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Study of the CFA Institute on the role of comprehensive income

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18 May 2015

The CFA Institute, a global association of investment professionals, has published 'Analyzing Bank Performance: Role of Comprehensive Income'. The study argues that the information reported on the statement of other comprehensive income (OCI) is an integral part of performance reporting and that there is a need to increase investor attention on OCI statement items.

The report reviews existing academic evidence and analyses data from 44 global and mainly large, complex banks over an eight-year reporting period (2006–2013). Although it focuses on banks, the findings are more widely applicable as the question of what constitutes performance is highly relevant and will also be one of the central questions of the forthcoming exposure draft on the Conceptual Framework project.

The study findings show that OCI information has economic information content and that losses on the OCI statement are more common than losses on the income statement. Therefore, the authors (who include a Trustee, a member of the IFRS Advisory Council, and a member of the IFRS Interpretations Committee) propose the following measures to enable and encourage investors to increase scrutiny and incorporate OCI in their valuation and performance analysis:

  • enhancement of the presentation and disclosure of OCI line items by financial statement preparers and standard-setters,
  • explanation of the purpose of OCI within the conceptual framework and incorporation of enhanced presentation principles into the intended performance reporting project, and
  • incorporation of granular OCI information into data aggregators' electronic databases to facilitate increased investor access.

Please click to access the study on the CFA Institute's website.

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