5.39 Item 22 inserts proposed section 234C which provides that, when it is performing its functions, the AUASB must have regard to the FRC’s views concerning the broad strategic direction of the standard setter, follow the general policy directions given to the standard setter by the FRC and take into account the advice and feedback provided by the FRC on matters of general policy.
5.40 The FRC does not have a power to direct the AUASB in relation to the development, or making, of a particular standard (see proposed subsection 225(7)).
5.41 Item 28, which inserts ‘Subdivision BA The Auditing and Assurance Standards Board’ into Part 12 of the ASIC Act, contains provisions which set out the procedural requirements for the conduct of AUASB meetings and provisions concerning AUASB membership.
5.42 Proposed section 236E (Procedures) contains a number of procedural requirements relating to the conduct of AUASB meetings. As with the AASB, a meeting, or part of a meeting, concerned with the content of an auditing standard must be held in public.
Appointment, resignation and termination of members of the AUASB
5.43 Proposed section 236F (Appointment of members of the AUASB) sets out the procedures for appointing the Chair and other members of the AUASB. These requirements mirror requirements currently applying to the AASB.
5.44 Proposed section 236G (Resignation and termination of appointment) deals with the manner in which the Chair or another member of the AUASB may either resign or have their appointment terminated. The independence of the AUASB is preserved by strictly limiting the grounds upon which an appointment can be terminated.
5.45 In the case of resignation, the Chair is required to provide a written resignation to the Minister, while other members are required to provide a written resignation to the Chair of the FRC (proposed subsection 236G(1)).
5.46 The Minister may terminate the appointment of the Chair for misbehaviour or physical or mental incapacity. The Minister must terminate the appointment of the Chair if the Chair:
applies to take the benefit of any law for the relief of bankrupt or insolvent debtors;
compounds with their creditors;
makes an assignment of his or her remuneration for the benefit of their creditors; or
contravenes section 237 (proposed subsections 236G(3) and (4)).
5.47 Proposed subsections 236G(6) and (7) deal with the circumstances in which the FRC may or must terminate the appointment of a member of the AUASB (other than the Chair). These subsections are expressed in terms similar to proposed subsections 236G(3) and (4) and give the FRC the same powers in respect of AUASB members as the Minister has in respect of the AUASB’s Chair.
5.48 Under proposed section 236H (Acting appointments), the Minister will be able to appoint a person to act as Chair of the AUASB during any vacancy in the office of Chair or at any time when the Chair is absent from duty (proposed subsection 236H(1)). Similarly, the members of the AUASB will also have the ability to appoint one of their number to act as Deputy Chair during any vacancy in the office of Deputy Chair or at any time when the Deputy Chair is absent from duty (proposed subsection 236H(2)). The FRC will also be able to appoint a person to act as a member of the AUASB (other than Chair) during any vacancy in the office of member or at any time when a member is absent from duty (proposed subsection 236H(3)).
5.49 Subsection 236H(1) is primarily intended to ensure that any delegations, functions or powers that can only be exercised by the Chair of the AUASB can continue to be dealt with during any period in which there is either no Chair (for example, because of death, resignation or expiration of appointment) or the Chair is absent (for example, because of overseas representational requirements, recreation leave or illness). The other provisions are intended to ensure that the AUASB retains the structure and the number of members needed to operate effectively and efficiently.
5.50 Items 29 to 31 amend section 237 of the ASIC Act (Confidentiality) to make the AUASB subject to the same confidentiality requirements that are currently applicable to the FRC and AASB.
5.51 The practical effects of these amendments are that the AUASB:
will be required to protect from unauthorised use or disclosure information that is given to it in confidence;
may disclose information where such disclosure is allowed by a law of the Commonwealth, is made to enable an authority or a person in a jurisdiction outside Australia to perform or exercise a function or power that corresponds to any of the functions or powers of the AUASB, or is made to a body that sets international auditing standards; and
may disclose information to ASIC to facilitate ASIC’s performance of its functions under the corporations legislation (other than the excluded provisions4).
5.52 As a result of a separate amendment to subsection 237(2) (see item 32), which is primarily designed to allow the FRC to provide information to the CALDB and the professional accounting bodies, the AASB and AUASB will also be authorised to provide information to the CALDB and the accounting bodies to the extent that it facilitates the performance of their respective functions.
Moneys of AASB and AUASB
5.53 Items 33 and 34 amend section 238 (Application of money) to include provisions concerning the moneys of the AUASB. The moneys of the AUASB may only be applied:
in payment or discharge of the costs, expenses and other obligations incurred by the AUASB in the performance of its functions or the exercise of its powers;
in paying or discharging, or reimbursing someone for, the costs, expenses and other obligations incurred in connection with the performance by the FRC of its functions and the exercise of its powers;
in meeting the administrative expenses of the committees and advisory groups the FRC establishes;
in payment of any remuneration and allowances payable to any person appointed to the FRC or the AUASB; and
in making payments to the AASB (proposed subsection 238(2)).
5.54 Equivalent amendments are proposed to the provision dealing with the moneys of the AASB (currently section 238).
5.55 The provisions have been structured so that either the AASB or AUASB may:
pay or discharge the costs, expenses and other obligations incurred by the FRC; and
pay the remuneration and allowances payable to any person appointed to the FRC.
5.56 The objective of these provisions is to enable the expenses of the FRC to be shared by the AASB and AUASB in accordance with decisions made by the FRC. The ability of the AASB and AUASB to make payments to each other is also intended to:
facilitate payment of FRC expenses where one body makes the payments and the other body reimburses the first body (for example, the AASB pays all of the FRC’s expenses and is reimbursed by the AUASB); and
allow the sharing of contributions made by government, the accounting profession and business towards the cost of the standard setting arrangements where the payment is made to one body but is intended to be for the three bodies.