The Committee of European Securities Regulators (CESR) has published its responses to the European Financial Reporting Advisory Group (EFRAG) draft comment letter on the International Accounting Standards Board (IASB) Discussion Paper - Preliminary views on financial statements presentation. The responses are:
- CESR agrees with EFRAG that the three suggested objectives behind the presentation of financial statements - namely cohesiveness, disaggregation and liquidity/flexibility - are objectives which should be applied in a pragmatic way.
- CESR believes that the separation of ‘business activities’ from ‘financing activities’ is important as such separation allows issuers to distinguish clearly those flows that arise from their continuing business activities from those that arise from the financing of their continuing business activities.
- CESR fully supports that any reclassification from one category into another category should be treated as a change in accounting policy and therefore be applied retrospectively.
- CESR is on balance supportive of the ‘management approach’ as described in the IASB Discussion Paper, although it feels that what is presented is probably not a ‘full management approach' as defined in International Financial Reporting Standards 8.
- CESR has mixed views on whether the statement of comprehensive income and the statement of other comprehensive income should be presented in two separate statements or in one single statement.
- CESR notes but is surprised by the assertion that users of financial statements are not generally satisfied with the information provided in statements of cash flows that use the indirect method. CESR believes the IASB should conduct a cost/benefit analysis and a field test before imposing the direct method on all IFRS users.
- CESR is also of the opinion that, although the suggested schedule of reconciliation might provide users of financial statements with useful information, a cost/benefit analysis and a field test should again be performed before introducing a requirement to provide such a schedule.
CESR has also published its response to the consultation regarding International Accounting Standards Committee Foundation Review of the Constitution Part 2.