Project background

In November 2017, the IASB added a project to its agenda to revise and update the IFRS Practice Statement Management Commentary issued in 2010.

The IASB's research indicated that the existing Practice Statement does not always provide investors and creditors with the information they need and that it lacked focus on matters that are important for the entity's long-term prospects; contained too much generic information and not enough entity-specific information.

The IASB's main aim in revising the Practice Statement is to address these shortcomings and outreach and consultation with its Management Commentary Consultative Group (MCCG), The IASB published an exposure draft 'Management Commentary' (the 'ED) in May 2021 with a 180-day comment period. 

EFRAG response to the MCPS ED

EFRAG published its draft comment letter in July 2021 (see DCL here ). Following targeted outreach with several working groups, EFRAG  published its Final Comment Letter in December 2021 with support for the proposed objective-based approach and proposed content elements and with suggestions for improvements including having governance as a separate content element and giving equal emphasis to opportunities and risks. EFRAG made several other detailed recommendations to improve the guidance.

Project status

In response to constituents’ feedback, the IASB put the
project on hold while awaiting the ISSB to decide on whether to undertake a project on integration in reporting based on the feedback to the 2023 ISSB agenda consultation.

IASB decision on project direction

In April 2024, the ISSB decided not to add a project on integration in reporting. In June 2024, after consulting the MCCG and other stakeholders including securities regulators, the IASB decided to finalise the project and will make targeted refinements to the proposals in the Exposure Draft Management Commentary based on the feedback to the ED.

Next steps

Though the Practice Statement is voluntary and not endorsed in the EU,  EFRAG  will continue monitoring the finalisation of the project. This is because a) the MCPS could help with the cross-pollination of best practices of the management report guidance across jurisdictions; b) the MCPS is connectivity related as it can help to enhance the connectivity of IFRS general purpose financial reporting