The Corporate Law Economic Reform Program (Audit Reform & Corporate Disclosure) Act (CLERP 9) added substantial new provisions. The CLERP 9 Act amends a number of Acts, including the Corporations Act , to give effect to reforms aimed at restoring public confidence in corporate. THE CLERP 9 REFORMS THAT NEED TO BE UNDERSTOOD AND MANAGED. Introduction. In September , we witnessed a doubled barrelled response.
The ASX foreshadowed that it would enhance its current listing rules disclosure requirements to ensure that listed companies fully report to the market, and shareholders on their adherence to these standards.
The adoption of such practices is intended to enhance the reputation of Australian capital markets and Australian companies.
CLERP Paper No. 9: CLERP (Audit Reform and Corporate Disclosure) Bill
Instead, liability is to rest with dlerp defendants in proportion to their contribution to the loss. What changes are recommended to the continuous disclosure regime?
Promote a greater role for international standards in the Australian accounting standard-setting process where this would be in the best interests of both the private and public sectors of the Australian economy.
Applies; Immediately Termination payments Shareholder approval will be required for an agreement to pay a prospective executive or director a termination payment greater than their average salary for the last three years multiplied by years of service with an upper limit of seven years. There are many unresolved issues as a result of the adoption directive and such consultation could address such issues as: The Council will issue statements of best practice corporate clwrp principles.
Prohibition on more than one former partner of an audit firm or director of an audit company from being a director or taking a senior management position within an audited body at any one time.
CLERP 9: Accounting and Auditing Reform
The issues identified by the Committee were: Establish appropriate consultative mechanisms, including committees and advisory groups. The proposed best practice guidelines on notices of meetings will include a section dealing with the explanatory material for ‘bundled resolutions’.
An essential criterion to assess the validity of corporate governance reforms is whether they empower the shareholder, particularly through the provision of material information both within the company itself, and via the marketplace as a whole. Issuers of continuously quoted financial products can now issue transaction specific PDSs with further information available on request.
Corporate Law Economic Reform Program Act 2004
The new standards should ensure that Australian companies involved in these markets will be able to rely on Australian supervision and will not have to alter their practices to comply with overseas requirements eg US Public Company Accounting Oversight Board’s new rules on audit firms.
The changes were based on the reform proposals contained in the CLERP 9 discussion paper, Corporation disclosure – strengthening the financial reporting frameworkwhich was released by the Australian government in September A Shareholders and Investors Advisory Council is to dlerp established, chaired by the Parliamentary Secretary to the Treasurer, that will consult on all disclosure-related reforms to ensure they meet the needs of retail investors CLERP 9 — Recommendation Expanded Financial Reporting Council.
In an effort to reduce the some pages of legislation to just “what you need to know” the table below has been designed to chronologically direct you to the more import changes arising from the CLERP legislation. Applies; To all reports prepared after 1 July Company secretary qualifications Listed entities must include qualifications and experience of the company secretary.
ASIC publish benchmark criteria used for determining the adequacy of the internal systems and processes of large audit firms. ASX proposed retaining its requirement that companies report on their main corporate governance practices in the Annual Report, and to do so by reference to the corporate governance principles set by the Council.
Applies; To financial reports for financial years after 1 July Members of listed entities can submit questions to the auditor concerning the auditor’s report or the conduct of the audit and make those questions available at AGM. Applies; To notices after 30 September To annual reports for financial years after 1 July Notice of meeting content A notice of meeting must be worded and presented in a clear, concise and effective manner.
Advise the accounting professional bodies on issues of auditor independence. Licensees should disclose any financial interest that they or a related party have in the subject of their advice or recommendation CLERP 9 — Recommendation Applies; To information received after 1 January What recommendations are made concerning fee disclosure?
Where the provision of non-audit services to an audit client poses a threat that cannot be reduced to an acceptable level, statement F1 prohibits the provision of that service. Applies; After 1 July Meeting procedure The chair of listed entities must allow members a reasonable opportunity to ask questions about or make comments on the remuneration report.
Establishment of a new Financial Reporting Panel to resolve disputes between ASIC and companies about the application of the accounting standards.
How are the corporate governance standards to be developed? It is envisaged that statements will be in place for the 30 June financial year.
CLERP Paper No. 9: CLERP (Audit Reform and Corporate Disclosure) Bill 2003
Auditor requirements There are mandatory “cooling-off” periods of up to two years before members of an audit firm or directors of an audit company may become an officer of an audited company. The Corporate Governance Council consists of 14 representatives of the following organisations: It appears that it is the intention of the Joint Parliamentary Committee on Public Accounts and Audit that this applies to wider group.
The Act Section be amended by adding that, in undertaking the assessment of a true and fair view, directors must consider the objectives contained in the ASIC Act section a and must include a statement in the financial report that they have done so Report — Recommendation 6.