Overview

The Corporations Legislation Amendment (Financial Reporting Panel) Act 2012 was enacted by the Parliament of Australia to address the perceived redundancy of the Financial Reporting Panel (FRP) due to a low number of referrals and contested issues between the Australian Securities and Investments Commission (ASIC) and reporting entities over the application of accounting standards. This Act amends the Corporations Act 2001, the Australian Securities and Investments Commission Act 2001, and the Corporations (Fees) Act 2001 to disband the FRP by repealing related provisions. The objective of the Act is to repeal the FRP, which was established in 2006 but had limited use, as only one case was referred to the FRP and resolved before a determination was made between 2006 and 2010. The Act also includes a transitional provision to allow courts to continue considering reports previously issued by the FRP despite its closure.

Scope and Application

The Corporations Legislation Amendment (Financial Reporting Panel) Act 2012 applies to entities and persons who previously engaged with the Financial Reporting Panel (FRP), as well as the Australian Securities and Investments Commission (ASIC) and courts, by amending the Corporations Act 2001, the Australian Securities and Investments Commission Act 2001, and the Corporations (Fees) Act 2001. This Act effectively disbands the FRP, which was established to resolve disputes over the application of accounting standards to financial reports, by repealing the relevant provisions. The scope of the Act extends across the Commonwealth of Australia and applies to all entities and individuals who may have previously referred disputes to the FRP or who may be subject to its rulings. The Act ensures that courts may still consider previous FRP reports in legal proceedings through a transitional provision, despite the Panel's closure. The Act does not specify any exclusions, exemptions, or thresholds, and its provisions are not extended or restricted through subordinate instruments.

Key Provisions

The Corporations Legislation Amendment (Financial Reporting Panel) Act 2012 (the Act) amends the Corporations Act 2001 (Cth) (section 1(1)(a)), the Australian Securities and Investments Commission Act 2001 (Cth) (section 1(1)(b)) and the Corporations (Fees) Act 2001 (Cth) (section 1(1)(c)) to repeal the provisions relating to the Financial Reporting Panel (FRP) (section 2). The Act also contains a transitional provision so that courts may continue to have regard to reports previously issued by the FRP despite its closure (section 3). The purpose of the Proclamation, as per subsection 2(1) of the Act, is to fix 1 October 2012 as the day on which Schedule 1 to the Act commences (Proclamation). The proposed commencement date allows for the functions of the FRP to be repealed before the terms of appointment of current eight part-time members expire on 11 October 2012. The appointments will automatically cease once the legislation is repealed. The FRP was established in 2006 to resolve contested issues between the Australian Securities and Investments Commission (ASIC) and reporting entities over the application of accounting standards to financial reports (Explanatory Statement). However, between 2006 and 2010, only one case was referred to the FRP, and the matter was resolved before a determination was made. Four cases were referred to the FRP in August 2010. These referrals led the Government to review whether there was an ongoing role for the FRP. There have been no referrals to the body since that time (Explanatory Statement). The Act amends the relevant Acts to disband the FRP by repealing related provisions (section 4). The Act imposes obligations on the relevant parties to comply with the changes introduced by the Act. Specifically, the FRP must cease to operate from the commencement date set by the Proclamation (section 2). Additionally, courts must continue to have regard to reports previously issued by the FRP despite its closure (section 3). The Act also provides for the automatic cessation of the terms of appointment of the eight part-time members of the FRP once the legislation is repealed (Proclamation). Breaches of the Act may result in civil or criminal penalties, depending on the nature and severity of the offence. However, the Explanatory Statement does not specify any particular offences, penalties, or civil/criminal consequences for breach. The maximum penalties for offences under the Corporations Act 2001, the Australian Securities and Investments Commission Act 2001 and the Corporations (Fees) Act 2001 are set out in those respective Acts and may include fines and/or imprisonment. The Statement of Compatibility with Human Rights confirms that the Act is compatible with human rights as it does not raise any human rights issues (Statement of Compatibility with Human Rights).