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Australian standard setter warns about far-reaching impacts of the IASB's Investment Entities ED

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05 Oct 2011

The Chairman of the Australian Accounting Standards Board (AASB), Kevin Stevenson, has addressed the public in a media release expressing a number of concerns about the proposals in the IASB's Exposure Draft: Investment Entities.

Stevenson admits that this media release is an unusual step, but he feels it is warranted as this draft raises fundamental questions about existing requirements and may have far-reaching impacts.

"In my view it could lead to increased use of off-balance-sheet accounting, see us depart from the concept of control and lead to unjustified changes in requirements accounting for associates and joint ventures. The exposure draft seeks to include in IFRS accounting practices previously used in North America and would be a step back from the universal consolidation model that we have followed. In this regard, I note that three IASB members have expressed alternative views on ED/2011/4."

The AASB has released the IASB's ED as AASB ED 220 in September. Stevenson urges constituents to carefully review the proposals and make their views known to the AASB and the IASB – to answer the question whether this proposed standard is in the interest of Australian reporting and of international reporting.

Comments are due to the AASB by the 30 November 2011 and to the IASB by 5 January 2012.

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