EFRAG Final Comment Letter on the IASB's exposure draft on Management Commentary

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10 Dec, 2021

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IFRS Practice Statement Exposure Draft ED/2021/6 'Management Commentary'.

The ex­pos­ure draft intends to update the 2010 IFRS Prac­tice State­ment 1 Man­age­ment Com­ment­ary.

Overall EFRAG sup­ports the pro­posed ob­ject­ive-based ap­proach in­clud­ing the six proposed content ele­ments and con­siders that de­vel­op­ing spe­cific, rule-based re­quire­ments for the man­age­ment com­ment­ary is primar­ily the re­spons­ib­il­ity of le­gis­lat­ors, se­cur­ity reg­u­lat­ors and/or na­tional stand­ard-set­ters.  EFRAG indicates that the ED introduces complexity by proposing three different types of disclosure objectives for the six content elements and suggests that the IASB consider the outcome of its ongoing consultation on the exposure draft Disclosure Requirements in IFRS Standards—A Pilot Approach, to assess whether a similar two-tier objective-based approach could be applied to the revised Practice Statement.

Additionally, EFRAG also considers that the statement of full compliance with the Practice Statement should be encouraged but not mandated and statement of partial compliance should not be allowed, suggests that the guidance should explicitly address the subject of governance, it should give equal emphasis​ to the discussion of 'opportunities and risks', and it should holistically address disclosures on intangibles. Additional illustrative examples on ESG and other matters are also suggested.

The press release and the final comment letter are available on the EFRAG website.

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