Bridging the narrative gap with IASB’s latest update
The International Accounting Standards Board (IASB) aims to improve the clarity and consistency of corporate storytelling with a recent update to IFRS Practice Statement 1: Management Commentary.
Published 23 June, the update is designed to sharpen the focus and usefulness of narrative reports that accompany financial statements.
The revised Practice Statement introduces a more investor-focused approach. It zeroes in on six essential content areas, from business model and strategy to risks and financial performance, each supported by disclosure objectives.
Developed in close collaboration with the International Sustainability Standards Board (ISSB), the guidance is designed to better align financial and sustainability narratives, drawing inspiration from the Integrated Reporting Framework.
Why does this matter? Because when narrative reporting falters, investor insight suffers. With this update, the IASB is inviting regulators around the world to adopt a new, improved baseline of quality for commentary – and for companies, it offers a roadmap to deliver richer, more connected information.
We see this as a useful opportunity to think about the digital representation of MPMs. By using iXBRL to connect management commentary with financial statement disclosures, firms can elevate clarity and comparability. Yes, we realise that opens up questions about the need for tagging of MPMs (aka “Non-GAAP”) metrics and disclosures in a way they can, at least, be compared over time, and at best, can be used within industry comparators.
Dive into the new Practice Statement and accompanying resources here.
