United States

Proposal: How information is communicated in financial statements


The International Accounting Standards Board has issued an Exposure Draft, General Presentation and Disclosures, to improve how information is communicated in the financial statements, with a focus on financial performance. 

Among other changes, the Exposure Draft proposes that an entity present the following new subtotals in the statement of profit or loss:

  • Operating profit or loss
  • Operating profit or loss and income and expenses from integral associates and joint ventures
  • Profit or loss before financing and income taxes

In addition, the Exposure Draft proposes to require an entity to disclose “management performance measures” in a single note. Management performance measures are subtotals of income and expenses that (a) are used in public communications outside financial statements; (b) complement totals or subtotals specified by International Financial Reporting Standards (IFRS); and (c) communicate to users of financial statements management’s view of an aspect of an entity’s financial performance. In this note, companies would be required to explain why the measures provide useful information, explain how they are calculated, and provide a reconciliation to the most comparable profit subtotal specified by IFRS.

The Exposure Draft also includes proposed new guidance to help companies disaggregate information in the most useful way for investors. Further, the Exposure Draft proposes requiring all entities to disclose unusual income and expenses in a single note. The Exposure Draft introduces a definition for “unusual income and expenses” and proposes related application guidance. 

The Exposure Draft is available for comment until June 30, 2020.

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