National Executive News

CFO Sessions

The G100 held CFO Retreats in Sydney, Melbourne and Brisbane in late November in conjunction with the US Working Council for Chief Financial Officers. The issues dealt with included corporate principles for navigating the downturn with themes relating to increasing yield on strategic investments with particular emphasis on information technology, upgrading company assets (human resources) and reinforcing critical revenue streams (marketing and sales).

These retreats provided small groups of CFOs with the opportunity to discuss issues of concern and share experiences on an informal basis.

Triple Bottom Line Reporting

Executive agreed to establish a Working Party to monitor developments and to prepare an information guide to articulate what comprises TBL reporting, issues and meaning from a company point of view, the responsibility for TBL reporting and the role of the CFO in the process.

Financial Reporting Council

Executive met with Jeff Lucy, FRC Chairman, to exchange views on the current status of standard-setting arrangements. The main issues discussed were the desirability of processes to speed-up the issue of accounting standards and UIG Abstracts, the relationship between Australia and the IASB and achieving an equitable and consistent basis of funding for standard-setting arrangements.

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Australian Accounting Standards Board (AASB) and Urgent Issues Group (UIG)

Note: The AASB has changed its communication process. Accounting Standards, UIG Abstracts and Exposure Drafts are now publicly available on the AASB's website (www.aasb.gov.au). The AASB Action Alert and UIG Media Release, issued after meetings, are also posted on its website.

Documents Issued

Accounting Standard

AASB 1044 "Provisions, Contingent Liabilities and Contingent Assets" (October 2001).
Operative date financial years beginning on or after 1 July 2002. Application of AASB 1044 is likely to have a significant impact on current practice, particularly in respect of restructuring provisions, onerous contracts and dividends.

UIG Abstracts

UIG Abstract 42 "Subscriber Acquisition Costs in the Telecommunications Industry" (October 2001). Operative for reporting periods ending on or after 18 October 2001.
UIG Abstract 43 "Classification of Financial Instruments with Conversion Options" (November 2001). Operative for reporting periods ending on or after 18 October 2001.

Exposure Draft

ED103 "Investment Property" (December 2001).
ED 103 is based on IAS 40 "Investment Property". Comments are requested by 31 March 2002. A copy of ED 103 is posted on the AASB's website.

Note: The G100 will form a Working Party and will co-operate with the Australian Property Council to prepare comments on ED 103. Members interested in participating are requested to contact Geoff Harris.

In Progress

A Status Report on the AASB's 2001-2002 Work Program is posted on its website.

Borrowing Costs and Foreign Currency Translation
At the December meeting the AASB discussed the IASB's tentative decisions in respect of borrowing costs and foreign exchange.

The AASB agreed with the IASB's tentative view that interest is a period financing cost and as such would not be capitalised. The AASB agreed to invite comments from constituents on this view in the event that the IASB's tentative views are confirmed. The IASB will determine its position on this issue after consulting with liaison standard-setters in January 2002.

The AASB also agreed with the IASB's tentative view to adopt a functional currency approach to foreign currency translation in IAS 21 "The Effects of Changes in Foreign Exchange Rates".

Note: The IASB will undertake due process before amending IAS 23 "Borrowing Costs" and IAS 21 "Foreign Exchange" as would the AASB in respect of harmonising AASB 1036 "Borrowing Costs" and AASB 1012 "Foreign Currencies Translation" with the IASB Standards.

Intangible Assets
The AASB considered issues papers and the results of field testing the US impairment approach to accounting for purchased intangibles (including goodwill). Seven G100 member companies undertook field testing for the AASB. Apart from some concerns/difficulties in respect of determining the fair values of some types of identifiable intangible assets, such as customer lists not based on contractual arrangements, the field testing indicated the practical feasibility of the approach.

The AASB also confirmed its intention to monitor the current IASB project with a view to issuing the IASB Exposure Draft for comment in Australia. The AASB was also advised that the IASB now expected to issue an Exposure Draft in the first half of 2002. (Members may recall that the IASB hoped to issue an Exposure Draft in December 2001).

Note: The G100 believes that the IASB and AASB should continue to give this project the highest priority.

Trilogy
Several members have advised of implementation concerns in respect of the so-termed "Trilogy", in particular, AASB 1018 "Statement of Financial Performance". The principal issues raised by members include:

the prescriptive nature of the cost of sales disclosure and difficulties in interpretation;
the presentation of asset disposals on a gross basis and the location of information on revenues and expenses;
the separation of reconciliation of retained earnings from the profit and loss section;
the prescribed format does not allow flexibility to tailor the presentation format to the needs of users; and
the presentation and disclosure requirements relating to individually significant items.

Note: The AASB has indicated that AASB 1018 "Statement of Financial Performance" is an anticipated agenda item for its meeting on 27-28 February 2002.

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IASB - International Accounting Standards Board

Financial Instruments

The IASB has commenced its review of IAS 32 "Financial Instruments - Disclosure and Presentation" and IAS 39 "Financial Instruments: Recognition and Measurement". As part of this review the IASB is likely to extend the use of fair values and to amend the hedging requirements to achieve convergence with US GAAP.

Note: At its December 2001 meeting the AASB confirmed its intention to issue the IASB Exposure Draft for comment in Australia. As such it is important for Australian entities to monitor developments in the IASB's project.

Share-Based Payment

The G100 has responded to the IASB's request for further comment on the G4+1 paper "Accounting for Share-Based Payment". A copy of the submission is posted on this website.

The G100 expressed the view that the IASB should, as an initial step, converge requirements with those applying in the US where the effect of certain share and option schemes on the profit and loss may be disclosed on a pro forma basis and not recognised in the statement of financial performance.

International Financial Report Issues Committee (IFRIC)

The IASC Trustees has announced membership of IFRIC which replaces the Standing Interpretations Committee, the international equivalent to the UIG. Wayne Lonergan, a former AASB member, has been appointed to the IFRIC.

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ASIC - Australian Securities and Investments Commission

Audit Independence

ASIC is expected to release the results of a survey on audit independence conducted in conjunction with the G100. An analysis of the survey results will be posted on the web site .early in January 2002.

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Congress 2002

Congress 2002 will be held at The Westin Hotel, Sydney on 30 April (dinner) and 1 May 2002 (technical program). A key feature of the Congress will be presentations from the US Working Council for Chief Financial Officers. Further details will be advised early in the New Year.

Could you please diarise these dates.

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