The IASB next week will start redeliberating its December 2019 proposal that aims to overhaul financial statement requirements so that companies provide more detailed, structured information about their operations.
Board discussions on March 23-24, 2021, will include what was proposed about new subtotals about profit or loss, and explanatory disclosures in a single note about non-GAAP metrics— alternative figures that some companies use to bolster earnings.
The proposal sought to bring non-GAAP metrics – termed management performance measures – in financial statements. This means those figures would be subject to being audited, a major change from reporting norms.
The board will discuss whether to expand the scope of management performance measures beyond income and expense subtotals, according to a staff paper.
Redeliberations will also focus on the proposed subtotals and categories in the statement of profit or loss and the board will be asked to confirm aspects of its approach to require and define an operating profit subtotal and an operating category in the statement of profit or loss.
The board had proposed to require companies to classify their income and expenses into four defined categories: operating; integral associates and joint ventures; investing and financing. They would present three subtotals between these categories: operating profit; operating profit and income and expenses from integral associates and joint ventures; and profit before financing and income tax.
These subtotals and categories would each reflect a different aspect of a company’s financial performance, providing relevant information for investors. In addition, they would create a consistent structure for the statement of profit or loss, making it easier for investors to compare companies.
The board will also redeliberate on proposed amendments to the statement of cash flows, including the scope of amendments and some of the specific proposals, the paper states.
The changes were floated for public comment under Exposure Draft No. 2019-7, General Presentation and Disclosures, which sets out proposals for a new IFRS standard on presentation and disclosures in financial statements that, when finalized, will replace International Accounting Standard (IAS) 1, Presentation of Financial Statements. It also sets out proposed amendments to other IFRS standards.
The comment period was extended from June 30 to September 30 in 2020 because of the COVID-19 pandemic. As of December 1, the board received 215 comment letters.
Extending Comment Deadlines on Some Projects
Separately, the IASB plans to discuss whether to extend the comment period on three exposure documents issued or will be issued in the near future after companies told the board they reached their limit on consultation documents at this point in time.
The board will discuss whether to extend the comment period for Exposure Draft No. 2021-1, Regulatory Assets and Regulatory Liabilities, from 150 days to 180 days; to extend the comment period on a forthcoming proposal, Disclosure Initiative—Targeted Standards-level Review of Disclosures, from 180 days to 270 days; and on the Request for Information on the Third Agenda Consultation, from 120 days to 180 days.
The board is monitoring other projects and may also extend the timeline for issuance, the staff paper explains. The exposure draft on Management Commentary, for example, initially set for issuance around the end of April, might be adjusted by a few weeks.
Among other topics, the board will hear a high-level summary from its staff about its Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment, which was issued March 2020. The deadline for submitting comments ended on December 31, 2020.
The board will start redeliberating its preliminary views in June.