Summary notes on IASB meeting on management commentary

From Kris Peach, Australian Accounting Board Chair and CEO:

“2nd meeting of IFRS Management Commentary panel broadly supportive of performance, position and progress proposals.

Key issues discussed included verifiability of information, location of management commentary as part of the financial report, how to reconcile neutrality with ‘through the eyes of management’, importance of understanding purpose and components of alternative earnings measures (similar to performance reporting project proposals), conciseness and linkage.

Some concern about asking for management compensation disclosures only when related to performance measures, given all management compensation impacts performance, and suggested disclosures only tiny piece of performance aspect of the compensation.

Support for asking for forecast disclosures where forecast has been made externally. Some wanted more aspirational recommendation to have forecasts. Discussed need guidance on whats in financial statements & whats in mgt commentary (eg some climate change info should be in financials and some in commentary).

Noted need for more explicit consideration of intangibles in management commentary, particularly if not recognised on balance sheet. Also noted importance of discussing what risks eventuated in current year that were noted in prior years. “

Follows on from first panel, which had discussion on purpose amongst other things which is going to back pack in panel 3. Details on the consulting process on IFRS management commentary here.