Frameworks

The IASB discussion paper defines Management Commentary itself as explaining: 'the main trends and factors underlying the development, performance and position of the entity's business during the period covered by the financial statements. It also explains the main trends and factors that are likely to affect the entity's future development, performance and position.'

There is a high degree of consensus on the information companies should provide in their narrative reporting. The paper concluded that the disclosure framework provided in the recent UK Reporting Statement on OFRs (RS1), subsequently released as a Reporting Statement, offered a useful structure, and presents a Management Commentary disclosure framework, rather than specifying disclosure requirements. To meet the objective of effective narrative reporting, it says an entity's Management Commentary should disclose information on:

• The nature of its business
• Its objectives and strategy
• Its key resources, risks and relationships
• Its results and prospects
• Its performance measures and indicators

This disclosure framework is entirely consistent with PricewaterhouseCoopers corporate reporting framework, the codification of over a decade of capital markets research.