SBR June 2022 Current projects

Practice Statement – not an IFRS – not mandatory

Objective is to assist management in presenting useful

management commentary on the financial statements

Management Management commentary should

Commentary
• Provide management’s view of the entities performance, position
and progress – including forward looking information
• Supplement and compliment the information in the financial
statements

Presentation
• Should be consistent with the related financial statements
• Avoid duplicating disclosures made in the notes
• Avoid generic and immaterial disclosures
Management
commentary - Elements
• Nature of the business
• Management objectives and strategies for meeting
objectives
• Entities most significant resources, risks and
relationships
• The results of operations and prospects
• The critical performance measures and indicators
that management use to evaluate the entity’s
performance against stated objectives
 • Practice statement 2
• Omission or misstatement could influence the decision
maker
• Materiality should ensure that relevant information is
Making not omitted or mis-stated and it should filter out
obscure information which is not useful

Materiality • When assessing materiality we’re considering whether

information is relevant to the user

Judgements
• IAS 1 states that disclosures required by an IFRS need
not be provided if the information is not material –
judgement required here!
• Too much disclosure of immaterial information can
obscure the relevant information required by users
• The practice statement is non mandatory
 1. Identify transactions/issues that are
potentially material
• Consider requirements of IFRS
• Consider common information needs
of the entity’s primary users
2. Assess whether information is material
4 step process • Assess whether the information could
reasonably influence the user
• Consider quantitative and qualitative
factors in the context of the financial
statements as a whole
 3. Organise clearly and concisely in the draft
financial statements
• Apply judgement in determining the best way
to communicate information clearly and
concisely
• Factors that help include: emphasising
material matters; explaining items simply;
minimising duplication; ensuring that
immaterial information does not obscure
4 Step Process material information
4. Review complete set of draft financial
statements
• Assess whether information is material both
individually and in combination with other
information
• Review may lead to information being added,
removed or altered
 Replace IAS 1 with a new standard

ED 2019/7 Mostly affects the P/L

• Defined subtotals in p/l

General • Disaggregate information in a more meaningful way

• Disclose information about APM’s presented in

presentation financial reports

Defined subtotals in P/L

and • IAS 1 requires just revenue and profit/loss for the year
– everything in between is decided by the directors
disclosure • P/L should be split into 4 categories; operating;
integral associates and JV’s; investing and financing
• Include 3 subtotals between these categories – see
next slide
 Disaggregation
Not enough of a ‘breakdown’ – large balances in ‘other operating expenses’

Proposals:
• Define ‘unusual income/expenses’ – ones with limited predictive value, in other words, ones
that will not occur again for several accounting periods
• Give a note disclosure on ‘unusual income/expenses’
• New standard will include a description of the ‘roles’ of the statement and the notes to allow
companies decide whether we should disclose in the statement or the notes
• New standard will include principles for aggregation/disaggregation
• New standard will require ‘meaningful’ labels rather than ‘other’ and where a meaningful
label can’t be used, then additional disclosure is required
 Additional performance measures

ED proposes that APM’s will have to be defined

All management APM’s will have to be disclosed in a single note including

detail about how management uses them and how they’re calculated

(Similar to ESMA guidelines)

Proposed changes to IAS 7 (ED 2019/7)
Interest
paid –
financing

Interest
received –
investing

Dividends
received –
investing

Dividends
paid -
financing