28 August 2003

Ms Ruth Picker
Acting Chairman
Australian Accounting Standards Board
PO Box 204
COLLINS STREET WEST VIC 8007

Dear Ruth

ED 116 Request for Comment on: IAS2 and IPSAS 12 Inventories

The Group of 100 response to exposure draft ED 116 is attached.

The G100 is a strong supporter of the convergence and harmonisation strategy of the Board and considers that implementation of the policy is in the best interests of the Australian economy over the longer term.

The Group of 100 believes that IASB Standards should be adopted for application in Australia without changing the requirements of the IASB Standards unless there are compelling reasons to do so. As set out in our submission on ED 102 ‘International Convergence and Harmonisation Policy’ (29 October 2001) we believe that the Board should apply its policy on the presumption that IASB Standards reflect best international practice and that the Board would only depart from IASB Standards in rare and exceptional circumstances.

Yours sincerely

John V Stanhope
National President

ED 116 Request for Comment on IAS 2 and IPSAS 12 Inventories

Specific matters for comment

1. Whether any of the features of AASB 1019 identified as different from IAS 2 in the comparison in this Preface should be included in the proposed Australian equivalent of IAS 2, and if so, which features.

No. The Group of 100 believes that the requirements and guidance in IAS 2 should be adopted.

Whether the proposals are in the best interests of the Australian economy.

Refer covering letter.

Whether the proposed format of the “new” series of Australian Standards is appropriate and workable.

The proposed numbering approach to Australian Standards appears reasonable and workable. However, while retaining the proposed numbering system for the Australian equivalents of International Financial Reporting Standards (IFRSs), which are those developed by the IASB, these Standards could be described as Australian Financial Reporting Standards. A consequence of this approach would be that the Australian equivalents of IASs, those Standards issued by the IASC, could take the same number as its IASB equivalent.

While acknowledging the Board’s desire to issue sector-neutral standards the G100 has concerns about how this impacts on the format and presentation of standards, particularly where there is a significant volume of not-for-profit material included in a standard. From the point of view of preparers subject to the Corporations Act the inclusion of not-for-profit material is potentially distracting and our preference would be for this material to be located elsewhere so that as far as possible Standards are the same as IFRSs.