Project Direction (Agenda Paper 15)

Background

In this paper, the staff provided an update on the status of the management commentary project following the joint IASB-ISSB meeting, at which potential collaboration with the ISSB was discussed.

The staff set out relevant background to and the evolving landscape around the management commentary project, summarising the origin of the project, the exposure draft (ED) Management Commentary and the feedback received in response, the interaction with the Integrated Reporting (IR) Framework, and the ISSB’s agenda consultation.

Based on these developments, the staff identified four broad alternative directions that the IASB could take at a future meeting:

• Finalise the project
• Retire the project
• Undertake a broader project
• Keep the project on hold

Finalise the project

Because of the broad support the IASB received for the proposals, the IASB could decide to make targeted or more extended enhancements to its proposals in the light of the feedback received on the ED and subsequent developments in the reporting landscape.

The staff plan to provide an analysis and recommendations for the scope of work for this alternative direction at a future meeting where the IASB will be asked to determine the direction of the project.

Retire the project

The staff explained that the IASB may determine that completing the project would not produce sufficient benefits, for reasons such as the shortcomings in practice being resolved by the work of the ISSB, or the revised guidance having insufficient influence on the shortcomings in practice.

This alternative would require the IASB to consider whether to rescind the existing Practice Statement, amongst other matters.

Undertake a broader project

This alternative would involve wrapping the work performed on the project to date into a new project such as a project on integration in reporting. Such a project could be worked on with the ISSB. However, it would require a revision of the objectives and scope of the project that would have to take into account diverse stakeholder feedback on the ISSB’s request for information Consultation on Agenda Priorities.

Keep the project on hold

If the IASB concludes that it needs more information to make the decision on the direction of the project, it could consider keeping the project on hold.

The staff noted that all of these alternatives are compatible with the IASB and ISSB working in a connected manner.

The IASB were not asked to make any decisions in this session.

IASB discussion

IASB members welcomed the discussion and highlighted additional information they might need to assist any future decision-making and outlining initial views on the development of the project. IASB members had diverse, tentative views about their preferred alternatives.

All IASB members noted that the change in the corporate reporting landscape since the project started, such as the creation of the ISSB and the consolidation of the IR Framework into the IFRS Foundation, should be considered and may warrant obtaining additonal stakeholder feedback.

Some IASB members wanted to understand the extent to which there was stakeholder interest to finalise the project and crystalise what had so far been developed. It was noted that the best way forward would be to make a decision soon so that IASB resources could be allocated efficiently. It was suggested that the staff could provide an analysis comparing the cost and resources requirements of each alternative to assist decision-making.

Some IASB members noted the feedback supportive of collaboration between the IASB and ISSB, also observing that feedback to the ISSB agenda consultation indicated such a project should be deprioritised compared to other ISSB projects. It was suggested by some that this may be indicative that the fourth altenative, to keep the project on hold, may be the most approrpaite. Others felt that doing so would allow knowledge and progress gained to be forgotten, and the reporting landscape to change even further.

It was also noted that IASB members might wish to consider taking a broader, IFRS Foundation perspective, rather than a narrower, IASB focus. This would entail considering the extent to which a management commentary practice statement would be duplicative when issued alongside the IR Framework and IFRS S1.

It was also discussed whether, if the project is finalised, what the form and status of management commentary would be. An IASB member noted that, if this became a mandated standard or similar, then additional feedback may be required if stakeholders previously responded on the basis of a revised practice statement being published.