The International Accounting Standards Board (IASB) on May 27 published a new framework proposing to overhaul “management commentary” — the report that complements a company’s financial statements.
The IASB published for public comment a proposed comprehensive framework for companies preparing management commentaries, which, it said in a statement, is more aligned with investors’ informational needs.
The proposed framework represents a major remodeling of IFRS Practice Statement 1 Management Commentary. “It builds on innovations in narrative reporting and would enable companies to bring together in one place the information investors need to assess a company’s long-term prospects—such as information about the company’s intangible resources and relationships and about sustainability matters that affect the company,” according to the statement.
Management commentary would not only explain a company’s financial statements but also give investors insights into variables that bear on a company’s ability to create value and generate cash flows, it said. It would be based on information used to manage the business, including financial and non-financial metrics used to monitor performance.
“The proposed new framework provides a robust basis for bringing together in a single report financial, sustainability and other information about the matters that are fundamental to a company’s long-term prospects,” Hans Hoogervorst, Chair of the International Accounting Standards Board, said.
The deadline for comments on the draft is November 23.
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