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EFRAG publishes its final comment letter on the IASB exposure draft ED/2019/7 General Presentation and Disclosures

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

05 Nov 2020

EFRAG has published its final comment letter in response to the IASB's Exposure Draft ED/2019/7 General Presentation and Disclosures (the ED).

The proposed new standard is intended to replace IAS 1 Presentation of Financial Statements.

In its final comment letter, EFRAG:

  • supports the IASB's proposals to present an operating, investing and financing category in the statement of profit or loss to improve comparability and reduce diversity in practice, but has reservations over some of the proposals in the ED;
  • expresses the view that separate presentation of integral and non-integral associates and joint ventures could provide relevant information for users of financial statements. However EFRAG is concerned that the IASB’s proposed definition would involve significant judgement and makes a number of suggestions in this regard;
  • supports the IASB's proposal to continue requiring entities to present an analysis of expenses using either by-function or by-nature method, based on whichever method provides the most useful information to the users of financial statements. However EFRAG recommends that the IASB further investigates the cost/benefit profile of its requirement to disclose on a by-nature basis in the notes when presenting by-function on the face of the financial statements, and, if appropriate, consider focusing on information that is most needed by users.
  • welcomes the IASB's efforts to define unusual income and expenses and to require entities to disclose such items in the notes, but notes that the definition of unusual items seems to be rather narrow;
  • questions the cost/benefit profile of the requirement to present the split of tax and non-controlling interest components for all the items when a performance measure is adjusted; and
  • welcomes the IASB's efforts to provide guidance on Management Performance Measures (‘MPMs’) but considers that not only subtotals on the face of the statement of profit or loss but also other measures, such as indicators of financial position or ratios, should be included in the scope of this requirement. EFRAG also considers that the IASB should articulate better the link between MPMs and IFRS 8

For more information, see the press release and the comment letter on the EFRAG website.  EFRAG's feedback statement which summarises the comments received by EFRAG on its draft comment letter and explains how those comments were considered by EFRAG during its technical discussions leading to the publication of its final comment letter is available on the EFRAG website here.

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