EFRAG's Final Comment Letter on ED/2021/6 Management Commentary

​In its letter, EFRAG welcomes the objective to improve the information reported in management commentary through the Exposure Draft Management Commentary (ED) but suggests to the IASB to reconsider the finalisation of this project in the context of the work that the ISSB is about to start. The role of the management commentary practice statement in fostering connectivity of financial reporting and sustainability information could be enhanced if the IASB and ISSB manage the project jointly.

Overall, EFRAG supports an objective-based approach including the six proposed content elements and considers that developing specific, rule-based requirements for the management commentary is primarily the responsibility of legislators, security regulators and/or national standard-setters.  However, EFRAG considers that the proposals in the ED introduce additional complexity by proposing three different types of disclosure objectives for the six content elements. EFRAG considers that the IASB should consider the outcome of its ongoing consultation on the ED Disclosure Requirements in IFRS Standards—A Pilot Approach, to assess whether a similar two-tier objective-based approach could be applied to the revised Practice Statement. 

EFRAG also considers that the statement of full compliance with the Practice Statement should be encouraged but not mandated and statement of partial compliance should not be allowed.

Finally, EFRAG suggests that the guidance should explicitly address the subject of governance, it should give equal emphasis​ to the discussion of opportunities and risks, and it should holistically address disclosures on intangibles. Additional illustrative examples on ESG and other matters are also suggested.​
EFRAG's Final Comment Letter can be found here​​.