Members' Update

1. National Executive

The National President met with Chris Pearce, MP, Parliamentary Secretary to the Treasurer, to advise him of G100 activities and highlight issues for consideration. The principal matters discussed were:

• the urgent need for action to remove duplication and differences in the requirements in the Corporations Act and AASB 1046 on director and executive disclosures; and
• the importance of reform in respect of replacing the current rules relating to payment of dividends with a solvency test and the presentation of parent entity financial statements.

2. CLERP Issues Working Party

National Executive wishes to form a Working Party to identify CLERP 9 reforms which need further refinement/amendment together with Corporations Act requirements where reform is desirable. (Note: Members interested in joining the Working Party and/or with suggestions for reform, are requested to contact g100tech@bigpond.com)

3. Draft Memorandum of Understanding on Role of National Standard Setters

The IASB has issued a draft Memorandum of Understanding (MOU) to clarify the roles of national and regional standard setters and the IASB under the evolving arrangements. The AASB is also issuing the draft MOU for comment.

Note: National Executive has discussed the future role of the AASB and the UIG in the context of the adoption of IFRSs and will make a submission. The comments of member organizations are invited and should be sent to g100tech@bigpond.com

4. IASB Projects

MD & A: The IASB will publish a discussion paper on their research project. This is the first step towards the development of an IASB Standard. (Note: The outcome of this project will affect Australian practice in the context of the CLERP 9 requirement for listed companies and the G100 guidance on Review of Operations and Financial Condition).

See attachment relating to:

• Financial Instruments: Cash Flow Hedging of Forecast Intragroup Forecast Transactions; ED 7 Financial Instruments – Day 1 Profit Disclosure, IAS 39 Fair Value Option
• Service Concessions: IFRIC Draft Interpretations

IASC Constitutional Review: The G100 submission is posted on the website.

5. AASB Projects

ED 138 Concise Financial Reports: The G100 submission is posted on the website.

Director and Executive Disclosures: At its March meeting the AASB considered approaches to amend AASB 1046 and welcomed progress being made by Treasury in developing proposals to eliminate duplication of remuneration disclosure for listed companies subject to Section 300A.

6. ASIC

Surveillance of reports: Following a review of 400 financial reports, ASIC has sought information and explanations in relation to the accounting treatments adopted by 32 listed entities. ASIC is in the process of reviewing the further information provided and discussing issues with the entities involved. Based on this process a decision will be made as to what action, if any, is warranted. ASIC’s inquiries are concerned with the following areas:

• fair value acquisition accounting issues, including queries over computation of goodwill, fair value of purchase consideration and assets required, and failure to include appropriate disclosures;
• carrying values of assets (particularly intangibles), including various instances of non-depreciation and non-amortisation;
• appropriateness of deferral of expenditure and associated recoverability;
• recognition and calculation of revenue;
• the timing and appropriateness of consolidation and deconsolidation of entities;
• failure to adequately disclose details of directors and executives remuneration either in the accounts or Directors Reports; and
• lack of disclosure in relation to appropriate accounting policies, EPS, discontinuing operations, IFRS and segment reporting.

ASIC has also reviewed the AASB 1047 disclosures of companies having 30 June 2004 balance dates. The overall level of compliance of the narrative disclosures was very high. However, higher expectations are likely to apply to 30 June 2005 disclosures because of the transition occurring from 1 July 2005.

7. ASX

There has been some concern expressed about the effect of the change in the time period for reporting to the ASX from 75 days to 60 days. Could you please advise the G100 Secretariat if this change is expected to present ongoing difficulties.

8. Second-tier Firms

In view of the current focus on audit independence National Executive considered that it may be useful to inform members of the major second-tier accounting firms that may be able to provide consulting services. A list of these firms is available from the Secretariat.

(All submissions can be accessed via the website www.group100.com.au)

March 2005

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