Second the newly created FRC had little experience as an oversight body and in

Second the newly created frc had little experience as

This preview shows page 277 - 279 out of 354 pages.

Second, the newly created FRC had little experience as an oversight body and in issuing strategic directions. At the time of the GAAP/GFS harmonisation agenda setting process, the FRC had arguably not yet clarified and operationalised its identity, role or raison d’ être. The result was a flawed due process before the FRC strategic direction was issued. The GAAP/GFS harmonisation project was considered only briefly by the FRC. FRC board members with non-public sector backgrounds made little contribution to the debate in the GAAP/GFS harmonisation agenda setting process and were found to be overly reliant on the expertise of public sector members and the support from members of the newly created epistemic community. This reliance, however, hardly satisfies common expectations of members of an oversight body. By analogy, private sector company directors are expected to adopt sufficient scepticism and make sufficient inquiries to inform themselves even in areas in which they may not have technical expertise. This process allows them to make informed and professional decisions. Over- reliance on others’ judgement or pressures from certain lobby groups is not acceptable. In essence, these events describe a failure in the FRC’s governance process as an oversight body and the loss of control over its agenda. This deficiency was recognised by the FRC. In February 2003, shortly after the FRC’s strategic direction on GAAPGFS harmonisation, a new FRC Chairman was appointed. He recalled (Interview, 17/11/2010) “The responsibilities of the FRC w ere expanded, and this was during the time when I was Chairman, to include oversight of the Auditing Standards Board. And so one of the first actions when we were given that responsibility was to undertake a review, an internal review, that led to a strategic directive being issued with regard to the Auditing Standard Board. The process that we followed there was I think a more transparent process and involved significant interaction with relevant
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264 stakeholders than had been the case with either of the two strategic directives issued in 2002. And part of that reflected my learnings and my observations based on how we did what we did in 2002. I felt that there was room for improvement and that was reflected in the process that was adopted for arriving at the strategic directive for the auditing Board. So for example one of the things that we did then was that there was actual discussion between the FRC and the Auditing Board which gave us a good understanding of the Board’s view. After the GAAP/GFS harmonisation experience, the FRC also adopted a formalised due process before issuing strategic directions. This process includes an “adequate opportunity” for the FRC and the AASB board members and stakeholders “to consider a draft direction and to provide com ment on that draft to the FRC” (ASIC Act 2001, section 225(2A)(c), paragraph 7).
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  • Fall '13
  • Government, The Land, International Financial Reporting Standards, Financial Accounting Standards Board, Australian Accounting Standards Board, Snow

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