Accounting for Goodwill

15 July 2002

Mr Keith Alfredson
Chairman
Australian Accounting Standards Board
PO Box 204
Collins Street West
MELBOURNE 8007

Dear Keith

Accounting for Goodwill

The Group of 100 has followed the IASB's and the AASB's discussion on issues relating to accounting for goodwill with interest and a degree of frustration. In February 2001 I wrote to Sir David Tweedie and yourself about the urgent need to achieve international harmonisation on accounting for purchased intangibles including goodwill and recommended that an international solution be based on the US approach.

In mid 2001 the IASB announced that an exposure draft would be issued in December 2001. This timetable has subsequently shifted such that an exposure draft is now expected in September 2002 at the earliest. This means that it is extremely unlikely that an international standard and an Australian standard will be issued before June 2003.

The G100 is concerned about these delays and their potential impact on the international competitiveness of Australian companies. The G100 strongly believes that the AASB should address these delays by issuing an interim standard to replace the existing requirement to amortise goodwill with an impairment testing approach and that the interim standard would be in place until the IASB standard is issued and adopted by the AASB.

The G100 recommends that the impairment approach proposed in the forthcoming IASB exposure draft on Business Combinations be adopted for this interim period until the IASB and AASB revised standards are issued.

Yours sincerely

Tom Pockett
National President