Management Commentary (Wider corporate reporting) [ED]

Comment period ended on November 23, 2021

Proposed effective date:

The ex­po­sure draft pro­poses that the Prac­tice State­ment would su­per­sede IFRS Prac­tice State­ment 1 Man­age­ment Com­men­tary for an­nual re­port­ing pe­ri­ods be­gin­ning on or af­ter the date of its is­sue. The Prac­tice State­ment is not an IFRS and its ap­pli­ca­tion is not manda­tory. Fi­nan­cial state­ments can com­ply with IFRSs even if they are not ac­com­pa­nied by man­age­ment com­men­tary or if they are ac­com­pa­nied by man­age­ment com­men­tary that does not com­ply with the Prac­tice State­ment.

 

Next steps:

The IASB will meet with the International Sustainability Standards Board (ISSB) to discuss feedback on a potential project on integration in reporting, which was described in the ISSB Consultation on Agenda Priorities. The IASB will then discuss the direction of the Management Commentary project.

Last updated:

December 2023

Overview

At its meeting in November 2017, the IASB discussed the following:

1. Update on developments in wider corporate reporting

The Board received an update on developments since March 2017 in wider corporate reporting.  The Board decided that the Foundation’s interest in wider corporate reporting should be limited to the provision of other financial information to meet the needs of existing and potential investors, lenders, and other creditors, as defined in the Conceptual Framework for Financial Reporting.

2. Proposal to add a project to revise and update the IFRS Management Commentary Practice Statement

The Board decided to add a project to its standard-setting agenda to revise and update the IFRS Practice Statement Management Commentary, which was issued in 2010.

A management commentary complements the financial statements by providing other financial information—insight into the company’s strategy for creating business value over time, its progress in implementing its strategy, and the potential impact on financial performance not yet captured by the financial statements.

Investors can use this other financial information to inform their economic decisions. Without this information:

  • management teams may prioritize short-term financial targets over long-term value creation not recognized in the financial statements;
  • investment capital may be diverted from companies pursuing a long-term strategy in favour of those prioritizing short-term earnings.

The update to the IFRS Practice Statement 1 Management Commentary will include consideration of:

  • developments from other narrative reporting initiatives—for example, the value of focusing on business-critical resources and long-term value creation;
  • acknowledged gaps in narrative reporting practice indicating that the goals of the Management Commentary and other narrative reporting regimes are unmet. For example, the International Integrated Reporting Council in its recent review has acknowledged the need to revisit its guidance on reporting on the ‘resources and relationships’ that companies use to ‘create value’. Other narrative reporting gaps include challenges in reporting forward-looking information, inconsistent reporting on business models, and short-term reporting on strategies. Stronger guidance, whilst still maintaining the principles-based approach of the original MCPS (Management Commentary Practice Statement) should help to address this.

 

Other developments

September 2023

In September 2023, the IASB staff up­dated the work plan to in­di­cate that the Board plans to de­cide on the pro­ject di­rec­tion in H1 2024.

July 2023

In July 2023, the IASB staff up­dated the work plan to in­di­cate that the Board plans to de­cide on the pro­ject di­rec­tion in Q4 2023.

November 2022

On No­vem­ber 28, 2022, the IASB staff up­dated the work plan to in­di­cate that the Board plans to de­cide on the pro­ject di­rec­tion in H2 2023.

January 2022

On January 28, 2022, the IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft Feedback in March 2022.

September 2021

On September 27, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft feedback in Q1/2022.

May 2021

On May 27, 2021, the IASB published the exposure draft Management Commentary in an effort to update the 2010 IFRS Practice Statement 1 "Management Commentary". Comments are requested by November 23, 2021.

April 2021

On April 7, 2021, the IASB released a statement that the exposure draft (ED) for a revised Practice Statement 1 "Management Commentary" is now expected to be published in May 2021.

February 2021

On February 19, 2021, IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in April 2021.

October 2020

On October 30, 2020, IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in Q2/2021.   

September 2020

On September 28, 2020, IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in Q1/2021.

July 2019

On July 23, 2020, IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in the first half of 2021.

On July 29, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in the second half of 2020.

July 2018

On July 18, 2018, the IASB® staff updated the work plan to indicate that the Board plans to issue an Exposure Draft in the 1st half of 2020.

May 2018

On May 25, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in 2020.

November 2017

On November 16, 2017, the IASB staff up­dated the work plan to in­di­cate that the IASB ex­pects to is­sue an Exposure Draft in respect of this project at some date in the future.

 

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