No. The proposals do not recognize that a joint arrangement may operate on the basis of achieving a designated level of voting on issues etc by participants and is not reliant on all participants voting in favour of a proposal in making decisions.

The existence of joint control and voting arrangements is established by the parties at the inception of the joint arrangement and the proportional interest of each party does not necessarily impact on the existence of joint control.

The proposals are consistent with the objective stated. However, it is important that the recognition criteria for assets and liabilities are satisfied when accounting for the contractual rights and obligations relating to the joint arrangement.

The G100 considers that some clarification is necessary in respect of the application of the control concept in relation to joint arrangements and the interpretation/application of decision-making tests. For example, day to day decision making is invariably ceded to the operator and venture level decisions about budgets/forecasts/planning options are more operational regarding maximizing venture outcomes than genuinely strategic. (Otherwise the entity would be operating a business not a venture e.g. ventures rarely buy and sell other ventures or develop new products for different markets). For most resource projects the real strategic decision comes at the time of making the project development decision. After that all parties are basically committed until the expiration of the life of the venture and the principal strategic decision is for the investor to decide whether or not to continue to hold its interest in the venture.
 

The G100 does not object to the removal of the term 'proportionate consolidation' as used in respect of interests in joint arrangement. However, if a party to a joint arrangement is to recognize assets, liabilities, income and expenses arising from its contractual rights and obligations relating to the joint arrangement the outcome is likely to be similar to that achieved by applying the proportionate consolidation method.

While we support the search for a better description of the method the G100 believes that the methodology should be retained pending research on developing a more transparent and relevant method of accounting for interests in joint arrangements. We do not consider that mandating the equity method of accounting for joint arrangements delivers transparency about these investments and relevant information for users.
 

While supporting the disclosure proposed in paragraph 39(a) the G100 does not support the disclosures in paragraph 39 in respect of material joint ventures which are more detailed than those required by IAS 28 'Investments in Associates' for investments that are equity accounted.

The G100 believes that where the equity method is applied the disclosures should be consistent with those required by IAS 28 'Investments in Associates' in respect of equity-accounted investees. As such, the level of disclosure should be the same in respect of all investments where the equity method is applied. The rationale for requiring different disclosures for different arrangements for which the equity method is required is not explained in ED 9. (On a matter of drafting, BC22 refers to joint arrangements whereas paragraph 39 refers to joint ventures. It is unclear whether this difference is intentional).

However, it is not clear from the proposals, how the reporting of production and reserves by companies engaged in extractive activities would be impacted where equity accounting is required instead of proportional consolidation.

It is important that commercial substance is paramount in the way production/reserves/revenue and costs are reported as that is how the markets understand things ' the legal form of the arrangement is irrelevant. We believe that information about a company's economic interest in reserves/production is more important to investors than the 'mechanics' of the arrangements. Upsetting the current reporting of production and reserves as a result of a change in this standard would be a poor outcome from the perspective of investors in companies engaged in these activities.
 

The G100 agrees with the proposal to restore to IAS 27 and IAS 28 the requirements to disclose a list of significant subsidiaries and associates. However, the G100 considers that a description of the activities of these entities is unnecessary.

No. The current disclosures are adequate. The proposals do not explain why the information would be more useful and for what purposes.