IASB proposes changes to the presentation and disclosure of profit

On 17th December the International Accounting Standards Board ('IASB') published an Exposure Draft which proposed changes to the “General Presentation and Disclosure” of financial statements. This would mean replacing the existing IAS 1 standard with a new reporting standard and would require some minor amendments to a number of other existing standards.

A snapshot of the changes prepared by the IASB can be found here:

In summary, the main changes in the draft standard are:

1.      Inclusion of defined profit sub-totals in the Income Statement (highlighted below)

Source: IFRS Standards Exposure Draft ED/2019/7: General Presentation and Disclosures

2.      Guidance on what classes of income, expense, asset and liability can be aggregated or disaggregated

3.      “Unusual income and expenses” to be reported in a single note (“An entity classifies income and expenses as unusual if and only if they have limited predictive value. Hence, income and expenses cannot be classified as unusual if it is reasonable to expect that income or expenses similar in type and amount will arise in any of several future annual reporting periods”

4.      Management performance measures – require an entity to disclose any financial measures which are publicly communicated in relation to the financial statements in a single note including how each measure is calculated

5.      EBITDA – proposal that this it not defined as part of this project (“However, the Board is proposing a measure similar to EBITDA, ‘operating profit before depreciation and amortisation’, as an IFRS-specified measure that companies can choose to present in a ‘by nature’ statement of profit or loss or disclose in the notes. The Board decided not to label this measure ‘EBITDA’ because its content does not match what the acronym ‘EBITDA’ stands for”.)

Comments on the Exposure Draft are invited up to 30 June 2020. Whilst no timeline for implementation is set out, past practice (the last accounting standard, IFRS 17, took 8 years from initial Exposure Draft to final approval) would suggest this is likely to be a drawn-out process.  

If you wish to discuss anything arising from this briefing, please ask your usual contact at FIT or call us on 020 7034 1111 or email us at Info@fit-rem.com.

This paper is intended to be a summary of key issues but is not comprehensive and does not constitute advice. No legal responsibility is accepted as a result of reliance on the contents of this paper.

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