IASB unanimously agrees to finalise the revision of the Management Commentary Practice Statement

At its meeting today, the International Accounting Standards Board (IASB) unanimously decided to move forward with finalising the revision of IFRS Practice Statement 1 Management Commentary by making targeted refinements to its proposals set out in the Exposure Draft Management Commentary.

The decision to improve the existing Practice Statement responds to demand for better information about the factors that have affected or could affect a company’s ability to create value and generate cash flows, including in the long term.

IFRS Standards do not require companies to prepare a management commentary. However, many securities regulators require a similar report. The IASB is reassured by its additional outreach that the revised Practice Statement would provide a comprehensive resource for regulators and companies to support improvement and greater global alignment in these types of reports.

The project codifies innovations in reporting, including concepts from the IFRS Foundation’s Integrated Reporting Framework^[1], in a set of standard-like requirements for management commentary designed to support investor-focused best practice.

Management commentary sometimes provides the home for a company’s sustainability disclosures. Supporting connectivity between a company’s management commentary and both its financial statements and sustainability disclosures is a key aim of the project. Finalising the project would also provide a stepping-stone towards greater integration in reporting in the future. In refining its proposals, the IASB will collaborate with the International Sustainability Standards Board (ISSB) and consult with the Integrated Reporting and Connectivity Council.

With the project already at an advanced stage and the IASB’s proposals broadly supported, the IASB expects to issue the revised Practice Statement in the first half of 2025.

[1] Following the consolidation with the Value Reporting Foundation, the Integrated Reporting Framework has become part of the IFRS Foundation’s literature. The Chairs of the IASB and the ISSB have issued a joint statement on the significance of the Integrated Reporting Framework to the work of the IFRS Foundation.