3 March 2010
Mr K Stevenson
Australian Accounting Standards Board
PO Box 204
COLLINS STREET WEST VIC 8007
Dear Mr Stevenson
Reducing Disclosure Requirements
The Group of 100 (G100) is an organization of chief financial officers from Australia's largest business enterprises whose primary purpose is to advance Australia's financial competitiveness. The G100 is pleased to provide comments on the AASB Consultation Paper.
Do you agree with the introduction of a second tier of reporting
requirements for preparing general purpose financial statements for:
(a) non-publicly accountable for-profit private sector entities
If not, and you do support differential reporting, what other classifications of entities do you think would be more appropriate for differential reporting and why?
Yes. From a G100 perspective the entities to which the second-tier
would apply seems a reasonable basis for identifying entities for which
a reduced disclosure regime is appropriate. The G100 feels strongly that
private equity entities should be included in Tier 1. The concept of an
'equal playing field' should apply to ensure adequate disclosure by
entities (whether listed or privately owned) is provided for all
interested parties in addition to shareholders.
Do you agree that entities within the second tier should be able to apply the
proposed reduced disclosure regime or would you prefer another approach (eg IFRS
for SMEs)? What is the basis for your views?
Yes. The G100 agrees with the approach adopted in respect of the second tier. The G100 believes that the general purpose financial statements of all entities should be prepared on a consistent basis for recognition and measurement and that relief be provided from the detail and complexity of disclosures.
We consider that it is important to the credibility of representations made in general purpose financial reports that measures of profit or loss, assets and liabilities are made on the same basis. For example, it is unacceptable for different measures of profit or loss to be reported depending on whether the entity falls in the first tier or the second tier.
From the perspective of users of general purpose financial statements comparability would be seriously impaired if a wide range of secondary measures such as ratios of return on sales, total assets and equity, EBITDA, gearing and working capital differed between the tiers.
Accordingly, the G100 believes that the adoption of 'IFRS for SMEs' is
inappropriate for use in Australia because it requires different recognition and
measurement requirements for some types of transactions and events. However, we
agree that the disclosure requirements of 'IFRS for SMEs should form the basis
of a reduced disclosure regime in Australia.
Would you require any other classes of public sector entities, such as
Government Departments, Government Business Enterprises (GBEs) or Statutory
Authorities, to be always categorised as 'tier 1' reporting entities? If so, on
Yes. The G100 suggests that government business enterprises
should be categorized in Tier 1 entities. It is our understanding that
government business enterprises are effectively for-profit entities to which
IFRS would apply. We are unaware of any compelling reasons why they should not
be subject to Tier 1 requirements. The International Public Sector Accounting
Standards Board implies that IFRSs apply to government business enterprises
through its statement that IPSASs are high quality financial reporting standards
for application by public sector entities other than government business
Are there any regulatory issues or other issues arising in the
Australian environment that may affect the implementation of the
proposals in this Consultation Paper?
We are not aware of any
impediments to adopting the proposals.
Overall, do you agree that the proposals would decrease the costs of
preparing financial statements whilst not materially reducing the usefulness of
those statements to users?
Yes. However, users would need to incur
additional costs to achieve comparability if the AASB were to require different
recognition and measurement requirements to be applied by entities in the
Are the proposals in the best interests of the Australian economy?
Group of 100 Inc