Primary financial statements [joint with FASB]

Date recorded:

Project Overview (IASB Agenda Papers 21A–21B)


The staff gave an overview of the IASB’s Primary Financial Statements (PFS) project. The staff touched on the objective and history of the project, its scope, the IASB’s tentative decisions on the project to date and the next steps.

Staff recommendation

The session was for educational purposes and therefore the agenda paper did not contain any staff recommendations.


As regards the project objective and scope, one FASB member asked which investors the IASB had reached out to. The IASB Technical Director said that it was a broad spectrum of investors. Regarding the improvement of disaggregation, a FASB member asked whether the factors to help entities determine whether a by-function or by-nature methodology provides the most useful information to users (ie the peer approach, the internal approach and the key components approach) are aligned. The IASB Technical Director confirmed that they should be but there may be situations where they are not.

The FASB assistant director of technical activities asked whether the IASB heard from stakeholders that if an entity selects a by-nature presentation, investors also wanted to see by-function information. The IASB staff said that if by-nature was presented in the primary financial statements a by-function analysis is not needed.

Financial Performance Reporting—Disaggregation (FASB Agenda Papers 21C–21D)


The purpose of this session was to update IASB members on the background and scope of the Financial Performance Reporting (FPR) project, explain why the FASB decided on the current scope and to discuss the feedback received as part of the staff’s initial deliberations. The FASB is focusing on two types of improvements:

  • Disaggregation of performance information
  • Structure of the performance statement (subtotals)

The staff solicited views on three issues around the disaggregation of performance information:

  • Describing cost of goods sold (COGS) and selling, general and administrative costs (SG&A) for disaggregation
  • Describing natural components (i.e. a grouping of expenses, gains, losses or income according to the kinds of goods or services received by the entity)
  • Other terminology—departments and allocations

Staff recommendation

The session was for educational purposes and therefore the agenda paper did not contain any staff recommendations. The FASB staff asked whether IASB Members have questions on the scope of the project and solicited observations or questions on how the FASB staff is attempting to describe what are COGS and SG&A lines. The FASB staff also asked if they have questions and observations on allocations and departmental expenses.


The discussion focussed on the disaggregation of COGS and SG&A. FASB staff confirmed that at least selling should be split out of SG&A, but ideally more should be split out. One IASB member advised that a by-nature presentation should always be simpler and less costly as the lowest level of the general ledgers are always by-nature. The costs get allocated to functions on a higher level. The IASB Chairman highlighted that the added value of the IASB’s PFS project is the introduction of structure and subtotals.

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