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Chapter 2 - Annual reports of bodies established under the ASIC Act
Auditing and Assurance Standards Board
The 2008-09 annual report of the Auditing and Assurance Standards Board (AUASB)
was received on 4 November 2009 and tabled in Parliament on 16 November
Under section 227B(1) of the ASIC Act, the functions of the AUASB
include making legally enforceable auditing standards; formulating other
auditing and assurance standards and guidance; contributing to the development
of agreed international auditing standards; and communicating with stakeholders
to promote the work of the AUASB.
Since 1 July 2008, the AUASB has been operating under a new structure
under the Financial Management and Accountability Act 1997 (the FMA Act).
Its activities are now split between the AUASB itself, which makes auditing
standards and prepares guidance, and the Office of the AUASB, a new entity
(also established under the ASIC Act) which supplies administrative and
technical support to the AUASB.
The AUASB's major work program for 2008-09 has been the revision of all
Australian Auditing Standards in line with the 'clarity' format endorsed by the
International Auditing and Assurance Standards Board. Following release of
exposure drafts and consultation with stakeholders, the revised Australian
standards will apply to reporting periods commencing on or after 1 January
2010. This will bring Australian standards into line with new International
Standards on Auditing which took effect from December 2009.
Australian Accounting Standards Board
The 2008-09 annual report of the Australian Accounting Standards
Board (AASB) was received on 4 November 2009 and tabled in Parliament on
16 November 2009.
Under section 227 of the ASIC Act, the functions of the AASB include
making accounting standards; developing a framework for evaluating proposed
standards; advancing the development of a set of internationally agreed
accounting standards; and promoting the work of the AASB.
Since 1 July 2008, the AASB has also come under the FMA Act. The
activities of the AASB are shared between the AASB itself and the Office of the
Australian Accounting Standards Board.
A focus of the AASB during 2008-09 has been keeping Australian accounting
standards in line with changes to the International Financial Reporting
Standards (IFRS) released by the International Accounting Standards Board.
The AASB has also maintained a focus on setting standards that treat
like‑transactions consistently, whether they occur in the for-profit
sector or the not-for-profit sector (unless there is a sound reason to differ).
IFRSs continue to be used as the starting point to determine Australian
During 2008-09 the AASB developed a website that allows users to more
readily identify the accounting standards, interpretations and conceptual
frameworks that apply to all financial reporting periods since 1 January 2005.
This should increase the ability of AASB constituents to prepare their
financial reports appropriately.
Companies Auditors and Liquidators Disciplinary Board
The 2008-09 annual report of the Companies Auditors and Liquidators
Disciplinary Board (CALDB) was received on 30 October 2009 and tabled in
Parliament on 16 November 2009.
Under part 11 of the ASIC Act, the role of the CALDB is to:
... determine whether a registered auditor or registered
liquidator has contravened provisions of the Corporations Act, has failed to
carry out their duties and functions adequately and properly, is not a fit and
proper person to remain registered, is subject to disqualification or is
otherwise ineligible to remain registered.
During 2008-09 the CALDB has increased the visibility of certain of its
decisions (and reasons for those decisions), in line with changes to the Corporations
Act 2001 which took effect on 1 January 2008. This has included making more
information about the board, its functions and its work available via the
However, as noted in the annual report, some matters referred to the
Administrative Appeals Tribunal or the Federal Court are the subject of orders
restricting publication of any details.
Increased visibility of the board's work is timely as there has been
substantial recent public interest in matters that may be referred to the
board. A number of high‑profile company collapses in Australia during
2008 and 2009 have seen the operation of Australia's insolvency provisions, and
the actions of auditors and liquidators, move into the spotlight. The committee
notes that the Senate Economics References Committee is currently conducting an
inquiry into the role of liquidators and administrators, their fees and their
practices, and the involvement and activities of ASIC, prior to and following
the collapse of a business.
Corporations and Markets Advisory Committee
The 2008-09 annual report of the Corporations and Markets Advisory
Committee (CAMAC) was received on 4 November 2009 and tabled in Parliament on
16 November 2009.
Under section 148 of the ASIC Act, the functions of CAMAC include
providing advice to the Minister for Financial Services, Superannuation and
Corporate Law on matters relating to the operation, administration or proposed
revision of corporations legislation; companies, securities or the futures
industry; or improved efficiency of the securities or futures markets.
During the 2008-09 reporting year, CAMAC published the following
Issues in external administration
Shareholder claims against insolvent companies: implications
of the Sons of Gwalia decision
Diversity on boards of directors, and
Aspects of market integrity.
Work is ongoing on a review requested by the Minister into the adequacy
of guidance for company directors in carrying our their role.
In its report, CAMAC flagged as noteworthy an increasing tendency by
shareholders (and others) to take private actions, including some by way of
class actions, and noted that this is a factor for consideration when evaluating
the effectiveness of the regulatory environment for corporate, financial
product and financial market matters.
Financial Reporting Council
The 2008-09 annual report of the Financial Reporting Council (the FRC)
was received on 13 November 2009 and tabled in Parliament on 16 November 2009.
Under part 12 of the ASIC Act, the FRC's responsibilities include broad
oversight of the processes for setting both accounting and auditing standards.
The FRC also monitors the effectiveness of Australia's auditor independence
requirements and reports to the Minister on related matters.
As noted earlier in this report, the AUASB and the AASB have been
FMA Act agencies since 1 July 2008. Accordingly, 2008-09 marks the first
year that they have provided separate annual reports to the Minister, rather
than submitting their reports under the auspices of the FRC.
A key focus of the FRC during 2008-09 has been monitoring the robustness
of Australia's financial reporting framework in the context of the global
financial crisis and changes to international standards. The FRC took a lead
role in the creation of the Asian-Oceania Standard Setters Group in early 2009
and during 2010 intends to focus on ensuring that Australia's financial
reporting framework remains appropriate in a changing global environment.
In the annual report, the Chairman of the FRC notes that the FRC's
auditor independence function is discharged by collecting information from ASIC
and other bodies with which it has a memorandum of understanding. The Chairman
suggests that Treasury review whether this function should be retained in
The annual report further notes that, now that AASB and AUASB are FMA
Act agencies, the FRC maintains only an advisory role in relation to the work
of these two bodies.
The 2008-09 annual report of the Takeovers Panel was received on 30 October
2009 and tabled in Parliament on 16 November 2009.
Under part 10 of the ASIC Act (and relevant provisions of the Corporations
Act 2001), the Takeovers Panel deals with issues that arise during takeover
bids. The Panel has powers to review ASIC decisions in relation to takeover
bids and to make declarations of unacceptable circumstances. Deciding
applications for declarations of unacceptable circumstances is the Panel's main
The global financial crisis and its impacts on company operations have
tested the Panel during 2008-09, with some of the issues raised falling outside
existing guidelines. As a result, redevelopment of guidance notes and policies
will be a focus during 2009-10. However, despite the unusual economic
circumstances, the number of applications received by the panel during 2008-09
(30 applications) was consistent with the number received in preceding years.
The committee notes the Panel's commitment to delivering outcomes which
are 'commercially sensible and practical while consistent with the principles
of ... the Corporations Act.'
Mr Bernie Ripoll MP
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