Disclosure initiative — Primary Financial Statements [ED]

Comment period ended on September 30, 2020 (extended from June 30, 2020)

Next steps:

The IASB expects to issue the new Accounting Standard in Q2 of 2024.

Last updated:

November 2023

Overview

The International Accounting Standards Board (Board) has proposed improvements to the way information is communicated in the financial statements, with a focus on financial performance. Responding to investor demand, the proposals would require more comparable information in the statement of profit or loss and a more disciplined and transparent approach to the reporting of management-defined performance measures (‘non-GAAP’).

The Board developed these proposals as part of its Primary Financial Statements project and wider work on ‘Better Communication in Financial Reporting’. The proposals cover three main topics.

New subtotals in the statement of profit or loss

Companies would be required to provide three new profit subtotals, including ‘operating profit’. Operating profit is commonly reported by companies but is currently not defined by IFRS Standards, making meaningful comparisons between companies difficult. The new subtotals would give better structure to the information and enable investors to compare companies.

‘Non-GAAP’ transparency

Companies would be required to disclose management performance measures—subtotals of income and expenses that are not specified in IFRS Standards—in a single note to the financial statements. In this note, companies would be required to explain why the measures provide useful information, how they are calculated and to provide a reconciliation to the most comparable profit subtotal specified by IFRS Standards. These requirements would add much-needed transparency and discipline to the use of non-GAAP measures and make it easier for investors to find the information they need to make their own analyses.

Improved disaggregation of information

Investors sometimes find it difficult to unpick a company’s reported information because items may be lumped together with insufficient labelling or explanations. Therefore, the Board has proposed new guidance to help companies disaggregate information in the most useful way for investors. Companies would also be required to provide better analysis of their operating expenses and to identify and explain in the notes any unusual income or expenses, using the Board’s definition of ‘unusual’. These requirements would help investors analyze companies’ earnings and forecast future cash flows.

 The proposals would result in a new IFRS Standard that sets out general presentation and disclosure requirements relevant for all companies, replacing IAS 1 Presentation of Financial Statements. The Board is also proposing to amend some other IFRS Standards.

The proposals would result in a new IFRS Standard that sets out general presentation and disclosure requirements relevant for all companies, replacing IAS 1 Presentation of Financial Statements. The Board is also proposing to amend some other IFRS Standards.

On July 26, 2023, the IASB an­nounced that it has con­cluded its de­ci­sion-mak­ing on this pro­ject—its fi­nal steps be­fore draft­ing and bal­lot­ing the new IFRS Ac­count­ing Stan­dard.

The IASB ex­pects to is­sue the new Ac­count­ing Stan­dard in the first half of 2024.

This stan­dard will re­sult in com­pa­nies re­port­ing more con­sis­tently and trans­par­ently on their fi­nan­cial per­for­mance, mak­ing it eas­ier for in­vestors to com­pare com­pa­nies. It will help to build trust be­tween com­pa­nies and in­vestors and ul­ti­mately ease the flow of cap­i­tal. The IASB is now sat­is­fied that it has re­fined its orig­i­nal pro­pos­als pub­lished in 2019 to re­flect stake­holder feed­back. This new Stan­dard will su­per­sede IAS 1 Pre­sen­ta­tion of Fi­nan­cial State­ments. 

 

Other developments

July 2023

On July 26, 2023, the IASB announced that it has concluded its decision-making on this project—its final steps before drafting and balloting the new IFRS Accounting Standard and that it expects to issue the new Accounting Standard in the first half of 2024.

May 2023

On No­vem­ber 28, 2022, the IASB staff up­dated the work plan to in­di­cate that the Board plans to is­sue the IFRS Ac­count­ing Stan­dard in 2024.

November 2022

On November 28, 2022, the IASB staff updated the work plan to indicate that the Board plans to issue the IFRS Accounting Standard (no date specified).

January 2021

On January 29, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to issue a new IFRS Standard on presentation and disclosures in financial statements that, when finalized, will replace IAS 1, Presentation of Financial Statements (no issue date yet specified).

December 2020

On December 18, 2020, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in January 2021.

September 2020

On September 28, 2020, IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft Feedback in December 2020.

July 2020

On July 23, 2020, IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft feedback in Q4/2020.

April 2020

The comment period on the Exposure Draft was extended by the IASB to September 30, 2020.

January 2020

On January 15, 2020, the AcSB released an exposure draft that corresponds to the International Accounting Standards Board's (IASB) exposure draft. Comments are requested by June 30, 2020.

December 2019

On December 17, 2019, the IASB published the exposure draft of a new standard General Presentation and Disclosures that is intended to replace IAS 1, Presentation of Financial Statements. Comments are requested by June 30, 2020.

October 2019

On October 1, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in December 2019.

July 2019

On July 29, 2019, the IASB staff updated the work plan to indicate that the Board expects issue an Exposure Draft in Q4/2019.

May 2019

On May 18, 2019, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in the second half of 2019.

November 2018

In November 2018, the IASB staff updated the work plan to indicate that the IASB expects to issue a Discussion Paper or Exposure Draft in the second half of 2019.

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to issue a Discussion Paper or Exposure Draft in the first half of 2019. 

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue a Discussion Paper or an Exposure Draft in the 1st half of 2017.

March 2017

On March 23, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to publish a Discussion Paper or Exposure Draft in respect of this project for comment after September 2017.

December 2016

On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish a Discussion Paper or Exposure Draft for comment after June 2017.

November 2016

On November 7, 2016, the IASB provided an update and papers summarizing this research will be presented to the Board in November 2016. It is expected that the Board will decide on the scope of the project in December 2016.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction by December 31, 2016.

 

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