SIC D13 - SIC D16 Submission - 4 September 1998

4 September 1998

The Standing Interpretations Committee
International Accounting Standards Committee
166 Fleet Street
London EC4A DY
United Kingdom

Dear Sir,

Draft Interpretations

The Group of 100 is pleased to provide comments on the following SIC Draft Interpretations:

SIC-D12 Consolidation of Special Purpose Entities (SPE)

The Group of 100 agrees that consolidation should be based on the existence of control ad that these principles should be applied to SPEs. Rightly, the principal focus of the draft Interpretation is one of looking to the substance of the relationship to determine whether control exists. Accordingly, we believe that the first sentence of paragraph 8 and the references to an SPE operating on autopilot in paragraph 12 should be removed and included in the Appendix as an example of arrangements where control may arise. The recipient of the risks and rewards is the most significant factor rather than whether or not the SPE is on autopilot.

SIC-D13 Jointly Controlled Entities - Non Monetary Contributions by Ventures

The Group of 100 agrees with the draft interpretation. While acknowledging that the requirements in respect of the contributions of similar assets rely on IAS18.12 and IAS16.23 we believe that a gain or a loss should be recognized in such circumstances. The form in which the assets are contributed to a new entity should not govern the recognition of a profit or loss. We also believe that the Interpretation should state explicitly the 'appropriate portion of the gain' to be eliminated.

SIC-D14 Property, Plant and Equipment - Compensation for the Impairment or Loss of Items

The Group of 100 is in broad agreement with the principles of the Interpretation. We believe that further explanation in respect of the revalued assets is necessary.

SIC-D15 Incentives on Operating Lease

The Group of 100 agrees with the Interpretation.

SIC-D16 Presentation of Treasury Shares

Under Australian Law, a company cannot hold its own shares. However, we agree that the purchase of Treasury Shares is an equity transaction and, as such, should not impact on the profit and loss account.

Yours sincerely,

Bryce JH Denison
National President