The European Financial Reporting Advisory Group (EFRAG) has invited comments on its draft letter to the IASB on the exposure draft of Business Combinations Phase II, which involves proposed amendments to IFRS 3, IAS 27, IAS 37, and IAS 19.
We would at the outset like to make clear our support for the objective of this project to achieve convergence if it is convergence to the better accounting solution and can be achieved with reasonable efforts. We have nevertheless some major concerns...
EFRAG's concerns relate to:
Click to Download EFRAG's Letter
(DOC 232k). Comment deadline is 21 October 2005. The United Kingdom Accounting Standards Board has Invited Comment on the IASB's Proposals
while expressing concerns similar to EFRAG's:
The ASB is issuing the proposed standards in accordance with its policy of aligning UK accounting standards with IFRS. It notes, however, that the proposals raise a number of issues, and, arguably, some of these would not represent an improvement in UK financial reporting. Amongst the more controversial issues are:
- the proposal that goodwill is to be recognised in full; that is, 100% of goodwill is recognised even if less than 100% is acquired;
- the requirement in IFRS 3 that, after initial recognition, goodwill should be measured at cost less impairment losses, and amortisation is not be permitted;
- unlike present requirements, liabilities will be recognised even where it is probable that no outflow will be required to settle the obligation. The probability of an outflow is reflected in the measurement of the liability.