Review by the Chairman
Activities during the year
During the period, the Panel received its first case referral. A sitting Panel was formed, research undertaken and preliminary meetings held but prior to a determination the matter was successfully resolved between ASIC and the company. In this instance the disputant chose to comply with ASIC's preferred approach with respect to the application of an accounting standard and the Panel dismissed the case. This is consistent with the FRP's policy objective of assisting in the timely resolution of financial reporting disputes between ASIC and an entity. As this case was successfully resolved between the parties, no determination was issued.
The Panel's other focus during the period was to continue its liaison activities with key stakeholders. In particular, FRP members met with officers of the Australian Securities and Investments Commission to discuss financial reporting surveillance in Australia and ASIC's surveillance priorities. The Panel also met with the Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, to provide him with a briefing on the Panel's activities. In addition, the Panel continued its liaison with industry to promote knowledge and awareness of the FRP.
During the period, Mr Greg Ward resigned from the Panel. Mr Ward had been with the Panel since its inception, and I thank him for his contribution to the development of the FRP.
Outlook for 2008-09
The increased financial market volatility witnessed during 2007-08, along with the tightening of credit conditions, are likely to have a significant impact on the 2007-08 financial reports of many Australian companies. This has already been witnessed with some companies announcing significant earnings downgrades following the recognition of impairment losses.
ASIC has announced their financial reporting surveillance priorities for the 2008-09 financial year. Areas of interest include asset impairment, the classification of debt, off-balance sheet arrangements, fair value measurement, foreign currency, disclosure of significant judgements and the going concern assumption. These priorities reflect the financial market conditions facing Australian companies.
The FRP's main focus for 2008-09 will be ensuring that it is ready to resolve any disputes emanating from ASIC's current surveillance program. The FRP also expects to continue its liaison activities with key stakeholders.
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