Chair of the IASB Hans Hoogervorst outlined the IASB's plans to maintain and strengthen the relevance of financial reporting in two specific areas: primary financial statements and management commentary.
First, the IASB will improve comparability by defining some of the commonly used subtotals as IFRS numbers. Second, where management still feel the need to provide additional metrics, the IASB will require increased transparency and discipline around the calculation and presentation of those subtotals.
The IASB understands that its definition of Operating Profit does not work for financial entities, such as banks. For this reason, the IASB has decided to require financial entities to include expenses from financing activities relating to the provision of financing to customers in Operating Profit. The IASB has found similar solutions for insurers and investment companies.
In addition to these new subtotals, the Primary Financial Statements project will introduce greater transparency and discipline to the use of subtotals not defined in IFRS Standards. Traditionally known as non-GAAP, the IASB has decided to call such subtotals ‘Management Performance Measures’, or MPMs. This definition makes it clear that these are performance measures created by the management of a company.
The challenge for the IASB is to build upon the success of IFRS Standards—one of the most successful standards in global finance. That means improving the structure and quality of the financial statements and creating a better platform for broader developments in corporate reporting.
Full speech
© IASB - International Accounting Standards Board
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