The principles underlying the consolidation model proposed in the ED are not well established and the guidance within the ED is ambiguous and inconsistent in a number of fundamental areas, not least of which in the failure to distinguish between 'power to control' and 'ability to control'. Without a clear definition of control, the resulting Standard will be difficult to interpret and apply on a consistent basis. As a consequence, the financial statements of groups will be less, not more, comparable and understandable. We do not believe that the ED in its current form is an improvement on existing IFRSs.

It is crucial that the Board responds on a timely basis to the global financial crisis and the recommendations of the Financial Stability Forum. We therefore believe that improved disclosure requirements should be issued as swiftly as possible. We are providing comments on specific aspects of the proposed disclosure requirements later in this letter. However, further work, including appropriate field testing, is required to adequately address concerns about the consolidation model itself. Once the results of such additional work has been analysed, we believe that the consolidation Standard should be re-exposed.