SwissHoldings, the Swiss Federation of Industrial and Services Groups in Switzerland, represents 59 Swiss groups, including most of the country’s major industrial and commercial enterprises. We very much welcome the opportunity to provide comments to this Exposure Draft (ED).
We very much appreciate that the IASB addresses the topics that are included in the ED. In our view many of the right questions are being asked. It is welcome that Operating Profit will become a defined term, and that topics such as the presentation of results of Associated and Joint Ventures are addressed and some basic improvements to IAS 7 are made. It is also important that there is a wider discussion about matters such as income statement presentation and non-GAAP measures, and we support that the IASB brings forward proposals about these matters.
Nevertheless we have strong reservations about some of the proposals.
- In some cases the proposals are not articulated clearly and precisely enough and will lead to confusion and inconsistency in practice. It is for example still unclear to what extent income statement sub-totals and individual line items, which is an existing issue under IAS 1, are permitted or prohibited by the ED. Indeed some SwissHoldings member companies are concerned that they will need to implement new non-GAAP income metrics in the future as their current income statement presentation will no longer be permitted.
- The proposals would benefit greatly from expanded Implementation Guidance and Illustrative Examples. Many obvious and frequently occuring situations are not clearly addressed.
- The proposal to have Operating Profit as a residual that is in no way linked or reconcilable to the IFRS 8 Operating Segment disclosures is particularly unfortunate.
- Some of the proposals seem to us to add little additional value to readers.
- The Management Performance Measures proposals create new metrics that duplicate the existing Alternative Performance Measures disclosures already required by regulators such as the SIX and ESMA.
- The by-nature disclosures and unusual income and expense disclosures are also largely duplications of information already required by other standards or that is given in the Management Discussion and Analysis.
- The proposals to require a by-nature disclosure of income statement items and to allocate foreign exchange gains/losses across the income statement will be time consuming and costly to implement.
- The proposals do not include any reliefs for non-public companies and smaller Group companies that use stand-alone IFRS for their statutory reporting. Since many of the proposals are supposedly at the request of investors, they are presumably not relevant for example for 100% owned subsidiaries.
We therefore recommend that the IASB reconsider their proposals, taking into account the results of the Fieldwork and the Comment Letters; and reissue a revised Exposure Draft with significantly expanded Implementation Guidance and Illustrative Examples at a future date.
See detailed response with appendix [pdf]