ARTICLE
4 February 2020

IASB Proposes Changes To Presentation And Disclosure Of IFRS Financial Statements

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A&O Shearman

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In December, the International Accounting Standards Board (IASB) published an exposure draft proposing changes to the rules governing...
United States Corporate/Commercial Law

In December, the International Accounting Standards Board (IASB) published an exposure draft proposing changes to the rules governing the presentation of financial statements prepared in accordance with International Financial Reporting Standards (IFRS). The three main changes proposed are:

  • New subtotals in the statement of profit or loss—The proposed rule change would require three new profit subtotals to be included in the statement of profit or loss, including "operating profit". Given that many companies already report operating profit, this change is intended to enhance comparability between companies.
  • "Non-GAAP" transparency—Companies would be required to disclose management performance measures— subtotals of income and expenses that are not specified in IFRS standards—in a single note to the financial statements. In this note, companies would be required to explain why the measures provide useful information, how they are calculated and to provide a reconciliation to the most comparable profit subtotal specified under IFRS. These proposed requirements are similar to the existing rules regarding disclosure of non-GAAP measures to which SEC-reporting companies are already subject. However, by requiring such measures to be disclosed in a note to the financial statements, they would technically not be "non-GAAP" measures for purposes of (and thus not subject to) the SEC's non-GAAP rules.
  • Improved disaggregation of information—The proposed rule change includes new guidance to help companies disaggregate information in the most useful way for investors. Companies would also be required to provide better analysis of their operating expenses and to identify and explain in the financial statement notes any unusual income or expenses.

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