Wednesday, 19 March 2014
Corporations and Financial Services Committee; Report
I present the Parliamentary Joint Committee on Corporations and Financial Services Report on the 2012-13 annual reports of bodies established under the ASIC Act, together with the minutes of proceedings of the committee and the transcript of evidence.
Ordered that the report be printed.
That the Senate take note of the report.
I present a report by the Parliamentary Joint Committee on Corporations and Financial Services, as I have said, into the 2012 annual reports of those bodies established under the ASIC—the Australian Securities and Investments Commission—Act. Section 243 of the ASIC Act specifies this committee's duties, which include to examine each annual report that is prepared by a body established by the ASIC Act, and the report on the 2012-13 annual reports has been prepared in accordance with this section of the ASIC Act.
For this report the committee examined the 2012-13 annual reports of the Auditing and Assurance Standards Board, the Australian Accounting Standards Board, the Companies Auditors and Liquidators Disciplinary Board, the Corporations and Markets Advisory Committee, the Financial Reporting Council and the Takeovers Panel. The committee examines the annual reports prepared by ASIC as part of the committee's ongoing oversight of ASIC and, accordingly, the annual report of ASIC is not considered in this particular report.
The committee has made a number of observations and recommendations in this report. Firstly, several of the bodies did not implement changes to annual reports previously requested by this committee and the Senate Economics Committee. The committee has therefore made explicit recommendations to the Companies Auditors and Liquidators Disciplinary Board, the Takeovers Panel, the Auditing and Assurance Standards Board and the Australian Accounting Standards Board. The Corporations and Markets Advisory Committee has already implemented suggestions from the Senate Economics Legislation Committee.
Secondly, amendments to the Corporations Legislation Amendment (Audit Enhancement) Act 2012 significantly change the Financial Reporting Council's role within the financial reporting framework, repealing its auditor independence functions and refocusing it to provide strategic policy advice. In addition, the Financial Reporting Council's strategic analysis of Australia's financial reporting framework identified significant changes to the threats and weaknesses faced by Australia's financial reporting system. The committee will continue to monitor the new role and changing environment of the Financial Reporting Council.
Thirdly, in its annual report the Financial Reporting Council identified deficiencies in the financial literacy of some cohorts of Australian directors. The committee is pleased to see that the Financial Reporting Council has already initiated measures to mitigate these deficiencies. The committee has also recommended that the council implement regular surveys to monitor the effectiveness of the measures.
Lastly, the committee is pleased that the Takeovers Panel annual report indicates a substantial reduction of time between panel decisions and the publication of reasons.
The committee also noticed the following trends, which we will continue to monitor. There has been an increase in the number of applications being dismissed by the Takeovers Panel, a decline in the case load of the Companies Auditors and Liquidators Disciplinary Board and a surge in projects being undertaken by the Australian Accounting Standards Board as a result of the work program developed by the International Accounting Standards Board.
I would also like to note the wind-up of the Financial Reporting Panel in October 2012. As the Financial Reporting Panel had no activity report for 2012-13, all operations were covered in its final 2011-12 report. The committee considered the final annual report for the panel in its previous report on annual reports. In reviewing the annual reports, the committee also considers whether there are opportunities to strengthen the operation of the corporations legislation. However, the committee is not recommending any changes at this time.
The committee considered the 2012-13 annual reports generally satisfactory and would like to thank officials of the organisations for their continuing cooperation and the secretariat for their assistance in compiling this report. The committee holds its next oversight hearing with ASIC and the Takeovers Panel on 28 March and will continue to pursue a number of the issues discussed in these reports and raised today. I commend this report and its recommendations to the Senate.
Question agreed to.