Carlton chief executive Greg Swann attacked the Swans' 'cost of living' allowance, saying he was "staggered" last year's premiers could add a player of Kurt Tippett's sizeable salary, without having to drop anyone from their list.
Colless suggested Swann be reprimanded by the League for muddying the reputation of the game.
Kernahan said he made a conscious effort to ease any animosity with his Sydney peers.
''I called them and we spoke about it and we smoked the peace pipe,'' Kernahan told The Age.
''Richard apologised, he said he was a bit worked up and went a bit far, and Tony understood no one had been having a go at GWS and he apologised for his whack.''
Geelong president Colin Carter has also queried the Tippett deal, saying the extra salary cap allowance needed to be evenly distributed across the entire playing list.
''The Kurt Tippett thing bothers me,'' he said.
''If they had $800,000 there for Kurt Tippett because they managed their salary cap well and had one, two or three highly paid players leave, then that is good management. But if they had $800,000 there because they have not been paying their other players that allowance, then that is wrong.
''The questions clubs are asking about that are fair enough ... I think [Colless] is wrong to say clubs are not entitled to ask the question or for the books to be looked at by the AFL.''
Shepherd said the 9.8 per cent cost-of-living allowance afforded the Sydney clubs should be raised to between 13 and 14 per cent. Colless believes the "true difference" is about 20 per cent.
GWS has proposed a Total Player Payments increase of almost $400,000, believing that the AFL's cost-of-living allowance for the Sydney clubs is too low.
The Giants' proposal has already been met with opposition from rival clubs, who say the recommendation is a reaction to the threat of having the existing allowance reduced or taken away from them.
The Sydney clubs already receive $900,000 in additional salary cap room.
It is reported the Giants' submission will be put to the AFL Commission later this month.
Kernahan, meanwhile, supports the idea of equalisation, but described Western Bulldogs president Peter Gordon's proposal to tax clubs' gaming revenue as "unacceptable".
''We spent a lot of money and went into debt to secure poker machines and we have made commitments based on AFL policies and agreements, so the idea that someone now should be able to come and take a cut of that income is unacceptable," Kernahan said.
