Financial Statement Presentation (FSP)

Date recorded:

Segment disclosures and the FSP project

The Board briefly considered possible changes to the IFRS 8 Operating Segments following the discussion during the joint meeting. The Board disagreed with any changes to IFRS 8 that would lead to changes in fundamental principles of IFRS 8. The Board noted that the FSP project was not the right place for changes to IFRS 8 and that the relevant issues should be addressed as part of the post-implementation review of IFRS 8 that should start during the following year.


Financial services entity issues

The Board considered specific issues related to the financial services entities. The Board noted that of the raised concerns, most of the issues were resolved during the re-deliberation process (line-by-line cohesiveness, short-term liquidity disclosures, and reconciliation schedule and category definitions).

The Board considered the requirement to present a direct method Statement of Cash Flows so that the Statement of Cash Flows reflected the substance of its transaction. The Board discussed the gross presentation of transactions (that is, whether to separately depict the transactions from and to depositors' accounts). Some Board members held the view that gross depiction of these transactions was not particularly useful as it related to hypothetical transactions. On the other hand, other Board members noted that it might provide some useful information.

Some Board members reiterated their view that Statement of Cash Flows was not useful for financial services entities. They proposed to require a 'statement of flow of funds' that would consider issues as volume of transactions, credit quality, and liquidity.

After a considerable debate during which the Board tried to assess the impact of various transaction on the Statement of Cash Flows, the Board asked the staff to prepare a further analysis that would include examples of application of some of the transactions on the Statement of Cash Flows prepared using the proposed direct method as well as analysis of the 'statement of flow of funds'.


Costs and benefits

The Board briefly considered the costs of the proposal. The Board agreed to seek input from constituents on the estimated cost of the overall proposal and its components (the Board would try to identify which requirements are most costly and difficult to implement). The Board also agreed to undertake outreach to assess the estimated costs considering one-off and ongoing costs, indirect costs of implementation, and on the internal control systems.


Net debt presentation

After a brief debate, the Board agreed to require disclosure of an analysis of the changes in the balances (roll-forward) of line items that normally constitute net debt (long-term debt, short-term debt, interest payable, cash, marketable securities, interest bearing deposits). The Board agreed to require disclosure of these data in a single note.

The Board also agreed not to specifically define 'net debt' and asked the staff to find suitable name for this disclosure (and not refer to it as 'net debt').

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