Why is management commentary necessary

We therefore support the principles and content elements of MC outlined in the ED. These are suitably high level to allow management to provide an analysis of the business and to assist users to 'understand the entity's financial statements as well as management's objectives and strategies for achieving those objectives'. Clearly the Board has reviewed the requirements in jurisdictions where there is already a robust framework for management discussion and analysis as part of the reporting process.

We believe that issues regarding sustainability reporting are increasingly important to equity shareholders as well as other users of corporate reports. Therefore the Board should refer to this explicitly within the content elements, although emphasis should be placed on whether such information is material to a holistic understanding of the accounts and the business. Otherwise, such CSR reporting may be better placed in other parts of the broader corporate reporting framework.

We also note that the UK Companies Act requirements, while emphasising the need to provide unbiased disclosure on factors likely to affect the future of the business, exempts companies from disclosing information on impending developments if it would, 'in the opinion of the directors, be seriously prejudicial to the interests of the company' section 10 CA We believe that such an exemption should also be included in the guidance from the IASB.

Question 3: Do you agree with the Board's decision not to include detailed application guidance and illustrative examples in the final management commentary guidance document? If not, what specific guidance would you include and why?

We agree that detailed application guidance is not necessary or desirable. The general, high level guidance in the ED allows for the right level of flexibility and opportunity to apply judgement as what is most relevant to both management and other users.

Users of management commentary We agree with the Board that if MC is to provide context for a set of financial statements within a set of financial reports, it should be aimed at the same set of primary users as the financial statements. In our response to the IASB's exposure draft Objective of financial reporting and qualitative characteristics, dated 27 October , we raised concerns about the perceived group of users providers of capital in general of financial reports being too wide.

We would reiterate that in our view, the primary user group to be equity shareholders, and would also note that in its discussion paper on Management commentary, the IASB also identified investors as the primary users of MC itself. With this, the International Accounting Standards Board envisages that companies would be able to apply the proposed framework along with national reporting requirements and in conjunction with frameworks that address particular topics of interest, such as sustainability.

The Practice Statement would succeed the IFRS Practice Statement 1 Management Commentary for annual reporting periods beginning on or after the date of its issue, meaning that the Practice Statement would be effective for annual reporting periods ending at least one year after the date of its issue.

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Ignore and log out. Investor-focused management commentary Investor-focused management commentary Investor-focused management commentary. Proposed new framework designed to bring financial and non-financial information into a single report.

Proposed new framework designed to bring financial and non-financial information. Share close. Highlights Why replace the existing practice statement? What is the Board proposing for management commentary? Management commentary should be clear and straightforward and be presented with a focus on the most important information in a manner intended to address the principles described in the Practice Statement, specifically:.

Although the particular focus of management commentary will depend on the facts and circumstances of the entity, management commentary should include information that is essential to an understanding of the five elements discussed in the table below. The table links these elements with the IASB's assessment of the needs of the primary users of management commentary:. An entity may apply the Practice Statement to management commentary presented prospectively from 8 December These words serve as exceptions.

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