Overview
The role of the FRP is to provide an independent expert determination in relation to the application of accounting standards in the financial accounts of a lodging entity.
Role and functions
The FRP provides an alternative dispute resolution service when a matter is referred to it by either ASIC or a company, disclosing entity or registered scheme regarding a dispute on the financial accounts of the lodging entity.
The FRP comprises part time members appointed by the Minister. Members are drawn from throughout Australia on the basis of their experience and knowledge in accounting, auditing, industry, law and business administration. A list of members is provided on page 30.
Decisions of the FRP are not binding however ASIC have publicly stated that they will be supportive of the FRP’s findings.
In the event of the FRP determining that the financial report of the lodging entity does not comply with the financial reporting requirements of the Corporations Act 2001 the Panel sets out changes that in the Panel’s opinion would need to be made to the financial report to ensure that it does comply with the requirement. Should the lodging entity in question fail to undertake the specified amendments or changes, ASIC may commence legal proceedings and a court may have regard to the FRP’s report in determining whether the lodging entity has complied with its reporting requirements.
As the FRP began operations during the year there is a need for the existence and functions of the FRP to become more widely known in the business and financial community. A communication strategy has been developed and a systematic programme launched in order to communicate the valuable role the FRP can play in dispute resolution on the application of accounting standards across the corporate sector.
The FRP has also identified that it can provide a valuable role in supplementing communication between Government and industry in relation to concerns and issues in regards to accounting standards. An example of how this operates in practice is the facilitation of meetings between the Australian Accounting Standards Board (AASB) and industry associations in relation to industry concerns regarding the Accounting Standard for Financial Instruments Recognition & Measurement (AASB 139).
To effectively undertake the role of possible adjudication on all of the forty plus accounting standards covering such diverse areas of accounting as leasing, intangibles and asset acquisitions, the Panel must have a broad composition of technical expertise, access to specialist industry knowledge and be in a position to anticipate the type of cases that may be forthcoming. It is important that the FRP actively research and identify possible areas where matters may be bought to the Panel so that preliminary work in relation to educating members and providing background research for potential cases is achieved. To assist the Panel in this regard, plans are underway to appoint a Technical Advisory Panel to undertake non-company specific research of an educational nature and be available as a source of expertise on particular case matters if and when needed.
Given that FRP decisions are non binding they are unlikely to be subject to judicial review.
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