Management commentary

Date recorded:

Oral Update

In this session the staff informed the Board about discussions held at the Management Commentary Consultative Group (MCCG) meeting in September 2018. Discussions included the overall approach of the project and the status of a future Practice Statement, the objective of Management Commentary, the application of materiality to Management Commentary and principles for preparing Management Commentary, focusing on completeness, neutrality and comparability. 

The MCCG supports the overall approach of the project and the revision of the Practice Statement based on the Conceptual Framework. Some members of the MCCG, mainly standard-setters, expressed a preference for the Practice Statement to become mandatory. Members agreed that the objective of Management Commentary should be consistent with the objective of other forms of financial reporting.

As regards materiality, the Materiality Practice Statement and the Conceptual Framework should be used as the basis for the staff’s approach.

When discussing completeness, the members of the MCCG agreed with the concept of narrative coherence, which includes alignment with financial statements and other sources of information. On neutrality, some noted that specific guidance was needed on aggregation and disaggregation of information. On comparability, some members raised concerns on sensitive information and comparability with peers.

As a next step, the staff will bring a paper to the Board on the objective of Management Commentary in November.


The Board members confirmed that practice is very interested in this project, and the main concerns in practice are with regard to materiality, verifiability and whether the Practice Statement will be mandatory or not.

Although some constituents called for the Practice Statement to be mandatory, it is acknowledged that the different existing frameworks in different jurisdictions would make this very difficult. The Chairman said unequivocally that the Practice Statement will not be mandatory. He urged the Board to refrain from discussing this topic further.

As regards verifiability and auditability, Board members confirmed that the Management Commentary should be reliable, but verifiability and auditability should not be a main focus of the project as this might result in the loss of information (i.e. information that is not auditable would not be allowed in the Management Commentary).

Constituents also asked whether the Practice Statement will be close to the International Integrated Reporting Framework. The Board has always confirmed that Integrated Reporting is important but the Practice Statement will be different.

One Board member suggested to rename the project as when people are looking for a project on reporting of broader financial information on the IASB website, they would not necessarily click on a project that is aimed at updating the Management Commentary Practice Statement.


No decisions were made.

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