Management Commentary
The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions. Financial statements prepared for this purpose meet the common needs of most users. However, financial statements do not provide all the information that users may need to make economic decisions since they largely portray the financial effects of past events and do not necessarily provide non-financial information.
To bridge the gap between what financial statements are able to achieve and the needs of users of those financial statements, the Board intends to develop guidance for a type of narrative report referred to as management commentary.
In this project, the Board will develop the principles and essential content elements necessary to make management commentary reporting useful to investors. The final work product will be issued as a non-mandatory guidance document.
Is this project part of the Memorandum of Understanding?
No. The MoU sets out a Roadmap of Convergence between IFRSs and US GAAP 2006-2008.
Click here for more information on the MoU.
Next due process steps
Stage 4: Development and publication of an exposure draft
The management commentary exposure draft is scheduled for publication in the fourth quarter of 2008.
Due process steps completed
Stage 1: Setting the agenda
The IASB moved Management Commentary from its research agenda to its active agenda at the December 2007 meeting. Click here for a copy of the observer notes.
Stage 2: Project planning
This project is being conducted by the IASB only. The project will result in guidance on the development of management commentary reports.
Given the limited scope of the project a working group has not been established.
Stage 3: Development and publication of a discussion paper
On 27 October 2005, the IASB published a discussion paper Management Commentary that assesses the role the IASB could play in improving the quality of the management commentary that accompanies financial statements. The discussion paper was prepared for the IASB by staff of the national standards–setters from Germany, New Zealand, the United Kingdom and the Canadian Institute of Chartered Accountants. Click here for a copy of the discussion paper.
The comment period for the discussion paper was 120 days and ended on 28 April 2006; 116 comment letters were received from constituents. Click here to view the comment letters.
Related projects
This project has interrelations with both the Conceptual Framework and the Financial Statement Presentation projects. This project may also affect the disclosure requirements contained in other standards.
Further information
- Click here to download the full project report. This document includes the project history, a summary of past Board discussions and the current status of the project.