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The CLERP 9 Bill's target date for implementation is 1 July 2004. As the deadline draws near, we summarise the major changes for the financial community
MORE THAN ONE YEAR AFTER THE ORIGINAL
CLERP 9 proposals were released, the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill (CLERP 9) was introduced into the House of Representatives on 4 December 2003 by the Federal Treasurer, Peter Costello, and the Bill was subsequently passed by the lower house on 16 February 2004.
The CLERP 9 legislation is the Federal Government's response to various developments relating to best practice in financial reporting and corporate governance internationally.
The Bill incorporates many of the proposals included in the Ramsay Report on audit independence as well as many of the recommendations of the HIH Royal Commission.
The CLERP 9 legislation is due to be effective from 1 July 2004 and is aimed largely at listed public companies and their auditors. While the majority of the provisions are not applicable to private companies, some of the provisions affect all companies subject to the Corporations Act 2001, particularly in relation to audit and financial reporting.
In this article, we look at the background to CLERP 9, the legislative process still to come, the changes made along the way and we summarise the key elements of the draft legislation.
CLERP 9 BACKGROUND
In September 2002, the Government released its CLERP 9 policy proposal paper called 'Corporate Disclosure: Strengthening the Financial Reporting Framework'. The proposals were broadly supported by both the business community and the accounting profession, with most commentators viewing the proposals as a positive move in enhancing the corporate governance framework in Australia.
DRAFTING THE BILL
After an initial comment period, draft legislation was due prior to June 2003. However, the draft CLERP 9 Bill was not finally released until October 2003 which left an extremely short six-week period for interested parties to comment.
The draft bill contained a significant number of changes from the original proposals, as well as many additional new rules, mainly resulting from the recommendations of the HIH Royal Commission.
Following the receipt of submissions from various organisations, including the Institute, a significant number of changes were made by Treasury to make the proposed...