Management Commentary

Date recorded:

The purpose of this session was to finalise the Board's preliminary views on certain topics for the exposure draft to be drafted.


Conceptual Framework

The staff asked the Board if it agreed to benchmark management commentary against the outcome of Phase A of the Conceptual Framework project ('Objective and qualitative characteristics') instead of the existing Framework of the IASB.

The Board agreed.


Objective of management commentary versus the objective of financial reporting

The project staff continued to get the Board's view on the objective of management commentary. Firstly, the staff asked the Board whether management commentary should be subordinated of the framework (that is, is the Conceptual Framework the 'umbrella' for management commentary). The Board agreed

The Board also had a short discussion of where to draw the line of the information to be provided in management commentary. The project team then asked the Board whether the objective of management commentary should be the same as for financial reporting. The Board had a discussion of whether overemphasising neutrality would impair the 'through the eyes of the management' approach. The Board agreed to the staff recommendation to align the objectives.

The staff then went on to explain that although the objective of both financial reporting and management commentary are the same, but the purpose of management commentary is unique, which should be reflected in the wording used.

After a short debate on the distinction between objective and purpose, the Board agreed.


Users of management commentary versus the users of financial reporting

The staff asked the Board whether the primary users of management commentary should be both present and potential capital providers as defined in the ED on objective and qualitative characteristics of financial reporting.

The Board agreed.


Qualitative characteristics of management commentary versus qualitative characteristics of financial reporting

The project team noted that the use different terminology to describe the qualitative characteristics of management commentary as compared to the qualitative characteristics of financial reporting.

Conceptual Framework

Management Commentary

Fundamental QCs:

RelevanceFaithful representation


Enhancing QCs:


UnderstandabilityComparability (over time)Supportability

The staff explained that 'balance' can be subsumed within faithful representation. There was a short discussion in this topic and whether balance was interchangeable with the notion of 'neutrality'. It was agreed to use 'faithful representation' instead of 'balance'

The area of bigger concern for Board members was the difference between verifiability and supportability. It was argued that although much of the information in management commentary is forward-looking, the process for 'verifying' is essentially the same as for historical information. It was proposed to better explain what verifiability meant in the context of forward-looking information and management commentary in general instead of introducing a new term. The Board had a lengthy discussion on this topic.

In the end, the Board agreed to replace 'supportability' with 'verifiability', but asked staff write up what is the intended meaning of verifiability in this context and bring this back to the Board.


Content of management commentary

The staff presented the Board the information to be disclosed to meet the objective of management commentary. Some Board members wanted that list to be expanded to include management compensation (and how it aligns to the performance measures), segment information, financing and taxes.

The Board agreed subject to expanding the list.


Permission to begin drafting an exposure draft

At the end of the session the staff sought permission to begin drafting an exposure draft. One Board member asked what type of publication that would be - it has already been agreed that it will not be part of IFRSs. The staff replied that this is work in progress, but this would be resolved in due course.

The Board then granted permission to begin drafting.

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