Do investors, issuers and other commenters agree that IFRS are widely used and have been issued through a robust process by a stand-alone standard setter, resulting in high-quality accounting standards?

Yes. The G100 believes that the due process adopted by the IASB in developing IFRSs and Interpretations is robust and thorough and leads to the development of high-quality accounting standards. In Australia, IFRSs are applied. For example, financial reports prepared by entities under the financial reporting provisions of the Corporations Act must be drawn up in accordance with the Australian Accounting Standards, the substantive requirements of which are adopted word for word from IFRSs.
 

From an Australian perspective we are concerned that a literal and narrow interpretation of IFRS as published by the IASB may inhibit Australian registrants from benefiting from the proposals. We believe that the criteria should apply to the substantive content and drafting of the IFRSs adopted in different jurisdictions. As indicated above, under Australian legislative requirements and practice Accounting Standards are delegated legislation and, while changes are made to accommodate these requirements, such as the inclusion of additional material relating to the scope and applicability of the Standard, the substantive requirements, as issued by the IASB, are adopted.

The G100 considers that although the present convergence activities of the FASB and IASB are a significant step in the right direction the process should deal with issues more expeditiously.

The G100 believes that the SEC, in adopting the proposal, should indicate an expectation that such convergence should continue and that the FASB and IASB should seek to ensure that substantially different outcomes do not occur. This should be highly unlikely given a principles-based approach and agreement on a conceptual framework.
 

Yes. IFRS requires extensive disclosure of accounting policies which provide users with sufficient knowledge of the company’s policies. We consider there is sufficient consistency in applying IFRSs to ensure comparability.
 

Yes. However, given the rigour applied to compliance with IFRSs from 1 January 2005 by both issuers and their auditors we do not believe there is widespread inaccurate or inconsistent application of IFRSs.
 

The application of IFRS is mandatory for all Australian companies. The Australian regulator, the Australian Securities and Investment Commission (ASIC), undertakes regular views of financial reports which ensure consistent and correct application of IFRS amongst all Australian companies, regardless of whether those companies are registered under the Exchange Act or not.
 

No. In respect of Australian companies who are registrants have substantial experience in applying IFRSs which were adopted for annual reporting periods beginning on or after 1 January 2005. Further, we believe that the international audit firms have robust processes and experience with the implementation of IFRSs.
 

No.
 

Support could be provided through active participation in IASB processes and activities and acceptance of the outcomes of those processes.

The Commission and its staff should continue to be involved as part of the standard setting process both through the continuation of the convergence program, involvement in IASB forums and participation in the IASB’s due process. We do not believe the Commission or any other securities regulator should be providing interpretive views where an issue has not been addressed by the IASB or IFRIC. This would result in the formation and application of ‘regulator GAAP’ which may not necessarily be consistent with the IFRS accounting framework and will only apply to the companies in that jurisdiction. We would prefer to see additional resources provided to the IFRIC to expedite the resolution of issues placed on its agenda.
 

See above.
 

Will the ability of an investor to understand and use financial statements that comply with IFRS as published by the IASB vary with the size and nature of the investor, the value of the investment, the market capitalization of the issuer, the industry to which the issuer in question belongs, the trading volume of its securities, the foreign markets on which those securities are traded and the regulation to which they maybe subjected, or any other factors? If so, should any removal of the reconciliation requirement be sensitive to one or more of these matters, and if so, how?

We are informed that investors are strong supporters of developing a set of high-quality international standards. We do not consider that the US GAAP reconciliation supports the information needs of international investors. Further, any requirement for a US GAAP reconciliation is inimical to the development of high-quality international standards and their acceptance in capital markets. We believe that this view is strongly exemplified by the fact that the majority of US 144A private placement debt programs no longer have a requirement to prepare a US GAAP reconciliation to the extent that the foreign issuer has audited IFRS financial statements.

We believe that the continued requirement for a US GAAP reconciliation is an impediment to the broader acceptance of IASB standards as published by the IASB. Financial statements prepared on the basis of IFRS achieve comparability, and informed users will make their own judgments of what is appropriate for comparing companies applying IFRSs and those applying US GAAP or some other basis of accounting.
 

While the disclosures may be useful in providing background and context we do not believe that investors will be disadvantaged by their absence in this form.
 

The G100 believes that there should not be any limitations on the eligibility of a foreign private issuer that adopts the substantive requirements of IFRS to file financial statements without a US GAAP reconciliation.

The G100 further believes that any change in policy of this nature should be introduced on a “once-for-all” basis and that phasing-in change will reduce comparability and is likely to create confusion and uncertainty for investors. Relief from the reconciliation requirement should be restricted to those registrants that are applying IFRSs as published by the IASB, subject to the procedural changes made to reflect national legislative changes.
 

The G100 suggests that the filing of the 20F could be accelerated on the grounds that the financial statements are applying IFRSs and no further work will be required in respect of preparing US GAAP reconciliation. We suggest that, ideally, the filing deadline should be shortly after (for example, one month) the lodgment in the registrant’s domestic market. This is presently 75 days in Australia. The additional content of the Form 20F above that required domestically can be considerable and additional time to complete that process should be taken into account when setting an appropriate filing deadline.
 

We believe that once the US GAAP reconciliation is removed for annual financial statements it should also be removed for interim financial statements.
 

This could occur where there are national legal requirements which take precedence over IFRSs as published by the IASB and impede compliance with an aspect of an IFRS. However, subject to national legal requirements (such as a statement of compliance in respect of, say, Australian Accounting Standards) there is no impediment to a registrant and its auditor making a similar statement in respect of compliance with IFRSs, where IFRSs as published by the IASB are adopted by the national standard setter. As noted above, the requirements of IFRS as published by the IASB may in practice be modified by national standard-setters relating to the scope and applicability of the IFRS standard in that jurisdiction. Therefore, in such situations, it may not be possible to unreservedly and explicitly state compliance with IFRS as published by the IASB. However, where the substantive requirements of the IFRS standard are adopted in that country as drafted by the IASB, we consider that the requirements of IFRS as published by the IASB should be taken as having been met.
 

Yes. We believe that investors should be given adequate notice to prepare for the change and that the removal of the reconciliation requirement for 2009 financial statements is feasible and desirable. Additionally, this date also coincides with the application of amendments to IFRSs arising from the IASB/FASB convergence process. Therefore, given IFRS is a robust and thorough accounting framework, we do not believe foreign private issuers who report under IFRS should be required to prepare a US GAAP reconciliation in their first filing.
 

No.

No. It is likely that significant differences between IFRSs and US GAAP requirements will be removed by the IASB/FASB convergence process which will come into effect for annual reporting periods commencing on or after 1 January 2009.
 

The information is likely to be useful for non-IFRS issuers.
 

No.
 

Australian national requirements have adopted IFRSs as published by the IASB. Half-yearly financial statements are required under the Corporations Act 2001 which requires compliance with Australian Accounting Standards. The substantive requirements of Accounting Standard AASB 134 Interim Financial Reporting are as drafted in IAS 34 Interim Financial Reporting.
 

We consider that the information reported under AASB 134/IAS 34 is adequate for investors. IAS 34 requires more condensed information than Article 10. We believe the information provided by IAS 34 together with the continuous disclosure requirements on listed companies provides adequate information for all investors. We note that US investors have in the past only received interim financial information for foreign private issuers on the basis of the information required by IAS 34. Issuers should not be required to increase their interim financial disclosures to comply with Article 10 if they comply with IAS 34.
 

No. We believe that the present IASB/FASB convergence project and delivery of improvements to the SEC’s expectations as indicated in the “road map” will be adequate. Some may argue that there are matters dealt with in IASB standards with which the FASB should also seek to achieve consistency. For example, IAS 16 Property, Plant and Equipment contains requirements relating to the revaluation of property, plant and equipment.

In areas not specifically addressed by IFRS, we believe that the requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, paragraphs 10 and 11, should apply rather than for the Commission to specifically address those areas or to require other disclosures. In essence, these paragraphs require that, in the absence of a Standard or Interpretation specifically applying to a transaction or other event, management must use its judgment in developing and applying an accounting policy that results in relevant and reliable information. In making this judgment, management considers the requirements and guidance in IFRS Standards and Interpretations dealing with similar and related issues as well as the guidance in the Framework for the Preparation and Presentation of Financial Statements and the requirements in a national jurisdiction which has a similar conceptual framework.
 

No. If the US GAAP reconciliation is removed it is not appropriate to seek equivalent disclosures by other means. If some US GAAP selected financial information is continued to be disclosed, significant additional explanatory data would be required for this information to be meaningful. In addition, in future filings there will be a diminishing amount of US GAAP selected information disclosed which will very quickly render the information ineffectual. Consequently, we believe that if the US GAAP reconciliation is no longer required, all US GAAP selected information should be removed.
 

Rather than refer to particular US GAAP references, the requirements should be expressed more generally to indicate the nature of the matters which should be addressed in such disclosures or should refer to appropriate IFRS guidance.
 

No. We believe the primary information requirements of oil and gas producers are adequately met by the existing IFRS and exchange requirements. The additional requirements of FAS 69 are extensive and require significant additional work effort to prepare. However, it would be helpful if the current IASB project on extractive industries were given a much higher priority.
 

IFRS 7 Financial Instruments: Disclosures requires quantitative and qualitative disclosures of the nature and extent of risks arising from financial instruments to which the reporting entity is exposed at the reporting date. In addition, IFRS requires an explanation of significant changes from the previous year, where applicable. The G100 considers that this relates to current or past matters, rather than the future. Therefore, the G100 is of the view that some kind of safe harbour provision or other relief or statement in relation to compliance with IFRS 7 is not needed.
 

Refer to Question 25.
 

No.
 

Australian entities have already provided (in 2005) a reconciliation from previous GAAP to IFRS. We therefore see no point in requiring a US GAAP reconciliation as a bridge from previous GAAP to annual financial statements prepared under IFRS.

By 2009, Australian entities would have been applying IFRS for 5 years. Therefore, the extension of the requirements of General Instruction G, which allow entities adopting IFRS for the first time to omit the earliest of the three years of financial statements, is not relevant to Australian entities.
 

Not applicable.
 

Yes.
 

No.
 

Yes. The proposed changes are clear and no further changes are needed.
 

Yes.
 

No comment.
 

Not to our knowledge.
 

Yes.
 

The G100 believes that this will depend on the requirements in the registrant’s home jurisdiction. For example, these concerns would be ameliorated if there is a high quality and robust regulatory regime in the relevant jurisdictions such as those which meet the criteria established by the PCAOB.
 

Yes.
 

The G100 believes that the present IFRS requirements and the achievements of the IASB/FASB convergence project to date are sufficient to warrant removal of the US GAAP reconciliation in respect of registrants from jurisdictions that apply both the substantive requirements of IFRSs as published by the IASB and that satisfy the PCAOB criteria.
 

We expect that the incentives for continuing convergence will be strong and well founded and will be significantly influenced by the activities and expectations of the SEC and the conditions on which the US GAAP reconciliation is based. The IASB would also be under significant pressure from registrants who are benefiting from the not having to prepare a US GAAP reconciliation to avoid actions which would lead to the reinstatement of the requirement. A further incentive for the standard setters would be to foreshadow monitoring and regular review of the maintenance of a high quality set of international standards.
 

It is incumbent on the part of all participants in the capital markets (preparers, investors and regulators) to maintain their vigilance and participation in the standard setting process to avoid reversion to parochial responses and national/regional solutions and interpretations.
 

Yes.
 

We believe that Australian registrants would avail themselves of the relief from providing the US GAAP reconciliation unless the conditions attaching to it are onerous and unreasonable.
 

Are there particular industry sectors for which a critical mass of the issuers who raise capital globally already report in IFRS? If so, which industries are they and why?

No comment.