The summary report of the event describes the main comments that EFRAG – EFFAS/ABAF – IASB received in the event. The main observations made can be summarised as follows:
- The members of the panel, formed by users of financial statements, noted that financial information obtained from P&L is key and often the starting point of their analysis. They also noted that the sector in which the company operated could influence users’ analysis and that for highly leveraged entities the balance sheet was important.
- The panel highlighted the importance of non-GAAP metrics based on P&L, such as EBITDA, EBIT and others.
- It is important for users to look at OCI to have a complete picture of a company’s performance. The panellists noted that if significant amounts of income and expenses were included in OCI and those amounts varied significantly, users failing to take these amounts into consideration, risked being misled. It was also noted that the lack of clarity as to what OCI represented was not helping users to get the full picture.
- The members of the panel pointed out that OCI had a confirmative role for investors and stressed the importance of understanding how much the amounts included in OCI were moving over time.
- Users need a number that reflects the underlying performance of a business so that they are be able to apply their valuation model.
- The concept of ‘business model’ was considered important and P&L should be closely linked to the entity’s business model and management’s view over the performance of the business.