Principles and qualitative characteristics

The IASB Management Commentary paper identifies a strong convergence of opinion on the concepts that underpin the preparation and presentation of narrative reporting for investors. For example, all five of the current guidance frameworks reviewed by the project team feature 'through the eyes of management' as a guiding principle. In general, these principles lead to a requirement for narrative reporting to:

• Supplement and complement the financial statement information
• Provide an analysis of the entity through the eyes of management
• Be forward-looking.

The paper also concluded that the attributes that make information useful to investors are:

• Understandability
• Relevance
• Supportability
• Balance
• Comparability over time