Primary financial statements

Date recorded:

Cover note and summary of feedback and redeliberations (Agenda Paper 21)

In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The comment period ended on 30 September 2020. In this meeting, the IASB continues its redeliberations of the proposals in the ED.

Use of columns to present management performance measures, and general requirements for additional line items and subtotals (Agenda Paper 21A)

Background

This paper addresses feedback on the proposal to prohibit the use of columns to present management performance measures (MPMs) in the statement(s) of financial performance. The paper also considers related feedback on the requirements for presentation of additional line items, headings and subtotals which were carried over essentially unchanged from IAS 1.

Staff recommendation

The staff recommended the IASB add a requirement based on the discussion in paragraphs BC31 and BC165 of the Basis for Conclusions (BC) to the ED for additional subtotals and line items that are presented in the statement(s) of financial performance in accordance with paragraph 42 of the ED to fit into the structure of the proposed categories and withdraw the proposal to specifically prohibit columns to present MPMs in the statement(s) of financial performance.

IASB discussion

IASB members agreed to add a requirement based on the discussion in paragraphs BC31 and BC165 of the BC to the ED for additional subtotals and line items that are presented in the statement(s) of financial performance in accordance with paragraph 42 of the ED to fit into the structure of the proposed categories. Some IASB members asked the staff to clarify that paragraph 43 of the ED require entities to present additional subtotals, which may be MPMs, in the statement(s) of financial performance when these are necessary to provide an understandable overview of an entity’s income and expenses if such measures comprise line items made up of amounts recognised and measured in accordance with IFRS Accounting Standards. Most IASB members agreed with the staff recommendation to withdraw the proposal to specifically prohibit columns to present MPMs in the statement(s) of financial performance. However, one IASB member thought that columnar presentation of MPMs may not be consistent with the principle to provide an ‘understandable overview’ of the entity’s income and expenses or assets, liabilities and equity. Some IASB members were concerned that absent an explicit prohibition, preparers may decide to present MPMs using columns or alternative presentations which may not be consistent with the application of general principles. Some IASB members preferred to remain neutral and neither permit nor prohibit the format in which MPMs are presented as they believed this is a management metric and management should be permitted to present in the format they believe best articulates the measure. Many IASB members asked the staff to include in the drafting that if MPMs are presented in the statement(s) of financial performance, they should be subject to the requirements in paragraph 42 and paragraph 106 of the ED. Those IASB members asked the staff to clarify that the requirements of paragraph 42 and 106 of the ED not only apply to the content presented on the statement(s) of financial performance but also to supplemental information if this is presented on the statement(s) of financial performance.

IASB decision

All IASB members agreed with the staff’s recommendation to add a requirement based on the discussion in paragraphs BC31 and BC165 of the BC to the ED for additional subtotals and line items that are presented in the statement(s) of financial performance in accordance with paragraph 42 of the ED to fit into the structure of the proposed categories.

9 of the 10 IASB members agreed with the staff’s recommendation to withdraw the proposal to specifically prohibit columns to present MPMs in the statement(s) of financial performance.

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