The International Accounting Standards Board
(IASB) has issued an IFRS practice statement on management
commentary.
The IASB said management commentary fulfils an
important role by providing users of financial statements with a
historical and prospective commentary on the entity’s financial
position, financial performance and cash flows. It serves as a
basis for understanding management’s objectives and strategies.
The practice statement allows the adaption of
information to particular circumstances of business, including the
legal and economic circumstances of individual jurisdictions, to
generate more significant disclosure about the most important
resources, risks and relationships, affecting an entity’s value and
how it is managed.
“Management commentary is one of the most
interesting parts of the annual report. It provides management with
an opportunity to add context to the published financial
information, and to explain their future strategy and objectives.
It is also becoming increasingly important in the reporting of
non-financial metrics such as sustainability and environmental
reporting,” IASB chairman David Tweedie said.
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