Having evaluated the proposals as a whole in the light of the comments received on the draft comment letter we issued in early August, we do not support the proposals in the EDs. That is because we believe that the proposed approach does not produce more useful information than the current IFRS 3; indeed in many respects we believe that it will have the opposite effect. In addition it will create major practical implementation issues. We also believe that it is inappropriate to introduce such radical and untested concepts through revision to specific standards at a time when the conceptual framework is under active review.

Our recommendation to the IASB and FASB is therefore that they should concentrate for the time being on simply doing what they set out to do, i.e. converging the existing standards to the better accounting solution, which we believe to be IFRS 3 (subject perhaps to some minor improvements to achieve convergence and to address certain practical aspects linked with the application of the acquisition method).

Summarising our concerns, we believe the proposed changes:

• 1. Are not in compliance with the current framework with regard to the recognition of assets and liabilities and should not be introduced until there has been an opportunity to have a full debate on them as part of the framework review;
• 2. Introduce a default category for non-financial liabilities without sufficient analysis or understanding of the range of liabilities that might as a result be brought within the scope of the standard; and
• 3. Introduce a high degree of subjectivity particularly for the measurement of low probability, but potentially significant, 'one-off' liabilities thereby reducing the reliability of information overall.