RefeRral Process Overview
Referral to the FRP:
May be made by ASIC or the lodging entity.
- Occurs when agreement cannot be reached on the appropriate accounting treatment/s in the lodging entity’s financial reports.
Prior to referral by ASIC
- ASIC to notify lodging entity of intent to refer matter to the FRP.
- Notice of referral must be made in the prescribed form using Form 2M01.
- Lodging entity to respond to ASIC’s notice within 14 days of receiving the notice.
Referral to the FRP
ASIC must provide evidence that it has satisfied the requirements in sections 323EC, 323ED and 323EF of the Corporations Act 2001 (the Act) by:
- Demonstrating that it has formed a view that the lodging entity’s financial report does not comply with one or more of the financial reporting requirements, being the accounting standards (sections 296 and 304) and the true and fair view requirements (sections 297 and 305).
- Demonstrating that it has given the lodging entity written notice of the proposed referral in the prescribed form (Form 2M01).
- Lodging the referral with the FRP in the prescribed form (Form 2M02) within 14 days after the lodging entity responds to ASIC’s notice or the time for the lodging entity to give ASIC that response ends without the lodging entity having given that response.
Lodging entity referral:
- Lodging entity must provide evidence that is has satisfied the requirements in sections 323EG, 323EH and 323EI of the Act by:
- Demonstrating the lodging entity has been informed by ASIC of its opinion that the financial report does not comply with one or more of the relevant financial reporting requirements.
- Demonstrating that it is of the opinion that the financial report does comply with the requirements, being the accounting standards and true and fair view requirements.
- Demonstrating that it has applied to and received ASIC’s consent to make the referral.
Lodging the referral with FRP in the prescribed form (Form 2M03), accompanied by ASIC’s statement setting out its opinion as to why the financial report does not comply and a cheque for $2010 payable to the Department of Treasury as set out in the Corporations (Fees) Amendment Regulations 2001 – Schedule 1 – Item 53.
Format and content of referral and subsequent submissions/rebuttals
- Referrals may be made by hand, post and should be supplemented by an electronic version either as an attachment to email or on CD/DVD during business hours of 9.00 am to 5.00 pm. Referrals received after 5.00 pm will be deemed to have been received at 9.00 am the following business day.
- Electronic documents must be sent as either Microsoft Word or PDF documents. Documents available only as images must be in a format which Windows XP can open, that is PDF, JPG, TIFF or BMP.
- Parties must provide four paper copies of their referrals/submissions/rebuttals: three bound copies and one unbound copy (for ease of photocopying).
- Clearly identify the primary contact person for each party and their contact details, that is phone, fax and email address.
- The referral must include an executive summary, be cross-referenced to the accounting standards and comprehensively address the issues being disputed.
- If the referral is not valid, the parties will be informed in writing. The notice will identify which provisions have not been complied with and:
- If there are further steps that are required to make a referral valid, those further steps; or
- If the referral is out of time and can only be progressed if it is recommenced.
Constitution of Sitting Panel (Panel)
Immediately following a referral the Chairperson will select a Panel, consider their declaration of interests and subsequently appoint a Sitting Chairperson, Sitting Deputy Chairperson and member.
- Where comment or written submissions are received on the membership of the Panel, the Chairperson will again consider the Panel membership. If in light of the argument of either party, the Chairperson determines that the member cannot continue to be a member of the Panel, the Chairperson will inform the member. The Chairperson will decide on a replacement member and vary the Chairperson direction appointing that member to the Panel. The FRP will inform the parties and give the parties two days to challenge the replacement.
Initial submissions from ASIC and lodging entity (Parties)
- Within 7 days of referral, the FRP to provide the Parties with a written notice requesting written submissions in relation to the disputed financial reporting requirement/s.
- The days specified on the notice shall not be less than 14 days after the notice is given.
- At any time, the FRP may request a party to lodge a further submission that addresses a matter specified in the request.
- The FRP will give a copy of the submission to the second party.
- The FRP may offer the second party the opportunity to lodge a submission that rebuts the further submission.
Representatives, witnesses and evidence
- The FRP will give directions as to who may attend the private proceedings.
- A party will not be legally represented unless the FRP otherwise determines.
- The FRP may call witnesses and take evidence under oath as it sees fit (section 239CE).
- A summons to witness must be made in the prescribed form using Form 4, ASIC Regulations.
- Failure to comply with section 239CE carries strict liability.
Conduct of proceedings
- Proceedings will take place in private unless otherwise requested in writing by the lodging entity.
- If proceedings are public, the FRP may conduct part of the proceedings in private if the FRP is satisfied that it is desirable to do so due to the confidential nature of any evidence or matter or to protect the interest of any other person.
- Public proceedings may be attended by members of the public, including parties related to the lodging entity and ASIC staff.
- Conferences will be held at a place and time determined by the Panel, usually between 7 and 21 days of receipt of the written submission, and will normally be attended by:
- The Sitting Panel, and FRP staff as required.
- Representatives of ASIC.
- Representatives of the lodging entity.
- Expert witnesses from either party (if requested and agreed to by Sitting Panel).
- Solicitor or counsel (if requested and agreed to by Sitting Panel).
- Representatives of the lodging companies auditors (if requested and agreed to by Sitting Panel).
- Panel expert witness (if required).
- Recording staff, who may or may not be FRP staff.
- Conferences will be recorded and adjourned at the Panel’s discretion.
- The Chairperson will facilitate the conference, providing each party with sufficient opportunity to make their case, take evidence from witnesses and communicate the next step.
Consider and report on submissions
- Within 60 days after the referral day the FRP will:
- Consider submissions.
- Prepare a report stating its opinion whether the lodging entity is compliant with the referred financial reporting requirements.
- If not compliant, set out changes that would need to be made in order to comply with that requirement.
- Provide copies of the report to lodging entity, ASIC and relevant market operator.
- The FRP may notify the lodging entity and ASIC if it requires an extension to provide copies of the report. Maximum timeframe is 90 days after referral day and the notification must be given within 60 days of referral day.
The FRP’s determination
It is the expectation that whilst not legally binding, the parties to a matter will normally respect the determination of the FRP.