David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I rise to present a report by the Parliamentary Joint Committee on Corporations and Financial Services on the 2012-13 annual reports of bodies established under the Australian Securities and Investments Commission Act.

Section 243 of the Australian Securities and Investments Commission Act specifies the duties of the Parliamentary Joint Committee on Corporations and Financial Services, which include to examine each annual report that is prepared by a body established by the ASIC Act. The report on the 2012-13 annual reports has been prepared in accordance with section 243 of the ASIC Act.

For this report, the committee examined the 2012-13 annual reports of the Auditing and Assurance Standards Board, the Australian Accounting Standards Board, the Companies, Auditors and Liquidators Disciplinary Board, the Corporations and Markets Advisory Committee, the Financial Reporting Council, and the Takeovers Panel.

The committee examines the annual reports prepared by ASIC as part of the committee's ongoing oversight of it. Accordingly, the annual report of ASIC is not considered in this report.

The committee has made a number of observations and recommendations in this report. Several of the bodies did not implement changes to annual reports previously requested by this committee and the Senate Economics Committee. The committee has therefore made explicit recommendations to the Companies Auditors and Liquidators Disciplinary Board, the Takeovers Panel, the Auditing and Assurance Standards Board and the Australian Accounting Standards Board. The Corporations and Markets Advisory Committee has implemented suggestions from the Senate Economics Legislation Committee.

Amendments to the Corporations Legislation Amendment Act 2012 significantly changed the Financial Reporting Council's role within the financial reporting framework, repealing its auditor independence functions and refocusing it to provide strategic policy advice. In addition, the Financial Reporting Council's strategic analysis of Australia's financial reporting framework identified significant changes to threats and weaknesses faced by Australia's financial reporting system. The committee will continue to monitor the new role and changing environment of the Financial Reporting Council.

In its annual report, the Financial Reporting Council identified deficiencies in the financial literacy of some cohorts of Australian directors. The committee is pleased the Financial Reporting Council has initiated measures to mitigate those deficiencies. The committee has recommended that the council also implement regular surveys in order to monitor the effectiveness of the measures. The committee is pleased that the Takeovers Panel annual report indicates a substantial reduction of time between a panel decision and the publication of reasons. These improvements are likely to be due to the recent changes to the ASIC regulations.

The committee also noted the following trends which it will continue to monitor: firstly, a continuing increase in the number of applications being dismissed by the Takeovers Panel; secondly, a decline in the caseload of the Companies Auditors and Liquidators Disciplinary Board; and, thirdly, a surge in projects being undertaken by the Australian Accounting Standards Board as a result of the work program developed by the International Accounting Standards Board.

I would also like to note the wind-up of the Financial Reporting Panel in October 2012. As the Financial Reporting Panel had no activity to report for 2012-13, all operations were covered in its final 2011-12 report. The committee considered the final annual report for the panel in its previous report on annual reports.

In reviewing the annual reports, the committee also considers whether there are opportunities to strengthen the operations of the corporations legislation, however, no changes are recommended at this time. The committee considered the 2012-13 annual reports generally satisfactory and we would like to thank officials of the organisations involved for their continuing cooperation, and the secretariat for their assistance in preparing the report. The committee holds its next oversight hearing with ASIC and the Takeovers Panel this Friday, 28 March, and will continue to pursue a number of the issues discussed in these reports and raised today. I commend this report and its recommendations to the House.

Report made a parliamentary paper in accordance with standing order 39(e).