EFRAG research project on better information on intangibles
- Research phase
- Rasmus Sommer, Hocine Kebli, Lina Lemessiou, Juan Jose Gomez de la Calzada
The aims of the project are:
- to understand how entities report on creating, maintaining and/or improving their value;
- to understand 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.
The project is focused on information provided in the IFRS financial statements, including the notes accompanying the primary financial statements, and the management commentary.
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.
On 5 February 2020, EFRAG published a literature review on the reporting of intangibles. the review was performed by a team from the University of Ferrara following a tender. The literature review, focusing on publications since 2007 provided insight into the following areas:
- Intangibles in a macro perspective ;
- Unaccounted intangibles and their impact on the relevance of financial reporting;
- Information on specific unaccounted intangibles and its impact on company performance, market value and users;
- Information on intellectual capital and its effects on company performance, market value and users;;and
- Frameworks and models for measuring and reporting on intangibles and their impact on company performance, market value and users.
In March 2020, EFRAG TEG approved the composition of an Advisory Panel on Intangibles (EFRAG API) which held five meetings from March to October 2020. The EFRAG API, comprising preparers, users and valuers, is aimed at discussing current reporting practices and challenges and help identify examples of good practice offering selected members a forum for exchanging ideas on how to improve information on intangibles. Several initiatives including the following, were implemented in those meetings in line with the aims indicated above:
- Share User/Preparer examples of (good) reporting practice and how information is being reported/consumed. Each Industry represented in the API (Pharma, Fast-moving Consumer Goods and IT/Media) was discussed based on members presentations (both users and preparers).
- Discuss whether and how current accounting framework could be improved.
- Discuss approaches on intangibles developed by other organisations.
- Gathering API members views on questions included in the DP/2020/1 Business Combinations-Disclosures, Goodwill and Impairment.
An additional meeting of the panel is considered for the first part of 2021.
In the coming months, EFRAG TEG will consider the various chapters of the discussion paper with an aim of publishing the discussion paper in mid-2021.
- EFRAG API members provided input and insights that fed into EFRAGs final comment letter response to the IASB’s Discussion Paper Business Combinations — Disclosures, Goodwill and Impairment.
- It is also expected that insights from the research will contribute on the revision of the Management Commentary Practice Statement and on the IASB's Third Agenda Consultation, specifically regarding its possible areas of focus and the need for an IASB project on intangibles.
- The developments at EU level on the reporting of non-financial information.
02/03/2021 - University of Ferrara, EFFAS, EFRAG, ICAS joint case study-based survey on intangibles
Participate in a new research project conducted by the University of Ferrara and supported by EFFAS, EFRAG and ICAS on reporting practices for intangible assets by completing the related case-study-based survey. The research project aims at collecting information on the preparation and use of the information on intangibles.
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.