Thursday, December 9, 2010

IFRS Practice Statement on Management Commentary – A Framework for Presentation

As dropped into my email INBOX on December 8, 2010, the IASB announced the publication of IFRS Practice Statement Management Commentary, a broad, non-binding framework for the presentation of narrative reporting to accompany financial statements prepared in accordance with IFRSs.

The Practice Statement is not an IFRS. Consequently, entities applying IFRSs are not required to comply with the Practice Statement, unless specifically required by their jurisdiction. Furthermore, non-compliance with the Practice Statement will not prevent an entity’s financial statements from complying with IFRSs, if they otherwise do so.

What is Management Commentary ?

Management commentary is a narrative report that provides a context within which to interpret the financial position, financial performance and cash flows of an entity. It also provides management with an opportunity to explain its objectives and its strategies for achieving those objectives. Users routinely use the type of information provided in management commentary to help them evaluate an entity’s prospects and its general risks, as well as the success of management’s strategies for achieving its stated objectives. For many entities, management commentary is already an important element of their communication with the capital markets, supplementing as well as complementing the financial statements.

Management commentary is within the scope of the Conceptual Framework for Financial Reporting, therefore it should be read in the context of the Conceptual Framework.

When management commentary relates to financial statements, an entity should either make the financial statements available with the commentary or identify in the commentary the financial statements to which it relates.

Management should identify clearly what it is presenting as management commentary and distinguish it from other information.

When management commentary is presented, management should explain the extent to which the Practice Statement has been followed. An assertion that management commentary complies with the Practice Statement can be made only if it complies with the Statements in its entirety.

Management should determine the information to include in management commentary considering the needs of the primary users of financial reports. Those users are existing and potential investors, lenders and other creditors.

An entity may apply this Practice Statement to Management Commentary presented prospectively from 8 December 2010.

For the complete exposition, please download the softcopy : IFRS Practice Statement - Management Commentary

1 comment:

  1. Dear Sir

    With due respect and regard
    Its pleasure to go through your blog.