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December 8, 2010

IASB issues management commentary statement

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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