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Description :
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The objective of this project was to develop a model for a narrative report, that would accompany but be presented outside of the financial statements, setting out management's explanation of the enterprise's financial condition, changes in financial condition, results of operations, and causes of changes in material line items. In was the intention of the IASB to develop the principles and essential content elements necessary to make management commentary reporting useful to investors. The output of the project should be a non-mandatory, 'best practice' guidance document rather than an IFRS.
In June 2006 the IASB issued the exposure draft Management Commentary
On 8 March 2010 EFRAG issued its comment letter in response to the exposure draft. In its comment letter, EFRAG supported the decision to develop high-level, principle-based, non-mandatory guidance on MC. In addition, the detailed proposals were broadly supported, except that:
• EFRAG had some concerns about the desirable qualitative characteristics it was proposed that MC should have;
• EFRAG did not support the IASB‘s decision to defer the development of placement principles until Phase E of the Conceptual Framework project. It was thought that some sort of placement principles were necessary to increase financial reporting effectiveness where MC was prepared.
• EFRAG thought it should be clarified that financial statements prepared in accordance with IFRS that are accompanied by management commentary, not prepared in accordance the guidance proposed in the ED, still can be said to be prepared in accordance with IFRS.
In December 2010 the IASB issued the IFRS Practice Statement Management Commentary as the final outcome of the project.
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