EFRAG - EFFAS/ABAF - IASB Investor Event in Brussels
Brussels, 01 July 2015
Could profit or loss (P&L) become more useful? And what is the role of other comprehensive income (OCI)?
The concept of profit or loss (P&L) is viewed by many investors, creditors and other users of financial statements as a fundamental measure of performance and is often the starting point of investors’ analysis.
One other concept that contributes to the measurement of performance is other comprehensive income (OCI). Although this concept has been an important part of the preparation of financial statements for many years, the existing Conceptual Framework does not include any guidance on OCI (for example, there are no clear principles for deciding on what basis gains and losses should be in OCI and/or when they should be recycled into P&L). Items that have historically been reported outside P&L have largely been addressed on an ad hoc basis to solve specific issues that arise in practice.
On 28 May 2015, the IASB published an Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting (the ‘ED’) which provides a description of the statement of profit or loss and suggests what OCI could be in undefined circumstances. The ED also seeks feedback on whether there is support for the proposed description of the statement of profit or loss and for proposals on the use of OCI.
To seek the views of users on the role of P&L and what should be the purpose of OCI and its separation from P&L, the European Financial Reporting Advisory Group (EFRAG), the European Federation of Financial Analysts Societies (EFFAS) and the Association Belge des Analystes Financiers (ABAF), in cooperation with the International Accounting Standards Board (IASB), organised a joint outreach event (‘the event’) that took place on 1 July 2015 in Brussels. In addition to users, the event attracted a range of other stakeholders, including preparers, auditors, standard setters and other European organisations.
The views expressed in this summary report reflect the individual views expressed by participants at the event. The feedback received will contribute to EFRAG’s comment letter in response to the ED.
The speakers and the panel comprised Hans Buysse, Member of EFFAS Management Committee and EFRAG Board Member; Steve Cooper, IASB Board Member; Mark Clatworthy, Professor, University of Bristol; Joachim Gassen, Professor, Humboldt University, Berlin; Frank Klein (panellist), Managing Director, Deutsche Asset & Wealth Management; Stefaan Genoe (panellist), Head of Equity Research, Petercam NV; Glen Suarez (panellist), CIO and Deputy CEO, Knight Vinke Asset Management; Françoise Flores, EFRAG TEG Chairman; and Patricia McBride, EFRAG Technical Director.