The staff introduced the session by reminding the Board that the forthcoming due process document:
- (a) places management commentary within the boundaries of financial reporting;
- (b) explicitly links management commentary to the financial statements, both of which are 'governed' by the [draft] conceptual framework for financial reporting;
- (c) establishes a framework for the preparation and presentation of management commentary; and
- (d) describes essential content elements for management commentary.
However, the management commentary document would not:
- (a) resolve questions about disclosure placement (the notes to the financial statements versus management commentary);
- (b) modify the disclosure requirements in existing IFRS to clarify disclosure placement;
- (c) offer a definition for what the Board means when it refers to 'financial information' or 'non financial information';
- (d) create a 'hard and fast' boundary between management commentary and the rest of financial reporting;
- (e) explicitly keep out from management commentary aspects of reporting that could be described as environmental impact reporting or corporate social responsibility reporting;
- (f) directly answer the question as to whether management commentary is necessary for a 'true and fair view' of the entity being reported on; or
- (g) contain application guidance or illustrative examples.
Much of the discussion centred on the nature of the guidance that the document would represent and whether the IASB's full due process should attach to it. Some Board members favoured treating the document as similar to the Expert Advisory Panel's guidance on measuring financial instruments, and would release the document on the IASB's Website and invite comment. Others favoured treating the document as a formal exposure draft of 'best practice' guidance. The Chairman was concerned that, having been asked by several jurisdictions to address this issue, to characterise it as an 'inferior document' would be a mistake.
By a majority, the Board voted to call the document an Exposure Draft [of proposed Best Practice Guidance]. The ED is expected to be issued in mid-June 2009 with an extended comment period ending in mid-February 2010.
Messrs Garnett, Kalavacherla, Leisenring, and (potentially) Smith indicated that they would be presenting an Alternative View.
Amendments to IAS 1 paragraphs 13 and 14 proposed in the Working Draft of the ED would be removed from the ED and referred to the Annual Improvements Project.