch_0312_Fin_Literacy_Directors.htm
• For financial professionals: www.plenarionlinesurveys.com/asxresearch_0312_Fin_Literacy_Professional.htm

At this meeting the Board discussed key not-for-profit (NFP) issues relating to:

• Control in NFP public and private sectors
• Income from transactions of NFP entities
• Service performance reporting
• NFP entities within the general government sector
• Government perspective on accounting for the carbon tax.

The AASB also:

• Formed views to be included in its submission to the IPSASB on its conceptual framework consultation paper
• Continued monitoring and forming views on the IASB leases, financial instruments, and insurance projects
• Made decisions relating to the reduced disclosure regime and received a  report on the differential reporting research project
• Considered and formed views on its tentatvie agenda decision on resource rent taxes
• Received reports relating to the IFRIC's March 2012 meeting and IPSASB’s March 2012 meeting.
• Considered EFRAG's discussion paper on business combinations under common control.

Click for AASB Action Alert (link to AASB website).

AASB 2012-1 Amendments to Australian Accounting Standards – Fair Value Measurement – Reduced Disclosure Requirements establishes and amends reduced disclosure requirements for entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements ('RDR') for additional and amended disclosures arising from AASB 13 and the consequential amendments implemented through AASB 2011-8.

The amendments eliminate the need for entity applying the RDR to comply with the disclosure requirement in AASB 13 that an entity disclose information that helps users of its financial statements assess, for recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss or other comprehensive income for the period.  It also eliminates the need to disclose items such as a description of the valuation technique(s) and the inputs used in the fair value measurement, and a movement schedule of items included in 'Level 3'.  Many other related disclosures are also excluded.

Click for AASB announcement (link to AASB website).

The Boards have stated their enthusiasm for the prospect of creating a single, strong and relevant membership body, and are excited about the potential opportunities and value this could create for members.

The key strategic driver for considering creating a new single organisation is that it would better position both Institutes and the Chartered Accountant brand for global consolidation of the profession, and therefore be in the long term interest of the existing ICAA and NZICA members in both countries.

Click for more information (link to NZICA website).