AASB 1015 Acquisition of Assets

5 January 2000

Senator Ian Campbell
Leader of Government Business
Parliament House
CANBERRA ACT 2600

Dear Senator Campbell

Disallowance of Accounting Standard
AASB 1015 "Acquisition of Assets"

The Group of 100 understands that a notice of motion for the disallowance of AASB 1015 "Acquisition of Assets" - paragraphs 6.3 and 6.4 - has been given in the Senate. These paragraphs deal with internal restructuring.

Our members are seriously concerned about the implications that disallowance would have on the capacity of Australian companies to undertake internal restructuring to respond and adapt to changes in the market place.

Whether to exempt internal restructuring from the scope of AASB 1015 was a contentious issue when the proposed Standard was discussed by the AASB. During this process the Group of 100 wrote to the AASB outlining the significance of flexibility in respect of internal restructuring. I have attached a copy of this letter for information.

We believe the AASB decision was appropriate to the circumstances of Australian corporates and is consistent with requirements in IASC standards and requirements in the USA.

We are most concerned that the motion for disallowance would politicize the standard-setting process. We believe that this is the first time that this has occurred in respect of an Accounting Standard. This action serves to undermine the integrity of process. Conceptually sound accounting standards are an integral component of high quality and credible financial reporting, the enhancement of Australia's reputation as a capital market and the credibility of the financial reports of Australian companies in international capital markets. The international reputation of Australian financial reporting would be further damaged if the decisions of the AASB are overturned in the political arena.

The Group of 100 considers this action is most unhelpful at a time when the CLERP reforms to the standard-setting process are being implemented and puts at risk those positive developments.

The same letter has been sent to Senator Stephen Conroy and Senator Andrew Murray.

Yours sincerely,

Bryce JH Denison
National President