Overview of the FRP

Role and functions of the FRP

The FRP commenced operations in July 2006. The Panel is established under the Corporations Act 2001 and provides an alternative dispute resolution mechanism to determine contested issues between ASIC and entities concerning the application of accounting standards and the true and fair view requirement in financial reports.

Prior to the establishment of the FRP, the only method for resolving these disputes was through legal action between ASIC and the entity, which has the potential to be both a costly and lengthy process. The FRP provides a more timely avenue for resolving these cases (the Corporations Act requires the FRP to determine cases within 60 days of the matter being referred to the Panel). In addition, matters referred to the FRP are considered by people experienced in accounting matters rather than lawyers/judges helping to reduce the cost of handling these disputes and facilitate more appropriate outcomes. Following consideration by the FRP either ASIC or the company may elect to process the matter through the courts.

A similar regime is also in place in the UK where accounting disputes are heard by the Financial Reporting Review Panel (FRRP) in the first instance rather than the courts.

Referrals to the FRP

Disputes between ASIC and an entity concerning a financial report can be referred to the FRP by:

ASIC, after giving the entity whose financial report is considered deficient 14 days to respond to a notice stating ASIC's intention to refer the matter to the FRP and the reason for doing so and any changes necessary to correct the financial report; or
an entity, where ASIC has informed the entity that its financial report does not comply with the Corporations Act and ASIC has consented to the referral to the FRP.

The FRP has the power to dismiss a referral at any stage.

Status of an FRP report

A report of the FRP on whether a financial report complies with the financial reporting requirements of the Corporations Act is not binding. However, ASIC has publicly stated that it will support the findings of the FRP and a court may have regard to the FRP's report in determining whether the entity's financial report complies with the Corporations Act.

The FRP is required to give a copy of its report to ASIC and the entity. If the entity is listed, a copy must also be given to the relevant market operator (usually the Australian Securities Exchange — the ASX). ASIC also 'must take such steps as it considers reasonable and appropriate' to publicise the FRP's report and whether the entity has made the changes to its financial report (if any) recommended by the FRP.

Panel members

The Panel is comprised of part-time members with knowledge or experience in accounting, auditing, business, company administration or law. All appointments are made by the responsible Minister.

As at 30 June 2008, the Panel comprised seven members including the Chairman (details below). During the period one member (Mr Greg Ward) resigned from the Panel. No new appointments were made during the period. The terms of all appointments expire on 7 May 2009.

Mr Paul Shannon, FRP Chairman

Mr Paul Shannon is a partner at KPMG in Melbourne, having joined the firm in 1976 and been admitted to partnership in 1986. Mr Shannon has over 30 years experience in providing audit and assurance services to Australian corporations in the Consumer and Industrial market sector. During his time at KPMG, Mr Shannon has served on national and international accounting and auditing policy committees of KPMG as well as held operational management positions within the firm. Mr Shannon has also previously been a member of the Auditing and Assurance Standards Board.

Professor Michael Burgess

Mr Michael Burgess is an Adjunct Professor of Commerce at the University of South Australia and a consultant to KPMG in the areas of health and not-for-profit organisations. He was previously a senior partner at KPMG. Over a period of 25 years he was actively involved in providing audit and financial advisory services to clients in Australia, Canada and the United States of America in the areas of financial services, insurance retailing, health care and manufacturing. Mr Burgess is also a member of the Board of Medical Insurance and the Advisory Board of the Australian Broadcasting Corporation.

Mr Allen Craswell

Mr Allen Craswell is Emeritus Professor at the University of Sydney. Mr Craswell has significant knowledge of accounting and auditing, having spent several decades in teaching and as the Head of Department in Accounting, both in Australia and abroad. Mr Craswell has held professorial appointments at the Universities of Sydney, Queensland and Melbourne.

Mr Craswell is a member of the Auditing Standards and Education Boards of the Institute of Chartered Accountants in Australia, and he has produced a number of books, articles and edited works in auditing and accounting.

Ms Brigid Curran

Ms Brigid Curran is an independent financial reporting consultant. She has previously held positions as National Technical Partner for PricewaterhouseCoopers and was a board member of the AASB and a member of the Urgent Issues Group. She has had a long history of involvement in the development and issuance of accounting pronouncements during her employment with the Australian Accounting Research Foundation (AARF) which included a period of secondment as technical director of the International Accounting Standards Committee (IASC).

Mr Martin Fensome

Mr Martin Fensome is the Partner in Charge of the Audit and Assurance division of Bentleys Melbourne. He has over twenty-five years experience, both within Australia and overseas, in providing external and internal assurance services to a broad range of clients in both the private and public sector and has made numerous presentations at various forums on financial reporting. He was previously a senior project manager with the Australian Accounting Research Foundation (AARF).

Mr Ken McKenzie

Mr Ken McKenzie has substantial experience in the manufacturing, distribution and marketing of consumer products industry. He is the Chief Financial Officer — Statutory & Compliance at Coca-Cola Amatil Ltd and previously held the positions of Group Controller and Corporate Planning Manager. He has been extensively involved in mergers and acquisition and business reorganisation.

Recently, he participated in the International Accounting Standards Group (a group that acted as an avenue for dialogue between the Government and other stakeholders on issues surrounding the adoption of International Accounting Standards). He is also current Chairman of the ASIC Standing Committee.

Prior to joining Coca-Cola Amatil Ltd, he worked with the Reckitt & Colman Group in key senior financial positions across various businesses.

Mr Ted Rofe

Mr Ted Rofe was a Director and Chairman of the Australian Shareholders Association. He has practiced as a solicitor in NSW and has lectured in Financial Accounting at the University of NSW. He has also been a member of the UIG, the AARF Legislation Review Board, the Corporations Law Simplification Consultative Group and the Australian Securities and Investments Commission Consumer Advisory Panel.

Organisational structure

The Panel's funding is included in the Treasury budget, and the Panel executive are employees of Treasury.

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