Submission to Mr Keith Alfredson, Chairman, Australian Accounting Standards Board.
3 September 2001
Mr Keith Alfredson, Chairman, Australian Accounting Standards Board
ACCOUNTING FOR INTANGIBLE ASSETS
I refer to your letter of 9 August 2001 and to our recent telephone conversation.
I understand from the editor of the Company Director Journal (CDJ) that you have written an article for the September issue of CDJ about the AASB project on intangible assets.
The members of our Accounting and Financial Advisory Committee discussed the subject of intangible assets at its most recent meeting. They agreed that field-testing of the FASB impairment approach to accounting for goodwill would be helpful. I have arranged for insertion of a box in the September issue of the CDJ asking directors to volunteer for the field-testing.
One issue that concerns the Committee is that Australian companies wishing to adopt the United States approach and abandon amortisation from July 2001, will still need to stay within the current rules (which require amortisation). A further issue they identified is that if the completion dates of the IASB and AASB projects extend beyond June 2002, companies continuing to amortise may have problems paying dividends under the Corporations Act, because amortisation depresses profits. Companies continuing to amortise will find themselves at a competitive disadvantage to companies adopting the US position. If you would like the Committee members to expand on these matters please let me know.
I will contact you and let you know how the call for volunteers is received. In the meantime please contact me if you have any questions.
Policy Manager/Company Secretary/Legal Counsel