Bulletin to Members
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Comments from participants and media coverage received indicates that Congress 2004 was a great success. National Executive was pleased with the strong registrations for both the Congress and dinner, in particular, the support from non-member organisations. Copies of presentations made by Cathy Walter at the dinner and John Stanhope at the Congress, are posted on the website.
The USA Working Council for CFOs presented a workshop for CFOs titled “Transforming Finance to Drive Decisions and Enable Growth”. Feedback from participants is that these sessions provide valuable insights and opportunity for networking and sharing concerns and approaches to resolving issues. Further workshops will be held in 2005.
The ASX has issued guidance to listed entities on their continuous disclosure obligations on the adoption of Australian equivalents to IASB Standards, including periodic reporting (see Companies Update – October 2004 on the ASX website).
Following revisions to the Corporations Law listed companies will be required to include parent company financial statements in half-yearly financial reports. The revised s303(2) of the Corporations Act does not explicitly provide the exception for parent entity accounts which was included in the former section. This exception taken in conjunction with AASB 1029 ‘Interim Financial Reporting, paragraph 1.2, meant that an economic entity need only present consolidated financial statements in half-year financial reports.
The G100 is writing to the Treasury to clarify whether the provision of parent entity reports in half-year accounts is an intended consequence of the legislative amendments. The most direct way of addressing this outcome would be for the law to be amended as the requirements of an Accounting Standard cannot override the Corporations Act.
The AASB noted views of the IASB (IASB Update September 2004) in respect of applying the requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors” (the Australian equivalent is AASB 108) on developing accounting policies in the absence of a Standard or an Interpretation that specifically applies to a transaction or event. The IASB has indicated that, in accordance with IAS 8, judgment must be used in developing an accounting policy that results in reliable and relevant information. In making this judgment, entities:
| a. | must refer to and consider the applicability of the requirements and guidance in Standards and Interpretations dealing with similar and related issues and the definitions, recognition criteria and measurement concepts in the Framework; |
| b. | may also consider the most recent pronouncements by other standard setting bodies that use a similar conceptual framework, other accounting literature and accepted industry practice, to the extent that it does not conflict with either the guidance in Standards, Interpretations dealing with similar and related issues or with the Framework; and |
| c. | under IAS 8 are precluded from applying a superseded Standard. For example, in respect of accounting for business combinations the pooling approach is not available. Accordingly, in respect of business combinations the IASB indicated that entities are permitted to look to IFRS 3 ‘Business Combinations’ for guidance but not the superseded Standard IAS 22 ‘Business Combinations’. |
In respect of (a) this approach applies even when the particular transaction or item is scoped out of the Standard or Interpretation. In these cases that Standard or Interpretation may still provide appropriate guidance for the transaction or item provided that it gives rise to relevant and reliable information in respect of the transaction or item.
Note: This clarification of the operation of the ‘hierarchy’ has significant implications for determining accounting policies in respect of items that are not dealt with, or are scoped out of, accounting standards and interpretations.
The IASB has posted a ‘near-final’ draft of IFRS 6 ‘Exploration for & Evaluation of Mineral Resources’ on its website. The AASB has indicated its intention to adopt IFRS 6 and to issue it before the end of 2004. The Australian equivalent of IFRS 6, which will replace AASB 1022, will apply from 1 January 2005. A copy of the draft proposed AASB 6, the Australian equivalent of IFRS 6, is posted on the AASB website.
The AASB is developing an Exposure Draft proposing amendments to AASB 1039 Concise Financial Reports’. The proposals agreed to date include:
| a. | exempting listed companies from providing a discussion and analysis since they are now required to provide similar information in the Directors’ Report; |
| b. | removing redundant requirements such as the disclosure of extraordinary items and updating terminology and cross references to be consistent with Australian equivalents to IASB Standards. |
The AASB decided not to require disclosures of the names and remuneration of directors and executives and is yet to consider whether to require disclosures relating to auditors’ remuneration and first-time adoption of Australian equivalents to IASB Standards.
(All submissions can be accessed via the website www.group100.com.au)
November 2004
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