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Financial Statement Presentation is an issue of fundamental importance, and we are pleased that the boards have decided to address some of the key issues involved and to give the work a high priority. EFRAG supports much of what is proposed in the discussion paper (DP), but does have a number of concerns. Major ones are listed below.
Although EFRAG thinks that cohesiveness is a good principle, we do not think the only way—or indeed the best way—to achieve it is to apply an ‘everything in the same order and disaggregated to the same extent’ rule. Yet we think that is largely what the DP proposes. In our view, it is very important that the implementation of the cohesiveness principle is done in a way that is thoughtful and pragmatic.
We do not support the proposal that the new standard should require use of the direct method of presenting operating cash flows. We are not persuaded by the DP that such an approach provides information that is more decision-useful than an indirect method and therefore justifies the additional cost that would usually be involved. We prefer the indirect method of presenting operating cash flows in the statement of cash flows.
EFRAG thinks that, although the proposed reconciliation schedule is an interesting idea, too many of the numbers that would be disclosed will be of little informational value to justify the cost of preparing the schedule in the form proposed. Our suggestion is that the schedule should be scaled down and should focus instead on remeasurements and large non-cash items.
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