Submission to IASB - Annual Improvements to IFRS

21 October 2011

Mr Hans Hoogervorst
Chairman
International Accounting Standards Board
20 Cannon Street
London EC 4M 6XH
UNITED KINGDOM

Dear Mr Hoogervorst

Annual Improvements to IFRS

The Group of 100 (G100) is an organization of chief financial officers from Australia's largest business enterprises with the purpose of advancing Australia's financial competitiveness. The G100 is pleased to provide comments on ED/2011/2 'Improvements to IFRSs'.

Q1.

Do you agree with the Board's proposal to amend the IFRS as described in the exposure draft? If not, why and what alternative do you propose?

The IASB proposes:
a.	that an entity that previously reported in accordance with IFRSs, but stopped doing so, would be regarded as a first-time adopter if it resumes reporting under IFRSs.
b.	to clarify that capitalization of borrowing costs prior to transition be grandfathered and that, subsequent to adoption of IFRSs, entities should apply IAS 23 'Borrowing Costs' prospectively for qualifying assets for which commencement date is on or after transition.

IFRS 1 First-time Adoption of International Financial Reporting Standards

The G100 agrees that:

a.	as proposed, an entity that previously applied IFRS but ceased to do so should comply with IFRS 1 when it recommences application of IFRSs. To do otherwise opens the potential for entities to switch in and out of IFRSs to suit particular purposes; and
b.	as a practical measure to facilitate transition to IFRSs first-time adopters should be permitted to retain the carrying amount of capitalized borrowing costs determined under previous GAAP at the time of transition to IFRSs. Subsequent to adoption, the requirements of IAS 23 'Borrowing Costs' should apply.

In view of the requirements to provide comparative information it is imperative that the IASB complete the remaining phases of the project with a significant lead time before the effective date so as to enable companies to implement the changes and to prepare comparative information. Further delays in completing the remaining phases of the project will not reflect well on the IASB and will call into question the requirements in respect of comparative information.

IAS 1 Presentation of Financial Statements

The IASB proposes:
a.	that IAS 1 be updated to achieve consistency between it and the conceptual framework in respect of the objective of financial statements.
b.	to clarify the requirements for comparative information when an entity provides financial information in addition to the minimum requirements such as the opening statement of financial position.

The G100 agrees that:

a.	the objective of financial statements in IAS 1 should be consistent with that specified in the Framework; and
b.	the clarification of the requirements for comparative information will assist preparers. The G100 supports the proposed clarifications that: i. if additional comparative information is provided it should be prepared in accordance with IFRSs; and ii. relate to changes in accounting policies and retrospective restatements or reclassifications.

IAS 16 Property, Plant and Equipment

The IASB proposes to clarify the treatment of servicing equipment under IAS 16 so that it is treated as property, plant and equipment and not inventory if it is to be consumed over more than one year and does not relate to a specific item of property, plant and equipment.

The G100 agrees that servicing equipment, whether used to service property, plant and equipment or otherwise, should be classified as property, plant and equipment if it is used for more than one annual reporting period.

IAS 32 Financial Instruments: Presentation

The IASB proposes to clarify the treatment of the tax effect of distributions to holders of equity instruments be removing a conflict between IAS 32 para 35 which requires distributions to be accounted for in equity net of tax, and IAS 12 'Income Taxes' paras 52A and 52B which are unclear in respect of the tax consequences of dividends recognized in equity.

The G100 believes that the taxation effects of transactions should be accounted for in accordance with IAS 12 'Income Taxes'. Accordingly, IAS 32 should be amended to confirm that income tax distributions and transaction costs associated with equity instruments should be accounted for in accordance with IAS 12.

IAS 34 Interim Financial Reporting

The IASB proposes to clarify that disclosure of segment assets is required in interim financial reports only when there has been a material change since the last annual financial statements by removing the inconsistency between IAS 34 para 16 and IFRS 8 'Operating Segments' para 23.

The G100 agrees with the proposed amendment to IAS 34 to clarify that an entity need only disclose segment assets in interim financial reports if that amount is regularly provided to the chief operating decision maker and there has been a material change in the segment assets since the last annual financial statements.

Q2.

Do you agree with the proposed transitional provisions and effective date for the issue as described in the exposure draft? If not, why and what alternative do you propose?

The G100 agrees with the proposals and that early adoption of the amendments should be permitted.

Yours sincerely
Group of 100 Inc

Peter Lewis
National President