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Description :
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Although the IASB and FASB have an active project on Financial Statement Presentation and have indeed issued a Discussion Paper on the subject recently, there are a number of fundamental issues about the presentation of financial performance information that that discussion paper does not address. Those issues include:
- should the net income line be retained?
- (if it should be retained), what should the basis be for determining whether something is within net income or outside net income?
- what role should recycling have in performance reporting?
The PAAinE Discussion Paper Performance Reporting: A European Discussion Paper explores those issues. It notes that performance is a complex, multi-faceted notion that cannot be encompassed in one or a few numbers. Nevertheless both preparers and users want some key performance reporting lines to convey headline numbers and to provide a starting point for analysis. It is therefore important that items of income, expense, gains and losses are disaggregated, grouped and aggregated in a way that ensures that the most useful key lines are presented. The paper notes that whether recycling is needed also depends on the aggregation/disaggregation model used. The final chapters of the paper discuss various disaggregation models.
This is the second PAAinE paper on Performance Reporting, and it follows on from the first (What (if anything) is wrong with the good old income statement?) which was issued in November 2006. This second paper has been prepared by staff of the Spanish standard-setter and EFRAG.
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