Broadly defined, performance is the relationship of the income and expenses of an entity. Traditionally entities reported their performance in an income statement. Under
IAS 1(2007), entities report performance either in a single statement of comprehensive income (with a subtotal for traditional profit or loss) or in two statements, an income statement and a statement of comprehensive income. IAS 1 allows flexibility in formats of, and groupings and subtotals in, those statements. The IASB and the FASB have a joint
Project on Financial Statement Presentation that encompasses performance reporting. In October 2008, they published a
Discussion Paper proposing the structure and format of an entity's financial statements. The new PAAinE discussion paper acknowledges the joint IASB-FASB project but notes that:
|
There are a number of fundamental issues about the presentation of financial performance information that that discussion paper does not address. Those issues include:
- should the net income line be retained?
- (if it should be retained), what should the basis be for determining whether something is within net income or outside net income?
- what role should recycling have in performance reporting?
|
The PAAinE paper observes that 'there is a clear need for one or more key lines to provide a basis for communication to the market and as a starting point for analysis and comparison'. The paper discusses the attributes such a key line needs to have if it is to fulfil this purpose. 'It is therefore important that items of income, expense, gains, and losses are disaggregated, grouped, and aggregated in a way that ensures that the most useful key lines are presented.' The paper notes that whether recycling is needed also depends on the aggregation/disaggregation model used. The final chapters of the paper discuss various disaggregation models. EFRAG invites comments on the paper by 30 September 2009.