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Primary financial statements — Agenda Consultation feedback

Date recorded:

Recap

The objective of this research project is to examine the purpose, structure and content of the primary financial statements, including the relationship between the individual statements.

In this meeting, the staff summarised the feedback on the primary financial statements project that is derived from the IASB’s 2015 Agenda Consultation, the Capital Markets Advisory Committee (CMAC) February 2016 meeting and the feedback received on the growth in the reporting of ‘non-IFRS’ information in response to the Trustee’s review of structure and effectiveness.

Most of the respondents to the 2015 Agenda Consultation who ranked the importance of the research project gave it a high priority. However, the respondents are divided in their view about what the focus of the research project should be. Many prefer a focus on aspects of performance reporting while some think that the project should focus on primary financial statements as a whole.

As a next step, the staff will bring a paper that outlines their proposed approach to research on this project in light of the feedback received. In addition the staff will continue its preliminary research to identify the problems in current financial reporting.

The Board will not be asked to make any decisions at this meeting.

Board discussion

The discussion focused on the question to what extent if any the work that had been performed previously in the financial statements presentation project (‘the FSP project’) could be used for this project. The Research Director said that it would be necessary to determine whether the scope of the project should be narrow or broad.

One Board member conceded that many areas of the FSP project had been highly controversial but to him that did not necessarily mean that they could not be used as many hours had been spent on that project. He regretted that the staff draft following the DP had never been exposed because of the controversy of the project and therefore, the good parts could not be identified. A fellow Board member replied that he had not been a Board member at the time of the project but that he had heard only bad things about it. Given that, it would be difficult to use any parts of the project. For him, the proposed changes had been too dramatic a change in the system which led to the widespread rejection.

The Board also discussed how the FASB’s discussions affected this project. One Board member said that although he was principally not in favour of US GAAP convergence, for this project he had a different opinion. The Technical Manager in charge of the session replied that they were monitoring the work of the FASB closely.

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