EFRAG research project on better information on intangibles
- Research phase
- Ricardo Torres Ruiz-Olivares, Rasmus Sommer, Hocine Kebli, Lina Lemessiou
The aims of the project are:
- to explain how entities report on creating, maintaining and/or improving their value;
- to explain how users consume information on creating, maintaining and/or improving value, and the extent to which current reporting addresses their needs; and
- to provide suggestions on how information on creating, maintaining and/or improving value can be provided in financial reports in a manner that is useful for decisions on providing resources to the entity.
To develop alternatives to provide more relevant information on intangibles in financial reporting, the EFRAG Secretariat plans:
- to address a number of aspects in relation to internally generated intangibles, including a categorisation and description of the different types of assets (marketing, technological, social, reputational or human capital) and how their different features are relevant in terms of financial reporting.
- to investigate how to consider uncertainties that exist both in relation to the entity's ability to access future benefits and their amount and timing. This includes, for example, considering the ability of competitors to duplicate the entity's resource, barriers for usage and spillovers.
- to develop metrics to express earning potential and value: Measurement or disclosures.
In August 2018, following the input received from constituents in response to the EFRAG Research Agenda Consultation, the EFRAG Board decided to add a research project on better information on intangibles to its research agenda.
In Q1 of 2019, the EFRAG Secretariat conducted a total of 17 interviews with academics, preparers, users, valuers and other professionals. There was a degree of consensus that that information about the intangibles is lacking in the primary financial statements, however, interviewees expressed a mix of views regarding the possible solutions to the problem.
Next Steps and Deliverables
The EFRAG Secretariat plans to issue the following deliverables in further stages of the research project:
- Problem Description. Performing activities which will result in gathering information in order to formally define and describe the problem. This phase is expected to be finalised in H2 2020.
- Input for the EFRAG comment letter on the IASB's project regarding management commentary. This input should be ready for the expected Exposure Draft in December 2020.
- Key Information solution. Researching possible solutions to the defined problems. This phase is expected to be finalised in H1 2021.
- Testing: testing the identified solutions on different entities including, if possible, testing with the European Corporate Reporting Lab. This phase is expected to be finalised in H2 2021.
- The in-progress consultation on IASB’s Discussion Paper Business Combinations — Disclosures, Goodwill and Impairment;
- The IASB 2020 Agenda Consultation, in particular regarding the need for an IASB project on intangibles and its possible areas of focus.
- The developments at EU level on the reporting of non-financial information.
- Setting up an Intangible Advisory Panel (see above).
- Organising roundtables on intangibles.
- Regular consultations with the EFRAG User Panel.
- Public consultations on EFRAG’s future Discussion Papers.
13/03/2020 - EFRAG announces the composition of its Advisory Panel on Intangibles
EFRAG TEG has approved the composition of the EFRAG Advisory Panel on Intangibles. EFRAG welcomes Florian Bercault, Ian Bishop, Giorgio Calimani, Laure Chatillon, Alexandre Goncalves, Laurine Lemon, Gianluca Manca, Marietta Miemietz, Bertrand Perrin, Laurent Pieraerts, Jochem Quaak, Ivars Strautins, Jeremy Stuber, Ton van Ooijen, Jesús Valero and Hanno Wulbrand as members of the EFRAG Advisory Panel on Intangibles.
18/02/2020 - Reminder: EFRAG calls for candidates for an advisory panel on intangibles
The application deadline is 21 February 2020.
05/02/2020 - Literature review on intangibles
EFRAG publishes a literature review on intangibles as part of its research project on better information on intangibles.
21/01/2020 - EFRAG Advisory Panel on Intangibles: Call for candidatesHow does an entity create, maintain and enhance value? What information about intangibles do investors need but cannot find in the financial statements?
14/01/2019 - Extended application deadline for the academic literature review on intangible assets
The new deadline is 31 January 2019.
04/12/2018 - EFRAG calls for an academic literature review on reporting on intangible assets
The academic literature review will form part of EFRAG's project on better information on intangible assets.