Peter Costello

Media Releases

Financial Reporting Council - Expanded Role

NO.038

FINANCIAL REPORTING COUNCIL - EXPANDED ROLE

The Government will provide $4 million over four years to support the expanded role of the Financial Reporting Council (FRC) under the ninth instalment of the Government's Corporate Law Economic Reform Program (CLERP 9). As proposed in the CLERP 9 policy proposal paper released on 18 September 2002, this expanded role will include:

  • oversight of auditor independence issues;
  • oversight of audit standard setting - the Auditing and Assurance Standards Board (AuASB) will be moved under FRC oversight with auditing standards being given the force of law;
  • monitoring and assessing the adequacy of the disciplinary procedures of the accounting bodies; and
  • promoting and advising on the adequacy of the teaching of professional and business ethics.

Details of these arrangements are being developed in consultation with the FRC and stakeholders, and in the light of stakeholder submissions on the CLERP 9 paper. Exposure draft legislation for the CLERP 9 reform package is expected to be released for public comment next month.

In exercising its new oversight functions, the FRC will work with the professional accounting bodies in their oversight of audit quality assurance and auditor discipline, but will also have the capacity for independent monitoring, including through use of consultants. In addition, Treasury will absorb significant salary costs for FRC secretariat support.

The FRC will also work with the Australian Securities and Investments Commission (ASIC) which will enforce compliance with the Corporations Act and auditing standards. A separate Budget measure provides ASIC with additional funding for surveillance, investigation and enforcement in relation to alleged contraventions of revised corporate disclosure requirements under CLERP 9.

The present measure will provide one third of the annual running costs of the AuASB, with the remainder to be contributed by the accounting profession and business community.

This measure will help strengthen key aspects of the corporate disclosure framework as part of the Government's CLERP 9 reforms. It is in addition to existing Government and industry funding for the FRC's oversight of accounting standard setting.

Contact: David Alexander
Office of the Treasurer
(02) 6277 7340

13 May 2003

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