Submission to the Financial Reporting Council - Year 2005 Strategy

16 April 2004

Mr Charles Macek
Chairman
Financial Reporting Council
The Treasury
CANBERRA ACT 2650

Dear Charles

Year 2005 Strategy

The Group of 100 (G100) National Executive discussed the FRC’s in-principle decision about the implementation of the Year 2005 strategy at its April meeting.

While confirming the G100’s strong support for the objectives of the Year 2005 strategy, the National Executive remains concerned about the timing of its implementation particularly in view of uncertainties about the status of standards relating to financial instruments and the extractive industries.

In view of these concerns and the impact of uncertainties on preparations by different types of companies the G100 believes that an orderly implementation of the Year 2005 Strategy would be enhanced if there was more flexibility about the process. The G100 believes that this can be achieved if:

the FRC defers implementation of the Year 2005 strategy for twelve months to annual reporting periods beginning on or after 1 January 2006; and
the AASB permits companies to early-adopt the Year 2005 Standards as a single package.

We recommend this approach as it retains the integrity of the Year 2005 Strategy and will facilitate its orderly implementation. We understand that many companies, particularly those whose preparations are not adversely affected by the uncertainties, would early-adopt AASB equivalents to IASB standards on 1 January 2005.

The G100 is also concerned about the potential implication of the decision that the AASB equivalents to the IASB Standards as issued at 31 March 2004 will be those applied on implementation of the Year 2005 strategy. To the extent that the IASB amends Standards forming part of its ‘stable platform’ at 31 March 2004 Australian companies will not be able to make an unqualified statement of compliance with IASB Standards. This may also put at risk their access to proposed SEC relief in respect of providing comparative information. Although described as minor, proposed amendments in respect of financial instruments and insurance may be significant for some companies.

One of the objectives of the adoption process was that Australian companies could make such a statement.

Yours sincerely

John V Stanhope
National President