The report summarizes all the comments received on EFRAG European discussion paper. The paper provides useful analysis on the current state of play in the accounting framework, including inconsistencies in the determination and (non-)recycling of Other Comprehensive Income (OCI) items.
EFRAG and European national standard-setters publish “Performance Reporting – summary of comments in response to the European Discussion Paper”. The Discussion Paper was issued for public comment in March 2009 as part of the European pro-active work and addressed some fundamental issues about the presentation of financial performance. The summary of comments can be downloaded here.
The Discussion Paper was issued for public comment in March 2009 as part of the European pro-active work and addressed some fundamental issues about the presentation of financial performance.
EFRAG and the European National Standard Setters have agreed to pool some of their resources and work together more closely so that Europe as a whole can participate more effectively in the global accounting debate. It was agreed that this initiative should in the beginning concentrate on longterm pro-active work. The objective of the initiative is to stimulate debate on important items on the IASB agenda at an early stage in the standardsetting process before the IASB formally issues its proposals. The initiative has the joint ambitions of representing a European point of view and exercising greater influence on the standard-setting process. This initiative is known as the “Pro-active Accounting Activities in Europe” (or PAAinE) initiative.
The PAAinE DP looked at how the term “performance” was used, what companies reported when the reported performance and whether users focused on particular performance numbers. It observed that, in fact, there was no agreement as to what performance represented at a detailed level; and that different users of financial statements had different approaches to what constituted “performance”. Empirical research suggested that companies used a range of different measures to explain their performance, and although most of the performance measures used had their merits, none exhibited much greater value relevance that others.
The PAAinE DP notes that performance is a complex, multi-faceted notion that cannot be encompassed in one or a few numbers. Nevertheless both preparers and users want some key performance reporting lines to convey headline numbers and to provide a starting point for analysis. It is therefore important that items of income, expense, gains and losses are disaggregated, grouped and aggregated in a way that ensures that the most useful key lines are presented. The paper notes that whether recycling is needed also depends on the aggregation/disaggregation model used. The final chapters of the paper discuss various disaggregation models.
© EFRAG - European Financial Reporting Advisory Group
Documents associated with this article
|
|
EFRAG report.pdf
|
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article